They've been dubbed the new consultants, the e-consultants, the e-business builders, the Internet strategists, the digital strategists, the electronic-commerce innovators, the interactive relationship managers, the solutionists. Christopher Lochhead, who is one, calls them something else. "We are the Marines of the business," says Lochhead, the unabashedly promotional chief marketing officer for Scient Not only does his 23-month-old San Francisco-based consulting company consist of an elite cadre of specialists, but, he says, those specialists can mobilise quickly, efficiently and decisively to craft and execute strategies for do-or-die e-commerce ventures at both brick-and-mortar companies and daring new dot-coms. After deployment, an occupation force may stick around for years, helping the client quell competitor uprisings or market changes.
In today's cutthroat e-business environment, the buzzwords have changed yet again. Lochhead calls e-business startups "attack businesses," operating not under a paradigm shift but under paradigm violence, a sudden, drastic and irreversible transformation in their markets.
And to deal with that, he and other e-business strategists say, companies need guidance from experts who know the territory, know the enemy and know how to map out a fast, comprehensive take-no-prisoners strategy.
E-commerce strategists say three main features distinguish them from their ancestors, the big-time consulting companies and traditional systems integrators, and their cousins, the Web design or advertising agencies. First, they're faster and more flexible. Many pledge to launch a global high-transaction e-business in anywhere from 10 weeks to six months, as opposed to old-fashioned startup plans, which are measured in years. "The traditional 12-month strategic planning process no longer works," says Randall Hancock, senior vice president of e-strategy for Mainspring Communications in Cambridge, Mass. "I no longer even have six months. I have six weeks."
Equally important: While most e-commerce strategists do build e-commerce systems, they don't consider themselves Web designers or developers. They emphasise business strategy as least as much as technology and tactics. Mainspring went so far as to register the trademark for "eStrategy." Some don't even get their hands dirty with IT implementation. "We are not in the business of installing huge armies of programmers," says John Sviokla, partner at Chicago-based Diamond Technology Partners and head of its digital strategy practice. "Generally, we act more as a general contractor," helping clients develop new business plans, then hire other companies to install, implement and maintain the technology to make the change happen.
Finally, despite their aggressive approach, e-commerce strategists tend to avoid the quick-hit, project-oriented approach. Agency.com recently turned down a major high-technology client for what amounted to a one-night stand. "We want a long-term relationship, a strategic partner," says Monica Fried, communications director for the New York City-based company. Those arrangements benefit clients as well "because the strategists have to live with the implementors," says Agency.com CEO Chan Suh. "The strategies are very firmly rooted in reality." Scient thinks the same way. Typically, a Scient team helps the company develop and implement an e-commerce strategy in a matter of months, then stays on board as long as necessary to help the client change course.
Certainly demand is there. US companies will invest more than $203 billion in Internet business initiatives by 2002, according to research by International Data of Framingham, Mass., a sister company to CIO Communications Not surprisingly, the growth of e-commerce consulting should keep pace: Businesses will spend $50 billion a year on Internet strategic services by 2005, according to Hambrecht & Quist, the San Francisco-based research and investment company. Accordingly, e-business strategists are staffing up. Agency.com, for instance, started as a two-person Web development company in late 1995; by September 1999, when it filed for an initial public offering, the company had grown to 850 employees in 11 offices worldwide. Scient, founded in early 1998, has already grown to more than 400 people, opening its New York office in a Soho office building that once housed Andy Warhol's famous Factory. And e-commerce strategists attract high-profile talent. Scient CEO Robert M. Howe, who previously helped launch IBM's consulting business, hired his executive team from the top ranks at IBM and AT&T Former Release 1.0 newsletter Editor Jerry Michalski now does some consulting work for Scient. Sviokla came to Diamond from Harvard Business School, where he established an international reputation as an e-business thought leader (see "Tricks of the Trade," below). Diamond's on-call expert network includes Internet activist John Perry Barlow, Walt Disney Imagineering Vice President Alan Kay, MIT Media Lab Associate Director Andrew Lippman and author Larry Downes, among others. Perhaps not coincidentally, e-commerce strategists don't come cheap. They may charge six-figure fees for preliminary research and recommendations, then work with million-dollar budgets as they sweep in, set up camp, and systematically build and execute an e-business strategy for conquering existing or new markets. Penny-pinching usually isn't even on their radar screens. "Almost nothing we do is associated with cost reduction, although that might occur," Lochhead says.
