COMPETITIVE ANALYSIS IDC MarketScape: Worldwide Business Consulting Services 2012 Vendor Anal ysis

Cushing Anderson

IN THIS EXCERPT
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The content for this excerpt was taken directly from the IDC MarketScape: Worldwide Business Consulting Services 2012 Vendor Analysis by Cushing Anderson (Doc # 233425). All or parts of the following sections are included in this excerpt: IDC Opinion, In This Study, Situation Overview, Future Outlook, Essential Guidance, and Synopsis. Also included are Tables 1 & 2, and Figure 1.

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IDC OPINION
This IDC study represents the vendor assessment model called IDC MarketScape. This research is a quantitative and qualitative assessment of the characteristics that explain a vendor's success in the marketplace and help anticipate its ascendancy. This study assesses the capability and business strategy of many of the leading business consulting firms. This evaluation is based on a comprehensive framework and set of parameters expected to be most conducive to success in providing business consulting services during both the short term and the long term. A significant and unique component of this evaluation is the inclusion of the perception of business consulting buyers of both the key characteristics and the capabilities of these consulting providers. As one would expect of market leaders, overall, these firms performed very well on this assessment. Key findings include: Surprisingly, this evaluation discovered that generally buyers are disappointed with the consulting provider's ability to deliver ROI for the project and maximize the project's value. While all vendors state a focus on maximizing the value of their projects, buyers believe this area is one of the weakest performance areas for consultants overall. Even though most firms describe themselves as capable of global delivery, an important factor for their clients is the ability to leverage local staff and resources on appropriate projects. Clearly, this reflects both a cost focus and a desire for local awareness. In both cases, consulting providers must improve their ability to exploit their local talent. Firms are generally quite good at demonstrating their ability to apply proven methodologies/tools and to provide a full spectrum of business consulting services; however, neither of these capabilities resonates particularly highly when enterprises consider selecting a firm for a particular project.

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Filing Information: March 2012, IDC #233426, Volume: 1 Business Consulting Services: Competitive Analysis

IN THIS STUDY
This IDC study uses the vendor assessment model called IDC MarketScape. This research is a quantitative and qualitative assessment of the characteristics that explain a firm's success in the marketplace and help anticipate its ascendancy. This study assesses the capability and business strategy of many of the leading business consulting firms. This evaluation is based on a comprehensive framework and set of parameters expected to be most conducive to success in providing business consulting services during both the short term and the long term. A significant and unique component of this evaluation is the inclusion of the perception of business consulting buyers of both the key characteristics and the capabilities of these consulting providers. As one would expect of market leaders, overall, these firms performed very well on this assessment. This study is composed of two key sections. The first part is a definition or description of the characteristics that IDC analysts believe make a successful business consulting firm. These characteristics are based on buyer and vendor surveys and key analysts' observations of industry best practices. The second part is a visual aggregation of multiple firms into a single bubble-chart format. This display concisely exhibits the observed and quantified scores of the consulting providers. The document concludes with IDC's essential guidance to support continued growth and improvement of these firms' offerings.

Methodology
IDC MarketScape criteria selection, weightings, and vendor scores represent wellresearched IDC judgment about the market and specific firms. IDC analysts tailor the range of standard characteristics by which firms are measured through structured discussions, surveys, and interviews with market leaders, participants, and end buyers. Market weightings are based on user interviews, buyer surveys, and the input of a review board of IDC experts in each market. IDC analysts base individual firm scores and, ultimately, firm positions on the IDC MarketScape, surveys and interviews with the firms, publicly available information, and buyer experiences in an effort to provide an accurate and consistent assessment of each firm's characteristics, behavior, and capability.

