Akamai Technologies is trying to do what few of its contemporaries have been able to —
adapt a business plan written during the boom to produce results after the swoon.
The initiative, dubbed Akamai 2.0, represents a broad rethinking of the Cambridge, Mass., content delivery company’s sales, partnerships, product mix and capital
expenses. Analysts briefed on the overhaul, liked what they heard.
“We believe Akamai is positioned to emerge in a position of strength as it wins new customers and enhances its value proposition,” investment firm Goldman Sachs
& Co. wrote in an investor’s note.
In addition to praise from industry watchers, Akamai 2.0 has already generated some positive financial results. In its most recent quarter, the 3-year-old company notched
customer wins and cut cost (although some of the savings came from layoffs and an office closing).
A central shift for Akamai 2.0 comes in its sales strategy. In 1998, when the firm burst on the scene, pitches were made to Internet companies, looking to improve
the performance of e-commerce or media Web sites.
The percentage of the company’s business from dot-coms has fallen (now 15 percent) in favor of larger more established customers such as computer giant Terra Lycos .
As a result of its large company focus, Akamai cut its telesales unit. Free-spending Internet companies responded well to cold calls, while larger, more
cost-conscious businesses, didn’t, the company explained.
When sales staffers do meet with prospective buyers, they are quick to point out how Akamai products and services fit into the overall IT infrastructure, and how
they can save companies money.
“The sales cycle for Akamai 2.0 is longer and more complex, but Akamai’s value proposition is far higher . . . and the rewards for Akamai should be greater,”
Goldman Sachs concluded.
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Other highlights of Akamai’s new approach include:
- Agressive partnering — In recent months, Akamai has inked alliances with IBM, Compaq
,
BEA and Interwoven.
- Continued expansion of Akamai’s network — Akamai servers are now located in over 1,000 networks worldwide.
- Commitment to improve cash flow — In discussions with analysts and reporters, the company’s CFO said Akamai enjoys the recurring revenue of a telecom
company with the high margins of a software developer.
Of course, the wild card for any business is the economy, which has been lagged for several quarters, and was further slowed been by the terrorist attacks of Sept.
11. And no one is predicting that the company’s stock, currently trading around 3.42 per share will ever reach 375, like it did in January 2000.
But given its technology, revamped approach and dedication to the bottom line, Akamai looks like a company that can successfully operate through a rapidly
changing market. Many a once high-flier would be happy to say the same.