Lecture Management Consulting: An Introduction9/24/20241 Andersen Consulting 2000AGENDAIntroduction/ExpectationsExample consultant companyConsulting: Nature, Trends, CareersSelected Methods (frameworks)Research (some basics)Graphics (from data to chart)9/24/20242AGENDAIntroduction/ExpectationsExample consultant companyConsulting: Nature, Trends, CareersSelected Methods (frameworks)Research (some basics)Graphics (from data to chart)9/24/20243Our Mission: Helping our clients create their future.ACCENTURE: MISSION AND VISIONOur Vision: To become one of the worlds leading companies, bringing innovations to improve the way the world works and lives.9/24/20244One 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 VALUES9/24/202451989 Andersen Consulting becomes a separate business unit from Arthur Andersen$1.6 billion21,400 employees1991Horizon 2000 Initiative to develop mission and strategic plan$2.3 billion25,000 personnel1993Andersen Consulting issues its first annual report$2.9 billion27,000 employees1997Andersen 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 employees1998$8.3 billion65,000 employees2000Joe Forehand becomes Managing Partner and introduces the 100 Day PlanAndersen Consulting wins arbitration against Arthur Andersen01.01.01Accenture, formerly known as Andersen ConsultingACCENTURE: IMPORTANT MILESTONES9/24/20246ACCENTURE GLOBALLYEmployees:over 65,000Countries: 48Revenue 99: 8,9 Billion USD Clients: The vast majority of Fortune 30 most profitable global public companies Nearly 75% of Fortune 200 global companies100 of the most significant “Industry Standard” Internet companies 9/24/20247ACCENTURE: DEVELOPMENT OF REVENUES(U.S. Billions)1993$2,8761994$3,4521995$4,2241996$5,3021997$6,6471998$8,39/24/20248ACCENTURE: GLOBAL PERSONNEL GROWTH199753,426199644,801199538,027199432,711199865,1349/24/20249AmericasEMEAIAsia/PacificHamburgFrankfurtMnchenDsseldorfBerlinWienZrichASG Austria, Switzerland, GermanyACCENTURE IN ASG2,750 Employees7 OfficesRevenues: 1,24 Mrd. DM9/24/202410Global Competitive OverviewStrategyDigital EquipmentMcKinseyAndersen ConsultingOrganizationProcessesInformationTechnologyBusiness ProcessManagement(Outsourcing)Cap Gemini SogetiUNISYSIBMComputer SciencesEDSBoston ConsultingBooz Allen9/24/202411ACCENTURE: MARKET UNITSFinancial ServicesBankingHealth ServicesInsuranceProductsAutomotive, Industrial Equipment, Travel & TransportationConsumer & Pharmaceutical ProductsRetailCommunications & High TechCommunicationsElectronics & High TechMedia & EntertainmentResourcesChemicals Energy & Natural ResourcesUtilitiesGovernment9/24/202412ACCENTURE: SAMPLE CLIENT LIST9/24/202413AGENDAIntroduction/ExpectationsExample consultant companyConsulting: Nature, Trends, CareersSelected Methods (frameworks)Research (some basics)Graphics (from data to chart)9/24/202414NATURE, TRENDS, CAREERSNature and purpose of consultingRecent trends and current challengesStaff and career paths in consulting9/24/202415NATURE AND PURPOSE OF CONSULTINGNature and Purpose of ConsultingDefinition of Consulting“Brief look into historyDifferent types of consultingConsulting market overviewConsultant: Profession descriptionConsulting strategiesShort overview over the consulting processReasons for clients to hire external consultantsGuidelines for the client - consultant relationship9/24/202416DEFINITION OF CONSULTINGDefinition of ConsultingTo 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)9/24/202417CONSULTING HISTORY (1/2)Brief look into history1532Macchiavellis Il Principe“1886Foundation of the analytical testlab“ by Arthur D. Little1895A piece rate system“ by F. Taylor1909Foundation of Arthur D. Little, Inc.1911The principles of scientific management“ by F. Taylor1911Motion Study“ by F. Gilbreth1912Consulting Firms“ by F. Gilbreth1914E. Booz sets up Business Research Services1925J.O. McKinsey starts his Consulting firm1934Urwick, Orr & Partners: Management ist lehr- und lernbar1939Peter Drucker The end of economic man“1947Foundation of the Travistock Institute9/24/202418CONSULTING HISTORY (2/2)Brief look into history1949Robert Wiener Cybernetics“1950Marvin Bower becomes CEO of Mc Kinsey and starts with the expansion1951First Deming-Avard for Quality in Japan1954Foundation of the BDU1954Peter Drucker: The practise of management“1957Argyris: Personality and Organization“1959Herzberg, Mausner, Snyderman: The motivation to work“1960Mc Gregor: The human side of enterprise“, Maslow: Motivation and Personality“1963Foundation of Boston Consulting Group1965Foundation of the first two Business Universities in Great Britain9/24/202419EVOLUTION OF CONSULTING FOCUS198019851990199520002005 Quality ManagementLean ManagementRe-engineeringERP projectsWeb TechnologyE-CommerceCRMM-Commerce Strategy9/24/202420TYPES OF CONSULTINGDifferent types of management consultingStrategyAdvice and counsel about corporate-level or business-unit strategiesOperations Management Figuring out how to improve the efficiency or productivity of how a business worksHuman