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Filing Information: August 2013, IDC #242453, Volume: 1

Business Consulting Services: Competitive Analysis

C O M P E T I T I V E A N A L Y S I S

I D C M a r k e t S c a p e : U . S . B u s i n e s s C o n s u l t i n g S e r v i c e s f o r

S m a r t C i t i e s 2 0 1 3 V e n d o r A n a l y s i s

Cushing Anderson Ruthbea Yesner ClarkeKerry Smith

I D C O P I N I O N

This IDC study represents the vendor assessment model called IDC MarketScape.

This research is a quantitative and qualitative assessment of the characteristics that

explain a vendor's success in the marketplace and help anticipate its ascendancy.

This study assesses the capability and business strategy of many of the leading

business consulting firms. This evaluation is based on a comprehensive framework

and set of parameters expected to be most conducive to success in providing

business consulting services during both the short term and the long term. Asignificant and unique component of this evaluation is the inclusion of the perception

of business consulting buyers of both the key characteristics and the capabilities of

these consulting providers. As one would expect of market leaders, overall, these

firms performed very well on this assessment. Key findings include:

Surprisingly, this evaluation discovered that generally buyers are disappointed

with the consulting provider's ability to maximize the project's value. While all

vendors state a focus on maximizing the value of their projects, buyers believe

this area is one of the weakest performance areas for consultants overall.

Firms are generally quite good at demonstrating their ability to apply proven

methodologies/tools and to provide a full spectrum of business consulting

services. As Smart Cities projects become more common, repeatable

approaches to similar issues will create higher value.

The firms assessed for Smart Cities are challenged with serving the midtier cities

and are heavily focused on large cities. While finding opportunities in midsize

cities is more labor intensive, there is a lot of opportunity that could be lost to

emerging high-tech urban consultancies. Repeatable processes catered to

smaller projects will not only create higher value in larger cities but also expand

market potential to midsize cities.

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©2013 IDC #242453 1

I N T H I S S T U D Y

This IDC study uses the vendor assessment model called IDC MarketScape. This

research is a quantitative and qualitative assessment of the characteristics that

explain a firm's success in the marketplace and help anticipate its ascendancy.

This study assesses the capability and business strategy of many of the leading

business consulting firms. This evaluation is based on a comprehensive framework

and set of parameters expected to be most conducive to success in providing

business consulting services during both the short term and the long term. A

significant and unique component of this evaluation is the inclusion of the perception

of business consulting buyers of both the key characteristics and the capabilities of

these consulting providers. As one would expect of market leaders, overall, these

firms performed very well on this assessment.

This study is composed of two key sections. The first part is a definition or description

of the characteristics that IDC analysts believe make a successful business

consulting firm. These characteristics are based on buyer and vendor surveys and

key analysts' observations of industry best practices.

The second part is a visual aggregation of multiple firms into a single bubble-chart

format. This display concisely exhibits the observed and quantified scores of the

consulting providers.

The document concludes with IDC's essential guidance to support continued growth

and improvement of these firms' offerings.

M e t h o d o l o g y

IDC MarketScape criteria selection, weightings, and vendor scores represent well-

researched IDC judgment about the market and specific firms. IDC analysts tailor the

range of standard characteristics by which firms are measured through structured

discussions, surveys, and interviews with market leaders, participants, and end

buyers. Market weightings are based on user interviews, buyer surveys, and the input

of a review board of IDC experts in each market. IDC analysts base individual firm

scores and, ultimately, firm positions on the IDC MarketScape, surveys and

interviews with the firms, publicly available information, and buyer experiences in an

effort to provide an accurate and consistent assessment of each firm's characteristics,

behavior, and capability.

S I T U A T I O N O V E R V I E W

I n t r o d u c t i o n

The concept of Smart Cities is in many ways a construct in which to frame local

government transformation. This transformation is enabled by emerging technologies,

such as the Internet of Things and machine to machine (M2M), social media, mobility,



2 #242453 ©2013 IDC

and Big Data and analytics, but it is also focused on specific goals. In IDC's definition,

Smart City pilots, projects, or initiatives are focused on one or more of the following:

Sustainability

Economic development and/or revitalization

Open data and transparency

Citizen and stakeholder engagement

A key ingredient in this transformation is also the ability for government leaders,

including CIOs and the IT department, to embrace and test new ideas and to promote

innovation and change. All of these factors together typically require new strategic

directions, organizational and process changes, and selecting and implementing new

systems to support a Smart City strategy.

