Enspiel

Strategy development for STRATEGY PARTNERS GROUP

Final report 12 December 2011

Cup Moscow 2011Final Case

Russian Intellectual Tradition

Titova ElenaKorkmazov AlexeyMnatsakan’yan AlexanderRodnyy Alexander

HIGHER SCHOOL OF ECONOMICSN A T I O N A L R E S E A R C H U N I V E R S I T Y

Team ENDSPIEL

Team ENDSPIEL

Participants:

3

Elena Alexey Alexander Alexander

NRU HSE NRU HSE NRU HSE NRU HSEManagement

4 yearManagement

4 yearManagement

4 yearManagement

4 year

Team ENDSPIEL

The Long-term goal

Leader in Russian market of strategy consulting

4

Source: Case data, Endspiel analysis

Level of sales channels

development

Diversity of business

Consultant staff

increase BrandQuality

Price Quantity

Revenue per consultant

Profit marginRevenues Value

Improve position

2011Business Value ~20,0 *Revenue 100% 19,0 COGS 19% 3,6 Direct costs 22% 4,2 Consulters 26% 4,9 Administrative 6% 1,1 Other 8% 1,5 EBITDA 19% 3,6

2016Business Value ~100,0 Revenue 100% 100,0 COGS 19% 19,0 Direct costs 17% 16,7 Consulters 23% 23,4 Administrative 5% 4,6 Other 17% 12,0 Ebitda 19% 19,4

Team ENDSPIEL

The ProblemsSPG strategy will be able to respond to internal and external challenges it faces

5

External

> Growing demand and stable supply of consulting talent

> Increasing importance of brand awareness

> Increasing likelihood of crisis

Internal

> Lack of integration with SBERBANK Group

> Low revenue per consultant

> Low recurrent clients rate

Team ENDSPIEL

The Scenarios

2-way approach allows to meet changing conditions

6

Increase reccurence rate

Large commercial customers

Brand awareness development

> Large companies

> Public sector

> IT consulting

> No Staffing

problems

> Medium & small companies

> PE Fund

> International expantion

to Ukraine & Kazakhstan

OptimisticPessi

mistic

- the target

Team ENDSPIEL

The Optimistic Scenario

Business value increase by 2016

7

Value

New projects

Agriculture

Oil&Gas + Energy

Manufacturing

FMCG

Insurance

+$14m

+$8m

+$7m

+$4m

+$2m

+$35m

PE Fund+$45m

We will increase the SPG value to $100m by 2016

+$80m

Team ENDSPIEL

The Optimistic Scenario

Implementation plan

8

2012 2013 2014 2015 2016

MARKETING

KAZAKHSTAN

UKRAINE

PE FUND

HIRE STAFF

REGIONAL DEVELOPMENT (SPb)

ACQUIRING NEW CLIENTS through SBERBANK GROUP

Team ENDSPIEL

The Optimistic Scenario

Marketing plan

9

Public projects

Ads in magazines Conferences & Trainings

Vestnik Srategy

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The Optimistic Scenario

New clients acquiring plan

10

ConsultingClients

Consulting

Consulting ClientsPRIVATE EQUITY

IPOM&A

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The Optimistic Scenario

Industries

11

Source: Case data, ExpertRA

0%14%28%

-4%21%

45%

FMCG

Manufacturing

Metallurgy

TransportTMT

Government

Finance institutions

Oil&Gas

Competitors’ Power

Growth Rate

Size represents market shareSelected industries

Team ENDSPIEL

The Optimistic Scenario

Practices in industries

12

Source: Case data, ExpertRA

Manufacturing Transport Energy Government Finance institutions Oil&Gas0%

20%

40%

60%

80%

100%

13% 15%11% 8%

20%

10%

14%18%

14%12%

15%

11%

30%

36%

40% 50%

HR

Tax & Legal

Organization

IT integration

IT management

Operations

Strategy

Financial consulting

Team ENDSPIEL

The Optimistic Scenario

CIS

13

Kazakhstan> Government (sustain)

> Oil&Gas

> Energy

> Mining

> Agriculture

> Finance (Troika Dialog)

Ukraine> Finance (Troika Dialog)

> Agriculture

Agriculture7.8

Mining6.2

Reprocessing22.4

Energy & gas3.6

Development4

Retail15.7

Transport10.5

Education5.7

Healthcare3.5

Other25GDP (Ukraine), %

Team ENDSPIEL

The Optimistic Scenario

Private Equity Fund will bring in an income of $45m* by 2016

14

5-10 Firms

$200 m

$90m$2000

m

2016

Consulting

$100m

$145m

~10% share

$1000 m

$ 145m will be returned to Sberbank, $ 10m – to the partners

Investment: 10-20% in small- and medium-sized companies (value $50-100 M) in FMCG, manufacturing, insurance

growth

Team ENDSPIEL

The Optimistic Scenario

Staffing. Salary. Structure.

15

Salary + Bonus($1000 Per month)

30 + 11

15 + 8

11 + 5,7

9 + 3,5

6 + 2,5

5 + 1,7

2,5

30Analyst

22Consultant

11Manager

4Director

5Jun. partner

25Administrative staff

90Analyst

33Consultant

15Senior consultant

33Manager

15Director

12Jun. partner

75Administrative staff

2011

2016

7Partner

10Partner

+MBA16

Partner

Junior Partner

Director

Manager

Senior consultant

Consultant

Analyst

Team ENDSPIEL

The Optimistic Scenario

Staffing sources

15

Hire 394 employees by 5 yearsTotal Hiring expenses $20,6 m for 5 years ($52400 per 1)

20%20%60%

Partners and Junior partners

IndustryIGOwn 31%

28%42%

Directors & Managers

IndustryIGOwn

29%18%

54%

Managers

IndustryIGOwn

27%7%

67%

Analysts

IndustryIGGraduates

Team ENDSPIEL

The Optimistic Scenario

Saint-Petersburg office

17

Source: Case data, ExpertRA

>Staff ~100

>Rental price of office is up to 2 times lower

18%

Total Consulting Revenue Breakdown in Russia, %

MoscowSaint PetersburgSiberiaPrivolzskyi FDCentralOther

Team ENDSPIEL

The Pessimistic Scenario

Business value increase by 2016

18

Value

New projects

Oil&Gas + Energy

Government

Finance

+$15m

+$10m

+$10m

+$35m

M&A+$15m

We will increase the SPG value to $70m by 2016

+$50m

Team ENDSPIEL

The Pessimistic Scenario

Implementation plan

19

2012 2013 2014 2015 2016

MARKETING

KAZAKHSTAN

CONCENTRATE on GOVERNMENT, FINANCE and OIL&GAS

BUY an IT-CONSULTANT

ACQUIRING NEW CLIENTS through SBERBANK GROUP

Team ENDSPIEL

The Pessimistic Scenario

Industries

20

Source: Case data, ExpertRA

3%15%27%

-34%3%

40%

FMCG

Manufacturing

Metallurgy

TransportTMT

Government

Finance institutions

Oil&Gas

Competitors’ power

Growth Rate

Size represents market shareSelected industries

Team ENDSPIEL

The Pessimistic Scenario

Practices in industries

21

Source: Case data, ExpertRA

Manufacturing Transport Energy Government Finance institutions Oil&Gas0%

20%

40%

60%

80%

100%

13% 15%11% 8%

20%

10%

14%18%

14%12%

15%

11%

30%

36%

40% 50%

11%

7%9%

27%

18%

7%

HR

Tax & Legal

Organization

IT integration

IT management

Operations

Strategy

Financial consulting

Team ENDSPIEL

The Pessimistic Scenario

M&A

22

~$10mStaff 180

IT - management IT - integration

60% revenue 40% staff 40% revenue 60% staff

Sell to

Fire50%

Stay50%

Staff (72)

Accenture72%

Own28%

New staff (18)

or

Team ENDSPIEL

The Pessimistic Scenario

Check list

23

Achieve for quadruple growth

Optimistic

PE F

und

Oil&

Gas

Man

ufac

turin

g

FMCG

UA &

KZ

Diversified Growth

Pessimistic

IT-m

anag

em.

prac

tice

Oil&

Gas

Gove

rnm

ent

Fina

nce

M &

A

Artificial Growth

Team ENDSPIEL 24

That’s it.Questions, please.

Team ENDSPIEL 25

Appendix

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1) Possible organizational culture barriers2) Problems with finding:

a) projectb) qualified personalc) money

3) Political situation

4) Uncertainty with crisis 20125) Absence of forecasted money return6) Troika’s reluctance of cooperation7) Absence of adjusted PEF – system8) Evaluation of benefits from selling IT - integrator

Probability

Effectslow

low

medium high

medium

high

8 5

3 4

7

2b6

2a2c

1

The Risks