Professional Services

[fgeorge]

Rust Report 27 Nov 2009

How forecasters weather a crisis


By Dave Noble*

Crisis? What Crisis?, the classic album released in 1975 by UK prog rockers Supertramp, could well have been the soundtrack for the Asia/Pacific analyst business over the past 12 months.

That's not to say that analyst firms in the Asia/Pacific region haven't been affected by the global financial crisis -- they certainly have. But the impact has been limited to certain services and markets, and most firms have been able to carry on pretty much as usual by making prudent cuts to operating expenses rather than through the headcount reductions that have occurred in North America and the US.

Most firms saw a slowdown in November and December last year, not necessarily because budgets weren't available, but because many companies were afraid to spend money. For some firms, January came to a grinding halt, but business picked up from February and all the firms we spoke to were on or ahead of target for the year-to-date, albeit against some reduced expectations.

Overall, analyst headcounts in the larger firms are pretty much where they were a year ago. There have been some departures -- related and unrelated to the economic conditions -- but generally analyst attrition rates are down and any cuts have been made in the back-office rather than on the front-line. Indeed, Gartner continues to recruit sales staff in key markets such as India and China, and IDC is also hiring, having moved some back-end positions into cheaper markets such as Malaysia and India.

Probably the area hardest hit -- as it was elsewhere -- was events, particularly large regional ones. Travel budgets were one of the first major expense areas curtailed by both IT vendors and end-user organisations, which impacted the ability of analyst firms to attract both attendees and sponsors.

No major events have been cancelled but pretty much all of them have been scaled down, and others adopted radical new formats -- IDC Australia trialled Directions 2009 as a Webcast for the first time.

Consulting also took a hit, particularly in the larger firms. While price is often an issue with consulting projects, some of the smaller firms found that their lower cost bases and greater flexibility gave them a definite advantage in a difficult economic environment. Both vendors and users put projects on hold, but in recent months anything focused on driving cost out of IT operations has attracted greater support.

Interestingly, subscription revenue held up well for all of the major firms. Users and vendors alike have extensively reviewed their subscriptions and information needs -- as well as pushing analyst firms hard on deliverables and price -- but overall most customers haven't reduced their spend significantly.

Overall, the Asia/Pacific analyst business has weathered the storm well, generally by spreading their exposure and undertaking necessary -- perhaps overdue? -- tightening of their operations and business models. Most are now preparing themselves for the usual fourth quarter surge, and planning to exploit new opportunities in 2010.

*Dave Noble is managing director of Intelligen Analyst Relations. This item first appeared in Knowledge Capital Group's AR Insider. Home

What do you think about business analysis and project management within the consulting industry? The big guys seemed to have weathered very well, especially in Australia. I am surprised to see the wealth of new vacant graduate positions - PM Partners is a pretty good firm for PM - I've had some good experiences with them.

[admin]

