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KN74091 KEY NOTE MANAGEMENT CONSULTANTS APRIL 2001

ISBN 1-84168-192-X
81 pages and 10 tables

Our price £151.00

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This report covers: management consultancy, information technology, corporate strategy, organisational development, production management, services management, human resource management, financial systems, administrative systems, project management, marketing, corporate communications, facilities management, outsourcing,electronic consultancies, environmental studies, economic studies,

Companies covered include: Cap Gemini Ernst & Young, PricewaterhouseCoopers, Accenture, Andersen Consulting, CSC Computer Sciences, FI Group, KPMG Consulting, PA Consulting, ICL, Fujitsu, Deloitte Consulting, Logica, Sema, Mckinsey & company, Bacon & Woodrow, Andersen, Arthur Andersen, AT Kearney,

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TABLE OF CONTENTS

Executive Summary 1
1. Market Definition 2
REPORT COVERAGE 2
The Role of Consultancy 2
The Consultant-Client Relationship 3
MARKET SECTORS 4
Information Technology 4
Corporate Strategy and Organisation Development 5
Production and Services Management 5
Financial and Administrative Systems 5
Project Management 5
Human Resources Management 5
Economic and Environmental Studies 6
Marketing and Corporate Communications 6
Outsourcing 6
MARKET TRENDS 7
Dynamic Growth 7
The Spread of IT 7
The Public Perception of Consultancy 7
E-Business 7
The Changing Shape of the Industry 7
MARKET POSITION 8
TRADE ASSOCIATIONS 8
Management Consultancies Association 8
Institute of Management Consultancy 9
2. Market Size 10
INTRODUCTION 10
THE TOTAL MARKET 10
Table 1: The Total UK Market for Consultancy Services by Value (£bn), 1996-2000 11
Table 2: The Total Fee Income of the Members of the Management Consultancies Association (£m), 1996-2000 11
Table 3: The UK Consultancy Fee Income of the Members of the Management Consultancies Association by Market Sector ( percent), 1996-2000 12
By Industry Sector 13
Table 4: UK Private- and Public-Sector Fee Income of the Members of the Management Consultancies 13
Association (£m), 1997-2000 13
The Private Sector 14
Table 5: UK Private-Sector Fee Income of the Members of the Management Consultancies Association by Sector (£m), 2000 14
The Public Sector 15
Table 6: UK Public-Sector Fee Income of the Members of the ManagementConsultancies Association by Sector (£m), 2000 15
MARKET SECTORS 16
Information Technology 16
Corporate Strategy and Organisation Development 16
Production and Services Management 16
Financial and Administrative Systems 17
Project Management 17
Human Resources Management 17
Economic and Environmental Studies 17
Marketing and Corporate Communications 18
Outsourcing 18
OVERSEAS CONSULTANCY 18
The EU 18
Table 7: The Consultancy Fee Income of the Members of the Management Consultancies Association from Work Carried Out in the EU by Market Sector ( percent), 1996-2000 19
3. Industry Background 20
HISTORICAL DEVELOPMENT 20
RECENT HISTORY 20
INDUSTRY STRUCTURE 21
Accountancy-Based Firms 22
IT and Telecommunications Companies 22
US-Based Consultancies 22
Small-to-Medium Consultancies 22
Actuarial Firms 23
Business Schools 23
Small Consultancies 23
Sole Practitioners 23
E-Consultancies 23
NUMBER OF COMPANIES 24
EMPLOYMENT 24
REGIONAL VARIATIONS IN THE MARKETPLACE 24
HOW ROBUST IS HE MARKET? 25
4. Competitor Analysis 26
THE MARKETPLACE 26
Table 8: The Top 15 Management Consultancies Operating in the UK Market by Fee Income (£m), 2000 27
MARKET LEADERS 28
Cap Gemini Ernst & Young 28
PricewaterhouseCoopers 29
Accenture 30
CSC Computer Sciences Ltd 31
FI Group PLC 31
KPMG Consulting 32
PA Consulting Group 33
ICL PLC 33
Deloitte Consulting Ltd 34
Logica PLC 35
Sema PLC 35
McKinsey & Company 36
Bacon & Woodrow 37
Andersen 37
AT Kearney 38
MAJOR SUPPLIERS BY SECTOR 39
Information Technology 38
Corporate Strategy and Organisation Development 39
Production and Services Management 39
Technology 40
Financial and Administrative Systems 40
Project Management 40
Human Resources Management 41
Economic and Environmental Studies 41
Risk Management 41
Marketing and Corporate Communications 41
OUTSIDE SUPPLIERS 42
ADVERTISING AND PROMOTION 42
Table 9: Main Media Advertising Expenditure by Management Consultants (£000), 1999 and 2000 43
5. Strengths, Weaknesses, Opportunities and Threats 44
STRENGTHS 44
WEAKNESSES 44
OPPORTUNITIES 44
THREATS 45
6. Buying Behaviour 46
Types of Client 46
BUYING METHODS 46
Payment 47
The One-Stop Shop or the Consortium? 47
What Clients Look For 48
Size of Client 48
7. Current Issues 50
INTRODUCTION 50
THE END OF DOTCOM FEVER 50
E-CONSULTANCIES 51
MERGERS AND ACQUISITIONS 51
THE ANDERSEN SAGA 52
TO FLOAT OR NOT to FLOAT? 53
INDUSTRY AWARDS 54
8. The Global Market 55
introduction 55
The World Market 55
The European Market 56
9. Forecasts 58
INTRODUCTION 58
FUTURE TRENDS 58
Patterns of Change 58
Consulting to Meta Markets 59
Collaborations and Joint Ventures 60
FORECASTS 2001 TO 2006 60
Table 10: The Forecast UK Market for Consultancy Services by Value (£bn), 2001-2006 61
10. Company Profiles 62
CSC Computer Sciences Ltd 63
FI Group PLC 65
ICL PLC 67
Logica PLC 69
Sema PLC 71
11. Further Sources 73
Associations 73
Periodicals 74
Directories 75
General Sources 75
Bonnier Information Sources 76
Government Publications 77
Other Sources 78
Key Note Research 80
The Key Note Range of Reports 81

