Fortune Magazine
When USWeb , a $60-million-a-year outfit that helps companies integrate the Web into their corporate networks, recently merged with CKS Group, a firm that specializes in online marketing, it was easy to dismiss the move as just so much Internet hype. For starters, Joseph Firmage, CEO of USWeb , and Mark Kvamme, CEO of CKS, decided to give the new company the oh-so-bold name of Reinvent Communications. Then there was the blather accompanying the merger. Firmage, who will head the firm, explains Reinvent's raison d'etre in slightly ominous terms: "The biggest single factor the Internet is introducing to the economy is that anything that doesn't change over time dies." (The Internet introduced this thought? Tell that to Schumpeter.) Firmage goes on, "You must perpetually reinvent your business or you will be commoditized."
Before you roll your eyes, consider: Reinvent is a smallish version of what you get when you cross a strategy consultant like McKinsey with a systems integrator like EDS and focus on how companies can better use the Web. The result is a new breed of marketing-oriented consulting firm that's starting to get a lot of attention.
The new guard includes upstarts like private companies Viant in Boston; Psient in San Francisco; Sapient, a $90-million-a-year public company in Cambridge, Mass.; and Reinvent. These businesses aren't yet a threat to Andersen Consulting, ($6.6 billion), EDS ($15 billion), or IBM's ISSC consulting division (similarly huge). But they've grown up as Internet businesses, and some analysts predict they'll achieve long-term success in the corporate marketplace.
Most companies that have embarked on Net-inspired business makeovers have had to enlist multiple partners, each of which contributed different pieces to the puzzle. As Viant CEO Bob Gett explains, this process often began when a company hired a consultant like McKinsey. McKinsey's analysis would lead to the hiring of a systems integrator (like IBM) that installed and configured the technology required to run the business. Finally, with the new strategy in place and the technology ready, an advertising or design shop would be brought in to build a Website where customers could interact with the company.
It is this third component--Web marketing--that is the special strength of the new breed. Such expertise grows more important as Websites become the hub of a company's connections to suppliers and customers. Seeing the opportunity, companies that started as nothing more than Web-page designers have evolved into consultants. Viant and Psient are trying to build that capability organically, while Sapient and Reinvent have made recent acquisitions.
"There's no one place that owns all the pieces of this process," says Julie Meringer, an analyst at Forrester Research in Cambridge, Mass. She says that while Sapient and Reinvent seem well positioned, Web-related systems integration is an industry that's just starting to jell. Traditional integrators are working hard to master online marketing. For example, Meringer says she expects Cambridge Technology Partners, a Massachusetts integrator that grew up helping companies design client-server systems, to extend its Web-oriented consulting and marketing services through acquisitions soon. (A Cambridge spokeswoman declined to comment.) Advertising Age recently reported that integrators like EDS, IBM, and Andersen are now being invited to compete with regular ad agencies for Web-marketing accounts. Message from Schumpeter to CEO Firmage: You'd better be prepared to perpetually reinvent your business, or even you may find yourself commoditized.
**Reprinted from Fortune Magazine, October 26, 1998