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Gartner for Business Leaders Research Note G00175106, Rolf Jester, Jacqueline Heng,
Michael von Uechtritz, 14 May 2010, V2 RA4 05202011
Introduction
This document contains a strength, weakness, opportunity and threat (SWOT) analysis for
Deloitte and the business consulting services it delivers to the global market. We list here only
those characteristics that have the greatest potential impact on Deloittes market position and
strategy. Each characteristic is examined in terms of its potential impact on the firms market
position and is rated as high, medium or low, according to its impact.
This document does not cover political, economic, social and technological (PEST)
characteristics, which are seen as universal factors affecting all players in the global business
consulting service market.
Deloitte competes in the business consulting services market, which Gartner estimates to
be worth $20.6 billion in 2010 out of a total of $73 billion for the overall consulting market.
It is a highly competitive and fragmented market in which Deloitte must differentiate itself
from a variety of types of competitors including: established management consulting brands,
such as McKinsey & Co. and BCG; boutique or niche consulting firms in several disciplines;
large global IT services providers, such as Accenture, Capgemini and IBM; and India-centric
consultancies, such as Infosys Consulting and Tata Consultancy Services. Deloitte must also
differentiate itself from immediate peers Ernst & Young, KPMG and PricewaterhouseCoopers,
the other members of the so-called Big Four that have an accounting heritage. Competition
with the business consulting arms of software and technology providers, such as Oracle
and SAP, is more in the technology consulting area, which is not the subject of this
SWOT analysis. Finally, Deloitte also competes with emerging consulting sources, such as
community networks.
Firms in this market face price pressure on consulting day rates and frequent changes to
technology that affect clients business processes. They also need to deal with the threat
and opportunity offered by new technology-based delivery models, such as online advisory
services. Business consulting services involve a mix of capabilities that reflect traditional
management consulting disciplines, such as operational, organizational or process consulting.
The foundational capabilities typically do not change dramatically, but the business and
technological environment in which the clients operate is changing rapidly indeed.
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Under current economic conditions, pressures on provider revenue
remain high. Consultants must update their knowledge base
frequently to keep pace with evolving business and technology
needs. Gartners Hype Cycle shows how dynamic the business
conditions are for providers and clients.
In 2009, many buyers of business consulting were focused on
immediate cost reduction as a result of the global recession. We
expect buyers will now cautiously start increasing their spending:
Our global forecast is for a 5.1% increase in business consulting
expenditure in 2010.
Deloitte was chosen for this SWOT analysis because of its
overall stature and influence in the business consulting service
marketplace. It is the largest global provider in terms of consulting
service revenue in Gartners 2009 market share, with $4.4 billion
revenue, ahead of IBMs $4.0 billion (see Table 1).
Table 1. Top 10 Consulting Service Providers Revenue, Growth and Market Share, Worldwide, 2008-2009 (Millions of Dollars)
Provider
2008
Revenue
2009
Revenue
2008
Share (%)
2009
Share (%)
Growth
Rate (%)
Deloitte
4,385
4,354
5.7
6.2
-0.7
IBM
4,353
3,958
5.6
5.6
-9.1
PricewaterhouseCoopers
3,316
3,225
4.3
4.6
-2.8
Accenture
3,074
2,590
4.0
3.7
-5.7
2,348
2,327
3.0
3.3
-0.9
CSC
1,926
1,769
2.5
2.5
-8.2
KPMG International
1,735
1,689
2.3
2.4
-2.7
Fujitsu
1,561
1,473
2.0
2.1
-5.7
HP
1,536
1,313
2.0
1.9
-14.5
10
Capgemini
1,566
1,291
2.0
1.8
-17.6
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expressed herein are subject to change without notice.
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the estimated 2009 consulting market share according to Gartners
definitions. Gartner neither covers nor forecasts consulting related
to mergers and acquisitions, valuation, bankruptcy, or other
transaction services, in which all the Big Four are also invested.
Note that the market share data is for consulting overall, which
includes both business consulting (the subject of this SWOT report)
and IT consulting.
