Scient Corp., one of a new breed of electronic commerce consulting firms, runs a risk as it sets out to prove that Internet business is not an oxymoron.
It can scare the daylights out of prospective clients.
"This is a market in which you don't know who all your competitors are, and you have to be a first mover," said Eric Greenberg, founder and chairman of the San Francisco-based firm. "If you're not a first mover, you'll lose."
Yet Mr. Greenberg set out not much more than a year ago to create a company with which an eBay Inc. and a Chase Manhattan Corp. could feel equally at home. And both do, apparently buying into his assertion that "making moves today will mean an advantage in five to 10 years."
Though Scient somewhat radically urges the more tradition-bound in its clientele to "think of e-business as a core business," Mr. Greenberg said, "this is more a business issue than a technology issue. It is not the technology that is the problem. No technology solution solves a business problem."
Such words might be reassuring to the four top-10 U.S. banks-Scient is free to disclose two of the names, Chase and First Union Corp.-and two top- five insurance companies among its 40-plus customers. But Mr. Greenberg went a step further in his conception of "the first e-business systems innovator," which is how Scient defines itself.
He surrounded himself with accomplished technologists and strategists and gave Robert M. Howe top billing. Before taking an entrepreneurial, coast-to-coast leap early last year to become Scient's president and chief executive officer, Mr. Howe was head of International Business Machines Corp.'s worldwide financial services organization.
Mr. Howe, 54, is one of several key hires who have been in the business world almost as long as the 34 years Mr. Greenberg has been alive.
Mr. Greenberg, who has nonetheless been around the high-tech block a few times, called Mr. Howe "a great mentor and leader ... the most intelligent, insightful person I have worked with."
They met Dec. 15, 1997, through the offices of David Beirne, a prominent venture capitalist and Scient board member. Thirty days later, Mr. Howe was working for Scient.
"We had a chance to take a consistent methodology and build a culture," Mr. Howe said in a recent interview. "And we're not just looking at the Internet."
IBM backgrounds are rather common among what Mr. Greenberg calls his dream team: Chief operating officer Stephen Mucchetti was general manager of IBM's telecommunications and media group and of IBM Consulting; chief technology officer C. Scott Frisbie designed the Integrion home banking system and its Gold technical standard; Robert Beck, Scient's vice president of people, spent 10 years at IBM and later headed human resources at BankAmerica Corp., among other places; and Diana Brown, point person for financial services and based in New York, was an architect of the e- business strategy that IBM trumpets in its advertising.
Also in the mix are people like "master architect" Andres Gutierrez, who developed Pacific Bell Internet Services; chief knowledge officer Douglas Kalish, formerly of the Price Waterhouse Technology Center; and chief financial officer William Kurtz, who was CFO of AT&T Corp.'s business markets division.
"This is a great spot to be in," said Ms. Brown, a Scient vice president. "Companies are really being transformed by e-business."
The contrast with IBM, she said, is that "this is all we do-we're not fighting the corporate structure."
To keep itself in sync, Scient "created itself and its culture as an e- business," Ms. Brown said. "Our clients see it work and ask if we can do that for them."
Agility becomes important with the compression of time that defines "e- business systems innovation." Banks may not yet be down to the three- or six-month product cycles that Silicon Valley companies are accustomed to, "but they have definitely picked up the pace," Ms. Brown said.
They can be prodded further through cross-pollination with Scient's electronic markets business unit, headed by vice president Nicholas DiGiacomo, which has helped set speed records working on Internet sites and strategies for eBay, Realtor.com, and others.
"A lot of what we are learning in building dot-coms," said Mr. Howe, referring to those companies with Internet suffixes, "we are trying to apply to financial institutions.
"We are talking with banks about getting two generations up in a year, instead of just one, and that is a big change."
"We integrate what we do with the (existing) business," Ms. Brown said, "but at the same time they need the latest and greatest technology and the brightest people-and to have it delivered on Internet time."
Mr. DiGiacomo has himself been cross-pollinated with banking and payment systems. While at Science Applications International Corp. of San Diego, he honed SET, the Secure Electronic Transaction protocol for Internet credit card payments.
Mr. DiGiacomo also set up Tenth Mountain Systems Inc., the company that certifies software packages for SET compliance. And he suffered along with SET's market travails, learning lessons in the process.
The slow acceptance "generated a sea change," Mr. DiGiacomo said. The security "couldn't be pushed so fast to the desktop, so it had to go between business partners-the banks and merchants-or within the enterprise.
"It all had to do with a risk estimation. If people were not scared at one level, using personal identification numbers or even something weaker, then it was better to bind the security elsewhere in the system. Businesspeople, not technical people, are making it happen."
Mr. Greenberg said that "what Nick did with SET and what Bob Howe and the IBM folks did with Integrion" speak volumes about his aspirations for Scient.
