Power Tools 1993 November - Disc 1/Power Tools Plus (Disc 1 of 2)(November 1993)(HP).iso/custsupp/cpetsppt/csg3p009.txt

Text File | 1992-10-26 | 20KB | 388 lines

Andersen Consulting

Company Statistics

Worldwide Headquarters:             Chicago, Illinois
Year Formal Business Unit Created:  1989
Managing Partner:                   George T. Shaheen, New York
Number of Employees Worldwide:      23,608
Number of Professionals Worldwide:  20,609
FY1991 Worldwide Revenues:          $2.256 billion

Products

PROFESSIONAL SERVICES

Andersen Consulting, a business unit of one of the largest international
professional service organizations, provides management consulting
services to link information technology to business practices. The
organization operates out of 145 locations in 46 countries. The services
provided by the organization span the spectrum from consulting and
systems development to implementation and systems management. Andersen
Consulting also offers application software products for manufacturing
resource planning and warehouse management as well as computer-aided
software engineering (CASE) tools and others.

Service Mission/Target Market

PROFESSIONAL SERVICES

Andersen Consulting has grown its core service offerings from a
foundation in management consulting and systems development. As the
organization expands its service portfolio, it is finding itself
competing with the business partners on which it once relied. Today, the
organization is a full service provider with a fast growing systems
integration and management practice. The organization has extensive
experience in almost every major industry segment. Knowledge of
industry-specific business practices is combined with technological
expertise to offer clients a "total business perspective" that links
business strategy with information technology. The organization has
identified its major challenge as linking technology with strategy,
operations and people to assist its clients in re-engineering the way
they do business to create sustainable advantage. Once a mainframe shop,
Andersen Consulting is transitioning to take advantage of the
opportunities offered by the client/server computing model.

Andersen Consulting's contribution to Arthur Andersen Worldwide
Organization's vision to become the "world's premier professional
services organization" is built upon four key competencies:

o Industry Knowledge
o Technology Expertise
o Geographic Coverage
o Full Service Provision

Andersen Consulting emphasizes key industries and believes that the
company's industry focus is one key competitive advantage. The Products
Group is currently comprised of the following: discrete/ repetitive
manufacturing, process manufacturing, retail and distribution, packaged
goods, airlines, energy and aerospace and defense. Other industry
programs such as banking, insurance and financial markets have been
rolled under a Financial Services Group.

Primary targets within industry segments are: manufacturing/industrial
products, consumer products, banking, capital markets, health care,
insurance, energy, telecommunications, utilities, national, state and
local government. Basic management capabilities are offered across these
segments which address financial management, materials management and
logistics, and sales and marketing. These capabilities utilize a common
approach in methodology and common level of industry knowledge that is
also consistent with the larger Arthur Andersen Worldwide Organization.
Arthur Andersen and Co., S.C. strives for uniformity across business
units. Uniformity facilitates cross-functional synergy between
organizations. Key to this synergy is a consistent level of expertise
and knowledge by which clients can set their expectations.

Another organizational change with a strategic motive is geographic. On
a worldwide basis, Andersen Consulting is attempting to merge its
integration and business consulting operations (strategy and change
management service lines), including product sales. All three aspects of
Andersen Consulting capabilities must be better integrated on a global
basis to facilitate marketing a total solution. At the core of this
effort is the vision that systems integration has evolved into business
integration. And business integration for Andersen Consulting is both an
internal cultural mind-set and a competitive differentiator.

Service Offerings

PROFESSIONAL SERVICE


Andersen Consulting's capabilities span a broad range of services
including, strategic services, information planning, systems building,
software products and services, change management services and
facilities management. Services are offered across a wide range of
industries. Andersen Consulting's services can be purchased as distinct
services or as an integrated set. The organization does not want to be
identified as a niche player. It prefers to be known as a player that
applies its "services end-to-end in every major industry." The
organization prides itself on its "total business perspective" which
translates to offering "clients not just systems building and
integration skills but strategic services systems management and change
management skills that ensure successful assimilation of technology."

The firm's portfolio of services includes the following:

     Integration Services

As the organizational chart of Andersen Consulting depicts, Andersen
Consulting service lines fall under an international umbrella.
Integration services is comprised of both Systems Integration and
Systems Management. Andersen Consulting has chosen to organize its
systems management services with its systems integration services to
create synergies despite the very different nature of these two
services. Systems integration is project oriented while systems
management is more relationship oriented. However, the organization
correctly recognizes that systems management contracts are a direct
outgrowth of integration projects and that the two are often closely
linked. Historically focused on discrete systems integration activities,
Andersen Consulting is emphasizing development of more comprehensive and
long-term systems management relationships - addressing requirements for
software re-engineering, maintenance and renewal, systems operations,
network services and backup and recovery.

