By Mina Landriscina
If the history of the consulting industry were an Aesop fable, it's a good bet Keane, Inc., would be the tortoise who beat the hare. For 35 years, the consultancy has steadily plodded along, growing at least 25 percent a year, to its present $1 billion size.
In the 1990s, when Big Five accounting outfits first stormed the consulting space, Keane, Inc., fortified its advance by harnessing its mainframe computing skills to help clients temper the impact of the millennium bug. Keane's Y2K evolutionary feat is one its Big Five rivals and others would now like to match as they attempt to open new veins of consulting opportunities inside e-business.
While it's not yet known which firms are likely to succeed inside the e-space, few pundits are betting against the plodding but ever-steady Keane.
"The name of the game in the services business is to evolve or die," says Richard Leggett, director of technology research at Friedman, Billings, Ramsey & Co. "Keane has seen a lot of technology transitions, and they've shown their ability to evolve. Unfortunately, as you get bigger, it takes longer to evolve."
And, with an 8,000-member consulting workforce, Keane is no longer a lightweight. Still, many people are surprised to learn that the firm existed long before its Y2K offerings. The company was founded by ex-IBMer John Keane, Sr. The one-man operation, above a donut shop in Hingham, MA, initially provided applications development services to mainframe clients. Later, in the 1970s, the firm added outsourcing capabilities, positioning itself for large program management opportunities.
A decade later, the company transitioned its core software services business to answer the demands of multiplatform computing. When Y2K concerns grew in the mid- to late 1990s, Keane could not have been in a better position; its client portfolio was a rich mix of mainframe and New Age client server clients. Today, at the turn of the century, the firm is evolving once more.
"We are truly positioned as one of the key firms that has an end-to-end solution — from front-end consulting through architecture and design to the ability to support those systems long-term," says Brian Keane, 39, son of the firm's founder and CEO since his appointment last November. He had joined the firm in 1987 and served in a number of management positions, including branch manager, area manager, and vice president. In 1997, he became co-president with his brother, John Jr., 40, who still retains the president's title.
Keane expects the firm to follow its current growth track and be a $3 billion company by the year 2005. The fastest growing area is its e-solutions practice, which generated $118 million and accounted for 12 percent of firmwide revenues in 1999. He expects this figure to balloon to 30 percent of the entire business this year.
Management consulting services, which has about 500 consultants, is predominately delivered through its Keane Consulting Group. Currently, KCG is the firm's second-fastest-growing unit. This practice is expected to grow about 40 to 50 percent to about $160 million to $180 million by the end of fiscal year 2000, Keane says.
Unlike the new e-business consultancies such as Scient, Sapient, and Viant, whose strengths lie in front-end e-strategy and creative Web site design, Keane's competitive advantage is its experience with large projects that require extensive back-end integration, says William Loomis, a managing director of Legg Mason.
"Keane can bring its strengths to the party," says Loomis. "The Keane name and brand is currently associated with very strong large-project management capabilities. They should use that as a strength as they move into e-business, as opposed to trying to rebrand themselves as the next creative shop."
If you sing the praises of the firm's Y2K work — which at its peak allegedly made up only a third of the firm's business — Brian Keane cringes. Even though Y2K income is down to nil, the firm's strong association with Y2K work has left Keane with a stigma that's hard to ignore. However, the CEO acknowledges that Y2K work helped raise the firm's profile and expand its client base. Half of its Y2K customers were brand new to Keane, and 85 percent of them are still with the firm.
"Yes, they looked to us for Y2K, but they realized our broader capabilities and they continued to leverage us for a whole series of other services," Keane says.
About 80 percent of the business is coming from the firm's approximately 1,000 existing Global 2000 clients such as 3M Corp., General Electric, and Sony Computer Entertainment. Because Keane, with its 50 branch offices in the U.S., Canada, and the U.K., tends to go after large-scale projects that can go up to $12 million on the development side and $90 million on the outsourcing side, it often finds itself in head-to-head competition with IBM, KPMG, CSC, the Big Five, and other e-services providers.
"At the end of the day, success is going to come down to delivering a project on time and on budget and meeting or exceeding clients' expectations," says Leggett. "Keane is very strong at that. And, their value proposition tends to mirror where clients feel the most pain and are spending the most money — around new development, application outsourcing, and maintenance."
While Keane was considered a trailblazer in information technology services in the 1960s and 1970s, Loomis adds, "They were late by about 12–18 months in their e-business initiative." Nevertheless, the firm has the potential to be a leading e-business consulting contender, Loomis says. "They will compete effectively inside their target market — these are very large companies that they have done work for in the past."
As Keane, Inc., continues its plodding but steady stride into the future, its consulting rivals may want to remain mindful of this warning: Watch out — the tortoise is rounding the bend!
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