Are Dot-Com Consultants To Blame for Shakeout?

This year alone, U.S. firms will pay $20 billion (US$) to consultants for design and construction of e-commerce Web sites, even though — according to Forrester Research — none of the big-name e-commerce integrators can actually deliver the type of across-the-board expertise needed to get an e-tailer up and running.

These findings may be surprising, especially to the people cutting the huge checks. But why should anyone be shocked to learn that e-commerce consultants are just as likely as anyone else to be making it up as they go along?

Maximum Experience

Even if a consulting firm brings decades of tradition and oodles of business management know-how to the table, the most it can offer in the way of e-commerce experience is a half-dozen years. In most cases, that estimate is high.

Think of it. Would a real-world company hire someone with just five or six years experience to make crucial business strategy and implementation decisions?

In the world of e-commerce, anyone who can claim those precious six years likely has more expertise in concocting seat-of-the-pants responses to trials and tribulations than in applying solid business practices. Long-term conclusions cannot be drawn from commercial Web sites whose histories are so brief.

The argument that a few years of baptism by fire is worth more than a few years of business-as-usual is weakened by the fact that the early years of e-commerce were marked by almost universally favorable market and venture capital conditions.

Despite the turbulence involved in midwifing a whole new industry, every consulting firm had at least one high-flying dot-com success story in its dossier as proof that it could do the e-commerce thing.

Hard Questions

But the climate has radically changed. Perhaps for the first time since the dawn of e-commerce, tough questions are coming from all directions. Investors are asking whether it is wise to bankroll companies with no short-term prospects for profit.

Even venerable Internet giant Amazon.com is lately facing some pretty tough music. Analysts who previously wondered when the company would turn the profit corner are now asking whether Amazon has sufficient cash to survive.

Growing numbers of dot-com companies are laying off increasing numbers of workers — 5,400 jobs have been shed since last year, according to a report earlier this week — and even operating with skeleton crews, many of them are unlikely to make the final e-commerce cut.

Assigning Credit

It seems now that Forrester is on the leading edge of the shakeout blame game with its analysis and rankings of consultants. Someone has to be responsible for the early demises of so many of the Web’s shining stars. Some of the blame surely must belong to the consultants.

What other business has the luxury of attracting clients without demonstrating a proven track record? Until recently, notes Forrester analyst Christine Overby, e-commerce consulting firms have had so much work to do, there was “little incentive for them to improve their service offerings.”

Now that some of big-names are appearing on the roster of e-commerce failures, faulty strategies — and the consultants who plied them — are being called into question.

Consultants taken to task in the Forrester Report include Cambridge Technology Partners, which helped Wal-Mart Stores, Inc. get online and Sapient Corp., also based in Cambridge, Massachusetts. Although Sapient ranks at the top of the heap, Forrester leveled criticism for at least one of its projects, a site that did not leave room for future growth.

Sharing Blame

The folks at Forrester point out that companies often doom consultants to failure by not having clear objectives when they hire them. The problem is that everyone is working to build structures on constantly shifting ground. Objectives and goals change as soon as companies articulate them. Consultant strategies and advice that seemed brilliant a year ago might not fly today.

If there were a tried-and-true formula for Web success, the Internet would quickly become as boring and predictable as the local mall, where all the storefronts end up looking the same. A formula that works on the Internet is inherently paradoxical.

One analyst said that creating Web sites that fail undermines the entire online economy. In other words, consultants who fail to keep a place on the cutting edge are dooming their own careers along with their clients.

Yes, the work poured in through the doors and the windows for a while, but the early flush of dot-com fever is gone. Just as the shakeout has taken hold of e-tailers themselves, it will arrive for the consultants who put it all together.

What do you think? Let’s talk about it.

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