SITUATION OVERVIEW
Introduction
Business consulting involves advisory and implementation services related to management issues. It often includes defining an organization's strategy and goals and designing and implementing the structures and processes that help the organization reach its goals. Business consulting includes three main areas: strategy

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consulting, operational improvement consulting, and change and organization consulting. The market is primarily served by four firm types: "Big Four": IDC recognizes the well-known Big Four firms as the four largest international accountancy and professional services firms Deloitte, Ernst & Young (E&Y), KPMG, and PricewaterhouseCoopers (PwC). Multidisciplinary: IDC describes multidisciplinary firms as large, diversified consulting organizations that offer a range of business consulting services to clients across a myriad of sectors. To distinguish these from other specialty firms, services must address more than two business functional areas, in addition to providing strategy and operational implementations. Technology led: These are also large, multifaceted firms and are known for deep expertise in both technology and business consulting. IDC identifies these firms as those that expanded from IT-centric business into more broad business consulting or vice versa. Specialty: Specialty firms have focused areas of consulting expertise in specific industries, functional areas, or technologies. Management and strategic consulting specialists that offer primarily strategy consulting and business intelligence models to specific sectors or industries including government fit into this category of firms.

IDC MarketScape Vendor Inclusion Criteria

This research includes analysis of the five largest business consulting firms and firms with broad portfolios spanning IDC's research coverage and with global scale. This assessment is designed to evaluate the characteristics of each firm as opposed to its size or the breadth of its services. It is conceivable, and in fact the case, that specialty firms can compete with multidisciplinary firms on an equal footing. As such, this evaluation should not be considered a "final judgment" on the firms to consider for a particular project. An enterprise's specific objectives and requirements will play a significant role in determining which firms should be considered as potential candidates for an engagement.

Weighting Evaluation Criteria

The importance of a firm's characteristics to project success and relevance of the particular issue combined with IDC's opinion about the impact those elements have on selection of firms implies a unique weighting of these elements when evaluating a firm's overall strategy and capability to address market opportunity and realizing market success (see Tables 1 and 2).

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TABLE 1
Key Strategy Measures for Success: Business Consulting Services
Subcriteria Weighting

Strategy Criteria Offering strategy

Criteria for Success Current development of offerings will be relevant and attractive to customers over the next three to five years. A wide variety of approaches will be employed to ensure increased functional and industry capability, including strategic hiring and training. To ensure maximum impact, organizations will need to increase their ability to construct teams that leverage those capabilities and provide precise value to clients. Methodologies and tools are increasingly leveraged from a single, universally accessible source to ensure worldwide consistency. To ensure maximum use and value, tools and methodologies must be accessible using a single library source. Increasingly, relevant offerings must involve the formation of multidisciplinary teams. A firm's increasing capability to identify potential team members, determine their fit and availability, and leverage their talents effectively will become an essential characteristic of successful engagements. Prioritization of new opportunities must consider demand and adjacent capabilities and involve a tiered (regional) prioritization process.

Functionality or offering road map

Delivery model

Portfolio strategy

Other offering strategies Offering strategy total Go-to-market strategy

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These strategies maximize the connection between offering and customers, including choosing to target customer segments that offer the greatest opportunity over the next three to five years. Firms must focus on the performance of their clients' business, and their pricing models must reflect the value of the services delivered. While contingent fees represent a strong statement of confidence, most buyers are not fully prepared for the gain sharing (as opposed to risk sharing), making these arrangements viable in only small proportion engagements. Consulting models are becoming more complex. Enterprise buyers need to consume consultative services in increasingly diverse ways. While still dominant, traditional engagement models are being supplemented by "microsourcing" of technically complex but narrow tasks such as analytic processing or ongoing benchmarking, and information services provided with less intensive "consultation" to support insourced analytical or benchmark operations. Growth comes from many types of opportunities and client interactions, including temporal opportunities. Identifying areas of high demand and providing comprehensive and timely solutions require an integrated firmwide effort but will best serve the client's most important and immediate needs. Consistent and innovative service delivery relies on collaborative efforts throughout an organization. Firms must ensure a strong culture of collaboration, consistent and relevant training, and executive oversight and support. 1

Pricing model

Sales/distribution strategy

Marketing strategy

Customer service strategy

Go-to-market strategy total Business strategy Strategies to grow the business are aligned with market trends and future opportunities over the next three to five years. Firms poised for growth in the near term provide relevant specialized offerings that address specific needs, particularly for industries, geographic markets, or the size of the

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Growth strategy

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TABLE 1
Key Strategy Measures for Success: Business Consulting Services
Subcriteria Weighting

Strategy Criteria

Criteria for Success client. Additionally, a consulting provider's ability to cultivate a wide range of referenceable clients ensures the provider's capabilities will get the widest exposure to opportunities. Growth strategy is measured by both the diversity of the planned dimensions of growth and the measure of enthusiasm of client recommendation across company size and functional areas.

