Leaders Tout Global Credentials

Should we care about these changing money flows? "Shareholders are increasingly global. They don't care about any one country's local issues. They just want higher returns," Suh noted. Once aware of that trend, managers will have to rethink how they cultivate shareholders. "Gone are the days when a company could nurture shareholders in just one country," he added.

These changes, he insisted, will clearly impact consulting. To begin, they will drive higher performance by forcing consulting firms to compete against global standards for cost, productivity, and quality. In short, they have raised the bar for consulting firms. They also will require consulting firms to acquire deep knowledge of the highest-performing companies and economies and adopt their practices as global best practices.

The workforce, of course, will be impacted by these changes as well. Managers must take care in managing the workforce in this new environment, lest they create what could be very destructive situations. It is important, Suh emphasized, that "global workforces do not compete with one another … they must be orchestrated."


Consulting is changing, Suh concluded. For example, the advent of Google has made sophisticated research available to every customer. In the past, consulting firms provided this kind of research for their clients. Other changes touch on technology-driven approaches to research, the rise of specialization, and the talent shortage.

Risk Management's Global Pressure

John Ladley of 
Navigant Consulting    
David Hartley of Protiviti    
William Spinard of 
Mercer Oliver Wyman

Panelist #1: William Spinard, 
Director, Mercer Oliver Wyman

What people forget when talking about risk management, said William Spinard at the outset of his presentation, is that "risk also has an upside. Companies can embrace risk and use it to competitive advantage.
That most companies are embracing risk management at some level became apparent in a recent Conference Board survey in which only 9 percent of the respondents reported rejecting any enterprise risk management (ERM) approach.

Spinard likes COSO's (the Commission of Sponsoring Organizations of the Treadway Commission) definition of risk management for two reasons: (1) It encourages a company to look at risk from a portfolio perspective, which means looking at risk across the entire spectrum of the company's activities; and (2) it requires the company to articulate its risk appetite, which requires specifying the kinds of risks it is willing to take. 


Mercer's ERM framework encompasses ERM infrastructure, process, and integration. ERM infrastructure addresses such things as goals, vision, and tools. The process component includes activities such as identifying and analyzing risk, developing initiatives, and measuring risk. The integration piece incorporates other corporate activities such as Six Sigma, Sarbanes-Oxley, and mergers.

Although ERM may seem overwhelming at first, "developing ERM is an evolution, not a revolution," said Spinard. He envisions organizations implementing ERM in three phases: assessment, in which they pin down the current state of risk; development, during which they build out the necessary processes; and implementation, which comes when the ERM effort is integrated with existing processes, budgets, and measurements.

Defining the risk appetite requires reconciling different perspectives of risk. For example, shareholders and debt holders likely will have divergent views of risk and look at different metrics. "A comprehensive definition of the organization's risk appetite, therefore, needs to encompass several different viewpoints," Spinard emphasized, ranging from what may be an acceptable cash flow at risk to the appropriate capital buffer to cover economic risks.

Spinard then pointed out a number of pitfalls to avoid, some as simple as ERM fatigue and over reliance on meeting compliance requirements. Strategic risks often are underweighted in the overall approach, while checklist-oriented ERM approaches often fail to result in any sustainable change. Still, he believes, organizations can avoid the pitfalls and take value from their ERM efforts. 


Panelist #2: David Hartley, Director, Protiviti Inc.



Why do cars have brakes? How you answer that question reveals a great deal about how you approach risk. Most people think that brakes enable you to slow down and stop the car. "We think that brakes help you go faster," says David Hartley of Protiviti.

So, why do businesses use ERM? Those in the brakes-slow-you-down camp see ERM as a way to avoid or mitigate threats. Those in the brakes-let-you-go-faster camp see ERM as showing how they can take advantage of those threats. These managers want to know "how risk management can help the company go faster," Hartley pointed out.

He ticked off six reasons to initiate ERM:
1. To reduce unacceptable performance variation.
2. To align and integrate different views of risk and risk management.
3. To build the confidence of the investment community and shareholders.
4. To enhance corporate governance.
5. To better respond to a changing business environment.
6. To align strategy with corporate culture.

Although "no two ERM solutions are alike," he declared, all companies implementing ERM confront similar issues when trying to implement it. There will be difficulties with communications, especially when trying to span different cultures, languages, and even time zones. Companies face different expectations even within the organization, which leads to conflicts and different priorities. In addition, the approach to ERM may not be consistent across the organization. Finally, there may not even be agreement on the risks themselves. "It is very hard to get to a common view of risk," Hartley noted.

To get started on an ERM initiative, Hartley recommended:
1. Downloading the COSO ERM framework at www.coso.org and studying it.
2. Discussing the ERM concept within the organization.
3. Identifying the specific key business risks, both domestic and international, that could bring down the organization.
4. Figuring out how to effectively monitor those risks.
5. Picking a piece of the business at which to pilot the ERM effort as a place to start.

