-
TECHNOLOGY BUSINESS RESEARCH, INC. 11 Merrill Drive, Hampton, NH
03842 Phone: (603) 929-1166 Fax: (603) 926-9801 This report is
based on information made available to the public by the vendor and
other public sources. No representation is made that this
information is accurate or complete. Technology Business Research
will not be held liable or responsible for any decisions that are
made based on this information. This report is not a recommendation
to purchase securities. This report is copyright protected and
supplied for the sole use of the recipient. Contact Technology
Business Research, Inc. for permission to reproduce.
PROFESSIONAL SERVICES BUSINESS QUARTERLYSM
DELOITTE CONSULTING Fourth Calendar Quarter 2001
Second Fiscal Half 2001 ended May 31, 2001
PSBQ is the comprehensive analysis of professional services,
such as management consulting, strategy consulting, system
integrations, outsourcers and other IT consultants. PSBQ covers
quarterly reports on IBM Global Services, EDS, CSC, Accenture,
Hewlett-Packard Services, Compaq Global Services, PwC, KPMG
Consulting, Unisys Corp., Cap Gemini Ernst & Young, Affiliated
Computer Services, Deloitte Consulting and McKinsey & Co. The
service also includes a quarterly benchmark report, analyst access
and custom consulting.
Publish Date: Jan. 30, 2002 Author: John Caucis, Contributing
Analyst Content Editor: Humberto Andrade ([email protected]), PSBQ
Director
TBR ANALYTICAL SUMMARY ( = negative, = neutral, = positive)
TBR POSITION Deloitte Consulting is the consulting arm of
worldwide accounting and auditing firm
Deloitte Touche Tohmatsu. DCs FY01 performance in the midst of a
general economic slowdown, as well as more substantial declines in
the consulting and IT services industries, speaks to the efforts to
diversify its business model. DC posted FY01 revenues of $3.49
billion, up 11.1% from $3.14 billion in FY00. While far from the
growth rates of 35% or more DC enjoyed prior to the deceleration in
IT spending, DC has managed to maintain positive revenue growth,
beating the PSBQ average of 9% for the period. TBR believes this is
due to the relative success of DCs efforts to geographically
diversify its business model, expand its portfolio of services and
strengthen its brand the next logical steps after establishing a
global footprint. While TBR certainly expects DC to continue its
expansion into new geographies in the future, it appears DC has
curtailed its expansionist strategy in favor of diversifying its
range of services. This served to buffer DC against overexposure to
the areas hardest hit by the IT spending slump and enabled it to
respond to clients demands for a broader range of services from a
single firm. DC may yet suffer a decline in revenues as corporate
IT spending is still soft and strategy consulting is weakening.
However, an even more serious threat to DC stems from the Enron
debacle and its corresponding effect on the auditing industry. TBR
believes that despite DCs ardent refusal to spin off from DTT, a
disruptive separation will be inevitable.
STRATEGIC OVERVIEW
.............................................................. Page
5 DCs primary strategic objectives of establishing a global
presence and serving the worlds
leading multinational corporations have remained intact in FY01
from FY00, though the strategy seems to be evolving to its next
stage. From DCs inaugural year in 1996 the consulting company has
grown from a handful of practices to 34 worldwide practices at the
beginning of FY00. This number has not grown since that time, and
TBR believes DCs corporate strategy has shifted from an
expansionist strategy to focusing on growing and strengthening its
portfolio of global strategic alliances. However, TBR believes the
slowdown in the consulting industry in 2001, especially in the
United States, also had an impact on DCs efforts to expand its
global footprint. FY01 revenues were $3.49 billion, up 11.1% from
$3.14 in FY00. These results are cause for some optimism for DC as
its 11.1% year-to-year revenue growth in FY01 edged out the 10%
year-to-year revenue growth achieved in FY00. However, year-to-year
revenue growth for FY01 and FY00 are far from the spectacular
growth rates of 35% or more during the height of the IT
infrastructure and services spending frenzy a few years back.
Technology
Business
Research
TECHNOLOGY
BUSINESS
RESEARCH
TBR
-
PROFESSIONAL SERVICES BUSINESS QUARTERLYSM Fourth Calendar
Quarter 2001 DELOITTE CONSULTING Page 2
TECHNOLOGY BUSINESS RESEARCH, INC. 11 Merrill Drive, Hampton, NH
03842 Phone: (603) 929-1166 Fax: (603) 926-9801 This report is
based on information made available to the public by the vendor and
other public sources. No representation is made that this
information is accurate or complete. Technology Business Research
will not be held liable or responsible for any decisions that are
made based on this information. This report is not a recommendation
to purchase securities. This report is copyright protected and
supplied for the sole use of the recipient. Contact Technology
Business Research, Inc. for permission to reproduce.
MARKET STRATEGY
............................................................................................Page
10 It would seem DC has curtailed its efforts to expand its global
footprint, as it has not increased its member
or subsidiary geographic practices since FY99. These practices
numbered 34 in FY99 and that has remained unchanged. Despite this,
DCs overseas revenues have continued to grow and become a larger
portion of its worldwide revenues. In FY01, revenues from EMEA and
Asia Pacific totaled $1.1 billion, up 19.4% from $926 million in
FY00. Individually, EMEA revenues were $661 million, up 7% from
$619 million in FY00, while Asia Pacific revenues were $445
million, up 45% from $307 million in FY00. Revenues from EMEA and
Asia Pacific accounted for 31.7% of total revenue in FY01 versus
29.5% in FY00. Revenue from Latin America has grown 33.8% to $210
million in FY01 from $157 million in FY00. To supplement the
Authentic Consultant branding and marketing campaign it launched in
July 2001, DC recently published the first two in its Straight Talk
series of books. DC hopes this effort will further distinguish
itself from its consulting rivals in the eyes of current and
potential clients. TBR believes this represents an effort by DC to
strengthen its brand recognition, which it admits has been weaker
than its consulting competitors. DC continues to target large
enterprises, both as clients and strategic partners (the consulting
needs of midmarket or smaller firms are primarily served by DCs
parent company DTT). In FY01, DC established new or expanded
relationships with Lucent, Siemens, BEA Systems and
Hewlett-Packard.
RESOURCE MANAGEMENT
...............................................................................Page
14 FY01 saw the virtual end of the war for talent DC and most other
consultancies were fighting during the
heyday of the e-commerce and Internet frenzy. The mass exodus of
consultants who left their positions with consulting firms like DC,
Accenture, McKinsey and the Boston Consulting Group to join or
start new e-commerce ventures intensified the competition for
talent during the e-commerce and Internet boom. But as IT spending
on new projects dried up, so did the need for the architects and
plumbers of the new technology, the strategy and IT consultants.
DCs globalization strategy led to substantial growth in its
worldwide staff and locations since 1998. Its worldwide staff has
grown 49.4% from 8,220 in FY98 to 12,282 in FY01. However, most of
this growth has been overseas, with staff in EMEA increasing 95.3%
from 1,469 in FY98 to 2,869 in FY01. DCs staff in the Asia
Pacific/Africa region has grown 79.1% from 1,454 in FY98 to 2,605
in FY01. In FY01, Asia Pacific became the fastest-growing region
for DC both in terms of revenue and human resources directed to the
area. An interesting development is DCs launch of Passport, the
firms Web-based alumni program established at the beginning of
FY01. In its first year, DC estimates the program already has more
than 2,000 registrants on its Web site. DC also reports receiving
more than 7,000 hits in one month from alumni looking for firm news
and information. DC also has formed alliances with major placement
firms to help track and place alumni. DC employs one full-time
global director, one full-time Web manager, has temporarily
employed some staff to build its alumni Web site and distributes a
regular newsletter.
FINANCIAL
METRICS...........................................................................................Page
19 DC sustained top-line growth during the recent slowdown in the
consulting and IT services industries.
Revenues for FY01 grew 11.1% to $3.49 billion from $3.14 billion
in FY00. Revenue growth, while still positive, has flattened since
FY99, corresponding to the decline in IT spending. FY99 revenue
growth was an impressive 37% from FY98, but the aforementioned
slowdown has pushed revenue growth rates down in the two years
since. FY00 revenue grew 9.9% from FY99 revenue of $2.9 billion,
with slightly better growth achieved in FY01. TBR estimates DCs net
income was $559 million in FY01, up 11.1% from FY00 net income of
$503 million. DCs net income growth rate kept pace with its revenue
growth rate, illustrating TBRs belief that it has succeeded in
controlling operating and other expenses in the face of the
slowdown in its business. DCs net margin of 16% in both FY01 and
FY00 declined from the 19% net margin of FY99. The stabilization of
DCs net margin in FY01 corresponds to DCs efforts to curtail
recruiting and hiring, among other expenses. TBR believes the
slowdown in FY00 caught DC somewhat by surprise, evidenced by the
sharp decline in net margin from FY99 to FY00, but the company may
have responded quickly enough to preserve its net margin and net
income for FY01.
-
PROFESSIONAL SERVICES BUSINESS QUARTERLYSM Fourth Calendar
Quarter 2001 DELOITTE CONSULTING Page 3
TECHNOLOGY BUSINESS RESEARCH, INC. 11 Merrill Drive, Hampton, NH
03842 Phone: (603) 929-1166 Fax: (603) 926-9801 This report is
based on information made available to the public by the vendor and
other public sources. No representation is made that this
information is accurate or complete. Technology Business Research
will not be held liable or responsible for any decisions that are
made based on this information. This report is not a recommendation
to purchase securities. This report is copyright protected and
supplied for the sole use of the recipient. Contact Technology
Business Research, Inc. for permission to reproduce.