IDC forecasts spending on business consulting services by U.S. local governments to

be $1.1 billion in 2014, with a growth rate slightly above 4% through 2017. Spending

for consulting specific to Smart City solutions will be a small but fast-growing segmentof this market as cities look to road map their technology investments and

organizational and process changes necessary for city transformation. In a 2012 U.S.

survey, 21% of local government respondents and 33% of state respondents said

they would use business consulting services to help research, implement, and/or

deploy smart technology solutions for their organization. These projects will be driven

by the following:

Meeting the Smart City goals listed previously, with economic development (i.e.,

job creation) being a top priority

Transforming business systems and processes to help cities provide improved

citizen services and meet rising citizen expectations

Strategic direction on the use of emerging technologies like Big Data and

analytics, cloud, social business, machine-to-machine automation, visualization

tools, and mobile apps

As described in IDC's Smart City Maturity Model, most cities are currently in the Ad Hoc

stage with traditional government modus operandi, with discrete, one-off Smart City

pilots or projects that are department based. While these projects serve to develop the

business case for further investment, many cities will start to require services to help

move to the Opportunistic stage in which project deployments need collaboration within

and between departments and where key stakeholders are aligned around developing a

long-term strategy. To move forward, city leaders will need to:

Begin to assess its Smart City current competency and maturity

Define short- and long-term goals and plan for improvements

Prioritize technology, partnership, staffing, and other related investment

decisions

Uncover maturity gaps among departments, business units, or between

functional and IT groups



©2013 IDC #242453 3

There are many challenges and obstacles to Smart City adoption that also drive the

need for external consulting services. Examples of the challenges include:

Fragmented decision making. Cities traditionally operate in a highly fragmented

state with budgets, governance, decision making, IT platforms, and information

handled by individual departments. The result is that IT strategy, investment, and

the processes that support services delivery are inefficient when viewed in asystemic citywide operational context: multiple data sets and applications exist in

different departments, relevant information is not shared, and operations are not

coordinated beyond emergency protocols or when required for special events.

Rigid processes and the lack of needed skill sets. Despite city leadership that

may be pushing a Smart City agenda, and the desire by many city workers to

improve and change, it is difficult for cities to overcome risk-averse cultures and

procurement processes that make experimentation and innovation a challenge

especially if staff lack the skill sets necessary to set the strategic and technical

direction.

A time of austerity. These barriers to adoption are further complicated by thelong economic recovery in which many cities are operating in very austere

environments, and there is limited federal funding for pilot projects. Cities are

very much still in "do more with less" or even "do less with less" mode and as

such Smart City initiatives must provide ROI, cost reductions, efficiency

improvements, and improved citizen services.

Many cities are wondering how to find investment dollars for these new projects and

also how to sustain them over time. Leveraging consultants with the right experience

at bridging stakeholder requirements and aligning project objectives, consultants who

have the process, technical, and even local government experience, and consultants

with expertise in funding models, public/private partnerships, performance

contracting, and/or capital raising initiatives is essential.

IDC MarketScape Vendor Inclusion Criteria

This research includes analysis of the five largest business consulting firms and firms

with broad portfolios spanning IDC's research coverage and with global scale. This

assessment is designed to evaluate the characteristics of each firm — as opposed to

its size or the breadth of its services. It is conceivable, and in fact the case, that

specialty firms can compete with multidisciplinary firms on an equal footing. As such,

this evaluation should not be considered a "final judgment" on the firms to consider

for a particular project. An enterprise's specific objectives and requirements will play a

significant role in determining which firms should be considered as potential

candidates for an engagement.

W e i g h t i n g E v a l u a t i o n C r i t e r i a

The importance of a firm's characteristics to project success and relevance of the

particular issue combined with IDC's opinion about the impact those elements have

on the selection of firms implies a unique weighting of these elements when



4 #242453 ©2013 IDC

evaluating a firm's overall strategy and capability to address market opportunity and

realizing market success (see Tables 1 and 2).

In addition to the criteria for success having varying weights, IDC believes the

aggregate criteria (offering, go to market, and business) should also be weighted.

Table 3 illustrates the relative weights used in this analysis.

Consequently, based on the weightings, we believe there are several criteria that are

most influential in predicting vendor effectiveness on specific engagements:

Marketing strategy: Particularly important is the ability of the consultant to

articulate its understanding of the key business issues of the day — those

specific to the engagement under consideration, but also more generally. And

those descriptions should reflect the unique criteria and characteristics of the

issue that make it relevant in the context of the enterprise.

Portfolio strategy: The consulting firms must be adding new capabilities to their

portfolio that not only reflect the large "in demand" services but also reflect the

consultants' point of view about those services that will become important in thenear- and midterm. To the extent its possible, it is also important that the

consultants position themselves with skills and offerings that reflect the long-term

direction of consulting — including increased use of risk awareness, risk

integration, and analytics.

Other offering capabilities and go-to-market capabilities: For this analysis,

significant weight was given to a review of both public and confidential-specific

illustrations of capabilities delivered. Sometimes, these were case studies; other

times, they were "qualifications" — confidential recommendations normally used

during a proposal process. The ability of consulting firms to represent their work

with specific client examples is essential to their ability to attract new clients and

gain additional qualifications. Particularly important was being able todemonstrate a wide breadth of Smart City examples.



©2013 IDC #242453 5

T A B L E 1

K e y S t r a t e g y M e a s u r e s f o r S u c c e s s : U . S . B u s i n e s s C o n s u l t i n g S e r v i c e s

f o r S m a r t C i t i e s

Strategies Criteria Criteria for Success

Subcriteria

Weighting

Offering strategy Current development of offerings will be relevant and attractive to customers

over the next three to five years.

