Heavy-Handed Procurement Policy Consequences in Tough Economic Times: Yankee Group Acquisition by 451 Group
Monadnock Research (Vol VI, No 2) - 9 Jan 2013
The Yankee Group, one of the technology research and advisory sector's pioneers, has been acquired by the 451 Group from Alta Communications, a Boston-based private equity firm. The transaction price was the firm's debt, plus a dollar. This Research Note uses the Yankee Group's acquisition by 451 as an example of the client consequences of heavy-handed consulting services sourcing and procurement policies in tough economic times, and how that will later translate into higher client costs and diminished value delivered to the world's largest global public and private client organizations. Research Note includes further analysis of the Celerant acquisition and Monitor bankruptcy. (4,415 words) . . . More
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Rate Factors: The 10 Key Dynamics of Consulting and Advisory Services Rate Models (3 of 3)
Monadnock Research (Vol V, No 24) - 26 Oct 2012
This Research Note presents the final three of ten key elements that impact consulting rates, and shows how each combines to influence rates and set fees that clients ultimately pay. We cover key factors that are essential to create consulting rate models; analyze firm capabilities, proposals and rate cards; establish and update strategic supplier Master Service Agreements; and negotiate Statements of Work for consulting engagements. This Note is part three in a three-part series focusing on Practice Development; Reputation; and Client/Firm Size and Stability factors. (2,315 words; Team license: http://www.monadnockresearch.net/products/item59.cfm) . . . More
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Monadnock Research Introduces Customized Consulting Rate Research
Monadnock Research - 22 August 2012
Organizations can now purchase customized consulting and advisory services rate research deliverables based on specific consulting market segments, geographic markets and levels of professional. If one or more of the circumstances below applies to your situation, we might be able to help. Do you need custom rate research for: A unique combination of consulting practice areas? Only a specific geographic area? Certain levels of professional? Operations consulting, but only rates of the Big Four, or weekly strategy rates for largest strategy specialists in France, or another customized group of firms? Rate ranges for IT consulting work in China or the UAE? Some variation of the above? Contact us for more information via our contact page: http://www.monadnockresearch.net/products/department10.cfm . . . More
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Strategy Consultancies Have Most Challenging Job Interview Processes of Any Organization
Monadnock Research (Vol V, No 20) - 18 August 2012
Seven of the top 10 most challenging interview processes in a recent Glassdoor study of US organizations were consulting firms. Five of the top 10 companies generate most of their revenues from Strategy consulting. Forty-four percent of the top 25 companies were consultancies. McKinsey, BCG, Oliver Wyman, A.T.Kearney, ZS Associates, Thoughtworks and Bain & Co. were the top 7 companies in the rankings. Research Note includes MR perspective on why the rigorous processes employed by these firms are so important to the clients they serve. (420 words) . . . More
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Rate Factors: The 10 Key Dynamics of Consulting and Advisory Services Rate Models (1 of 3)
Monadnock Research (Vol V, No 18) - 10 Aug 2012
The average global rate for a consultant in 2011 across all practice areas and industries was $216 per hour. That rate might have interesting historical value, but it's a meaningless statistic to most clients. What's relevant, for example, is what a reasonable MSA rate for Deloitte professionals would be in Switzerland for organizational strategy work next year if global strategy spend is expected to be around $2.5 million in 2013. This report helps clients answer those difficult questions by understanding how to analyze the key elements that impact fees. There are ten key dynamics that influence rates for consulting and advisory services. This report offers perspective on those factors, and shows how each combines to influence rates and set fees that clients ultimately pay. We do not provide exhaustive detail on each factor. But we do cover the key elements that are essential to understand for creating consulting rate models; analyzing firm capabilities, proposals and rate cards; establishing and updating strategic supplier Master Service Agreements; and negotiating Statements of Work for consulting engagements. This Research Note is the first in a 3-part series, focusing on Economics, Competence, Markets and Competition factors. It also contains 6 charts detailing mean rates across Strategy, Operations, HR and IT consulting, and Financial and Business Advisory services. (4,600 words; Team license: http://www.monadnockresearch.net/products/item59.cfm) . . . More
