SMU Business Case 1

SMU Business Case 1 - International Management Consulting...

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Unformatted text preview: International Management Consulting Company ITOM 2308 – Business Case 1 Overview Calatestra Partners (Calatestra) is an international management consulting company with offices in more than 10 countries and expanding rapidly. Calatestra, with over 1200 consultants worldwide, provides services in a variety of industries and functional areas. The firm generates over $400 million dollars in annual revenue. The company was founded in 1992 and has experienced a compounded annual growth rate of more than 25% since its inception. Calatestra’s main strategic challenge is to continuously invest in the development of leading edge capabilities in industries, geographies, and functional areas with substantial growth potential to ensure its continued success. Its main operational challenge is to continue to source the best talent to successfully deliver on those capability-development investments. At the operational level, efficiently matching demand for consulting services (business development) with availability of experienced and skilled consultants becomes the main challenge. ******** The following is a more detailed description of some of the key functional areas of the business: Sourcing At Calatestra, consultant are sourced from 3 main channels: colleges, industry, and through headhunters for specialized hires. Each of these channels provides around 50%, 40%, and 10% respectively of all new consultants to the firm. The college recruiting function maintains a list of target universities for recruiting as well as an ideal profile to help in the identification of the best potential candidates at each university (e.g., work experience, grades, interests, etc.). Each year the college recruiting function interacts with each of the placement offices in the selected colleges to review and select a short list of candidates. The process starts with a telephone interview with each potential candidate to determine whether to include him or her in the on-campus interview schedule. On completion of a successful on campus interview, an invitation to visit the office is extended for a full set of interviews with the appropriate industry and functional leaders. After a successful office visit, an offer letter is extended and a start date is defined. Industry recruiting is mostly driven by employee referrals. Referral bonuses are paid for successful hires following a successful performance review after 90 days. Headhunters are only used for the strategic and targeted recruiting of senior positions such as office managing directors and industry and/or functional leads. Education New consultants may or may not go through initial industry, functional and/or company operations training based on their seniority and background. This training focuses on standardizing and level setting all consulting staff on the company’s various methodologies, tools, methods (intellectual property), operations, and overall standards. Consultants’ education is an ongoing requirement. Each consultant at the company is required to secure 120 formal education credit hours every year via internal and/or external (approved) sources. Staffing Consulting staff’s billable and non-billable time commitments are tracked by operations to try to maximize their billable utilization. Management teams (i.e., Vice Presidents) of the various industry and functional areas get together every week to review and discuss staffing and staff utilization. During these meeting, available staff (non-billable) may be assigned to new ITOM-2308 (Larrave) Business Case 1 Page 2 of 3 projects coming down the business development pipeline, or to existing and/or expanding projects, based on their specific skills, experience and the needs of the project. The company maintains specific utilization targets by level as follows: consultants 100%, senior consultants 90%, managers 75%, principals 50%, vice president 25%. Projects may be staffed with consultants from any office and any industry and/or functional group as needed. Performance review Every consultant receives an annual performance review based on an expectations framework for each level. This framework defines expected levels of performance along 10 dimensions (e.g., analysis, leadership, presentation, business development, recruiting, intellectual capital, writing, etc.). A reviewer (a senior consultant) is assigned to each consultant at performance review time. The reviewer is responsible for collecting feedback from all the people that interacted with the consultant during the year (360 review). These reviews are the basis for promotions and raises. Forecasting A rolling 8-week forward looking staffing forecast is maintained by operations for all consultants by industry and functional area. This forecast estimates the amount of billable and non-billable time each consultant is expected to have over the next 8 weeks based on project commitments. Business development Potential business opportunities (i.e., projects) are tracked by operations to provide a view into the future billable work coming down the pipeline. Each new opportunity is defined by the pursuing officer and assigned a probability score based on very specific milestones as follows: discussions 10%, requirements meeting 30%, proposal delivered 50%, accepted 80%, started 100%. This pipeline is maintained by functional and industry group as well. Realization Calatestra has a target realization rate of 80% for all of their projects and holds its officer accountable for this number. Realization for a given project is the ratio of “actual” billings divided by “ideal” billings at standard billable rates. Each consultant is assigned a standard billing rate as follows: consultants $125, senior consultants $175, managers $225, principals, $275, and vice presidents $325. Sometimes officers may not be able to bill or recover standard rates for a given project based on competition, project size, client relationship, etc. so discounts may be given. Billings always include both billable time and out-of-pocket expenses (e.g., travel, etc.). Management teams from the various industry and functional groups review the realization rates for all active and completed projects on a monthly basis to be able to monitor, and take corrective action if necessary, on a timely basis to ensure profitability targets are being met. Internal projects Calatestra maintains a number of internal projects related to critical infrastructure items such the development of methodologies and tools or the launching of new capabilities, businesses and/or functions. Consultants charge time to these projects as if they were billable so they are not penalized in their overall utilization numbers. Intellectual property Intellectual property development is a key component of each consultants’ expectations framework. The more senior the consultant the more important this becomes. This is a key measure and predictor of the future success of the firm in terms of leading thinking, best-in-class services, delivery of unquestionable value to clients. ITOM-2308 (Larrave) Business Case 1 Page 3 of 3 Marketing The primary marketing efforts of the firm are through the leverage of their internal experts (e.g., seminars, speaking, expert testimony, interviews, press, publications, etc.), intellectual capital (education, licensing, etc.). Company level scorecard The company has an annual strategic/operational and financial planning cycle. The resulting annual plans are presented to the board for approval every year. Progress against plan is tracked on a monthly and quarterly basis. Profit and loss statements are tracked by office. A functional/industry matrix organization is also maintained to help evaluate the effectiveness of various strategic/operational initiatives. This matrix tracks each consultant (revenue generation engine) by office and functional and industry groups. This way revenue for each industry, geography and functional area can be calculated to assist in the allocation of resources during the planning cycle. ******** Current Applications and Technology Consultants All consultants receive a fully configured laptop upon joining the company. This laptop includes the following applications packages: • • • • • • • • • Word processor - Word Spreadsheet - Excel Presentation - PowerPoint Database - Access Browser – Firefox and Explorer Project managements - Project Flow charting/diagram - Visio Graphics package – Paint and Photoshop Email and calendaring - Outlook Corporate The company uses Oracle for its financials – general ledger, sub-ledgers (AP, AR, FA) and ADP for outsourcing its payroll processing and direct deposit. No formal applications exist for anything else. The use of excel for everything else – forecasting, realization, utilization, staffing – creates a number of bottlenecks and inefficiencies throughout the business resulting in: • • • Outdated information by the time is all pull together Highly inefficient and expensive data collection processes Inaccurate information because of its manual nature and constant re-keying ...
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