As earlier reported, the German-based firm today launched EdgeWing, a new division formed out of Plaut's existing computer services and hosting arm known as Syntacom IT Services. Plaut, one of the original consulting partners for German software giant SAP, acquired Syntacom in late 1998.
EdgeWing said it intends to offer one-stop shopping for midsized businesses moving their operations online. The services offered by Waltham, Mass.-based EdgeWing will include Web strategy, development, site design, systems integration work, application hosting and Web site hosting services.
The company touts its expertise in heavy-duty back-end integration work, namely its history with implementing SAP's core enterprise resource planning (ERP) software. EdgeWing says this gives it an advantage over competitors by being able to offer its customers' Web sites integration with information housed in back-office systems, such as order fulfillment and accounting. ERP software automates a company's financial, human resources and manufacturing needs.
EdgeWing is joining a crowded but lucrative market.
As more companies move online or expand their Internet strategy, the demand for Internet consulting services continues to surge. EdgeWing is going up against Internet consulting firms such as Scient, Razorfish and Viant, along with more established players such as EDS and Andersen Consulting. EdgeWing's rivals also include those that offer application hosting services and Web site hosting, including Corio, Exodus and MarchFirst.
According to Forrester Research, the U.S. market for Internet services is expected to grow from $19.6 billion this year to $64.8 billion by 2003. Leading research firms also predict growth for both the application service provider (ASP) market and the Web hosting market.
An ASP hosts software so customers don't have to install and manage it themselves. People access the software from their desktops, and it is typically remotely monitored from a data center. Web site hosting companies provide businesses with Internet connections and data center facilities necessary to run a site. Exodus, for instance, monitors, manages and upgrades Web sites for companies such as online auctioneer eBay.
A better pedigree?
Analysts say that EdgeWing's focus on serving midmarket companies and its global resources derived from parent company Plaut will help set the company apart from a crowded pool of competitors.
"Their differentiator is their pedigree," said Joshua Greenbaum, an analyst who heads Enterprise Application Consulting. "This is a bona fide company with a bona fide track record. It's not a bunch of newbies getting together to prove their mettle by testing their capabilities on a number of (first-time) customers."
AMR Research analyst Dave Boulanger said the company is smart to target the middle market, especially midsized manufacturers that typically don't have the internal computer resources or IT staff to help them deal with ongoing issues. Most of EdgeWing's existing competitors, he said, aim their services at Fortune 500 companies or dot-coms.
EdgeWing is well positioned to capture ongoing revenues and long-term business from manufacturing clients because their needs are constantly evolving, Boulanger said.
"Manufacturers deal with so many issues...Because with the manufacturing industry, (business) processes change rapidly," Boulanger said. "Prices change, e-commerce needs change, and now most manufacturers want to build (or join) marketplaces and exchanges. EdgeWing is serving that specific need."
Newly appointed president Paul Shaughnessy said he is focused on achieving realistic growth rates for the near term, projecting the company will grow roughly 75 percent per year.
"We're looking for a dozen to two dozen (clients) that are a right fit for us and for them," he said. "This is a relationship (that we're building). We're not looking to be just a supplier of services."
EdgeWing, which has about 30 customers, manages clients' applications and Web sites from some of Plaut's seven existing data centers scattered across the United States and overseas. The company, which has 70 employees, plans to open more data centers in the United States soon.
In addition, EdgeWing said it will fold recently acquired Web consulting group Lara Consulting into the new venture. The company will also maintain relationships with Syntacom's existing partners Sun Microsystems, Compaq Computer, SAP, SunGuard Data Systems and AT&T.