The Agents of Change

Welcome to the 500 biggest brands in IT professional services. Most are familiar companies with the same shingle, a few are veterans of the VARBusiness 500 now sporting refurbished names, and the remainder are new to the ranking.

New and old combined, these companies are the leading solution providers in the industry and have enormous influence. Collectively, they generated $231 billion in revenue last year. That translates to a sobering 21 percent gain from $191 billion in 1998. And the price of admission grew even more this year: To qualify for the 2000 ranking, a company needed $22.5 million in revenue, 27 percent more than the $17.8 million reported by the No. 500 company last year.

Clearly, smaller solution providers are growing. But the big ones are getting bigger, too. IBM Global Services, on top yet again, posted $32.2 billion in fiscal 1999 revenue, up from $29.0 billion the year before, an 11 percent rise. How significant is that? Let's put it in perspective: If IBM Global Services had spun off the additional $3.2 billion into a separate company, the new company would have vaulted into the ranking at No. 13. And its revenue would have exceeded the combined revenue of the bottom 100.

While IBM continues to outpace EDS Corp. by a wide margin, many others on the VB500 are flourishing as well. Membership in VARBusiness' Billion-Dollar Club, for example, continues to swell. This year, 42 finalists reported 10-digit revenue, compared with 34 on the 1999 ranking, and 75 companies weighed in with at least a half-billion dollars. Even so, 80 of our ranked companies suffered an outright decline in revenue--three Billion-Dollar Club members among them--and as we went to press, Inacom Corp. announced its Chapter 11 filing.

This is the sixth VB500 and our 12th ranking of solution providers. In that time, we have witnessed massive change. Nevertheless, the Internet and e-business made 1999 one for the record books. Last year, we added the fledgling Web integrator business model to the four mainstays (consultant, network, software and total solution provider). Then 13 Internet-focused companies registered among the 500. This year, we expanded the range of e-business categories to include four specialties (ASP, interactive agency, ISP and strategic Web consultant), and grouped them with Web integrator/developer under the umbrella of "Internet professional services organization."

The result? Last year's baker's dozen of e-specialists rose sixfold to 78 companies on the 2000 VB500. Those that focus on at least one of the five e-business areas consist of the original 13 Web integrators from the 1999 ranking, plus 41 newcomers and 24 others from last year's 500 that have rebranded themselves as e-solution providers. These dynamic innovators are leading the industry and redefining the role of service providers who are downright offended by their formerly coveted label of value added reseller.

Granted, many of them continue to deploy technology with a hardware component. But they have a new dignity that demands a more elegant name. They have become their customers' strategic business partners, allies with an enduring stake in the companies that rely on their services. In some cases, their mutual dependence even extends to an exchange of equity.

Next year's ranking will no doubt include dozens more Internet professional services organizations. Nipping at the heels of the 78 among the current 500 are a pack of e-innovators that just missed the cut--more than a few with run-rates exceeding 100 percent. As those companies evolve, they are stretching the boundaries of the solution provider space, forcing us to broaden the range of specialties the VB500 covers. And with each successful customer transformation, they narrow the gap between business and e-business.

In the end, there is only one kind of business, and it revolves around your customers. Our 500 finalists get it. Do you? Let me know at avogel@cmp.com.