Short Takes

War of Words

McKinsey vs. Andersen E-business Face-off

 E-commerce opportunities are breathing new life into a decade-old debate that pits traditional strategy firms against technology consultants who argue that the strategy firms' meager technology deployment capabilities will undermine their ability to compete for clients.

"We're absolutely the best there is when it comes to marrying technology capability to business process. There's nobody who goes any deeper with technological skills or with as much scale as us," says Andersen chief executive George Shaheen, before delving into a familiar e-commerce oration — a lofty sermon that recently led Forbes to dub him the "Digital Messiah."

 McKinsey senior partner Mark Owen, who heads up the firm's business technology office (BTO), believes the growing hype inside the e-commerce consulting space is in part due to technology consultants experiencing shrinking opportunities elsewhere.

"You've got a lot of consultants whose sales of ERP (enterprise resource planning) services are slowing very quickly, and they view e-commerce as the next feeding frenzy," explains Owen.

"Most of these consultants don't understand the client's industry or where the money is to be made. They're just selling a solution," says Owen, who estimates that McKinsey is now involved in more than 300 e-commerce-related projects. "We don't have an army of people that we have to keep busy by selling work whether or not it ultimately delivers value to the client," he explains. Owen further says that the firm will often evaluate implementation partners for clients once the high-end strategy work nears completion.

While Owen claims that McKinsey has no interest in striking more formalized alliances with e-business implementation partners, certain e-business consulting executives say such alliances may make strategic sense for the consultancy.

Global Strategies

Hewitt Study Offers M&A Insights

For those consultants who know what it's like to belong to an acquired or merged consultancy, a recent study from human resources firm Hewitt Associates underscores the challenges merged companies face in the area of cultural integration.

According to a study involving more than 250 HR directors, different regions of the world experience unique challenges while completing a merger or acquisition.

Some of the study's findings highlight: the difficulties of integrating benefit programs belonging to Asia-Pacific companies; higher staff turnover inside Asia-Pacific, Canadian, and European companies; and reduced productivity by Latin American companies. For their part, many U.S. companies complained of having incurred extra costs when consolidating their benefit plans. HR professionals from every region agreed communication was the most critical factor contributing to the success of a given transaction.

Strategic Operatives

BCG's Grim Reaper

Sometime this summer, a number of consultants from the Boston Consulting Group are expecting to receive an assignment of a lifetime. A handpicked group of consultants has been asked to kill off the firm — or rather, to examine strategies that could put the consultancy out of business. The assignment is meant to help the consultancy detect potential land mines that could hinder the firm's efforts to create competitive advantages for its clients. Given the experience a consultant could gain from such an unusual assignment, you wonder whether a membership in the BCG "death squad" could become a prime qualification for future McKinsey & Co. partners.

Global Expansion

PwC Remains Bullish on Asia and ERP Opportunities

Expect to see PricewaterhouseCoopers acquire as many as six additional consultancies before the year's end, as the firm steps up a buying spree that appears to have few geographic limitations.

Having recently snatched up consulting capabilities in France, Belgium, and Italy, PwC Global Managing Partner Scott Hartz recently told Consulting the firm has no plans to curtail its acquisition strategy and will likely make another half dozen before the calendar year's end. PwC will continue to target consulting capabilities inside geographies where the firm's demand for resources is greatest, Hartz explains.

"We're very bullish on both Korea and Japan," he said, having recently returned from a trip to Korea, where PwC acquired a 50 percent interest in Dacom Systems Technologies, a Korean telecommunications consultant. "[Korea and Japan] aren't really large practices when placed beside, say, our New York one, but we're the largest consulting firm in Korea right now," says Hartz.

Separately, Hartz said that unlike certain consultancies, PwC does not expect to experience a slowdown in the sale of consulting services tied to enterprise resource planning (ERP) software. "We have the largest ERP force in the world, and if there are fewer deals to be had, I think we'll win a larger percentage of them. … I'm not letting up on our people in terms of expectations and performance in this space," explains Hartz.

Asked to comment on whether the ERP practices of certain firms may have encountered trouble due to their fixed-priced policies, Hartz replied: "The people who get into trouble on fixed-priced contracts are those who have fixed-priced something they can't define. If you haven't done the design job, it's pretty hard to fix-price the implementation effort. If you're stupid enough to do that, you deserve to get burned."

