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TBR’s second semi-annual iteration of our comprehensive management consulting benchmark provides analysis on areas of growth and investment aligning to the change that has shaped the industry. …

TBR’s second semi-annual iteration of our comprehensive management consulting benchmark provides analysis on areas of growth and investment aligning to the change that has shaped the industry. Acquisition strategies have shifted, growth from technology innovation is positioning firms to win big, and focus areas of cloud, social media, BI/analytics and mobility are driving enterprise clients to invest. Join Senior Analyst Liz Leonard as she discusses

•Aggregate increases or declines in performance across the 16 firms covered in the benchmark
•Key areas of growth driving enterprise clients to seek consulting led investments
•How firms are boosting revenues by leveraging global delivery methods a way similar to IT consulting

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  • 1. PROFESSIONAL SERVICES PRACTICESMBeyond the Jargon: TBR’s 2H11 Management ConsultingBenchmark ReportWEBINARLiz Leonard (liz.leonard@tbri.com),Professional Services Practice Senior Analyst TBR T E C H N O L O G Y B U S I N E S S R ES E AR C H , I N C .
  • 2. Management Consulting CY2011 Firm Dynamics TBRTBR’s 2H11 Management Consulting Benchmark provides insights intocompetitive approaches and opportunitiesKey Areas Covered and Questions Answered Investments Offerings Strategy Delivery • Talent, technology, • Resource mix, • Industry specialization facilities utilization, profit 2 2H11 Management Consulting Benchmark Webinar ©2012 Technology Business Research Inc.
  • 3. Beyond the Jargon: Approach and Vendors TBRLeading firms compete on breadth and depth, align capabilities toopportunities Vendors currently included in the study are: Deloitte Accenture McKinsey Mercer PwC IBM Bain Aon Hewitt KPMG Capgemini BCG Towers Watson E&Y A.T. Kearney Booz & Co. Oliver Wyman The output of this study includes: • Executive summary and report comparing headcount, business metrics and vendor strategies • 16 in-depth profiles on each benchmark consulting firm • Database and Excel pivot table • Analyst knowledge transfer 3 2H11 Management Consulting Benchmark Webinar ©2012 Technology Business Research Inc.
  • 4. Management Consulting Benchmark Segment Overview TBRBenchmark firms cluster into groups whose assets vary in relevanceto growing demand for technology-enabled business consulting Segments •Deloitte •Accenture •Ernst & Young •Capgemini •KPMG •IBM •PWC Management Consulting Benchmark •A.T. Kearney •Aon Hewitt •Bain •Mercer •BCG •Oliver Wyman •Booz & Co. •Towers Watson •McKinsey Focal Points4 2H11 Management Consulting Benchmark Webinar ©2012 Technology Business Research Inc.
  • 5. Management Consulting Benchmark Revenue Growth TBRContinued growth in 2011 was born from relevant alignment ofofferings with high-priority business issuesManagement Consulting Revenues and Growth CY2011 Revenue (in $ million) and Revenue Growth (vs. CY2010) $9,000 50%• Total 2010 to 2011 from $48.3 billion $8,000 62.3%* Percent Growth Year-to-Year to $56.1 billion, 17.3% YtY growth 40% Revenue in $ millions $7,000 $6,000• Deloitte, PwC, McKinsey, Accenture, $5,000 30% E&Y led in revenues through strategic $4,000 20% scale, reputation, breadth and depth $3,000 $2,000 10%• Growth leaders Aon Hewitt, KPMG, $1,000 PwC, Accenture, Deloitte driven by $0 0% Bain IBM Ernst & Young McKinsey Towers Watson Aon Hewitt Accenture Mercer Deloitte Booz & Co. Oliver Wyman Capgemini KPMG BCG PwC AT Kearney key investments, acquisitions Big Strategy Solutions HR/ Four Led Led Specialty SOURCE: TBR AND BENCHMARK FIRMS *This data point was adjusted to present the data in a more visually readable way.5 2H11 Management Consulting Benchmark Webinar ©2012 Technology Business Research Inc.