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KPMG to Acquire German Supply Chain Advisory, BrainNet
Monadnock Research - 16 June 2012
KPMG has agreed to acquire BrainNet Supply Management Group, a Germany-headquartered consulting specialist in the area of procurement and supply chain management. The acquisition is expected to enhance the capabilities of member firms' in the design and optimization of global supply chains, and broadens service offering to support clients across their entire value chain. KPMG will create a global Center of Excellence as part of the transaction to provide support for the procurement and supply chain management offering of member firms, including BrainNet. (440 words) . . . More
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Freddie Mac Consulting Contracts with Gingrich Group at Center of US Presidential Campaign Politics
Monadnock Research (Vol V, No 2) - 9 February 2012
The former consulting firm of US Republican Presidential candidate Newt Gingrich has released 1999 and 2006 contracts between Gingrich and US mortgage giant Freddie Mac (NYSE: FMCC). Gingrich relinquished ownership in his former consultancy in May 2010, after announcing his candidacy for US President. While Gingrich characterizes the work as strategy consulting, the Romney campaign has called it lobbying and influence peddling on behalf of Freddie Mac. Part of the scope of services in the 1999 agreement appears to support the Romney campaign's assertion. Research Note includes copies of the two agreements; a profile of the Gingrich Group; analysis of agreement terms; detail on fee structures; and potential impact of allegations against Gingrich, and by Gingrich against Romney's work at Bain and Bain Capital, on the presidential campaigns of the two former consulting firm leaders. (1,500 words) . . . More
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BDO Wins Arkansas Supreme Court Appeal to Arbitrate Fraud Allegations
Monadnock Research (Vol V, No 1) - 14 January 2012
BDO Seidman has won an appeal against Straits Steel & Wire, forcing the client's allegations of fraud to be heard by arbitrators and not the courts. The Arkansas Supreme Court decision reverses a ruling of the Sebastian County Circuit Court, which had denied a motion by BDO to compel arbitration against Straits Steel & Wire, Co. and its affiliates. The case involves tax consulting services and allegedly fraudulent tax shelters. BDO successfully argued on appeal that the circuit court erred in denying arbitration because it was the dispute resolution mechanism of choice in agreements signed by the parties. SSW attempted to get around the dispute resolution choice by claiming unconscionability of the alleged fraud. SSW claims breach of fiduciary duty, negligence and professional malpractice, negligent misrepresentation, disgorgement of excessive and illegal fees, fraudulent inducement, fraudulent concealment, fraud, civil conspiracy and breach of contract. Research Note includes Arkansas Supreme Court ruling and MR perspective on the inherent system bias of arbitration clauses in consulting agreements. (1,375 words) . . . More
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Lions Gate Sued for Non-Payment Under Terms of Performance-Based Consulting Agreement; Highlights Challenges Small Firms Face in Client Litigation
Monadnock Research (Vol IV, No 41) - 1 Dec 2011
MR - A small consulting firm based in Los Angeles, GBB Consulting, has sued Lions Gate Films over non-payment in a performance-based fee arrangement associated with Nicole Kidman's film, "Rabbit Hole". The suit, filed on 22 November 2011, alleges breach of contract. Kidman was nominated for an Oscar and won a Screen Actors Guild (SAG) award for her performance in the film. GBB claims it wasn't compensated for its services and role in helping to secure Kidman's award and nomination. While the claimed damages are only around $115,000, the case highlights the challenges many small firms face in working with larger organizations with significant resources in high-stakes engagements. Research Note includes a copy of the complaint and MR perspective on the consequences of playing hard-ball and cost-shifting to small and mid-market firms in the current economic environment. (740 words) . . . More
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P&G Awards Ernst & Young and Infosys for Supplier Excellence
Monadnock Research - 10 November 2011