SWOT Analysis
Figure 1 provides an overview of Deloittes worldwide business
consulting strengths, weaknesses, opportunities and threats.
This SWOT analysis draws on Gartners research and analysis of
Deloitte in the business consulting services market. Figure 2 shows
Gartners assessment of Deloitte in a weighted summary of its
Strengths
Value-driven approach
Business-led, IT-enabled approach to
engagements
Depth in vertical industries and business
processes
Ability to invest in growth
Stability and capability from audit business
Weaknesses
Brand awareness limited to only some
executives in the client enterprise
Global association structure
Relative immaturity of global delivery capability
Underpenetration into Asia
Limitation of market opportunity due to audit
Trusted brand
Breadth of service and skills
Opportunities
Threats
Green agenda
Software brands
Pattern-Based Strategy
Midmarket penetration
Other high-growth sectors
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strengths, weaknesses, opportunities and threats. To create the
figure, we analyze the strengths and weaknesses that are internal
to the provider, and the opportunities and threats from external
sources. For each category, we define a number of characteristics
based on parameters such as company or market, business
consulting services, finance, and operations and assign to each a
weighting. Each characteristic is examined in terms of the potential
impact on the providers position in the market and whether this
factor is addressed or ignored in the next 12 months. These
impacts are then rated as high, medium or low to determine a final
numbered rating for each quadrant in the figure. The sizes of the
four boxes in Figure 2 are a representation of the weighted rating of
the strengths, weaknesses, opportunities and threats.
Strengths
Value-Driven Approach
Deloittes value-driven approach is one of the attributes that sets it
apart. All major consulting service providers would claim, if asked,
that they focus on value for the client. But for Deloitte, this is an
W
O
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explicit part of its strategy, day-to-day client approach, offering
and messaging, embodied in the models and artifacts it uses. It
is evidenced, for instance, by the use of its Value Map to identify
priority opportunity areas within client organizations for improving
the value of the enterprise. Deloitte claims to stick to the client
engagement until there is improvement in the chosen variable (till
the needle moves on the dial). And while that may not be strictly
the case in every instance, it is a fair representation of the firms
intent and style of working. In those business-led assignments that
eventually lead to IT work, this will be a particular advantage, as
genuine concern for real, defined business value can occasionally
be somewhat neglected by some of the more IT-centric providers,
despite all the claims to the contrary.
A value-based billing approach is not an absolutely necessary
consequence, but Deloitte does offer value-based billing, sharing
risk and reward with the client. Many service providers say they
offer value-based billing, and some do offer it; for Deloitte, it is wellsuited to its value-based business-led approach using the Value
Map. The firm also has a relatively mature business approach to
value-based contracts, treating them as a portfolio of investments
managed by a specific team, balancing risks and returns across
the whole. This is in contrast to the one-off, decentralized approach
taken by some other providers.
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to make smaller, focused strategic acquisitions globally. Other
investments include the substantial Deloitte University in Dallas,
Texas, which was prudently deferred during the financial crisis but
on which construction has now commenced.
Trusted Brand
Deloitte enjoys a trusted brand that works for CEOs and CFOs
and sometimes for some other C-level executives. The firm has
excellent long-term high-level relationships with executives. Such
relationships sustain the perception of cultural fit with the buying
organization, which is one of the key factors for satisfactory
consulting service relationships uncovered by our user-wants-andneeds research.
Weaknesses
Brand Awareness Limited to Only Some Executives in
the Client Enterprise
Beyond the executives with which Deloitte has relationships, its
brand is known for the accounting business, but not necessarily
well-understood. Finance executives know Deloitte and the other
Big Four well; other C-level executives do not always have such a
clear picture of their broader capabilities. Particularly among CIOs,
who are increasingly involved in business consulting decisions,
even sophisticated buyers express continuing confusion about the
current status of the Big Four in consulting services.
This can mean, for example, that Deloitte does not necessarily
appear on the procurement list for services in functions beyond the
obvious finance area.