HIGHLIGHTS OF THE QUARTER ( = negative, = neutral, =
positive)
NEW SERVICES AND PRODUCTS DC Announces Support for Siebel 7
10/15/01 DC announced its support for Siebel 7, the seventh
major release of Siebel eBusiness Applications from Siebel Systems
Inc. Through its Global Strategic Alliance with Siebel Systems, DC
will now be able to incorporate Siebel 7 into its CRM technology
service offering. During CY01, DC has solidified its position as a
Siebel Systems partner with joint wins at major insurance, computer
manufacturing and consumer good companies.
DC Research Finds PC Market to be Stable in 2002 10/5/01
According to recent DC research, all indicators point to a
lackluster comeback in 2002 for the PC industry. The PC Critical
Industry Trend Evaluator, an analysis tool developed by DC to track
the health of the PC industry, provided the data for the DC study.
PC-CITE is based on financial data from PC manufacturers, component
and peripheral suppliers. It also collected data from distributors
and retailers, as well as stock market indicators through calendar
2Q01.
NEW CLIENTS AND CONTRACTS DC Withdraws from U.K. Job Center
Projects
12/10/01 DC has withdrawn from its contract to manage two
flagship job center projects in Leeds and Suffolk, England because
of business reasons. The announcement will come as a blow to the
U.K. government, which has been seeking to bring private sector
knowledge into the public sector. Under the agreement, job seekers
in Leeds and Suffolk are able to visit one office for their benefit
and employment requirements. Recently the Public Commercial
Services Union claimed private sector companies managing job
centers faced a high level of staff turnover because of poor levels
of pay.
DC Partners with Lucent to Implement Billing System for U.K.
Utility Company 11/7/01 Lucent is working with DC to implement its
Arbor/BP billing platform for U.K. utility company npower. npower
will use the Arbor/BP billing platform to support the introduction
of new telephony services to its expanding customer base across the
United Kingdom.
DC Assists Launch of Web Site for California Technology, Trade
and Commerce Agency 11/5/01 The California Technology, Trade and
Commerce Agency unveiled its new one-stop Web site, providing
dynamic access for business attraction and development, job
retention, and international trade and investment services online.
DC worked with the TTCA to integrate and execute its agency-wide
Internet strategy for the site. The firms services included
redesigning the look and navigation of the TTCA Web site and
building the new site using the My California portal
technology.
ALLIANCES AND ACQUISITIONS HP and DC Establish Global
Alliance
1/14/02 DC and Hewlett-Packard announced a global alliance to
jointly develop and deliver collaborative solutions for customers
in the manufacturing sector. The alliance will combine HPs
technologies and complementary services with DCs business
consulting and solution delivery. The alliances initial focus and
solution development will center on product lifecycle
collaboration, a framework to support collaborative product
development and lifecycle management.
BEA Partners with DC 1/9/02 Software maker BEA Systems has
entered a partnership agreement with DC, capping its strategy to
compete against its No. 1 rival IBM. The partnership network is
designed to give BEA access to customers around the globe and
compete with IBM Global Services. The accord completes BEAs full
sweep of computer service providers, Cap Gemini Ernst & Young,
Computer Sciences Corp., EDS, Accenture, PricewaterhouseCoopers,
Andersen and KPMG Consulting.
-
PROFESSIONAL SERVICES BUSINESS QUARTERLYSM Fourth Calendar
Quarter 2001 DELOITTE CONSULTING Page 4
TECHNOLOGY BUSINESS RESEARCH, INC. 11 Merrill Drive, Hampton, NH
03842 Phone: (603) 929-1166 Fax: (603) 926-9801 This report is
based on information made available to the public by the vendor and
other public sources. No representation is made that this
information is accurate or complete. Technology Business Research
will not be held liable or responsible for any decisions that are
made based on this information. This report is not a recommendation
to purchase securities. This report is copyright protected and
supplied for the sole use of the recipient. Contact Technology
Business Research, Inc. for permission to reproduce.
Siemens and DC Announce Agreement 11/29/01 Siemens and DC
announced they have signed a teaming agreement to pursue potential
business opportunities in the security and CRM marketplace. The
agreement formalizes the existing relationship the two global
companies have developed in security and CRM services since earlier
this year. Under the agreement, Siemens and DC will jointly respond
to project opportunities with clients that focus on the deployment
and management of security and CRM solutions.
Asia Logistics Forms Strategic Alliance with DC 11/6/01 Asia
Logistics Technologies has formed a strategic alliance with DC to
provide ERP and SCM services and solutions to local and
international clients.
DC Partners with Digital Detroit 10/24/01 DC is joining hands
with Digital Detroit, a nonprofit technology association, to
promote Southeast Michigan as a technology center and an area
specializing in more than just automotive manufacturing. Digital
Detroit is a high-tech networking association for business leaders
in Michigan. The association provides educational resources to its
members and the high-tech community via events, print and broadcast
news and an online forum, as well as various networking functions.
DC will work on the promotion with its parent company, DTT LLP.
DC Signs Services Provider Agreement with SupplySolution Inc.
10/15/01 DC has signed an agreement with SupplySolution, a provider
of supply chain execution applications, to provide project
management, implementation, support, maintenance and other services
to SupplySolutions customers. DC will serve as an implementation
ally for SupplySolutions fulfillment application, i-Supply, to
automotive and manufacturing companies worldwide.
Nucleus Financial and DC Announce Alliance 10/1/01 Nucleus
Financial Network and DC have announced an agreement to work
together to market software and professional services for strategic
processing environments to global financial institutions. Nucleus
Financial and DC will provide financial institutions with a
comprehensive technology solution for strategic processing and an
outsourcing alternative for the onerous task of security master
maintenance. These services will be backed by DCs enterprise-level
integration services.
ORGANIZATIONAL CHANGES DC Deploys Saba e-Learning Solution
11/12/01 California-based Saba Software Inc. has supplied its
Saba Learning, Enterprise Edition e-learning system to the
professional services provider DC. DC will use Sabas system to
deliver self-service electronic learning to its consulting
professionals worldwide. The Internet-based Saba solution offers
support for multilingual content and environments, as well as the
ability to support business rules that are appropriate for the
local business practices at each of the consulting firms worldwide
offices.
FINANCIALS DC Reports FY01 Revenues of $3.49 Billion, Up 11%
from FY00
5/31/01 FY01 revenues for DC were $3.49 billion, up 11%, or $350
million, from FY00 revenue of $3.14 billion. (Note: DC restated
revenue amounts reported in prior annual reports for FY00 to
include all revenues of DC instead of revenues only from
professional fees in FY00. DC also restated FY00 revenues in U.S.
dollars using FY01 exchange rates.)
For complete press releases, see TBRs Web site.
-
PROFESSIONAL SERVICES BUSINESS QUARTERLYSM Fourth Calendar
Quarter 2001 DELOITTE CONSULTING Page 5
TECHNOLOGY BUSINESS RESEARCH, INC. 11 Merrill Drive, Hampton, NH
03842 Phone: (603) 929-1166 Fax: (603) 926-9801 This report is
based on information made available to the public by the vendor and
other public sources. No representation is made that this
information is accurate or complete. Technology Business Research
will not be held liable or responsible for any decisions that are
made based on this information. This report is not a recommendation
to purchase securities. This report is copyright protected and
supplied for the sole use of the recipient. Contact Technology
Business Research, Inc. for permission to reproduce.
STRATEGIC OVERVIEW DCs primary strategic objectives of
establishing a global presence and serving the worlds leading
multinational corporations have remained intact in FY01 from FY00,
though the strategy seems to be evolving to its next stage. From
DCs inaugural year in 1996 the consulting company has grown from a
handful of practices to 34 worldwide practices at the beginning of
FY00. This number has not grown since that time, and TBR believes
DCs corporate strategy has shifted from an expansionist strategy to
focusing on growing and strengthening its portfolio of global
strategic alliances. However, TBR believes the slowdown in the
consulting industry in 2001, especially in the United States, also
had an impact on DCs efforts to expand its global footprint. FY01
revenues were $3.49 billion, up 11.1% from $3.14 in FY00. These
results are cause for some optimism for DC as its 11.1%
year-to-year revenue growth in FY01 edged out the 10% year-to-year
revenue growth achieved in FY00. However, year-to-year revenue
growth for FY01 and FY00 are far from the spectacular growth rates
of 35% or more during the height of the IT infrastructure and
services spending frenzy a few years back.
Deloitte's Four-Year Annual Revenues
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
FY98 FY99 FY00 FY01Fiscal Year
$ in
Mill
ions
STRATEGIC OBJECTIVES l Expand its portfolio of services through
alliances l Serve Global 2000 companies l Leverage relationship
with parent company DTT to expand client base l Grow e-government
practice l Grow its strategy consulting practice
Relating Strategic Objectives to Actions In the sections below,
TBR relates recent actions taken by the company to the strategic
objectives listed above.
EXPAND ITS PORTFOLIO OF SERVICES THROUGH ALLIANCES l HP and DC
formed an alliance to jointly deliver solutions to the
manufacturing sector. l DC partnered with BEA with to better
compete with IBMs Global Services and Software groups. l Siemens
and DC formed an alliance to pursue potential business
opportunities in the security and CRM
marketplaces. l Asia Logistics Technologies formed a strategic
alliance with DC to provide ERP and SCM services. l Lucent is
working with DC to implement its Arbor/BP billing platform for U.K.
utility company npower. l Nucleus Financial Network and DC have
announced an agreement to work together to market software
and professional services for strategic processing environments
to global financial institutions.
