Europe: often perceived by US companies as a somewhat awkward land mass east of New York with too many different countries and languages, a place that would be really great for business if only it were a little more like America.

But as many traditional multinationals have already found out, business is good in Europe and they have built up established networks throughout the continent on the back of their well-known brands, hefty investments, advertising, alliances and acquisitions. This is all deeply historical for Coca-Cola, Ford, Citigroup, Du Pont, Microsoft, Boeing etc. However, in the past two to three years, many smaller US companies have taken advantage of America's head start in the use of computers as a business tool and more widespread acceptance of the internet to take their experiences to Europe.

Take three US companies. All relatively young, founded between 1993 and 2000, all with a similar backbone of branches in the US and now beginning to expand in Europe. Akibia, Extraprise and Inforte have an impressive combined client list of blue-chip financial, industrial, retail, internet and IT-related US companies that would provide a good basis for any investment portfolio. All three companies specialise in consultancy for Customer Relationship Management (CRM), or putting companies "in touch" with their best customers and their buying patterns. And all three have an alliance with Siebel, the leading CRM software supplier, to implement, maintain and upgrade Siebel CRM programs. But each company's approach to the burgeoning European market is distinctly individual.

"The world has become much more integrated because of the internet," says Adam Honig, chief executive of Akibia, which is based in Boston with branches in New York, Chicago, Dallas and San Francisco. Akibia's move into Europe began in London, largely because that was where Siebel's second-highest "density" of staff was based after the US. As his company is closely linked to Siebel, it was a "pretty logical business decision", Mr Honig says. The high rate of growth in the UK's CRM market was another draw. He is very upbeat about growth prospects for CRM sales in Europe, even if the continent follows the US into an economic downturn. "There is so much room to expand," he says.

Although Mr Honig recognises the "cultural empathy" between the US and the UK, he chose to establish Akibia's European headquarters in the Netherlands. "American companies may think of the UK as a springboard to Europe, but Europe doesn't see the UK the same way. The sense is that the UK is a bit remote from the EU and not a fully fledged 'member'."Noting that to "get to Europe from London" requires at least a few hours' travel and "a passport", tends to reinforce this view, as does the UK's approach to adopting the euro.

Language barriers

Mr Honig argues that the perceived language barrier in Europe is not that big an issue because many Dutch professionals are bilingual anyway. Staffing issues were also a consideration, in that skilled IT staff are harder to find, and more expensive, in the UK than in the Netherlands. "Salaries are around half that of the UK," he says, conceding that the high costs of setting up in London were also a factor. Extraprise, which is also Boston-based, has similarities and marked differences in its European strategy. James Beagle, vice president for international operations, shares Mr Honig's outlook for growth in Europe's CRM market. "The growth potential for Europe is phenomenal. The compound growth rate is 30 per cent a year, and overall growth for the EU stands at around 50 per cent per annum over the next three years," Mr Beagle predicts. He notes that the CRM market is more mature in the US, which is now into its second generation of CRM, whereas Europe is still in its first-generation wave.

European expansion began in April 2000 with the acquisition of two UK service-based companies: Pointer Consulting (a CRM consultancy) and Bridgewater (a growth management consultancy). "The idea was to gain critical mass and momentum quickly," says Mr Beagle. "We looked at the alternatives and decided to acquire, forming a core group of around 50 people." Extraprise employed a mergers and acquisitions expert who identified more than 60 companies fulfilling its criteria: similar strategy; technical and internet capabilities; and CRM - especially Siebel - credentials. "The fact that there were so many potential companies illustrates that the UK was an ideal place for our European headquarters.

The UK was an early adopter (of CRM) compared to Europe, and the market was taking off," says Mr Beagle.He notes that softer issues, such as cultural similarities, also held sway. The opening of the Amsterdam office in July 2000 was by "direct entry" from the UK base through work for the Dutch operations of UK-based clients.Mr Beagle says it is easy to both resource staff from the UK and to run projects with multilingual teams. He notes that in the London office, 12 different languages are spoken and one-third of the staff are not British.

Cultural issues

In January this year, Extraprise opened an office in Munich, and is now in the process of establishing its Paris office. Mr Beagle, who is British, concedes that the "cultural issues" of setting up in both Germany and France are "more significant" for a US company. Additionally, he says the recruitment market is "tough", both in terms of finding staff and dealing with the complexity of labour laws, social security issues and different approaches to stock options. The company is now standardising its European financial accounts in euros and sterling.The theme of the UK as a springboard to the rest of Europe was also a prime factor in the expansion strategy of Inforte. "The UK is the 51st state of the US," says Phil Bligh, Inforte's chairman, CEO, president and founder. But he notes that there is now more two-way traffic, and that European companies are starting to use the UK as a launchpad for developing their US businesses, due to the strong presence of US companies in Britain.

Established in 1993 in Chicago, Inforte has offices in Atlanta, Dallas, Los Angeles and San Francisco. The west coast US offices now provide 55 per cent of revenues due to rapid growth in CRM. Mr Bligh views the UK potential in a similar mould, for many of the same reasons as the other two companies; high growth for CRM implementation and consulting, plus the cultural links. Inforte's London links are reinforced by Mr Bligh's consulting past. Richard Ingleton, head of Inforte's London office and director of international expansion, worked with Mr Bligh before he left for Chicago. Again the Siebel connections are a factor. Inforte is one of Siebel's oldest partners, the two having worked together since 1995. "Siebel is very big in the UK, there is lots of room for growth," says Mr Bligh. He thinks the next wave of opportunity will be Germany, then France. But it is a fast-moving sector and a lot is going on. "Demand chain management is the next big thing," says Mr Bligh. "That is where the growth is for the next three to five years: in the US... and Europe, with the UK leading the pack."

Inforte has hired many European staff and has several pan-European projects covering two or more countries. "Sometimes it's a question of acting local and thinking global," says Mr Bligh.The views of this trio are very much in tune with a recent survey on doing business in Europe. Conducted late last year by TNS Harris, a London-based market research group, European company executives ranked the UK as the best place to set up a company based around, or related to, the internet. Germany and France were next in line. The survey of 1,477 senior managers at companies with average annual sales of $1.64bn (£1.1bn) covered the UK, France, Germany, Italy, Belgium, the Netherlands and Spain. However, cultural affinities were surprising. Nearly one-fifth of the managers said they would rather become American if they could change their nationality, ahead of Switzerland, France and Italy. The UK managed to scrape fifth in the list. So, after all, European companies appear to have a surprising amount in common with their counterparts in that large, awkward land mass to the west of the UK with its many states, diverse cultural mix, strange laws and accents.

annie.counsell@ft.com