Functionality or offering

road map

A wide variety of approaches will be employed to ensure increased functional

and industry capability, including strategic hiring and training. To ensure

maximum impact, organizations will need to increase their ability to construct

teams that leverage those capabilities and provide precise value to clients.

1.0

Delivery model Methodologies and tools are increasingly leveraged from a single, universally

accessible source to ensure worldwide consistency. Tools will be sifting to

include more data-based research applied to solutions. Clients will demandgreater degree of knowledge transfer to assure maximum ongoing value for the

project. Also essential for effective delivery is the ability to transfer knowledge to

the client teams.

3.0

Portfolio strategy To remain relevant, consulting firms will add capabilities to both high-demand

services and those services that the consultant believes will become important.

Consultants will also begin to incubate offerings that reflect the long-term

direction of consulting — including increased use of risk awareness, risk

integration, and analytics. Also important as a portfolio strategy is the ability of

the consultant to challenge corporate culture.

4.0

Other offering strategies Prioritization of new opportunities must consider demand and adjacent

capabilities and involve a tiered (regional) prioritization process and will often

include incorporating risk awareness into engagements in a proactive manner.

2.0

Offering strategy total 10.0

Go-to-market strategy These strategies maximize the connection between offering and customers,

including choosing to target customer segments that offer the greatest

opportunity over the next three to five years.

Pricing model Not used in this evaluation. NA

Sales/distribution

strategy

Consulting models are becoming more complex. Enterprise buyers need to

consume consultative services in increasingly diverse ways. While still dominant,

traditional engagement models are being supplemented by "microsourcing" of

technically complex but narrow tasks such as analytic processing or ongoing

benchmarking and information services provided with less intensive

"consultation" to support insourced analytical or benchmark operations.

2.0

Marketing strategy Growth comes from many types of opportunities and client interactions, including

temporal opportunities. Identifying areas of high demand and providing

comprehensive and timely solutions require an integrated firmwide effort but will

best serve the client's most important and immediate needs. Additionally,

enterprises must perceive consultant competence in key issues to gain

permission to address specific client problems.

7.0



6 #242453 ©2013 IDC

T A B L E 1

K e y S t r a t e g y M e a s u r e s f o r S u c c e s s : U . S . B u s i n e s s C o n s u l t i n g S e r v i c e s


Strategies Criteria Criteria for Success

Subcriteria

Weighting

Customer service

strategy

Consistent and innovative service delivery relies on collaborative efforts

throughout an organization. Firms must ensure a strong culture of collaboration,

consistent and relevant training, and executive oversight and support. In the

best case, firms use a combination of formal and informal peer review as a

quality catalyst, sharing better practices and establishing a culture of high-quality

engagements.

1.0

Go-to-market strategy

total

10.0

Business strategy Strategies to grow the business are aligned with market trends and future

opportunities over the next three to five years.

Growth strategy Firms poised for growth in the near term provide relevant specialized offeringsthat address specific needs, particularly for industries, geographic markets, or

the size of the client. Additionally, a consulting provider's ability to cultivate a

wide range of referenceable clients ensures the provider's capabilities will get

the widest exposure to opportunities. Growth strategy is measured by both the

diversity of the planned dimensions of growth and the measure of enthusiasm of

client recommendation across company size and functional areas.

3.0

Innovation/R&D pace

and productivity

Firms must be able to deliver innovation to their clients, in terms of both

leveraging existing experience for the unique benefit of a client and developing a

truly unique approach to solutions. Delivery of innovation is measured by client

perception of the innovation delivered on the project.

5.0

Employee strategy To maximize the ongoing capability of the consultant's employees, firms provide

required training related to specific functional or technical areas and related tomore broad-based consulting capabilities. The hours of required training

demonstrate the firm's commitment to specific, continuous improvement of its

individual consultants.

2.0

Business strategy total 10.0

Source: IDC, 2013



©2013 IDC #242453 7

T A B L E 2

K e y C a p a b i l i t y M e a s u r e s f o r S u c c e s s : U . S . B u s i n e s s C o n s u l t i n g S e r v i c e s


Capabi lities Criteria Criteria for Success

Subcriteria

Weighting

Offering capabilities The offering's capabilities align well with current market needs and demands.

Functionality/offering

delivered

Offering capability is a combination of functional (domain) knowledge, industry

insights, and technical capabilities. Higher capability reflects buyer perception of

a firm's capability.

3.0

Delivery model

appropriateness and

execution

The appropriate delivery model must include an appropriate integration with the

client team and meet client-developed project timelines. Additionally, for

consistent success, the consultant must drive and support a culture of change.

Higher capability is reflected in higher buyer perception of a firm's capability in

both the "ability to integrate with client team" and the "ability to meet project

timelines" and "drive and support change across the organization."

3.0

Cost competitiveness Cost competitiveness can best be measured by the ability to deliver financial

benefits as a result of the project and directly improve client performance.

Higher capability reflects buyer perception of a firm's capability in those two

areas.

1.0

Portfolio benefits

delivered

Evolved consulting firms will necessarily be required to provide a full range of

consulting services combined with an ability to provide specific insights related

to industry, technical, or domain issues. Evolved consulting increasingly includes

analytics or analytical components as a delivery tool and output of

engagements. Higher capability reflects buyer perception of a firm's fullness and

appropriateness of services offered and its ability to integrate analytics into an

engagement.

