04/08/23© Andersen Consulting 2000 1

Lecture – Management Consulting: An Introduction

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AGENDA

Introduction/Expectations

Example consultant company

Consulting: Nature, Trends, Careers

Selected Methods (frameworks)

Research (some basics)

Graphics (from data to chart)

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Our Mission: Helping our clients create their future.

ACCENTURE: MISSION AND VISION

Our Vision: To become one of the world's leading companies, bringing innovations to improve the way the world works and lives.

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• One Global Firm – Act to enhance the collective values of the global partnership, while sustaining local culture.

• Stewardship – Think future oriented; act and invest to build a stronger firm for tomorrow.

• Integrity – Act with openness and honesty. Always.

• Respect for the Individual – Treat each person as we would like to be treated.

• Quality Client Service – Understand and meet client expectations 100 percent of the time.

• Best People – Are highly competent and make a commitment to excellence, teamwork, and the success of our clients.

ACCENTURE: CORE VALUES

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1989 • Andersen Consulting

becomes a separate business unit from Arthur Andersen

• $1.6 billion• 21,400 employees

1991• Horizon 2000 Initiative to

develop mission and strategic plan

• $2.3 billion• 25,000 personnel

1993• Andersen Consulting issues

its first annual report• $2.9 billion• 27,000 employees

1997• Andersen Consulting creates a global

network of communications-focused solution centers in an effort to set the standard for speed and quality of performance

• $6.6. Billion• 53,000 employees

1998• $8.3 billion• 65,000 employees

2000• Joe Forehand becomes Managing Partner

and introduces the 100 Day Plan• Andersen Consulting wins arbitration

against Arthur Andersen

01.01.01• Accenture, formerly known as Andersen

Consulting

ACCENTURE: IMPORTANT MILESTONES

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ACCENTURE GLOBALLY

Employees: over 65,000

Countries: 48

Revenue ‘99: 8,9 Billion USD

Clients:

• The vast majority of Fortune 30 most profitable global public companies

• Nearly 75% of Fortune 200 global companies

• 100 of the most significant “Industry Standard” Internet companies

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ACCENTURE: DEVELOPMENT OF REVENUES

(U.S. Billions)

1993

$2,876

1994

$3,452

1995

$4,224

1996

$5,302

1997

$6,647

1998

$8,3

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ACCENTURE: GLOBAL PERSONNEL GROWTH

1997

53,426

1996

44,801

1995

38,027

1994

32,711

1998

65,134

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Americas

EMEAI

Asia/Pacific

Hamburg

Frankfurt

München

DüsseldorfBerlin

WienZürich

ASG – Austria, Switzerland,

Germany

ACCENTURE IN ASG

• 2,750 Employees• 7 Offices• Revenues: 1,24 Mrd. DM

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Global Competitive Overview

Strategy

Digital Equipment

McKinsey

Andersen Consulting

Organization Processes InformationTechnology

Business ProcessManagement(Outsourcing)

Cap Gemini Sogeti

UNISYS

IBM

Computer Sciences

EDS

Boston Consulting

Booz Allen

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ACCENTURE: MARKET UNITS

Financial Services• Banking• Health Services• Insurance

Products• Automotive, Industrial Equipment, Travel & Transportation• Consumer & Pharmaceutical Products• Retail

Communications & High Tech• Communications• Electronics & High Tech• Media & Entertainment

Resources• Chemicals • Energy & Natural Resources• Utilities

Government

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ACCENTURE: SAMPLE CLIENT LIST

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AGENDA

Introduction/Expectations

Example consultant company

Consulting: Nature, Trends, Careers

Selected Methods (frameworks)

Research (some basics)

Graphics (from data to chart)

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NATURE, TRENDS, CAREERS

Nature and purpose of consulting

Recent trends and current challenges

Staff and career paths in consulting

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NATURE AND PURPOSE OF CONSULTING

Nature and Purpose of Consulting

• Definition of „Consulting“

• Brief look into history

• Different types of consulting

• Consulting market overview

• Consultant: Profession description

• Consulting strategies

• Short overview over the consulting process

• Reasons for clients to hire external consultants

• Guidelines for the client - consultant relationship

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DEFINITION OF CONSULTING

Definition of Consulting

• „To give expert advice or provide expert counsel.“ (IKS)

