e-consultant targets local governments

German e-consultants, Instingo, are targeting the Middle Easts government as they ramp up operations in the region. However, the question remains, can the new breed of consultants match up to the power of the old guard?

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By  Matthew Southwell Published  July 24, 2001

Instingo opens doors at DIC|~||~||~|Just over eighteen months ago the new breed of e-consultants were riding high. Market leaders such as MarchFirst, Razorfish and Viant towered above the NASDAQ as they transformed offline businesses into e-commerce powerhouses and launched dot-com after dot-com. However, times have changed.

In October last year Razorfish merged European offices and cut staff, whilst April this year saw MarchFirst sell its most valuable assets before filing for bankruptcy protection.
This year's first quarter financial results pointed to further troubles as Razorfish appointed a new CEO and reported a pro forma net loss of $6.6 million, while Viant detailed net losses of $12.7 million.

At the time of going to press, Razorfish was valued at $0.47 per share whilst Viant tabled a slightly more promising $1.81 per share.

The decline from respective highs of $55 per share in January last year and $59 in December 1999 is, however, clear for all to see.

The dot-com crash and the following industry shake out were blamed for the e-consultants ailing fortunes, but according to some, the very essence of e-consultancy was doubtful from the start.

"It was always debatable whether the specialists could really compete with the large system integrators on major projects," says Pete Foster, principal consultant at Ovum.

It is against this background of e-consultant failure that Instingo moves into the Middle East. Having experienced some success in its home country of Germany, the company opens the doors of its DIC office hoping to deliver, primarily, e-government solutions to the region.

The company has targeted the local market because it believes that it is currently characterised by confusion.

"There is a lot of confusion when it comes to e-government and e-procurement. People were not quite sure what they were meant to be doing," says Anas Chbib, CEO, Instingo.
This confusion has manifested itself as trend buying for IT solutions.

"No project is started correctly in the Middle East, they follow trends. They choose software because of vendors marketing, then they get the hardware and then the processes. This is the wrong way round because only then do they realise that they need an e-strategy," says Jamil Ezzo, managing director, Middle East, Instingo.

Just how the governments of Dubai and Bahrain will feel about this is unclear. Both countries, like the rest of the Middle East, have been working hard to establish e-government initiatives and, in some cases, are a significant way down the 'e-road'. EDS is working with the government of Dubai to assess government procedures, and procurement has largely been taken care of with business-to-business marketplace Tejari.

Bahrain, on the other hand, is building on its long established shared database with its Computer Services Division (CSD) of the Statistics Organisation using applications from Oracle.

||**||A failed business model|~||~||~|Whilst Instingo's bullish approach may be a novelty, its offering is not. The company's core business is providing an 'e-strategy' and overseeing its implementation.
Such services are already provided by a number of companies in the Middle East.

Accenture was providing these services, as Anderson Consulting, as early as 1996. There is also the small matter of IBM's Global services division operating in the region. Both, it would seem, have something to say about any e-consultant operations heading towards the Middle East.

Bashar Kilani, manager of business transformation & integration software, Middle East and Africa, IBM, sees them as potential clients and nothing more.

"IBM is in the fortunate position to be able to offer customers end-to-end solutions, based on the IBM software, hardware, as well as services and consultancy… We do not see them as threats at all," he says.

Having come across the new breed of e-consultants in Europe and won out in competitive pitches, Phillipe Rixhon, partner at Accenture, is rather more damning. He states that Instingo "don't present themselves to me as e-consultants. They have one idea for a specific thing."

He points to the resources that have made Accenture successful and implies that, without such resources, the e-consultants cannot succeed. Firstly there is the deep industry knowledge, developed over 88 years of business. This has led to a certain amount of respect for the old economy, which according to Rixhon, "is important when clients are caught up in the new one and [are] targeting the micro-economy."

Whilst e-consultancies may argue that such experience leads to staleness, rather than a competitive advantage, the fact remains that from experience comes the prestige of successfully completed projects.

"Middle East businesses are led by no frills people. They want something solid. They like to see people like us come into the Middle East and take charge and implement things that have been successful in Europe and the US," says Rixhon.

Unfortunately, for any company entering a new market this is difficult to overcome. When any business in the Middle East decides to forge ahead with a new project it is globally recognised companies that head its shopping lists, whether they can afford them or not.

Perhaps more important is the issue of size. Accenture has 110 people in the Middle East and 73,000 worldwide. Each of the local teams are linked directly into solution centres throughout Europe. "Size allows us to be holistic and have the experience in every department. For example, we can fly someone in overnight from Singapore to deal with a specific problem," Rixhon adds.

Compared to this, Instingo will have ten consultants in the field with additional manpower being supplied by partners such as Lamont and Systema.

As other potential differentiators such as cost are buffered by the old guard consultants willingness to accept shares as payment and value based deals, the future for e-consultants is challenging to say the least. Globally the model is outdated and appears to have failed, whilst at the local level the markets more experienced players seem to have it sewn up.||**||

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