A non-compete agreement recently expired that allows Booz Allen Hamilton back into the commercial business. The non-compete was related to the spin-off of Booz & Company back in 2008, which had prohibited the government-focused consulting business from re-entering the commercial market. But that was then and this is now.
Currently, the commercial business is "incubating" as part of BAH's civil business, says Patrick Peck, executive vice president and leader of Booz Allen's U.S. Commercial Business. "So far, we're exceeding our internal plan, and I think we're exceeding the leadership team's expectations around revenue and staff growth," Peck says. "Downstream, we have aspirations for the commercial business to be, at the bottom line, equivalent to our civil, defense and security businesses."
By "downstream," Peck's talking about a three-to five-year window. BAH never technically left the commercial business. As part of the non-compete, the firm was always permitted to continue selling work under anything related to cyber security in the commercial space, Peck says.
"The first year or two, that cyber security commercial business was very low-key and more opportunistic than strategic," he says. "It wasn't really until the third year that we started using that cyber exception to execute on some of that commercial business."
But it turns out that cyber security is only a small part of the firm's commercial re-entry strategy. "We knew that we'd be able to leverage the cyber security capabilities and that would offer us something different than our competitors," Peck says. "But we also felt strongly that our regulatory expertise in financial services, health and energy would go a long way."
And those three markets figure to be where BAH will make the most noise in the commercial space, allowing the firm to leverage its expertise from its government business, particularly in financial services and healthcare. "We didn't want to go back into commercial and pretend we're something that we're not," he says.
Peck says he sees the firm's value proposition as the space between the high-end strategy firms—Bain, McKinsey and BCG—and the outsourcing operations work done by IBM and Accenture. "We want to be right in the middle of that gap," he says. "We want to take the strategy from the boardroom of our clients and help them execute on it. That is
our overarching commercial strategy."
All of this, of course, will take talent and Peck says the firm is in the process of bringing in domain and industry expertise, similar to what it has in the government business. "The idea is to have staff in the local communities. We want to build a presence in places like New York, Charlotte and San Francisco… we don't want to be always flying people out of Washington" to serve commercial clients.
—J.K.
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