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Date Posted: 23:47:49 12/21/99 Tue
Author: warren
Subject: CYSV(10/15)

Very interesting...


New crop of services firms vies for the spotlight
By Kim Girard and Melanie Austria Farmer
Staff Writers, CNET News.com
December 21, 1999, 12:20 p.m. PT
URL: http://news.cnet.com/category/0-1008-200-1502290.html

If 1999 was the year of the glitzy Internet services company, 2000 could be the revenge of the nerdier systems integrators.

In the past year, hot IPOs, and a heavy dose of marketing, have put Scient, Viant, Razorfish and others on the Internet services
map.

In the coming year, look for systems integrators including Context Integration, Emerald Solutions, Eggrock and NerveWire to make
their move. Those companies are part of a pack of small, privately held firms less focused on building Web sites and more interested
in connecting Web sites to existing business applications, such as order entry systems.

Whatever buying and selling a company does with a customer or business partner on the Web has to be tracked on internal order
entry, manufacturing and accounting systems that typically aren't running on the same computing platforms.

To be sure, bread-and-butter integration work isn't as sexy as Web design or strategy planning. But analysts say any company with
a mix of legacy and client-server computer systems will need smart integrators to get their business-to-business e-commerce
systems humming.

"Smart clients will look for hard-core engineers," said Ben Tanen, analyst at Giga Information Group.

And smart e-commerce services firms will look to partner with integrators. USWeb/CKS recently merged with Whittman-Hart in part
for its back-end technical expertise, and many more pairings of systems integrators and e-commerce experts are expected this
year.

Analysts predict nothing but huge growth and profitability for services and systems integration companies. Market research firm
International Data Corp. projects that market to reach $78.6 billion by 2003.

"This is a huge market, and it's only getting bigger," said Ed Caso, a financial analyst at First Union Securities.

A new crop of services companies--alongside middleware makers that provide software to make different computing systems
communicate--will likely benefit from that shift, adds Stan Lepeak, analyst at Meta Group.

"Clearly it will be [business-to-business] or technically competent firms," he said. "It won't be putting up a Web site. It will be: How
do we put together a back office? How do we do the heavy lifting?"

Lepeak lists a group of less glamorous, more technical companies he is watching, including Cysive, formerly Alta Software, which
recently went public and has done work for both Cisco and AT&T; Concord, Mass.-based Eggrock Partners, headed by Maureen
Ellenberger, yet another former Cambridge Technology Partners executive who has moved on to a start-up that provides integration
and application hosting; Dallas-based systems integrator Akili, which recently merged with e-commerce services company
Hybridigital; and Needham, Mass.-based business-to-business e-commerce services start-up NerveWire, which today merged with
Northeast Consulting Resources.

Another company, Irvine, Calif.-based Nexgenix, is expected to go public during the first half of next year. Backed by Redpoint
Ventures, which invested $20 million in the company last month, Nexgenix has roots in systems integration, recently adding
interactive services and brand-building strategy offerings to its plate.

Chicago-based Lante, a veteran systems integrator now focused on business-to-business e-commerce and headed by ex-Andersen
Consulting e-commerce division executive Rudy Puryear, filed to go public this month.

First Union's Caso said that while many Internet services companies offer a full range of skills, including strategy, creative and
systems integration, the technology end of projects is going to become more complicated as corporate e-business strategies grow.
Caso said the profiles of companies that are now neglected by Wall Street as being too technical will likely grow as a result of that
shift.

Publicly held Tanning Technology, for one, may not get enough recognition--partly because they don't market hard enough and
publicize their client wins, said Credit Suisse First Boston financial analyst Wayne Segal.

"It's known they're doing work with E*Trade and FedEx, but many clients don't want to publicize [their partnership with Tanning]
because if people know you're working with Tanning, there's something wrong [with your back-end systems]," Caso said.

"Scient is a different animal," Segal said. "Clearly the rationale behind Scient is that when a company grows its business at a 70
percent to 80 percent [rate] sequentially, they tend to get a buzz [on Wall Street]...Plus, they've been more promotional than
others."

Now it will be time for the techies to go on a marketing blitz, Lepeak said.

"So far [a lack of marketing] hasn't hurt anyone," he said. "Now they'll need to market and articulate what they do."

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