Magic Quadrant for Business Operations Consulting Services, Worldwide, Dec 2013

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Magic Quadrant for Business Operations Consulting Services, Worldwide

Magic Quadrant for Business Operations Consulting Services, Worldwide 23 December 2013 ID:G00248935 Analyst(s): Dana Stiffler

VIEW SUMMARY This Magic Quadrant evaluates the global business operations consulting capabilities of 10 business consulting service providers. Buyers can leverage this Magic Quadrant to identify and select the appropriate consultancy for business operations strategy and execution projects.

Market Definition/Description Business operations consulting (BOC) services are strategy and transformation consulting services that support senior business stakeholders — that is, COOs, chief supply chain officers, chief procurement officers and other leaders — in their efforts to improve their companies' operations on a global basis. The following capabilities fall into Gartner's definition of BOC: Operations strategy and transformation consulting services as a horizontal category across the following three functional categories: Product innovation and life cycle management Supply chain management (SCM), which encompasses plan, source, make, deliver and service Sourcing and procurement, which is pulled out separately from SCM since it is often treated as a separate, very large transformational area BOC services help companies analyze, define, validate and improve operations, and they require strong capabilities in program management, change management and governance. A BOC services client sits in an operations function or line of business. BOC services exclude technology consulting, system integration and outsourcing, or any service in which the primary client is the IT organization. They also exclude outsourced supply chain and operations business processes; pure strategy consulting services that do not have an implementation/execution focus; and any form of business process outsourcing or ongoing business process support. Technology may be an enabler for these engagements, particularly for analytics-heavy projects, but it is not the focus of the service being delivered. Operations outcomes are the focus.

Magic Quadrant Figure 1. Magic Quadrant for Business Operations Consulting Services, Worldwide

EVIDENCE This analysis is based on: Interviews and briefings with the 10 participating service providers Fifty client references (submitted by the participating service providers), which were personally interviewed by the analysts supporting this research Gartner inquiries and discussions conducted in the past 12 months with service provider and buyer organizations Press releases and publicly available information, including company websites and financial reports

EVALUATION CRITERIA DEFINITIONS Ability to Execute Product/Service: Core goods and services offered by the vendor for the defined market. This includes current product/service capabilities, quality, feature sets, skills and so on, whether offered natively or through OEM agreements/partnerships as defined in the market definition and detailed in the subcriteria. Overall Viability: Viability includes an assessment of the overall organization's financial health, the financial and practical success of the business unit, and the likelihood that the individual business unit will continue investing in the product, will continue offering the product and will advance the state of the art within the organization's portfolio of products. Sales Execution/Pricing: The vendor's capabilities in all presales activities and the structure that supports them. This includes deal management, pricing and negotiation, presales support, and the overall effectiveness of the sales channel. Market Responsiveness/Record: Ability to respond, change direction, be flexible and achieve competitive success as opportunities develop, competitors act, customer needs evolve and market dynamics change. This criterion also considers the vendor's history of responsiveness. Marketing Execution: The clarity, quality, creativity and efficacy of programs designed to deliver the organization's message to influence the market, promote the brand and business, increase awareness of the products, and establish a positive identification with the product/brand and organization in the minds of buyers. This "mind share" can be driven by a combination of publicity, promotional initiatives, thought leadership, word of mouth and sales activities. Customer Experience: Relationships, products and services/programs that enable clients to be successful with the products evaluated. Specifically, this includes the ways customers receive technical support or account support. This can also include ancillary tools, customer support programs (and the quality thereof), availability of user groups, service-level agreements and so on. Operations: The ability of the organization to meet its goals and commitments. Factors include the quality of the organizational structure, including skills, experiences, programs, systems and other vehicles that enable the organization to operate effectively and efficiently on an ongoing basis. Completeness of Vision Market Understanding: Ability of the vendor to understand buyers' wants and needs and to translate those into products and services. Vendors that show

