European Trends in Management Consulting

1
European Trends in Management Consulting

• Antoine Beuve-Méry, IBM- Belgium, Chairman of
  Feaco
• Feaco annual conference
• Budapest, 8-10 November 2006

2
Market trends The Background

• Significant impact of globalization and of ever
  faster innovation
• Innovation is everywhere (traditional RD BUT
  ALSO in new business models)
• Ever increasing role of technology ? high degree
  of adaptability is a MUST
• Globalization impacts our clients and our
  industry
• Best shoring is becoming standard practice for
  consultants AND for their clients
• Economies grow at different paces
• Western Europe
• Central Europe
• China India, Far East
• Consulting industry is changing fast but has a
  bright future
• Support / assistance to innovation change
  remains in high demand
• Strong demand as well in outsourcing an best
  shoring
• To actually take over some non core process
• IT, Finance, HR, cal centers, other support
  process
• To support change associated to best shoring

3
Feaco survey

• Market growth 1997-2005

4
Feaco survey

• MC market size by country/region

5
Feaco survey

• What hides behind these charts ?
• 14 average growth rate in 2005, partially due to
  a redefinition of the scope of the MC market
• Wide disparity in growth between countries
• Growth of MC EU and (most) national markets gt
  growth GDP, but there is a wide disparity in the
  part of national GDP that MC represents
• An a-typical market few very large players, very
  many very small players which keeps
  concentrating
• National markets, and the ways in which they are
  developing, are unique

6
FEACO Survey

• Common trends
• Main drivers economic growth and stability, the
  increased export to Eastern European countries,
  accession to the EU,
• Driving sectors the public sector and the
  Financial Services sector
• Consulting services are reaching maturity in most
  countries.
• Increased loyalty from clients towards
  consultants. Experience is a key element for
  choosing a consultancy. Clients are clearer about
  their requirements and interested in measurable
  results.
• Short-term projects are still dominating most
  markets, but there is a shift towards more
  long-term projects.
• Fee rates are still under pressure.
• quality is essential to be able to compete in the
  marketplace. Ethics and professionalism also play
  an important role in the selection of a
  consultant.
• trend towards investment in new projects,
  especially in the countries that reported good
  market growth..
• The EU expansion was generally judged as having a
  positive effect on the market.

7
MC Industry trends Other considerations

• A word of caution The crystal ball is still a
  myth
• Looking forward
• Expect continuation of 2005 trend for 2006 2007
• Top markets remaining UK, Germany France, Italy,
  and Central Europe
• Consulting Industry is on slow but clear
  consolidation trend
• More acute in the IT consulting industry
• Appearance of the Indian players willing to
  increase foot print in Europe
• The hot topics
• Growth vs cost reduction
• RD Customer interaction vs Operations (supply
  chain, procurement etc)
• Strategy (IT global growth), Perf. Mgt
  Business intelligence, SOA enabling easier and
  cheaper data exchange internally and externally
  (driving major changes in process and innovation)

8
Market trends Other considerations

• BPO still a very hot topic (cf process innovation
  even as part of SSC set-up)
• Important source of revenue short and mid term
• Competition between Outsourcers and Consultants
  specialized in Outsourcing advisory
• Latter assist in
• preparation of deals / selection of outsourcers
  (to avoid conflicts of interest with the big
  players)
• PMO support / QA / X-cultural support
• Outsourcers claim they can do it all
• Change Mgt and organizational support for
• the locally remaining operations
• In the X-cultural working relationships
• Potential important role in support of /
  cooperation with the Indian based big players
• Ever existing debate / competition between BPO
  transformational outsourcing VS Transform and
  outsource
• Potential issue on the longer term? Not really
• Limited as not every corporation is culturally
  ready for outsourcing (evolution process over
  time)
• Consulting lives out of change There will be a
  next wave

9
Market trends Other considerations

• Best Shoring is here to stay
• Reserves of top educated brains in India and
  China are limitless
• Not limited to IT, e.g. presently leveraged
• By the strategic consulting firms for their
  desktop research
• For multilingual and translation purposes
• For development and delivery of e-learning
• Big Indian players are more and more present and
  aggressive
• Develop higher value added commercial proposition
• Are hardly visible as rarely part of local
  associations
• The reborn of the big 4 consulting practices, BAS
• MA, Business planning Perf. Mgt, FOI, BPR,
  Risk management
• Growing faster than the rest of consulting,
• Business anchored on broad financial skills,
• Remaining distant from Business model
  transformation involving IT except for PMO
  Change Mgt support Public Sector is a potential
  exception
• Other Key players are
• Local MC firms potentially members of X-borders
  networks
• Value added system integrators focusing on
  local process improvements, not on Business model
  innovations

10
Market trends Other considerations

• Fee discounting still present but becoming less
  of an issue
• Exist overcapacity in some segments
• Best Shoring impact on gross numbers, but
  delivering higher profitability
• Consulting come back as a good lever to
  facilitate accelerate change
• Engagement size
• Ever present need to get support