BUSINESSWEEK ONLINE : JUNE 19, 2000 ISSUE
COVER STORY Clash of the E-Consultants Net upstarts and the Old Guard battle for the Cyber Age Fred Huff presides over a room full of new recruits like the facilitator at a New Age relationship weekend. The khaki-clad people-strategies director at Sapient Corp. (SAPE), a Cambridge (Mass.) Internet consulting firm, is asking the new hires to break into small groups and sit in circles. Huff asks them to share the ups and downs of their personal and professional lives and the secrets of what motivates them. Then he asks them to tie their personal motivations to Sapient's mission: to help companies, big and small, get wired--and fast--to the Web. ''I ask them to see themselves as revolutionaries,'' he says. ''I tell them there's no room for ambivalence.'' It's a similar story over at San Francisco consulting upstart Scient Corp., where recruits also are drilled on the company's mission. There, new employees, including secretaries, are told to memorize a four-sentence statement of purpose for the company. Then they are asked to deliver it, one by one, with gusto. Those who mumble, or fumble the words, must do it again--and again, if necessary, until they get it right. In this case, right means bold and brassy, and the more upstart attitude, the better. ''There is no room for less than legendary, in everything we do,'' says Chief Marketing Officer Chris Lochhead, the hyperbole fully intended. NO PARODY. Welcome to basic training for the new breed of Internet consultants. It's easy to snicker, but these intense exercises are no parody of high-tech management styles. At new Net-only consulting firms, speed rules: No slackers allowed. What the Sapient and Scient drills do is instill the same management discipline and understanding of the corporate mission found at traditional consulting firms. After all, many of these new-breed consultants used to be the geeks you called to design Web pages. Now, they're calling themselves Web strategists, and for millions of dollars a year, they're helping world-class companies, from United Airlines to Kmart to Compaq, get wired. What's behind the appeal of Net-only consultancies? For starters, a 100% focus on e-business, an ability to attract cutting-edge talent, and speed. Viant (VIAN), for one, No. 87 on Business Week's list of tip-top tech performers, boasts it can get an enterprise from concept to launch in as little as nine months--about one-third the time of a traditional consulting project. And clients love it. Says Fred Herczeg, chief information officer and senior vice-president at copy company Kinko's Inc.: ''Viant kept us moving at a pace that's a lot faster than what we were used to.'' Not only did Viant help Kinko's shrink its own printing and distribution costs by 80% but it did it in six months. With that kind of zip, the new consultants are giving the Old Guard--such as Andersen, McKinsey & Co., and Ernst & Young--a run for their money and are forcing them to pick up the pace. Over at McKinsey, for example, executives formed a special Web-only unit that claims to be able to help get online ventures up and running in as little as three months. Before the dust settles, expect an industrywide shakeout, fueled partly by an all-out war over talent. Watch this year for established consultancies to snap up some of the Net hotshots--and for some newbies to start banding together. Says Mary Tolan, managing partner for growth and strategy at Andersen Consulting: ''The shakeout is going to be massive.'' For the big guys, the message couldn't be clearer: Add e-business smarts, or risk losing new clients--and top talent. Internet consultancies are going to need all the brainiacs they can find. Hambrecht & Quist analyst Dirk Godsey estimates that, by 2001, the top 18 consulting firms will nearly double their ranks--expanding from 18,000 employees now to more than 35,000--just to keep up with the e-business boom. By 2003, businesses will fork over close to $80 billion a year for Internet services, up from $12.9 billion last year, according to International Data Corp. And increasingly, consulting firms will be serving up so-called innovation services, a new industry buzz-phrase that refers to Web strategies and advice about cultural transformations. ''Traditional consultants are still mostly focused on getting clients wired up--but not necessarily transformed,'' says Eric Ross, an e-business analyst at Donaldson, Lufkin & Jenrette Inc. In the consulting business, the spoils of the New Economy will go to the innovators. ''Innovation will never become a commodity,'' Ross says. ''Why pay a company $400 an hour to build a Web site when I can pay someone else that much to help me come up with a new business model and change my culture?'' NEW BREED. Sapient knows the answer to that question. It's one of the more profitable e-business upstarts around, ranking No. 91 on the Info Tech 100. Its client roster includes an impressive number of dot-coms and blue chips, including Nordstrom, Chase Manhattan Bank, and iWon.com. It racked up a tidy profit last year of $30.3 million, more than triple that of the previous year, on revenues that jumped 68%, to $276.8 million. Sapient's edge: an attractive mix of Web-only technical, cultural, creative, and marketing advice--with a dash of wireless technology know-how sprinkled in. Wall Street analysts predict the firm could grow 40% this year. Sapient isn't the only new-breed Net consulting firm that is growing by leaps and bounds. In Boston, Viant's revenues have shot up by 29% since last December. And Lehman Brothers Inc. expects Scient, which has grown 54% since December, to reach $350 million in revenues this year--up from $155 million last year. That doesn't mean the Old Guard should give up the ghost. In the past year, companies such as Andersen Consulting and McKinsey & Co. have started to stem the brain drain, woo new talent, and attract clients with new Web-only initiatives. Some firms, including Andersen, are creating investment schemes in the style of initial public offerings to keep top talent from bolting. Says Harley Manning, a consulting analyst at Forrester Research Inc.: ''Last year, the Old Guard were all sucking wind for their lack of experience on Net projects. That's changing now.'' Just ask 74-year-old McKinsey & Company, the doyen of strategy consultancies. Early last year, executives created @McKinsey, an e-business consulting unit with 500 Web specialists. It's also launching an e-business incubator in Atlanta that aims to help Web startups. Since the initiatives debuted, McKinsey says it has picked up more than 1,000 new e-business projects. Andersen Consulting, meanwhile, has created 22 ''dot-com launch'' centers in cities around the world, from Oslo to Milan, to kick-start e-commerce efforts at traditional companies. And Andersen plans to start teaming up with telecom, software, and marketing companies to provide new services, such as consulting about wireless applications. At this rate, who could argue with the power of boot camps for consultants? By Marcia Stepanek in New York _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS Clash of the E-Consultants TABLE: Net Advisers INTERACT E-Mail to Business Week Online

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