Twelve months after setting up shop in London, Sapient Corporation the Cambridge Massachussetts-based systems integrator and software development house reports that business from its European outpost is slow accounting for no more than 7% of total revenues. Sapient followed some of its multinational clients to Europe and entered the market in July 1998 using the UK as a convenient staging post for expansion to continental Europe. But the company has found European businesses unwilling to sign with a services company that only has a presence in London. Des Varady, senior vice president told us that this has pressed the company into looking to establish a presence in Scandinavia, the Netherlands and business areas in the south such as Barcelona and Milan.
Sapient is perhaps best known for its use of fixed price/fixed time client/server projects that prove attractive to businesses looking for cost predictability. It moved to n-tier web developments as demand grew among a client base that includes BancBoston, Merrill Lynch, Wells Fargo, Land Rover and Siemens Electromechanical Components. Sapient generally targets clients in the verticals of financial services, utilities, manufacturing, communications, healthcare and government.
Last week Sapient announced results for the first quarter ending March 31, 1999 showing revenue up a healthy 82.43% at $56.06m on revenue for the first quarter 1998 recorded as $30.7m. Revenue for the year ending December 1998 was recorded as $160.37m up from $90.36 for the previous year. Revenues from Europe accounted for about $12m in fiscal 1998. Gross margin for the year came in at 51.6% for the year ending 1998 and 52% for the first quarter 1999.
Varady says that there are three main focus areas in e-commerce for Sapient: e-commerce involving transaction processing, e-business involving distribution, human resources, procurement and integration with back-end systems, and ‘rapid’ implementation of packaged software from vendors such as Broadvision and Netscape. This currently accounts for around 10% of business. Interestingly, around 40% of new business is said to be coming from .com start-ups, according to Varady.
Some 50% to 55% of Sapient’s overall revenue is now derived from the e-commerce/internet sector of its business. Following the March 1999 $55m dollar acquisition of Adjacency Inc, a San Francisco-based internet and e-commerce consulting firm and the August 1998 acquisition of leading interactive design firm Studio Archetype, Sapient Corporation claims that it is now able to offer a full-service e-business support.
Sapient has managed a churn rate among its professional services staffs that’s less than 15% – well below the average in an industry where experienced consultants are a principal asset. Sapient’s headcount growth has kept pace with its revenue increases. The company grew from approximately 800 employees at year-end 1997 to 1,450 employees at year-end 1998. As of March 31 1999 the total number of employees including employees of Adjacency stood at 1,647 up from 1,450 for the previous quarter. Currently Sapient has 60 consultants in Europe working on projects with an average size of about $4m, according to Varady.
Sapient says it can guarantee on-budget and on-time delivery using its proprietary QUADD (Quality Design and Delivery) process. QUADD is a workshop-based method that emphasises client participation to create time-critical business and technology project deliverables. A rapid implementation plan workshop is used to identify a client’s needs and develop an action plan. A subsequent design workshop outlines proposed process changes and the technology required to achieve and support those changes.
Sapient sells a range of services that span implementation and integration of packaged software applications, custom software development, implementation of ERP systems, production support, and business and operational consulting.
