Catching up with AT Kearney Procurement Solutions

In contrast to IBM's purchase of PWC's consulting arm -- which turned out by virtually all observers to be an extremely effective move -- EDS and AT Kearney never quite clicked after they exchanged vows. But earlier this year, AT Kearney finally got a chance at independence once again when their partners conducted a management buyout of the firm. Much was on the line, as the firm's stellar operational consulting reputation had gone down -- not to mention its pole position for high-end sourcing and supply chain work -- since before the merger. To gauge where AT Kearney was during this rocky period, you can read a few of my earlier posts on them during this time here, here, and here. When I was in grad school in the mid nineties, I can remember how AT Kearney had a reputation approaching that of McKinsey's from a recruiting perspective as a consultancy. But this image dropped off precipitously in the years following the acquisition.

The good news is that since the management buy-out, things have been looking up for the venerable consultancy. Last week, I had the chance to catch up with Joe Raudabaugh and Mike Sorensen of AT Kearney Procurement Solutions. AT Kearney Procurement Solutions is what I would describe as a boutique "firm within a firm" focused exclusively on the Spend Management arena. Procurement Solutions started out less than a decade ago with around 60 staffers, and now counts 150 team members, all of whom specialize in the Spend Management space. While many know that the group offers classic category and event-based sourcing support and consulting capabilities, few I talk to outside of Kearney are aware that Procurement Solutions also delivers data analytics solutions (including spend visibility and analytics) and consortium buying. The eBreviate sourcing technology, which is no longer owned by the group, is now part of UGS (while AT Kearney maintains an agreement with UGS to use the technology, they believe it is important to remain technology neutral from a client decision standpoint).

Procurement Solutions is focused on creating repeatable, expert solutions to Spend Management versus a more traditional management consulting approach which looks at each new procurement and supply chain opportunity from a generalist, one-off analytical lens. According to Procurement Solution's leadership, more sophisticated organizations are most likely to use their services to augment their own capabilities where there is a specific need. In contrast, the management consulting organization is typically a better fit from a sourcing and category basis with clients who are less mature and need greater process help and all around Spend Management expertise and guidance. The exception to this are more sophisticated companies looking to solve abstract problems or those that demand industry specific expertise -- these situations are also a better fit with AT Kearney's more traditional management consulting services arm. But quite often, the two torganizations cross pollinate on projects, joining forces to help clients. Management consulting type-engagements, however, such as a complex make / buy manufacturing analyses, which are large and transformational in nature, are more likely to be led by generalist firm resources than specialized Procurement Solutions ones.

While we did not get into a day or blended rate discussion during the call, I know first hand that Procurement Solutions' rates are significantly less than AT Kearney's management consulting resources (which command some of the highest prices in the market). Still, the rates are not cheap. In other words, Procurement Solutions' pricing is more in line with what more expensive boutiques and the Big 5 charge for operational and strategic consulting. Not inexpensive, but not the highest in the market.

Last month, Procurement Solutions made a small stir at Procuri's Empower event by announcing a relationship with the On Demand supply management vendor. Later in the week, I will analyze this announcement, looking at the Procuri / AT Kearney relationship in detail. In particular, I will plan to explore how AT Kearney is delivering supply markets content to clients -- and now to Procuri customers as well. This content takes the form of commodity specific templates as well as category sourcing updates and insight. Procurement Solution's content push is commendable and one that I'd wager is a sign of things to come in the market. Ariba also offers related supply markets content to customers as well. But other offerings like this are few and far between in the market. I believe the market opportunity for supply markets related content -- from upfront supplier identification through to active supply risk management -- is far larger than many are thinking about at the moment.

- Jason Busch