CXO

Stitching together the pieces of consulting's recent afflictions

HP won't buy PricewaterhouseCoopers, and marchFIRST just laid off 10 percent of its staff. Do such events spell a grim future for e-consulting? Columnist Tom Rodenhauser offers his thoughts.


Four events over the last month provide a glimpse of consulting’s future. First, Hewlett-Packard calls off its shotgun wedding with PricewaterhouseCoopers. Then, the SEC reaches a compromise with accountants and consultants. Then, marchFIRST lays off about 1,000 employees, or about 10 percent of its workforce. And finally, A.T. Kearney CEO Fred Steingraber announces his retirement.

Sorry, conspiracy buffs, none are related. But each episode does have a connection to the industry’s larger scheme.

Even though the PwC deal didn’t work, accountants will continue divesting themselves of consultants (which is why KPMG will not abandon its IPO). The new disclosure rules put forth by the SEC are just uncomfortable enough to push the separation issue over the edge. When—not if—PwC and KPMG go free, Deloitte and Arthur Andersen will be hard-pressed not to follow.

The marchFIRST mess is sad yet typical of the mercurial rise and fall of consulting hotshots. In the rush to be big, marchFIRST never quite paused long enough to get its act together and present a cohesive value proposition to its clients, let alone to the markets. We would like nothing better than a Lazarus-like resurrection for the company… No one enjoys grave dancing. At the same time, marchFIRST is representative of a whole class of consultancies that will find 2001 extremely challenging.

Fred Steingraber’s retirement probably won’t register with most folks. Fred pushed the 1995 EDS/ATK union when most analysts scoffed at the idea of putting integrators and strategists in the same car. Needless to say, Fred endured many arrows over the next five years as well as change in EDS leadership. His successor at ATK, Dietmar Ostermann, is the first European chief executive in the company’s eight-decade history. And at 38, Ostermann is only two years older than Steingraber’s entire tenure—36 years—at ATK.

What does it all mean? There is a changing of the guard within consulting, both literally and figuratively. Old guards like ATK are bringing in fresh leadership. The industry’s biggest players are radically restructuring themselves. And the Young Turk consultancies—once hailed as the industry’s future—are crashing and burning all around us.

The smoke won’t clear for another 12 to 18 months. And when it does, the consulting landscape will look dramatically different.

Heard on the street
Who says VC money has dried up? i2e, a Netherlands-based I-consultant, received more than $20 million of funding from Morgan Stanley Dean Witter Capital Partners and Watershed Capital, together with Morton Meyerson’s 2 M Technology Group. The company is led by Robert Pickering, former CEO of Origin B.V., a $2 billion European systems integrator.
Inside Consulting is written by Tom Rodenhauser as a free weekly supplement to The Rodenhauser Report. The report informs senior advisors and business executives of consulting trends and best practices. Subscription cost is $295 per year for 10 issues. Copyright 2000, Consulting Information Services, LLC. Reproduction is prohibited. Quotation with attribution is encouraged.

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