marchFIRST, Others Defend Flagging Industry

The interactive agency and Web integration industry has taken a beating in the press within the past year, as many technology trade and mainstream publications have reported on excess spending, shrinking profits, layoffs and what is perceived as a general lack of vision and purpose behind the business plans of such firms.

But on Sunday, CEOs from iXL, Razorfish and marchFIRST defended their companies’ business practices and, in effect, their existence, in a panel discussion before members of the international press. The discussion, held at CNN Center in Atlanta, was part of the kick-off of IBM’s ParterWorld 2001 meeting.

Anne Smith, vice president of consultants and integrators for IBM, said Big Blue continues to be bullish on continued growth in the e-business marketplace.

“We see continued strong growth in e-business, and for solution providers as well,” Smith said. “Clearly the market opportunity remains strong.”

Forrester Research analyst Christine Spivey Overby began the discussion by suggesting that there’s a critical need for Web integrators, design and solutions firms. A study by Forrester showed that an overwhelming number of large corporations — two-thirds of those surveyed — expect their commitments to outsourcing for Web solutions will increase within coming months, and that revenue spent for 2001 is expected to be up by 3.6 percent on average, or around $35 million per company.

The first CEO to speak, Bob Bernard of marchFIRST, said that misconceptions exist about Web integration and solutions firms, but these types of companies aren’t just the latest fad.

“As this market has changed, we have been lumped into categories of ‘I-‘ or ‘e-‘ integrators,” Bernard said, “when in fact what marchFIRST has tried not to do in its 17 years of existence is to be lumped into any category at all. We have gone through many evolutions, and we will continue to do so.”

Perhaps the most enthusiastic of the CEO panel, Razorfish’s founder and CEO Jeff Dachis said that while a certain amount of pessimism exists in the solutions market right now, there’s no evidence that the industry is a dying breed.

“Overall, I think the market for professional services offer a huge opportunity, and the opportunity isn’t ‘e’-anything; It’s about business. And as businesses start to come under pressure, it’s up to companies like ours to find ways to make our clients’ businesses operate more effectively. We’ve found that there are specific solutions required for each business, not specific technologies.”

“While we traditionally focus on Fortune 500 companies, I believe there’s a convergence of activity for all our clients, and one of the areas is our clients’ inability to solve their problems,” iXL’s CEO Chris Formant said. “The solutions that are being delivered to the marketplace are not working. Our intention at iXL is to build solutions that can transform our clients into the types of companies they say they want to be.”

The CEOs also diffused the impression that they jumped too heavily onto the dot-com bandwagon.

“We’ve had a wonderful base of clients, but very few dot-com client,” Dachis said. “And we’ve delivered 20 straight profitable quarters. Our clients and investors are demanding ROI — they insist on seeing a return on their investment. We’re very excited about the opportunities out there, and believe me, there are plenty.

Formant also noted that while his company and many like iXL have seen better days, there isn’t enough reason to dismiss consultancy firms as unnecessary.

“At iXL, we have the worst of our storm behind us,” Formant said.

Bernard agreed that 2000 was a nightmare year for companies like his. “All 12 months of 2000 were difficult,” he said, “But there were many valuable lessons learned that will make marchFIRST a stronger company in the long run.”

Responding to a question about what he has learned from his experiences both at iXL and at PriceWaterhouseCoopers, where Formant worked prior to taking over the helm at iXL, Formant said that the key is learning from previous mistakes in order to stay viable.

“Recruitment and finding the right talent has become a big priority for iXL,” Formant said. “I’m also a firm believer that in order to be in this business, you need to understand your client’s industry inside and out. I do believe clients will buy those ‘grainy’ solutions. It’s also important in surviving any storm not to believe your own press. We intend to keep very quiet for a while, and just go to work.”

Fauve Yandel is the managing editor of atlanta.internet.com.

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