1.0

Other offering

capabilities

Consulting firms are continually introducing new service offerings. For high

relevance, firms introduced a mix of both temporal and "foundational" offerings

in the past years. Additionally, firms have a broad range of available case

studies to demonstrate relevance to key issue and opportunities in this domain.

2.0

Offering capabilities total 10.0

Go-to-market

capabilities

These capabilities maximize the connection between offerings and customers,

such as delivery, partnerships, pricing, distribution, marketing, sales, and

service.

Pricing model options

and alignment

Not used in this evaluation. NA

Sales/distribution

structure, capabilities

Firms must operate by balancing both local and global requirements. Global

presence indicates a firm's ability to respond and be relevant to cross-

geographic issues. Higher capability reflects buyer perception of a firm's

capability.

4.0

Marketing The ability of a fi rm to connect to its clients' issues is essential to establishing a

level of trust in the firm's ability to solve the problem. Issue performance is

evaluated and weighted based on industry, domain, and regional priorities.

6.0



8 #242453 ©2013 IDC

T A B L E 2

K e y C a p a b i l i t y M e a s u r e s f o r S u c c e s s : U . S . B u s i n e s s C o n s u l t i n g S e r v i c e s


Capabi lities Criteria Criteria for Success

Subcriteria

Weighting

Higher capability reflects buyer perception of a firm's capability.

Customer service Not used in this evaluation. NA

Other go-to-market

capabilities

Not used in this evaluation. NA

Go-to-market capabilities

total

10.0

Business capabilities Financial, employee, partner, and R&D management, among other capabilities,

are in agreement with current market opportunities.

Growth strategy

execution

Essential to a consulting firm's growth is its ability to develop industry-specific

"referenceable clients." Clients that strongly believe the firm will represent their

best interests are most often referred. Growth strategy execution is measured by

the degree of enthusiasm of industry-related recommendations by clients.

3.0

Employee management In addition to "required training," the culture of continuous improvement in an

organization can be reflected by how much training consultants consume

annually. A higher score indicates more annual training consumed by

consultants.

2.0

Other business

capabilities

Also essential to a consulting firm's growth is the firm's ability to develop size-

and domain-specific "referenceable clients." Clients that strongly believe the firm

will represent their best interests are most often referred. Business capabilities

are measured by the degree of enthusiasm of recommendations by clients to

enterprises of similar size and by executives of similar responsibility.

5.0

Business capabilities

total

10.0

Source: IDC, 2013



©2013 IDC #242453 9

T A B L E 3

A gg r e g a t e C r i t e r i a W e i g h t i n g f o r U . S . B u s i n e s s C o n s u l t i n g S e r v i c e s


Weighting

Strategy Criteria Capabilities Criteria

Offering 5.0 5.0

Go to market 3.0 3.0

Business 2.0 2.0

Total 10.0 10.0

Source: IDC, 2013

F U T U R E O U T L O O K

I D C M a r k e t S c a p e U . S . B u s i n e s s C o n s u l t i n g

S e r v i c e s f o r S m a r t C i t i e s M a r k e t

V e n d o r A s s e s s m e n t

The IDC vendor assessment for the business consulting services for Smart Cities

market represents IDC's opinion on which providers are well positioned today throughcurrent capabilities and which providers are best positioned to gain market share over

the next few years. Positioning in the upper right of the grid indicates that providers

are well positioned to gain market share. For the purposes of analysis, IDC divided

potential key strategy measures for success into two primary categories: capabilities

and strategies.

Positioning on the y-axis reflects the provider's current capabilities and menu of

services and how well aligned it is to customer needs. The capabilities category

focuses on the capabilities of the company and services today, here and now. Under

this category, IDC looks at how well a provider is building/delivering capabilities that

enable it to execute its chosen strategy in the market.

Positioning on the x-axis, or strategies axis, indicates how well the provider's future

strategy aligns with what customers will require in three to five years. The strategies

category focuses on high-level strategic decisions and underlying assumptions about

offerings, customer segments, business, and go-to-market plans for the future, in this

case defined as the next three to five years. Under this category, analysts look at

whether or not a provider's strategies in various areas are aligned with customer

requirements (and spending) over a defined future time period.



10 #242453 ©2013 IDC

Figure 1 shows each provider's position in the vendor assessment chart. A provider's

market share is indicated by the size of the bubble.

F I G U R E 1

I D C M a r k e t S c a p e U . S . B u s i n e s s C o n s u l t i n g S e r v i c e s f o r

S m a r t C i t i e s V e n d o r A s s e s s m e n t

Source: IDC, 2013

P r o v i d e r P r o f i l e s

Accenture

According to IDC analysis and buyer perception, Accenture is an IDC MarketScape

Leader for business consulting for U.S. Smart Cities projects.

