Catching its competitors asleep at their servers, Ernst & Young LLP, New York, is picking up a nice piece of change with its World Wide Web-based Internet service named Ernie: Your online business consultant (http://ernie.ey.com).
At $6,000 for an annual subscription, Ernie has racked up impressive numbers in its first six months: more than 1,000 queries, over $1 million in revenues and more billings for the firm.
Launched last May, the interactive business program has attracted 250 organizations, nearly 90 of which are new customers. It covers areas such as accounting, corporate finance, human resources, information technology, personal finance, process improvement and taxes.
With its overnight success, Ernst & Young added a customized business research and analysis function to Ernie in October. It lets subscribers commission an in-depth analysis of information, custom-tailored and interpreted with the specific needs of the client's unique business situation in mind. The price of this service depends on the scope of the project. Future plans for Ernie include strategic alliances with content providers. The company also is planning to go international with its model; Ernie is currently limited to the U.S. market.
Judged by their Web sites, none of Ernst & Young's five competitors among the Big Six accounting firms (Arthur Andersen, Coopers & Lybrand LLP, Deloitte & Touche LLP, KPMG Peat Marwick and Price Waterhouse LLP) nor top-tier management consulting firms such as Booz-Allen & Hamilton or McKinsey & Co. offer anything like Ernie.
Officials at the companies who responded to telephone queries about competing services said they did not offer similar services. While none of those interviewed visited the Ernie Web site, all said it was unlikely that their firms would offer such a service.
Marie Lerch, director of public relations for Booz-Allen & Hamilton, McLean, Va., said, "We have a Web site and are expanding into a constellation of sites with more content. We do not have any plans to sell consulting services over the Internet; we serve a more targeted client set."
More direct was Bill Matassoni, the partner responsible for communications at McKinsey and Co., New York. When asked whether the firm had any plans for offering a service like Ernie, he replied, "I doubt that we would do anything like that. Our reputation rests on personal contact and follow-up with clients." New York-based KPMG Peat Marwick Webmaster Dave Goessling said, "This is not something the firm is planning in the near
According to Brian J. Baum, director of Internet Service Delivery for Ernst & Young's Entrepreneurial Consulting Practice, New York, Ernie targets entrepreneurial firms, defined as fast-growth companies with $200 million or less in annual revenues.
"Ernie responds to a market need for a one-stop shop for business questions and helps expand the capability of our staff. While we designed it for more established high-growth companies in consumer products, we are starting to see international interest," says Baum.
Ernst and Young tracks subscriber usage and finds the majority of questions come from the human resources department and sales. From the outset, the primary target was the 9,000 clients with whom Ernst & Young enjoyed a tax or audit relationship. In the first six months, 65 percent of subscribers are existing clients and 35 percent are new, according to company data.
The online service gives subscribers access to a password-restricted Web site. The subscribing companies can sign up any number of users. Once in, users fill in forms by choosing a category, asking a specific question and providing background information. Typical questions include: What's the best way to gear up for an initial public offering? How do I find out about reciprocal import duty regulations? Where can I explore trends in office design for software developers?
Visitors to the Web site find a "Q of the day" and the Ernst & Young answer. A recent query was "What are considered 'best practices' for reducing the administrative effort for purchasing small dollar items?"
The opening paragraph of the 422-word answer read: "Several thoughts come to mind regarding the reduction of administrative effort for purchasing small dollar items. A number of companies have significantly automated the process by using systems that will automatically generate an order within simple minimum/maximum ordering rules. The system is linked to an [electronic data interchange] tool, which transmits the order automatically to the vendor. The vendor acknowledges electronically, in the most sophisticated environment, and invoice and payment are electronic."
After users type in the information and press the submit button, the high-tech, high-touch combination begins. Through a program written in Java, the questions are sent to Ernie, sorted manually by broad subject category and routed by e-mail through Ernst & Young's intranet by a focal point knowledge provider, or fkp, to the professional most knowledgeable about the industry, topic or issue. Replies are sent back through the company's intranet and placed in the user's account within two business days, where the subscriber logs in and picks it up.
In another part of the service, subscribers can scroll through a database of answers to frequently asked questions or FAQs. Ernie also offers a news clipping service in cooperation with Farcast, a news retrieval service that subscribers themselves can custom-design. Users specify the information they want to gather by selecting key words to search among press clippings and articles produced by a variety of news sources, such as AP and BusinessWire. Once the items are collected, Ernie transmits them by e-mail to the user's Internet address.
Baum believes Ernie is an excellent example of a learning organization practicing knowledge management by leveraging its knowledge assets - more than 21,000 people in 89 offices in the United States.
"One of the most difficult challenges was defining what a question was, that is, what constituted a question," says Baum. "Our intent was to offer a first level service. We are now in the process of stabilizing the model and getting a better grasp of how to manage and introduce this type of service for clients and other interested parties."
The Ernie platform integrates the Internet, a corporate intranet and Lotus Notes. The Internet is the interface between the subscriber and Ernst & Young. Client questions are routed via the company's intranet to its network of knowledge workers. That person then uses his or her experience and resources, as well as a proprietary Ernst & Young, Lotus Notes-based knowledge web, to gather and package their reply. When completed, the answer is sent by the knowledge worker back to the client through the Internet.
According to Ernst & Young Web materials, online sales of goods and services are expected to top $60 billion in 1997. Industry observers project that figure will grow to $1.65 trillion over the next decade. And a recent survey of CEOs conducted by Forbes magazine predicted that businesses will derive 40 percent of their revenues from the Internet within 10 years. Further, over the next three years, many companies and individuals who exchange information electronically in electronic commerce or electronic data interchange are expected to increase at a compound annual rate of 46 percent.
Nearly 90 firms beta tested Ernie during a four-month live pilot test in the fall of 1995. Users asked questions on subjects ranging from new product launches and pending business legislation to human resources issues and methods of cost accounting.