Resources Compensation and benefits advice, attracting, motivating, and retaining high quality employeesInformation TechnologyDesign, implement, test and roll-out new IT or install and operate massive packaged software solutions“.9/24/202421Worldwide Professional Services Market$billionsSource: Dataquest$250$475$45$85$25$5$0$100$200$300$400$500$600199019992003STRATEGY VS. IT- CONSULTING18% annual growthPure StrategyIT-related Service9/24/202422GERMAN CONSULTING MARKET OVERVIEWGerman 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.)9/24/202423TOP 20 CONSULTING COMPANIES WORLDWIDE9/24/202424TOP 30 CONSULTING COMPANIES IN GERMANYSource: Lnendonk Consultancy + Research GbR, Hamburg9/24/202425WHERE DO YOU WANT TO GO TODAY? A scene from Lewis Carrolls Alices 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 dont much care where. said Alice.Then, it doesnt matter which way you go. said the Cat.9/24/202426REASONS 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 knowledgeIncreasing M&A activities - High complexity of transactions and tasks related to Post Merger IntegrationChallenges of the high tech environment: employees are wholly occupied with daily work and dont have the time to think about innovationsChanging working environment necessitate creative and up-to-date HR ManagementDeregulation 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)9/24/202427REASONS 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.9/24/202428BENEFITS OF USING CONSULTANTS Subject matter expert: A consultant will save time and money by arriving to a solution to the clients 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 clients 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 ideas9/24/202429WORK AND LIFESTYLE CHARACTERISTICSWork at client siteWork in team environmentWork with a variety of clients across industriesAssess client business and technical challengesDevelop solutions to move client forwardExtensive traveling Enriching learning experienceCyclical overtimeTravelVariety of responsibilitiesWork with technology9/24/202430TOP 10 WAYS TO KNOW YOU ARE DATING AN CONSULTANT1. Refers to lovemaking as a win-win.2. Valentines Day card has bullet points.3. Cant 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, lets 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 deliverables9. Talks to the waiter about process flow when dinner arrives late.10. Referred to the first month of your relationship as a diagnostic period.9/24/202431NATURE, TRENDS, CAREERSNature and purpose of consultingRecent trends and current challengesStaff and career paths in consulting9/24/202432RECENT TRENDS AND CURRENT CHALLENGES Changing customer expectationsIncreasing market power of the TOP consulting companiesEffective usage of information technologySplit Tax/Auditing - ConsultingStrategic Alliances and Start-up PartnershipsNew suppliers enter the consulting marketExpansion of the well known consulting companiesIT consulting by traditional consulting companiesGet & retain the right peopleHow to face the current challenges9/24/202433 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 RapidinnovationCHANGING CUSTOMER EXPECTATIONS SOME STATEMENTS9/24/202434CHANGING CUSTOMER EXPECTATIONS Customer expect real added valueStandard 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 contract9/24/202435INCREASING MARKET POWER OF THE TOP 20 CONSULTING COMPANIESFacts40 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 offerPlanned partly IPO of KPMG, Arthur D. Little, Andersen Consulting also investigating Increasing market power and influence through ventures, e.g.- AC Venture - McKinseys “New Venture” - Roland Berger & bmp9/24/202436SPLIT TAX/AUDITING REASONS AND CONSEQUENCESReasonsU.S. Security and Exchange Commission:Critical if Consulting Companies advice clients that are audited by the same company Higher margins and growth rates in consultingInability for consulting part to raise money by going public as long as they are part of auditing companiesConsequencesConsulting companies can and will go public (e.g. KPMG)No more legal restrictions for consulting companies to advice other companiesDifferentiation process will accelerate (increasing marketing activities)Repositioning needs 9/24/202437SPLIT TAX/AUDITING - CONSULTING ExamplesAndersen Consulting vs. Arthur Andersen:Arbitration Decision in order to allow Andersen Consulting to split from Arthur AndersenKPMG:IPO of KPMG Consulting BusinessCisco took 20% stakeAnother 20% for the accounting partHewlett Packard interested to buy PriceWaterhouseCoopers Management and IT Consulting partCap Gemini to buy consulting piece of Ernst & YoungA.T. Kearney and EDS9/24/202438STRATEGIC ALLIANCES OF ACCENTURE9/24/202439ALLIANCES 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 - Cisco9/24/202440NEW COMPETITORS ENTER THE CONSULTANT MARKETNew Suppliers enter the consulting marketHardware manufacturers - HP already increased their number of in-house consultants to 6.000 + potential PriceWaterhouseCoopers