Few businesses have been hit harder by the combination of last year's dot-com meltdown and this year's economic slowdown than Web design and consulting firms.
Once-thriving Web design companies have downsized or even closed down in recent months. Among the most notable are Boston-based Viant Corp. and Scient of San Francisco, which implemented massive layoffs in March and April, respectively, and Chicago-based MarchFirst Inc., which filed for Chapter 11 bankruptcy protection last month.
Closer to home, Internet consulting company Proxicom Inc., founded by Washington Capitals minority owner Raul Fernandez, is entertaining offers from suitors for a fraction of the company's market value less than one year ago.
But Web consulting may prove a well-worn adage: The bigger they are, the harder they fall. A variety of smaller consulting firms have found profitable niches and continue to expand their businesses in the face of the slowdown.
One such firm, privately held Doceus Inc. of Washington, is turning to software licensing as a bulwark against the downturn. It will still rely on its bread-and-butter consulting and Web design services, but sales of its software could provide a multimillion-dollar annual revenue stream, according to Elliott D. Frutkin, Doceus president and chief executive.
At a gathering of current and prospective clients last week, the company pitched a new software package designed to help nonprofits and associations -- about half of Doceus's existing clients -- manage event planning and Web content online.
Frutkin, 25, said Doceus is growing, not downsizing, despite the toughening economic times that have put larger Internet consulting firms in a crunch. Frutkin, who co-founded Doceus in his American University dormitory room in 1995 with his childhood friend Harry Schechter, said his entrepreneurial spirit, not hard times for his firm, drove him to think of the new component to expand his business.
"We're doing well, but I just identified [licensing software] as a way we can do even better," Frutkin said.
Frutkin said Doceus, with about 45 employees, is profitable and generated $3 million in revenue last year from consulting and Web design. He expects the company to nearly double revenue in those areas this year, to between $5 million and $6 million.
Doceus is not alone in adding software sales to its consulting business. Last week, Cysive Inc., a Reston Web development, design and consulting firm, said it also plans to start selling its own software in July.
Doceus last week launched customer testing of its software and plans to sell it to new prospects as well as existing customers, including well-known media companies Discovery Communications Inc. and Lifetime Entertainment Services.
The software is designed to help groups manage content on their Web sites and tasks such as keeping track of attendees for conferences and events. Doceus is pitching it as a cheaper alternative to its customized services.
Doceus's Web consulting and design services cost clients an average of $200,000 per project. The new software will carry a one-time license fee of between $20,000 to $30,000. Optional Web hosting, site maintenance and upgrades will range from $500 to $3,000 per month, Frutkin said.
The Washington D.C. Technology Council, a current customer of Doceus's Web design services, has signed up to test the new software for $10,000. A handful of other organizations, including a former World Bank project called Global Development Network, are also considering trying out the software, Frutkin said.
Initially, the software will help associations plan and organize conferences, by helping them send out e-mail invitations and manage a list of attendees from the planning stage to the finish of an event. The software puts Doceus in competition with Arlington-based Cvent Inc., a seller of Web-based event-planning software.
The competition among Web-based event-planning services has thinned over the past year, as companies such as consumer event-planning sites Mambo.com and TimeDance.com have gone out of business. Yet the field is still crowded. In addition to Cvent, Doceus faces competitors such as Event411 and B-there.com.
Doceus is hoping its focus on nonprofits and associations will give it an edge over those competitors, which mainly target businesses.
Doceus plans to add to its software other features designed to appeal to its target clients, such as tools for facilitating contributions and donations online and sending thank-you e-mails to donors, as well as a component for managing content on an association Web site.
"We are using Cvent and we are looking at some other things because we are looking at how to do things best for our customer base," said Charlotte Hayes, president of the D.C. Technology Council.
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