MR - P&G conferred its highest supplier honor, Business Partner of the Year, upon Ernst & Young, Infosys, and 10 other companies for 2011. E&Y was honored for its non-audit advisory work. P&G has more than 75,000 suppliers globally. This year under 1% of its partners were among those selected for awards. Business partners consistently performing at high levels within P&G's internal performance management system earned an Excellence Award. A total of 86 external partners were recognized this year. Beyond Business Partner of the Year recipients Ernst & Young and Infosys, 12 firms providing consulting services as part of their offering were also 2011 Excellence Award recipients. (450 words) . . . More
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Wellogix Prevails in Trade Secret Theft Case Against Accenture
Monadnock Research (Vol IV, No 38) - 2 Nov 2011
MR - Accenture will likely pay around $49 million in compensatory and punitive damages to a former software and services partner, Wellogix, in a trade secret theft and misappropriation case involving SAP and their client, British Petroleum. The court's latest order lowers a $94.38 million jury verdict against Accenture in May 2011. The Texas jury found that Accenture intentionally misappropriated trade secrets from Wellogix, and then knowingly copied, communicated and/or transmitted them without Wellogix's permission. Wellogix has asserted that the associated acts drove it out of the business of providing complex process procure to pay software and services to energy clients. This Monadnock Research Note includes case details; information on additional patent infringement actions involving energy sector clients; copies of complaints against Accenture, BP, and SAP; the Wellogix v. Accenture jury verdict; and various agreements that served as exhibits at trial. (450 words) . . . More
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Accenture Settles Rille Qui Tam Suit with US DOJ for $63.675 Million
Monadnock Research (Vol IV, No 29) - 18 Sept 2011
MR - Accenture has agreed with the U.S. Department of Justice to settle a whistle-blower suit filed in 2006 for $63.675 million. The Qi Tam lawsuit was originally filed by Rille and Roberts alleging that Accenture submitted false claims for payment under contracts with US federal agencies for IT consulting and services. The Justice Department characterizes the settlement as Accenture agreeing to resolve the claims that it received kickbacks for recommendations of hardware and software to the government, fraudulently inflating prices and rigging bids. Accenture continues to vigorously deny the allegations and says that the firm and the Justice Department have settled only to avoid the additional time, inconvenience and expense that would come with protracted litigation. The Accenture kickback allegations were part of a larger investigation of government technology vendors that has resulted in numerous settlements to date with firms that include IBM, PwC, CSC, Oracle, Hewlett-Packard, EMC, and Cisco. The total of the settlements paid by IBM, PwC, and CSC were around $6.5 million. That aggregated total was just a fraction of that paid by each of the firms that waited to settle. So there was clearly a significant premium charged to Accenture and the other firms that refused to address the risk early. Accenture's settlement, as well as that of Oracle, were in the range predicted by Monadnock Research in a September 2010 publication. This Research Note includes MR analysis and perspective on: the cost to firms of waiting to settle; why clients need to better understand firm partnerships, since acting in the client's best interest is often not in the firm's best interest; related case settlements and supporting documents, including complaints; and recommendations on what clients and firms should do to mitigate associated risk. (2 graphics, 1,950 words) . . . More
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The Silent Tectonic Shift in IT Services
Monadnock Research (Vol IV, No 27) - 15 July 2011
MR - The business models of large consulting and technology product and service providers are in the early stages of a tectonic shift. Changes like this are infrequent in any marketplace, but technology products and services are utilized by clients in all sectors. So the implications are not only significant for consultancies and technology product and service firms, but for the client organizations they serve. The shift is driven primarily by a combination of three factors: (1) ever-spiraling IT system costs; (2) protracted implementation timeframes; and (3) application functional capabilities that don't meet client expectations. What we refer-to as the "Oracle Factor" is fueled by dramatic discontinuities between