Andersen Consulting Outlines Its Challenges - InformationWeek

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Andersen Consulting Outlines Its Challenges

Success for Andersen Consulting, CEO Joe Forehand says, will be determined by the firm's ability to fund technology innovation, cope with the IT skills shortage, and operate at a speed more conducive to E-business.

Whereas the typical consulting approach to business projects had been to develop a pilot program and test it outside a client's mission-critical environment for 12 to 18 months, some clients want results in 30 days. Forehand, speaking Wednesday at the company's eighth annual media and analyst conference in New York, said, "This is very different from a few years ago, when clients were looking at multiyear ERP implementations."

Forehand sees his company growing primarily in two areas: as a provider of E-business-related services and as an investor in companies driving the Internet economy. "We want to be a prolific creator of new companies and are committed to spending $1 billion over the next three years to do this," Forehand said. These investments, made through Andersen Consulting Ventures, are expected to begin bearing financial fruit within the next six months. During that time, Andersen expects 10 of the companies it has invested in to file for initial public offerings.

With this changing business model comes a shift in priorities and a new breed of competition for Andersen Consulting. In 1999, Andersen saw about $1.5 billion in revenue related to E-commerce, or roughly 18% of its overall business. Forehand said he conservatively estimates that this percentage will rise to the "mid-20s" in 2000.

Forehand predicted that competition in E-business services will come from three areas during the next several years:

- High-profile technology vendors that offer services for their products- Telecommunications companies that are moving aggressively into systems integration - Venture capitalists who are funding competitors to Andersen's 238 dot-com clients

This convergence of consulting, technology, and venture capital in E-business has spawned a complex structure that creates opportunity for all three, as long as "the pie is growing," said Mel Horwitch, director of the Institute for Technology and Enterprise of New York's Polytechnic University. "Andersen Consulting is in an excellent position to succeed, as long as it understands the complexity of this new model. E-business is about more than technology; it's about bringing in the right talent."

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