Answerthink attempts to escape the e-consulting quicksand

With many pure-play e-consultancies sinking fast, Answerthink must distance itself from the chaos and flex its muscle. Columnist Tom Rodenhauser shares his predictions for Answerthink's future.

“I yam what I yam,” says Popeye, the cantankerous spinach-gulping cartoon sailor. Answerthink (Nasdaq: ANSR) is the Popeye of the consulting industry.

First a Hollywood recap: Answerthink emerged in 1997 when several ex-KPMG partners—frustrated in their attempts to push the consulting arm of the staid accountancy towards the public markets—bolted to build a systems integration company without the typical Big Five baggage. (Note to screenwriter: Founders enjoy irony of KPMG Consulting IPO.)

Basking in the initial success of their own public offering in 1998, the A-thinkers were unexpectedly swept up with the pure-plays in the emerging e-revolution. Much to their chagrin and delight, analysts instinctively lumped Answerthink into the pure-play category. The company could do little to distance itself from the mosh pit that permeated e-consulting circa 1999.

With those one-trick ponies now sinking in the quicksand, Answerthink—bruised and jostled by the market’s mob mentality—wants to remind us that they weren’t part of the revolution.

The company announced fiscal year results Tuesday, posting a 19 percent revenue increase to just over $311 million. But fourth-quarter revenues and net income dropped as compared with the previous year. Much like their e-counterparts, Answerthink suffered from the dot-com meltdown and have had to cut back staff and tweak its client mix.

So why is Answerthink like the sailor with bulging forearms? Both are do-gooders who resolutely plow ahead with minimal regard for appearances. Answerthink, with its three functional areas and five industry lines, consistently challenges the industry’s Bluto—IBM and the Big Five—for enterprise/systems integration work. Rarely does the firm go head-to-head with the e-consultants. Yet the world wants to toss the company in the dustbin with the other flameouts.

Answerthink has a distinct challenge going forward. It’s approaching the size/scale intersection ($500 million) that historically bedevils other consultancies. And even though talk of industry consolidation has abated as e-firms struggle, Answerthink remains a logical target for those companies that desire a turnkey services operation.

Fending off would-be suitors, managing growth, saving clients. Maybe Answerthink should stock up on the spinach.

Heard on the street
There’s a Kevin Bacon-like connection to the recently announced alliance between Avanade and Unisys. Unisys CEO Larry Weinbach is the former chief of Andersen Worldwide, the umbrella that tried to supervise the Andersen Consulting (Accenture)/Arthur Andersen rivalry. Weinbach left before the arbitration case got really ugly. Reconnecting with the Accenture division is hardly surprising. One can play “Six Degrees of Separation” with most every Andersen acolyte in the industry.
Inside Consulting is written by Tom Rodenhauser as a free weekly supplement to The Rodenhauser Report. The report informs senior advisors and business executives of consulting trends and best practices. Subscription cost is $295 per year for 10 issues. Copyright 2001, Consulting Information Services, LLC. Reproduction is prohibited. Quotation with attribution is encouraged.

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