• „Consulting provides value by diagnosing, strategizing, designing, constructing, integrating, operating, or implementing solutions. Consulting utilizes relevant knowledge, based on integrity and objectivity, in both expert and advisory roles.“ (Consulting Services Team)

• „Consulting is whatever a consultant does." (Cambridge Computer Services)

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CONSULTING HISTORY (1/2)

Brief look into history

• 1532 Macchiavelli‘s „Il Principe“

• 1886 Foundation of the „analytical testlab“ by Arthur D. Little

• 1895 „A piece rate system“ by F. Taylor

• 1909 Foundation of Arthur D. Little, Inc.

• 1911 „The principles of scientific management“ by F. Taylor

• 1911 „Motion Study“ by F. Gilbreth

• 1912 „Consulting Firms“ by F. Gilbreth

• 1914 E. Booz sets up Business Research Services

• 1925 J.O. McKinsey starts his Consulting firm

• 1934 Urwick, Orr & Partners: Management ist lehr- und lernbar

• 1939 Peter Drucker „The end of economic man“

• 1947 Foundation of the Travistock Institute

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CONSULTING HISTORY (2/2)

Brief look into history

• 1949 Robert Wiener „Cybernetics“

• 1950 Marvin Bower becomes CEO of Mc Kinsey and starts with the expansion

• 1951 First Deming-Avard for Quality in Japan

• 1954 Foundation of the BDU

• 1954 Peter Drucker: „The practise of management“

• 1957 Argyris: „Personality and Organization“

• 1959 Herzberg, Mausner, Snyderman: „The motivation to work“

• 1960 Mc Gregor: „The human side of enterprise“, Maslow: „Motivation and Personality“

• 1963 Foundation of Boston Consulting Group

• 1965 Foundation of the first two Business Universities in Great Britain

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EVOLUTION OF CONSULTING FOCUS

1980 1985 1990 1995 2000 2005

Quality Management

Lean Management

Re-engineering

ERP projects

Web Technology

E-Commerce

CRM

M-Commerce

Strategy

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TYPES OF CONSULTING

Different types of management consulting Strategy

• Advice and counsel about corporate-level or business-unit strategies

Operations Management

• Figuring out how to improve the efficiency or productivity of how a business works

Human Resources

• Compensation and benefits advice, attracting, motivating, and retaining high quality employees

Information Technology

• Design, implement, test and roll-out new IT or install and operate massive packaged software "solutions“.

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Worldwide Professional Services Market

$billionsSource: Dataquest

$250

$475$45

$85

$25$5

$0

$100

$200

$300

$400

$500

$600

1990 1999 2003

STRATEGY VS. IT- CONSULTING

18% annual growth

Pure Strategy

IT-related Service

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GERMAN CONSULTING MARKET OVERVIEW

German Consulting market overview1998: 62.500 Management-, Personnel- and IT-Consultants (BDU e.V.)

13.200 Consulting CompaniesTotal revenues: 18,8 bn. DM (BDU e.V.)

1999: 64.500 Management-, Personnel- and IT- Consultants (BDU e.V.)14.300 Consulting CompaniesTotal revenues: 21,3 bn. DM (BDU e.V.)

Strategy26%

Process23%

IT46%

O&HP5%

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TOP 20 CONSULTING COMPANIES WORLDWIDE

Total StaffFirm 1998 1997 1998

1 Andersen Consulting 8.307 6.647 65.1342 PriceWaterhouseCoopers 6.000 4.286 46.5003 Ernst & Young Consulting 3.970 2.950 19.0504 CSC 3.500 3.000 n/a5 Deloitte Consulting 3.240 2.310 19.5596 KPMG Consulting 3.000 2.300 15.2497 Mc Kinsey & Company 2.500 2.200 n/a8 Mercer Consulting Group 1.543 1.338 11.0349 Arthur Andersen 1.367 952 9.19610 A.T. Kearney 1.234 1.061 4.64611 Towers Perrin 1.230 1.120 n/a12 Booz-Allen & Hamilton 1.204 1.075 8.80013 American Management Systems 1.057 872 8.20014 Gemini Consulting 1.044 900 2.30015 Hewitt Associates 880 709 9.70016 DMR Consulting 853 700 9.10017 Boston Consulting Group 730 655 n/a18 Watson Wyatt Worldwide 720 672 5.10019 Bain & Company 630 551 2.20020 Aon Consulting Worldwide 615 553 5.500

