• 1. Lecture – Management Consulting: An Introduction *1© Andersen Consulting 2000
    • 2. AGENDAIntroduction/Expectations Example consultant company Consulting: Nature, Trends, Careers Selected Methods (frameworks) Research (some basics) Graphics (from data to chart)Date2
    • 3. AGENDAIntroduction/Expectations Example consultant company Consulting: Nature, Trends, Careers Selected Methods (frameworks) Research (some basics) Graphics (from data to chart)Date3
    • 4. Our Mission: Helping our clients create their future.zccy: MISSION AND VISIONOur Vision: To become one of the world's leading companies, bringing innovations to improve the way the world works and lives.Date4
    • 5. 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.zccy: CORE VALUESDate5
    • 6. 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 employees1997 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 zccy, formerly known as Andersen Consulting zccy: IMPORTANT MILESTONESDate6
    • 7. zccy GLOBALLYEmployees: 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 Date7
    • 8. zccy: DEVELOPMENT OF REVENUES(U.S. Billions)1993$2,8761994$3,4521995$4,2241996$5,3021997$6,6471998$8,3Date8
    • 9. zccy: GLOBAL PERSONNEL GROWTH199753,426199644,801199538,027199432,711199865,134Date9
    • 10. AmericasEMEAIAsia/ PacificHamburgFrankfurtMünchenDüsseldorfBerlinWienZürichASG – Austria, Switzerland, Germanyzccy IN ASG2,750 Employees 7 Offices Revenues: 1,24 Mrd. DMDate10
    • 11. Global Competitive OverviewStrategyDigital EquipmentMcKinseyAndersen ConsultingOrganizationProcessesInformation TechnologyBusiness Process Management (Outsourcing)Cap Gemini SogetiUNISYSIBMComputer SciencesEDSBoston ConsultingBooz AllenDate11
    • 12. zccy: MARKET UNITSFinancial 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 GovernmentDate12
    • 13. zccy: SAMPLE CLIENT LISTDate13
    • 14. AGENDAIntroduction/Expectations Example consultant company Consulting: Nature, Trends, Careers Selected Methods (frameworks) Research (some basics) Graphics (from data to chart)Date14
    • 15. NATURE, TRENDS, CAREERSNature and purpose of consultingRecent trends and current challengesStaff and career paths in consultingDate15
    • 16. NATURE AND PURPOSE OF CONSULTINGNature 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 relationshipDate16
    • 17. DEFINITION OF CONSULTINGDefinition 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)Date17
    • 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 InstituteDate18
    • 19. 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 BritainDate19
    • 20. EVOLUTION OF CONSULTING FOCUS1980 1985 1990 1995 2000 2005 Quality Management Lean Management Re-engineering ERP projects Web Technology E-Commerce CRM M-Commerce StrategyDate20
    • 21. TYPES OF CONSULTINGDifferent 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“.Date21
    • 22. Worldwide 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 ServiceDate22
    • 23. GERMAN CONSULTING MARKET OVERVIEWGerman 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.)Date23
    • 24. TOP 20 CONSULTING COMPANIES WORLDWIDEDate24
    • 25. TOP 30 CONSULTING COMPANIES IN GERMANYSource: Lünendonk Consultancy + Research GbR, HamburgDate25
    • 26. 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. Date26
    • 27. 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)Date27
    • 28. 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.Date28
    • 29. 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 ideasDate29
    • 30. WORK AND LIFESTYLE CHARACTERISTICSWork 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 technologyDate30
    • 31. TOP 10 WAYS TO KNOW YOU ARE DATING AN CONSULTANT1. 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."Date31
    • 32. NATURE, TRENDS, CAREERSNature and purpose of consultingRecent trends and current challengesStaff and career paths in consultingDate32
    • 33. 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 Date33
    • 34. "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 STATEMENTSDate34
    • 35. 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 contractDate35
    • 36. INCREASING MARKET POWER OF THE TOP 20 CONSULTING COMPANIESFacts 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 Date36
    • 37. SPLIT TAX/AUDITING – REASONS AND CONSEQUENCESReasons 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 Date37
    • 38. 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 EDSDate38
    • 39. STRATEGIC ALLIANCES OF zccyDate39
    • 40. 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 - CiscoDate40
    • 41. NEW COMPETITORS ENTER THE CONSULTANT MARKETNew 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 companiesDate41
    • 42. 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 Date42
    • 43. 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 consultingDate43
    • 44. 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 PEOPLEDate44
    • 45. "WINNING THE WAR FOR TALENT" Key factors of success Image Interesting tasks Personal development Balanced life style International atmosphere 1.DaimlerChrysler2.Lufthansa3.McKinsey 4.BMW5.KPMG6.Boston Consulting7.Deutsche Bank8.Siemens9.SAP10.zccy Attractive employeesFocus 30. August 1999Date45
    • 46. 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 - technologyDate46
    • 47. NATURE, TRENDS, CAREERSNature and purpose of consultingRecent trends and current challengesStaff and career paths in consultingDate47
    • 48. STAFF AND CAREER PATHSPartnerAssociate PartnerManagerConsultantAnalystDirectorPrincipleAssociate PrincipleProject ManagerConsultantzccyMcKinseyDate48
    • 49. Lead work teams Facilitate Team-Meetings Systems design Client presentations Lead subprojectsConsultantAnalystProposals 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 peersROLES AND RESPONSIBILITIES: EXAMPLESDate49
    • 50. PartnerManagerInterface 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 teamDate50
    • 51. 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."Date51
    • 52. PERSONS TO SUPPORT YOUR PERSONAL CAREER Personal Mentor Peer Group Annual Reviews (upward/downward/sideward) Partner Group Practice LeadersDate52
    • 53. 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 thinkingDate53
    • 54. BENEFITS AND CHALLENGES OF CONSULTINGBenefits 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 Date54
    • 55. PROJECT WORK PLAN: ONE EXAMPLE FOR A THREE-MONTH PROJECT EXAMPLEALTE FOLIE VERWENDENDate55
    • 56. YOU KNOW THAT YOU HAVE BEEN TOO LONG A CONSULTANT WHEN … you feel naked without a laptop hanging from your left shoulder; you start thinking that life in the US Navy Submarine Corps would give you more time at home; 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; "vacationing" is spending an entire weekend in your own home; you have seen more movies at 35,000 feet than you have at your local movie theater before starting the car, you insist on telling everyone where the emergency exits are; before stopping the car, you insist that everyone stay seated until the fasten seatbelts sign is off; instant coffee tastes good; you've been staying in the same hotel, you instinctively call it "home"; you say "Whoopee! Half day!" when you leave at 10:00PM;Date56
    • 57. AGENDAIntroduction/Expectations Example consultant company Consulting: Nature, Trends, Careers Selected Methods (frameworks) Research (some basics) Graphics (from data to chart)Date57
    • 58. AGENDAIntroduction/Expectations Example consultant company Consulting: Nature, Trends, Careers Selected Methods (frameworks) Research (some basics) Graphics (from data to chart)Date58
    • 59. AGENDAIntroduction/Expectations Example consultant company Consulting: Nature, Trends, Careers Selected Methods (frameworks) Research (some basics) Graphics (from data to chart)Date59