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EXECUTIVE SUMMARY

2000 was possibly the best year yet for the UK management consultancy market. In 2000, total revenue generated by members of the Management Consultancies Association (MCA) amounted to £3.72bn (including overseas earnings).

Key Note estimates that total revenues for the UK market - including the earnings of both MCA members and non-MCA members - were around £5.75bn in 2000. The European Federation of Management Consultancy Associations (FEACO) estimated that, in 1999, European consultancy revenues totalled £36bn. The UK is the second-largest consultancy market in Europe, behind Germany.

The UK consultancy market is segmented into nine sectors: IT (information technology); corporate strategy and organisation development; production and services management; financial and administrative systems; project management; human resource management; economic and environmental studies; marketing and corporate communications; and outsourcing (or facilities management). Of these, the largest sector is IT, which accounts for 38.8 percent of the total market. The major client sectors are financial services, telecommunications and retailing.

The market is characterised by around 15 to 20 extremely large consultancies, followed by a similar number of medium-sized firms. The remainder of the market comprises hundreds of smaller firms and sole proprietors. Its rather vague boundaries make this one of the most complex industries in the UK. Almost every economic sector has companies that offer consultancy. The most pronounced feature of the industry is the number of large IT companies it supports.

Structurally, the most important change in recent years has been the splitting up of the large accountancy-based firms into separate consultancy and accountancy businesses. Such activity is a result of pressure from the Securities and Exchange Commission (SEC) in New York, which has voiced its disapproval of these large firms offering consultancy and accountancy under the same roof.

The lure of e-commerce (electronic commerce) is making an impact on this market. Specialist e-consultancies (electronic consultancies) have started up, while the more traditional firms have been engaged in a flurry of activity in the e-business (electronic business) sector. Many of the e-consultancies face a bleak future, or no future at all, but the best will survive.

While the market has shown rapid growth in recent years, it is unlikely that this trend will continue. Key Note forecasts a comparatively modest increase in revenues between 2001 and 2003, reflecting the unstable US economy, the impact of the current outbreak of foot and mouth disease among livestock in the UK, volatile stock-market prices, decelerating growth in the IT sector and reduced profits reported by some of the major players. Growth is forecast to increase in 2004, but it is unlikely to match the rates which have characterised the market in recent years.

Text © 2001 Key Note

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Last updated by Duncan Nottage 5th May 2001