But is what they do necessary? While veteran Web businesses may be skeptical-after all, many started with no hired help-e-commerce strategists and their clients say times have changed. To compete at Internet speed, what Lochhead calls a "here-today, gone-later-today" market, both existing companies and startups need to hit the ground running. For maximum efficiency, clients say, it makes perfect sense to bring in savvy, veteran guides to integrate technologies, point out organisational problems, identify business opportunities and threats, and set priorities.
"It's not that we don't know what to do," says Julia Groves, head of digital channels for British Airways in London, which hired e-commerce consultant Agency.com to develop a business strategy for its highly acclaimed Web site. "We just need to do it fast and do it right." The company also needs to do it globally, she adds. "Being born, bred and based in the U.K., we want to feel that we are keeping pace with the US market, not just the U.K. or European markets," she says. "Agency.com keeps us in touch with the New York market."
At Compaq Computer in Houston, an Agency.com team has repeatedly "helped us get to market faster," says Seth Romanow, director of marketing and communications for the company's online stores at Compaq.com. "They've helped us turn things around very, very quickly. They understand who we are and how we work. They understand our customers and our offerings.... Our time to market is usually faster and the work is usually better." In one case, Agency.com helped Compaq redesign the front end of its PC order platform, allowing the company to deploy several extranets to serve its large business accounts in a matter of weeks. Agency.com and Compaq have worked together on a variety of e-commerce projects over the past few years. "They're tasked with ensuring the long-term viability and growth of Compaq.com," Romanow says. And that commitment makes all the difference: "If something doesn't work, they're here to share the blame as well as the glory."
Agency.com began its work with Compaq in mid-1998 by auditing its site and recommending immediate improvements, some as simple as adding links to the home page for all product lines rather than forcing customers to drill down deeper to find them. Some recommendations were more involved: Agency.com helped Compaq see that its customers didn't necessarily view themselves and their computer needs the same way Compaq did. The company had split its product offerings into three customer categories: home user, small- to medium-size businesses and enterprise solutions. But through Agency.com's research, Compaq found customers wanted to view and evaluate a broad range of products-regardless of how Compaq had categorised them or where the products were promoted on its Web site. As a result, Compaq redesigned its stores to provide much more integration between the product lines. "[Agency.com] provides us with a good, objective sense of the user experience," Romanow says.
E-commerce strategists say they can apply their expertise to any e-commerce venture, even if they've previously specialised in other industries. Scient, for instance, points with pride to a diverse client list that includes First Union , S.C. Johnson & Son , eBay , PlanetRx.com and National Association of Realtors' Realtor.com. "We've built 40 of these things," Lochhead says of the e-businesses. "No matter how good your team is, there is not a chance you're going to be able to duplicate what we have." On the other hand, there's the argument that thousands of highly successful Web ventures started on little more than a big idea, a little cash, a lot of sweat equity-and no hired guns. Their founders, some millionaires many times over, love spinning their legends of launching an e-business on a shoestring. Cyberian Outpost 's Darryl Peck launched his Kent, Conn.-based computer-products retailer in 1995 for $28,000 after reading a Web site-building guide. Many other companies have launched sites with virtual budgets, working with existing employees and tiny hardware investments.
For instance, Arthur Tisi, CIO of The Metropolitan Museum of Art in New York City, says he's turned to outside specialists occasionally in developing the organisation's busy e-commerce site. But he prefers to rely on internal intuition and expertise, pooh-poohing the idea that e-commerce strategists keep companies abreast of critical trends. "A year-and-a-half ago, if we'd had one of those companies come in, they would have been talking about push [technology] and streaming [audio and video]," Tisi says. "We would have built our Web strategy around that, and we would have been wrong." As for the argument that e-strategists bring outside experience, Tisi argues that no Web project worth its bandwidth can be designed using existing templates. "You may be getting watered-down, homogenised advice," he says. "It's not based on you. It reflects everyone else's experience. You can't get it done quickly and get it done uniquely."
