Wednesday's announcement by Organic that it will slash a quarter of its work force and close two offices follows a rash of similar moves by other e-business specialty consulting firms. More than 5,000 employees at e-business consulting firms have lost their jobs during the past three months.
These firms and others--including Lante, Luminent, US Interactive, Xpedior and now Organic--have all recently announced one or more of the following: layoffs, office closings, revenue shortfalls or resignations of senior management.
As early as January of this year, Gartner research noted the following trends:
Limited differentiation among e-consultants, with no one provider occupying a clear leadership spot in any given area
Limited track record of dealing with complex projects
Few projects completed for enterprises
Subsequently, some customers have reported mixed results and the necessity of legal threats to get projects done. Clearly, many e-consultancies were enticing early adopter customers with a great deal of hype and less substance. Many e-consulting customers now report that the consultants lacked the business skills and system integration muscle to deliver on their promises.
The bloodletting we are seeing therefore isn't just the result of shrinking income from dot-com customers and slowing sales cycles; it's the result of insufficient attention to the fundamentals of managing a service business. Many e-consulting firms have failed to ask some basic questions before taking on projects:
Does this project fit our focus?
Can we provide business value and results for this customer?
Will this assignment add to our intellectual capital?
Is this a profitable assignment, or, failing that, is it part of a long-term strategy for developing a new service offering?
Will this assignment create new knowledge and skills for our people?
Research by Gartner's Dataquest forecasts that the worldwide market for e-business services will grow from $23.6 billion in 1999 to $157.9 billion in 2004. This game has room for many players. But the ante is customer satisfaction, and, so far, too many players have been trying to get by on bluffing.
For related commentary on why many IT service providers lack focus, see Gartner.com.
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