-
PROFESSIONAL SERVICES BUSINESS QUARTERLYSM Fourth Calendar
Quarter 2001 DELOITTE CONSULTING Page 6
TECHNOLOGY BUSINESS RESEARCH, INC. 11 Merrill Drive, Hampton, NH
03842 Phone: (603) 929-1166 Fax: (603) 926-9801 This report is
based on information made available to the public by the vendor and
other public sources. No representation is made that this
information is accurate or complete. Technology Business Research
will not be held liable or responsible for any decisions that are
made based on this information. This report is not a recommendation
to purchase securities. This report is copyright protected and
supplied for the sole use of the recipient. Contact Technology
Business Research, Inc. for permission to reproduce.
SERVE GLOBAL 2000 COMPANIES
l BEA Systems counts the majority of the Fortune Global 500
among its clients and its newly established partnership gives DC
access to this clientele.
l Clients include General Motors, Hewlett-Packard, Cargill,
Philip Morris and Microsoft. l Largest 40 clients represent nearly
50% of total revenues.
GROW E-GOVERNMENT PRACTICE
l DC worked with the California Technology, Trade and Commerce
Agency to integrate and execute its agency-wide Internet strategy
for its new Web site.
Changes and Developments to Strategic Objectives TBR will
comment on a strategic objective only if there is some change in
its status, such as its addition or removal, or if there is some
development concerning it.
EXPAND ITS PORTFOLIO OF SERVICES THROUGH ALLIANCES TBR believes
the decline in the consulting industry has highlighted the benefits
of global diversification as well as having a diverse portfolio of
services. Now that DC has completed its global footprint, at least
for now, it is focusing on broadening its range of services. A
corollary to this is the need to build a strong portfolio of
strategic alliances by cultivating new relationships with hardware,
software, infrastructure and services providers from a diverse
range of industries and geographies. DC has the advantage of having
a large multinational parent company with an extensive clientele as
a source for new clients and strategic partners.
GROW ITS STRATEGY CONSULTING PRACTICE DC has recognized clients
are increasingly expecting a broad range of services from their
consulting and IT services companies. For example, CRM clients are
demanding that services companies bridge the design and build
phases of an IT project with the latter implement and operate
phases. Furthermore, clients are no longer agreeing to invest in
cutting-edge technology with unproven or uncertain returns on
investment. Identifying the quantitative and qualitative elements
of a return on an investment is a core competency of the strategy
and management consulting discipline a discipline DC in which
recognized its weakness just a few years ago. Since that time, DC
has been aggressively building its strategy practice. In FY00, DCs
strategy practice was among the fastest growing in the industry;
TBR estimates it generated $1.4 billion in FY00, achieving a 26%
year-to-year growth from FY99 revenues of $1.1 billion. DCs
strategy practice is also accounting for a larger share of total
revenue. In FY99, strategy consulting generated 39% of total
revenue, while in FY00 it generated 45% of total revenue. While DC
did not report strategy-consulting revenue in its FY01 annual
report, TBR is skeptical DCs strategy consulting practice will be
able to replicate its performance of FY99 and FY00 in FY01, though
DC has a stronger position against the pure-play strategy shops and
IT services rivals it competes against. For example, McKinsey &
Company, long regarded as the consulting industrys most prestigious
firm, has been criticized for its unwillingness to help clients
implement its recommendations. DC has recognized the
hyper-cerebral, pie-in-the-sky musings of strategy consulting
elitists like McKinsey are less likely to leave clients awestruck
by their prima facie brilliance, especially if not accompanied by a
commitment to assist in their execution. Clients are still seeking
strategic counsel to guide any project and insure there is a solid
business reason for its initiation. But clients are increasingly
demanding consultants work with clients to put the ideas generated
into action. An example on the other end of the spectrum is ZAMBA
Solutions, a small systems integration and implementation company
credited with solid implementation expertise but lacking a
meaningful consulting component in its service offerings. DC must
continue to expand its portfolio of services along with its
strategy consulting practice if it expects to compete with IGS, EDS
and Accenture in IT services, as well as strategy consulting
leaders like McKinsey, Boston Consulting and Booz-Allen &
Hamilton.
-
PROFESSIONAL SERVICES BUSINESS QUARTERLYSM Fourth Calendar
Quarter 2001 DELOITTE CONSULTING Page 7
TECHNOLOGY BUSINESS RESEARCH, INC. 11 Merrill Drive, Hampton, NH
03842 Phone: (603) 929-1166 Fax: (603) 926-9801 This report is
based on information made available to the public by the vendor and
other public sources. No representation is made that this
information is accurate or complete. Technology Business Research
will not be held liable or responsible for any decisions that are
made based on this information. This report is not a recommendation
to purchase securities. This report is copyright protected and
supplied for the sole use of the recipient. Contact Technology
Business Research, Inc. for permission to reproduce.
CORPORATE STRENGTHS AND WEAKNESSES
Strengths l Owned by DTT l Privately held l Strong CRM
practice
Weaknesses l Owned by DTT l Privately held l Weak in outsourcing
l Overexposure to IT implementation
Changes and Developments to Strengths and Weaknesses TBR will
comment on a strength or weakness only if there is some change in
its status, such as its addition or removal, or if there is some
development concerning it.
STRENGTH: OWNED BY DTT DC benefits from having a large
multinational company as its corporate parent; DTT operates in 140
countries, employs more than 95,000 people and generated $12.4
billion in revenue in FY01. In the United States, DTT operates as
Deloitte & Touche. Once the smallest of the Big Five accounting
firms, DTT is now surpassed by only PricewaterhouseCoopers, which
generated $24 billion in revenue in FY01 and employs 160,000
people. DC has leveraged this association and its extensive client
base to build its own client base. Certainly, DCs role as a DTT
subsidiary has strengthened its brand recognition. But DC has done
its part to build a reputation for itself as well. For example, DC
has been one of the fastest-growing segments of DTT since its
launch, especially overseas. For example, in the United Kingdom in
FY01, DCs revenue grew 30% to $289 million from $221 million in
FY00, while DTT revenue grew 19.3% year-to-year. For example, the
continued growth of DCs strategy consulting practice will enable it
to offer a more comprehensive range of services and further
strengthen its brand.
WEAKNESS: OWNED BY DTT DCs relationship with DTT represents a
weakness as well as a strength. The impact of the Enron collapse on
the accounting industry makes the future of this parent-subsidiary
relationship unclear as DTT may be forced to divest its consulting
practice on short notice. Senator Barbara Boxer of California
introduced legislation in January that would ultimately ban U.S.
accounting and auditing firms from providing consulting services to
audit clients. In addition, the SEC is expected to tighten the
regulations regarding auditor independence. The impact of such a
separation on DC is unclear as the recent separations of KPMG
Consulting and Accenture from their former auditing parents have
had contrary impacts on both consultancies. KPMG has struggled
through the early stages of its existence as an independent
company. It is struggling to rebrand and expand its global
footprint, but lacks the cash to fund these efforts and is still
subject to the restrictions of the non-compete agreement with its
former parent. KPMG suffered a 10.4% year-to-year decline in
revenues in 1Q02 (calendar 3Q01), and KPMGs management expects a
best-case scenario of a 13% year-to-year decline in revenues in
2Q02 (calendar 4Q01). On the contrary, Accenture has quickly become
a leader in the consulting and IT services industries since
becoming an independent company. It has successfully rebranded and
completed the separation from Arthur Andersen LLP, and has enjoyed
two consecutive quarters of year-to-year revenue growth since its
IPO, achieving record revenues of $2.99 billion in its most recent
quarter. Should the expected restrictions on auditing firms prevent
DTT from upselling auditing and accounting services, DCs client
base of shared patrons may shrink and the availability of potential
new clients may disappear. This is assuming that DTT does not
divest its consulting services. Should the two companies separate,
the transition to an independent company may be financially and
culturally disruptive.
WEAKNESS: WEAK IN OUTSOURCING Though they boast an outsourcing
capability, DC does not posses the extensive outsourcing
infrastructure of ACS, IGS or EDS (ACS, for example, has more than
500 locations worldwide while DC has but 19 outsourcing-capable
locations). TBR believes DC poses no threat to these leading
companies, and will only realize marginal financial
-
PROFESSIONAL SERVICES BUSINESS QUARTERLYSM Fourth Calendar
Quarter 2001 DELOITTE CONSULTING Page 8
TECHNOLOGY BUSINESS RESEARCH, INC. 11 Merrill Drive, Hampton, NH
03842 Phone: (603) 929-1166 Fax: (603) 926-9801 This report is
based on information made available to the public by the vendor and
other public sources. No representation is made that this
information is accurate or complete. Technology Business Research
will not be held liable or responsible for any decisions that are
made based on this information. This report is not a recommendation
to purchase securities. This report is copyright protected and
supplied for the sole use of the recipient. Contact Technology
Business Research, Inc. for permission to reproduce.
benefits from being a minor outsourcing player. DC must expand
its outsourcing services if it seriously expects to gain a
meaningful share of this growing market.
OPPORTUNITIES AND THREATS
Opportunities l Growing outsourcing market l Growing CRM market
l Expand into Russia, Eastern Europe and other developing markets l
Grow strategy practice
Threats l Fallout from Enron collapse l Decline in systems
integration and IT implementation services l Consulting industry
maturing
Changes and Developments to Opportunities and Threats TBR will
comment on an opportunity or threat only if there is some change in
its status, such as its addition or removal, or if there is some
development concerning it.
OPPORTUNITY: GROWING OUTSOURCING MARKET In the face of a slowing
economy, many companies have implemented cost-cutting measures such
as outsourcing their IT departments or other business processes.