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Global Association Structure
The structure of the Big Four, including Deloitte, as associations of
independent country-level firms, necessary for the audit business,
also poses a challenge for business consulting. For instance, the
structure means that innovations in consulting services cannot
simply be rolled out in a centrally mandated manner. The partners
of the country firms have to be persuaded to take on new offerings
or other innovations. And because many of them are accountants
by education, they may be naturally (and possibly appropriately)
conservative in their investment and innovation decisions.
The structure can slow down decision making and is to some
extent a source of friction in cross-border deals. In Deloitte, this
factor exists, of course, but innovation still does happen and does
become rolled out globally. So while the firm seems to be more-orless effectively managing around this issue, there is a cost to that.
There is also a positive side to this issue. The very need to
persuade the global partners is in its own way a minor advantage. It
means that business cases have to be made very convincingly.
Opportunities
Change in Economic and Business Environment
The changing world economic and business environment creates
opportunities for major consulting firms to help clients with global
competitive and environmental challenges. These include the
following.
Tougher competition
Consolidation, mergers, acquisitions and divestitures
Growing awareness of business risk
Increasing regulation, but also deregulation in other areas
Growing public sector
Increasing globalization
Requirements for sustainability
Pursuit of agility
Growth of emerging economies
Growth of digital economy
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The strengths discussed earlier mean that Deloitte is wellpositioned to capitalize on these opportunities if it chooses. Its
own relative success in stemming serious revenue loss during the
economic crisis allows it to lead by example, especially for clients
that are themselves in services industries.
Green Agenda
The whole green agenda is a major opportunity for Deloitte. It has
a trusted brand and approaches this issue from a serious business
perspective, being seen to be on the same side as business
and yet with sound credentials and skills in areas such as carbon
emissions trading. The services required for this opportunity sit
comfortably with an accounting and business consulting heritage
such as Deloitte has. Businesses know they have to do something
and will turn to trusted advisors to help them. Thus, Deloitte has
invested in market offerings and recruitment for sustainability
services. Green IT is only a minor part of this because it affects
only a small proportion of business costs and environmental
impacts. The real impact is on the wider business; therefore,
business-led firms have a strong advantage in this field.
Pattern-Based Strategy
Gartner has identified the need for enterprises to adopt an
approach to management and strategy based on pattern seeking
(see the Recommended Reading section). Firms like Deloitte, with
a strongly fact-based and numerate culture, used to dealing with
complex, tough and cross-disciplinary problems or opportunities,
should be able to build excellent business from this. On the whole,
Deloitte could exploit some real relative advantages here.
Midmarket Penetration
Deloitte already has excellent penetration in this segment. It reports
that outside the U.S., 70% of its total revenue comes from small
and midsize businesses (SMBs), and in the U.S., 61% comes
from SMBs. The local country-based audit practices provide
good access to this market. This could be exploited further, and
some of Deloittes innovations, such as Deloitte Digital, may prove
valuable for this. Deloitte conducts specific research into midmarket
business. In Australia, Deloitte is already experimenting with solution
offerings based on software as a service for SMB clients.
Threats
More-Focused Competitors From IT Heritage
Deloitte is to some extent vulnerable to more-focused IT services
providers because it is not easy, even at the scale of Deloitte, to
cover all aspects of IT that are needed to implement its consulting
advice. For some enterprises, working with consulting providers
that also provide their own technology is a pragmatic advantage.
This puts a limit on Deloittes ability to effectively control the
outcome of all its business consulting projects.
Software Brands
Software brands, especially SAP and Oracle at present, have a high
degree of recognition and intent to use among buyers of consulting
services. Even though the consulting offerings of these vendors are
today centered on their own products, our demand-side research
does show a willingness by buyers to consider them for businessoriented services. Even if these specific vendors do not become
more active in that space, this buyer perception opens the door
to new types of competitors, new entrants and substitutes for
business consulting.
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Implications for Deloitte
Deloitte is in a strong position in the business consulting market.
