Douglas Hayward
AT Kearney looks to grow after leaving EDS
We met last week with Mark Page, a vice-president and board member at management consultant AT Kearney, which regained its independence from EDS earlier this year.AT Kearney is employee owned and has 176 partners worldwide, with another 1,300 to 1,400 consultants and around 700 support staff. It's based in North America, but has businesses in EMEA and Asia. Page says AT Kearney is now a net recruiter, after being raided for staff last year during the period of uncertainty when EDS was finalising the sell-off. In Europe, AT Kearney is especially active in France, the UK and Germany, with annual revenues of roughly $50m, $50m and $140m, respectively. The German practice specialises in utilities, automotive, telecoms and manufacturing; the UK team specialises in telecom, pharmaceutical/healthcare, consumer goods, process industries and government. AT Kearney has recently opened an office in the Middle East. Page says clients are typically COOs, CFOs or senior executives with functional responsibility.Page stressed that Kearney is not closely tied to EDS. Although it has a guaranteed revenue stream from EDS, this is only around 3% of revenues this year and is set to halve next year. EDS doesn't exclusively use AT Kearney for consulting services, and Kearney works with other IT services players: 'we don't have any special status at EDS'. The marketing alliance with EDS does not mandate that the two sides jointly bid for work, although it doesn't prevent this happening either, he adds. In terms of client demand, Page reports strong demand among mobile telecoms operators for consulting around operational efficiency (such as raising pricing yields or adopting better processes from FMCG industries), and Kearney is also working with a mobile industry consortium to challenge the EU on mobile roaming rates. In fixed telecoms, operational efficiency is a priority, but demand is also strong for consulting on launching and positioning new services such as triple play, IPTV etc. Page sees telecom companies making greater use in future of customer segmentation tools: 'people talked about these before, but now they are really making them work'. Kearney wants to strengthen its position in financial services in Europe, where it's active in growth areas including payments systems, back-office process improvement and pricing/yield management. Comment: Consulting is coming back after a long hibernation, and Page says Kearney is ahead of plan this year and hopes for growth in the high single digits or maybe 10%. He reckons that the overall market is growing more slowly, perhaps mid single digits, and we agree.It's a different consulting market from that of the dot.com boom, when Kearney was booming under EDS's ownership before the market turned down and the relationship soured. It's more about operational efficiency and less about blue-sky thinking and new business plans. True, there's renewed interest from clients in revenue-growing propositions (not just in cost-cutting ideas), but this tends to be focused on less revolutionary and more evolutionary initiatives. Clients also want more knowledge transfer - they don't just want one-off gains on profitability that disappear when the consultants walk away; they want their staff given the skills to find new ways of cutting costs and growing revenues by themselves. This rather more "grounded" growth in demand - in contrast to the exuberance of the dot.com era - should play well to AT Kearney's image as a solid mainstream consultancy with a long heritage. As we've said before, independence from EDS should benefit both AT Kearney and its former parent. Our only caveat is that Kearney would do well to emphasise that it doesn't have a strategic relationship with EDS, despite the marketing alliance and the fact that the outsourcing giant still buys some consulting services from its former subsidiary.
