Consulting Clients Drive Strategy Rebound

Peterborough, NH, September 30, 2003 — Consulting clients will seek more strategic advice in order to identify new growth opportunities, according to a new research report by Kennedy Information that examines the spending, preferences and perceptions of management consulting clients in the U.S. Over 87% of clients surveyed said they are apt to purchase strategy or strategic planning consulting services through 2005. The findings run counter to expectations that the consulting profession's leading strategy firms would see a continued waning of their influence on U.S. businesses.

The report, "The Client-Side Intelligence Report: Purchasing Behavior, Brand Awareness, & Firm Perceptions," ranks leading consulting firms in the categories of awareness, perception, and performance, based on surveys and interviews with clients who engaged consultants within the last year. Clients surveyed for the study, who collectively represent over $1 billion in consulting spending in the last 12 months, rated four strategy firms among the top five in terms of their overall performance.

Booz Allen Hamilton (McLean, VA), which ranked high in clients' performance ratings among leading strategy firms, senses businesses' renewed interest in setting practical strategy for growth. "Companies are moving beyond cost-cutting and turning to consulting firms for new growth opportunities," said Dan Lewis, President of Booz Allen's Worldwide Commercial Business. "At the same time, companies expect increasing value from consultants, and Booz Allen is positioned to offer the independent advice and tangible results that our clients demand."

Human resources firms outperformed other consulting firms in client perception ratings. Hewitt Associates (NYSE: HEW), an HR outsourcing and consulting firm that ranked highest amongst HR firms in the areas of expertise, quality, and thought leadership, isn't surprised by the trend. "HR strategies, processes, and benefit programs are even more important to companies as they focus on how to succeed in today's challenging economic environment," says Dale L. Gifford, chairman and CEO, Hewitt Associates. "We've certainly found that partnering with our clients to design and implement effective HR strategies has made a positive impact to their business results."

The upbeat news for strategy and HR firms was accompanied by the report's forecast of modest 3.7% growth in global consulting spending in 2004. Healthcare and government sectors are identified as the two industries with the greatest opportunities for consultants through 2005. But as the procurement process for consulting services centralizes, the "level playing field" created by more open, standardized RFP's — as well as the increasing importance of price as a criterion — is opening the door to specialized firms that may lack the relationships of the leading firms. In response, some firms have developed outsourcing service offerings as a way to ensure they keep a lock on their consulting relationships.

IT consulting firms continue to be held to particularly high standards by their clients. By more than twice the rate of other categories, clients measure the success of their IT projects based on demonstrated revenue potential and positive ROI. Deloitte Consulting (New York, NY), often cited by clients as particularly responsive throughout the latest economic downturn, attributes IT clients' higher expectations to the failure of many IT firms to deliver as promised. Deloitte's Jim Sloane, Global Director of Markets and Services, comments on the high ratings Deloitte received from IT clients by saying, "The key to anticipating and meeting our clients' needs is being focused on their business and the market dynamics they are facing. Our straightforward and collaborative approach to delivering service brings us very close to our clients, and so we know, for example, whether they need to be in cost-cutting or revenue-enhancing mode. Our goal in every project — especially if it is IT-focused — is to create untapped value for our clients. This study tells us that our approach is succeeding." Deloitte remains one of the top ten most highly rated and most recognized names in the consulting industry.

About Kennedy Information, Inc.

Kennedy Information, a subsidiary of the Bureau of National Affairs, is the leading information source on management consulting since 1970. It annually publishes The Global Consulting Marketplace, Global IT Management Consulting Marketplace, and Benchmarks in Management Consulting, among other research reports. Editors of the newsletters Consultants News, Global IT Services Report, and Management Consultant International, the company also publishes Consulting Magazine, the Directory of Management Consultants, the Web portal ConsultingCentral.com, and produces the annual Consulting Summit conference for thought leaders in the profession. Kennedy Information is based in Peterborough, N.H., with bureaus in New York, Washington, D.C. and London.