Edito Janvier 2004

The guest of the editorial board >> February 2004 57th AMCF Meeting in New York (3-5 December 2003) Interview: Lanny Cohen Lanny Cohen is President of the 57th AMCF Meeting and Vice President of Cap Gemini Ernst & Young Mister Cohen, you are the President of the 57th AMCF meeting. Could you tel our European readers what AMCF is all about ? Lanny Cohen : In the USA we have only two primary associations at a national level : the AMCF, the Association of Management Consulting Firms and the IMC, the Institute of Management Consultants. This later is aiming at bringing together individuals whereas the former is concerned by consulting firms. At a national level AMCF and IMC address the many different industries and services lines, including the IT sector which is also represented by the ITAA, the Information Technology Association of America. America is a word that comes easily. But in the acronym AMCF, there is no special référence to America. Is that an intended purpose ? Lanny Cohen : As best as I know it, this has never meant to be « American » but « Association » ... getting members from all around the world is what we do. It changed slightly last year, as you can see it in our mission statement, but only in terms of focus. So to speak this is a very international association... One which has not to have American in the name. We have a good number of members from outside. Firms see the north american market as important and want to establish partnerships, do business, open offices... So we try to help them. AMCF was born in 1929. Is this related to the economic crisis ? And may we point out with you a few milestones in the AMCF history ? Lanny Cohen : A priori this [1929] is incidental. AMCF was founded by pure strategy firms... Chairmen and CEO gathered and it was equaly constituted with social and professionnals.... At that time business was good before the crash. From that point on we can trace the AMCF history. The first stage was collaborating on topics related to the crisis. Then phases reflected more the composition of members. At begining predominently strategy : [BCG], McKinsey ... Next stage was when accounting firms consulting divisions came in the 50’s and 60’s.Then strategists left, but we still have some such as Roland Berger. Another phase that show up today relies on product based companies such as IBM, PeopleSoft, SAP, Templeton ... Somehow it reflects the composition of the market. So we went from strategy to accounting and now Information Technology. Today 55% of consulting services are provided by IT product based companies. ...Which brings us to the present and the changes currently occuring. Could you tell us a little bit about that topic ? Lanny Cohen : We have had a major decrease in demand with a significant over-capacity problems [in USA and around the world] which laid to actvity reductions & laid offs. Also an increase in skepticism among customers. Then we alianated a big portion of the labour, the youngsters switching to corporate, banks ... Before most of MBA graduates - say 80% - were going in consulting and investment banking. Now it is down to 20%.. Whatever 60 points have been lost ! What is going on at the moment ? Any new trend in the US and worldwide markets ? Lanny Cohen : The worse thing is that there is no big trend or new idea. In the early 90’s we had re-engineering. In the mid 90’s the ERP deployment. In 2000 the Y2K ... These fueled 75% of growth ! However we can observe new things : IBM which came out with its « on demand » concept. But some think that’s no new trend. On the other hand it tell us that consulting becomes a buyers market. September 11 clearly contributed to impact because consulting was mobile whereas today people want it to makes things more local. This must not hide another trend : on clients side there was a large change in term of cost production pressure which lead to Outsourcing and now Off Shoring. Offshoring, that’s the big issue at the moment in a country where activity is picking up whithout job development. How can this impact the consulting activity? Lanny Cohen : I dont know what’s going to be the next thing in consulting, but what people are talking about is : a slip toward Outsourcing, especially Business Process Outsourcing, and not only IT, and moving the work to the right place. A little bit of flying consultants will follow the clients and a part of consulting will be off shored. Accenture next year will have 10 000 people moved in India ! Much of IT can be off shored : Help Desk, IT Development, Application Maintenance ... but also Finance Operations, Cost Center Operations, Research Capability... A number of operations have off shored their Cost Center Operations : Customer Services ... for business in general. There is a big discussion in the country. And we are just begining discussions to get on the social and political aspects. The CEO of Tata spent more than 60% of his time on Capitol Hill to talk the implications. 