Accenture offers a broad array of management consulting services to both the public andthe private sectors in the context of cities and local government. Its approach is to explore

the opportunities for clients — and increasingly for public/private partnerships — and to



©2013 IDC #242453 11

define an outcome in economic and stakeholder terms that helps drive their businessforward and deliver results. Accenture sees itself as a strategic and operational

management consultant willing to pursue a number of innovative value-based approacheswith its clients tied to realizing results. As of June 2013, Accenture had more than 266,000people, with growth that appears to be well distributed by geography.

Accenture's management consulting growth platform is responsible for the developmentand delivery of the company's strategic, operational, functional, industry, process, and

change consulting capabilities, working closely with the professionals in its technology andoutsourcing growth platforms.

Accenture Management Consulting's Strategy and Sustainability practice works closelywith the company's Health & Public Service operating group to serve local government

and cities. As required by local government and city-oriented clients, Accenture draws onthe supporting functional expertise of its five function-based service areas: sales and

customer services, finance and enterprise performance, operations, risk management,and talent and organization. Accenture Management Consulting also includes Accenture

Analytics, which is increasingly involved in these sectors. Many Accenture ManagementConsulting professionals also help clients assess and implement strategic business

solutions in areas such as cloud and mobility.

These groups are backed up by Accenture's centers of excellence (COE) and innovation

centers, including the recently opened Analytics Innovation Center in Singapore,

established in collaboration with Singapore's Economic Development Board. Accenturehas a number of analytics centers around the world supporting cities in education, health,smart grid, transportation, and procurement. Delivery of city and local government service

offerings is also supported by the specialist skills in its Capability Network. Thisincorporates a client-facing Global Capability Network, which provides capabilities in high-

demand areas, such as sourcing, procurement, and analytics. From a growing number of regional centers around the world, this satisfies client demand for consulting to beprovided at speed and at scale.

Accenture launched in 2012–2013 a number of new business services — some functionaland some industry specific — helping to focus its offerings of end-to-end solutions for

state and local smart government. These include customer-facing digital governmentservices, intelligent processing (e.g., for human service and revenue agencies), integrated

social services, enterprise (ERP) platforms and a range of productivity solutions (sharedservices and strategic sourcing), pension transformation, and police services.

Accenture also offers a range of strategy consulting services to support business model

and financing model innovation, including structures for public/private partnerships. It also

provides integrated digital and physical urban master planning solutions that extendbeyond real estate–driven development to full economic ecosystem development.

Accenture smart grid services and smart building services are additional discrete offerings

to public bodies and utility companies.

Accenture has worked extensively with many of the largest cities in the United States and

around the world to modernize technologies and systems for delivering citizen services. For instance, the firm worked with New York City in the launch and development of its 311 call

center and online services. Integrating and consolidating technology, databases, andprocess streamlining for social service agencies is another area of Accenture expertise. The

firm has developed technology assets, the Accenture Public Service Platform and software



12 #242453 ©2013 IDC

applications, that align with its public sector consulting to help address growing state andlocal government needs for integration and citizen access across government agency silos.

Accenture has overhauled its public service marketing and, in 2012, launched a multiyear,multi-thematic umbrella marketing and thought leadership campaign, Delivering Public

Service for the Future. This weaves together research on long-range challenges

confronting governments and best practices to boost public sector productivity.

Accenture has also undertaken extensive research with NGOs and third-party

organizations — for example, its work with the World Economic Forum on smart grids and

its collaboration with the Carbon Disclosure Project on a joint report on European cities'emissions and carbon disclosure. It recently published a report with Arup, The ClimateGroup, and Horizon (the University of Nottingham) — Information Marketplaces: The New

Economics of Cities — that addressed how technology can be used in cities to meet thegrowing challenges of expanding urbanization.

Accenture sees dynamic convergence of technologies, industries, and social trends,

creating new operating environments and opportunities for fundamental change andirrevocably altering relationships between governments and citizens and businesses and

customers. The company is focused on helping organizations leverage technologiessupporting overall digital strategy to transform relationships with customers and citizens.

In FY12, Accenture's total net revenue grew by 11% (in local currency), from $25.5 billionto $27.9 billion. Overall consulting services (according to Accenture's definition that

includes management and technology consulting as well as systems integration services)grew by 6% to $15.6 billion. Emerging geographic markets such as Brazil, China, andIndia continued to contribute to Accenture's recent performance.

For business consulting overall, Accenture is considered to be among the most

capable firms at helping clients expand into new markets or geographies, reduce

costs, and drive innovation through their organizations.

Strengths/Opportunit ies

In the U.S. Smart Cities sector, Accenture is seen as most capable of all firms at

integrating risk awareness and solutions within other consulting engagements,

maximizing the value of a project, and transferring knowledge to the client. Additionally,

Accenture is seen as among the most capable at helping drive innovation through an

organization and integrating appropriate analytics into an engagement. Accenture is

seen as better than many of its peers at directly improving clients' overall mission

performance, helping enterprises create a more effective business, leveraging local and

global staff appropriately, providing industry insights and competence, and offering the

necessary spectrum of business consulting services.

Boston Consulting Group

According to IDC analysis and buyer perception, Boston Consulting Group (BCG) is

an IDC MarketScape Major Player for business consulting for U.S. Smart Cities

projects.