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Magic Quadrant for Business Operations Consulting Services, Worldwide the highest degree of vision listen to and understand buyers' wants and needs, and can shape or enhance those with their added vision. Marketing Strategy: A clear, differentiated set of messages consistently communicated throughout the organization and externalized through the website, advertising, customer programs and positioning statements. Sales Strategy: The strategy for selling products that uses the appropriate network of direct and indirect sales, marketing, service, and communication affiliates that extend the scope and depth of market reach, skills, expertise, technologies, services and the customer base. Offering (Product) Strategy: The vendor's approach to product development and delivery that emphasizes differentiation, functionality, methodology and feature sets as they map to current and future requirements. Business Model: The soundness and logic of the vendor's underlying business proposition. Vertical/Industry Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific needs of individual market segments, including vertical markets. Innovation: Direct, related, complementary and synergistic layouts of resources, expertise or capital for investment, consolidation, defensive or pre-emptive purposes. Geographic Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific needs of geographies outside the "home" or native geography, either directly or through partners, channels and subsidiaries as appropriate for that geography and market.

Source: Gartner (December 2013)

Vendor Strengths and Cautions Accenture Accenture is positioned in the Leaders quadrant. Gartner estimates that Accenture had about 2,800 business operations professionals who generated revenue of about $620 million in calendar year 2012. Notable developments in the past 12 months included Accenture's focus on product innovation and life cycle management. In August 2013, it acquired Prion Group, a Germany-based product life cycle management consulting and implementation service firm with more than 300 employees. Besides innovation, risk management and the impact of digital technology and analytics are key areas of operations investment. In terms of its enablement capabilities and assets, Accenture has a center of excellence for every major operations function, dedicated benchmarking and analytics solutions, the Accenture Supply Chain Academy, and 300 dedicated operations resources based in the Accenture Management Consulting Capability Network. Accenture's operations consulting practice has most of its engagements in broad SCM, followed by sourcing and procurement engagements, and then product innovation. The consumer goods, retail, high-tech and communications, and energy sector value chains are dominant in the portfolio. Strengths Geographic strategy: Accenture's BOC capability is massive, global and well-integrated. Service: Accenture's consistent commitment to proactively investing in supply chain and operations consulting and adjacent services across industries is unrivaled, as is its ability to deliver from strategy to execution. Customer experience: Accenture's program management expertise was the highest rated among participants. Relationship management and responsiveness from the junior through the executive staff are strong. Cautions Sales strategy: Overpitching and overselling are perpetual challenges as Accenture's associates continually seek the next big deal. Pricing: Accenture's services command a premium, relative to other participants in this research. Customer experience: While clients relish the attention and responsiveness they get from Accenture, they must also contend with aggressive salesmanship, which they don't always care for.

A.T. Kearney A.T. Kearney is positioned in the Leaders quadrant. Gartner estimates that it had about 1,400 business operations professionals who generated revenue of about $470 million in calendar year 2012. Notable

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developments in the past 12 months included A.T. Kearney's focus on advancing the integration of existing service capabilities, optimizing functional offerings, investing in innovation capabilities, and designing more collaborative services to help clients enhance and refine their own capabilities. With regard to its enablement capabilities and assets, A.T. Kearney has developed a number of proprietary tools and methodologies, including the Seven Step Strategic Sourcing Model. A.T. Kearney's functional specialty is sourcing and procurement across multiple sectors, complemented by other engagements in the end-to-end supply chain. Strengths Market understanding: A.T. Kearney's strong competitive views and operations roots allow it to be tough and credible in convincing stakeholders across the organization that changes must be made. Service: A.T. Kearney delivers smoothly from strategy through implementation across the firm, aided by its single profit pool structure. Its focus on sourcing and procurement has led to a deep understanding of and ability to execute against value-based pricing models. Customer experience: Clients cite A.T. Kearney's strong tools and methodologies, IP cocreation, collaborative capability building and knowledge transfer as key strengths. Cautions Geographic strategy: Lack of local talent outside the U.S. and Western Europe is a gap. Offering strategy: The broader operations consulting groups are underrepresented in IT capabilities and enabling analytics engines. Collaborating within different practices at A.T. Kearney could yield additional value for clients and opportunities for the firm. Customer experience: Clients would welcome more strategic interactions with and thought leadership from A.T. Kearney.