Innovation/R&D pace and productivity

Firms must be able to deliver innovation to their clients, in terms of both leveraging existing experience for the unique benefit of a client and developing a truly unique approach to solutions. Delivery of innovation is measured by client perception of the innovation delivered on the project. There is no simple approach to employees firms need to invest in career customization programs to retain some advanced talent, providing for a diverse range of career tracks. Emerging market expansion requires increased focus on local capabilities and the capability to deliver services from specialized delivery centers to provide both rewarding opportunities and high client value. Employee strategy is evaluated by examining the types of career/employee management practices in place. Particular weight is given for career customization/diversity programs that facilitate multiple paths to career success within the firm.

Employee strategy

Business strategy total

Source: IDC, 2012

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TABLE 2
Key Capability Measures for Success: Business Consulting Services
Subcriteria Weighting

Capabilities Criteria Offering capabilities Functionality/ offering delivered Delivery model appropriateness and execution

Criteria for Success The offering's capabilities align well with current market needs and demands.

Offering capability is a combination of functional (domain) knowledge, industry insights, and technical capabilities. Higher capability reflects buyer perception of a firm's capability. The appropriate delivery model must include an appropriate integration with the client team and meet client-developed project timelines. Higher capability is reflected in higher buyer perception of a firm's capability in both the "ability to integrate with client team" and the "ability to meet project timelines." Cost competitiveness can best be measured by the ability to deliver an appropriate and sustainable return on investment. Higher capability reflects buyer perception of a firm's capability. Evolved consulting firms will necessarily be required to provide a full range of consulting services combined with an ability to provide specific insights related to industry, technical, or domain issues. Higher capability reflects buyer perception of a firm's fullness and

Cost competitiveness

Portfolio benefits delivered

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TABLE 2
Key Capability Measures for Success: Business Consulting Services
Subcriteria Weighting

Capabilities Criteria

Criteria for Success appropriateness of services offered.

Offering capabilities total Go-to-market capabilities Pricing model options and alignment Sales/distribution structure, capabilities Marketing These capabilities maximize the connection between offerings and customers, such as delivery, partnerships, pricing, distribution, marketing, sales, and service. Contingent fee structures are a useful alternative model to help share risk and acknowledge joint ownership of results. A moderate level of use of this fee reflects a firm's trust in its own relevance and commitment to client success. Firms must operate by balancing both local and global requirements. Global presence indicates a firm's ability to respond and be relevant to cross-geographic issues. Higher capability reflects buyer perception of a firm's capability. The ability of a firm to connect to its clients' issues is essential to establishing a level of trust in the firm's ability to solve the problem. Issues are evaluated and weighted based on regional priorities. Higher capability reflects buyer perception of a firm's capability. A firm's ability to provide service to a client is contingent on the firm's ability to deploy local resources where appropriate. Higher capability reflects buyer perception of a firm's capability.

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Customer service

Go-to-market capabilities total Business capabilities Growth strategy execution Financial, employee, partner, and R&D management, among other capabilities, are in agreement with current market opportunities. Essential to a consulting firm's growth is its ability to develop "referenceable clients." Clients that strongly believe the firm will represent their best interests are most often referred. Growth strategy execution is measured by the degree of enthusiasm of industryrelated recommendations by clients. Also essential to a consulting firm's growth is the firm's ability to develop "referenceable clients." Clients that strongly believe the firm will represent their best interests are most often referred. Business capabilities are measured by the degree of enthusiasm of recommendations by clients to enterprises of similar size.

