News broke this week that global IT software and services firm NTT Data is acquiring Charlotte, NC-based Carlisle & Gallagher Consulting Group. Like an onion, this is one of those deals that has many layers—but will they add up to a successful marriage?
NTT Data, the IT platform and services spin-off of Japan’s Nippon Telegraph and Telephone Public Corporation, has burgeoned into a $16 billion global business, focusing on the more heavily-regulated industry lines. Despite this success, NTT Data has struggled to break into the US banking market, in part because US regulations strongly favor native technology platforms for banks. But another stumbling block for NTT Data has been that its advisory services in the banking space have been on the thin side – governance, process efficiency & realignment, etc. – and have been heavily reliant on NTT Data software products and tools.
In that view, the acquisition of Carlisle & Gallagher makes perfect sense, as Carlisle & Gallagher brings more than a decade’s worth of experience providing strategic, operational and technology consulting services to North America’s largest financial services companies. Furthermore, the firm is headquartered in the US’ second largest financial services hub, and has deep relationships with most of the country’s largest banks. And the firm has cemented its reputation in financial services with its detailed and ground-breaking studies on some of the most challenging elements of banking customer behaviors and channel management. For NTT Data, Carlisle & Gallagher is a key that opens doors to the senior leadership of the top US banks.
But will this marriage work? If done right, NTT Data could itself enable Carlisle & Gallagher further by giving the firm the full IT services wing that it sorely needed, as well as (in turn) open doors for Carlisle & Gallagher to engage clients beyond US shores. But Carlisle & Gallagher is, at its heart, a strategy-oriented management consulting firm with a very different talent and operating model than an IT services firm. The challenge is for NTT Data to make this work by preserving Carlisle & Gallagher’s greatest assets—its consultants—and letting them do what they do best in the way they know best, without getting in the way. This is a formidable task, but if NTT Data can pull it off, they will have achieved nothing short of a coup.
Tomek Jankowski is aSenior Analyst, Lead for Financial Services Consulting Research.
Gabe Walle is Industry Analyst, Financial Services Consulting Research.