BearingPoint BearingPoint is positioned in the Challengers quadrant. Gartner estimates that it had about 450 business operations professionals who generated revenue of about $100 million in calendar year 2012. Through BearingPoint's exclusive alliance network with the consulting firms West Monroe Partners (U.S.-based) and ABeam Consulting (Japan-based), it is able to augment its talent base to another 550 operations professionals if clients require locally based resources in the Americas or the Asia/Pacific (mainly Japan) region. Notable developments in the past 12 months included BearingPoint's opening of a China office with 20 consultants, further global alignment of capabilities among the alliance partners, and the carving out of offerings and tools like the Supply Chain Transformation Toolbox and Green Supply Chain Management. In terms of its enablement capabilities and assets, BearingPoint has proprietary analytics tools like HyperCube and LogEC. BearingPoint's functional focus is strongest for end-to-end SCM, followed by sourcing and procurement, and product innovation. The combined alliance network of BearingPoint/ABeam/West Monroe Partners has strong and differentiating capabilities in automotive and retail, including a rare focus on workforce optimization in the distribution and retail sectors. Strengths Market responsiveness: BearingPoint's offerings are in line with the times, with services that meet specific operations and regulatory needs. Its engagement style is practical and flexible. Pricing: Being in tune with the current consulting needs of clients means flexibility and innovation in engagement structures, including gain share and more fixed fee work than competitors. Customer experience: BearingPoint's consultants are globally experienced, multilingual and expert across operational processes and topics. Cautions Geographic strategy: While formidable in Europe, BearingPoint is still regarded as a regional player. Direct resources are not available in key locations globally, which is a disadvantage when clients move to implementation mode. Marketing strategy: The BearingPoint brand has a difficult legacy behind it, and the alliance network is challenging to explain. These are two hurdles to articulating value, and other global consulting firms do not have to deal with this. Customer experience: Clients would like to see more strategic thinking from BearingPoint to complement its process improvement expertise.

Deloitte Deloitte is positioned in the Leaders quadrant. Gartner estimates that it had about 4,800 business operations professionals who generated revenue of about $1.17 billion in calendar year 2012. Notable developments in the past 12 months included Deloitte's acquisition of Monitor Group, which bolstered its strategy, innovation and life science capabilities. In addition, Deloitte formed an alliance with 3D Systems to help clients understand the implications of the evolving 3D printing space, as well as advanced service accelerators with an emphasis on end-to-end solutions, analytics, data visualization, and risk and sustainability management. Deloitte's enablement capabilities and assets include wargaming techniques, a design-for-value framework, and the analytics visualization studio at its Highly Immersive Visual Environment (HIVE) center. Deloitte's BOC portfolio is strong in end-to-end SCM, sourcing and procurement, and product innovation. Leading sectors in Deloitte's practice are consumer goods and industrial discrete manufacturing, as well as healthcare and energy.

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Strengths Offering strategy: Strategy and execution capabilities at scale are Deloitte strengths, as is consistent quality in the resource pool. Overall satisfaction with the complete engagement approach and experience is among the highest in this study. Innovation: Deloitte's investments in alliances, tools and robust methodology have payoffs in the consistent experiences that clients report. Customer experience: A quick understanding of client issues and complex company dynamics is a strength. Lead partners are consistently impressive. Global presence and consistency in delivery are strong selling points. Cautions Marketing execution: Marketing of operations consulting and accompanying thought leadership remains fragmented across Deloitte. Pricing: Clients rate Deloitte's services as more expensive relative to other consulting partners. Customer experience: "Consulting speak" can be a distraction in some engagements, clouding what are otherwise solid recommendations to diverse stakeholders.