  • 6. Management Consulting Benchmark Headcount and Revenue Growth TBRIndustry alignment within service line capabilities and acquired expertisedrove leading firms’ positions in 2011Benchmark of Revenues and Headcount CY2011 Headcount & Revenue Growth in Millions (vs. CY2010) 60%• Benchmark firms drove annual 50% average growth rate of 17.3% in Aon Hewitt Headcount Growth: CY2011 36%; Revenue Growth: 62.3%*• Acquisitions in key growth 40% Revenue Growth % KPMG regions also drove headcount PwC Accenture among leaders Deloitte, E&Y and 30% Deloitte PwC• Revenue laggards in 2H11, Booz IBM 20% Bain McKinsey & Co. and IBM GS suffered Capgemini BCG exposure to weak economies 10% Ernst & Young Mercer that dragged down management Booz & Co. AT Kearney Towers Watson consulting deals. 0% Oliver Wyman -15% -5% 5% 15% 25% 35% 45% Headcount Growth % SOURCE: TBR AND BENCHMARK FIRMS6 2H11 Management Consulting Benchmark Webinar ©2012 Technology Business Research Inc.
  • 7. Management Consulting Benchmark Market Drivers TBRManagement consulting firms continued to invest, specialize and improvebottom-line results in CY2011Key Market Drivers: Headcount and Capacity, Industry Alignment, Efficient Delivery Investments driven Industry-specialized Efficiencies enable revenues offerings profit Revenue growth Leaders go-to-market High utilization rates correlates to headcount with deep vertical coupled with lower-cost volume, driving scale of expertise emphasizing resource leverage talent demand in an significant growth improves operating essential relationship- industries and margin. led business. competitive focus. 7 2H11 Management Consulting Benchmark Webinar ©2012 Technology Business Research Inc.
  • 8. Management Consulting Investments Overview TBRFirms increased investments in headcount, tools and locations to expandglobal operations • CY2011 headcount growth enabled breadth andInvestments Growth capacity to capitalize on opportunities • Big Four firms led headcount base and growth Investing in people, through acquisitions and headcount investments technologies and aligned to demand, Strategy-led is second largest with relatively slow headcount growth locations Benchmark firms expanded consulting headcount, increased technology-led delivery innovations and global footprint. 8 2H11 Management Consulting Benchmark Webinar ©2012 Technology Business Research Inc.
  • 9. Management Consulting Investments Overview TBRTotal MC headcount grew to expand capacity in both billable and non-billable employees in CY2011Billable and Non-Billable Headcount and Year-to-Year Growth • Aggregate billable headcount growth rate vs. non-billable • Increased leverage of centralized research and client-delivery support personnel, as firms increased standardization and realize improved profit form leverage of lower cost resources TBR TOTAL MANAGEMENT CONSULTING BILLABLE VERSUS NON-BILLABLE HEADCOUNT AND GROWTH 40,000 45% Management Consulting Headcount Growth Y/Y Management Consulting Headcount 40% 35,000 35% 30,000 30% 25,000 25% 20% 20,000 15% 15,000 10% 10,000 5% 0% 5,000 -5% 0 -10% Ernst & Young Towers Watson Accenture Aon Hewitt Bain IBM Booz & Co. Deloitte Mercer McKinsey Capgemini Oliver Wyman BCG KPMG AT Kearney PwC Billable Headcount Non-Billable Headcount Billable Headcount YtY Growth Non-Billable Headcount YtY Growth SOURCE: TBR AND COMPANY DATA9 2H11 Management Consulting Benchmark Webinar ©2012 Technology Business Research Inc.
  • 10. Management Consulting Investments Overview TBRFast-growing and core geographies grew as firms compete on scaleManagement Consulting Headcount by Region Key Geo Insights • Americas remains home to theAmericas Total Headcount: 88,200 majority of resources with 45% of % of Global Headcount: 45% global headcount and 13% YtY growth APAC Total Headcount: 38,500 US Total Headcount: 71,350 % of Global Headcount: 19% • U.S. is single largest country for % of Global Headcount: 36% MC headcount and grew by nearly 14% YtY EMEA Total Headcount: 72,100 % of Global Headcount: 36% • EMEA’s fast growing areas (MENA) enabled 10% headcount growth YtY for the region • APAC led in growth for CY2011, Average Total Headcount headcount up 18% however is still Growth Overall: 10.5% smallest global region overall Benchmark Leaders Headcount Growth Overall: 17.5% (Top 6) 10 2H11 Management Consulting Benchmark Webinar ©2012 Technology Business Research Inc.
  • 11. Management Consulting Industry Overview TBRFinancial Services and Healthcare present opportunities Financial Services Consulting CY11 Revenue and Revenue Growth in Millions (2011 vs. 2010)Industry-led Growth and Specialization • Largest vertical remains Financial Services at $14 Offerings increasingly billion for CY2011 • 17% aggregate align to industry revenue growth priorities for financial services on YtY basis Healthcare Consulting CY11 Revenue and Revenue Growth in Millions (2011 vs. 2010) Firms increased capabilities and • $4 billion in offerings that align to CY2011, but strategic industries to growing build depth and • 22% average YtY capitalize on growing revenue growth demand per firm for healthcare sector 11 2H11 Management Consulting Benchmark Webinar ©2012 Technology Business Research Inc.
