Lecture - Management Consulting: An Introduction - Andersen Consulting 2000
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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) 2 2022/1/18
AGENDA Introduction/Expectations Example consultant company Consulting: Nature, Trends, Careers Selected Methods (frameworks) Research (some basics) Graphics (from data to chart) 3 2022/1/18
ACCENTURE: MISSION AND VISION Our Mission: Helping our clients create their future. Our Vision: To become one of the world's leading companies, bringing innovations to improve the way the world works and lives. 4 2022/1/18
ACCENTURE: CORE VALUES • Quality Client Service – Understand and meet client expectations 100 percent of the time. • One Global Firm – Act to enhance the collective values of the global partnership, while sustaining local culture. • Integrity – Act with openness and honesty. Always. • Stewardship – Think future oriented; act and invest to build a stronger firm for tomorrow. • Best People – Are highly competent and make a commitment to excellence, teamwork, and the success of our clients. • Respect for the Individual – Treat each person as we would like to be treated. 5 2022/1/18
ACCENTURE: IMPORTANT MILESTONES 1989 1997 • Andersen Consulting • Andersen Consulting creates a global becomes a separate network of communications-focused solution business unit from Arthur centers in an effort to set the standard for Andersen speed and quality of performance • $1.6 billion • $6.6. Billion • 21,400 employees • 53,000 employees 1991 1998 • Horizon 2000 Initiative to • $8.3 billion develop mission and • 65,000 employees strategic plan • $2.3 billion 2000 • 25,000 personnel • Joe Forehand becomes Managing Partner and introduces the 100 Day Plan 1993 • Andersen Consulting wins arbitration against • Andersen Consulting issues Arthur Andersen its first annual report • $2.9 billion 01.01.01 • 27,000 employees • Accenture, formerly known as Andersen Consulting 6 2022/1/18
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 7 2022/1/18
ACCENTURE: DEVELOPMENT OF REVENUES (U.S. Billions) $8,3 $6,647 $5,302 $4,224 $3,452 $2,876 1993 1994 1995 1996 1997 1998 8 2022/1/18
ACCENTURE: GLOBAL PERSONNEL GROWTH 65,134 53,426 44,801 38,027 32,711 1994 1995 1996 1997 1998 9 2022/1/18
ACCENTURE IN ASG ASG – Austria, Switzerland, Germany Hamburg Berlin Düsseldorf Frankfurt EMEAI München Americas Wien Zürich Asia/ Pacific • 2,750 Employees • 7 Offices • Revenues: 1,24 Mrd. DM 10 2022/1/18
Global Competitive Overview Strategy Organization Processes Information Business Process Technology Management (Outsourcing) Andersen Consulting IBM Computer Sciences EDS McKinsey Boston Consulting Booz Allen Digital Equipment Cap Gemini Sogeti UNISYS 11 2022/1/18
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 12 2022/1/18
ACCENTURE: SAMPLE CLIENT LIST 13 2022/1/18
AGENDA Introduction/Expectations Example consultant company Consulting: Nature, Trends, Careers Selected Methods (frameworks) Research (some basics) Graphics (from data to chart) 14 2022/1/18
NATURE, TRENDS, CAREERS Nature and purpose of consulting Recent trends and current challenges Staff and career paths in consulting 15 2022/1/18
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 16 2022/1/18
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) 17 2022/1/18
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 18 2022/1/18
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 19 2022/1/18
EVOLUTION OF CONSULTING FOCUS Quality Management Lean Management Re-engineering ERP projects Web Technology E-Commerce CRM M-Commerce Strategy 1980 1985 1990 1995 2000 2005 20 2022/1/18
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“. 21 2022/1/18
STRATEGY VS. IT- CONSULTING Worldwide Professional Services Market $600 $85 $500 18% annual growth $400 Pure Strategy $300 $45 IT-related Service $475 $200 $250 $100 $5 $25 $0 $billions 1990 1999 2003 Source: Dataquest 22 2022/1/18
GERMAN CONSULTING MARKET OVERVIEW German Consulting market overview 1998: 62.500 Management-, Personnel- and IT-Consultants (BDU e.V.) 13.200 Consulting Companies Total revenues: 18,8 bn. DM (BDU e.V.) 1999: 64.500 Management-, Personnel- and IT- Consultants (BDU e.V.) 14.300 Consulting Companies Total revenues: 21,3 bn. DM (BDU e.V.) 23 2022/1/18
TOP 20 CONSULTING COMPANIES WORLDWIDE 24 2022/1/18
TOP 30 CONSULTING COMPANIES IN GERMANY 25 2022/1/18 Source: Lünendonk Consultancy + Research GbR, Hamburg