And there's a trade-off for that young, fresh, cutting-edge approach: It's not backed by the decades of expertise offered by old-line management consultants. "None of the online [service] agencies has 15 years of experience," says British Airways' Groves. "You have to accept that there's learning on both sides."
Many companies hire their own e-commerce executives whose duties obviously include setting the company's Web business strategy. Those, too, are big investments. Recruiters say companies can expect to pay salaries of $150,000 to $300,000, plus bonuses, stock options and benefits for vice presidents of e-commerce.
Scient doesn't see the two as mutually exclusive. "Over time, the e-business becomes the business," Lochhead says. For that reason, his company prefers to work with organisations "whose chief e-business officer is also known as the CEO. In fact, we won't engage unless the CEO is involved. We have clients planning to spend in excess of $100 million" to plan, design, build, integrate promote, launch, staff and maintain a major e-commerce initiative, he says. "If the CEO doesn't get it pretty soon, we'll just wait to talk to the new CEO." And, of course, with the current staffing crisis and the crunch of Y2K preparations, companies may have a tough time finding employees with the right experience at the right time.
E-business strategists' approaches vary, but several use a four- or five-step process (see "Recipes for E-Commerce") to develop a strategy in six to 10 weeks and to get to market in three to eight months. Surprisingly, the strategy-setting may last longer and cause more pain than the implementation because, in examining the client's e-commerce ideas, consultants must cut to the bone. "It's usually getting them thinking about what they want to be and then holding up a mirror and saying, 'Here's what's keeping you from getting what you want,'" says Agency.com's Suh. Or, as Lochhead puts it, "It's not easy to tell somebody their baby is ugly, even if the baby is ugly."
Sometimes strategists go right to the marrow, starting with a deceptively simple question, such as, "What business are you in?" or "Who's your biggest competitor?" Answers aren't always obvious. In working with Agency.com, British Airways learned, to its executives' surprise, that Web site visitors didn't compare the company with other airlines but with their best experiences at unrelated e-commerce sites, such as banks and booksellers. And the airlines aren't British Airways' biggest rivals for online ticket sales; that distinction goes to travel Web sites like Microsoft 's Expedia.com.
Agency.com, whose other clients include Gucci, Kmart, Pacific Bell and Unilever, has been helping British Airways toward an ambitious goal of doing 50 per cent of its business online within three years, up from less than 10 per cent today. Groves says Agency.com also helped the airline develop new approaches for reaching customers in any medium. "It's important that we're there in whatever channel the customer chooses," Groves says. Agency.com's team helped her organisation "understand what the customer expectations are for each channel and design for them accordingly," she says. As a result, customers can now access British Airways' Web site not only from desktop computers but from personal digital assistants, wireless devices and interactive television as well.
E-commerce strategists typically set up dedicated teams with their clients, often offering a mix of creative, management and technical specialists. At British Airways, Groves says, that approach eliminated the "us" and "them" perception. "The lines between the corporation and [the e-commerce strategists] can and should blur because it's really just a question of the right experience being in the room to get the right results," she says. "At that point, Agency.com is just one of the people in the room." Sometimes e-strategists simply provide a fresh perspective on priorities. "It is not unusual to find literally 100 different initiatives going on in a dozen different business units in a Fortune 500 company," says Mainspring's Hancock. An e-commerce consulting team can winnow the list to, say, the top five projects, then unite them in a coordinated strategy covering everything from organisational change to performance measurement to partnerships. Down the line, the team can keep tabs on how or whether new technologies fit into the client's e-business. "Servers, security, personalisation. Just keeping up with those and understanding how they fit into your environment and how they scale-that's tricky," says Diana Brown, Scient's vice president and general manager of the Financial Markets Business Unit.
