Version 4; July, 2010 BCIS 4690/5700 Class 1

Genealogy of IT Consulting Firms

Jack D. Becker, UNT &

Phil Osborn, PrincipleIT Management Consultants

w/editorial assistance from

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Preview• Timeline• Major Players in Accounting Industry

– Beginning of Consulting– Big 8 Formed Companies– Main Movements– Intermediate Mergers– Big 4 Players

• Ernst and Young• Deloitte Touche Tohmastsu• KPMG• Price Waterhouse Coopers

– IT Consulting Players• IBM (Price Waterhouse Coopers)• Cap Gemini (Ernst & Young)• Accenture (Arthur Anderson)• Bearing Point (KPMG)

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Timeline

Left out the sale/exit of Big 8consulting businesses

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“The Birth of Management Consulting”

• A.T. Kearney – Orginially Kearney & MicKinsey in 1922– A. Thomas Kearney kept the name after

McKinsey left to be CEO of Marshall Fields– McKinsey starts with there beginning after

A.T. Kearney, makes it appear as if they were first.

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The Big 8 [circa 1970]1. Arthur Anderson

– 1913- Founded as by as Andersen, DeLany & Co– 1918- Name changed to Arthur Andersen & Co– 2001- Andersen consulting forced to change name to

Accenture– 2002-Convicted for shredding documents related to its

audit of Enron.– 2005- Conviction overturned by Supreme Court due to

flaws in the jury instructions– 2010- Andersen has not returned as a viable business

even on a limited scale2. Coopers & Lybrand

– 1957 merger of Cooper Brothers & Co; Lybrand, Ross Bros & Montgomery and a Canadian firm McDonald, Currie and Co

– 1998 merged in with Price Waterhouse to form PricewaterhouseCoopers.

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The Big 83. Deloitte Haskins & Sells (Haskins & Sells)

– 1845- Deloitte founded by William Deloitte– 1952-Agreement reached to merge the businesses of

Deloitte, Plender, Griffiths & Company and Haskins & Sells in the U.S., under the name Deloitte Haskins & Sells.

– 1992- Coopers & Lybrand Deloitte became Coopers & Lybrand

– Deloitte Haskins & Sells was a predecessor firm of Coopers and Lybrand UK and Deloitte Touche Tohmatsu

4. Ernst & Whinney (Ernst & Ernst)– 1903- A.C. Ernst in 1903, joined with his brother,

Theodore, to start Ernst & Ernst. Accounting firm– Whinney, Smith & Whinney had been closely allied with

Ernst & Ernst since the 1940s, and in 1979 Whinney Murray, Ernst & Ernst, and Turquands Barton Mayhew joined together as Ernst & Whinney, creating the fourth largest accountancy firm in the world.

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The Big 85. Peat, Marwick, Mitchell– 1867- Robert Fletcher establishes accountancy firm which

later becomes Peat Marwick Mitchell

– 1925-  Peat and Marwick Mitchell & Co join to create a transatlantic firm

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The Big 86. Touche Ross (1960-1985)– 1960-Touche, Niven, Bailey & Smart merges with George

Touche & Co. (Britain) and Ross, Touche & Co. (Canada) to form Touche, Ross, Bailey & Smart

– 1969- Adoption of the name Touche Ross & Co., mergers completed with more than 50 other firms in the U.S. and formal associations created with national firms in 55 countries.

– 1975- Agreement reached with Tohmatsu Awoki & Co into Touche Ross

– 1982- David Moxley and W. Grant Gregory became the leaders at Touche Ross

– 1984- J. Michael Cook became managing partner of Deloitte, Haskins & Sells.

– 1985- Edward A. Kangas, a management consultant, was appointed managing partner of Touche Ross

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6. Touche Ross (Continued; 1989-1993)

– 1989- Deloitte Haskins & Sells in the USA merged with Touche Ross in the USA to form Deloitte & Touche. The merged firm was led jointly by J. Michael Cook and Edward A. Kangas. Led by the UK partnership, a smaller number of Deloitte Haskins & Sells member firms rejected the merger with Touche Ross and shortly thereafter merged with Coopers & Lybrand to form Coopers & Lybrand Deloitte (later to merge with Price Waterhouse to become PwC). Some member firms of Touche Ross also rejected the merger with Deloitte Haskins & Sells and merged with other firms

