In common with every other ERP consulting and implementing operation, Renaissance Worldwide Inc has noticed a dramatic slowdown in the market. But it is more than just a Y2K issue, according to Richard Wheeler, international managing director of the Newton, Massachusetts-based company. Wheeler believes ERP systems are increasingly being seen as not adding value. In […]
In common with every other ERP consulting and implementing operation, Renaissance Worldwide Inc has noticed a dramatic slowdown in the market. But it is more than just a Y2K issue, according to Richard Wheeler, international managing director of the Newton, Massachusetts-based company. Wheeler believes ERP systems are increasingly being seen as not adding value. In comparison, web-enabled applications and the development of the front office with customer management applications from the likes of Siebel Systems Inc and Clarify Inc often offer dramatic business benefits. It is Wheeler’s view that the demand now is for faster, smarter and cheaper enterprise software implementation.
Industry analysts confirm that IT service operations face strong pricing pressure form large corporations. In past years, implementation work especially that involving SAP has become a gravy train, commented Wheeler. What’s going on now is possibly no more than a market correction to this. But in the US, it has been severe and some expect it to increase in Europe.
Renaissance focuses its sales efforts primarily on large organizations with complex business and technology needs. At the moment, the vendor is settling down to a period of consolidation following three years that saw no less than 23 acquisitions. The company now boasts a global presence and European revenue for the year ending December 1998 was $67.9m or 8.7% of its $776.3m total revenue. Gross margin for the year stood at 31.9%. In the year ended December 26, 1998, approximately 18% of the company’s revenue was derived from its top 10 customers, none of which accounted for more than 10% of revenue.
Renaissance focuses primarily on communications, financial services, computing, manufacturing and the public sector. Clients in Europe include Deutsche Bank, Hong Kong and Shangai bank, Michelin in France and HSBC and General Motors in the UK.
Renaissance has restructured over the past 18 months to group its main business lines into four segments – Business Strategy, Enterprise Solutions Group, Government Solutions Group and Information Technology Consulting Services (ITCS). As of December 26, 1998, the company had approximately 6,000 employees globally, consisting of 2,900 salaried consultants, 2,000 hourly consultants and 1,100 branch, corporate and administrative staff. In addition, Renaissance had approximately 500 consultants working on an independent contractor basis. Wheeler reports that there is enormous pressure for the company to attract and retain quality staff with all its major Big 5 competitors recruiting very aggressively. Renaissance experienced some fallout during its restructuring but Wheeler says that the company’s emphasis upon working in tightly-knit teams as well as its share option scheme has allowed it to keep its churn rate down to a respectable level.
ITCS is the largest of its business lines and accounted for around 68% of the company’s total revenue for fiscal 1998. IT staffing and project management provides IT supplemental staffing and project management services on a contract basis for application development and software engineering. The network solutions unit provides a range of services including infrastructure readiness, implementation, and management and operations. ITCS also offers IT transformation services and IT strategy advice and management consulting; IT architecture, including outsourcing analysis and architecture and migration strategies; Year 2000 strategy and implementation, and program management services designed to promote on-time, on-budget project delivery. The principal offerings of the Enterprise Solutions Group fall into five categories; enterprise performance management, enterprise applications, e-business, technology integration and outsourced enterprise systems.
In March 1998, Renaissance Worldwide added to the group’s competencies through a number of acquisitions. In Europe it bought Exad Galons, a French business process and IT consulting firm, for $5m and Hackenberg, a German networking and database services company specializing in Peoplesoft implementations, for $3.2m.
The Government Solutions Group provides IT services to the public sector, primarily in the areas of strategy, systems integration and electronic commerce. In June 1998, Renaissance acquired International Public Access Technologies which added significant resources and competencies to the Government Solutions Group.
Its Business Strategy Group provides strategy development and implementation consulting services to large organizations, primarily in the global telecommunications, computing and energy industries. During the 12 months ending in December 1998, BSG accounted for approximately 8% of Renaissance’s revenue.