BRW BRW, Edition 1
THU 15 APR 2010, Page 46

CROUCHING TIGER


By: Agnes King

Deloitte is poised to shake-up the big four accountancy rankings. Report: Agnes King
Deloitte wants to be the second-largest accounting firm in the country by 2015. It is a heady aspiration for an organisation that six years ago was in shocking shape, the laggard of the financial service firms. Take-home salary of senior partners was nearly half that of rivals Ernst & Young, KPMG and PricewaterhouseCoopers. Voluntary staff turnover was at 36 per cent and there was trouble filling positions, with 400 open jobs in a firm of 2000 employees. People used to joke about the big four being, in reality, the big three.
Today, Deloitte's annual fees are just $89 million lower than EY, which holds third place. Profitability is on par with its peers. But to knock off EY and the second-placed KPMG, Deloitte needs to increase annual fees by $146 million, assuming KPMG stands still, which it won't.
"In order to get there I need to have a few surprises up my sleeve," Deloitte chief executive Giam Swiegers says.
"It's a big call but why would you be in business if you don't enjoy these challenges."
Deloitte is sporting its best form in a decade. It averaged higher growth in the past five years (13.2 per cent) than any of its rivals. It has a stronger consulting division that any of its peers and it is the only one of the big four to maintain a sizable insolvency practice. Insolvency was one of the two top performing service lines during the past 12 months, posting double-digit growth, thanks to the global financial crisis. The other is consulting, which now accounts for 25 per cent of revenue ($213 million in 2008-09).
"Now we're a close four," Deloitte chairman Wayne Goss says. "By 2015, not only will we be number two, we'll be a different number two."
Brand differentiation is something all the big four firms struggle with but it's where Deloitte's weakness has provided an edge.
"Because of their relatively weak position Deloitte has developed a different way of competing, innovative both in its service offering and the way the firm is led," Jasper Consulting director, Colin Jasper says.
Instead of chasing traditional markets, such as big company audits that are difficult to reposition in the short term, Deloitte carved out niches in forensic accounting and independent expert reports, which directors use in merger and acquisition transactions to demonstrate the value of a purchase to shareholders.
"The genius of Swiegers and his management team was not to follow the crowd," Beaton consulting group director George Beaton says. It searched for blue ocean spaces using its "100 days of innovation program", which aims to ensure that 30 per cent of the firm's revenue comes from services it didn't provide two years ago.
The program is underpinned by one of Swiegers' favourite management mottos: try new things, but fail fast and fail cheaply.
Deloitte also increased its penetration among medium companies by acquiring Horwath's Sydney practice and BDO's Melbourne division. Half the firm's fees are derived from small and medium enterprises these days.
The acquisitions boosted Deloitte's profitability. However, a large number of BDO and Horwath partners have quit in the three years since the transactions closed leaving some industry commentators wondering whether Deloitte extracted full or even fair value from the mergers.
"Can anyone ever say they got the best out of a merger?" Swiegers says. "The talent and clients we acquired in these deals made it a very good play for us. We bought them on their revenue but profit was the main game."
Rumours about staff losses and retrenchments have dogged Deloitte in recent times. While competitors shed hundreds of staff through the financial crisis, Deloitte maintains it made no mass retrenchments. Confronted by claims that partners actively managed people out of the business during this period, Swiegers says: "I don't have to answer to the outside world. I know what the facts are and a March survey of 2200 staff, half our total workforce, shows they believe I live up to my commitments."
Swiegers says that while Deloitte honoured its commitment not to retrench people it didn't stop quarterly performance counselling, a process that regularly culls underachievers.
Introduced early in his tenure this benchmark ruffled a lot of feathers.
"Soft on people, tough on performance" is another of Swiegers favourite tag lines.
When he first took the helm in 2003, Swiegers identified top-performing partners using feedback from people who worked for them, with them, and above them in the hierarchy. He plotted the results on an X and Y axis and distributed it to all partners. Human resources almost had heart failure.
During this time of renewal, 25 per cent of the top 50 leaders in the firm were changed.
Swiegers is unrepentant.
"Leadership is not about taking people where they want to go, it's about taking people were they should go. It's not a popularity contest," he says.
His hard-line attitude may not make him popular but it has earned respect among Deloitte's 475 partners. Last November, 98 per cent voted to renew Swiegers' tenure early, locking him in until June 2015.
Deloitte will rely heavily on its consulting practice in its bid to become number two, but it's also an area where competitors are closing in. Like the other big four accounting firms, Deloitte had planned to divest itself of consulting in 2003 after the US collapse of Enron raised concerns about conflict of interest between companies and their financial auditors. Midway through the sale, however, Deloitte changed its mind. This story has two versions, the first being that it couldn't find a buyer, the second that management realised it would cost more to offload the consulting business, which employed 1300 people at its peak, than to keep it.
For three years Deloitte had the consulting space to itself (its competitors constrained by non-compete agreements). But it suffered a huge setback in 2003 when Telstra cancelled a multimillion-dollar contract. Deloitte's consulting practice contracted to 200 staff in less than two years as a result. It has since recovered, posting 40 per cent growth in 2006-07, 39 per cent the following year and 26 per cent for the year to June 30, 2009.
"It's gone from a dog in the portfolio to a solid contributor in two ways: firstly revenue, but also it's infusion in the delivery of traditional accounting services like audit and tax," managing partner of consulting, Asia Pacific, Gerhard Vorster says.
He hopes consulting will reach double-digit growth this financial year but says the drain on talent has been material since other big four firms started rebuilding their consulting arms.
"Some of our people started to be attacked, we had to be very clear on our value proposition," Vorster says."

GIAM SWIEGERS BIOGRAPHY
Born: Pretoria, South Africa, July 27, 1956, Married with three children.
Education: Bachelor of Commerce, University of Pretoria; Chartered Accountant South Africa and Australia.
Career highlights: 1979, joined Deloitte's Pretoria office as an audit analyst; 2003, made Deloitte Australia's chief executive; 2005 named the best chief executive for the advancement of women by the Equal Opportunity for
Women in the Workplace Agency.
Fast facts: Member of the Australian School of Business advisory council; the Queensland University of Technology dean's CEO strategy committee; councillor, Australian Business Arts Foundation and the Australian Business and Community Network.

Deloitte under analysis
Chose not to follow the crowd and instead carved out niches in digital technology and mergers and acquisitions expert advice. Its innovation agenda meant it didn't attack areas where its other three big competitors are well entrenched (i.e. audit). Did not divest its consulting and insolvency practice in 2002-03 when governance and conflict of interest issues forced the other big three accounting firms to sell these divisions. Has an extremely strong practice in the high-growth forensics arena. Has not been afraid to acquire expertise in areas of strategic importance. Visionary, focused leadership that has the full support of partners. Swieger's to-do list is very short, leaves no questions about what Deloitte stands for and where its going. Has a clear succession plan for the firm's 42 key management roles.
Government advisory practice is weak compared with KPMG and EY especially.
Remains weak in big company audits, it holds only three S&P/ASX 50 audits (AGL, Woolworths and Oil Search) compared with KPMG and EY which own 15 each and PwC which has 16. These audits rarely change hands making it virtually impossible for Deloitte to make up ground in this area any time soon. Several partners acquired in the BDO Melbourne and Horwarth Sydney mergers have left depleting its expertise in medium business and the value of these acquisitions.
Built up a national M&A practice of 11 staff in the past four years that should do well when deals start flowing again. Performance has registered on Deloitte global's radar making it well placed to leverage international connections, particularly with inbound investment so strong. Focus on improving the organisational culture and increasing the ratio of women in leadership roles. Could expand sectorial benchmarks.
Risks falling into the trap of complacency having made up ground so fast, needs to protect its momentum. Must live up to bold statements around diversity and innovation agenda or staff will become disenfranchised. Management consulting staff and clients being attacked as rivals rebuild their consulting arms. Consulting clients are becoming more savvy and informed, they see organisational change as a way of life and are creating capability to do more consulting-type projects themselves. Like all big four accounting firms Deloitte's biggest threat comes from within, a rogue partner or division damaging the brand. Big accounting firms are increasingly concerned about protecting themselves from clients - the extent to which they're liable should something go wrong on an audit or transaction - making them more complicated and costly to do business with.