Approximately 5% of Andersen Consulting's revenues come from systems
management services while 70% is derived from integration and system
development activities. While custom application development was once
its bread and butter, the organization does not see high growth in this
area. Instead, the opportunities lie in network support/integration and
systems management.

     Change Management Services

Change Management Services support Andersen's strategic services by
providing implementation assistance as clients induce elements of change
- whether it affects people, processes and/or technology. These services
are supportive of Andersen's other service lines rather than being lead
revenue generators for the company. This service line is the
implementation arm of the Andersen approach. The practice supports
implementation of technology via organizational change, knowledge
transfer and technology assimilation. Change Management focuses on
issues that include but extend beyond the implementation of technology.
The practice also addresses human resource management, quality
management and organizational design. Of special note is Andersen
Consulting's use of leading-edge education/training technology such as
interactive videodisc, digital video interactive, computer-based
training, integrated performance support systems and video conferencing
to ensure advanced technology is assimilated into the client's
organization.

     Strategic Services

As with Change Management, the Strategic Services offered by Andersen
Consulting are not necessarily limited to information technology, but
include the creation and management of corporate strategic plans and
marketing and competitive analyses. The philosophy followed by Strategic
Services is that organizations need to link their information technology
to their corporate strategy.

Service Delivery

PROFESSIONAL SERVICES

Andersen Consulting's organization is a complex matrix made up of
geographic, vertical market and practice area organizations. Some
resources are centralized to benefit the worldwide organization such as
technology research and development and staff training functions.

Andersen Consulting is organized geographically into three main areas:

o Americas
o Europe/Middle East/Africa/India
o Asia/Pacific

The managing partners responsible for the three major geographies are
responsible for the delivery of all services to clients. In addition,
the organization is structured to provide lines of services, technology,
application products and market development throughout the world under
managing partners who report directly to Shaheen. Worldwide Deal
Services, a corporate organization, packages standard service products
into customized service solutions. This organization also has
responsibility for integrating the resources across practices when
packaging services.

Andersen Consulting is divided into three international lines of
services. A managing partner who reports to Shaheen oversees the
establishment of strategies and planning for each of the service lines:
Integration Services, Strategic Services, and Change Management
Services.

Global in scope, a service line such as systems management, a component
of Integration Services, has a managing partner in each geography.
Within the Americas, each region has a Regional Managing Partner
responsible for systems management. National support is provided to the
areas, with support for this service line located in Dallas, Texas.
Outside the U.S., each service line often has country managing partners.

The Technology Services organization is responsible for ensuring
technical competence, research and development and the development and
maintenance of FOUNDATION, Andersen Consulting's CASE software tool set.
It operates six units to carry out its charter:

o Advanced Technology
o Network Solutions
o Center for Strategic Research (CSTaR)
o FOUNDATION Development Group
o Advanced Development Group
o Knowledge Transfer

Applications Products builds and maintains Andersen Consulting's
packaged software applications. The group also acts as a central
resource for software products and industry trends to the organization's
professional staff. Through the OASIS program, the Applications Products
group maintains relationships with other vendors of packaged software
products that Andersen Consulting implements in its engagements.

The Market Development organization is responsible for corporate
communications and image initiatives in America, Europe and Asia,
internal and external communication, market analysis and competitive
assessment. In addition, Market Development manages Andersen
Consulting's six industry practices:

o Financial Services
o Utilities
o Products
o Health Care
o Telecommunications
o Government

In the U.S., Andersen Consulting is separated into five geographies
headed by a regional industry director with responsibility for an
industry practice within each area. The regional directors administer/
coordinate the projects and resources within their geographic
responsibility.

The firm carries out its worldwide service through a group of 20,604
professionals.

Service Marketing/Pricing

PROFESSIONAL SERVICES

Andersen's marketing approach leverages the organization's complementary
service lines to pursue additional opportunities within the base
account. Furthermore, the organization looks beyond the base account to
transfer marketable products, such as developed expertise and software,
to other clients.

Andersen Consulting was the first professional services organization to
embark on an image campaign. A historical perspective is useful to
illuminate the corporate culture of Andersen Consulting and the
reasoning behind the campaign which was the first of its kind.

Arthur Andersen is the youngest of the big accounting organizations. As
far back as 1947, the partnership realized that its audit staff could
not provide the full array of business services required by its
customers. Consequently, the organization started a management
consulting arm. Arthur Andersen realized early on the importance of
information technology and began offering information technology
services as early as 1954 when Arthur Andersen installed the first
business computer for General Electric. Soon Arthur Andersen's
consulting practice grew to be the largest consulting practice of the
then "Big 8" accounting organizations.