Making Room for Sleep

Deloitte's Nap Room Refreshes the Weary, 20 Minutes at a Time

Back in November 1997, when Deloitte Consulting moved into its new downtown Pittsburgh offices, a small windowless room was set aside by office management and later designated "the nap room" — a sanctuary for those consultants who could stand to catch 20 winks before returning to work on a client proposal.

Equipped with a single leather recliner and a blanket, the room is available for anyone who may find themselves sleepy-eyed, but with a pressing deadline looming. "It definitely has helped increase productivity inside our

different work groups," said Sandy Francis, human resources director for Deloitte. Francis claims that 15 to 20 minutes of sleep are all that is needed sometimes to help refresh a groggy consultant.

"We don't necessarily want to encourage long stretches of sleeping, but we don't really regulate it," said Deloitte marketing manager Noemi Tomarkin.

The unique office use has led different groups within Deloitte to tour the Pittsburgh office. "They're always really intrigued by the [nap room]," explains Francis, who said a recent group of visitors asked if they could get more information on the concept. According to Francis, two other offices within Deloitte Consulting have incorporated nap rooms into their workspaces.

Between the Lines

The IPO Query

As Another E-business Consultant Garners IPO Treasure, Top Consultancies Respond to the Nagging Question by Saying, "No, but Maybe."

 Asked what advice he'd offer newcomers to the consulting profession, Robert Howe, CEO of e-commerce consultancy Scient Corp., quickly enumerates three golden rules:

1. Become really knowledgeable in an area rich in intellectual capital, and strive to be the world's best in that area.

2. Keep learning.

3. If you don't love it, leave.

Somehow, Howe forgot number 4: Take your firm public and capture a fortune.  Howe's stake in Scient grew to more than $175 million this May  when the e-commerce juggernaut sold 3 million shares to the public.

Here's how three top executives representing large and middle-tier firms responded when asked whether they are considering offering shares in their firm to the public:

Andersen Consulting CEO George Shaheen:

"If the marketplace is going to demand an equity base or wealth creation vehicle, as far as a compensation program goes, than we can't stand by and ignore that phenomenon — but it's not clear to me yet, that through a relatively brief period of hot Internet stocks and unrealistic evaluations and distribution, that we want to jump off that bridge right now. But that could be a reason. But I will tell you, if we needed to do that, I would look very strongly at more of the phantom stock program in which an individual can do that but you keep that stock out of the public marketplace. …My biggest concern is that it would not be the same company — it can't be."

Grant Thornton CEO Dom Esposito:

"We are right now in the process of taking a look at how we can have our people participate in an increased valuation of our firm as we get bigger and stronger as a brand. So we have undertaken a study and retained a firm to develop a model that could result in our people sharing in some kind of upside valuation of our firm through some kind of phantom stock options. We also are carefully watching what is going on with the proposed IPO that is being considered by KPMG … and we are going to study those developments to see if we should consider this."

Deloitte Consulting Managing Director Doug McCracken:

 "Obviously, we'll continue to look at what our competitors do, and we'll continue to look at our need for capital. An IPO I suppose in the future could be an option, but I think it's important to point out that operating a business in a public environment is very different from operating as a partnership — firms like A.T. Kearney are finding this out — it changes the character of the organization, it changes the culture, it changes the focus, and it actually changes the dynamic of a firm."

On-Campus Maneuvers

First Woman Citadel Grad Joins Andersen

Just where Nancy Mace, 21, chose to work upon graduation from college would likely be of little interest to most people had she not been the first women to graduate from The Citadel, the venerable military college in Charleston, S.C. The Citadel had resisted co-ed education and was forced by court order in 1995 to enroll its first woman. Mace was one of four women to enroll in the fall 1996 semester. Today, 42 woman are following in Mace's footsteps. Prior to graduation May 8, Mace was reportedly courted by the FBI and South Carolina Sen. Strom Thurmond's staff, before opting for a job with Andersen Consulting as an analyst trainee. According to Andersen, hazing will not be part of the new recruit's orientation.