  • 12. Management Consulting Industry Overview TBR Industry-specific expertise drives opportunity for specialization Verticals of Focus With Benchmark Total Leading Vertical Revenues and year-to-year Average Revenue Growth for 2011 Financial High Tech, Energy & Industrial Services Comm. & Media Utilities Solutions/Manu. Vertical $14 billion $8 billion $8 billion $7 billion 17% 18% 17% 21.2% • Acumen in reform, • Presence, • Expertise in new • Innovation for compliance with relationships and service access, efficient supply- latest regulations knowledge of infrastructure chain operations • Global reporting fast-growing planning in India • Leverage integrated Tactics to methods adjacent markets and China multichannel Capture excellence • Competitive • Strategy services customerOpportunity • Transform marketing and for long-term distribution model. operating models, pricing strategies sustainability and • Develop global product/service • Guide through optimization of expansion plans portfolios regional resource mix based on regional • Leverage of regulatory impact • Regional utility analysis. analytics, mobility, insights around social media Smart Grid technologies 12 2H11 Management Consulting Benchmark Webinar ©2012 Technology Business Research Inc.
  • 13. Management Consulting Industry Overview TBRVertically aligned contribution to firms’ revenues reveal areas ofclient traction, alignment and investment for firms in 2012Industry Revenue Contribution per Firm in CY2011 Big Four Strategy-led Solutions-led HR/Specialty Towers Watson Ernst & Young Oliver Wyman Aon Hewitt AT Kearney Booz & Co. Capgemini Accenture McKinsey Deloitte Mercer KPMG PwC Bain BCG IBM Financial Services 26.2% 29.8% 20.0% 28.1% 11.9% 27.6% 22.3% 18.0% 18.7% 19.0% 19.4% 25.0% 22.3% 34.3% 47.7% 31.3% Retail 5.6% 6.5% 9.0% 11.9% 22.3% 9.7% 11.2% 6.2% 4.5% 2.1% 4.2% 7.1% 4.7% 10.6% 14.1% 7.5% Energy & Utilities 9.2% 13.3% 9.9% 15.2% 19.4% 11.7% 12.0% 11.5% 19.9% 18.5% 12.1% 6.3% 16.5% 12.9% 10.2% 13.4% High Tech, Communications & Media 11.7% 22.5% 16.9% 11.2% 13.8% 16.7% 14.5% 20.9% 13.6% 21.8% 9.3% 9.5% 18.4% 9.2% 6.8% 19.6% Industrial Solutions/ Manufacturing 15.2% 6.5% 16.5% 6.4% 13.7% 17.5% 11.0% 12.9% 13.2% 12.3% 17.4% 12.4% 20.7% 20.6% 6.8% 11.8% Public Sector 4.9% 7.0% 11.8% 9.7% 3.9% 5.6% 8.8% 8.4% 13.1% 13.8% 21.0% 10.1% 8.2% 3.9% 2.8% 2.9% Healthcare 11.7% 7.0% 7.5% 6.4% 7.8% 3.1% 8.4% 4.1% 9.7% 5.5% 5.7% 6.9% 4.6% 2.2% 5.4% 5.2% Consumer Packaged Goods 12.6% 4.5% 3.4% 9.2% 5.8% 8.1% 3.1% 7.7% 4.0% 6.9% 4.6% 3.6% 1.2% 1.9% 1.9% 0.8% Other 3.0% 2.9% 5.0% 1.9% 1.3% 0.0% 8.8% 10.3% 3.3% 0.1% 6.3% 19.3% 3.5% 4.5% 4.2% 7.5% Key: HIGH MEDIUM LOW Source: TBR and Benchmark firmsIncreasing industry depth across service line offerings in 2011 indicates where firms are heading in terms ofboth capabilities and focal clientele in 201213 2H11 Management Consulting Benchmark Webinar ©2012 Technology Business Research Inc.
