Salmon's Vertical Wisdom

Brown is an Annapolis graduate who completed the Advanced Management Program at Harvard Business School. He was named president and CEO of KSA in 1998, while the 56-year-old Cole has stayed on as chairman. With Brown at the helm, KSA is bolstering its presence in Asia, where it has offices in Hong Kong, New Delhi, and Tokyo, and in Europe, where it operates in all major countries. The firm provides a full portfolio of services from IT, logistics, corporate finance strategy, and e-commerce. "We're very engaged on the e-commerce side," says Brown, who previously has led the firm's European practice. "It represents half our business."

KSA doesn't name its clients, but they include many of the leading global consumer and retail outfits that are transitioning to e-business as well as dot-coms such as boo.com, which has emerged as a major on-line European retailer. "In 1999, our e-commerce was probably a 60-40 split, the 60% being the dot-coms and the 40% being the bricks-and-mortar," says Brown. "We've already
seen so far in 2000 a dramatic shift to it being probably 70-30, 70% being the bricks-and-mortar retail people, primarily in business-to-business activities."

A digital leap of faith

Under Cole, and more recently Brown, KSA has moved aggressively to position itself as a leader in cyber commerce. It sponsors the so-called Cyber Connection and Consumers Choice awards, which honor companies for investing to build Web-based ties to their customers. This past December at its annual executive briefings, KSA presented awards to a number of high-visibility e-commerce players, including Fogdog Sports, Amazon.com, Lands' End, Streamline.com, and Dell Computer.

KSA has also initiated a number of alliances with key technology vendors. Recently, for instance, David Cole joined the board of QRS Corp., a leading provider of b-to-b e-commerce solutions with which KSA partners. It has also established strategic alliances with Syncra Systems; IP Net; Whittman-Hart, with which KSA has formed a joint venture to focus on advanced technologies; SAP; and JBA International among others. "We're working with a lot of software vendors that are developing e-solutions," Jean-Louis Simoneau, managing director, Europe, says. "We're also quite happy working with some of the traditional IT players, such as IBM and Cisco."'

As part of its e-commerce efforts, KSA has been an early and enthusiastic champion of CPFR (Collaborative Planning, Forecasting, and Replenishment) processes, which enable manufacturers to develop one common forecast to drive replenishment and production. The firm has worked with at least one client, a $30-billion-plus retailer, in using CPFR to identify cost savings across the supply chain and improve sales and margin performance, Brown says. "CPFR helps the client determine exactly how much product to buy in the future, and how to reduce inventory in the supply chain."
Finally, in going after some of the new on-line consumer and retail outfits, KSA is taking a piece of the action in lieu of its usual fee. "We're taking equity or a combination of equity and success fees with some dot-com clients," notes Simoneau. "It's the venture banks who know us well, and who bring us into certain [opportunities]."

The price of loyalty

Over the years, KSA has established a strong reputation among consumer and retail clients. As evidence of this, the firm's last end-of-project survey of clients that came this past September indicated that 100 percent of the respondents intend to retain KSA again and will recommend the firm to others. KSA claims that it has one of the highest percentages of repeat assignments within the consulting industry.
This loyalty can be partially attributed to the TLC KSA lavishes on its clients. "All our senior leaders spend half their time with clients," notes Brown.
Another plus is the in-depth knowledge and intellectual capital KSA has developed in the market segments it serves, plus its ability to apply this knowledge effectively in working with global clients. One reason for this: While many global consultancies are really a collection of affiliated firms — with each affiliate jealously guarding it own intellectual capital — KSA is structured as a single corporate entity. "Our principals all own the same company, so you don't get the internal friction that sometimes develops," says Brown. "We're able to flow our intellectual capital and best practices to the best opportunity."

In working with a U.S. retailer that is trying, say, to establish itself as an e-business player in Europe or Asia, KSA is able to draw freely upon best practices developed working with other clients around the world. "In Europe, the [on-line] retail market is very different than in the U.S.," Simoneau explains. "For example, in France or Germany, you can't provide [home pages that are written] only in English. Some big retailers such as Reebok and Sara Lee have been really effective in setting up really efficient Internet and local models. We're able to build best practices from these models."
Also, he says, without the internal politics and game playing that can develop among affiliates, KSA is able to develop truly international consulting teams. "Over here, we have Pan-European teams combining German, French, and English talent," Simoneau notes.
"Another advantage of our [unified] organizational structure is that we have a common message throughout the company," adds Brown.

In good health

While most of KSA's attention is directed at the retail and consumer markets, it has been quietly building up a robust health care practice through Hamilton HMC, its health care division. "It's about a $20 million practice with 70 to 80 people," explains Mark Wietecha, the division's national director.
Clients include physician group practices, integrated delivery systems, and hospitals and other health care organizations such as Mt. Sinai Hospital in New York, the Mayo Clinic, and Henry Ford (Hospital). Unlike KSA, which provides a broad range of services, Hamilton is targeted at specific areas.
"It's a modest-scale practice," says Wietecha. "We want to focus exclusively on areas where we're strong enough to keep out the competition. Ours is a rifle approach."

Those areas include strategic planning, IT services, and facility and design services where Hamilton has a good range of functional depth. A typical assignment runs from 12 to 18 months. "It's classic, knowledge-based consulting," Wietecha says. "If Mayo is looking for a way to improve performance, we can show them how we've done it elsewhere."
In today's constricting health care industry, cost savings and efficiencies are at a premium. "A number of our clients have gone through mergers," Wietecha explains. "Their boards are typically made up of people from Fortune 100 companies, and they want to see the same kind of synergies that are occurring in the private sector."

Of course, health care has to live with a number of regulations that don't exist in other industries. It's Hamilton's job to not let these constraints stand in the way of achieving results.

The Viants of the world

For KSA, the explosion of e-business is not without a downside. In this gold rush environment, good people are increasingly hard to find. "Talent is at a premium," concedes Simoneau.

His group has had some success in attracting people from competitors. "In Europe, KSA is seen as a good alternative to the Big Five and Cap Gemini, as we have a depth of global knowledge from strategy to technology," he notes.
In the U.S., KSA is going after very diverse candidates, says Brown, and is using the Web to do some of its recruiting. "We target people from the leading business schools around the world, as well as high-caliber undergraduate engineering students," he says.
To observers both inside and outside the company, it's clear that Brown's KSA will be able to use all the help it can get in an e-commerce field now overrun with skilled competitors like the Sapients, Scients, and Viants of the world. No one has ever said that the "e" in e-business stands for easy money, but that doesn't seem to daunt this fearless — and adaptable — survivor consultancy.

Firm Facts:

• Management Offices: Atlanta, GA
• Year Founded: 1935
• Number of Consultants: 670
• Number of Offices: 21
• 1999 Revenue: $100 Million*
• 1999 Growth Rate: 15 percent
• Management: Founded 65 years ago by textile engineer Kurt Salmon, KSA grew to 70 consultants in the 1960s and assumed a global presence in the 1970s under David A. Cole. Appointed KSA's managing director in 1977, Cole moved up to the chairman and CEO slot in 1988. KSA's Peter G. Brown was named CEO and president  in 1998, when Cole stayed on as chairman.
   *Estimated