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ldentllCrlsheconsultingirm bornof the Big Fivealk to the founders ofAnswerthink, and it's easy osee hey havea major idenrirycrisison their hands.
In [act, they may very well be running one of theleast-understood omoanies n the solution-
is workingo shed ts pure-play-servicesmage
provider business oday.The company that envisioned tself as an alter-
native to Big Five consulting, only to find itselfrhrust into the dreaded'Web ntegration boomand bust of2000, wants to set he recordstraight:Itb not purely an e-services ompany. Never hasbeen.Never will be.
"Ve havealwaysstruggledwith an identiry try-ing to define who we are," saysAnswerthink CEO TedFernandez.lW'e eallyare unlike the pure-plays, he largeBigFive and systemsntegrators."
Stereotypesside, he company that grew to more than $300million in 2000 revenue,with 1,500 employees, elieves t hasgot the right combination of technical kills,business rowess ndstrategic hinking to do what so many high-flying servicesirmshavenot-go from promising, young start-up to industry leader.
"The question now is, '!?hat do they want to be?"'saysStanLepeak,chief research fficer for Ajunto.com, who hasbeen ollowing the company since ts formation. "They havea nice little consultancy,but I don't think that was the goalwhen they startedout. They wanted to challenge he Big Fiveand make much more of a name for themselves."
The companywas ounded in 1997 when Fernandezwalkedout of KPMG PeatMarwick's strategic ervices onsultancy,eav-ing his role asnationalmanagingpartner amid an internalpowerstruggleregarding he firture ofthe company.Fernandezhad aspi-rations to spin it offinto an independentpublic company.Oth-
ers n the companyt eadership id not. SoFernandeznd a fewdozenofhis colleagues etout to createa new model for big con-sultancies. mong the defectorswere ormer KPMG CTO Allan
Frank, now presidentof Answerthink, and UlyssesKnotts,former managing partner for marketing and sales.
The young company mmediately ried to posi-tion itself as the alternative o Big Five consul-tancies-with the traditional experienceandERP skills o serve nterprise lients,but withoutrhe stodgyattitudeand stiffbureaucracy.n addi-
t ion, Fernandez'dreamf running a public com-pany becamea reality with a 1998 IPO that raised
more han $33 million. (lronically,KPMG made ts ownIPO earlier his year, he first ofthe Big Five o spin out rntothe public markets.) nswerthink hen went on a buying spree,scooping up more than l0 companies, ncluding financialbenchmarkingand accounting irm Hackett Benchmarking n1997 and 7'ebdevelopmentshopThink New Ideas n 1999.Right Place,Wrong TimeAsk Fernandez o describeAnswerthink and the word heinevitably returns o is hybrid. "We specifically aywe'renot oneof rhosee-integrators, ut we'renot one of those BMs or Big Fivecompanies," esays.W'e'reight in the middle, kind of a hybrid."
Unfortunately, \WallStreethas never iked hybrids. In fact, Fer-nandezsaysanalysts' nabiliry to understandAnswenhink earlyonmade them lump it togetherwith dozensof pure-playe-servicesfirms sprouting up everywheren 1999. That comparisononlyinrensifiedafter the companysmergerwith Think New Ideas.In many ways,you could sayAnswerthink experienced heworst of both worlds.The company,which debutedmore than
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intellectualThere's othingas importantas buildinganculture hat brings ogetherthe differentskills and
Answerthinkls ldentiLy Crisisa year beForehe dot-com craze ook ofl couldnt Fullyenjoy thebenefits I the e-sevices evolutionbecausets corebusiness asstill in CRM and arge-scaleRP packages. uring the boom,its stockpricereached lmost$40 per share ut nevermatchedthe astronomical ighsoFcomparriesike Razorfish nd Scient.Yetwhen thingswent sour, t felt the full elfect of the bubble'sburst,hi t t inga majorstumblingblock n late2000as he poolfor dot-com services uickly dried up.
Answerthinkalso ound itselfat the centeroFthe electron-ic privacydebatewhen i t obtained he ident i t ies f a dozenanonymous nternet users nd sued hem for allegedlywritingdisparaging ommentsand revealing onfidential n[ormarior-rabout the company on Yahoo'smessage oards.One o[ thedefendants urned out to be Hackett Benchmarking ounderGree P Hackett.