  • 14. Management Consulting Delivery Overview TBRMC firms increased utilization through service delivery sophistication 2011 MANAGEMENT CONSULTING UTILIZATION RATE BY VENDOREfficient Delivery Methods TBR 100% 90% Efficient resource 80% 70% leverage Percentage 60% 50% 40% 30% 20% 10% 0% OLIVER WYMAN DELOITTE IBM PWC MERCER ERNST & YOUNG AON HEWITT AT KEARNEY TOWERS WATSON CAPGEMINI MCKINSEY BOOZ & CO. KPMG BAIN BCG ACCENTURE Standardization, resource mix and utilization drove SOURCE: TBR AND COMPANY DATA profitability. • Increased leverage of standardization, automation, and communication enabled utilization rates for more sophisticated vendors (i.e., Accenture up 100 basis points, McKinsey up 150 basis points since 1H11). • Efficient internal communications platforms (Yammer, other social media) facilitate multi-location teams’ success and enabled reach to global clientele. 14 2H11 Management Consulting Benchmark Webinar ©2012 Technology Business Research Inc.
  • 15. Management Consulting Delivery Overview TBRStrategy-led firms averaged most profitable segment, holding down costsand driving up utilization in CY2011Operating Margin Metrics and Benchmark Leaders TBR • McKinsey’s operating margin is 21% higher RANKING COMPANY than next closest peer, attributed to TOP 3 COMPANIES maturity of its operating methods, high 1 33.3% MCKINSEY utilization rates and cost containment 2 26.3% BCG 3 23.8% BOOZ & CO. 4 22.5% BAIN 5 20.5% PWC 6 16.8% IBM 7 16.5% DELOITTE 8 16.0% KPMG 9 15.5% AT KEARNEY 10 14.8% ERNST & YOUNG 11 13.9% TOWERS WATSON 12 13.3% ACCENTURE 13 10.5% CAPGEMINI 14 7.5% AON HEWITT 15 6.0% OLIVER WYMAN 16 5.4% MERCER15 2H11 Management Consulting Benchmark Webinar ©2012 Technology Business Research Inc.
  • 16. Management Consulting Trends TBRFirms are opportunistic with investments, developing portfolios that alignto clients’ highest priorities How are MC firms Responding and meeting demand? delivering on the ever- evolving inventory of Investing for Growth client needs Added depth, industry expertise Reacting to changing economic climate to Innovating for provide the highest- Efficiency, Profit value services16 2H11 Management Consulting Benchmark Webinar ©2012 Technology Business Research Inc.
  • 17. Example Firm Profile: Key Competitive Metrics TBRTBR’s 2H11 Management Consulting Benchmark report includes profilesfor 16 vendors with key competitive metrics Service Lines 2H11 Accenture: Management Consulting Geography Metrics (% of revenue)Metrics Half-Year Full Year Percent Change 1H10 2H10 1H11 2H11 2010 2011 Year to Year 2H10 to 2H11Americas Regional revenue, Revenue (in $ millions) $1,012 $1,106 $1,241 $1,363 $2,118 $2,604 22.9% 23.2% Headcount 6,150 6,399 6,802 7,202 6,399 7,202 12.5% headcount, partners, Partners 381 398 426 452 398 452 13.5% Billable Employees Non-Billable Employees 5,386 764 5,603 796 5,958 844 6,308 894 5,603 796 6,308 894 12.6% 12.4% billable, non-billableU.S. Revenue (in $ millions) $831 $909 $1,021 $1,123 $1,740 $2,144 23.3% 23.6% resource mix Headcount 4,350 4,498 4,815 5,148 4,498 5,148 14.5% Partners 269 280 302 323 280 323 15.4% Billable Employees 3,853 3,984 4,266 4,566 3,984 4,566 14.6% Non-Billable Employees 497 514 549 583 514 583 13.2%EMEA Revenue (in $ millions) $1,014 $1,068 $1,190 $1,227 $2,082 $2,417 16.1% 14.9% Headcount 5,200 5,300 5,600 5,890 5,300 5,890 11.1% Partners 323 326 348 368 326 368 12.9% Billable Employees 4,550 4,643 4,907 5,157 4,643 5,157 11.1% Service line revenue Non-Billable Employees 650 657 693 733 657 733 11.6%APAC contribution to total Revenue (in $ millions) $318 $360 $417 $449 $678 $867 27.8% 24.9% Headcount 3,150 3,301 3,598 3,908 3,301 3,908 18.4% revenue per firm Partners 167 184 196 210 184 210 14.4% Billable Employees 2,681 2,809 3,061 3,327 2,809 3,327 18.4% Non-Billable Employees 470 492 537 581 492 581 18.1% Semi-annual and Year-to- Year revenue changes 17 2H11 Management Consulting Benchmark Webinar ©2012 Technology Business Research Inc.