Revenues in Mio $

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TOP 30 CONSULTING COMPANIES IN GERMANY

Source: Lünendonk Consultancy + Research GbR, Hamburg

Firm 1999 1998 1999 19981 CSC Ploenzke AG, Kiedrich 1251 974 3986 31722 Andersen Consulting Unternehmensberatung GmbH, Sulzbach 1240 804 2401 21273 McKinsey 730 650 1420 13004 Roland Berger & Partner GmbH, München 680 574 1341 12045 gedas GmbH, Berlin 648 405 2994 19696 KPMG Consulting GmbH, Frankfurt 524 400 1380 10237 PriceWaterhouseCoopers Unternehmensberatung GmbH, Frankfurt 481 340 1800 13008 Plaut -Gruppe, Ismaning 460 340 1800 13009 Ernst & Young Consulting GmbH, Stuttgart 441 308 1456 1103

10 A.T. Kearney GmbH, Düsseldorf 395 246 590 44211 Softlab GmbH, München 360 320 1398 127012 Gemini 360 320 600 54413 The Boston Consulting Group 360 310 490 42514 Sercon 334 265 1650 125015 Mummert + Partner Unternehmensberatung AG, Hamburg 330 264 1050 87516 Origin 295 243 950 82217 pdv Unternehmensberatung GmbH, Hamburg 253 213 1030 88018 Materna GmbH, Dortmund 252 148 730 59019 CMG Deutschland GmbH, Eschborn 243 114 855 55020 PSI AG, Berlin 242 186 949 75121 Atos GmbH, Stuttgart 235 230 1050 90822 msg Systeme GmbH, Ismaning/München 220 184 950 85023 Schumann Unternehmensberatung AG, Köln 218 201 820 76024 Deloitte Consulting GmbH/ DTT, Düsseldorf 215 163 706 47625 ESG GmbH, München 211 203 800 80026 Arthur D. Little International, Inc., Wiesbaden 210 183 372 35027 Booz o Allen & Hamilton, Düsseldorf 205 167 300 30028 sd&m AG, München 190 157 658 55229 Marketing Corporation, Bad Homburg 181 156 361 32530 Heyde AG, Bad Nauheim 180 76 670 358

Total StaffRevenues in Mio

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WHERE DO YOU WANT TO GO TODAY?

A scene from Lewis Carroll's "Alice's Adventures In Wonderland", when Alice asks the Cheshire cat for directions, speaks volumes about planning where an organization wants to be in the future.

"Would you tell me, please, which way I ought to go from here?" asks Alice. "That depends a good deal on where you want to get to," said the Cat.

"I don't much care where." said Alice."Then, it doesn't matter which way you go." said the Cat.

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REASONS TO HIRE EXTERNAL CONSULTANTS (1/2)

Reasons for clients to hire external consultants (1):

• Existing companies are not ready for the pace globalization and vanishing market barriers they face -> need Consultants with broad market / industry knowledge

• Increasing M&A activities -> High complexity of transactions and tasks related to Post Merger Integration

• Challenges of the high tech environment: employees are wholly occupied with daily work and don’t have the time to think about innovations

• Changing working environment necessitate creative and up-to-date HR Management

• Deregulation enabled new companies to enter the market. In order to position and compete against former monopolists they need industry related consulting experience (+other way round, ex-monopolists try to defend themselves against new market entries using the knowledge of external companies)

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REASONS TO HIRE EXTERNAL CONSULTANTS (2/2)

Reasons for clients to hire external consultants (2):

• Consultants have access to information on a truly global basis (Knowledge Exchange)

• Widespread acceptance of using consultants to gain outside expertise.• Rapid technological change.• Movement to enterprise wide solutions.• Lack of in-house expertise in Processes, technologies, industry best practices, and

project management.