IGS, EDS, Accenture and ACS have all reaped the financial benefits
of this trend. DC operates seven Client Support Centers in the
United States and Canada, and 12 other centers throughout EMEA and
the Asia Pacific region from which they provide business process
outsourcing, application management and remote development
services. The potential client base available to DC through its
subsidiary relationship to DTT is an opportunity for DC to
capitalize on the growing outsourcing market, though it must first
expand its outsourcing capabilities.
OPPORTUNITY: GROWING CRM MARKET IDC expects the CRM services
market to total $148 billion by 2005, growing at a compounded
annual growth rate of 25.2% between 2001 and 2005. In FY01, TBR
estimates CRM services accounted for 13% of DCs total revenues, or
about $454 million. DC has also been advertising its CRM
capabilities through its Straight Talk series of books and was
recognized by Gartner three times in 2000 and 2001 as a leader in
CRM services. TBR believes DC is positioned to capture a share of
this growing market.
THREAT: FALLOUT FROM ENRON COLLAPSE The Enron collapse is likely
to lead to sweeping changes in the accounting and consulting
professions. In fact, the very business model of accounting firms
that cross-sell consulting services to their client bases may be
challenged. DCs relationship with its professional services parent
DTT may be at risk if regulators or governmental agencies tighten
the restrictions on accounting firms. Though DC has vigorously
denied any intention to split from DTT, it may have no choice but
to pursue a greater degree of independence from its parent company.
TBR believes the Enron failure and DCs peer review of Enron auditor
Arthur Andersen LLP may impact DCs relationship with its parent
company as well as its image. DC has leveraged its relationship to
DTT to reach new clients, especially during its infancy as a
consultancy. TBR certainly expects a stringent review of auditing
firms that offer business-consulting services with their accounting
and assurance services. TBR also expects the investigation to
re-examine the value of the triennial peer review process among and
between these firms, a process in place since 1978. Ultimately,
this may impact DCs ability to share clients with its parent
company, and may eventually force DC to reconsider its options as a
subsidiary of DTT despite its ardent refusal to consider a spinoff
or IPO. Furthermore, DCs current clientele may perceive the current
uncertainty surrounding the auditing industry as a potential threat
to the continuity and quality of their current relationships with
DC, and they may migrate to DCs competitors.
-
PROFESSIONAL SERVICES BUSINESS QUARTERLYSM Fourth Calendar
Quarter 2001 DELOITTE CONSULTING Page 9
TECHNOLOGY BUSINESS RESEARCH, INC. 11 Merrill Drive, Hampton, NH
03842 Phone: (603) 929-1166 Fax: (603) 926-9801 This report is
based on information made available to the public by the vendor and
other public sources. No representation is made that this
information is accurate or complete. Technology Business Research
will not be held liable or responsible for any decisions that are
made based on this information. This report is not a recommendation
to purchase securities. This report is copyright protected and
supplied for the sole use of the recipient. Contact Technology
Business Research, Inc. for permission to reproduce.
THREAT: DECLINE IN SYSTEMS INTEGRATION AND IT IMPLEMENTATION
SERVICES Systems integration and third-party implementation
services have been hard hit by the slowdown in IT spending in 2001.
These services comprise a substantial portion of DCs services
portfolio, dangerously exposing DC to this decline.
CONCLUSION DCs FY01 performance in the midst of a general
economic slowdown, as well as more substantial declines in the
consulting and IT services industries, speaks to the efforts to
diversify its business model. DC posted FY01 revenues of $3.49
billion, up 11.1% from $3.14 billion in FY00. While far from the
growth rates of 35% or more DC enjoyed prior to the deceleration in
IT spending, DC has managed to maintain positive revenue growth,
beating the PSBQ average of 9% for the period. TBR believes this is
due to the relative success of DCs efforts to geographically
diversify its business model, expand its portfolio of services and
strengthen its brand the next logical steps after establishing a
global footprint. While TBR certainly expects DC to continue its
expansion into new geographies in the future, it appears DC has
curtailed its expansionist strategy in favor of diversifying its
range of services. This served to buffer DC against overexposure to
the areas hardest hit by the IT spending slump and enabled it to
respond to clients demands for a broader range of services from a
single firm. DC may yet suffer a decline in revenues as corporate
IT spending is still soft and strategy consulting is weakening.
However, an even more serious threat to DC stems from the Enron
debacle and its corresponding effect on the auditing industry. TBR
believes that despite DCs ardent refusal to spin off from DTT, a
disruptive separation will be inevitable.
-
PROFESSIONAL SERVICES BUSINESS QUARTERLYSM Fourth Calendar
Quarter 2001 DELOITTE CONSULTING Page 10
TECHNOLOGY BUSINESS RESEARCH, INC. 11 Merrill Drive, Hampton, NH
03842 Phone: (603) 929-1166 Fax: (603) 926-9801 This report is
based on information made available to the public by the vendor and
other public sources. No representation is made that this
information is accurate or complete. Technology Business Research
will not be held liable or responsible for any decisions that are
made based on this information. This report is not a recommendation
to purchase securities. This report is copyright protected and
supplied for the sole use of the recipient. Contact Technology
Business Research, Inc. for permission to reproduce.
MARKET STRATEGY It would seem DC has curtailed its efforts to
expand its global footprint, as it has not increased its member or
subsidiary geographic practices since FY99. These practices
numbered 34 in FY99 and that has remained unchanged. Despite this,
DCs overseas revenues have continued to grow and become a larger
portion of its worldwide revenues. In FY01, revenues from EMEA and
Asia Pacific totaled $1.1 billion, up 19.4% from $926 million in
FY00. Individually, EMEA revenues were $661 million, up 7% from
$619 million in FY00, while Asia Pacific revenues were $445
million, up 45% from $307 million in FY00. Revenue from EMEA and
Asia Pacific accounted for 31.7% of total revenues in FY01, versus
29.5% in FY00. Revenue from Latin America has grown 33.8% to $210
million in FY01 from $157 million in FY00.
To supplement the Authentic Consultant branding and marketing
campaign it launched in July 2001, DC recently published the first
two in its Straight Talk series of books. The first, titled Your
Secret Weapon: How to Get the Most Out of Your Consultant, is
intended to guide clients in deciding whether or not to hire a
consultant. The second book, How to Eat the CRM Elephant, explores
CRM from a customer service perspective, warning against becoming
infatuated with CRM technology and losing touch with ones
customers. This book series will detail the results of DCs research
into what consulting clients are demanding in the current climate
of cynicism toward the consulting industry. DC hopes this effort
will further distinguish itself from its consulting rivals in the
eyes of current and potential clients. DC also hopes this will lend
credence to its claim that it has remained focused on its clients
rather than on distractions such as talent wars and IPOs,
distractions it claims have preoccupied many of its rivals at the
expense of their clients. TBR believes this represents an effort by
DC to strengthen its brand recognition, which it admits has been
weaker than its consulting competitors.
DC continues to target large enterprises, both as clients and
strategic partners (the consulting needs of midmarket or smaller
firms are primarily served outside of DC by parent company DTT). In
FY01, DC established new or expanded current relationships with
Lucent, Siemens, BEA Systems and Hewlett-Packard. The recently
established marketing alliance with HP grew out of HPs relationship
with DC as a client, and represents a common evolution among DCs
web of partners and clients.
TBR believes the publication of DCs How to Eat the CRM Elephant
and its recent alliances with Siebel and Siemens illustrate its
faith in the CRM market. In FY01, TBR estimates CRM services
accounted for 13% of DCs total revenues, or about $454 million. DC
has engaged in a number of marketing events to promote its presence
in the CRM services market, such as its sponsorship of Davos and
its sponsorship of Siebel Systems User Week in Europe. DC also
sponsored Siebel Worldwide User Week 2001 in Chicago during
September 2001. TBR expects DC to continue to pursue CRM-related
partnerships and clients, as well as continuing to market itself as
a leader in the development and implementation of CRM services.
In response to increasing client demand that a quantifiable ROI
be established prior to the initiation of a technology project, DC
has developed software tools to be used in conjunction with the CRM
applications of its partners like Siebel Systems. Quantifying ROI
has become an integral part of the selling stage of technology
projects and TBR believes DC recognized this before several of its
rivals. Another crucial part of the project-selling process is the
establishment of project milestones to specify frequent ROI reviews
for clients. Part of DCs CRM services includes a series of regular
deliverables to clients, sometimes every three months, to provide
clients with quick wins through frequent ROI updates. TBR believes
this is part of a larger effort to broaden the range of services
included under the CRM umbrella.
GEOGRAPHIES Asia Pacific revenue is becoming a larger portion of
DCs total revenue, as illustrated in the above chart. Thanks to a
45% increase in revenue from FY00 in DCs Asia Pacific business,
revenue generated outside North America grew to 37.7% of total
revenue from 34.5% in FY00. TBR also believes DCs Latin American
business is growing, as evidenced by its increase to 6% of total
revenue in FY01 from 5% in FY00. Growth in EMEA has slowed as the
slowdown in the United States has migrated across the Atlantic. In
FY01, DCs EMEA business grew 7% from FY00 versus 20% year-to-year
growth achieved in FY00 from FY99 and a phenomenal 56% growth rate
in FY99 from FY98. TBR is not surprised to see DCs rates of
non-North American revenue growth slowing as DC shifts the focus of
its expansionist strategy from geographies to services.