Ironically,Answerthink sees ew acquisitionopportunitiesin many of the strugglinge-servicesompanies hat wereonceconsideredrsclosest omperir iorr.Planning Answerthink's Future\While Fernandez ecognizes he opportunities in wireless,speech ecognition nd other ernerging echnologies, e's firmbelievcr hat the realmoney or the company s still in leverag-ing traditional T architecturesor e-business.lt may seem ikeold hat,bu t Web adoption sstill at suchan infancystage,tk ajoke," Fernandez ays.
To that end, the company'skey technology partnersinclude BM and Sun on rhehardware ide;Oracle,People-SoFt nd SiebelSystemsor appl icat ions; EA, SCT and See-Beyond or middleware;and Informaticaand BusinessObjects
fo r datawarehousing.On the business-strategyide,Answerthink's
grcateststrength comes from Hackettk financialbenchmarkingar.rdworkflow-analysis apabilities.(The companysayst has nformationon 80 per-cent ofthe Dow, two-thirds ofthe Fortune100 and40 percentoFthe Fortune500.)On the technol-ogy-appl icat ion ide, Answerthink uses hosebenchmarking kills o comparepackaged ppli-cationsbased n Functionaliry-helpinglientspi tthe likesof Oracle againstPeopleSoft, r Siebelagainst AP-to see ow eachwould fi t into their
sPeclncnfrastructures.The companyhasalsobr.rilt strong elationshipwith IBM
and is a key member of Big Blue's uccessful onsultantsandIntegrators rogram,workingcloselywith IBM on a numberof wirelessnit iat ives nd vert ical-marketolut ions,ncludingl iFe cicncesnd hcalthcarc.
"[Answerthink s] very strong n things ike benchmarkingand research, usinessransformationand technology ntegra-tion, and it is successfullypplying hat expertisen a vertical-rnarketapproach,"saysAnne Smith, vice presidentof IBMIConsultantsand Integrators.
But more han being usta go-to partnerFor erticalmarkets,Answerthinkhas nanagedo snag BM asa major client, help-ing thc technology iant build and shape ts online strategy."Certainly, n thiseconomicclimate,you get a ot of peopleout theresaying,'Don't ocuson strategy,us t focuson cuttingcostsand on increasing evenue,"'says .P Frenza,marketingdirector of IBMt Consultantsand Integrators nitiative. "ButAnswerthink hasa very good strategypractice. hey are con-stantlywalking aror.rndhe tableand trying to look at fthings]frorndiFFerentirections," e says. Theyve been eallyhelpful,taking he strengths f IBM and bendingand rwisting hem towhrt tl-remarket reallywantsas ar ascurrency."
The Brains Behind AnswerthinkAnswerthink'sernployee ase an be broken down into threecat-egories: usiness trategyand transformation,package mple-
pefspeCtiVgS . -AllanFrank, nswerthinkVith its stockdropping to less han $5 pershare, he com-
pany madea tough decision t the end of 2000 to cut rela-t ionshipswith i ts dot-comcl ients,which accountedor some15 percentof its revenue, nd lay off more than l 0 perccntofits staFF.'Weactuallywent to clienrsand said that unlesswecould defir-reur businesselationships nder incrediblysrrict61sdl1 s1m5-rnanyoFwhich heysimplycouldnt match-weUhave o wind down or simply erminate bout l5 relatior-rships,"Fernandez-ays. That wasverydiFficult o do-and it impact-ed our irnmediatcgrowth-but it was he right decisior-r."
Answcrthinkhasbeengrowing steadily versince,with rev-enueexpectedo increase rom$311 mil l ion lastyear o closeto $500 million this year,and t hasa good chance o get backto prof i tabi l i ty y rheendof 2001.In hindsight, he company's nabiliry to takeFulladvantageof the e-serviceshenomenonm:ryhavebee a blessingn dis-guise. hi le mostpubl ice-scrvicesompanies ow have tockpriccsoF ess han $ a share,Answerthinkk issues avesincerebounded somewhat and are holding their own. (By lateAugust, he stockheldsteady t roughly$9.50per share.)"fAnswerthink]has omeout oFthisOK," Ajunto.com's ep-eaksays. To its benefit, t had a ot moreoperarional nd man-agement kills,and t did a better ob at settingup a consultrn-cy. t may not havepicked he hot trendsand may havemissedout on someopportunities here,but it hasstronger ales, ccount-managementand client-relationship kills han mostof the e-ser-vices irms had."56 VARBusinesswww.varbusiness.com September 17,2OO1
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