15M$ by state of India have been given by governor to Tata. Beyond Offshoring can we see any new technology that could boost the consulting business ? Lanny Cohen : We cant make any assumption. But a few new technologies might add up to give market opportunities. Use of RFID tags (Radio Frequency Identification) is for instance a global trend that could drive the IT market. It can be a huge opportunity for consultants to put it in place. It is to begin next year and should be good for consulting activity. However if RFID will certainly impact we dont know yet if it must give us a hope. What about fees. Are they going to continue to get down and what is the reason why ? Lanny Cohen : Companies are focusing on billing rates etc ... [We must understand] that we are facing an economic restructuring of consulting. The fundementals of economics of our profession are changing. Today it is fundementaly different !.. Evrything is changing and modify the cost structure. We populated the client with ex consultants. People that left consulting are now within the companies and their capabilities have been raised. They outsource now their Core Business... but hire brains as the same time. One significant competitor is the client ! It is an interesting trend. This certainly impacts on fees. Do we see any clearing in the sky ? Lanny Cohen : In the economic forcast we see positive signs : [ in the US ] the GDP went to the roof for the last month but it will take time to have big consulting spending back. And we have sectors in bad shape, so it is a mixed picture. 2004 will be flat, but there is no agreement on that. IT growth forcast is ranging from - 7% to + 12% which is a 90 % gap ! It is fair to say that public spending will increase. Corporate IT will certainly be flat. Government spending will increase. Federal IT spending with government transformation not related to elections. [The landscape] is transforming itself : corporate’s flat and public’s up. What can be said in term of markets comparison ? Lanny Cohen : My sense is that the US feels a little bit stronger than the European economy. It is getting better faster ! Second point, even if the recovery is slow there are some European firms doing pretty well because of the deregulating markets. However «Resource Transformation» is a potential future trend we hear about. What is the position of AMCF in this changing market ? Lanny Cohen : Diversity is a question we try to address within AMCF. Other topics would be ethics, accountability, people, leadership in the market, leading on the profession and finaly bringing firms together If there was one question you would like to answer, what would it be ? Lanny Cohen : I would talk about what we do at AMCF. In good time who needs to gather ? Before [members] were surveying. Now they come together to discuss on topics such as I said «Diversity». It is an aspect of the cultural challenge we are facing. Words collected by Bertrand Villeret Editor in Chief Notice : French consultancy firms such as CGE&Y and Algoé Consultants are members of AMCF AMCF Members : A. Brain Management Consultants Co Ltd (China) Algoe Consultants (Ecully, France) Anderson & Schwab Inc. (New York, USA) Boer & GROON Strategy & Management Group ( Amsterdam, Hollande) Cap Gemini Ernst & Young (5 time square New York USA) Charles Brooks Associates Inc (Charlotte, USA) Deloitte (1633 Broadway, New York USA) Dr Wieselhuber & Partner (Munich, Allemagne) Establish (Fort Lee, USA) Frank Lynn & Associates Inc (Chicago, USA) GITP Internatinal BV (Nijmegen, Hollande) Hay Group (Philadelphia, USA) IBM Business Consulting Services (Armonk, USA) International profit Associates (Buffalo Grove, USA) James E. Arnold Consultants Inc (New York, USA) Kurt Salomon Associates (New York, USA) LCI Communications Ltd (New York, USA) Management Consulting Group Plc [Institute of Management Resources - Proodfoot Consulting Europe] (Londres, Royaume Uni) Management Partner GmbH (Stuuttgart, Allemagne) Morgan Anderson Consulting (New York, USA) Naremco Services Inc (New York, USA) New System Consulting Group [Shenzen NSMAC] (Shenzen, Chine) PeopleSoft (Pleasantown, USA) PepperCom (New York, USA) Princeton Consultants (Princeton , USA) Ransford (Houston, USA) RHR International Company (Wood Dale, USA) Rijnconsult BV (Velp , Hollande) Robert E. Nolan Coompany Inc (Simsbury, Dallas, USA) Roland Berger Strategy Consultants (Munich, Allemagne) RSM Mc Gladrey Inc (Mineapolis, USA) SAP America (Newton Square, USA) Templeton & Company , (West Palm Beach) Strategic Decision Group (New York, USA) The Center for Organizational Excellence (Rockville, USA) The Chapman Group (Columbia, USA) TPG and Associates (Concord, USA) TrueTalk Inc, (Croton on Hudson, USA) Tunnel Consulting (King of Prussia, USA) Twynstra Gudde Management Consultants (Amersfoort, Hollande) Watson Wyatt Worldwide (Washington, USA) To know more about AMCF : AMCF, 380 Lexington Avenue, Suite 1700 Tel : 212 551 78 87 Aussi 7 Avenue des Gaulois B-1040 Brussels, Belgium amcf@associationhq.com http://www.amcf.org Copyright Quantorg 2003-2004 ConsultingNewsLine All rights reserved Reproduction interdite

Mister Cohen, you are the President of the 57th AMCF meeting. Could you tel our European readers what AMCF is all about ?

