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Trad integrators rule e-business roost

The Future belongs to the Past

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In July last year. Morgan Stanley Dean Witter forecast a move by corporates away spending from traditional IT projects. Instead, the money would be shovelled into Web integration work.

The beneficiaries of this move was supposed to be the Razorfishes, the Framfrabs, the Scients etc. And the losers were supposed to be the traditional corporate resellers and consultancy operations.

It appears the customers weren't listening: there have been a string of redundancies at the biggest Web-specialist developers, most notably MarchFirst, Razorfish, which made 43 people redundant in its UK operation a couple of weeks ago, and Framfrab, the Swedish e-consultancy which lurches from crisis to crisis.

And on a local UK level, Entranet, the UK's eleventh biggest Web developer , according to New Media Age, issued 30 redundancies, while lossmaking TW2.com went into liquidation, following the withdrawal of backing by its major shareholder, Specialist Computer Holdings.

SCH says it will integrate TW2 operations, but considering that is a reseller, while TW2 is a Web developer, it's difficult to see what's left to integrate.

However, it does appear that the future does not belong to the new-style Web design agencies.

A lot of Web developers grew very quickly on the back of overpriced paper. But with the current state of the world's stock markets, there is very little chance for loss-making Web developers to raise capital through IPO. Web developers never deserved skyhigh multiple as there billable hour businesses are not exactly scalable.

It seems that very few companies from this sector have been able to make the transition to becoming proper integrator.

Building multimillion pound database Web sites requires those boring project management skills which live within the traditional integrators and consultancies. In February, Arthur Andersen bought the UK arm of Xpedior, a big US Web developer, for an undisclosed sum, but gaining in the process "65 highly skilled employees". Expect more deals along these lines. ®

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