BCG is among the most globally recognized strategy consulting firms, employing

4,400 consultants. BCG organizes its capabilities into corporate development,

corporate finance, operations, strategy, marketing and sales, information technology,



©2013 IDC #242453 13

and organization, with other areas of focus including innovation, turnaround,

transformation, postmerger integration, globalization, sustainability, managing in a

slow-growth economy, and growth. The industries served by BCG include automotive,

biopharmaceuticals, consumer products, energy and environment, engineered

products and project business, financial institutions, insurance, media and

entertainment, medical devices and technology, healthcare payers and providers,

metals and mining, private equity, process industries, public sector, retail, technology

and software, telecommunications, transportation, travel and tourism, and social

impact. BCG is credited with pioneering a number of strategy frameworks for the

management consulting industry as BCG's focus on conceptual, strategic thinking has

yielded ideas that have become classics of strategy, including the experience curve,

time-based competition, sustainable growth, and total shareholder value — concepts

that many organizations have leveraged to improve their competitive positions.

BCG has remained a large strategy firm that still mainly focuses on strategy, rather

than also building a large operations practice around which it can bundle strategy

services. The firm does have some operational capabilities, particularly around the

supply chain management element of postmerger integration work.

Research published by BCG is based on survey findings and typically delves deeply

into either a specific industry's business concern or regionally specific business

issues, recently with a significant focus on emerging economies. Publications in 2010

that illustrate the depth and far-reaching impact BCG addresses include What's Next

for Alternative Energy?; Big Prizes in Small Places: China's Rapidly Multiplying

Pockets of Growth; and Winning in Emerging-Market Cities: A Guide to the World's

Largest Growth Opportunity. BCG is recognized for expanding its deep regional

insights in emerging economies supported by investments and proprietary resources,

including BCG's China Center for Consumer Insight.

As a company culture, BCG grows organically. Geographic areas of expansion for

BCG in 2011 included Morocco, Africa; Istanbul, Turkey; and Canberra, Australia

(sites of three new offices for BCG). Another area of growth for BCG is focusing on

public issues and financial services clients. In Mexico and Latin America, BCG has

been aggressive in preparing services around IFRS compliance by training staff and

reducing services costs.

BCG advocates for a systemic approach to some of the major concerns facing

government organizations today: the growing pressure to get more results out of

decreased funding; the difficulties in balancing economic and environmental

necessities when addressing climate change; the need for effective and efficient

social services in light of changing populations and demographics; and the mandate

for transformation within large and complex government organizations. With that in

mind, BCG works with clients to leverage its capabilities in three primary areas. First,

its "Lean Productive Government" approach brings private sector best practices to

areas of the public sector, including justice, health, welfare, defense, transportation,

and education. Second, BCG's public sector sustainability and energy practice

merges energy industry knowledge with public sector capabilities and social

impact/sustainability experience. Third, the company's IT capability enables

governments to get more out of its tech investments — delivering programs on time

and on budget and optimizing sourcing strategies, for example.



14 #242453 ©2013 IDC

For business consulting overall, BCG is seen as better than many of its peers at

helping clients expand into new markets or geographies.


To advance as a leader in the U.S. Smart Cities sector, BCG must significantly improve

client perception of its ability to help enterprises create a more effective business as wellas its ability to provide industry insights and competence. Additionally, BCG should

improve client perception of its ability to deliver value-creating innovation, directly

improve clients' overall mission performance, help drive innovation through an

organization, and integrate appropriate analytics into the engagement.

CSC

According to IDC analysis and buyer perception, CSC is an IDC MarketScape Major

Player for business consulting for U.S. Smart Cities projects.

CSC provides technology-led consulting to support the business and mission needs of

clients, with approximately 96,000 employees as of September 2012. CSC has

locations in 70 countries and offers consulting, systems integration, and outsourcing

services organized in two main business units — Global Business Services (GBS),

which includes consulting and systems integration, and Global Infrastructure Services

(GIS) — and three incubator offers: cyber, cloud, and Big Data. CSC serves Global

1000 companies and national and local governments through five industry verticals:

financial services, health services, manufacturing/A&D, public sector, and diversified.

CSC is one of the last remaining independent IT services companies with global reach.

CSC reports that in 2012, its GIS service line accounted for 40% of its revenue, while

consulting contributed 20%. Applications, industry software, and others contribute the

remaining 40%.

With a new CEO, CSC has announced a multiyear transformation plan to fix the

foundation in terms of costs, expand market coverage and drive demand, move up

the value chain, scale next-generation infrastructure, and rationalize and standardize

offerings. While the consulting workforce is globally balanced, different regions have

developed particular strengths such as banking, insurance, retail, transportation, and

manufacturing in continental Europe; public sector and healthcare in the United

States and the United Kingdom; utilities in Latin America; and natural resources and

public sector in Australia. The group has globalized these horizontal and vertical

practices to radiate solutions to all regions.