Lanny Cohen : In the USA we have only two primary associations at a national level : the AMCF, the Association of Management Consulting Firms and the IMC, the Institute of Management Consultants. This later is aiming at bringing together individuals whereas the former is concerned by consulting firms. At a national level AMCF and IMC address the many different industries and services lines, including the IT sector which is also represented by the ITAA, the Information Technology Association of America.

America is a word that comes easily. But in the acronym AMCF, there is no special référence to America. Is that an intended purpose ?

Lanny Cohen : As best as I know it, this has never meant to be « American » but « Association » ... getting members from all around the world is what we do. It changed slightly last year, as you can see it in our mission statement, but only in terms of focus. So to speak this is a very international association... One which has not to have American in the name. We have a good number of members from outside. Firms see the north american market as important and want to establish partnerships, do business, open offices... So we try to help them.

AMCF was born in 1929. Is this related to the economic crisis ? And may we point out with you a few milestones in the AMCF history ?

Lanny Cohen : A priori this [1929] is incidental. AMCF was founded by pure strategy firms... Chairmen and CEO gathered and it was equaly constituted with social and professionnals.... At that time business was good before the crash. From that point on we can trace the AMCF history. The first stage was collaborating on topics related to the crisis. Then phases reflected more the composition of members. At begining predominently strategy : [BCG], McKinsey ... Next stage was when accounting firms consulting divisions came in the 50’s and 60’s.Then strategists left, but we still have some such as Roland Berger. Another phase that show up today relies on product based companies such as IBM, PeopleSoft, SAP, Templeton ... Somehow it reflects the composition of the market. So we went from strategy to accounting and now Information Technology. Today 55% of consulting services are provided by IT product based companies.

...Which brings us to the present and the changes currently occuring. Could you tell us a little bit about that topic ?

Lanny Cohen : We have had a major decrease in demand with a significant over-capacity problems [in USA and around the world] which laid to actvity reductions & laid offs. Also an increase in skepticism among customers. Then we alianated a big portion of the labour, the youngsters switching to corporate, banks ... Before most of MBA graduates - say 80% - were going in consulting and investment banking. Now it is down to 20%.. Whatever 60 points have been lost !

What is going on at the moment ? Any new trend in the US and worldwide markets ?

Lanny Cohen : The worse thing is that there is no big trend or new idea. In the early 90’s we had re-engineering. In the mid 90’s the ERP deployment. In 2000 the Y2K ... These fueled 75% of growth ! However we can observe new things : IBM which came out with its « on demand » concept. But some think that’s no new trend. On the other hand it tell us that consulting becomes a buyers market. September 11 clearly contributed to impact because consulting was mobile whereas today people want it to makes things more local. This must not hide another trend : on clients side there was a large change in term of cost production pressure which lead to Outsourcing and now Off Shoring.

Offshoring, that’s the big issue at the moment in a country where activity is picking up whithout job development. How can this impact the consulting activity?

Lanny Cohen : I dont know what’s going to be the next thing in consulting, but what people are talking about is : a slip toward Outsourcing, especially Business Process Outsourcing, and not only IT, and moving the work to the right place. A little bit of flying consultants will follow the clients and a part of consulting will be off shored. Accenture next year will have 10 000 people moved in India ! Much of IT can be off shored : Help Desk, IT Development, Application Maintenance ... but also Finance Operations, Cost Center Operations, Research Capability... A number of operations have off shored their Cost Center Operations : Customer Services ... for business in general. There is a big discussion in the country. And we are just begining discussions to get on the social and political aspects. The CEO of Tata spent more than 60% of his time on Capitol Hill to talk the implications. 15M$ by state of India have been given by governor to Tata.

Beyond Offshoring can we see any new technology that could boost the consulting business ?

Lanny Cohen : We cant make any assumption. But a few new technologies might add up to give market opportunities. Use of RFID tags (Radio Frequency Identification) is for instance a global trend that could drive the IT market. It can be a huge opportunity for consultants to put it in place. It is to begin next year and should be good for consulting activity. However if RFID will certainly impact we dont know yet if it must give us a hope.

What about fees. Are they going to continue to get down and what is the reason why ?