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BENEFITS OF USING CONSULTANTS

• Subject matter expert: A consultant will save time and money by arriving to a

solution to the client‘s needs at a faster pace because of past extensive knowledge and experience in dealing with other business owners.

• Objective point of view: A consultant will bring a refreshing outside point of view to the client‘s company, which will pin-point existing problems or reach faster solutions.

• Educate, inform: A good consultant will educate and inform the client as the task is completed.

• Share information about industry and competition: This is essential to reaching company goals.

• Assist with strategic planning which will help reach company goals faster and easier.

• Offer innovative ideas

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WORK AND LIFESTYLE CHARACTERISTICS

• Work at client site

• Work in team environment

• Work with a variety of clients across industries

• Assess client business and technical challenges

• Develop solutions to move client forward

• Extensive traveling

• Enriching learning experience

• Cyclical overtime

• Travel

• Variety of responsibilities

• Work with technology

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TOP 10 WAYS TO KNOW YOU ARE DATING AN CONSULTANT

1. Refers to lovemaking as a "win-win."

2. Valentine's Day card has bullet points.

3. Can't be trusted with the car - too accustomed to beating up rentals.

4. Celebrates anniversary by conducting a performance review.

5. Ends any argument by saying, "let's talk about this off-line."

6. Tries to call room-service from the bedroom.

7. Congratulates your parents for successful value creation.

8. Referred to the yield of the tomato plants in your home garden as "deliverables"

9. Talks to the waiter about process flow when dinner arrives late.

10. Referred to the first month of your relationship as a "diagnostic period."

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NATURE, TRENDS, CAREERS

Nature and purpose of consulting

Recent trends and current challenges

Staff and career paths in consulting

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RECENT TRENDS AND CURRENT CHALLENGES

• Changing customer expectations

• Increasing market power of the TOP consulting companies

• Effective usage of information technology

• Split Tax/Auditing - Consulting

• Strategic Alliances and Start-up Partnerships

• New suppliers enter the consulting market

• Expansion of the well known consulting companies

• IT consulting by traditional consulting companies

• Get & retain the right people

• How to face the current challenges

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"CTOs and other e-business strategists do not want to hear me tell them I can help

Web-enable their business. That is not enough. They want to know how I can help them

transform their business."

-- Chuck Burns, global senior vice president, services,

KPMG

"CTOs have more choices than ever before when it comes to selecting a consultant.

We go into bids now where we may compete against one of the giant, Big Five firms ...

and even, in some cases, an advertising or marketing agency."

-- Scott Lochridge, principal, strategy solutions group,

DiaLogos

"The days of black magic are over, Consultants can no longer get away with just writing

a white paper for the client and saying, 'OK, now you do what I say.' ”

-- Jose Campos, president of Rapidinnovation

CHANGING CUSTOMER EXPECTATIONS – SOME STATEMENTS

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CHANGING CUSTOMER EXPECTATIONS

• Customer expect real added value

• Standard Implementations are decreasing while individual end-to-end solution become much more important

• Unsuccessful ERP implementations in the 90s made the customer more aware of risks and challenges --> Customer are much more sensitive to what they get for their money

• Results in new payment schemes like:

• Fixed price (especially done by smaller / start-up companies)

• Risk and reward sharing

• Equity payment

• Payment in terms of %-age of actual value added

• On time delivery clauses in contract

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INCREASING MARKET POWER OF THE TOP 20 CONSULTING COMPANIES

Facts

• 40 TOP Consulting Companies increased their market share in Germany from 42 to 45 %

• Average growth rate of the TOP Player: ~ 19,5 %/p.a.

• Smaller Consulting companies: ~ 4,0 %/p.a.