-
PROFESSIONAL SERVICES BUSINESS QUARTERLYSM Fourth Calendar
Quarter 2001 DELOITTE CONSULTING Page 11
TECHNOLOGY BUSINESS RESEARCH, INC. 11 Merrill Drive, Hampton, NH
03842 Phone: (603) 929-1166 Fax: (603) 926-9801 This report is
based on information made available to the public by the vendor and
other public sources. No representation is made that this
information is accurate or complete. Technology Business Research
will not be held liable or responsible for any decisions that are
made based on this information. This report is not a recommendation
to purchase securities. This report is copyright protected and
supplied for the sole use of the recipient. Contact Technology
Business Research, Inc. for permission to reproduce.
Geographic Revenues
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
FY99 FY00 FY01
Tota
l Rev
enue
North America EMEA Asia Pacific Latin America
Source: DC 2001 Annual Report and TBR estimates.
SERVICES STRATEGY In FY01, DC claimed to have merged its
industry and services practices to illustrate its stated commitment
to and focus on meeting its clients needs. The reorganization
resulted in the formation of the Markets and Services organization.
While TBR believes this change to be more symbolic than an actual
reorganization of its corporate structure, it further illustrates
DCs efforts to distinguish itself from its rivals. TBR does not
believe this represents a departure from the strategy of offering
industry-specific expertise that DC and many other consultancies
pursued in response to increasingly specialized client demands.
Instead, TBR believes DC is enhancing its vertical and horizontal
integration among its industry and services groups. Simply put, the
reorganization may represent nothing more than increased
collaboration among industry groups to more quickly identify and
respond to cross-industry needs and trends.
It is important to note that DC recognized a lack of business
process expertise among its services and industry groups and
attributed this to the admitted weakness of its brand image against
some of its rivals. TBR believes increasing business process
expertise along each of DCs industry and services lines is, and
will continue to be, a part of its overall services strategy.
DC retains the alignment of its service areas into 14
comprehensive and complementary units as follows.
Customer Relationship Management Services include: business
solutions, technology integration and process improvement;
transformation and integration of customer interaction channels
including Web, wireless, e-mail, chat, contact centers, field
sales, field services, customer portals and indirect channels;
customer data consolidation; and integration of technologies
related to marketing analytics, personalization, campaign
management and marketing effectiveness into customer
operations.
Supply Chain Management Services include: supply chain planning,
collaboration and optimization technologies such as i2 and
Manugistics; supplier relationship management technologies,
including sourcing and e-procurement solutions such as Atlas
Commerce, Ariba and i2; collaborative
commerce/business-to-business/public and private e-marketplaces;
product innovation and lifecycle management, including
collaborative product commerce solutions such as Agile Software,
PTC, Unigraphics, i2; and logistics operations technologies,
including warehouse management systems, transportation management
systems and e-fulfillment solutions such as Manhattan Associates,
Exe, i2 and Nistevo.
Integrated Enterprise Solutions Services include: business
solutions, technology integration and process improvement related
to enterprise resource planning and related technologies/solutions;
all ERP, CRM, supply chain management, business-to-business, human
resource dynamics, SEM, financial management, business warehouse
and portal solutions for Oracle, PeopleSoft
-
PROFESSIONAL SERVICES BUSINESS QUARTERLYSM Fourth Calendar
Quarter 2001 DELOITTE CONSULTING Page 12
TECHNOLOGY BUSINESS RESEARCH, INC. 11 Merrill Drive, Hampton, NH
03842 Phone: (603) 929-1166 Fax: (603) 926-9801 This report is
based on information made available to the public by the vendor and
other public sources. No representation is made that this
information is accurate or complete. Technology Business Research
will not be held liable or responsible for any decisions that are
made based on this information. This report is not a recommendation
to purchase securities. This report is copyright protected and
supplied for the sole use of the recipient. Contact Technology
Business Research, Inc. for permission to reproduce.
and SAP (also includes SAP/Commerce One); and all
industry-specific solutions developed around Oracle, PeopleSoft and
SAP.
eTI (e-Technology Integration) Provides technology solutions and
services with primary capabilities in information dynamics,
development services, enterprise connection services, enterprise
systems management and security, technology architecture services,
internetworking services and IT transformation; solutions and
service offerings that package the capabilities into
cross-industry, package-specific and industry-specific points of
view; and includes all non-ERP industry specific package solutions
such as FTI, Keenan and Amarta.
Emerging Business Solutions Services developed with vendor
partners include Web design and development, creative/interactive
eStudio services, Web presence and branding, user-centered design
and personalization, enterprise portals (Viador, Plumtree,
DataChannel, Epicentric), content management (Vignette,
Interwoven), digital asset management, mobile commerce/wireless
(724, WareNet, Nuance), e-commerce integration (ATG, BroadVision),
collaborative commerce integration, e-payment integration services,
e-transformation services, and innovative technology assessment and
deployment.
Offshore Development Focused on providing offshore development
capability with appropriate on-site development support in
engagements across DCs services; skills include Java, C, C++
development, UNIX and Microsoft platform development, database
administration, Web development, and selected software
configuration skills; and leverages SEI CMM Level 5 development
expertise to support development-oriented projects.
IT and Business Process Outsourcing Services include application
management outsourcing; application services running on DCs
servers; hosting services supporting some or all of a clients
technology infrastructure, including servers, networks, desktops,
computer operations and helpdesk support; IT outsourcing combining
application management with hosting services to effectively become
a clients IT department; remote development of ERP interfaces,
conversions, reports, enhancements and functional configurations at
DCs Application Support Centers; and business process outsourcing
for functions such as payroll or human resources applications.
Performance, Learning and Change Services focus on issues of
human performance such as organizational alignment, organizational
design, culture, strategic transformation planning, leadership,
communication, enterprise and initiative-related learning, and
collaborative knowledge management.
Customer/Product/Market Services include analysis, strategy and
implementation associated with the sales, marketing and service
processes; customer-driven business strategies, including
multi-channel strategies and channel conflict; marketing, branding
and pricing analysis and strategies; customer value/performance
metrics; customer-centric processes, organization and decision
making; and transformation of an enterprises brand, customer
service, sales and marketing capabilities.
Operations/Supply Chain Services include analysis, strategy and
implementation related to areas such as supply chain, both within
an enterprise and across enterprises; supplier relationship
management, including procurement and strategic sourcing;
collaborative commerce/business-to-business/public and private
e-marketplaces; product innovation and lifecycle management,
including new product development and collaborative product
commerce; logistics operations, including inventory management,
warehousing and logistics management; reconfiguration of work
through the application of lean operations principles across an
enterprises entire value stream (enterprise-level lean principles);
merger and acquisition integration; operations improvement not
categorized elsewhere.
-
PROFESSIONAL SERVICES BUSINESS QUARTERLYSM Fourth Calendar
Quarter 2001 DELOITTE CONSULTING Page 13
TECHNOLOGY BUSINESS RESEARCH, INC. 11 Merrill Drive, Hampton, NH
03842 Phone: (603) 929-1166 Fax: (603) 926-9801 This report is
based on information made available to the public by the vendor and
other public sources. No representation is made that this
information is accurate or complete. Technology Business Research
will not be held liable or responsible for any decisions that are
made based on this information. This report is not a recommendation
to purchase securities. This report is copyright protected and
supplied for the sole use of the recipient. Contact Technology
Business Research, Inc. for permission to reproduce.
Financial and Performance Management Services include analysis,
strategy and implementation related to the financial and
performance management business processes, including business
planning, financial reporting, closing/consolidation, financial
planning and budgeting, performance measurement and treasury
management; business requirements and performance improvement
strategies related to the CFOs arena; financial analysis and
modeling; merger and acquisition analysis; value-based management
and strategic enterprise management; activity-based costing and
strategic cost management; and turnaround management.
Business IT Strategy Services include strategic use of
information technology to impact basis of competition, performance,
economics, and value creation; e-business strategy; digital
strategy; IT organization and processes transformation; IT value
analytics; and links to IT strategy in DCs technology
competency.
Corporate Strategy Services include industry, market, and
competitive research; alternative business models; complexity,
scenarios and real options; market entry and operations strategy;
links to organization strategy; and e-business.
Program Leadership Services include the alignment of programs
with corporate and operations strategies; program and project
prioritization (against strategy); portfolio and program benefits
realization; portfolio and program management; program office
management for major change programs; and links to M&A and all
competencies.
PRICING DCs project revenue is directly related to the hourly
rate charged to its customers. This hourly rate can differ due to
size of project, different tasks, individual negotiations and
status of customer, such as private sector or government. In
addition to time, DC bills for out-of-pocket expenses such as
travel, lodging, meals, report production and specialized
software/hardware products. DCs out-of-pocket expenses typically
average about 20% of fees. The company also is willing to propose
fixed expenses on a project-by-project basis. The following chart
details DCs billing rates for its labor categories.
DC Hourly Wages for Various Labor Categories Labor Category
Estimated Hourly Rate Partner/Principal $395-$475 Director
$315-$445 Senior Manager $290-$395 Manager $265-$370 Senior
Consultant $180-$270 Consultant $85-$150
Source: www.state.fl.us/st_contracts.
-
PROFESSIONAL SERVICES BUSINESS QUARTERLYSM Fourth Calendar
Quarter 2001 DELOITTE CONSULTING Page 14
TECHNOLOGY BUSINESS RESEARCH, INC. 11 Merrill Drive, Hampton, NH
03842 Phone: (603) 929-1166 Fax: (603) 926-9801 This report is
based on information made available to the public by the vendor and
other public sources. No representation is made that this
information is accurate or complete. Technology Business Research
will not be held liable or responsible for any decisions that are
made based on this information. This report is not a recommendation
to purchase securities. This report is copyright protected and
supplied for the sole use of the recipient. Contact Technology
Business Research, Inc. for permission to reproduce.