Lanny Cohen : Companies are focusing on billing rates etc ... [We must understand] that we are facing an economic restructuring of consulting. The fundementals of economics of our profession are changing. Today it is fundementaly different !.. Evrything is changing and modify the cost structure. We populated the client with ex consultants. People that left consulting are now within the companies and their capabilities have been raised. They outsource now their Core Business... but hire brains as the same time. One significant competitor is the client ! It is an interesting trend.

This certainly impacts on fees. Do we see any clearing in the sky ?

Lanny Cohen : In the economic forcast we see positive signs : [ in the US ] the GDP went to the roof for the last month but it will take time to have big consulting spending back. And we have sectors in bad shape, so it is a mixed picture. 2004 will be flat, but there is no agreement on that. IT growth forcast is ranging from - 7% to + 12% which is a 90 % gap ! It is fair to say that public spending will increase. Corporate IT will certainly be flat. Government spending will increase. Federal IT spending with government transformation not related to elections. [The landscape] is transforming itself : corporate’s flat and public’s up.

What can be said in term of markets comparison ?

Lanny Cohen : My sense is that the US feels a little bit stronger than the European economy. It is getting better faster ! Second point, even if the recovery is slow there are some European firms doing pretty well because of the deregulating markets. However «Resource Transformation» is a potential future trend we hear about.

What is the position of AMCF in this changing market ?

Lanny Cohen : Diversity is a question we try to address within AMCF. Other topics would be ethics, accountability, people, leadership in the market, leading on the profession and finaly bringing firms together

If there was one question you would like to answer, what would it be ?

Lanny Cohen : I would talk about what we do at AMCF. In good time who needs to gather ? Before [members] were surveying. Now they come together to discuss on topics such as I said «Diversity». It is an aspect of the cultural challenge we are facing.

Words collected by Bertrand Villeret
Editor in Chief

Notice :
French consultancy firms such as CGE&Y and Algoé Consultants are members of AMCF

AMCF Members :

A. Brain Management Consultants Co Ltd (China)
Algoe Consultants (Ecully, France)
Anderson & Schwab Inc. (New York, USA)
Boer & GROON Strategy & Management Group ( Amsterdam, Hollande)
Cap Gemini Ernst & Young (5 time square New York USA)
Charles Brooks Associates Inc (Charlotte, USA)
Deloitte (1633 Broadway, New York USA)
Dr Wieselhuber & Partner (Munich, Allemagne)
Establish (Fort Lee, USA)
Frank Lynn & Associates Inc (Chicago, USA)
GITP Internatinal BV (Nijmegen, Hollande)
Hay Group (Philadelphia, USA)
IBM Business Consulting Services (Armonk, USA)
International profit Associates (Buffalo Grove, USA)
James E. Arnold Consultants Inc (New York, USA)
Kurt Salomon Associates (New York, USA)
LCI Communications Ltd (New York, USA)
Management Consulting Group Plc [Institute of Management Resources - Proodfoot Consulting Europe] (Londres, Royaume Uni)
Management Partner GmbH (Stuuttgart, Allemagne)
Morgan Anderson Consulting (New York, USA)
Naremco Services Inc (New York, USA)
New System Consulting Group [Shenzen NSMAC] (Shenzen, Chine)
PeopleSoft (Pleasantown, USA)
PepperCom (New York, USA)
Princeton Consultants (Princeton , USA)
Ransford (Houston, USA)
RHR International Company (Wood Dale, USA)
Rijnconsult BV (Velp , Hollande)
Robert E. Nolan Coompany Inc (Simsbury, Dallas, USA)
Roland Berger Strategy Consultants (Munich, Allemagne)
RSM Mc Gladrey Inc (Mineapolis, USA)
SAP America (Newton Square, USA)
Templeton & Company , (West Palm Beach)
Strategic Decision Group (New York, USA)
The Center for Organizational Excellence (Rockville, USA)
The Chapman Group (Columbia, USA)
TPG and Associates (Concord, USA)
TrueTalk Inc, (Croton on Hudson, USA)
Tunnel Consulting (King of Prussia, USA)
Twynstra Gudde Management Consultants (Amersfoort, Hollande)
Watson Wyatt Worldwide (Washington, USA)

To know more about AMCF :

AMCF, 380 Lexington Avenue, Suite 1700 Tel : 212 551 78 87
Aussi 7 Avenue des Gaulois B-1040 Brussels, Belgium
amcf@associationhq.com