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. 26 2022/1/18
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) 27 2022/1/18
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. 28 2022/1/18
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 29 2022/1/18
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 30 2022/1/18
TOP 10 WAYS TO KNOW YOU ARE DATING AN CONSULTANT 10. Referred to the first month of your relationship as a "diagnostic period." 9. Talks to the waiter about process flow when dinner arrives late. 8. Referred to the yield of the tomato plants in your home garden as "deliverables" 7. Congratulates your parents for successful value creation. 6. Tries to call room-service from the bedroom. 5. Ends any argument by saying, "let's talk about this off-line." 4. Celebrates anniversary by conducting a performance review. 3. Can't be trusted with the car - too accustomed to beating up rentals. 2. Valentine's Day card has bullet points. 1. Refers to lovemaking as a "win-win." 31 2022/1/18
NATURE, TRENDS, CAREERS Nature and purpose of consulting Recent trends and current challenges Staff and career paths in consulting 32 2022/1/18
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 33 2022/1/18
CHANGING CUSTOMER EXPECTATIONS – SOME STATEMENTS "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 34 2022/1/18
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 35 2022/1/18
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 36 2022/1/18
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 37 2022/1/18
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 38 2022/1/18
STRATEGIC ALLIANCES OF ACCENTURE 39 2022/1/18
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 40 2022/1/18
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 41 2022/1/18
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 42 2022/1/18
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 43 2022/1/18
GET AND RETAIN THE RIGHT PEOPLE • 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. 44 2022/1/18
"WINNING THE WAR FOR TALENT" • Focus 30. August 1999 1. DaimlerChrysler 2. Lufthansa Key factors of 3. McKinsey success 4. BMW Image Attractive 5. KPMG Interesting tasks employees Personal development 6. Boston Consulting Balanced life style 7. Deutsche Bank International 8. Siemens atmosphere 9. SAP 10. Accenture 45 2022/1/18
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 46 2022/1/18
NATURE, TRENDS, CAREERS Nature and purpose of consulting Recent trends and current challenges Staff and career paths in consulting 47 2022/1/18
STAFF AND CAREER PATHS Accenture McKinsey Partner Director Associate Partner Principle Manager Associate Principle Consultant Project Manager Analyst Consultant 48 2022/1/18
ROLES AND RESPONSIBILITIES: EXAMPLES Analyst Consultant Proposals Forecasting Lead work teams Develop and execute client Facilitate Team-Meetings training Client interviews Systems design Programming Client presentations Systems Documentation Lead subprojects 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 49 2022/1/18
ROLES AND RESPONSIBILITIES (CTD.) Partner Interface with client senior management Lead client meetings Manager Develop new business Lead client meetings Develop management team Manage projects Shape and impact the Firm Lead and develop project team Attain Ownership in the Firm 50 2022/1/18
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." 51 2022/1/18
PERSONS TO SUPPORT YOUR PERSONAL CAREER Personal Mentor Peer Group Annual Reviews (upward/downward/sideward) Partner Group Practice Leaders 52 2022/1/18
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 53 2022/1/18
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 54 2022/1/18
PROJECT WORK PLAN: ONE EXAMPLE FOR A THREE-MONTH PROJECT EXAMPLE ALTE FOLIE VERWENDEN 55 2022/1/18
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; 56 2022/1/18
AGENDA Introduction/Expectations Example consultant company Consulting: Nature, Trends, Careers Selected Methods (frameworks) Research (some basics) Graphics (from data to chart) 57 2022/1/18
AGENDA Introduction/Expectations Example consultant company Consulting: Nature, Trends, Careers Selected Methods (frameworks) Research (some basics) Graphics (from data to chart) 58 2022/1/18
AGENDA Introduction/Expectations Example consultant company Consulting: Nature, Trends, Careers Selected Methods (frameworks) Research (some basics) Graphics (from data to chart) 59 2022/1/18
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