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This section contains Monadnock Research Notes and feature articles, providing research findings and timely details on substantive consulting industry developments.

2010 US Public Sector Business Consulting Services Rates Increase by 3.5 Percent
Monadnock Research (VIII N9) - 12 March 2010
Rates for business consulting services provided to US public service organizations in 2010 increased by 3.5 percent over 2009 levels. The mean hourly rate for services across all categories was a little under $200. But less than one-fifth of business consulting services firms included executive-level positions in their negotiated rate schedules. This Research Note summarizes our analysis of rates for the business consulting services category under the US GSA's Schedule 874, Mission Oriented Business Integrated Services (MOBIS). It also analyzes the consolidated hourly rates of each firm within MR's 8 labor rate categories, including details on the categories themselves, for the top 5 percent of the 2,000 firms providing related services. Over the next eight weeks we will publish our analysis of rates for financial and business advisory services, human resources and administrative services, advertising and integrated marketing services, and information technology professional services. (1,850 words, 4 Charts) . . . More

Hewitt Spins-Off Part of Its Executive Compensation Consulting Business as Meridian Compensation Partners
Monadnock Research (VIII N8) - 25 February 2010
MR - Hewitt Associates has divested a portion of its North American executive compensation consulting business, forming Meridian Compensation Partners LLC. Under the agreement, a number of principals and consultants will be leaving Hewitt to form Meridian. Staff departures will be staged between February and October 2010. The move addresses regulatory changes in the U.S. related to transparency and objectivity of advisory relationships, and conflicts they may pose. Hewitt and Meridian say the firm will operate as an independent executive compensation advisor. There will be no cross-ownership interest held by principals of either entity, according to Meridian sources. Hewitt says it will continue to serve board clients that are comfortable with its current controls in place to ensure independence of executive compensation advice, or where fee disclosure is not a material issue. (732 words) . . . More

Former Deloitte Consultant Settles Insider Trading Allegations
Monadnock Research (VIII N7) - 25 February 2010
MR - A former Deloitte employee benefits consultant and three co-defendants have settled SEC insider trading charges, agreeing to pay around $145,000 without admitting or denying the allegations. The case involved insider trading in securities of Crocs, YRC Worldwide, Spectralink Corporation, and SigmaTel. Crocs was a Deloitte audit client. (Includes copies of settlement documents - 300 words) . . . More

KPMG on 2010 Global Consulting Market, with Monadnock Research Perspective
Monadnock Research (VIII N6) - 12 February 2010
MR - Aidan Brennan of KPMG Advisory offers his views on the state of the global consulting marketplace in 2010, including his insights on the emerging dominant position of the Big 4 and, historically, what brought us to this point. Monadnock Research offers its perspective on Brennan's key points, and why the Big 4 should carefully consider their expansion plans. (2,045 words) . . . More

Sky Broadcasting Wins Fraud Ruling Against EDS/HP Over Failed Consulting Project
Monadnock Research (VIII N5) - 28 January 2010
MR - British Sky Broadcasting (Sky) has won a partial victory in its 5 year legal battle against HP Enterprise Services UK Ltd., the U.K. successor to Electronic Data Systems. The court found EDS guilty of deceit, negligent misrepresentation, and breach of contract. Former EDS CRM practice Managing Director, Joe Galloway, was found to have lied to Sky in order to secure a £47.64 million contract for a CRM system that ultimately cost Sky £265 million. In a now-notorious court incident, the former SHL Systemhouse executive was found to have committed perjury in defending his mail-order M.B.A., when Sky's council secured identical credentials in minutes for his dog at trial. Sky anticipates fees and damages in the range of £200 million. (Research Note includes 468 page ruling - 1,280 words) . . . More