RESOURCE MANAGEMENT FY01 saw the virtual end of the war for
talent DC and most other consultancies were fighting during the
heyday of the e-commerce and Internet frenzy. The mass exodus of
consultants who left their positions with consulting firms like DC,
Accenture, McKinsey and the Boston Consulting Group to join or
start new e-commerce ventures intensified the competition for
talent during the e-commerce and Internet boom. But as IT spending
on new projects dried up, so did the need for the architects and
plumbers of the new technology, the strategy and IT consultants.
Rival KPMG Consulting slashed jobs three times during 2001.
McKinsey scaled back its recruiting efforts, froze its hiring, and
released 210 support staff during the year. Even Accenture, despite
recently concluding four straight quarters of year-to-year revenue
growth during 2001, implemented measures to match workforce size
with business trends (though in calendar 4Q01 Accenture actually
hired 2,400 professionals, illustrating the momentum of its
business relative to its rivals).
DCs globalization strategy led to substantial growth in its
worldwide staff and locations from the companys launch in 1996
until FY00, but has slowed since. Its worldwide staff has grown
1.4% from 12,116 in FY00 to 12,282 in FY01. This was following 9.4%
year-to-year growth in FY00 and 34.7% year-to-year growth in FY99,
which certainly illustrates how DCs hiring trends corresponded to
the decline in its business. DC reported staff in the Americas
decreased 1.6% from 6,916 in FY00 to 6,808 in FY01. DC includes
Latin America in this figure, and TBR believes headcount in Latin
America actually increased as business in the region did as well.
Given this, TBR believes the bulk of the decline in staff took
place in the United States. Staff in EMEA increased 1.3% from 2,832
in FY00 to 2,869 in FY01, illustrating the corresponding slowdown
in DCs business in EMEA. Business in Asia Pacific has continued to
grow, as has DCs staff in the region. In FY01, Asia Pacific became
the fastest-growing region for DC both in terms of revenue and
human resources DC directed to the area. Asia Pacific staff has
grown 10% from 2,368 in FY00 to 2,605 in FY01.
An interesting development is DCs launch of Passport, the firms
Web-based alumni program established at the beginning of FY01. In
its first year, DC estimates the program already has more than
2,000 registrants on its Web site. DC also reports receiving more
than 7,000 hits in one month from alumni looking for firm news and
information. DC also has formed alliances with major placement
firms to help track and place alumni. While DC seems to be just
acknowledging the value of alumni relations, it is certainly a step
in the right direction. A strong alumni network can also serve to
boost DCs prestige as a consultancy, and consequently its brand
strength. McKinseys alumni network is considered perhaps the most
extensive and well managed in the consulting industry and is
perhaps the most powerful sales building resource leveraged by any
consultancy. DC has recognized the value of alumni networks as a
way to cut costs by curbing headhunter and search fees, estimating
that each alumni rehire can cost as much as $50,000 in such fees.
DC employs one full-time global director, one full-time Web
manager, has temporarily employed some staff to build its alumni
Web site and distributes a regular newsletter.
DC Revenue and Net Income FY99 FY00 FY01
Total Revenue (in $ Millions) $2,861 $3,144 $3,493
Net Income (in $ Millions) $544 $503 $559
Revenue Year-to-Year Change 37% 10% 11%
Net Income Year-to-Year Change 42% -8% 11%
Net Income Margin 19% 16% 16% Source: DC FY01 Annual Report and
TBR estimates. Note: DC restated revenue figures for FY99 and FY00
in its FY01 annual report from those reported in its FY00 annual
report.
-
PROFESSIONAL SERVICES BUSINESS QUARTERLYSM Fourth Calendar
Quarter 2001 DELOITTE CONSULTING Page 15
TECHNOLOGY BUSINESS RESEARCH, INC. 11 Merrill Drive, Hampton, NH
03842 Phone: (603) 929-1166 Fax: (603) 926-9801 This report is
based on information made available to the public by the vendor and
other public sources. No representation is made that this
information is accurate or complete. Technology Business Research
will not be held liable or responsible for any decisions that are
made based on this information. This report is not a recommendation
to purchase securities. This report is copyright protected and
supplied for the sole use of the recipient. Contact Technology
Business Research, Inc. for permission to reproduce.
OPERATING UNITS AND ORGANIZATIONAL STRUCTURE DCs geographic
emphasis is global and it claims to be able to serve clients in any
industry, with a strong focus on e-business consulting. Although DC
claims to have merged its industry groups with its services
practices in FY01 to form the Markets and Services group, DC has
retained its industry focus within the following seven industry
groups.
Company Segments/Global Market Groups Manufacturing Energy
Financial Services Public Sector
Health Care Communications/Media
Consumer Business
Manufacturing Assesses current operations, recommending
transformation strategies, implementing initiatives and coaching
staff to become in-house change agents. Addresses issues like
process reengineering, application development, technology
selection and implementation, and improving the retail environment.
Serves automotive, aerospace, high-tech and process industries, and
life sciences manufacturing sectors.
Financial Services Provides enterprise transformation, ERP, CRM,
mergers/acquisition/integration, strategy/financial management and
systems integration services to financial service firms.
Health Care Works in conjunction with the tax, auditing, and
accounting services of DTT to provide services in strategic
transformation, mergers/integration, as well as service to improve
clients market positions, service execution and market strength.
Also provides services through Total Health Management, an
integrated set of services and capabilities related to the
management of clinical care across health care organizations.
Consumer Business Addresses issues of consumer relations,
multichannel marketing, supply-chain management and business
process management. Services focus on enterprise transformation and
include strategic enterprise management, CRM, process enhancement,
supply chain integration, ERP and systems integration, e-business
consulting, and mergers and acquisitions.
Energy Serves clients in oil, gas and utility companies.
Services include CRM, energy systems integration, mergers and
acquisitions, and ERP.
Public Sector Offers services to enhance the access to and
delivery of government services to citizens, business partners and
government employees. Services include enterprise transformation,
ERP, CRM and change leadership.
Communications/Media Provides communication companies with
services, including scenario planning, increasing customer focus,
operational efficiency, revenue stream architecture,
e-transformation strategies and other IT services.
-
PROFESSIONAL SERVICES BUSINESS QUARTERLYSM Fourth Calendar
Quarter 2001 DELOITTE CONSULTING Page 16
TECHNOLOGY BUSINESS RESEARCH, INC. 11 Merrill Drive, Hampton, NH
03842 Phone: (603) 929-1166 Fax: (603) 926-9801 This report is
based on information made available to the public by the vendor and
other public sources. No representation is made that this
information is accurate or complete. Technology Business Research
will not be held liable or responsible for any decisions that are
made based on this information. This report is not a recommendation
to purchase securities. This report is copyright protected and
supplied for the sole use of the recipient. Contact Technology
Business Research, Inc. for permission to reproduce.
Revenue Growth by Global Market Unit
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
Manufacturing Financial Services Health Care Consumer Business
Energy Public Sector Communications/Media
Other
Rev
enue
s in
Mill
ions
FY99 FY00 FY01
Source: TBR estimates.
Five of DCs seven global market units have grown since FY99, the
two exceptions being the Manufacturing and Financial Services
groups. TBR estimates revenues for these segments continued to
shrink in FY01 thanks to continued weakness in the U.S. financial
services and manufacturing markets. However, TBR believes these
groups performed better in EMEA and Asia Pacific. Revenue in DCs
Consumer Business segment grew in FY01, but only slightly. TBR
expects continued erosion of revenues in DCs Financial Services,
Manufacturing and Consumer Business segments. DC has enjoyed strong
growth in its Energy, Public Sector and Communications segments
since FY98, trends TBR expects will likely slow with the declining
economy and consulting industry, although TBR expects DCs increased
focus on the public sector will produce continued growth. DCs
Health Care unit posted impressive growth in FY01, driven mostly by
strong U.S. business.
DC Organizational Structure
John M. SullivanDeputy CEO
Robert A. GoDeputy CEO
Robert J. GlatzCFO
Richard H. MurrayGeneral Counsel
Tom FriedmanGlobal Director Deloitte Ventures
Brian FugereChief Marketing Officer
Graham BaragwanathManaging Director, Asia Pacific
Manoj SinghManaging Director, Americas
Ken ClinchyManaging Director, Europe
Douglas McCrackenCEO
Martin ShawChairman
SALES FORCE AND DISTRIBUTION CHANNELS TBR believes DC relies
primarily on the efforts of its more than 850 worldwide partners to
generate new and repeat business. The rapidly increasing number of
partners worldwide since FY99 illustrates this, and this has
generally coincided with DCs revenue growth. As revenue growth
slowed in FY01, so did the number admitted to the partner ranks. DC
reported 690 worldwide partners in FY99, which jumped by 128 to 818
in FY00, but then grew by 34 in FY01. Partners proactively
establish contact with targeted prospects to identify potential
sales opportunities and
-
PROFESSIONAL SERVICES BUSINESS QUARTERLYSM Fourth Calendar
Quarter 2001 DELOITTE CONSULTING Page 17
TECHNOLOGY BUSINESS RESEARCH, INC. 11 Merrill Drive, Hampton, NH
03842 Phone: (603) 929-1166 Fax: (603) 926-9801 This report is
based on information made available to the public by the vendor and
other public sources. No representation is made that this
information is accurate or complete. Technology Business Research
will not be held liable or responsible for any decisions that are
made based on this information. This report is not a recommendation
to purchase securities. This report is copyright protected and
supplied for the sole use of the recipient. Contact Technology
Business Research, Inc. for permission to reproduce.
work to establish awareness and preference for their services.
