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For at least three years, James Ivy, the founder of Dallas-based consultant/integrator Stonebridge Technologies, has been weaning himself off the business.
He sold a majority ownership in the company in 1998 to a group of private investors, then the following year hired his successor as CEO, and by last year was working solely on the com- panys product integration venture with MOCA. Once that transitional deal was finalized, Ivy felt free to finally back away from his offspring and consider his next career move.
But, as so often happens in technology, rapid shifts in the market altered those plans. “Late last year, I was involved in the business strictly at the board level,” says Ivy, who retains a large equity stake in the 16-year-old company. “I had reached the point where I was ready for something new.”
However, by that time, Stonebridges unprecedented growth was grinding to an unpleasant halt. Under its new CEO, Jim Sherriff, the company had revved up its top-line performance in such consulting disciplines as e-branding and front-end design. Sherriffs charter was simple: rapidly grow services revenue, head count and brand-name recognition in anticipation of an initial public offering.
“And, no question, Jim built something impressive on the consulting side,” says Ivy. “The idea was to [combine our strengths] in back-end integration with the front-end piece and compete on an end-to-end [basis] … and then, it all changed, and we were slow to react.”
Although Stonebridge did lay off 30 percent of its 580-member workforce in late 2000 and early 2001, and addressed problems in financial management, some big obstacles remained, says Ivy. Specifically, the company was too dependent on front-end services that the market no longer desired; it was still too heavily reliant on a local delivery model, which created no opportunity for leverage; and, finally, costs were too high and the organizational structure too complex.
The board, for its part, determined that Sherriff was not the one to unravel all of the growth initiatives that he had put in place, and instead turned to Ivy to make the hard choices. Sherriff could not be reached for comment on his departure from Stonebridge, although a source close to the ex-CEO doubts that Sherriff would have wanted to stick around and run the company in its new slimmed-down, “back to basics” mode.
“For me, it comes back to a love for the company I started,” Ivy says. “I think, if anything, my time away confirmed that love. So when they asked me to step back in, I didnt look back. There was nothing I couldnt drop that was more important than this.”
Upon reclaiming the CEO job last month, Ivy instituted several changes, including another drastic personnel cut that reduced head count to 290 and a streamlining of the companys services offerings, down to three core solution sets: business intelligence/data warehousing (Oracle expertise); extended enterprise resource planning (XERP), or linking supply-chain components; and Web-enabled customer relationship management (integrating the Web into back-office systems).
In addition to radically narrowing the mission, Ivy simplified Stonebridges complex organizational structure, under which more than 20 people were reporting to the CEO. Now, the CEO has only seven direct reports. A flatter organization also will include some centralization of the client delivery function, although Ivy insists the company is not totally abandoning the local delivery model.
Ivy says these changes have the support of Stonebridges key institution- al investors, including Wm. E. Simon & Sons, Arlington Capital Partners and Mellon Ventures.
Ivy adds that hes putting some of his own money back into the firm. He believes that Stonebridge is sufficiently capitalized to ride out the tough times, with the hope that 2002 will bring relief and a long-overdue IPO.
Stonebridge appears to be better funded than many consulting firms that capsized in the economic storm. And it helps to have a familiar captain at the helm.