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IBM beefs up Net consulting in Europe

The computer giant plans to invest up to $65 million over the next 18 months to expand its Web integrator program to Europe, where the market for Net consulting is booming.

IBM is expanding its Web integrator initiative to Europe, where the market for Internet consulting and services is booming.

Big Blue today said it plans to invest up to $65 million over the next 18 months to expand its Web integrator program to Europe's Web consulting companies. The move is part of the computing giant's strategy to generate revenue through partnerships with Web integrators, also know as Internet consulting and Web design firms.

IBM intends to invest in sales and technical staff, training, technology, support, and joint marketing efforts before the end of the year to help Web integrators provide their services to the growing European e-business market. The company is working with U.S.-based Net consultants that have opened or acquired offices throughout Europe, such as Agency.com, MarchFirst and Organic, as well as with home-grown support companies including Helsinki-based Icon and London-based Nettic.

IBM launched the Web integrator initiative last year to help expand its sales to the rapidly growing market of small to midsized businesses--the initial target audience of most Internet consulting companies including Razorfish, Scient, iXL Enterprises and Viant.

The European market has been slow to respond to the Internet. But as European businesses wake up to the idea and necessity of moving their operations online, most are beginning to look to consulting firms for help with developing their Web strategies. A number of U.S. Net consultants have been setting up shop overseas in the past year to gain a foothold in the burgeoning market.

E-business services in Europe could generate $25 billion by 2003, up 55 percent annually from 1999, according to IBM, citing estimates from market researcher International Data Corp.

That new revenue stream could help some consulting firms to offset a slowdown in domestic business. Many U.S.-based Internet consulting companies over the past few weeks have been experiencing rocky financial times and struggling through an overall market shift.

Companies like iXL and Viant, which were once Wall Street favorites, have seen their stock slammed after recently issuing profit warnings. Both blamed longer sales cycles due to the market transition from dot-com clients to serving more established, brick-and-mortar client types. Though consulting projects are expected to be more lucrative in the long-run, Net consultants will see slower revenue growth as those engagements take longer to complete.

Some Net consultants opened offices in Europe specifically to land wireless projects. Companies such as Razorfish and Scient began offering services and other options for customers in Europe, where wireless devices are more prevalent.

As part of the expansion, IBM will invest in establishing a field sales force and a technical support team in more than 20 European countries. The company said it will also create technology development labs with its partners including the development this fall of a U.K.-based Linux lab with Web integration partner Agency.com.

In addition, IBM will provide its partners with access to resources such as IBM wireless software products via its existing research labs in England and Germany.