Inventing a market
A number of consultancies and integrators are heeding the privacy call. Big-time firms such as Arthur Andersen, Deloitte Consulting, E&Y and PricewaterhouseCoopers all have launched privacy consulting activities. IBM Global Services also offers such services to "assess, create and monitor policy and procedures to protect the privacy of information," according to the company.
Internet professional services firms and Web integrators, which face increasing competitive pressures from the traditional integration community, are getting into the privacy act, as well.
All of that activity has led some observers to declare the birth of a privacy consulting market. "What we are going to see is a market for e-commerce and privacy integration, going in and doing turnkey solutions," says Steven Lucas, chief privacy officerââ,¬"the latest in the line of c-level executivesââ,¬"at Persona Inc., a maker of personal information tools and a privacy consulting firm. While few question that privacy services are in demand, opinions differ regarding how important the market will become and how those services will be delivered.
Horst Joepen, CEO of Webwasher.com, a Siemens AG spinoff that markets privacy and content-filtering products, says privacy will be the next hot market, following in the footsteps of enterprise resource planning and customer-relationship management. "Privacy consulting will probably be the next wave," he says.
Big Five firms stand to collect seven-figure fees from full-blown privacy engagements for Global 1000 customers. "There's money to be made, and people are going for it," says David Zimmerman, chief technology officer of YOUpowered.com, which develops privacy-protection products for consumers and businesses. He credits PricewaterhouseCoopers with "spearheading" the concept of privacy consulting.
However, most of the Internet professional services firms that are starting to offer privacy services haven't yet broken them out as standalone practices.
Etensity, an Internet professional services and development firm, offers privacy consulting as a component of an overarching e-business solution. "We haven't found people running around looking for an online privacy solution," says Connie Ling, chief marketing officer at Etensity. "We lead with the business application piece, not online privacy," she adds.
Emerald Solutions, another specialty e-services firm, also treats privacy as a component of a broader offering. The company includes privacy as part of its infrastructure services, which include such elements as security, database administration and stress testing. Jim Ruggiero, chief technology officer at e-business consultancy Novo Corp., says the creation of a separate privacy practice might be warranted if the federal government were to pass an online privacy law. Presumably, a law would create enough turmoil to justify a distinct service line.
Finding dollars in market dislocation has long been a staple of the consulting trade. And for a foretaste of what disruption a comprehensive federal privacy law might cause, one only has to look at the April enactment of the Children's Online Privacy Protection Act (COPPA). The law prohibits Web sites from collecting profile information from children under 13 without their parents' consent. A number of Web sites deemed compliance with COPPA too costly, in some cases shutting down operations geared toward the under-13 set.
But even without a nationwide mandate, privacy concerns appear to be growing among e-businesses. Marshall of Emerald Solutions says privacy has become a hot button among his customers in the last six months. Clients that first were interested in just getting the rudiments of e-commerce up and running now consider privacy a top priority.
"They're matured to the point where they are thinking of needs other than food and sleep," Marshall says of his e-commerce customers. To reach "the next level of maturity," he adds, those companies must cater to their customers' comfort level. That means developing privacy policies and deploying processes and tools for ongoing management. And to the extent companies are outsourcing those functions, both traditional integrators and their Internet services rivals have a business opportunity within their grasp.
