Consulting to Grab a Piece of the Internet Pie
S. McVey - December 15th, 1999
Consulting recently announced plans to deploy $1 billion of its privately-held
capital to foster growth in web start-ups and new technology companies. Up to
half of the stake will be in cash and half in access to intellectual property.
The new venture will operate from Silicon Valley, home of Andersen's research
facility in Palo Alto, CSTaR (Center for Strategic Technology and Research).
Jackson Wilson, formerly the firm's managing partner of global markets, will
head Andersen Consulting Ventures in its bid to harvest the Internet economy.
long time resident of Silicon Valley, Andersen has apparently grown tired of
watching idly as tiny Internet start-ups spring from the ground and mushroom
into mega-giants. The $9 billion management consulting firm's millionaire partners
have taken a bold step, one that promises as much for it as it does for its
investments. The move was designed in part to stem further turnover in its 65,000
consultants, a chronic problem for private firms in general and Andersen in
particular. In the past year, Andersen's supply chain practice alone has lost
at least twenty experienced resources to startups, software vendors, former
clients, and other consulting firms. Even former Managing Partner George Shaheen
proved unable to resist the lure of Internet riches when he left his post to
lead on-line grocer Webvan. As Shaheen's example illustrates, private firms
must constantly seek creative ways to retain talented employees. Of the Big
Five, Andersen has the most conservative compensation strategy, reserving million-dollar
salaries for the select few who make partner. Others, like Ernst & Young and
Deloitte, do a better job of sharing their take with rank and file employees,
a practice that has resulted in lower attrition rates. It is unclear just how
investment returns will be distributed among its employees, but Andersen should
consider offering some portion to its legion of talented though less experienced
consultants to keep and cultivate them.
Probably the most important criterion to consider when choosing a service provider
is the competence of its staff. Consulting firms often use the expertise of
a few individuals to represent the qualifications of their organization as a
whole. They often elaborate on past accomplishments, but fail to disclose whether
the people behind the success are still on the payroll, let alone whether they
will be the ones working on your project. The sobering fact is that, on average,
the consultants who will implement your $8 million ERP package and dig around
in your legacy systems will have less than two years experience - probably less
in the package that you have chosen. Make sure that the proposal team of every
service provider you interview guarantees that the people behind the glowing
resumes will be the ones on your project.