EY EY is positioned in the Challengers quadrant. Gartner estimates that it had about 1,500 business operations professionals who generated revenue of about $350 million in calendar year 2012. Notable developments in the past 12 months included EY's acquisitions of Axia Value Chain, with about 140 employees in Brazil, and J&M Management Consulting in Germany, with a staff of 320 consultants. Each acquisition expands EY's operations presence in Brazil and continental Europe, respectively. In addition, EY launched sector-specific global centers of excellence. With regard to enablement capabilities and assets, EY has a Supply Chain Transformation Framework and Value Chain Optimization Methodology. EY's BOC portfolio consists primarily of end-to-end supply chain work — including integrated business planning and logistics and fulfillment engagements — followed by sourcing and procurement projects, as well as product innovation. Strengths Service: EY scores high marks on the quality of its people, as well as its expertise across supply chain functions, notably procurement. Its complex implementation management capabilities are impressive. Pricing: Clients are pleased with the value they receive from EY for comparatively lower fees. Customer experience: EY's understanding of client organizations and specific issues, as well as cultural fit, is among the best in this study. Overall quality of service is also outstanding. Cautions Geographic strategy: EY is still building a global presence in these consulting categories (see acquisitions above), and does not yet have a foundation of global assets to leverage. Offering strategy: EY's strategic consulting capabilities are not yet on par (at scale) with its execution capabilities. Customer experience: Clients working with extended teams across regions noted a dip in the quality of resources.

Hitachi Consulting (Celerant Consulting) Celerant Consulting, which was acquired by Hitachi Consulting on 31 December 2012, is positioned in the Challengers quadrant. Gartner estimates that the combined BOC capability of Celerant and Hitachi was about 750 business operations professionals, who generated revenue of about $175 million in calendar year 2012. Celerant, a pure-play business operations consulting firm with an estimated 600 employees, was based predominantly in the U.S. and Europe. In terms of proprietary enablement capabilities and assets, Hitachi Consulting builds on Celerant's intellectual property (IP), including its Closework framework, readiness assessments, productivity benchmarking, and project management control and reporting system. Celerant focuses on broad operations improvement, as well as product innovation and sourcing and procurement. It is particularly well-established in the industrial, consumer goods, process manufacturing and resource sectors. Strengths Industry strategy: Rare plant-level and manufacturing network strategy and execution expertise — down to the operational technology level — set Celerant Consulting apart, particularly in the industrial and process manufacturing industries. Business model: More than any other participant in this research, Celerant Consulting's operational consulting business model is value-based — that is, an engagement's goals must be met and a positive outcome achieved for the firm to collect its fees. Customer experience: Celerant's robust execution methodologies and clarity in guiding clients result in sustained capabilities once the client is on its own. Also, in contrast with larger consulting firms, even relatively new associates have the breadth, depth and experience to quickly gain credibility with clients. Cautions

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Offering strategy: The intense focus on process execution and excellence means that more strategic operations dialogue with clients has been limited. Also, since IT was not a focus of Celerant's, its analytics competencies and toolsets are not as sophisticated as its competitors'. Geographic strategy: Ties between Celerant's U.S. and European practices need strengthening, and a global identity and capabilities need to be established for the now-united capability under Hitachi Consulting. Customer experience: The very structured methodology and specialized language can result in Celerant's inability to grasp the full scope of the client's need and difficulty in connecting with diverse stakeholders.

IBM IBM is positioned on the edge of the Leaders quadrant. Gartner estimates that it had about 2,500 business operations professionals who generated revenue of about $630 million in calendar year 2012. One notable development in the past year was IBM's move to leverage a pool of 275 IBM corporate operations and supply chain employees in the delivery of consulting services. In addition, IBM invested in exploring digital technology implications for operations, re-engineered its transformation and program management approach BetterTransformation, and refined its benchmarking program. In terms of enablement capabilities and assets, IBM has a Supply Chain Transformation method, supply chain analytics software assets (like Emptoris and Ilog), a Target Operating Model framework, an integrated product development framework, a supply chain scenario modeler and the IBM Program Work Center (IPWC). The bulk of IBM's operations work is in the end-to-end supply chain, followed by sourcing and procurement. IBM's portfolio spans all sectors, with a strong focus on high tech, industrial and consumer goods manufacturing. Strengths Geographic strategy: IBM's global presence and the global expertise of its top consultants are formidable. Whether employing local employees or employees in low-cost delivery centers, IBM is among the leaders in terms of its ability to field and leverage a global workforce. Service: IBM executes well across supply chain functions and issues. Portfolios within specific functions are deep, with strong views into enabling technologies. Customer experience: Deep knowledge of the electronics manufacturing sector sets IBM apart, as does enabling technology expertise in diverse functional areas. Consultants listen well and do not overprescribe. Cautions Operations: IBM is massive, which can lead to uneven quality in business consulting resourcing and execution. Pricing: Clients report IBM to be relatively expensive compared with other consultants featured in this study. Customer experience: Clients would like to see stronger knowledge transfer and more innovative approaches from IBM. They associate IBM's value proposition strongly with technology as an enabler.