"Electronic business was crying out for a services company that could deliver systems innovation," Mr. Greenberg said. "It needs to be a company that can partner and innovate over time."
Last September, when Scient had 15 clients, a staff of 110, and was pulling in about $1 million of revenue a month, Mr. Greenberg was talking about getting to between $400 million and $700 million annually within five years.
The client base has nearly tripled, employment is up to 250, and Mr. Greenberg stifles talk of dollar figures because "we are in a kind of quiet period," meaning a public stock offering may be on the horizon. "I get up and pinch myself every day to remind myself this is really happening," he said when contemplating the rapid growth.
Educated in financial accounting at the University of Texas, Mr. Greenberg got into the consulting business but said he naturally drifted toward sales and eventually a burning desire to start things up.
He began GartnerGroup's interactive business, which put him in the thick of the Internet commercialization that started in 1994.
In 1996 he started a company, Silicon Valley Internet Partners, that became Viant Inc., now a Boston-based rival of Scient that describes itself as "an Internet consulting firm that helps clients plan and build digital businesses." Clients include American Express Co. and J.P. Morgan & Co.
Mr. Greenberg parted ways with Viant CEO Bob Gett, then took a year and a quarter off to recharge. He resurfaced as "entrepreneur in residence" at Benchmark Capital, the firm where David Beirne, a former executive search consultant, is a partner.
Mr. Greenberg began to put his plans for Scient in place and got early backing from Benchmark and from Sequoia Capital, whose partner Doug Leone is also on his board. (Other directors include former McKinsey & Co. chief executive officer Fred Gluck and Mort Meyerson, who was CEO of Electronic Data Systems Corp. and Perot Systems Corp.)
Scient has raised more than $30 million overall, including a recent $11 million mezzanine round with Sequoia, Amerindo Investment Advisors, and Palantir Partners.
"More companies are turning to systems innovators to rapidly build e- businesses," said Amerindo senior analyst Christopher Lord. "Scient, with the strength of its first-class management team, has quickly established itself as a market leader."
Scient emblazons on its Internet site a quote from Mr. Beirne: "Scient's team is the best ever assembled in the technology services market."
Praise like that goes a long way in e-business circles. Mr. Greenberg, who excels at salesmanship and turning a phrase, feeds that notion that talent is everything: "I'm a dyed-in-the-wool entrepreneur," he said. "I'm not an operations-type guy. I like to surround myself with great people."
Great as the formula may be working so far, the market for what are variously called Web consulting or Web enabling firms is not fully formed. Companies like Scient and Viant with low-double-digit revenue numbers are dwarfed by mainline consultancies and even some niche outfits. Consultants in more mainstream firms say they rarely find themselves battling the new entrants for work.
New terminology like "e-business systems innovator," though getting across the point that traditional systems integration or outsourcing does not always compute on the Internet, make these companies hard for market analysts to categorize.
Scient might be compared, for example, with Razorfish, which bills its specialty as "digital change management," or USWeb/CKS, a 2,000-person "professional services firm that works with clients to define strategies and implement innovative ways to build their businesses through the combination of expertise in strategy, Internet technology, and marketing communications."
Both those companies have roots in advertising and marketing and have struggled to get out of those pigeonholes.
Scient is, to be sure, a Web enabler, but wants to keep grounded in the business contexts that traditionalists understand and that "dot.coms" need to.
Much of the work for banks revolves around customer knowledge and relationship management-in a highly Web-centric way.
"A bank has to demonstrate it is giving a good deal, making my life as a consumer simple," Mr. Howe said.
"We take an end-to-end business view and customer view, and we do all the hard, ugly things that our clients don't know how to do," said Ms. Brown.
With year-2000 concerns looming, Ms. Brown sees major financial institutions facing a six- to nine-month "shutdown period," beginning in about June, putting development work on hold. "Whatever head start they can get on electronic channels between now and June" will pay off starting in about March 2000, she said.
"Relationships, not transaction issues, drive electronic commerce," Mr. Greenberg said. He predicted that the financial industry will "start aggregating around customer groups" or "communities of interest."
One opportunity for the taking is private banking, he said: "There is not a single decent Internet interface for private banking."
"Thought leadership" is also important to Mr. Greenberg. Scient is sponsoring, and he is chairman of, International Data Group's Internet Commerce Expo March 22-25 in Boston.
"There is only so much we can do ourselves, but we do want to push thinking," Mr. Greenberg said. "People who take a wait-and-see approach or are complacent doing business the old way have a significant business risk. Our feeling is that the more connected people are in the new economy, the better it will be for all of us."
While things are still being sorted out, "people are putting up commerce sites without any notion of relationships," he added. "There is no value added in going there.
"This is not an Internet revolution, this is a business revolution. Most people don't recognize that, and that's what we evangelize."