Growth at CSC comes from both acquisitions and targeted moves to increase market

share organically. In 2011, CSC made the following acquisitions: finalization of the

acquisition of iSOFT Group Ltd., one of the world's largest providers of advanced

healthcare IT solutions; VIXIA Consultoria e Tecnologia Ltda., a São Paulo, Brazil-

based IT services firm focused on providing core operational software, business

consulting, and systems integration services to leading insurance, reinsurance, and

financial institutions in Brazil; Maricom Systems Inc., which provides business

intelligence and data management solutions that support mission-critical health

information technology systems within the U.S. Department of Health and Human



©2013 IDC #242453 15

Services (HHS); and AppLabs Technologies Pvt. Ltd., the world's largest pure-play

software testing and quality management service provider.

Through its Leading Edge Forum (LEF) and the Barometer program, CSC continues

to publish research that supports its growth strategy. In 2011, the LEF published a

series of reports to glean new insights from data: Big Data and Data rEvolution.

Survey results include Global CIO and SRM, as well as Customer Intimacy in Europe.The Barometer program also includes surveys for other CXO functions including

human resources (HR), finance, and payments.

CSC believes that governments operate more effectively with the right technology

and partners with clients to develop systems that will help them address some of their

biggest challenges. Much of CSC's tech-driven approach is focused on government

clients in the United States and leverages IT solutions such as cloud, cybersecurity,

communications, virtualization, datacenter, and infrastructure. This practice offers

specialized business and technology capabilities, from mission and strategy

development to business and policy impact analysis. In addition, BCG offers deep

strategic expertise in functional areas as well as the service-oriented architecture,

enterprise transformation, and technology solutions that support them.

For example, CSC has worked with state health departments in Massachusetts

(designing and launching a first-of-its-kind Web site to connect the uninsured with

universal coverage); New York (implementing the country's largest, most technically

sophisticated Medicaid Management Information System [MMIS]); and North Carolina

(replacing the state's MMIS with a new healthcare administration system to manage

other state agency health services in addition to Medicaid). CSC also worked with the

state of California to migrate its multiple email applications to a cloud-based solution

and the Maryland Department of Transportation to implement the Coordinated

Highways Action Response Team, the first U.S. statewide intelligent transportation

system, to improve highway safety and operating efficiency. The system monitors

data traffic cameras, road sensors, and speed detectors and then shares it with more

than 30 state agencies and the public. On the municipal level, CSC partnered with the

city of Knoxville, Tennessee, to manage rising costs from work-related injuries by

implementing software for risk management and claims processing, which ultimately

lowered workers' compensation claims by $3 million.

CSC's deep industry and business process expertise provides a lens through which

CSC's broad spectrum of capabilities focus on client needs. The ability to expand

across all regions and across all lines of service is the foundation for CSC's future

growth.

For business consulting overall, CSC is seen as among the most capable at helping

drive innovation through a client organization.


In the U.S. Smart Cities sector, CSC is seen as most capable of all firms at helping

drive innovation through an organization and at integrating appropriate analytics into

an engagement. In addition, CSC is viewed as being among the most capable firms

at maximizing the value of a project and is considered to be better than many of its

peers at delivering value-creating innovation, directly improving clients' overall



16 #242453 ©2013 IDC

mission performance, helping enterprises create a more effective business, and

transferring knowledge to the client. However, CSC must significantly improve client

perception of its ability to integrate risk awareness and solutions within other

consulting engagements, to leverage local and global staff appropriately, and to

provide the necessary spectrum of business consulting services.

Deloitte

According to IDC analysis and buyer perception, Deloitte is an IDC MarketScape

Leader for business consulting for U.S. Smart Cities projects.

Deloitte is a global professional services organization, with more than 200,000

practitioners in 150+ countries. As a multiservice consultancy, Deloitte's depth andbreadth of capability is key to its business-led approach. Services include:

Enterprise risk

Finance services (including audit and tax advisory services)

Human capital

Strategy and operations

Technology services (full life-cycle technology including advise, implement, and

manage)

As a provider of both assurance and advisory services, Deloitte does not provide

consulting services to its audit clients but does benefit from the strong clientrelationships it has established with audit customers.

Deloitte advocates its proposed value of "executable strategy" with a broad services

footprint to help clients from strategy development to execution. Deloitte believes this

differentiates it from both the newly rejuvenated consulting offerings of the Big Four firms and the traditional or pure-play firms as well as outsourcing-led competitors.

Deloitte is the only firm among the Big Four firms not to have divested itsmanagement consulting and technology business nearly a decade ago. Deloittecredits its strong growth to its breadth and depth of services, global reach with localperspectives, industry insights, and client-centric approach.

Deloitte has industry specialties in all major sectors, including consumer business and

transportation, energy and resources, financial services, life sciences and healthcare,manufacturing, public sector, real estate, technology, and media and

telecommunications. Deloitte continues to evolve its industry model, serving 30 micro-industry sectors across capabilities and geographies.

Deloitte is focused on advancing its innovation culture and is investing in this area.

John Levis was appointed global chief innovation officer to lead both innovation and

Deloitte's integrated market offerings (IMOs). Deloitte has released an innovationframework called Four Cornerstones Innovation Framework and has recentlyexpanded its Global Innovation Ecosystem.