• Acquisitions of smaller and mid-sized consulting firms by the larger companies in order to diversify their market offer

• Planned partly IPO of KPMG, Arthur D. Little, Andersen Consulting also investigating

• Increasing market power and influence through ventures, e.g.- AC Venture - McKinsey’s “New Venture” - Roland Berger & bmp

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SPLIT TAX/AUDITING – REASONS AND CONSEQUENCES

Reasons

• U.S. Security and Exchange Commission:Critical if Consulting Companies advice clients that are audited by the same company

• Higher margins and growth rates in consulting

• Inability for consulting part to raise money by going public as long as they are part of auditing companies

Consequences

• Consulting companies can and will go public (e.g. KPMG)

• No more legal restrictions for consulting companies to advice other companies

• Differentiation process will accelerate (increasing marketing activities)

• Repositioning needs

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SPLIT TAX/AUDITING - CONSULTING

Examples

• Andersen Consulting vs. Arthur Andersen:Arbitration Decision in order to allow Andersen Consulting to split from Arthur Andersen

• KPMG:

• IPO of KPMG Consulting Business

• Cisco took 20% stake

• Another 20% for the accounting part

• Hewlett Packard interested to buy PriceWaterhouseCoopers’ Management and IT Consulting part

• Cap Gemini to buy consulting piece of Ernst & Young

• A.T. Kearney and EDS

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STRATEGIC ALLIANCES OF ACCENTURE

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ALLIANCES AND PARTNERSHIPS: SOME EXAMPLES

• Cap Gemini: - Siebel Systems- IBM

- Sun Microsystems- Microsoft

• KPMG: - Compaq - Cisco

- Microsoft- JD Edwards

• CSC: - Peoplesoft - Broadvision

- IBM- Lucent

- Nokia

• EDS: - Sun Microsystems - SAP- Oracle - Cisco

04/08/2340

NEW COMPETITORS ENTER THE CONSULTANT MARKET

New Suppliers enter the consulting market

• Hardware manufacturers - HP already increased their number of in-house consultants to 6.000 + potential PriceWaterhouseCoopers part

• Internet service providers, e.g. Pixelpark buying the Swedish Consulting

firm “Cell Network / Mandator”

• Building „Inhouse-Consulting capabilities“

- Siemens (Siemens Business Services providing ERP,

CRM implementations)

- SAP System

- Deutsche Telekom buying majority stake in Debis

Systemhaus

• Financial Institutions and Telecommunication companies

04/08/2341

EXPANSION OF WELL KNOWN CONSULTING COMPANIES

• Expansion of the TOP consulting companies through M&A, alliances,

ventures and strategic partnerships.

• Chance to expand business and opening new markets

• After M&A, differentiation becomes critical, therefore high advertising budgets

• IPO Strategies:

• Raise money for eCommerce strategy

• Venture Capital funds

• To attract people (competitive salaries and payment structures)

• Examples:

• Cap Gemini acquiring Ernst & Young

• Cap Gemini buying SD&M

• CSC Ploenzke to buy KPMG France

04/08/2342

IT CONSULTING AT THE ESTABLISHED CONSULTING COMPANIES

• As eCommerce is acknowledge to be one of the key business drivers, also the traditional consulting companies try to get into it

• Strategy companies like Booz Allen Hamilton etc. to launch eCommerce centers and venture capital firms

• By buying smaller companies and partnering they are able to provide a full implementation service, e.g. Bain alliance with i2 and Oracle

• McKinsey has been accused having overslept the e-Commerce age; now trying to work on that subject through increasing alliances & ventures in the eBusiness

• After split from Andersen Consulting, Arthur Andersen will get more into IT consulting

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• IPO in order to attract personnel• Until backdrop of Dot.Coms and the stock market, tendency of leading

personnel to leave traditional companies to join Start-ups:• Cambridge Technology lost over the last year many top managers (i.e.

Founder and CEO, CFO, General counsel, Head of its E-Business unit, Managing director of the Cambridge Technology Capital venture fund) mostly to small high-tech companies.

• Dean Hawkins, former CFO of Adidas to become CFO @ boo.com

• Joe Galli, Vice President Black & Decker to join Amazon.com as member of the board

• Heiner Rutt, chairman @ Boston Consulting Group to become president at Proxicom

• IBM Germany has about 3.000 open IT positions for 2001, Hewlett-Packard to look for 500 IT specialists, PricewaterhouseCoopers 300 and Siemens 1.500, Andersen Consulting with 1.100 open positions in ASG.