The new breed of MIS directors/CIOs wanted to link their future
technology strategies with service providers who were willing to take
risks, innovate and engage in partnerships. These are not the same
characteristics attributed to the ideal accounting organization. An
auditor has to be prudent, conservative and cautious while remaining
independent. While the accounting organization image was puzzling to
customers in the 1980s, in the 1990s the image became a liability. This
reason, in addition to the SEC restrictions on the relationships between
audit organizations and their clients, prompted Arthur Andersen's
management consulting practice to split from the accounting organization
and embark on its image campaign to establish a separate name in the
marketplace. Of course, there were characteristics of a big accounting
organization that Andersen Consulting wanted to hold on to: fiscally
sound, long term stewardship, best and brightest people, well-trained,
etc.

The organization believes it is now well known as a systems integrator,
hence one focus of the campaign is on establishing credibility in
providing "new" high growth services, such as systems management.

Another focus of Andersen Consulting's marketing campaign is the
organization's "total business perspective." The organization wants to
be better known for its industry knowledge, ability to link information
technology to corporate strategy, and its information technology
assimilation approach. These themes support Andersen Consulting's
efforts to advertise the organization's competitiveness and leadership
in the systems integration and facilities management (outsourcing)
markets. The marketing campaign highlights the synergies of the
organization's service lines. Recent advertisements illustrate several
points:

o Andersen Consulting has demonstrated expertise in assessing
  clients' "fundamental business approaches"

o Andersen Consulting uses methodology and skills transfer across
  industries and practices to ensure consistency and quality in
  service delivery. In a larger sense, these attributes are
  consistent across all of the Arthur Andersen Worldwide business
  units due to a common core of basic training

o The "straight line" approach addresses the absolute requirement of
  many organizations to make the "correct" business decisions,
  employing technology to optimize their competitiveness

Current economic conditions and increasing levels of competitiveness
among Andersen Consulting's client industries reinforce this marketing
approach.

Andersen Consulting conducts image awareness tests every six months. The
organization's goal is to equal the market awareness of IBM. Over 80% of
those surveyed now recognize Andersen Consulting as a player in the
information technology services market, but 99% identify IBM.

In addition to changes in organizational orientation, Andersen
Consulting's growth strategy includes a new pricing scheme. This new
pricing scheme institutes a shift in project pricing from time-related
billing to fixed-cost pricing in an attempt to more discretely identify
and recoup costs associated with the systems integration business.
Andersen Consulting's attempts to maximize the ability to quantify costs
associated with long-term contracts is a problem that other vendors in
this business are also experiencing as they struggle to optimize
profitability over the life of the contract. For Andersen Consulting,
this shift in pricing strategy is an evolutionary step as the
organization continues to progress from its historical consulting roots
toward being a total solution integrator.

Perception/Evaluation

PROFESSIONAL SERVICES

Andersen Consulting will expand its market presence and capabilities
through three approaches: merger & acquisition activity, joint ventures
and new offices. The organization employs what it terms "business
combinations" to accommodate social, political and economic differences
on an international basis. Andersen Consulting has found this strategy
to be particularly effective in Southeast Asia, a geography with
dramatic diversity and tremendous change. Lastly, a strong focus on
international expansion also indicates that Andersen Consulting
recognizes that delivery of services in a consistent and rapid manner is
highly valued by global customers.

Andersen Consulting plans to grow at rates consistent with the market,
approximately 20 to 25% annually. The organization's future activity
includes a strong focus on international expansion, particularly in the
Pacific Rim (Japan and the Far East), Europe (particularly Germany and
Eastern Europe) and Canada. This activity may take the form of new
approaches to `business as usual' to address the specific needs in these
market places. For example, small- and medium-sized companies may
present revenue possibilities for Andersen to use its data centers for a
time-sharing service. This service could offer smaller organizations
access to Andersen Consulting software running on an Andersen Consulting
data center mainframe. Mainframe software may have previously been
inaccessible to these companies. Time-sharing services, as an example,
may represent an opportunity in new markets beyond Andersen's
traditional marketing efforts targeting large systems management
accounts.

Andersen Consulting is finding it necessary to re-examine the level of
management to which the organization markets and sells business
solutions. CEOs and CIOs have historically been the sales targets for
Andersen Consulting marketing activities. Andersen Consulting is now
increasing its exposure with client CIOs, MIS directors and functional
department heads. The value-added marketing approach used by
integrators/consultants stresses that beyond bridging disparate
technology and applications is the need to bridge internal cultural
differences between operations - such as in the manufacturing industry.
As distributed computing becomes more prevalent, it is important for
Andersen Consulting to also influence those at lower levels who have
authority or influence enterprise-wide implementations.

Andersen Consulting will continue establishing partnerships and joint
ventures to provide integrated information technology solutions. The
organization is after the one-stop shopping technology solution.
Increases in marketing alliances and joint R&D activity demonstrate
Andersen's willingness to share risks in co-developed software products.
One of the more publicized examples of this activity is the agreement
with Aetna Life & Casualty Co. Andersen developed an investment
management package for Aetna, and currently sells the package and
provides a royalty on each sale to Aetna. This cooperative approach, or
partnering, provides an image of a true business partnership as well as
sources for additional revenues.