MCN Direct Newswire

Issue: Vol. 5 No. 35, 11 December 2006

This issue is sponsored by:

TeleWare and The UK Consulting Industry Report 2005/6

This issue news

1. KPMG's UK advisory business grows 23%
2. Vertex goes up for sale
3. Axon acquires again in the US
4. Accenture supports rebuilding of New Orleans
5. Atos Origin wins €130m financial services contract
6. Further information - feedback/pass on to a colleague/remove from mailing list

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1. KPMG'S UK ADVISORY BUSINESS GROWS 23%

KPMG has reported 23% revenue growth in its UK advisory practice for the year to 30 September. Forensic, corporate finance and risk advisory services led the way, and KPMG will be looking for more expansion following the recent merger of all its advisory services into one business line (MCND 5-32).

In total, KPMG UK showed full-year revenue up 14% to £1.5 billion, with advisory growing ahead of tax on 13% and audit on 2%.

KPMG also said that its partners in the UK and Germany have approved a merger of the two country firms, which will take place next October to create KPMG Europe.

John Griffith-Jones, chairman and senior partner of KPMG UK, who will become a joint chairman of KPMG Europe with German lead Rolf Nonnenmacher, explained: "This will allow us to serve global clients more effectively, provide our people with new and exciting opportunities and - by combining the strength and quality of our audit practices - will help support the public interest and capital markets."

On a global basis, KPMG's advisory business was its fastest growing, showing 13% growth for a total of $5.3 billion (£2.7 million).

This is the third set of promising consultancy results from ex-Big 4 firms. PricewaterhouseCoopers also said advisory was its fastest growth area when it reported a full-year gain of 18% to $4.4 billion. Deloitte Touche Tohmatsu, the only firm that did not spin-off its consultancy business in the break-up of the Big 4, showed a full-year gain of 1% in consulting to reach $4.8 billion (MCND 5-33 and MCND 5-31).

2. VERTEX GOES UP FOR SALE

Business process outsourcing supplier Vertex is to be sold off by parent company United Utilities.

Announcing its interim results for the six months to 30 September, United Utilities said Vertex was not considered a long-term strategic hold and that the divestment process had been initiated. Chief executive Phillip Green said United Utilities' ongoing strategy would be to focus on the core areas of managing water, waste water, electricity and gas networks.

This about-face comes just two years after United Utilities paid £47.5 million to Capgemini for the 14.6% of Vertex it had not already acquired from a joint venture launched in 2001.

In recent months, Vertex has not performed well within United Utilities and while the BPO business has a strong order book, operating profit before restructuring costs in the first half fell to £3.5 million from £8.1 million in last year's comparable period.

United Utilities first signalled its doubts about Vertex in July, when it appointed Merrill Lynch to advise on its options after bidders from both industry and the private equity community expressed interest in the company. At that time, Vertex was thought to be worth about £450 million, but valuations now range as low as £200 million.

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3. AXON ACQUIRES AGAIN IN THE US

Business transformation consultancy Axon Group has bought two US SAP specialists in as many months and claims it is "now the largest independent SAP consultancy in the world".

Axon's latest purchase is Zytalis, a California-based provider of SAP consulting services to companies in the high-tech and discrete manufacturing sectors. Axon will pay an initial $15 million (£7.7 million) cash for Zytalis, about 0.5-times 2006 revenue, and a deferred cash payment of up to $14.6 million during 2008-2010 depending on business performance.

The two consultancies have worked together on joint assignments, leading Zytalis CEO Martin Lidington to comment: "Axon has consistently demonstrated its ability to acquire leading industry-specialist SAP consulting companies and integrate them in a way that gets the best out of both organisations."

Axon CEO Mark Hunter said the Zytalis acquisition was strategically important, and was also expected to increase fiscal 2007 revenue and profit by about 10%.

Axon's second SAP acquisition in the US is Premier HR Solutions, a provider of SAP HR consulting services. Axon will pay an initial $11.5 million, of which $3.6 million will be in new Axon shares, with a deferred cash payment of $3 million paid in 2008 subject to performance.

4. ACCENTURE SUPPORTS REBUILDING OF NEW ORLEANS

Accenture has promised a $600,000 (£307,000) donation to provide operations and IT services support to non-profit organisations rebuilding the New Orleans area, post Hurricane Katrina.

Accenture has given $62,000 cash to the Louisiana Association of Non-profit Organisations (LANO) and will offer a further $538,000 worth of consulting, management, IT and outsourcing expertise.

Accenture started working with LANO in December 2005. It has since developed a post-Katrina strategic plan and has helped develop LANO's Central Resource Co-operative that will directly help non-profit organisations provide services such as preventative healthcare, counselling services and job training.

Melissa Flournoy, LANO's CEO, said: "With so many citizens of Louisiana still displaced as a result of Hurricane Katrina, it is clear that something must be done to improve our ability to reach out and provide aid. Accenture's consulting services and assistance are helping us develop an intervention strategy to support hundreds of non-profits that are committed to providing services to rebuild the city and lives of our citizens."

One year after Hurricane Katrina, many non-profit organisations are still without buildings, donors, board members, volunteers or staff. Accenture's services, including project management, organisation & process design and technology consulting, will help these organisations establish their basic operations.

5. ATOS ORIGIN WINS €130M FINANCIAL SERVICES CONTRACT

Atos Origin has been selected from a shortlist of 10 providers for a €130 million (£88 million), 10-year outsourcing contract with UK insurer NFU Mutual.

Under the terms of the deal, 78 NFU Mutual employees transferred to Atos Origin earlier this month and will become part of its financial services practice, providing outsourced data centre and desktop services to the rural insurance company.

NFU Mutual corporate services director William Schouten said: "The choice of Atos Origin was made not only because of its ability to provide the required expertise and levels of service, but also its close fit with our culture and its commitment to the welfare and development of employees."

Atos Origin's executive vice president for UK markets, Derek Ward, noted: "This is a significant win for Atos Origin and demonstrates that we have both the capability and expertise to deliver big deals in the financial services sector."

The contract was awarded after a 12-month procurement process, supported by external industry specialists from Approach Consulting. Consultation with NFU Mutual's staff and the Amicus union also formed part of the negotiation process.

* This is the last issue of MCN Direct before Christmas. We would like to take this opportunity to wish all our readers and advertisers a very happy Christmas and prosperous New Year.

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Written by Sarah Underwood. Copyright 2012 PMP (UK) Ltd.