GET AND RETAIN THE RIGHT PEOPLE

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"WINNING THE WAR FOR TALENT"

Key factors of success

Image

Interesting tasks

Personal development

Balanced life style

Internationalatmosphere

1. DaimlerChrysler

2. Lufthansa

3. McKinsey

4. BMW

5. KPMG

6. Boston Consulting

7. Deutsche Bank

8. Siemens

9. SAP

10. Accenture

Attractive employees

• Focus 30. August 1999

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HOW TO FACE THE CURRENT CHALLENGES

• New strategies

• Branding Campaigns

• Personnel development concepts

• Efficient Knowledge Management

• Accurate Planning

• Change as Chance

• Synchronize the key success factors:- people- process- strategy - technology

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NATURE, TRENDS, CAREERS

Nature and purpose of consulting

Recent trends and current challenges

Staff and career paths in consulting

04/08/2347

STAFF AND CAREER PATHS

Partner

Associate Partner

Manager

Consultant

Analyst

Director

Principle

Associate Principle

Project Manager

Consultant

Accenture McKinsey

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Lead work teams

Facilitate Team-Meetings

Systems design

Client presentations

Lead subprojects

Consultant

Analyst

Proposals

Forecasting

Develop and execute client training

Client interviews

Programming

Systems Documentation

Participates in problem solving

Recommends and implements solutions

Defines user requirements

Researches new and existing technology

Provides production support

Tests software

Reviews work of peers

ROLES AND RESPONSIBILITIES: EXAMPLES

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Partner

Manager

Interface with client senior management

Lead client meetings

Develop new business

Develop management team

Shape and impact the Firm

Attain Ownership in the Firm

ROLES AND RESPONSIBILITIES (CTD.)

Lead client meetings

Manage projects

Lead and develop project team

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CONSULTING: ALWAYS STAY REALISTICALLY

A consultant, manager and a partner from a Consulting company are walking through a park on their way to lunch when they find an antique oil lamp.

They rub it and a Genie comes out in a puff of smoke. The Genie says, "I

usually only grant three wishes, so I'll give each of you just one.

"Me first! Me first!" says the consultant. "I want to be in the Bahamas,

driving a speedboat, without a care in the world." Poof! she's gone.

In astonishment, "Me next! Me next!' says the manager, "I want to be in

Hawaii, relaxing on the beach with my personal masseuse, an endless supply of pina coladas and the love of my life." Poof! He's gone.

"You're next," the Genie says to the partner. The partner says, "I want

those two back in the office after lunch."

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PERSONS TO SUPPORT YOUR PERSONAL CAREER

Personal Mentor

Peer Group

Annual Reviews (upward/downward/sideward)

Partner Group

Practice Leaders

04/08/2352

SOME ATTRIBUTES FOR GOOD CONSULTANTS

• Ambition to permanently learn

• Determination to succeed

• Strong communication skills

• Motivation

• Flexibility

• Agility

• Approachable

• Proactive

• Innovative

• Results-oriented

• Self Confident

• Entrepreneurial thinking

04/08/2353

BENEFITS AND CHALLENGES OF CONSULTING

Benefits of Consulting

• Learning new industries

• Earning more income

• Flexible contract lengths

• Possible full time opportunities

• Less office politics

• Learning new technical skills

• Meeting new people

Challenges of Consulting

• Not being a "full-timer"

• Possible additional travel or commute time

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PROJECT WORK PLAN: ONE EXAMPLE FOR A THREE-MONTH PROJECT EXAMPLE

ALTE FOLIE VERWENDEN

04/08/2355

YOU KNOW THAT YOU HAVE BEEN TOO LONG A CONSULTANT WHEN …

1. you feel naked without a laptop hanging from your left shoulder;

2. you start thinking that life in the US Navy Submarine Corps would give you more time at home;

3. you are upset when you come home on Friday night and the lights aren't on, the bed isn't turned down, and there are no chocolates on your pillow;

4. "vacationing" is spending an entire weekend in your own home;

5. you have seen more movies at 35,000 feet than you have at your local movie theater

6. before starting the car, you insist on telling everyone where the emergency exits are;

7. before stopping the car, you insist that everyone stay seated until the fasten seatbelts sign is off;

8. instant coffee tastes good;

9. you've been staying in the same hotel, you instinctively call it "home";

10. you say "Whoopee! Half day!" when you leave at 10:00PM;