Accounting Scandals May Create Need For Help With Internal Controls

Marv Richardson, managing director and CTO of Chicago-based Lante, said that if Enron is any indication, he expects to see a short-term negative ripple effect in IT spending.

However, Richardson said he also believes after the initial shock wears off, companies will turn to outside consultants to improve internal controls and compliance reporting. The interest from Lante's energy sector clients, said Richardson, is a good indication.

"Interestingly, we are seeing heightened interest in compliance management," said Richardson. "Specifically, demand for the use of interactive dashboards for monitoring performance and reporting on regulatory and policy metrics."

Lante last year shifted its focus from B2B to business-partner integration services and has since aggressively built capabilities, alliances and demonstration prototypes using what it calls "the next generation of realtime Internet technologies."

Most recently, Lante unveiled a deal with Altio, an XML presentation and server solution company, to jointly develop, market and sell solutions aimed at helping enterprises improve their business processes.

The alliance focuses on delivering applications such as executive dashboards, which aggregate content from internal and external systems and provide customized, realtime information.

Lante's focus on the energy sector comes in part as a result of its previous work for the industry coupled with the January 2002 acquisition of Luminant Worldwide. Global 2000 clients that came with the $5.2 million acquisition include British Petroleum and Lockheed Martin.

Richardson said it remains to be seen if potential demand will be stalled by sales cycles that are already stretched by companies hesitant to spend more money on big IT projects right now.

"That's possible for specific companies enduring heightened scrutiny," said Richardson. "Generally speaking, the more likely scenario is for prospects to postpone contracts that they otherwise would have been prepared to undertake."

While some Lante customers have expressed worries about working with combination audit/consulting firms, those clients have singled out a particular company or software vendor.

Other, smaller, privately held solution providers such Glastonbury, Conn.-based Tallan said they aren't hearing much concern from customers in the wake of the accounting scandals.

"I think the impact will be felt across all spending, not just IT," said Doug Rivard, president and COO of Tallan, a majority-owned operating company of CMGI.

Wall Street, said Rivard, appears to be extremely skittish while waiting for the next Goliath to fall. "It's forcing companies to take a second look at their current and past reportings. Delivering bad news, and not just of scandal proportion, will get your stock hammered," said Rivard.

In the wake of sluggish revenue, said Rivard, a majority of companies will most likely still work to meet earnings numbers through expense reduction, or maybe acquisition.

For a small company such as Tallan, it's not any harder to sell business to the Global 2000, he said. The company, however, continues to hold its own with a hard-fought track record even in the midst of a "horrible economy," he said.

As for sales cycles, Rivard said with sales cycles right now standing at six to nine months long, he does not imagine them getting much longer.

"Trust me," said Rivard. "Sales cycles are long enough now."