Another Former McKinsey Consultant Indicted for Operating "Hawala"
Monadnock Research (VIII N4) - 9 January 2010
MR (VIII, N4) - In a second blow to the reputation of the venerable strategy firm, a former McKinsey & Co. consultant has been indicted on charges of conspiracy and operating an unlicensed "money transferring business." Mahmoud Reza Banki's activities are said to have occurred before and after his departure from McKinsey. The scheme allegedly involved a hawala, which operated as an informal value transfer system in which money did not physically cross international boundaries through the banking system. Approximately $4.7 million was exchanged between companies and individuals indirectly in the U.S., Iran, Saudi Arabia, Kuwait, Latvia, Slovenia, Russia, Sweden, the Philippines, and other countries. (Includes indictment, 762 words) . . . More

Gartner Acquires the Burton Group
Monadnock Research (VIII N3) - 5 January 2010
MR (VIII, N3) - Gartner has acquired the Burton Group, a leading market research and advisory services firm that provides services to front-line IT professionals. The firm has approximately 41 analysts and 40 sales and client service associates, and projects 2009 revenues will be in the $30 million range. Burton provides consulting services in application development and cost control; cloud computing; infrastructure and operations architecture and sourcing; identity and security; secure and available networks; and workforce location and communication strategies. The deal closed on 31 December. (Research Note, 865 words) . . . More

Former Senior McKinsey Principal Pleads Guilty to Fraud and Conspiracy in Galleon Case
Monadnock Research (VIII N2) - 7 January 2010
Former McKinsey Principal, Anil Kumar, pleaded guilty to fraud and conspiracy in Manhattan Federal Court on 7 January. He was one of McKinsey's 400 senior partners, capital markets practice leader, and KPO thought leader. Kumar apologized to colleagues and admitted that Raj Rajaratnam, Galleon hedge fund founder, agreed to pay him $1.75 million for confidential information on a McKinsey client. He remains free on $5 million bail, and has agreed to pay $2.6 million as part of his plea deal, and could be sentenced to up to 25 years in March. The fine could have been $17.5 million, with a prison sentence on each fraud charge of 20 years and 5 years on the conspiracy charge. (Research Note includes copies of complaints - 650 words) . . . More

Deloitte Granted Summary Judgment on Liability Claims against Former Vice Chairman
Monadnock Research (VIII N1) - 6 January 2010
MR - Deloitte has won a partial summary judgment against former Advisory Partner and Vice Chairman, Thomas P. Flanagan, on the question of liability for allegedly trading securities based on confidential audit client information. Deloitte was granted the summary judgment on liability related to the firm's amended complaint claims for breach of fiduciary duty, breach of contract, common law fraud, and equitable fraud. Deloitte claims Flanagan traded in the securities of clients over 300 times over several years. According to the Court's Opinion, Flanagan contended that no evidence exists that he used Deloitte's Tracking & Trading System, so any errors related to improperly recording his trades must have been made by his secretary. Damages will likely be assessed only after a trial, unless a settlement is reached. (Includes opinion and complaint - 980 words) . . . More

Trends, Stats & Insights: Accenture Senses Recovery; Terminates Woods' Sponsorship
Monadnock Research (VII N56) - 18 December 2009
MR - Accenture is seeing signs of an economic recovery, with early indications coming from its global consulting practices. The turnaround is taking hold, to some degree, horizontally across the firm's consulting groups. Revenues before reimbursements for Q1 F2010 were $5.38 billion, a decrease of 11 percent in U.S. dollars and 12 percent in local currency from the same period in 2009. Net consulting revenues were $3.12 billion, a decrease of 15 percent in USD terms and 16 percent in local currency. Accenture forecasts year-over-year consulting revenue growth in the second half of 2010 in the range of high single to low double digits. Utilization for the first quarter was 88 percent, with attrition for the quarter at 12 percent. The firm also terminated its 6-year relationship with Tiger Woods this week, saying he was "No longer the right representative for [Accenture's] advertising" (includes Accenture CEO's perspectives on fees and market trends - 905 words). . . . More