KPMG KPMG is positioned in the Challengers quadrant. Gartner estimates that it had about 1,400 business operations professionals who generated revenue of about $295 million in calendar year 2012. Notable developments in the past 12 months included KPMG's establishment of a global procurement center of excellence, which will be followed by new centers for end-to-end supply chain and product innovation, respectively. In addition, the firm invested in new development of some sector-specific methodologies, a rapid value assessment tool and new enabling technologies. With regard to enabling capabilities and assets, KPMG has a value delivery framework, a supply chain and operations process toolkit, and a target operating model framework, to name a few. Sourcing and procurement engagements dominate KPMG's portfolio today, with broader SCM projects increasing in number and product innovation emerging as a focus. Strengths Service: KPMG's service quality is excellent, with especially strong delivery in the procurement function. Qualifications across multiple functions and participants in the automotive and industrial equipment value chains are differentiating. Pricing: Clients report receiving high-quality resources and deliverables for relatively low fees. Customer experience: Tools and training approaches for procurement in particular are robust and global. Mixed teams of consultants and industry practitioners drive strong stakeholder alignment within clients. Cautions Offering strategy: The full value of integrated strategic consulting, enabling technologies and diverse functional offerings — and the broader, deeper bench that these require — is not yet present at scale. Marketing strategy: As a result, KPMG's operations consulting messaging is under construction. The firm has not yet staked out territory that allows it to have a differentiated value conversation with clients. Customer experience: The way KPMG communicates and delivers value needs to be in the

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client's language, not the terminology of the practice or firm.

Kurt Salmon Kurt Salmon is positioned in the Leaders quadrant. Gartner estimates that it had about 1,080 business operations professionals who generated revenue of about $275 million in calendar year 2012. Notable developments in the past 12 months included Kurt Salmon's focus on adapting its service portfolio to include capabilities for digital, omnichannel selling and fulfillment, and analytics via hiring dedicated senior talent and establishing a new team of data scientists for supporting projects. In terms of enablement capabilities and assets, Kurt Salmon has a sector-based benchmarking database, a 1-to-1 retailing methodology and a target operating model framework. Most of Kurt Salmon's operations portfolio is led by a broad supply chain practice, followed by sourcing and procurement, logistics, and product innovation. Kurt Salmon is very much focused on retail and consumer goods, followed by financial services. The firm has a burgeoning healthcare provider practice in the U.S. Strengths Market understanding: Kurt Salmon's understanding of client challenges and opportunities is world-class, stemming from its pool of highly seasoned consultants and former practitioners. Industry strategy: Kurt Salmon serves fewer industries than others in this study, but its ability to go deep on strategy and execution in those industries — particularly retail and consumer goods — is more consistent and impactful than firms that have larger portfolios. Customer experience: Clients appreciate Kurt Salmon's clear sector and operations focus, as well as its willingness to recuse itself where it does not have expertise. The mix of strategic and execution expertise is top-notch. Cautions Geographic strategy: The firm's local presence and depth of experience are concentrated in Western Europe and the U.S. Operations: Kurt Salmon's business model is heavily dependent on senior consultants for nearly every aspect of an engagement. Injecting slightly more junior resources would improve leverage and provide exposure and strong pipelines for future firm leadership. Customer experience: Despite the firm's strength in markets where innovation is highly prized, clients are often surprised to find that its innovation and product life cycle expertise are not as strong as they should be.