  • 18. Management Consulting CY2011 Firm Dynamics TBRTBR’s 2H11 Management Consulting Benchmark provides insights intocompetitive approaches and opportunitiesKey Areas Covered and Questions Answered Investments Offerings Strategy Delivery • Talent, technology, • Resource mix, • Industry specialization facilities utilization, profit 18 2H11 Management Consulting Benchmark Webinar ©2012 Technology Business Research Inc.
  • 19. For additional information please contact:Liz Leonard, Professional Services Practice Senior Analystliz.leonard@tbri.comAlison Crawford, Marketing Directoralison.crawford@tbri.comJames McIlroy, Sales Directormcilroy@tbri.comwww.tbri.com11 Merrill Drive Hampton, NH 03842 TBR T E C H N O L O G Y B U S I N E S S R ES E AR C H , I N C .
  • 20. QUESTIONS TBR T E C H N O L O G Y B U S I N E S S R ES E AR C H , I N C .
  • 21. TBR Terms Defined and Report Overview21 2H11 Management Consulting Benchmark Webinar ©2012 Technology Business Research Inc.
  • 22. TBRManagement Consulting Benchmark Metrics: Terms Defined Terminology Definition Any employees who perform professional services that may or should be billed to clients as part of contractualBillable Employees agreement; these employees contribute more billable hours than non-billable hours to their organization. Any employees who perform professional services or activities common to all clients as part of doing business or inNon-billable Employees support roles for the organization; these employees contribute more non-billable hours than billable hours to their organization. Principal leaders of consulting organizations who often contribute capital and usually share in the risks and profits of the organization; TBR includes all levels of partners and most senior organizational leaders (regardless of title orPartners capital contribution) as part of the management consulting benchmark partner definition and calculations that factor partners. The number of billable employees who voluntarily turn over within a certain period; TBR uses a multichannel approach to attain the information in our attrition rate estimates and assumes the understanding [as a calculation] toAttrition Rate be: Attrition rate (%) = Number of billable employees resigned for the period/total number of employees for the period. The billing efficiency of an individual or a firm; current utilization rates in the management consulting benchmark areUtilization Rate self-reported by the firms based on their calculation. Utilization rate calculation = Number of billed hours for the period/fixed number of expected total work hours for the period, typically between 2,000 and 2,100 hours annually. Operating margin is equal to operating profit divided by revenue. Operating profit is total revenue less all costs beforeOperating adjustment for taxes, dividends to shareholders and interest on debt. TBR uses a multichannel approach to attain theMargin/Profitability information in our profitability rate estimates and assumes the understanding [as a calculation] to be: Operating margin = Operating income/revenue. Revenue per Employee is the ratio that indicates a firms sales performance in relation to number of employees. TBRRevenue per Employee assumes the understanding [as a calculation] to be: Revenue per employee = Total revenues/total headcount; for half- year calculations derivative factors are multiplied by two to align to annual performance. 22 2H11 Management Consulting Benchmark Webinar ©2012 Technology Business Research Inc.
  • 23. Management Consulting Benchmark Report Overview TBRTBR’s Management Consulting Benchmark provides revenue and resourceanalysis by region, service line and vertical • TBR’s Management Consulting Benchmark is a semi-annual deliverable providing key service line, regional, vertical and operational data and analysis across 16 leading management consulting firms. • Benchmark deliverables include: o Executive Summary and Report o Appendix data o 16 Individual firm reports o Database and Excel pivot table Management Consulting Benchmark Coverage Vendors Firm Segments Service Lines Regions Verticals Key Metrics Time Period • Deloitte • Solutions-led • Strategy • Americas • Financial • Revenue by: • Current report • Ernst & Young • Strategy-led • Operations • U.S.-only services o Service line includes data • KPMG • Big Four o HR • EMEA • Retail o Region for: • PWC • HR/Specialty o Supply • APAC • Energy & o Verticals o 1H10 • AT Kearney chain Utilities • Headcount o 2H10 • Bain o Finance & • High Tech, (partners, billable, o 1H11 • BCG Accounting Comm., and non-billable) by: o 2H11 • Booz & Co. o CRM/ Media o Service Lines o CY 2010 • McKinsey Customer • Industrial o Regions o CY 2011 • Accenture o Governance, solutions/ • Operational • Capgemini Risk & Manufacturing Metrics • IBM Compliance • Public sector o Profitability • Aon Hewitt • Organization & • Healthcare o Utilization • Mercer Change • Consumer o Attrition • Oliver Wyman • Technology Packaged • Towers Goods Watson • Other 23 2H11 Management Consulting Benchmark Webinar ©2012 Technology Business Research Inc.