Querying Experts By Keystroke

Nation's Business, Nov 1, 1998 by Steve Kaufman

Steve Kaufman is a free-lance business writer in San Jose, Calif.

Major consulting firms are targeting small companies with online programs that answer business questions at affordable fees.

Lyle DeWitt used to spend up to five days a month tracking down answers to questions on administrative minutiae. The task was part of his job as controller of TriNet Employer Group, a San Leandro, Calif., professional employer organization that juggles employee administration details for 250 venture-capital-backed companies in California, Massachusetts, and North Carolina.

Sometimes DeWitt couldn't figure out the answers himself. He had to shell out money for an expert, such as the time he paid $2,250 for an immigration attorney to determine whether a foreign postdoctoral candidate conducting research for one of DeWitt's clients was exempt from Social Security taxes. (The answer, it turned out, was yes.)

"Little things like that used to drive me crazy," DeWitt says. 'You have to find out the answer fast. And you have to get it right or face substantial financial penalties."

Today, DeWitt's life is easier because he's a subscriber to an Ernst & Young online consulting program called Ernie. For $3,500 a year, he can type questions into his computer and get a response on each one from an Ernst & Young expert within 48 hours.

That means less tedious work, fewer headaches, and no worries about costly mistakes. "Ernie is kind of like having 50 consultants in my pocket--and for a phenomenally inexpensive rate," DeWitt says.

Welcome to the fledgling world of online consulting, an outgrowth of the Internet and a trend with the potential to revolutionize the tony Brooks Brothers milieu of high-stakes consulting.

Ernst & Young, with Ernie, and Arthur Andersen, with its recently introduced KnowledgeSpace program, are pioneering online consulting in a bid to attract small companies into their fold--companies that generally can't afford such big-name firms' advice. It's a chance for these major accounting and consulting firms to get in on the ground floor with small clients who might become more lucrative accounts eventually

Answers, Not Strategies

Online consulting often gives small firms their first crack at independent consultants, and it supplements mainstream consulting offered by large firms. Clients get solid answers to important questions at a relatively low cost, but they don't get major strategic advice about penetrating new markets or undercutting key competitors. That too might occur in time, however, as artificial intelligence and expert system software evolve to match the analytical capabilities of seasoned consultants.

Today, online consulting is mostly about getting advice from a live consultant, but the stage has been set for more computer-based offerings. Offline, Ernst & Young already sells proprietary software packages that in effect substitute for high-level, face-to-face consulting.

Ernst & Young's Software Selection Advisor, which costs $4,000, offers clients the methodology to implement companywide resource planning, accounting systems, manufacturing systems, and other key aspects of a business.

Another Ernst & Young program, the $3,000 Supply Chain Diagnostic Tool, mirrors the practices used by the firm's consultants to assess the efficiency of a company's supply-and-distribution chain, ranging from where it buys raw materials to how fast it ships finished goods.

"Until now, consulting has always been a people-intensive business," says Tom Hoglund, general manager of Arthur Andersen's KnowledgeSpace. The consultant "jumps in his car, drives to his client spends two hours with him, and bills him for $500," Hoglund states. "It's one-on-one service delivery

"Now we're seeing the start of one-to-many service delivery. The physical encounter becomes a virtual encounter as one consultant services a lot more clients via the Internet and offers some of the same advice for much less money

The advantages of online consulting seem compelling. TriNet's DeWitt, for example, uses the Ernie program to get fast, accurate answers to questions on topics such as the intricacies of 40 1(k) and so-called cafeteria benefit plans, health insurance, payroll taxes, and immigration issues.

"I know that I'll get the right answer back in two days and that I don't have to worry about where the data is and when I'll get it," DeWitt says. "That saves me a lot of stress in a business where everything seems to be due yesterday"

Sorting And Routing

Ernst & Young, which serves emerging growth companies extensively, started online consulting in May 1996. It has about 1,000 online clients, more than triple the number it had a year ago, says Brian Baum, director of online consulting services. Half of the clients have revenues under $20 million a year.

Questions put to Ernie are sorted according to subject by its "knowledge providers" and routed through Ernst & Young's intranet to the appropriate professional. The firm fields questions in seven categories, including general management, human resources, information technology taxes, and corporate finance.