PwC PwC is positioned in the Leaders quadrant. Gartner estimates that it had about 3,700 business operations professionals who generated revenue of about $997 million in calendar year 2012. Notable developments in the past 12 months included PwC's investment in new research, as well as its focus on new offerings and IP for product innovation and value chain transformation. In terms of enablement capabilities and assets, PwC's set includes its PACE methodology, Catalyst Advanced Decision Acceleration methodology, PwC Benchmarking and Analytics solutions, Sourcing and Procurement Excellence framework, and Spend Analytics methodology. PwC's operations portfolio is led by its expertise in the end-to-end supply chain, followed by sourcing and procurement, and product innovation. The BOC practice is fairly evenly distributed across sectors, with the industrial discrete manufacturing sector (composed of automotive, industrial, and aerospace and defense) just slightly larger than other sectors. Strengths Offering strategy: PwC's operations consulting practice is broad and deep across functional domains, and is nicely balanced in its ability to speak to more strategic agendas, as well as to more standard supply chain and manufacturing ones. Market understanding: PwC understands the challenges of running global operations very well, and this translates into the ability to grasp client challenges quickly. Its offerings are logically aligned to these capabilities. Customer experience: Clients appreciate the way PwC consultants work seamlessly with client teams, and PwC's ability to set and meet expectations with diverse stakeholders. In this study, analytical skills were a particularly high-scoring area for PwC, compared with others. Cautions Innovation: With its focus on designing and implementing standard operations best practices, PwC does not often support or push enough innovative points of view for some clients. Pricing: Some clients find PwC to be relatively expensive for the value it provides. Customer experience: Clients want less consulting jargon and non-value-added reporting from PwC. Enabling technologies is not one of PwC's strong suits, compared with other operations consultants.

Vendors Added and Dropped We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant or MarketScope may change over time. A vendor appearing in a Magic Quadrant or MarketScope one year and not the next does not necessarily indicate that we have changed our opinion of that vendor. This may be a reflection

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of a change in the market and, therefore, changed evaluation criteria, or a change of focus by a vendor.

Added A.T. Kearney was added.

Dropped PA Consulting Group was dropped due to its focus on global strategic sourcing in indirect categories rather than direct, and little/no revenue generated in SCM or product innovation consulting.

Inclusion and Exclusion Criteria The criteria for service providers' inclusion in this Magic Quadrants are based on a combination of quantitative and qualitative elements: Quantitative Criteria: Revenue: The provider must have total revenue from BOC of $50 million or more in calendar year 2012. Portfolio: The provider must have capabilities and a track record in at least two of the three operational functions listed above in the Market Definition/Description section. SCM must be one of these. The provider must have strategy and transformation (implementation/execution) qualifications. Global track record: The provider must deliver 50% or more of its total BOC project volume on a global basis (that is, involving two or more regions, such as Western Europe and Asia/Pacific). Note: It is unnecessary for the provider to always have its own operations in the regions where projects are being delivered. Client references: The provider must provide five commercial-sector enterprise (with revenue of $5 billion or more) client references. Note: Projects must have been initiated and/or completed within the past 24 months. In addition, respondents must maintain an operational/line-of-business leadership role, and must still be employed at the organization selected. Qualitative Criteria: Client interest: This involves client interest in specific BOC service providers, as revealed by Gartner analysts' interactions with buyers and/or Gartner analysts' opinions on the attractiveness of specific providers to Gartner's global operations and supply chain clients. Market visibility: This is the overall market interest and visibility of the provider.

Evaluation Criteria Ability to Execute Gartner analysts evaluate service providers on the quality and efficacy of the processes, systems, methods or procedures that enable provider performance to be competitive, efficient and effective, and to positively impact revenue, retention and reputation. Ultimately, service providers are judged on their ability and success in capitalizing on their vision. Product or Service: Core services offered by the service provider that serve the defined market. This includes current service capabilities, quality, feature sets, skills and so forth. Overall Viability (Business Unit, Financial, Strategy, Organization): Viability includes an assessment of the overall organization's financial health; the financial and practical success of the business unit; and the likelihood that the individual business unit will continue to invest in the service, offer the service, and advance the state of the art within the organization's portfolio of services. Sales Execution/Pricing: This criterion involves the service providers' capabilities in all presales activities and the structure that supports them. It includes deal management, pricing and negotiation, presales support, and the overall effectiveness of the sales channel. Market Responsiveness/Record: This criterion involves the ability to respond, change direction, be flexible, and achieve competitive success as opportunities develop, competitors act, customer needs evolve, and market dynamics change. It also considers the provider's history of responsiveness. Marketing Execution: This criterion involves the clarity, quality, creativity, and efficacy of programs designed to deliver the organization's message to influence the market, promote the brand and business, increase awareness of the services, and establish a positive identification with the service, brand and organization in the minds of buyers. This mind share can be driven by a combination of publicity, promotional activities, thought leadership, word of mouth and sales activities. Customer Experience: This criterion involves the relationships, products and services/programs that enable clients to be successful with the services evaluated. Specifically, it includes the ways customers receive technical support or account support. This can also include ancillary tools, customer support programs (and the quality thereof), availability of user groups, service-level agreements and so forth. Operations: This criterion involves the organization's ability to meet its goals and commitments. Factors include the quality of the organizational structure, including skills, experiences, programs, systems and other vehicles that enable the organization to operate effectively and efficiently on an ongoing basis.

