BearingPoint Still Recovering Despite Setback

By John Moore  |  Print this article Print


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BearingPoint expects to miss a milestone in its ongoing overhaul, but the company's CEO remains optimistic about restructuring efforts.

BearingPoint Inc. will likely miss a key milestone in the company's months-long overhaul, but the integrator's chief executive officer said he expects the company to turn a profit in 2006.

BearingPoint on Tuesday called it "unlikely" that the company will complete its financial statements for 2004 by the end of October, which had been the objective. BearingPoint provided no information on when it will complete the statements. Problems with internal financial systems first disclosed last November prompted an audit that remains under way.

By late Tuesday afternoon, the company's shares fell about 7 percent to $7.14.

Harry You, who became BearingPoint's CEO in March, has been working to right the company's problems, which include turnover and a high cost of sales among other issues. You cited progress in his campaign during a meeting with analysts Tuesday in New York.

He predicted a return to profitability in 2006. The company released guidance of $3.5 billion to $3.7 billion in net revenue next year and $180 million to $250 million in operating income.

To get there, You emphasized the need to pursue higher-margin projects, an objective he outlined earlier this year. The company's compensation program for managing directors now is based on project profit margins as opposed to consultant utilization rates, which had been the primary metric.

You also noted that BearingPoint is focusing on solution sets in growth areas. He cited the example of a "digital oil field" solution that the company will bring to market in conjunction with Halliburton and Honeywell. In addition, BearingPoint will target electronic medical records, which he described as a market worth "tens of billions" of dollars going forward.

To sharpen focus and reduce costs, BearingPoint has reduced the number of industries it focuses on from five to three and consolidated or eliminated 38 percent of the market sectors within those industries. The company's three verticals are financial services; public services, which include government and health care; and commercial services, which cover areas such as consumer packaged goods and oil and gas.

BearingPoint also has moved to trim its client roster, pruning small or unprofitable accounts. The company plans to exit some countries in which it has practices.

All told, BearingPoint expects to achieve cost savings of $200 million to $300 million over the next 18 to 24 months, according to You.

As for attrition, the rate of managing director turnover declined from 17 percent in the first quarter to 15 percent in the third quarter. The company's global attrition rate, however, has increased to 28 percent from 26 percent during that time span.

You called that attrition rate "not optimal for us or anyone else."

BearingPoint began implementing employee retention programs in June.

Roundarch decides to go it alone.

Roundarch Spins Out of Joint Venture

Roundarch Inc., founded in 2000 as a joint venture between Deloitte Consulting and WPP Group, has spun off as an independent consulting firm.

The company specializes in enterprise Web solutions, operating in a niche between interactive agencies and large-scale IT providers, noted Jeff Maling, Roundarch's president and chief experience officer. The company aims to couple the online strategy thrust of companies such as Avenue A/Razorfish with the technology orientation of IT service firms such as Accenture and IBM.

The company's services include interactive strategy development, user research, visual design, portal framework services, application design, integration, and application maintenance and support.

Maling said he believes Roundarch's focus will help the company compete with larger service providers. "We are more focused on the Web space and have more user-experience capabilities," he noted.

Roundarch pursues customers who seek Web solutions to boost customer or employee productivity. That strategy has led the company to the financial services and government markets. Customers include Bear Stearns, JPMorganChase and the U.S. Air Force (through a pact with Lockheed Martin Corp.).

Two years ago, Roundarch helped Bear Stearns devise a Web framework for its prime brokerage business. As tech-savvy hedge fund managers emerged as major customers, Bear Stearns sought stronger customer-facing technology, Maling noted. Roundarch is now in the process of expanding its prime brokerage work to other parts of Bear Stearns, he added.

Roundarch, with main offices in New York and Chicago, has completed engagements for more than 75 customers.

Agilysys Automates Giant Foods

Agilysys Inc. is fielding a retail solution for Giant Food Stores, which involves a self-service kiosk and mobile scanners.

Agilysys partnered with St. Clair Interactive Communications Inc., IBM and Symbol Technologies Inc. on the project. The solution consists of kiosk systems, dubbed Shopping Solutions, and Personal Shopper Systems composed of handheld scanners.

The kiosk system employs IBM Anyplace Kiosks equipped with Symbol's MS 3207 MiniScan scanners and five large LCD digital media screens. The kiosks link to 14 legacy data sources. Web services, Open DataBase Connectivity and IBM's Retail Connectivity Option are the "primary integration methods used for the data interfacing," according to Paul Civils, vice president of sales at Agilysys.

The kiosks let shoppers perform such tasks as preordering from specialty departments within a store and looking up prices on various products.

The Personal Shopper System, meanwhile, uses portable Symbol PS3050 handheld devices that integrate with Giant's point-of-sale and self-service checkout systems. Shoppers can use the devices to scan and bag purchases. The devices keep a running tab on purchases.

The Shopping Solutions kiosks and Personal Shopper Systems are running in two Giant stores: Camp Hill, Pa., and Winchester, Va. The kiosk-based solutions are slated for installation in two more stores in November, Civils said.

EDS Expands US Airways Reservations System

Electronic Data Systems Corp. on Monday said it will integrate reservations systems at US Airways, which recently merged with America West Airlines.

The EDS reservation system now used at America West will be expanded throughout US Airways. The hosted system, known as Shares, runs on an EDS mainframe, according to a spokesman for US Airways.

EDS has worked with both companies in past years. The company has provided IT services to America West since the airline's inception in 1983 and has maintained an outsourcing pact with US Airways since July 2001.

Atos, Managed Objects Join Forces

Atos Origin's North America Consulting and Systems Integration division has selected Managed Objects' Business Management System to create a system that monitors IT service levels.

The U.S. integration arm of Paris-based Atos Origin has built a Service Cockpit, which provides service-level management and root-cause analysis among other functions.

The North American Consulting and Systems Integration division initially will provide the Service Cockpit for use in Atos Origin's managed services operation, noted Lou Migliorini, vice president of channel sales for Managed Objects. The division will offer the solution to external customers as well.

John writes the Contract Watch column and his own column for the Channel Insider.

John has covered the information-technology industry for 15 years, focusing on government issues, systems integrators, resellers and channel activities. Prior to working with Channel Insider, he was an editor at Smart Partner, and a department editor at Federal Computer Week, a newspaper covering federal information technology. At Federal Computer Week, John covered federal contractors and compiled the publication's annual ranking of the market's top 25 integrators. John also was a senior editor in the Washington, D.C., bureau of Computer Systems News.


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