Salvaging stalled e-biz initiatives - eWEEK

By Paula Musich, eWEEK
January 22, 2001 12:00 AM ET

As staff cuts and money woes decimate boutique Web integrators, major services companies are finding themselves increasingly pressed into action to complete projects the small shops couldn't handle or couldn't finish.

The rescue efforts of such enterprise integrators as IBM Global Services and Electronic Data Systems Corp. are offering e-businesses left in the lurch hope, stability and added services.

Officials at IGS and EDS said their companies have accepted hundreds of engagements in the past six months, coinciding with the downturn in fortunes of such boutique Web integrators as Razorfish Inc., MarchFirst Inc., IXL Enterprises Inc., Scient Corp. and Viant Corp.

For e-businesses, making the transition from one Web company to another-in many cases in midproject-is no trivial matter. But they're doing so for a variety of reasons, including smaller Web integrators' frequent inability to deliver on their promises of a well-built, well-integrated product.

"We were pulled into a significant number of situations where the client ended the work because it wasn't up to their expectations," said Pete Martinez, an e-business strategy executive for IBM, in Boca Raton, Fla.

And with the vast number of Web projects in the pipeline, no industry has been immune. When a major U.S. bank first saw the code a boutique delivered for a critical e-commerce initiative late last year, technologists responsible for the project knew they were in trouble. Rather than getting the flexible platform they wanted that would allow them to adapt to changing business requirements, they received something that would require constant support, according to bank officials.

"We were terribly uncomfortable with what we found," said the bank's former chief technology officer for the project, who asked not to be named. After an intense negotiation in which the bank tried to get the boutique to solve the problems, the CTO ultimately turned to MphasiS Corp.-BFL to put the project back on track.

While hardly a household name, MphasiS, of Bangalore, India, and Santa Monica, Calif., does have something its smaller competitors envy: deep back-end integration experience and a stable record of profits through 2000.

It's not unheard of for another consulting company to be brought in to clean up the mess left by an earlier company. But the volume of companies that are engaging in this process is new. The gold rush mentality surrounding many e-commerce projects led to unrealistic expectations, according to Jeroen Tas, president of MphasiS.

"I think everybody got carried away with the hype," Tas said. "They started to believe you could build a complex system in six months. It takes time and a lot of testing to build a robust system. In the rush to market, people didn't do a thorough job."

That lack of due diligence was often fueled by the boutiques themselves, which overpromised, then fell short of meeting expectations when the sliding market hit their staffs and their wallets beginning early last year.

But switching horses in midstream raises its own set of issues, and it raises the question of how well-prepared larger players are to step in quickly to salvage failing projects.

EDS officials claim that they have a services offering, dubbed NetSource, that can be tailored for such tasks.

It's important to listen to the client to understand what it's trying to accomplish and then put a complete road map together for the project, IBM's Martinez said.

"That was one of the faults of many of these companies running into problems. They had one good idea and everything had to be structured to their offering," he said.

"We always sit with the business to understand their expectations," Tas said. "You have to do the due diligence ... even if they don't want it."

To minimize the potential damage, clients can protect themselves by taking several steps, said Brad Rucker, executive director of EDS Bluesphere, in Plano, Texas.

"Hold the vendor to milestone deliveries-ask for copies [of mock-ups, design documents and so forth] for every step of the way," Rucker said.

Struggling services
Provider Latest Setback Prediction
Razorfish Deep personnel cuts late last year; stock buyback in progress Dead by summer
MarchFirst Second round of layoffs cut 1,000 earlier this month Recent $150 million cash infusion amounts to life support
Scient Laid off more than 400 last month; sales dropping near 40 percent With stock price off 97 percent since March, can the end be far off?
Viant Laid off 125 in December; losses seen continuing Company may have enough cash to stave off Chapter 11