partInternet 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 SystemhausFinancial Institutions and Telecommunication companies9/24/202441EXPANSION 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 marketsAfter M&A, differentiation becomes critical, therefore high advertising budgetsIPO 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 France9/24/202442IT 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 itStrategy companies like Booz Allen Hamilton etc. to launch eCommerce centers and venture capital firmsBy buying smaller companies and partnering they are able to provide a full implementation service, e.g. Bain alliance with i2 and OracleMcKinsey has been accused having overslept the e-Commerce age; now trying to work on that subject through increasing alliances & ventures in the eBusinessAfter split from Andersen Consulting, Arthur Andersen will get more into IT consulting9/24/202443IPO in order to attract personnelUntil 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.comJoe Galli, Vice President Black & Decker to join Amazon.com as member of the board Heiner Rutt, chairman Boston Consulting Group to become president at ProxicomIBM 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 PEOPLE9/24/202444WINNING THE WAR FOR TALENTKey factors of successImage Interesting tasks Personal developmentBalanced life styleInternationalatmosphere 1.DaimlerChrysler2.Lufthansa3.McKinsey 4.BMW5.KPMG6.Boston Consulting7.Deutsche Bank8.Siemens9.SAP10.AccentureAttractive employeesFocus 30. August 19999/24/202445HOW TO FACE THE CURRENT CHALLENGES New strategiesBranding Campaigns Personnel development conceptsEfficient Knowledge ManagementAccurate Planning Change as ChanceSynchronize the key success factors:- people- process- strategy - technology9/24/202446NATURE, TRENDS, CAREERSNature and purpose of consultingRecent trends and current challengesStaff and career paths in consulting9/24/202447STAFF AND CAREER PATHSPartnerAssociate PartnerManagerConsultantAnalystDirectorPrincipleAssociate PrincipleProject ManagerConsultantAccentureMcKinsey9/24/202448wLead work teamswFacilitate Team-MeetingswSystems designwClient presentationswLead subprojectsConsultantAnalystwProposalswForecastingwDevelop and execute client trainingwClient interviewswProgrammingwSystems DocumentationwParticipates in problem solvingwRecommends and implements solutionswDefines user requirementswResearches new and existing technology wProvides production supportwTests softwarewReviews work of peersROLES AND RESPONSIBILITIES: EXAMPLES9/24/202449PartnerManagerwInterface with client senior managementwLead client meetingswDevelop new businesswDevelop management teamwShape and impact the FirmwAttain Ownership in the FirmROLES AND RESPONSIBILITIES (CTD.)wLead client meetingswManage projectswLead and develop project team9/24/202450CONSULTING: 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, Iusually only grant three wishes, so Ill 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! shes gone.In astonishment, Me next! Me next! says the manager, I want to be inHawaii, relaxing on the beach with my personal masseuse, an endless supply of pina coladas and the love of my life. Poof! Hes gone.Youre next, the Genie says to the partner. The partner says, I wantthose two back in the office after lunch.9/24/202451PERSONS TO SUPPORT YOUR PERSONAL CAREERwPersonal MentorwPeer GroupwAnnual Reviews (upward/downward/sideward)wPartner GroupwPractice Leaders9/24/202452SOME ATTRIBUTES FOR GOOD CONSULTANTS Ambition to permanently learnDetermination to succeedStrong communication skillsMotivationFlexibilityAgilityApproachableProactiveInnovativeResults-orientedSelf ConfidentEntrepreneurial thinking9/24/202453BENEFITS AND CHALLENGES OF CONSULTINGBenefits of ConsultingLearning new industries Earning more incomeFlexible contract lengthsPossible full time opportunitiesLess office politicsLearning new technical skillsMeeting new peopleChallenges of ConsultingNot being a full-timer Possible additional travel or commute time9/24/202454PROJECT WORK PLAN: ONE EXAMPLE FOR A THREE-MONTH PROJECT EXAMPLEALTE FOLIE VERWENDEN9/24/202455YOU 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 arent on, the bed isnt 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 theater6.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.youve been staying in the same hotel, you instinctively call it home;10.you say Whoopee! Half day! when you leave at 10:00PM;9/24/202456AGENDAIntroduction/ExpectationsExample consultant companyConsulting: Nature, Trends, CareersSelected Methods (frameworks)Research (some basics)Graphics (from data to chart)9/24/202457AGENDAIntroduction/ExpectationsExample consultant companyConsulting: Nature, Trends, CareersSelected Methods (frameworks)Research (some basics)Graphics (from data to chart)9/24/202458AGENDAIntroduction/ExpectationsExample consultant companyConsulting: Nature, Trends, CareersSelected Methods (frameworks)Research (some basics)Graphics (from data to chart)9/24/202459