2001
Towards the mainstream: e-consulting
By
Andrew Fisher
Despite a turbulent year for e-consulting and dotcoms, consultants believe that there will be work for all of them as companies recognise how the internet can help them to achieve their strategic goals
The Financial Times,
30 March 2001
When dotcoms seemed to be aggressively rewriting the rules of business, established companies wondered if life would ever be the same again. Now that many Internet companies have collapsed or are struggling to survive, business is returning to normal - but with some important differences.
Profits are back in style, as opposed to the share price-oriented nature of many online ventures of the past two years or so, and projects must be based on firm investment returns rather than the vague hope of future revenue gains.
But, as consultants report, the way companies set strategies and the means they adopt to implement them have changed considerably. This in turn has altered the shape of the consultancy market, where almost every activity involves some aspect of e-business.
"Most serious business people are pleased that they are dealing with proper economics again," says Ian Watmore, UK managing partner at Accenture (formerly Andersen Consulting). "At the height of the dotcom bubble, normal business arguments didn't seem to apply."
Thus, those companies which were not swept up by online enthusiasm can be excused a certain smugness. "If the dotcom failures have done anything, they have awakened the realisation that business economics don't go away," says John Little, a member of PA Consulting's management group.
Profits are firmly back at the centre of e-business models. But the Internet has opened up enticing new horizons. Through IT and Web-based software, companies can transform themselves, streamlining and linking their business processes - both internally and externally - and hiving off many non-core activities to outsiders such as application service providers (ASPs).
This will enable them not just to cut costs but, more importantly, to tap new markets, attract new customers and interact more effectively with suppliers and partners. To realise these benefits, companies must focus hard on strategy but be highly flexible about how to implement it.
This is because the Internet has put a tremendous premium on speed. Companies must be prepared to embark on a range of projects aimed at strategic goals, but drop some of them rapidly if necessary. Those which make the grade must then be scaled up quickly.
"Fail cheap, fail quick," says Mr Watmore. "When you have a success, scale fast." The aim is to create an enterprise which is imbued with e-business technology and culture across all divisions, units and sales channels.
It means adopting a "portfolio" approach to projects rather than launching unwieldy one-off programmes lasting several years. "E-business means 'faster, better, cheaper' and biting it off in smaller chunks," says Gilbert Toppin, head of the e-business practice at Deloitte Consulting.
Hugh Josty, also of PA Consulting, talks of "controlled experimentation".
Yet, most companies, even the most internet-savvy, are still far from formulating, let alone implementing, a complete e-business strategy. "It's a very, very hard job to encourage, marshal and enthuse different people across the business with very different conceptions," says Mr Josty.
Against such corporate challenges, consultants remain confident there will be more than enough work to go round. Nevertheless, some of the smaller Internet and e-commerce consultancies are having a rough time.
Razorfish, for example, has cut staff numbers sharply, while Scient has slimmed down and reshaped itself as an overall e-business specialist. Cambridge Technology Partners of the US is being bought by Novell, the US software group.
Stephanie Moore, of Giga Information Group, US-based market research analysts, says worldwide companies taking big IT and e-business investment decisions need consulting firms with large global presence, many consultants and different skill sets.
"Global 1000 firms have legacy or existing information systems that must be altered and/or integrated so that they can participate in new e-business systems and processes," she wrote in a recent study. "Internet integrators are weak in this area, having focused on front-end creative and Web application development skills."
David Henderson, a UK-based partner at PwC involved in IT strategy, says companies need consultants who can take projects from conception to full execution. "Full service providers have definitely got an advantage in being able to work with clients from the 'blue sky' to the implementation stage. Niche players have a role, but they can't do all of it," he says.
To realise their e-business ambitions, companies need a robust and flexible IT architecture and software that can integrate their systems so that vital data is available when and where it is needed. A strong IT backbone - including an enterprise resource planning (ERP) system - is needed to make data transparent across the company.
The advent of electronic exchanges, or e-marketplaces, has also caused companies to rethink their operations. Through these, they can link up purchasing and other operations to save costs and widen the scope of their operations. Exchanges can also link up with each other.
Thus, as well as B2B (business-to-business) activities, the term X2X (exchange-to-exchange) is also entering the corporate vocabulary, says Mr Toppin. "This is a good example of how technology is breaking down the boundaries between companies." But here, too, hype has overtaken reality. Several exchanges have collapsed even as the e-marketplace trend is barely under way, while others are struggling to develop a profitable business model. Yet exchanges will clearly form an essential part of most companies' e-business strategy.
Another term in vogue is B2E (business-to-employee), the use by companies of the Web to train and inform employees. Keeping employees' skills constantly updated will be vital as e-business permeates corporations.
The day will come, of course, when "e" no longer prefixes such words as business, commerce and procurement. Mr Toppin thinks it will disappear by the end of this year. Others expect the "e" to last a while longer.
"The e-world has become the world," says Maurice Abell, chief executive for the UK of Cap Gemini Ernst & Young. "But it's not just about glitzy Web sites any more. Companies want creativity and certainty."
Copyright: The Financial Times Limited
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