TIMELINE
1891: Yarwood Vane & Co accounting firm sets up in Sydney
1980: Yarwood, along with a number of other practices rebrands as Deloitte Haskins and Sells
1989: Internationally, Deloitte Haskins & Sells (London), Touche Ross&Co.(United States) and Tohmatsu&Co. (Japan) merge to form Deloitte Touche Tohmatsu
1993: Touche Ross Australia decides not to become a member of Deloitte Touche Tohmatsu
Dec 1993: Deloitte Touche Tohmatsu Australia merges with Duesburys then the largest second-tier accounting firm in the country
July 1994: Merges with BDO Nelson Parkhill in Western Australia and Haly&Co in Brisbane
July 2005: Merges with PKF in Adelaide, Darwin, Alice Springs and Katherine
2006: Acquires BDO Melbourne practice
2006: Acquires WHK Howarth Sydney
2005: Buys South Australian online consulting firm Chimo
2006: Acquires Butler Walker actuarial firm
2007: Poaches senior staff from PA Consulting Group
2009: Hires three senior partners from Bearing Point, they are followed across by 70 staff
2010: Acquires Melbourne data analytics firm Pathfinder

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Australian Financial Review Australian Financial Review, Edition 1
TUE 06 APR 2010, Page 27

Accountancy firm taps into Singapore market


By: Mark Fenton-Jones

The Sydney office of national accounting group WHK Horwath has successfully launched an Open Analytics web-based reporting tool in a public-private partnership with the Singapore government.
Singapore government regulations require all locally listed and private businesses to supply their financial statements in eXtensible Business Reporting Language (XBRL), which follows the global push to standardise the reporting and benchmarking of company information in digital form.
WHK Horwath business development principal, Sue-Ella Prodonovich, said the new platform would allow anyone to immediately view and analyse financial statements that have been submitted to Singapore's Accounting and Corporate Regulatory Authority (ACRA).
The accounting firm began work on the project three years ago, basing its work on its own Enterprise Intelligence Services software. All intellectual property associated with Open Analytics remains with the accounting firm.
ACRA chairman Peter Ong predicted that directors, management and shareholders would be able to compare the performance of their companies against their peers to identify improvement opportunities.
"For banks, Open Analytics provides the financial information of the companies they extend credit to. This is particularly useful if their clients are small and medium-sized enterprises," Mr Ong said.
He expected entrepreneurs and investors would be able to identify untapped niche areas and hidden gems in the Singapore corporate space. "Analysts can use Open Analytics to monitor and analyse trend performance of companies or any specific industry sector," he said.
Businesses can tap into the Open Analytics product by subscription. Charges range from $49 for a year's access on a single company to $950 for comparative analytics of all companies within a specified industry sector.
Analytics technology has become popular in recent years as businesses seek to gain a competitive advantage on their rivals by better understanding the data created by their day-to-day operations. Typically, it has been used by retailers to better understand their customers' buying habits and enable more targeted sales and marketing strategies.

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[admin3]

Altis appoints international practice leader

By Gordon Peters
Wednesday, 24 November 2010 00:11

IT People

Australian data warehousing, business intelligence and data management consultancy, Altis Consulting, has appointed 15-year industry veteran, Marcel van Rooyen as its international practice leader of analytics for the Australian and New Zealand regional market.

Based in Sydney, Van Rooyen will be responsible for leading Altis’ data-mining analytics practice focussing on delivering financial benefits to its clients in the areas of sales effectiveness, retail volume, customer management and service, customer lifetime management and operations effectiveness and efficiency.

Altis CEO, John Hoffman, said Van Rooyen joins the company with 15 years experience in data analytics and operations management. He previously, managed credit card fraud analytics at Westpac Bank in Sydney. He also worked for four years at PricewaterhouseCoopers (PwC) as a senior member of the advisory data mining practice, and in operations and distribution management for organisations including Oswalds Bank, Ballance Agri Ltd. (New Zealand) and multinational resources company, Anglo American.

Van Rooyen has Masters degrees in computer science and business administration and is a past director of the Logistics Association of Australia.