Table 1. Ability to Execute Evaluation Criteria

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Criteria Evaluation Criteria

Weighting

Product or Service

High

Overall Viability

Medium

Sales Execution/Pricing

Medium

Market Responsiveness/Record

High

Marketing Execution

Medium

Customer Experience

High

Operations

Medium

Source: Gartner (December 2013)

Completeness of Vision Gartner analysts evaluate service providers on their ability to convincingly articulate logical statements about current and future market direction, innovation, customer needs and competitive forces, and how well they map to Gartner's position. Ultimately, service providers are rated on their understanding of how market forces can be exploited to create opportunity for the provider. Market Understanding: This criterion is the service provider's ability to understand buyers' needs and translate them into products and services. Vendors that show the highest degree of vision listen to and understand buyers' wants and needs, and can shape or enhance them with their added vision. Marketing Strategy: This criterion involves a clear, differentiated set of messages that are consistently communicated throughout the organization and externalized through the website, advertising, customer programs, and positioning statements. Sales Strategy: This criterion involves the strategy for selling service. It uses the appropriate network of direct and indirect sales, marketing, service, and communication affiliates that extend the scope and depth of market reach, skills, expertise, technologies, services and the customer base. Offering (Product) Strategy: This criterion involves a service provider's approach to product development and delivery; it emphasizes differentiation, functionality, methodology and feature set as they map to current and future requirements. Business Model: This criterion involves the soundness and logic of a provider's underlying business proposition. Vertical/Industry Strategy: This criterion involves the service provider's strategy to direct resources, skills and offerings to meet the specific needs of individual market segments, including vertical industries. Innovation: This criterion involves the direct, related, complementary and synergistic layouts of resources, expertise or capital for investment, consolidation, or defensive or pre-emptive purposes. Geographic Strategy: This criterion involves the service provider's strategy to direct resources, skills and offerings to meet the specific needs of countries, either directly or through partners, channels and subsidiaries.

Table 2. Completeness of Vision Evaluation Criteria Evaluation Criteria

Weighting

Market Understanding

High

Marketing Strategy

Medium

Sales Strategy

Medium

Offering (Product) Strategy

High

Business Model

High

Vertical/Industry Strategy

High

Innovation

High

Geographic Strategy

Medium

Source: Gartner (December 2013)

Quadrant Descriptions Leaders Leaders are performing well today, gaining traction and mind share in the market; they have a clear vision of market direction and are actively building competencies to sustain their leadership positions.

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Challengers Challengers execute well today for the portfolio of work selected, but they have a less-defined view of market direction. Consequently, these service providers may be the "up and comers" of the future, or they may not be aggressive and proactive enough in preparing for the future.

Visionaries Visionaries articulate important market trends and directions. However, they may not be in a position to fully deliver and consistently execute. They may need to improve their optimization of service delivery.

Niche Players Niche Players focus on a particular segment of the market, as defined by such characteristics as functional area (that is, sales, marketing or service), vertical industry, client size or project complexity. Their Ability to Execute is limited to those focus areas and, therefore, assessed accordingly. Their ability to innovate may be affected by this narrow focus.