– 1993- the international firm was renamed Deloitte Touche Tohmatsu to reflect the contribution from the Japanese firm as well as agreements to use both of the names Deloitte and Touche

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6. Touche Ross (Continued; 1995-2010)

– 1995- the partners of Deloitte & Touche decided to create Deloitte & Touche Consulting Group (now known as Deloitte Consulting)

– 2002- Arthur Andersen's UK practice, the firm's largest practice outside the U.S., agreed to merge with Deloitte's UK practice. Andersen's practices in Spain, the Netherlands, Portugal, Belgium, Mexico, Brazil and Canada also agreed to merge with Deloitte. The spin off of Deloitte France's consulting division led to the creation of Ineum Consulting

– 2009- Deloitte purchased the North American Public Service practice of BearingPoint (formerly KPMG Consulting) after it filed for bankruptcy protection.

– 2010- The firm took over the UK property consultants Drivers Jonas

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The Big 8

7. Price Waterhouse– 1849 - Samuel Lowe Price creates firm in U.K.– 1865 - Samuel Price partners with William Holyland and

Edwin Waterhouse.– 1997 - Price Waterhouse and Coopers & Lybrand

announce plans for a global merger and integration.– 1998 - Price Waterhouse and Coopers & Lybrand

complete a global merger and the name of the new firm is PricewaterhouseCoopers

8. Arthur Young– 1906 Arthur Young & Company was set up in Chicago – 1989 Ernst & Whinney the fourth largest accountancy firm

in the world merged with the then number five, Arthur Young, to create Ernst & Young

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Infamous Consulting Events

• Equity Funding Scandal (1973) precipitated computer audit practices

• Saving and Loan Crisis (Started in 1980 fell 1988)• Y2K January 1, 2000• The Enron Scandal of 2002 brought to light problems

in accounting auditing and was the precursor of the fall of Arthur Anderson the companies primary auditing firm (Filed Bankruptcy in November 2002)

• MCI Scandal of 2002 found $3.8 billion fraud; • By 2003 it was estimated that MCI’s assets were

inflated by $11 billion• Sarbanes Oxley Effective July 30, 2002

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The 3 Intermediate Mergers

Three Mergers• KPMG Peat Marwick• Ernst & Young• Deloitte & Touche

The three holdouts (only room for two)

• Anderson Worldwide• Coopers & Lybrand• Price Waterhouse

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Big 4

• Ernst and Young

• Deloitte Touche Tohmastsu

• KPMG

• Price Waterhouse Coopers

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Ernst & Young• 1989- Two biggest accounting firms merge

– Arthur & Young & Co and Ernst & Whinney• 1996- Consulting sector splits from management Service

Activities• 2001- Major take over of tax consultants• 2003- Audit firm “Swaelen & Co” joins Ernst & Young• 2004- Ernst & Young sells its Actuarial Division to Lane,

Clark & Peacock.

• Ernst & Young sells its Association Management Department to The Kellen Company, creating Kellen Europe.

• Ernst & Young Belgium sells its interim management department ‘Executive Temporary Management’ (ETM) to the management team and Michel Van Hemele.

Note: Slogan from E&W

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Deloitte Touche Tohmastsu• 1952-Agreement reached to merge the businesses of Deloitte, Plender, Griffiths & Company and Haskins & Sells in

the U.S., under the name Deloitte Haskins & Sells.• 1952- Nobuzo Tohmatsu qualifies as a certified public accountant in Japan and becomes a partner in a foreign

affiliated accounting firm. • 1972- Touche Ross Chairman Robert Trueblood chairs a committee that leads to the establishment of the Financial

Accounting Standards Board — the FASB. • 1990- Merger that creates Deloitte & Touche.• 1993- International firm is named Deloitte Touche Tohmatsu.• 1996- Deloitte & Touche Eastern Europe divided into two organizations — Deloitte & Touche Central Europe and

Deloitte & Touche CIS• 1997- Deloitte & Touche Central America is established• 2000- Deloitte Touche Tohmatsu became a founding member of the United Nations Global Compact, which seeks to

promote responsible global citizenship by advancing universal values in business operations around the world• 2002- Eloitte Touche Tohmatsu’s global revenues were US$12.5 billion• 2003- A decision to not separate Deloitte Consulting allows Deloitte Touche Tohmatsu to maintain its wide and

deep range of multidisciplinary capabilities• 2005- On September 1, Deloitte Touche Tohmatsu China merges with Pan-China Schinda, the second merger in the