But nothing stands still. We recognize that Deloitte is a firm whose
leadership is constantly challenging its own assumptions and the
business model. It should actively continue the following:
Invest, experiment and innovate in the areas of automation,
online services, emerging business models and offshore labor.
Apply thought leadership marketing, and manage it even more
rigorously.
Deliberately extend the capability and the brand into new areas
of client need, such as sustainability consulting, while avoiding
overextension.
It should undertake these steps to secure the future:
Work on an appropriate level of global integration of the
consulting business that is compatible with the current global
structure.
Carefully extend the relevance and awareness of the brand
among more nonfinance executives.
Automotive
Industrial products and services
Process industries
Consumer products
Retail, wholesale and distribution
Tourism, hospitality and leisure
Transportation
Electric power
Mining
Oil and gas
Water
Banking and securities
Insurance
Real estate
Company Overview
Deloitte refers to Deloitte Touche Tohmatsu, legally constituted
as a Swiss Verein (association) whose members are separate
partnerships in 140 countries worldwide. Each partnership is a
legally separate entity under the laws of its country and may have
its own subsidiaries. Thus, for example, Deloitte LLP is the peak
legal entity in the U.S. The Deloitte name and the origins of the
earliest member firms go back to the middle of the 19th century.
Deloitte provides audit, tax, consulting and financial advisory
services to public and private clients.
Worldwide, the firm employed 169,000 staff at its reporting date at
the end of May 2009.
The vertical industries served by Deloitte are as follows, varying
somewhat by geography:
Investment management
Education
International governmental organizations
International not-for-profit and nongovernmental organizations
National, regional and local governments
Health plans
Health care providers
Life science
Technology
Media
Telecommunications
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They are grouped into sectors as follows:
Financial services
Manufacturing
Public sector
Real estate
Technology, media and telecommunications
2008
2007
2006
2005
2004
Growth
(%) 2009
Growth
Growth
(%) 2008 (%) 2007
Growth
(%) 2006
Growth
(%) 2005
Audit
11.9
12.7
11.0
9.8
8.7
7.4
-6.3%
15.5%
12.2%
12.6%
17.6%
Financial Advisory
2.0
2.4
1.9
1.5
1.3
1.2
-16.7%
26.3%
26.7%
15.4%
8.3%
Consulting
6.5
6.3
5.2
4.5
4.3
3.9
3.2%
21.2%
15.6%
4.7%
10.3%
Tax
5.7
6.0
5.0
4.3
3.9
3.8
-5.0%
20.0%
16.3%
10.3%
2.6%
Total
26.1
27.4
23.1
20.1
18.2
16.3
-4.7%
18.6%
14.9%
10.4%
11.7%
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In May 2009, Deloitte acquired substantially all the North American
public-sector practice of BearingPoint, bringing some 4,250
principals and employees and an estimated $745 million in (2008)
revenue into Deloitte through an asset purchase agreement that
included assets associated with the Middle East public-sector
practice of the same firm (see Table 2).
Methodology
Deloitte was chosen for this SWOT analysis because of its
overall stature and influence in the business consulting service
marketplace as the largest global provider in terms of consulting
service revenue in Gartners 2009 market share.
The Gartner vendor SWOT analysis is designed for the use of
vendors as a supplement to their planning processes. Its primary
value is as an independent analysis of the vendors competitive
situation. The SWOT analysis provides a unique independent view
of the strengths, weaknesses, opportunities and threats for a
specific vendor in a specific market and geography.
Definitions
An audit firm is a legal person or entity approved in accordance
with law by the competent authorities to carry out statutory audits.
The term network means the larger structure that is aimed at
cooperation and to which a statutory auditor or an audit firm
belongs. The network aims for profit or cost sharing or shares
common ownership, control or management, common quality
control policies and procedures, a common business strategy, the
use of a common brand name, or a significant part of professional
resources.
Statutory audit means the audit of annual accounts or
consolidated accounts as required by law.
Statutory auditor is a person approved in accordance with law by
the competent authorities to carry out statutory audits.