A key output of its innovation process is a portfolio of global integrated market

offerings in which the firm integrates skills from a variety of practices and geographies

across its service lines. The firm has a mature set of global IMOs through which



©2013 IDC #242453 17

Deloitte has enjoyed good momentum in the past several years and is continuouslyincubating new areas of investment. Its current IMO portfolio includes such areas asanalytics, finance transformation, IFRS, M&A, risk, and sustainability.

Deloitte also announced the launch of Deloitte Digital. Deloitte Digital combines thestrengths of a creative agency, an IT consultancy, and an industry-centric business

strategy provider into a single consultancy. Deloitte expects to help clients unleashthe business value of these emerging technologies and domains. Deloitte Digital

includes Deloitte's online- and subscription-based services to support the company'sclient demand for data and advanced analytics and for alternative delivery models.

Deloitte is recognized as an employer of choice, as evidenced by its recognition in manyindependent rankings in North America, Europe, the Middle East, and Asia. Deloitte is

known for promoting flexibility and customization for each individual employee's career path via its mass career customization (MCC) program and its development and

adoption of corporate lattice career model where employees no longer move up and outin the antiquated "corporate ladder" structure but move more fluidly and flexibly

throughout the organization as desire and demand requires. Deloitte has also madesignificant investments in training and education for its employees with Deloitte

University, a state-of-the-art leadership development center near Dallas, Texas, whichformally opened in October 2011. Deloitte University served more than 40,000professionals from 70 countries over the past year. Deloitte is currently assessingwhether to stand up similar campuses in Europe and Asia/Pacific.

Deloitte's growth is both organic and through acquisition in key areas. Deloitteannounced its plans this year to invest in certain priority markets, announcing a

combined $750 million investment over the next three years in 11 priority markets.The investment program aims to expand client service and industry capabilities,

bolster the hiring and deployment of top talent, and cultivate innovative new servicesand multidisciplinary offerings. In its last reported fiscal year 2012, Deloitte

successfully completed 30 strategic acquisitions in its developed markets as well asDeloitte's priority markets and capability areas. Focused on acquiring assets of

strategic importance such as strategy, digital, analytics, software as a service (SaaS),financial advisory, legal services, and consulting, several of the more recent high-profile transactions were:

Aggressor, merging with existing capabilities to position Deloitte as a leading

Workday integrator

Bersin & Associates, a provider of research-based membership programs and

advisory services in the human resources, talent, and learning market

CRG, in the financial advisory area, to grow its financial restructuring, turnaround

management, and bankruptcy reorganization capabilities

Monitor Group, a leading global pure-play strategy firm, to enhance Deloitte's

broad-reaching strategy and execution presence

Übermind and Daemon Quest to build upon its Digital and Customer capabilities

Deloitte's U.S. State Sector practice has been serving state and local governments as

well as higher education institutions for over 46 years. Applying a broad range of

services including consulting, enterprise risk, tax and financial advisory services,



18 #242453 ©2013 IDC

Deloitte has worked with its clients to address their complex challenges and take on

many of their most pressing issues. Over the past 5 years, Deloitte has served 47 of the

50 states, 8 of the 10 largest cities, and more than 200 institutions of higher education.

Deloitte's U.S. State Sector practice focuses on the delivery of government

transformation projects with a particular emphasis in health and human services,

finance and administration, higher education, transportation, and labor andemployment. Deloitte creates integrated and sustainable solutions focused on helping

clients address a full spectrum of concerns — including fiscal, process, policy,

security, and technology. The company's research and insights analyze the major

strategic, organizational, and technical issues facing state and local government

organizations today and help clients understand how to apply leading best practices

in disruptive innovation, emerging technologies, and new business models.

The development of new cutting-edge services and recent acquisitions further

strengthen Deloitte's footprint in the state sector industry. The acquisition and

integration of Monitor has extended Deloitte's strategy and innovation capabilities,

enabling the firm to capitalize on its deep industry experience and collaborate with

clients to create executable strategies — seeing them through to implementation.Deloitte's "Deloitte Digital" service line provides a range of cutting-edge technical

services including strategy, mobile, social, Web, and digital content development,

further positioning Deloitte to help states make significant strides in advancing their

technical solutions and interactions with citizens. Finally, Deloitte's Innovation

Centers, particularly, the Center for Health Solutions, the Center for Cyber Innovation,

and the Center for Federal Innovation have delivered research and solutions to help

state government clients creatively address top-of-mind issues including health

reform, security and privacy, and complex data analytics. The combination of deep

sector experience, research, and resources has positioned Deloitte to be a firm that

states regularly turn to work through their most complex issues.

For business consulting overall, Deloitte is considered to be the strongest of all firms

across a number of key metrics. Deloitte is viewed as the most capable at integrating its

project team with a client, maximizing the value of a project, meeting project timelines,

and providing the necessary spectrum of business consulting services. Deloitte is also

considered the best in the field when it comes to helping enterprises comply with new or

existing regulations and leveraging local and global staff appropriately.


In the U.S. Smart Cities sector, Deloitte is seen as among the most capable of all firms

at helping enterprises create a more effective business. Deloitte is also considered to be

better than many of its peers at helping drive innovation through an organization,

maximizing the value of a project, providing industry insights and competence, andproviding the necessary spectrum of business consulting services. Conversely, