A. T Kearney and the new “defining entity” Background: “No longer is IT just another tool the CEO might use to accomplish costs saving and operational ends. Today, information technology can help solve product problems, set new levels of service and create new distribution and communication channels. ” Founded in 1926, A. T. Kearney had evolved into one the world’s dominant management consulting practices. Its approach was to develop realistic solutions and help clients implement recommendations that generated tangible results and improved competitive advantage.
The mix of strategy and operations had differentiated A. T. Kearney from its competitor’s and driven the firm’s outstanding results. A. T. Kearney had doubled its size every three years since 1983 and was recently listed in Consultants news as one of the five fastest-growing consulting firms in the world. EDS started in 1962 with Ross Perrot and $1000 dollar investment. It helped customers use information and technology to recast their economics and to identify and seize new opportunities.
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Considered by many to be the inventor of “outsourcing,” EDS had established itself as a world leader in information technology services. EDS defined its business as “shaping how information is created distributed, shared, enjoyed, and applied for the benefit of businesses, governments, and individuals around the world. ” Its service offering included four different types of products: Systems Development, Systems Integration, Systems Management, and process management. EDS later entered the management consulting industry as part of a strategy to offer business solutions rather than simply IT solutions to its customers.
EDS eventually formalized its efforts of management consulting by creating MCS which leveraged its tradition and strengths, MCS brought a new dimension to EDS. Over a short two-year period, EDS had built MCS into an organization of 1,300 people, with 30 offices in 20 countries. Competition for both firms revolved around the big six classic IT firms who were enjoying annual growth rates in excess for 15 percent as IT became increasingly strategic in nature and instrumental for reengineering. Operation and Strategic Firms, who were best known for their strategic expertise, were broadening their service fferings as they moved aggressively downstream into operations consulting. Systems Integrators and Systems Vendors had moved to more traditional management consulting markets and new information technology entrants that spotted the opportunity to consolidate client relationship by selling “upstream” consulting services on top of their core outsourcing and system integration skills. Because of intense competition and extensive opportunities, EDS acquisitioned A. T. Kearney Ltd. in order to provide is a full service company.
Despite amazing growth in the first year, the “new entity” had problems in leveraging the two companies, and jumping on these new attractive opportunities. However, the acquisition also raised many issues. Among these was the issue of how to leverage the merger in terms of providing strategic consulting and information systems solutions to clients. There’s also the issue about the ability of these two very different organizations, with different skill sets and cultures, to work together in blending their services into a broad, seamless continuum. Should the two firm’s cross-sell each other’s services?
Should A. T. Kearney call on existing ED’s clients and vice-versa? Should the two firms work together to secure new clients? Sales management issues arising from this decision. For example, if cross-selling is to be encouraged, what incentive scheme might be appropriate? Strengths: * Successful merger between EDS and A. T. Kearney * World leader in Information Technology services * Offer services from systems development to Consulting services * Companies are very well known world-wide * Well positioned in the market place * Unparalleled spectrum of capabilities to clients Steady growth * “One Stop Shop” * Broad Range of services * Well matched for both A. T. Kearney and MCS. * Strong goals of growth, globalization, and leadership. Weaknesses * Leveraging and combining each other’s strengths in the marketplace * Merging of two entirely different cultures * Fear that A. T. Kearney would be viewed as the front end for EDS * Merge not working out among employees * May be difficult to attract and retain good people * Consulting vs. Systems * Un-established environment where the two companies could remain apart, but at the same time work together. Sales and account management Opportunities: * Draw on the strengths of both organizations and develop entirely new products. * Full service firm * Technology being integrated into business strategy * A lot of growth potential * Technological Investments will increase * Substantial cross-marketing opportunities * Host events where employees from both organizations attend Threats: * Competitors becoming full service * Political and legal policies affecting the merge * Competition from other firms * The “Big Six” ??? Classic IT firms * Operational and Strategic Firms Systems Integrators and system vendors * New information technology entrants Recommendations: Cross-Selling will be strongly encouraged in the company by giving incentives to the sales teams of both companies. In addition, the company should train a middleman between the two services. Train employees in cross-selling techniques. The approach must be built around serving the customer, not just selling more stuff. For example, you might describe how the additional products or services would complement the original purchase and further solve the customer’s problem.
Be on the same payroll, their pay depends on the other company. Basically, there should be consultants from A. T. Kearney, who are involved in the creation of the IT programs from EDS. The two firms should work together to secure new clients. Essentially, whether the client from A. T. Kearney or EDS. A. T. Kearney will encourage the client to buy the software and services from EDS or EDS can ask the client use A. T. Kearney consulting services or they can also make it a package deal. In order to do so there’s a need to establish consistent forms of communication??with various layers of management.
Setting up a communication program that includes a comprehensive list of employee groups within the purchasing and selling organizations; a very specific timetable for addressing each group; tools and forums to be used in communicating to each group; and deadlines for developing content and producing material, along with the individuals charged with accomplishing these tasks. There should be clear communications to??all??employees,??the expectations for working in the post-transaction environment.
They should, therefore, hear the same message from management so that all employees are “singing from the same prayer book. “?? Ideally, members of a company’s executive team should initially address all employees directly. On a follow-up basis, however, managers should be reinforcing the “big picture” painted by senior officials while focusing on specific actions expected of employees under their supervision. To ensure these follow-up communications are consistent in their message and reflect top management’s expectations for employee action, a company-wide communication plan should be in place.
Overall controls on the type and content of the communications could range from providing managers with content outlines and/or key talking points, to centralized development of the presentation material itself. Listen to the views and concerns of all employees??regarding work in the “new” environment. Overall, the newly formed company must work hard at finding a blend of corporate practices and procedures – from operations, sales and R&D to finance, management systems and the use of capital and human resources – that best suits its planned goals and objectives.
Reason for Recommendation: If two firms were to create a new environment that can work for both organizations by communicating, it will provide both firms with optimum advantage. Benefits from the blend will include: keeping as many clients as possible, getting some more and most importantly, have a good and efficient organization, not just to the eyes of the clients, but also to the new inner structure that the company will have. The entity can host event for the employees to get to know each other this way EDS employees can refer clients to a specific A. T.
Kearney consultant or perhaps have both work together, even introduce the A. T. Kearney consultant to the client and visa-versa. In order to encourage this, the company can provide incentives for cross-selling, or they can. For the vendor, the benefits are also substantial. The most obvious example is an increase in revenue. There are also efficiency benefits in servicing one account rather than several. Most importantly, vendors that sell more services to a client are less likely to be displaced by a competitor. The more a client buys from a vendor, the higher the switching cost