Still Standing

It's been a rough year for Jerry Greenberg and Stuart Moore. In July, split-adjusted shares in Sapient, the tech consultancy they co-founded in 1991, were trading for six bucks and change, down from around $60 a year before. The young co-CEOs - who last year made Fortune's list of the 40 richest Americans under the age of 40 - can now add "ex-billionaire" to their résumés.

Those paper losses reflect an abrupt reversal of fortune for a company that had enjoyed nine straight seasons of bountiful growth. Sapient's sales, which hit $503 million last year, an 82 percent increase over 1999, have been in free fall since December and could end the year down 27 percent or more. To cut costs the company has shed 1,060 employees - about a third of its workforce - since March.

Sapient is hardly alone. During the first six months of 2001, combined revenues for Net-centric consultancies Answerthink, iXL, Razorfish and Scient were down 53 percent from the same period last year. Yet IDC recently offered the rosy prediction that e-business consulting sales will grow from $22 billion in 2000 to $68 billion in 2005.

The question is, who will be around to profit from that growth? At one end of the e-services spectrum are Web site builders such as Razorfish and Scient, which look increasingly shaky. At the other end are Big Five consultancies like Accenture, Cap Gemini Ernst & Young and KPMG Consulting, and old-school tech giants like Computer Sciences Corp., Electronic Data Systems and IBM Global Services - all of which offer e-business consulting as just one component of their technology and strategy services portfolios.

Sapient sits somewhere in the middle. On the one hand, it's been tarred with the same dot-com brush as the Scients and Viants. But unlike those rivals, Sapient has years of pre-Net experience in the less-than-sexy business of systems integration. The old stalwarts, however, have even broader backgrounds to draw upon, as well as formidable brand names and long-standing customer relationships. As Sapient takes on these giants for a piece of the e-services market, the question is whether its blend of new-economy agility and old-school technology smarts will be enough to help it compete.

Established in Cambridge, Mass., in 1991, Sapient has changed consulting specialties the way a prom queen swaps boyfriends.

In the beginning, Sapient focused on systems integration, unifying customers' disparate hardware and software resources into efficient, enterprise-wide systems. A couple of years later, as client-server technology replaced the old mainframe-terminal architecture, the company tweaked its training and hiring efforts to position itself as a client-server expert.

Then, in 1996, Sapient turned its attention to the Net, eventually embarking on a major rebranding effort. Its consultants became "architects for the New Economy." The splashy introduction to the company's 1998 annual report referred to the Net no less than seven times. "The Internet changes everything," it proclaimed in headline type. "Run, don't walk, down the digital road, or be left in the dust." The company's acquisitions - including Web design firm Studio Archetype in 1998 and Web developer Adjacency in 1999 - bolstered its new, Net-centric reputation.