DC also employs telemarketing, joint marketing relationships,
seminars, direct mailings, advertising and client referrals. In
addition, consultants are taking an increasing role in sales
building as part of DCs recent Authentic Consultant marketing and
advertising initiative.
Deloitte Worldwide Partners and Revenue per Partner
-
100
200
300
400
500
600
700
800
900
1,000
FY00 FY01
Par
tner
s
$3.3
$3.4
$3.5
$3.6
$3.7
$3.8
$3.9
$4.0
$4.1
$4.2
$4.3
Rev
enue
per
Par
tner
($
Mill
ions
)
Partners Revenue per Partner
Source: DC 2001 Annual Report and TBR estimates.
DCs revenue per partner has grown as the number of partners in
the firm has grown each year except FY00, when DCs revenue growth
declined sharply while its number of partners continued to grow.
Revenue per partner in FY01 rebounded to levels approaching those
in FY99 as revenue growth outpaced the number of new partners
admitted.
Deloitte Revenue per Employee and Growth
$230,000
$240,000
$250,000
$260,000
$270,000
$280,000
$290,000
FY99 FY00 FY01
Rev
enue
s pe
r E
mpl
oyee
($
Mill
ions
)
-1.5%
2.5%
6.5%
10.5%
14.5%
18.5%G
row
th
Revenue per Employee Revenue per Employee Year-to-Year Grow
th
Source: DC 2001 Annual Report and TBR estimates.
DCs revenue per employee grew to $284,400 in FY01 from $259,492
in FY00. Year-to-year revenue per employee growth rebounded to 9.6%
in FY01 from 0.5% in FY00 as DC scaled back its hiring while
revenues continued to grow; employee ranks grew 1.4% from FY00 to
FY01 while revenues grew 11.1%. This followed a 9% growth in
full-time personnel from 11,076 in FY99. TBR expects this trend to
continue, though FY02 revenue growth may not be sufficient to
produce a jump in revenue per employee similar to FY01.
-
PROFESSIONAL SERVICES BUSINESS QUARTERLYSM Fourth Calendar
Quarter 2001 DELOITTE CONSULTING Page 18
TECHNOLOGY BUSINESS RESEARCH, INC. 11 Merrill Drive, Hampton, NH
03842 Phone: (603) 929-1166 Fax: (603) 926-9801 This report is
based on information made available to the public by the vendor and
other public sources. No representation is made that this
information is accurate or complete. Technology Business Research
will not be held liable or responsible for any decisions that are
made based on this information. This report is not a recommendation
to purchase securities. This report is copyright protected and
supplied for the sole use of the recipient. Contact Technology
Business Research, Inc. for permission to reproduce.
RECRUITING AND RETENTION While DC has not openly admitted to
joining the ranks of consulting firms releasing, or counseling out,
consultants in droves, TBR believes that at least in North America
DC has been reducing its headcount. TBR estimates DCs North
American headcount has declined 2% to 3% since FY00. (DC provided
headcount by region for its operations in the Americas in its
annual report. However, DC did not distinguish between North
America, the United States, or Latin America, but TBR believes
because the slowdown in IT services and consulting was most acute
in the United States, headcount reductions took place mostly in
that region and not in the growing Latin American market.) However,
DC has openly stated it has moved groups of consultants between
various geographies, mostly from the United States to EMEA and Asia
Pacific where business was stronger. Given this, and given DC
excluded support personnel in the worldwide headcount figures it
reported in its annual report (which may in fact show an actual
worldwide headcount reduction), TBR believes DC may be mimicking
McKinsey and Accenture in managing its human resources. McKinsey
and Accenture have been reluctant to dismiss consultants outright.
Their preference has been to offer temporary workforce alternatives
such as leaves of absence, in the case of Accenture, or to dismiss
support staff, in the case of McKinsey. This practice in lieu of an
outright layoff of consultants demonstrates a belief that the
industry will rebound and the company should be prepared to respond
quickly when the rebound occurs. Finally, TBR believes DC has also
curtailed hiring and recruiting efforts again like McKinsey, which
has also cut back hiring, suspended summer internships and
associate programs, postponed start dates for new hires and even
withdrawn employment offers.
DC has conceded a shift in its hiring focus, which may
correspond with the aforementioned shift away from its corporate
strategy of geographic expansion. Where hiring was once more
focused on building general practices simply by increasing
personnel, hiring is now focusing on meeting more specific
strategic needs. DC continues to emphasize diversity in hiring,
claiming that its diverse workforce enables it to better serve
international clients with consultants acclimated to local culture
and local issues.
PHYSICAL INFRASTRUCTURE AND WORLDWIDE LOCATIONS DCs
aforementioned globalization strategy has resulted in substantial
international expansion since FY97. In FY97, DC had offices in five
nations, including the United States and Canada. It has since grown
to include locations or subsidiary practices in 34 nations
worldwide.
Africa Pretoria, South Africa; and Johannesburg, South
Africa.
Americas Buenos Aires, Argentina; Sao Paulo, Brazil; Calgary,
Alberta, Canada; Montreal, Quebec, Canada; Ottawa, Ontario, Canada;
Toronto, Ontario, Canada; Vancouver, British Columbia, Canada;
Santiago, Chile; Mexico City, Mexico; Monterrey, Mexico; New York,
N.Y.; Boston, Mass.; Chadds Ford, Pa.; East Brunswick; N.J.;
Parsippany, N.J.; Philadelphia, Pa.; Stamford, Conn.; Atlanta, Ga.;
Marietta, Ga.; Washington, D.C.; West Palm Beach, Fla.; Austin,
Texas; Irving, Texas; Houston, Texas; Chicago, Ill.; Cincinnati,
Ohio; Cleveland, Ohio; Detroit, Mich.; Downers Grove, Ill.; Kansas
City, Mo.; Minneapolis, Minn.; Pittsburgh, Pa.; Bellevue, Wash.;
Foster City, Calif.; Los Angeles, Calif.; Phoenix, Ariz.;
Sacramento, Calif.; San Francisco, Calif.; San Ramon, Calif.; Santa
Ana, Calif.; and Seattle, Wash.
Asia Pacific Brisbane, Australia; Canberra, Australia;
Melbourne, Australia; Perth, Australia; Sydney, Australia;
Shanghai, China; Hong Kong; Jakarta, Indonesia; Osaka, Japan;
Fukuoka, Japan; Tokyo, Japan; Kuala Lumpur, Malaysia; Auckland, New
Zealand; Wellington, New Zealand; Makati City, Philippines;
Singapore; Seoul, South Korea; Taipei, Taiwan; and Bangkok,
Thailand.
Europe Vienna, Austria; Brussels, Belgium; Zaventem, Belgium;
Copenhagen, Denmark; Helsinki, Finland; Paris, France; Berlin,
Germany; Dusseldorf, Germany; Frankfurt, Germany; Hamburg, Germany;
Hannover, Germany; Munich, Germany; Milan, Italy; Rome, Italy;
Strassen, Luxembourg; Amsterdam, Netherlands; s Hertogenbosch,
Netherlands; Oslo, Norway; Lisbon, Portugal; Madrid, Spain;
Barcelona, Spain; Stockholm, Sweden; Zurich, Switzerland; Basel,
Switzerland; Bath, England; Warwick, England; and London,
England.
-
PROFESSIONAL SERVICES BUSINESS QUARTERLYSM Fourth Calendar
Quarter 2001 DELOITTE CONSULTING Page 19
TECHNOLOGY BUSINESS RESEARCH, INC. 11 Merrill Drive, Hampton, NH
03842 Phone: (603) 929-1166 Fax: (603) 926-9801 This report is
based on information made available to the public by the vendor and
other public sources. No representation is made that this
information is accurate or complete. Technology Business Research
will not be held liable or responsible for any decisions that are
made based on this information. This report is not a recommendation
to purchase securities. This report is copyright protected and
supplied for the sole use of the recipient. Contact Technology
Business Research, Inc. for permission to reproduce.
FINANCIAL METRICS DC sustained top-line growth during the recent
slowdown in the consulting and IT services industries. Revenues for
FY01 grew 11.1% to $3.49 billion from $3.14 billion in FY00.
Revenue growth, while still positive, has flattened since FY99,
corresponding to the decline in IT spending. FY99 revenue growth
was an impressive 37% from FY98, but the aforementioned slowdown
has pushed revenue growth rates down in the two years since. FY00
revenue grew 9.9% from FY99 revenue of $2.9 billion, with slightly
better growth achieved in FY01.
DC does not report net income figures, but TBR estimates DC
earned $559 million in FY01, up 11.1% from FY00 net income of $503
million. DCs net income growth rate kept pace with its revenue
growth rate, illustrating TBRs belief that it has succeeded in
controlling operating and other expenses in the face of the
slowdown in its business. DCs net margin of 16% in both FY01 and
FY00 declined from the 19% net margin of FY99. The stabilization of
DCs net margin in FY01 corresponds to DCs efforts to curtail
recruiting and hiring, among other expenses. TBR believes the
slowdown in FY00caught DC somewhat by surprise, evidenced by the
sharp decline in net margin from FY99 to FY00, but may have
responded quickly enough to preserve its net margin and net income
for FY01.
Deloitte Growth and Profitability
$-
$600
$1,200
$1,800
$2,400
$3,000
$3,600
$4,200
FY99 FY00 FY01
Rev
enue
s an
d N
et In
com
e ($
Mill
ions
)
0%
10%
20%
30%
40%
50%
Yea
r-to
-Yea
r R
even
ue G
row
th
Net Income Revenue Year-to-Year Revenue Grow th
The above graph illustrates the decline of DCs revenue growth in
FY00 and the stabilization of revenue growth in FY01. While the
systems integration and implementation segments of DCs business
have slowed, TBR believes DCs diversified services portfolio has
helped preserve revenue growth. TBR wonders if DC will repeat this
in FY02, as the impact of the slowdown on systems integrators has
been more acute in the second half of 2001, the first half of DCs
next fiscal year.