Context This Magic Quadrant analyzes the leading provider landscape for BOC services globally. The relative positioning of providers in this Magic Quadrant is based on factors that Gartner has determined to be relevant to this market. We analyze consulting projects that may require a blend of strategy and transformation capabilities for product innovation and life cycle management, SCM, and sourcing and procurement, underpinned with program management, change management and governance capabilities. When considering BOC service providers for an RFI or RFP, do not simply select those in the Leaders quadrant. All selection processes are company-specific; consequently, providers in the Challengers quadrant may prove to be more appropriate for your engagement. This Magic Quadrant analysis is for the consulting services required for discrete project work only, and excludes multiyear contractual engagements that are typical of managed services or outsourcing agreements. This Magic Quadrant is a point-in-time analysis, and the view covers key competitors with the breadth and scale of offerings across a wide array of criteria. A consulting service provider may appear in a specific quadrant given its strategy, as compared with the full market criteria set in this evaluation. As a result, in any given deal, provider selection is best decided by a client's needs; therefore, consulting service providers should not underestimate any potential competitor, because the Magic Quadrant inclusion criteria result in the analysis of the most established providers in the BOC service market. Other consulting service providers not evaluated in this Magic Quadrant may present better alternatives for clients' business requirements. For this analysis, we obtained more than 50 client references provided by the 10 BOC service providers to supplement our views, based on daily interactions with Gartner clients as well as other primary and secondary research projects. Discrete manufacturing was the most prominent vertical industry from which consultants provided client references, followed by consumer goods, process manufacturing and retail. These four vertical industries represented more than 70% of all referenced client companies: Discrete manufacturing: 30% Consumer goods: 17% Process manufacturing: 16% Retail: 9% Distribution: 6% Energy: 6% Financial services: 6% Life sciences: 6% Media, entertainment and telecommunications: 4% Participant-provided references were based in North America, followed by Europe and other regions: North America: 46% Europe: 44% Other: 10% In terms of functional responsibility, nearly two-thirds of references came from leaders with broad supply chain and operations responsibilities, while 30% were from sourcing and procurement specifically: SCM: 62% Sourcing and procurement: 30% Product innovation and life cycle management: 8% Organizational issues, especially skills building, were the most common issues among BOC clients, followed by efficiency and productivity management, and then data/information management in the third major challenge category: Organizational issues and capability building: 22%

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Magic Quadrant for Business Operations Consulting Services, Worldwide

Efficiency and productivity: 19% Data/information management: 16% Strategy and change management: 14% Customer fulfillment: 14% Regulatory and compliance management: 9% Sustainability: 5% Half of the clients interviewed increased their consulting spend in 2013 compared with 2012, while 23% decreased their spend: Increased: 50% Stayed the same: 27% Decreased: 23% Fixed price was the most popular pricing model for clients' consulting engagements in this segment, followed closely by time and materials. Value-based pricing was used in some instances; however, it is important to note that, in most cases, the value-based component represented half or less of the total fees the client paid on the engagement. There was only one referenced client that paid 100% of fees based on the value realized: Fixed price: 45% Time and materials: 40% Value-based pricing: 15%

Market Overview BOC services, which are dominated by supply chain consulting, represent the largest part of the global business consulting service market. They require strong capabilities in program management, change management and governance. Gartner has observed consistently strong demand for BOC services over the years, accelerated by increasing globalization, continued economic volatility, digitalization of business and operating models, the need to better manage risk and environmental sustainability, and emerging analytics that enable better insights. In this context, most providers are streamlining and continually enhancing their operations consulting service portfolios to globally address complex client requirements in better and more integrated ways. BOC services are well-established capabilities offered by a wide range of providers, large and small. Small and midsize providers, however, are being quickly acquired by their larger competitors. BOC service providers all technically classify themselves as strategy and operations consultants, but on closer examination, they may have very different services in their portfolios. Therefore, clients must first qualify the specific requirements they have and be able to articulate whether they are in the market for a strategy engagement, a transformational engagement or a standard business process improvement exercise. Many companies have used BOC services with the goal of globalizing and industrializing operations functions to improve their bottom lines, and to increase their flexibility and agility. However, BOC services are not just addressing bottom-line issues, but also enabling companies to position top-line initiatives successfully. This is an increasingly important orientation to have as companies view operations as a way to enter new markets and offer new value propositions, rather than as a pure cost center.

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