18 NOVEMBER 2014 Consulting®

Corner

Each issue, Kennedy Consulting Research & Advisory (KCRA) offers a take on the current state of the consulting profession

Matthew Lyons is a Senior Analyst, Lead for Financial Consulting Research for Kennedy Consulting Research

& Advisory. For more information, visit www.

kennedyinfo.com/ consulting.

It’s a Floorwax... It’s a Dessert Topping...
Actually, it’s Both!

There are few sure things in the world. One might cite death and taxes, but only slightly down the list is the inevitable answer a Big Four consultant provides to the question “What is your firm’s strength?”

Everything, of course.

Today that answer may be closer to the truth than other consulting firms wish to admit, with final pieces such as Booz & Company, Parthenon Group, and Monitor Group snapping neatly into Big Four services puzzles to create monolithic consulting offerings. We’ve seen movement in Big Four services portfolios before, as firms spun off IT consulting assets during the dot-com era, divested controversial units in the wake of Sarbanes-Oxley legislation, then slowly refortified gutted consulting portfolios that weren’t so offensive to regulators or the business community post-SOX.

This rebuilding all started innocuously enough; a high-end technology capability here, a restructuring practice there, all carefully orchestrated to take advantage of the acquirer’s scale and the target’s new services scope. But things changed in 2010 with PwC’s acquisition of Diamond and subsequent PRTM purchase. Deloitte’s acquisition of troubled—but capability-rich— Monitor Group followed.

Then, PwC snapped up Booz & Company. EY shelled out for Parthenon Group. KPMG announced the creation of “KPMG Strategy,” an expensive internal initiative netting 900 employees into a global delivery group. The Big Four firms can’t seem to find enough shiny strategy baubles to burnish.

What gives? In a word… cross-selling. Firm leaders expect strategy consultants to help in two ways: either they generate their own new sales with externally-facing business development, or they get pulled into projects to augment the project capabilities of other consulting units. Both cases will result in numerous opportunities to cross-sell services from the extremely broad platform each of the Big Four possesses.

Think Wal-Mart here. You’ve got five items in the cart (project) already…what about that sixth? It’s not a big jump, especially if you’re a Big Four client that spends multimillions on projects every year. Even less of a leap if the services come with a bundling discount.

Each firm has taken its own unique approach to building the ubiquitous consulting practice. PwC’s strategy is certainly the most aggressive, involving big transactions with lots of integration. Deloitte’s been in the game on a large scale the whole time, supplemented by scale-increasing acquisitions.

EY entered the fray with a deliberate approach—acquiring boutique Parthenon Group which provides scale, but also complements the firm’s Transaction Advisory Services team because Parthenon’s focus is inorganic growth strategy. KPMG has been more deliberate still, announcing their intention to grow its strategy practice internally.

So what’s next? Is there any dry powder waiting to be deployed on a big strategy firm acquisition? Yes, of course. But will one or more pull the trigger? I think we need to wait and see. It’s interesting times among the Big Four. Which strategy-en-hancing strategy will prevail?