IT Factory Dissolves In Face Of Tough Market

Citing a tough third quarter exacerbated by the fallout from the events of Sept. 11, the Boston-based company is selling its assets and has consolidated what remains of its technology business in Copenhagen, confirmed Lars Johansen, who was CEO of the privately held company.

Johansen said companies acquired by IT Factory in the past two years are negotiating to get their businesses back. IT Factory scored a lot of ink in the past two years with acquisitions of eight companies, including Solutions By Design in April 2000, ECMS a year later and Synergistics in May 2001.

The Synergistics deal was particularly "challenging," IT Factory sources said. Cincinnati-based Synergistics specialized in knowledge management tools, but "this was an acquisition that stopped performing once it was acquired," said one IT Factory source.

At its height, IT Factory employed 425 people.

Part of IT Factory's problems may have come from overexpansion, but solution providers said the company made some strategic mistakes. "They were building an architecture atop [Lotus Domino. Why would a third party do that and not Lotus itself?" asked Constantine Photopoulos, president of Eden Communications, a Saratoga Springs, N.Y.-based Lotus partner that sometimes competed with IT Factory.

IT Factory also fell victim to curtailed IT spending, Johansen said.

"We had as much revenue in the first half of this year as all of last year. Business was going well until the third quarter," Johansen said, noting that after Sept. 11, two large insurance companies deferred planned projects until next year.