The last recommendation is particularly important to Hartley, yet often overlooked. "You have to start with a pilot. You cannot do it all at once."

Panelist #3: John Ladley,
Director, Navigant Consulting


While much of the talk about ERM may seem intangible, there are concrete things managers can and should be doing. These tend to focus on data. Specifically, Ladley suggested the following action items:

To begin, managers need to assess data quality with an eye to errors and impacts. Many errors, he noted, are caused by poor data quality. After that, organizations need to document existing controls and develop initial metrics for risk management. To apprise management of what is happening across the risk arena, the organization must develop dashboard reports that monitor audit data on all content and, in particular, monitor the content of e-mail. This can be done through sampling techniques (performed with due regard to the tenets of the Electronic Communications Privacy Act).

While management has long kept its eye on structured data, unstructured data poses a new set of challenges. "There are risks in unstructured data. E-mail is an area of extreme risk," Ladley pointed out. As a result, organizations must set up context-sensitive searches of unstructured data to identify potential areas where business processes are not being followed. They also should be prepared to block access to unstructured data from multiple security points of view. These views may be role-based, individual-based, content-based, or process-based. Finally, organizations should develop content retention guidelines and archival processes.

While management has long kept its eye on structured data, unstructured data poses a new set of challenges. "There are risks in unstructured data. E-mail is an area of extreme risk," Ladley pointed out. As a result, organizations must set up context-sensitive searches of unstructured data to identify potential areas where business processes are not being followed. They also should be prepared to block access to unstructured data from multiple security points of view. These views may be role-based, individual-based, content-based, or process-based. Finally, organizations should develop content retention guidelines and archival processes.

Two things about ERM solutions can trip an organization up: latency and reporting. By latency, Ladley was referring to the time it takes from discovery of a risk to when this newly discovered information is actually used. "You have to know the latency of the metrics you are using," he advised. 



"Basel II is a good place to start reporting risk," said Ladley, but you also need to focus on content risk reporting. Such reports will reveal errors caught or not caught, audit data availability, archive and destruction activity, fraud detection, control and workflow (approvals, authorizations, reviews, and such), and e-mail- and document-scanning activities. The data, he added, should include percent errors and range errors.

Advancing the Global Delivery Model

Atul Vashista, 
CEO Of neoIT    
John White of Adjoined Consulting    
Tip Soloman of BearingPoint Inc.

Panelist #1: Atul Vashistha, CEO, neoIT

NeoIT's mission, Vashistha explained, is to help firms take advantage of offshore services. To that end, the consulting firm and its clients are tapping into several powerful trends.

First, globalization is maturing and has grown far beyond manufacturing to encompass IT and business processes. Second, globalization is no longer limited to India or China. New contenders are emerging in Asia, Eastern Europe, and even Latin America. Third, managers are now recognizing the risks in terms of infrastructure, intellectual property, and security, and understanding the need to manage those risks. Fourth, failures are being recognized as well. 
"We're learning from client mistakes," said Vashistha.

All of the above has caught the attention of C-level executives, which has raised globalization and offshoring to a strategic issue, which is further driving adoption of the practice. Now, leading companies across many industries boast offshore operations.

The benefits are clear: lower cost, faster time to market, access to a global talent pool, improved quality, and increased productivity. As the same time, the full range of risks is becoming apparent: financial, legal, and control risks; cultural and social risks; operations risks; and infrastructure risks.

To capitalize on the benefits and mitigate the risk, neoIT is promoting a new approach. "We are applying supply chain management principles to services to create a service supply chain for talent," said Vashistha. The idea is to look at talent across the world and assemble the right combination to meet the company's needs. The Philippines, for example, may be best for customer support for a U.S. market, while Mexico may be ideal for serving a growing Hispanic market customer base. Romania is proving popular for custom development, Russia for engineering, and Canada for IT and back-office work.

The trick, Vashistha noted, is not to look globally just to lower costs, but to view the global market as a place to source talent and knowledge.

Panelist #2: John White, Managing Officer,

Adjoined Consulting


John White carried the banner in this global services forum for U.S.-based consulting firms. "We are a full-service management consulting firm with a domestic focus," he declared.

The company takes a vertical industry approach, but it too has been influenced by the globalization of services. "We are very flexible in our approach," he explained. In light of that, it engages in extensive partnering and will bring in subject matter experts whenever a client needs them. Clients today are seeking help on how to expand geographically, keep costs down, find alternative sources, and provide service and flexibility. "We use knowledge management and leverage partnerships to help clients do this," said White. For example, the company might help a client set up an overseas network and design the flow path to extend their supply chain. As an example of the kind of complexity its clients are dealing with, "there may be 20 to 30 handoff points in the supply chain," he pointed out. Each of those handoffs adds cost and time to the process.

