By Jack Sweeney
In the 1990s, technology alliances for most management consultancies meant partnering with application vendors whose product upgrades cascaded annually into the consulting space known as enterprise resource planning. SAP, PeopleSoft, and Oracle were among the big names that competed to capture the mindshare of the consulting community through subsidized training and marketing efforts.
Another big technology name now hovers near the pool of talent otherwise known as the consulting profession, however. And while at first some may wonder what consulting alliances have to offer a technology leader the size of Intel Corp., they need only to look at where the monster chipmaker is headed. Expected to capture nearly $38 billion in revenue in 2001, Intel, certain analysts contend, will soon be garnering 25 percent of its revenue from the sale of products other than processors. That is, if the company isn't overburdened by its own chip-making girth. Behold the value of consulting alliances — Intel's doors-of-entry to new worlds of products and services. So far, Intel has enlisted the consulting muscle of IXL, Proxicom, PricewaterhouseCoopers, and Ernst & Young, but few doubt that its alliance building is only just getting underway.
To help better expose how consulting alliances have become a central component of the technology company's bold strategy to build new businesses, Intel Corp. CEO Craig Barrett recently granted Consulting Magazine an exclusive interview in which he reveals just what role consultants will play in creating the new Intel.
CM: Consultants tell us there were few opportunities to partner with Intel in the past, but that's not the case anymore. What's changed?
Barrett: Well, the whole world has changed. If you sit with a stagnant personality, you're going to die. In the '90s, we were basically PC-oriented. We created great silicon. We worked with hardware vendors, we worked with Microsoft, and we worked with software vendors who created programs that worked with our processors. And it was pretty much a self-contained deal in terms of those involved. At the end of the '90s, the computing industry really transformed itself more or less into supporting the Internet and the growing Internet economy, and if you look at the Internet economy, where economic processes run over the Internet and communication runs over the Internet — this is bigger than the historic set of partners we have worked with in the past.
There is a whole set of e-business solutions providers that are now part of the solution chain and are bringing the customer a solution — a solution that comprises integrated hardware, software, and applications relative to the customer needs. What we're about is bringing Intel architecture and our capability into the Internet space both at the desktop and server level. So we're working with what I would call the equivalent of the application vendors of the '90s, who are now the folks dealing with the customer and doing application solutions work for customers involving the Internet. And those are consultants.
CM: So, it's a desire to become party to the discussion that consultants are now having with clients that has made them attractive partners at this point in time?
Barrett: Well, we want to help them provide the building blocks for their solutions, and just as we were very much interested in the architecture of the PC for a decade or more, now we are very much interested in the architecture of e-business solutions. That's a combination of the client and server and network that exists, and we need to be part of that communication across the board, including the customer and the customer's specific application, and that's where the consultant comes in.
CM: What types of consultants are you looking to partner with?
Barrett: There are a wide variety of folks that have popped up relatively recently, if you will, that are growing like mad. IXLs, Proxicoms, and Pricewaterhouse and other Big Five we'd put in that category. We're seeing now that we'd like to deal with some of the more classic consultancies as well. If we had our druthers, we'd like to deal with all the consultancies that are successful in this space, and become an integral part of the solution that they are recommending and architecting with their investments. We have deals set with a number of these players, but we're not frozen in place and we'll work with as many as we can, as we establish e-business solution centers around the world and work with all sorts of relationships.
CM: How do you believe these relationships will evolve over time?
Barrett: Part of our business is hosting Web solutions through our Intel on-line services function, and some of these relationships are now centered on this aspect and working with people who create solutions where customers de-host that capability.
In other instances, there will be more classic fellow travelers in the space, where a consultant might become involved with some specific application solution for its customer. We think we have some of the best price performance and the best capability from a hardware/client/server standpoint, and the idea is to make the consultant's solution tuned to run best on our hardware. … So, it will run the gamut from relatively formal relations, to informal sharing of road maps and requirements, to working with these solution centers that we've opened.
CM: We understand Intel has broken itself into five different organizations. Is this part of Intel's new business organization that is reaching out to these consultancies?
Barrett: Well, Intel on-line services is out of our new business group, and clearly some of the technology that comes out of our new business group consultants will certainly find of interest. For instance, one of the groups includes the Intel architecture lab, and a lot of the technology that comes out of there is very applicable to Web-based solutions, whether its streaming audio, streaming media, telephony capability. So there is lots of interaction between the new business group and this function, but the bedrock of this association is clearly Intel architecture Web-based solution providing.
CM: Should we expect to see Intel pursue alliances similar to what Cisco and Microsoft have done? Where Cisco invested somewhere near $1 billion in KPMG, and Microsoft invested more than $380 million in Andersen?
Barrett: If the deal is that you have to buy equity in someone to get them to look at your product [the answer is] probably not in the short term. What we're trying to do is form what I would call "win-win" business relationships by bringing great technology and working with people to have them tune their solutions on them. We've got relationships with Proxicom and PwC, who have committed to building applications on our product, but that's a different form of relationship as opposed to going out and saying I want to buy you for an extensive fee.
CM: Is there any reason Intel might find more traditional consultancies such as Bain, BCG, and McKinsey attractive partners, even though they don't necessarily directly play in the Web services space?
Barrett: If they want to move into this space, I think we will soon be playing with them as well. The whole world is moving in this direction, and it's really a matter of how fast you are moving in this direction rather than whether you are going to be involved.
CM: Will we be seeing some of your new consulting partners leveraging your global infrastructure?
Barrett: I would hope so. We now do 60 percent of our business outside the U.S., so we have an international infrastructure in place. We already have had application support centers around the world to support people doing their applications on our architecture, and we're now looking to expand that with 30 e-business solution centers around the world. So people who want a global presence will find that our Internet on-line services program is intended to be international in scope. While we've opened the two facilities inside the U.S., we'll also be up and running in the Japan by midyear, and up and running in India, the U.K., and Latin America. So, there'll be something like seven or eight international locations for people to work with.
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