Mainland that year following a deal with Beijing Pan-China CPA Ltd• 2006- Deloitte Touche Tohmatsu announces aggregate revenues of more than US$20 billion in the fiscal year

ending 31 May 2006, an increase of 10 percent over 2005. It is the fourth consecutive year of double-digit revenue growth and the 13th consecutive year of continued growth

• 2007- On June 1, James H. Quigley is named Chief Executive Officer of Deloitte Touche Tohmatsu, succeeding William G. Parrett. In addition, John P. Connolly is named the new Chairman of the Board of DTT, succeeding Piet Hoogendoorn.

• 2008- Deloitte Touche Tohmatsu announces aggregate revenues of US$27.4 billion in the fiscal year ending 31 May 2008, an increase of 18.6 percent over 2007. It is the sixth consecutive year of double-digit revenue growth. In addition, Deloitte grew by approximately 15,000 people in the past year, with considerable growth in emerging markets.

• 2010- Deloitte purchased the North American Public Service practice of BearingPoint (formerly KPMG Consulting) after it filed for bankruptcy protection.[9] The firm also took over the UK property consultants Drivers Jonas in January 2010.[10]

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KPMG• 1876- Robert and Sydney Stokes establish Stokes Firm• 1987- Firm becomes part of firm accountancy mega-merger• 1999- KPMG Peat Marwick shortens its name to KPMG LLP, a branch

of KPMG International • 2000- Consulting wing becomes an independent firm• 2002- Merger lead to enlargement of firm• 2008- Won “Best Big Company to Work For” in he prestigious Sunday

Times Best Companies award• 2009- KPMG was ranked #2 on the list for “Best Places to Intern”• 2010 KPMG, an Irish partnership and a member firm of the KPMG

network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity

• 2010- KPMG made DiversityInc's Top 50 Companies for Diversity for the third consecutive year in 2010, moving up 6 spots to No. 15

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PriceWaterhouseCoopers• 1849- Founded in London• 1890- New York office opened• 1990- coopers & Lybrand merged with

Deloitte Haskins & Sells in the United Kingdom

• 1998- Formed from merger between Price Waterhouse and Coopers & Lybrand

• 2002- PricewaterhouseCoopers' partners approve sale of PwC Consulting to IBM

• 2004- PricewaterhouseCoopers implements the Connected Thinking methodology

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IT Consulting Players

• IBM (Price Waterhouse Coopers)– No merger between Arthur Anderson and Price

Waterhouse due to cultural differences

• Cap Gemini (Ernst & Young)– Grew out of services offering

• Accenture (Arthur Anderson)– Faced legal challenges after Enron

• Bearing Point (KPMG)– No deal when it tried to joint venture with CISCO

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Conclusion

• Consulting opened new industry

• Industry movements lead to mergers

• IT needs own consulting area– Driven by regulatory acts– Big IT Consulting is captive to IT product

vendors and outsourcers, no longer independent

Bibliography• "About Ernst & Young - History - Timeline - Belgium - Ernst & Young -

Belgium." Advisory, Assurance, Tax, Transaction Services - Ernst & Young - Global. Web. 08 July 2010. http://www.ey.com/BE/en/About-us/Our-history/History---Timeline---Belgium

• "Campus: KPMG Awards." KPMG Campus. Web. 08 July 2010. http://www.kpmgcampus.com/whoweare/awards.shtml

• "History." Deloitte | Audit, Consulting, Financial Advisory, Risk Management and Tax Services. Web. 08 July 2010. <http://www.deloitte.com/rss/en_GX/global/about/overview/history/index.htm>.

• "PricewaterhouseCoopers History and Milestones." PricewaterhouseCoopers US: Audit and Assurance, Tax and Advisory Services with an Industry Focus. Web. 08 July 2010. http://www.pwc.com/us/en/about-us/pwc-corporate-history.jhtml

• PricewaterhouseCoopers US: Audit and Assurance, Tax and Advisory Services with an Industry Focus. Web. 08 July 2010. http://pricewaterhouse.com

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