Panelist #3: Tip Solomon, 

Senior Vice President, BearingPoint


Most of the $3.1 billion in revenue BearingPoint reported last year came from systems integration and management services, noted Tip Solomon. The firm's go-to-market approach focuses on three broad market segments: financial services, the commercial sector, and the public/government sector. Across those market segments, it offers strategy, process, and transformation solutions; CRM; supply chain management; global finance; enterprise solutions (packaged applications); technology infrastructure and integration; and managed services. Its managed services offerings fall into two categories, IT outsourcing and business process outsourcing.

The area of managed services is emerging as a key interest. Among its offerings in this area, "today, we're most focused on application outsourcing," Solomon reported. Application outsourcing addresses core enterprise applications such as ERP and CRM. BearingPoint handles application outsourcing either onshore or offshore, but more recently the trend has been toward a blended approach, he added.

In the area of business process outsourcing, customers are seeking ongoing management of key business applications and functions/processes (principally FA & HR). Application management, which encompasses management and production support for both ERP and enterprise applications, has become BearingPoint's primary interest. Here the firm offers ongoing management of core enterprise applications, such as SAP, legacy or custom-developed applications, and vertical utilities. To deliver these services, its blended model typically involves a small team situated onshore and a larger team offshore. Offshore and onshore facilities then are connected via a suitable high-speed data communication link.

Previously, managed services focused strictly on taking out cost. Said Solomon: "That's always implied. Now we have to show the kind of value you get back."

Human Capital's Worldview

Bill Chafetz of 
Deloitte Consulting    
Kevin Rubens of 
Aon Consulting    
Jim Monastero of BearingPoint Inc.

Panelist #1: Bill Chafetz, 

Principal, Deloitte Consulting


As Bill Chafetz sees it, the workforce picture today is playing out "as a drama in three parts." Part 1: not enough talent. Part 2: a far more diversified workforce. Part 3: a challenge to the workforce by relentless competition, demanding customers, increased complexity, demands for speed and flexibility, and pressure to innovate.

Deloitte's response is to focus on people and roles, paying particular attention to critical workforce segments. "These are the resources that you need to achieve your strategy, resources that are square in the middle of the value chain," Chafetz explained.


A new model stresses the key activities of acquiring, developing, deploying, connecting, and retaining critical workforce segments. For everyone to succeed, the company will have to help employees get the skills that will enable them to achieve their goals as they help the organization execute its strategy.

This model requires workforce planning. "Companies must do good blocking and tackling when it comes to workforce planning," Chafetz insisted. To begin, managers need to project their needs based on a wide range of factors, including attrition. Then they need to put in place sourcing and development strategies to ensure that they will have the people when they need them.

Panelist #2: Kevin Rubens,
Senior Vice President, Aon Consulting


With the post–economic downturn recovery well under way, Aon Consulting has noticed a renewed interest among its clients in finding and developing the best talent, reported Kevin Rubens. Immediately, however, the clients began encountering a number of challenges, from managing intergenerational attitudes and expectations to maintaining employee engagement in the face of outsourcing and restructuring and the need to remaining globally competitive while still meeting obligations for healthcare benefits and pensions. "If all rules-based knowledge jobs are ultimately exportable, how do we design sustainable organizations?" he asked.

At the same time, government statistics project labor force growth in the U.S. dropping steadily although remaining positive over the next 50 years, while Europe and Japan experience negative growth. And the "possible government responses like increasing immigration or reintegrating people with disabilities may fall short of providing a solution," Rubens noted.
 With little hope for a governmental solution, Rubens offered a number of suggestions:

1. Focus on reducing staff turnover.

2. Strive to become an employer of choice.

3. Provide more flexibility in working conditions.

4. Establish a new social contract with employees.

5. Segment the approach to human capital management on the basis of talent management and total reward systems.
Most likely, organizations will have to try all of the above while focusing on leadership development programs, he concluded: "No longer does one size fit all."

Panelist #3: Jim Monastero,

Chief People Officer, BearingPoint


"In a knowledge economy, it really is all about human capital. How you source, acquire, retain, and deploy talent is critical," observed Jim Monastero.



Ideally, organizations want to acquire talent from anywhere and deploy it anywhere. However, a number of factors complicate this. For example, he noted, "there are too few young workers coming in. Also there are, multiple layers of rules and constraints."



To address its talent needs, BearingPoint is pursuing a three-pronged strategy consisting of human capital development, workforce optimization, and changes in rewards and compensation. "We have to move concurrently on all the paths as an integrated program," he added.

At the same time, good people know that they have many opportunities. "They will ask themselves who will be the best steward of their future," said Monastero. If BearingPoint or any firm is to attract the talent it needs, it will have to provide a culture of leadership development and offer a mix of compensation involving both short- and long-term rewards.

"What we're seeing among good people is the emergence of a free-agent society," Monastero pointed out. Companies will need to initiate the right dialogue if they want to succeed.