PA Consulting vs. McKinsey vs. Bain
News | Knowledge Seeker | February 4, 2009 at 10:45 am
There’s an interesting read on Ovum.com, analysing the strengths and positioning of PA Consulting Group. The article compares PA Consulting with Mckinsey and Bain.
PA Consulting finishes a strong 2005
Murray reported “double-digit growth” across PA’s practices in systems integration and IT solutions, with last year’s pipeline pickup now turning into solid work. Some practices are on very high utilization and are effectively “sold out”. His verdict: “We’re seeing pent-up demand coming through.” Overall, including non-IT work that’s growing more slowly, PA expects to grow revenues by about 5-7% this year.
PA clients are now confident enough to ask for innovative ideas for generating business growth, not just new ways to cut costs, Murray said. ”Now, it’s about creating value,” But there is still resistance to “bleeding edge” technology.
While clients are more receptive to value-creating ideas, they want ever more experience and specialist expertise, Kelly added. “Generic stuff just doesn’t sell”. Chargeout rates are holding steady.
Growth drivers include regulatory pressure in financial services, utilities and telecoms. There’s growing demand for legacy renewal or replacement among companies that have merged, especially in financial services. Demand for service management consulting (especially ITIL-related) is also growing. Looking ahead, PA sees opportunities in helping both corporates and telcos get benefits from Internet Protocol, and in using technologies such as wireless and RFID to do new things
PA is now focusing on building a stronger presence outside the public sector, to create a more balanced portfolio as commercial sectors return to strength. The focus will be principally telecoms, energy and financial services – and especially the latter, where PA is making up ground it lost during the downturn. PA says discretionary spend on innovation is returning across all sectors.
Comment: What’s PA’s differentiator? As a management consultant up against the likes of McKinsey and Bain, it’s got a strong focus on technology as a value creator, and it’s got implementation experience that most management consultancies lack. And as an IT services player, it plays the role of independent “trusted adviser”, helping end users to select and manage their IT outsourcers and systems integrators. Together, these are a defensible niche for PA.
PA prides itself on being a “real” consultancy, and not an integrator or outsourcer with a consulting front-end. But it knows that it can’t survive on its consultants’ wits alone. It’s therefore been investing in creating pre-built intellectual property (such as workflow engines and business-intelligence software) that cut the time and cost of building systems for clients. PA’s small Indian team has done part of this work.
We think that a general move towards more “asset-based” consulting is inevitable, given clients’ never-ending demands for faster and cheaper implementations. Pre-built solutions – both vertical and horizontal – will be key tools for consultancies moving forward, but they’re the tail that should not wag the dog, something that PA knows well.
Earlier this year, PA picked up the UK government’s Zanzibar e-procurement framework deal, in which it will be operating the system as well as designing and building it. Is this a change of strategy? We think not. Kelly says that the Zanzibar initiative was a special case. It wants to re-use the Zanzibar intellectual property for other clients, but we reckon it will use partners for outsourcing delivery. As we said recently, we expect PA to collaborate more in future with some of the less consulting-heavy outsourcers, such as Xansa and Fujitsu Services – but without creating exclusive or even preferred relationships.
A closing note: PA says it’s picking up senior staff from the big IT services houses, people that it says are frustrated with doing delivery work and want to do “real” consulting. We hear the same thing from other consultancies and from the professional services firms. To some extent, this is just part of the merry-go-round – the IT services houses poach from the pure-play consultancies, too.
Still, I wonder if there’s a growing disenchantment among business consultants based in the IT services suppliers, as these organizations move their focus more towards outsourcing and service delivery. Definitely one to watch.
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Tags: Bain, Mckinsey, PA Consulting
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PA is an integrator / outsourcer with a consultancy front end. Which is why it does so much IT development / integration work. It is not in competition with, or even in the same market as, McKinsey or Bain!