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Other business capabilities

Business capabilities total

Source: IDC, 2012

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FUTURE OUTLOOK
IDC MarketScape Worldwide Business Consulting Services Market Vendor Assessment
The IDC vendor assessment for the business consulting services market represents IDC's opinion on which providers are well positioned today through current capabilities and which providers are best positioned to gain market share over the next few years. Positioning in the upper right of the grid indicates that providers are well positioned to gain market share. For the purposes of analysis, IDC divided potential key strategy measures for success into two primary categories: capabilities and strategies. Positioning on the y-axis reflects the provider's current capabilities and menu of services and how well aligned it is to customer needs. The capabilities category focuses on the capabilities of the company and services today, here and now. Under this category, IDC looks at how well a provider is building/delivering capabilities that enable it to execute its chosen strategy in the market. Positioning on the x-axis, or strategies axis, indicates how well the provider's future strategy aligns with what customers will require in three to five years. The strategies category focuses on high-level strategic decisions and underlying assumptions about offerings, customer segments, business, and go-to-market plans for the future, in this case defined as the next three to five years. Under this category, analysts look at whether or not a provider's strategies in various areas are aligned with customer requirements (and spending) over a defined future time period. Figure 1 shows each provider's position in the vendor assessment chart. A provider's market share is indicated by the size of the bubble, and a (+), (-), or () icon indicates whether or not the provider is growing faster, slower, or even with overall market growth.

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FIGURE 1
IDC MarketScape Worldwide Business Consultin g Services Vendor Assessment

Source: IDC, 2012

Provider Profiles
IBM
According to IDC analysis and buyer perception, IBM is an IDC MarketScape Leader worldwide. One example of the client feedback we received, from a manufacturing leader, confirms this: "It is a company that puts all its resources to achieve objectives." IBM is one of the largest multidisciplinary consulting firms, with more than 200,000 employees globally in its combined services business, and serves clients in more than 300 locations across 170 countries. IBM provides consulting services related to strategy and innovation, operations management, finance, HR, change management, and business advisory services.

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Additionally, IBM's range of IT consulting services is extremely comprehensive and is well recognized for its industry-specific IT and business solutions. At the forefront of IBM's consulting capabilities is its Strategy and Transformation practice. Strategy and Transformation has five functional areas: business and customer strategy, finance and risk, operations and supply chain, technology strategy, and organization and people. IBM Strategy and Transformation consultants bring IP-based assets and accelerators to client engagements to deliver tangible benefits; provide an integrated, collaborative, and systematic approach to accelerate transformations; and deliver client business transformation consulting services. IBM continues to offer a range of consulting offerings, including management consulting in GBS and technology consulting in conjunction with GTS, demonstrating its ability to integrate and implement IT and business consulting capabilities. Unifying market offerings from both a technology and a business perspective benefits clients, particularly when clients are faced with technology-rooted operational changes, such as digital business transformation and supply chain operations optimization. IBM has expanded its capabilities in business function and industry-specific analytics, focusing on business and workforce improvement solutions, among other areas that align with IBM's five Smarter Planet growth areas. These growth areas are clustered around core themes of social business, cloud, smarter commerce, smarter cities, and business analytics optimization and are typically paired with other relevant offerings. IBM has also made significant investments in collaboration, knowledge management, and assets by deliberately creating a culture of knowledge sharing and collaboration that rewards consultants who contribute and reuse knowledge. In November 2010, IBM launched a new consulting service focused on social business and its implications to organizations and people strategies. This service is targeted at helping clients shift toward a more social form of employee collaboration. The social business consulting services will draw from experts in IBM's Strategy and Transformation practice and with specific vertical expertise dedicated to workforce management. IBM has worked to extend its Smarter Planet messaging into specific industries such as banking/financial services, food, government, oil, public safety, and healthcare. IBM is actively marketing its Smarter Planet vision, part of which calls for eco-friendly operational efficiencies across industries and regions, increasing its focus on developing environmentally sustainable technologies and services. IBM has coined the phrase "ecoefficiency" and drives its Green Sigma initiatives throughout its IT and consulting capabilities. At the same time, IBM's Smarter Cities challenge, announced in November 2010, is the company's largest philanthropic initiative to date, with a $50 million technology and services grant to create 100 "smarter cities." IBM GBS is actively engaging senior business leaders through its CEO, CFO, CHRO, and other studies that were published in 2011. The firm has deepened its executive strategy insights and focused particularly on the new global complexities following the economic downturn, creative leadership, and global operations and integration in recently published reports including the 2011 IBM Global CMO Study Collective

