Lyle DeWitt used to spend up to five days a month tracking down answers to administrative minutiae. His toll was especially heavy because he was controller of San Leandro, Calif.-based TriNet Employer Group, which handles employee administration matters for 250 venture capital-backed companies.
Sometimes, DeWitt couldn’t figure out an answer himself. Then he had to shell out money for an expert–for example, $2,250 for an immigration attorney to determine whether a foreign post-doctoral candidate conducting research for one of his clients was exempt from paying Social Security taxes. (The answer, it turned out, was yes.)
“Little things like that used to drive me crazy,” DeWitt recalls. “You have to find out the answer fast. And you have to get it right or face substantial financial penalties.”
Today, DeWitt says life is easier because he’s a customer of Ernst & Young’s “Ernie” on-line consulting program. For a few thousand dollars a year, he types questions into his computer and gets a response on each one from an Ernst & Young expert within 48 hours. He has received answers to queries ranging from the intricacies of 401(k) and cafeteria benefit programs to health insurance, payroll tax and immigration issues. That means less tedious work, fewer headaches and no worries about costly mistakes.
“Ernie is kind of like having 50 consultants in my pocket, and for a phenomenally inexpensive rate,” DeWitt says.
Welcome to the fledgling world of on-line consulting, an outgrowth of the Internet with the potential to alter the tony, Brooks Brothers milieu of high-stakes consulting. Ernst & Young and Arthur Andersen LLP are pioneering the on-line effort in a bid to attract smaller companies into their fold–companies that generally can’t afford their advice. It’s also a chance for these Big 6 accounting firms to get in on the ground floor with small clients who may eventually flourish and become lucrative accounts.
On-line consulting often gives small businesses their first crack at outside consultants and supplements mainstream consulting at bigger companies. Clients get solid answers to important questions on the cheap, but not major strategic advice about penetrating new markets or undercutting key competitors.
Not all consulting firms and independent market researchers are convinced that on-line consulting has much of a future. Companies want face-to-face consulting, regardless of their size, they say, and the world has become too complex to ship tidy little answers through cyberspace.
“If you’re a CEO of a Silicon Valley start-up and can’t afford face-to-face consulting on marketing or positioning strategy, you still won’t go on-line for help,” says Julie Meringer, an analyst in computing strategy at Forrester Research in Cambridge, Mass. “You simply won’t feel comfortable.”
Greg Seal, a managing director at Deloitte & Touche LLP, says answers to most questions today are not black and white and hence not suitable for Internet transmission. “The business world has become exceedingly complex,” he says. “Now most questions must be answered in shades of gray. The answers may start with `yes’ or `no,’ but then you have to outline scores of exceptions.”
On the other hand, businesspeople are becoming dissatisfied with consulting. TriNet Employer Group’s DeWitt, for example, says the consulting world’s globe trotters aren’t around when he needs them. A consultant may arrive from Indonesia, spend a week with his company, then head off to Germany. Questions may crop up, but the consultant is unavailable, DeWitt complains.
Going on-line with a consultant with a video interface may solve the problem, he says.
For now, on-line consulting mostly brings the advice of a live consultant via e-mail, but the stage has been set for more automated offerings. Already, Ernst & Young sells proprietary software packages aimed at replacing high-level, face-to-face consulting.
E&Y’s Software Selection Advisor, which costs $4,000, offers clients the methodology required to implement companywide resource planning, accounting systems, manufacturing systems and other key aspects of a business.
Another E&Y program, the $3,000 Supply Chain Diagnostic Tool, mirrors the practices used by Ernst & Young consultants to assess the efficiency of a company’s supply and distribution chain.
“Until now, consulting has always been a people-intensive business,” says Tom Hoglund, general manager of Arthur Andersen’s “Knowledgespace,” an on-line competitor to Ernst & Young’s Ernie program. A consultant “jumps in his car, drives to his client, spends two hours with him and bills him for $500.”
“It’s one-on-one service delivery,” Hoglund explains. “Now we’re seeing the start of one-to-many service delivery. The physical encounter becomes a virtual encounter as one consultant services lots more clients via the Internet and offers some of the same advice for much less money.”
Ernst & Young, which extensively serves emerging growth companies, pioneered on-line consulting in May 1996. It has about 1,000 on-line clients now, more than three times the number a year ago, says Brian Baum, Ernst & Young’s director of on-line consulting services. Half of the clients have revenues of less than $20 million annually. After subscribers give Ernie their questions, Ernie “knowledge providers” sort the questions by subject, then route them through Ernst & Young’s Intranet to the appropriate professional.
The firm fields questions in seven categories, including general management, human resources, information technology and corporate finance. Ernst & Young offers two levels of service: For $18,000 a year, five employees can ask an unlimited number of questions; for $3,500, five can ask a total of 10 questions.
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Both programs also offer unlimited access to a PAQ (Previously Asked Questions) database; Trendwatch, a database providing an overview of topical trends in different emerging growth industries; and Mediawatch, which provides articles from seven trade magazines.
Arthur Andersen’s Knowledgespace program, introduced at the start of 1998, typically costs $2,500 a year. It provides continually updated data about key functional areas, such as corporate finance, and about specific industries, such as oil and gas exploration, telecommunications and wholesale distribution. It also offers bulletin boards on different topics and a “global best practices” database, including tools that allow companies to improve their performance by comparing themselves with others in different areas.
In addition, Knowledgespace professionals respond to specific queries via electronic mail for $100 hourly.