Strategic Diversification of Mid-Market Companies the Top Priority for Engaging Consultants and Advisors
Clemente Comm. (VII N55) - 9 December 2009
Clemente - Forty-five percent of U.S. middle-market companies say the process of "strategic diversification" is a main driver for retaining consultants and other professional services firms, according to the findings of a recent study by Clemente Communications. More than 36 percent rank complications in R&D/new product development as a primary concern, and nearly 33 percent voice fear about delays in new product launches. More than 72 percent of client organizations plan to evaluate three or more firms before making an engagement decision (455 words). Purchase 80 page report here: http://www.monadnockresearch.net/products/item34.cfm . . . More

KPMG Advisory Client Allegedly Forges Audit Report to Secure $75 Million in Funding
Monadnock Research (VII N54) - 4 December 2009
MR - Financial statements provided by healthcare transaction services firm, Canopy Financial, were found to have been fraudulently prepared, according to criminal and civil complaints filed by the FBI and SEC. During November, Canopy notified Spectrum, the lead investor in a two-phase $75 million funding round, that it could not rely upon the fiscal 2007 and 2008 financial statements purportedly audited by KPMG because the attestation was fraudulently prepared. (Research Note includes detail on the alleged fraud and copies of the bankruptcy filing, and SEC and FBI complaints) . . . More

Consulting Trends, Stats & Insights: Accenture
Monadnock Research (VII N53) - 1 December 2009
MR and Wall Street Journal: Accenture discusses the pitfalls of working with a new breed of competitors, the bundled hardware/software/services vendors, and the firm's high mix of outcome-based fee arrangements, in a recent Wall Street Journal article. The firm's current plan calls for significant hiring globally in 2010. Accenture views the current unfavorable economic situation as an opportunity to invest and put some distance between the company and its competitors. The firm believes that sticking by clients in these tough economic times will benefit both the client and the firm in the long-run. . . . More

Consulting Category Management 2009: Trends & Best Practices
Monadnock Research (VII N52) - 16 November 2009
Monadnock Research conducted a number of interviews with consulting category management executives at leading organizations during 2009. This 60 page report provides details on the trends, best practices, and strategic priorities at 7 organizations with leading consulting category management practices. The report also provides details on the Monadnock Research Value Leadership Framework for consulting category management. Purchase report here: http://www.monadnockresearch.net/products/item32.cfm . . . More

Capgemini Holds FairPoint Hostage for $30 Million Preference in Bankruptcy
Monadnock Research (VII N51) - 19 November 2009
MR - FairPoint Communications, who filed a U.S. bankruptcy petition in late October, has agreed to settle its fee dispute with Capgemini for $30 million in cash. Half that amount has been paid and the other half is due and payable by 31 December. An additional $20 million will be treated as unsecured debt. Unsecured creditors, bondholders, shareholders, and union members are starting to question FairPoint's decision to compensate consultants, attorneys, executives, and secured lenders with cash, leaving little for them. The fact that Capgemini was able to threaten to cancel its 2009 IT services agreement and get such a large percentage of what it was owed as an unsecured creditor in cash has rankled some stakeholders. Research Note includes details on negotiated settlement and full text of contracts and related documents. . . . More

Archstone Consulting Acquired by the Hackett Group for $20 Million
Monadnock Research - (VII N50) 12 November 2009
MR - The Hackett Group (fka Answerthink) has acquired Archstone Consulting in exchange for shares of Hackett stock with a current value of approximately $20 million, including stock allocated for earn-outs and executive grants. Archstone is a leading mid-sized strategy, operations, and CFO advisory consultancy that works primarily with clients in the consumer goods, retail, manufacturing, pharmaceutical, and utility sectors. Archstone CEO, Todd Lavieri, will lead Global Industries and Strategic Account Management for Hackett. Lake Capital Chairman (and Archstone's largest shareholder), Terence M. Graunke, will join Hackett's Board. Archstone's 130+ principals and associates expand the firm's capabilities in strategy, operations, and enterprise performance management. The acquisition comes at a time when Hackett's revenues and profits have been hit hard by what it characterizes as delays in client decision-making and protracted sales cycles. Revenues for the first 9 months of 2009 are off by 25 percent and net income is down by 82 percent. Hackett's stock slid by 21 percent in the two days following the transaction's announcement on 10 November. . . . More