it and the current offerings of alternatives other than Oracle, and the traction Oracle is getting from clients today offers proof. Ironically, it is fueled by an architectural change that is more reminiscent of environments of the past than any new innovation. This Research Note presents the Monadnock Research perspective on the emerging vendor business models that clients will choose between for technology products and services that will carry them through the next generation of business system expenditures. We preview the emerging models, and review many implications for clients, and for services associated with IT strategy and operations consulting, IT services, and outsourcing of IT infrastructure and enterprise applications. We also make predictions for the shifting technological landscape and offer 5 key recommendations for consulting client organizations. (5,625 words) . . . More
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EC Commissioner Barnier Considers Prohibiting Auditors from Offering Consulting
Monadnock Research (Vol IV, N 21) - 1 July 2011
MR The EC Commissioner for Internal Market and Services, Michel Barnier, addressed a conference of the Federation of European Accountants on 30 June, and advocated for a number of auditor regulatory changes that could include a total ban on audit firms providing consulting services and mandated rotation of auditors. Barnier is the EC official responsible for the Internal Market and Services Directorate General and Office for Harmonization in the Internal Market. Speaking before the federation of European CPA's Barnier intimated that he believes the regulatory environment for auditors in Europe is deeply flawed and in need of reform. He proposes the EC focus on: auditor independence issues; opening of the audit services market; and a more integrated European auditor regulatory and certification environment. The issue of auditors offering consulting and advisory services was addressed in his remarks. He believes that a key factor that fuels excessive familiarity between auditors and their clients lies in providing too many consulting and non-audit advisory services. Barnier asks, "How can we view an auditor as independent when the firm also advises the client in the area of strategy?" Research Note includes translation and interpretation of key points from speech associated with consulting. (865 words) . . . More
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SAIC Subcontractors Indicted in $40+ million Alleged Fraud; SAIC Consultant Pleads Guilty in Scheme
Monadnock Research (Vol IV, N 20) - 1 July 2011
MR - Nine defendants have been indicted in connection with an elaborate scheme to defraud the City of New York on its CityTime project. The people named in the indictment are Mark Mazer, Gerard Denault, Padma Allen, Reddy Allen, Dimitriy Aronshtein, Svetlana Mazer, Larisa Medzon, and Anna Makovetskaya. The SAIC subcontractors allegedly complicit in the scheme, along with 2 SAIC employees and a New York Office of Payroll Administration staffer, are Technodyne LLC, D.A. Solutions, Inc. and Prime View, Inc. The contractors are alleged to have grossly over-billed for consultant time on the engagement, and to have employed a network of shell companies and bank accounts in the US and elsewhere to conceal more than $40 million in fraudulently-billed consulting fees. Mark Mazer was a city employee authorized to approve consultant invoices. SAIC employee, Carl Bell, a Chief Systems Engineer in the firm's New York Office, pled guilty to multiple charges in the fraud, and has admitted to receiving millions in kickbacks. Another SAIC employee, Gerard Denault, was charged and is out on bail. Ironically, CityTime, a project that endeavors to properly report time worked, has itself ballooned to 950% of its original budget due, in part, to fraudulently reported time. "IT contracts that involve hundreds of millions of dollars and multiple layers of consultants are a new frontier for fraud, and DOI has been at the forefront of exposing it," said Rose Gill Hearn, Commissioner, New Your City Department of Investigation. (updated 1-July-2011, Research Note includes allegation details, indictment and complaint - 2,975 words) . . . More
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Capita Acquires Procurement Consultancy
Monadnock Research - 31 May 2011
MR - Capita has acquired Red Procurement and Business Systems Limited. Red provides sourcing and procurement consulting services to the public and private sectors. Its clients include BDR Thermea, Anite Telecoms and a number of other FTSE100 market leading companies including Capita. Red has 19 employees and all will transfer to Capita (300 words) . . . More
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