Even in the Internet economy, some things remain constant. "We still fly planes," says British Airways Groves. "And customer service stands true no matter what you're talking about." But, she adds, "There's a clear understanding across the airline that [e-commerce] will fundamentally change the way British Airways does business." And that kind of change doesn't come easily. "There's a lot of pain out there," says Mainspring President and CEO John M. Connolly. "The majority of executives we meet are hurting because they just don't understand how to move forward. The Internet is so uncertain, the business models are so embryonic, investment is so high, they don't know what to do." For many companies, e-commerce strategists who can provide answers are worth their weight in gold-literally.
Tricks of the Trade
John Sviokla on the four steps to doing it right John Sviokla, a partner with Diamond Technology Partners, an e-commerce strategy consultancy, previously taught at Harvard Business School. While there, he co-authored an influential 1994 Harvard Business Review article arguing that as companies move from physical marketplaces to virtual, information-based, marketspaces, they create entirely new ways of thinking about business, revenue and value.
These days, Sviokla says, companies moving into e-commerce face four questions.
1. What's the company's digital business strategy? What's the right value proposition for its new business model? E-commerce ventures don't usually fit neatly into established business categories, Sviokla says. Traditional strategies probably won't fly either.
2. What's the right organisational structure? "Most of the time, [existing companies'] structures are designed to sustain the existing marketplace model," Sviokla says. "But it's like any other machine: You can't get a trench digger to be a lawnmower." Companies usually need to realign their structures to break functional "silos" and to meet very different e-business needs.
3. What's the best capital structure? With all the hot Internet stock activity, capital markets tend to reward innovative capital structures rather than traditional ones, Sviokla says. "They're buying the future and not the past."
4. Finally, what's the correct technology platform? Companies succeed online only with IT designed for a digital economy, Sviokla says. And the e-commerce technology must integrate seamlessly with customer-call, billing and shipping systems.
Marketspace victors work simultaneously on several ventures and are "willing to kill unworkable projects quickly," Sviokla says. They also tend to judge success by risk-taking rather than by traditional ROI measurements, fund e-commerce projects by milestones rather than dates and celebrate failure as part of entrepreneurial learning.
Recipes for E-Commerce
Many Web strategists begin with a streamlined four- or five-step process for launching an e-business and customise for each client. Two e-commerce consultancies, Scient and Agency.com, share theirs.
Conceive. Understand the client's requirements, define the desired results, strategy and initiatives.
Architect. Scope, design and plan business applications, supporting software, development tools, components and infrastructure.
Engineer. Develop and deliver business and IT applications.
Extend. Develop an ongoing partnership that keeps delivering just-in-time applications and content to help the client's e-business adapt quickly to change.
Conduct overview. Do comprehensive business analysis, including competitive intelligence and internal interviews. Use findings to set groundwork for development.
Plan. Develop enterprisewide Internet strategies, sometimes launching short-term initiatives while still developing long-term ones.
Assess site. Compare current online offerings with those of competitors and industry best practices, then recommend strategic and technical improvements.
Report. With both off-the-shelf and custom-built applications, track the client's site performance and ROI.
Manage transition. Help executives, employees and other constituents adjust to changes in processes, organisational structure and day-to-day activities.
What to look for when choosing an e-business strategist * Choose someone you trust. You're spending a lot of money, and your hired strategist will learn a lot of highly sensitive corporate information.
* Choose someone you like. Meet the actual strategy team, not just consulting company partners, and look for passionate commitment and enthusiasm. You'll be working together intensively; it's critical that you click.
* Choose someone who knows the Internet economy as well as your traditional industry and markets. Your biggest competitors may be startups in seemingly unrelated fields.
* Research previous clients' experiences, not just the results. Don't select a consultant based on how previous clients' Web sites look. Talk to those clients about what the strategists did, how it translated to the Web and how quickly it happened.
* If possible, insist on exclusivity within your market.
* Sign up for the long haul. And make sure the consultant plans to invest in the long-term relationship too.
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