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Intelligence: Capitalizing on the Crowd; its Supply Chain Management report Smarter Commerce Is Redefining Value Chain Visibility: Connecting the Dots; and Enterprise Risk Management thought leadership studies. IBM's growth continues to come from emerging economies such as India, China, Latin America, and Africa, among others. IBM continues to invest in additional growth market regions with new marketing and sales programs across Southeast Asia, Latin America, Eastern Europe, Africa, and the Middle East. To ensure consistent delivery to all customers, IBM has created a Strategy Consulting Center of Competence that deploys deep, proven experts to client projects anywhere in the world. This approach has been particularly helpful in growth markets where local talent continues to develop. Worldwide, IBM is seen as the most capable of all firms at applying proven methodologies/tools and at delivering innovation in the project. IBM is also seen as the most capable of all firms at maximizing project value. IBM is also seen as the most capable of all firms at integrating its project team with the client's and at helping clients drive innovation. Additionally, IBM is seen as among the most capable at meeting the project timeline and at providing a full spectrum of business consulting services. IBM is also seen as among the most capable at helping clients create a more effective business and implementing options for growth. To continue to improve its position on this IDC MarketScape, IBM should improve client perception of its ability to help enterprises comply with new or existing regulations.

ESSENTIAL GUIDANCE
Most business consulting providers are particularly adaptive to changes in economic or business conditions: adding or removing staff by geography, industry specialization, or domain expertise. To remain successful, it will be important to: Create visible links between project strategy and "business execution." Integrate multiple disciplines throughout the project to ensure client needs are most fully satisfied and to ensure deep multidisciplinary relationships and strong positioning on the next project. Evolve and adapt to prevail through specific periods of change by seeking to capitalize on "temporal opportunities." Establish deeper expertise in strategically valuable areas of growth, industries, and geographies. Firms that have been successful at adapting to temporal opportunities share some common characteristics including the willingness to seek out dynamic shifts in their clients' marketplaces, the ability to evolve their offerings based on unique experience, and the ability to deploy a multidisciplinary team to support highly specialized client

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requirements. IDC believes these characteristics represent a core set of practices that will enable firms to adapt quickly and service their clients most effectively. Overall, it will be important for global, industry, and geographic leaders to create proactive responses to clients and prospects. Our long-term guidance for providers contained in previous documents remains consistent: Focus on regional priorities. Functionally, consulting firms worldwide should focus on improving their ability to meet client expectations related to the delivery of return on investment for the project. Even though vendors focus on maximizing the value of their projects, buyers believe this area is one of the weakest performance areas for consultants worldwide. Additionally, consulting providers must improve their ability to exploit their local talent in order to meet the cost and insight requirements of their clients. Worldwide, strategies and drivers are divided between cost control, realigning, and transforming operations. Enterprises are seeking to improve operational efficiency and therefore their business consulting projects reflect that. While cost reduction remains important regionally, enterprises have refocused globally. Consulting vendors must: Exploit technical and functional insights to attract customers. Identify opportunities to consistently deliver on client expectations, especially timely delivery of services. Maximize the business value of projects, reach a common and consistent understanding with key stakeholders on the success criteria, and publicize successes. Develop core messages that highlight how to improve operational efficiency and reduce costs. As 2012 continues, firms that can best address the regionally specific shifts in client requirements will be best positioned to gain share.

Synopsis
This IDC study uses the IDC MarketScape model to provide an assessment of a number of providers participating in the worldwide business consulting services market. The IDC MarketScape is an evaluation based on a comprehensive framework and a set of parameters that assesses providers relative to one another and to those factors expected to be most conducive to success in a given market during both the short term and the long term. "While consulting providers are generally perceived as capable, buyers of consulting services believe consulting vendors are weakest at ensuring projects meet their projected return on investment. This vendor analysis shows that some vendors are better able to produce meaningful results than others." Cushing Anderson, program vice president, Business Consulting Services research

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Copyright Notice
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