The recent performance of rival KPMG Consulting illustrates
this. KPMG posted 21% year-to-year growth for its FY01, which
generally corresponds to DCs fiscal year (DCs fiscal year ends May
31, KPMGs ends June 30). But KPMGs pipeline of new IT services
contracts began drying up during FY01, and consequently in 1Q02
revenues dropped dramatically; down 10.4% year-to-year from 1Q01.
This was the first year-to-year decline in KPMGs quarterly revenues
in the last 14 quarters it has reported revenue figures. These 14
quarters of consistent year-to-year growth represent the boom years
in IT services, especially for firms with strong systems
integration capabilities like KPMG and DC. Although systems
integration and implementation is also a substantial part of DCs
business, TBR believes the aforementioned diversification of DCs
services portfolio beyond these areas served to mitigate the impact
of the slowdown. DC did not enjoy the annual revenue growth rates
of 15% to 20% KPMG did during FY00 and FY01, but it may also avoid
suffering the substantial decline in revenue that KPMG did in its
most recent fiscal quarter as it offers a more diverse portfolio of
services than KPMG. However, though DC offers outsourcing services,
for example, it is not a major outsourcer and does not possess the
outsourcing capabilities of companies like ACS, EDS or IGS.
Furthermore, while DC is attempting to build its strategy
consulting practice, the strategy consulting industry is going sour
with the current economic recession and the growing skepticism
toward the consulting industry in general. Strategy consulting is
becoming a more necessary element in DCs portfolio of
-
PROFESSIONAL SERVICES BUSINESS QUARTERLYSM Fourth Calendar
Quarter 2001 DELOITTE CONSULTING Page 20
TECHNOLOGY BUSINESS RESEARCH, INC. 11 Merrill Drive, Hampton, NH
03842 Phone: (603) 929-1166 Fax: (603) 926-9801 This report is
based on information made available to the public by the vendor and
other public sources. No representation is made that this
information is accurate or complete. Technology Business Research
will not be held liable or responsible for any decisions that are
made based on this information. This report is not a recommendation
to purchase securities. This report is copyright protected and
supplied for the sole use of the recipient. Contact Technology
Business Research, Inc. for permission to reproduce.
services, but the slowdown in the industry may not result in DCs
strategy consulting practice making a substantial contribution to
revenues.
Revenue Growth Year-to-Year
0.0%
10.0%
20.0%
30.0%40.0%
50.0%
60.0%
70.0%
FY99 FY00 FY01
Deloitte PSBQ FY01 Average
Source: TBR estimates.
The above graph illustrates the deceleration in DCs revenue
growth in FY00, and the stabilization of revenue growth in FY01.
TBR believes this coincides with the deceleration of DCs worldwide
expansion efforts, though TBR also expects DC to revive its efforts
to expand internationally. In addition, the recent economic
slowdown and the decline in the IT services market have contributed
to this decline.
Net Income Growth
$450
$470
$490
$510
$530
$550
$570
FY99 FY00 FY01
Net
Inco
me
($ M
illio
ns)
-10%
5%
20%
35%
50%
65%
80%
Yea
r-to
-Yea
r G
row
th
Net Income Net Income Grow th
Source: TBR estimates.
DC has struggled to repeat the 50% net income growth it achieved
in FY99 during the past two years. In FY00, TBR estimates DCs net
income declined 7.5% to $503 million from $544 million in FY99. In
FY01 DCs net income growth of 11% emulated the 11% growth achieved
to the top line. Net income in FY01 grew to $559 million from FY00.
TBR believes this indicates DC responded to the slowdown in its
business by aggressively implementing expense controls, which
ultimately resulted in the FY01 rebound in net income growth. Staff
reduction was a part of these control measures, but TBR believes DC
opted to cut support staff instead of consultants in the hope that
it will be better prepared when its business rebounds. DCs revenue
and net income figures indicate this rebound may already be
underway.
-
PROFESSIONAL SERVICES BUSINESS QUARTERLYSM Fourth Calendar
Quarter 2001 DELOITTE CONSULTING Page 21
TECHNOLOGY BUSINESS RESEARCH, INC. 11 Merrill Drive, Hampton, NH
03842 Phone: (603) 929-1166 Fax: (603) 926-9801 This report is
based on information made available to the public by the vendor and
other public sources. No representation is made that this
information is accurate or complete. Technology Business Research
will not be held liable or responsible for any decisions that are
made based on this information. This report is not a recommendation
to purchase securities. This report is copyright protected and
supplied for the sole use of the recipient. Contact Technology
Business Research, Inc. for permission to reproduce.
FUTURE OUTLOOK 12-MONTH OUTLOOK TBR believes FY02 will reveal
much about the wisdom and momentum of DCs business model. The
outlook for DCs outsourcing services is optimistic as IT
outsourcing is a growing industry. Large technology outsourcers
like IGS and EDS reported impressive results in 2001, and this is
expected to continue in 2002 as outsourcing continues to be a major
driver of revenue growth. TBR does not expect DC to pose a threat
to these outsourcing giants, but DC is still in the right place at
the right time. DC should also pay close attention to Accenture,
which is quickly emerging as an industry leader not only for its
outsourcing services, but its other IT and consulting services as
well. Accenture has also been able to successfully split from its
former auditing parent and rebrand, something DC may soon be
compelled to do. The ability to bundle strategy and management
consulting services with IT implementation and integration services
will help win new business from clients increasingly seeking a full
range of services. The decline in IT spending and its corresponding
impact on systems integration and implementation may hurt DCs FY02
performance, though TBR believes there are indications that the
market for these services may be rebounding. Given this, the second
half of FY02 may be better than the first half, though the timing
of this rebound is still unclear.
The impact of the Enron collapse may substantially alter the
services portfolios of many accounting and auditing firms if the
SEC tightens the regulations regarding their ability to provide
business-consulting services in addition to assurance services.
However, the SEC and other federal regulators may simply throw down
the gauntlet and demand the separation of consulting from auditing.
TBR believes a separation of DC from DTT would be a severe
disruption of DCs business. DC may have to make the transition to
an independent firm on short notice and without a plausible or
coherent strategy going forward. It is unclear if DC could make a
smooth cultural transition from a partnership to a public company
should the split involve an IPO. Accenture was able to while so far
KPMG Consulting has been unable to. TBR believes DTT and DC will
eventually be forced to retreat from their vigorous opposition to
separating consulting from auditing. For example, DC may be forced
to reverse itself from the spirit and language of its bold
announcement in July 2001 the advertisement it ran entitled
Deloitte Consulting Is Pleased Not To Announce An IPO. Ultimately,
they may have to concede, and go their separate ways. Although DTT
vigorously opposes separation and has argued passionately that
providing auditing services with consulting services does not pose
an independence problem, a separation may be inevitable as the
outrage grows from the Enron debacle. TBR does not expect the
auditing industry to fully realize the impact of these events
during 2002, but the year may mark the beginning of the end for the
bundling of business-consulting services with auditing
services.
-
PROFESSIONAL SERVICES BUSINESS QUARTERLYSM Fourth Calendar
Quarter 2001 DELOITTE CONSULTING Page 22
TECHNOLOGY BUSINESS RESEARCH, INC. 11 Merrill Drive, Hampton, NH
03842 Phone: (603) 929-1166 Fax: (603) 926-9801 This report is
based on information made available to the public by the vendor and
other public sources. No representation is made that this
information is accurate or complete. Technology Business Research
will not be held liable or responsible for any decisions that are
made based on this information. This report is not a recommendation
to purchase securities. This report is copyright protected and
supplied for the sole use of the recipient. Contact Technology
Business Research, Inc. for permission to reproduce.
Deloitte ConsultingAnnual Statement of Income(in Millions)Fiscal
Year 1999 2000 2001
Revenue 2,861$ 3,144$ 3,493$ Expenses 2,317$ 2,641$ 2,934$ Net
Income 544$ 503$ 559$
As a Percentage of RevenueRevenue 100% 100% 100%Expenses 81% 84%
84%Net Income 19% 16% 16%
Year-to-Year ChangeRevenue 63% 10% 11%Expenses 60% 14% 11%Net
Income 75% -8% 11%
-
PROFESSIONAL SERVICES BUSINESS QUARTERLYSM Fourth Calendar
Quarter 2001 DELOITTE CONSULTING Page 23
TECHNOLOGY BUSINESS RESEARCH, INC. 11 Merrill Drive, Hampton, NH
03842 Phone: (603) 929-1166 Fax: (603) 926-9801 This report is
based on information made available to the public by the vendor and
other public sources. No representation is made that this
information is accurate or complete. Technology Business Research
will not be held liable or responsible for any decisions that are
made based on this information. This report is not a recommendation
to purchase securities. This report is copyright protected and
supplied for the sole use of the recipient. Contact Technology
Business Research, Inc. for permission to reproduce.
PSBQ REPORT AND SCORING METHODOLOGY Report Sections Each PSBQ
report contains four sections: strategic overview, market strategy,
resource management and financial metrics. In addition, each
company-specific report begins with the TBR position. All sections
are summarized on the first two pages of each report and assigned a
TBR ranking of positive, neutral or negative characterized by an
upward, horizontal right or downward arrow. Furthermore, TBRs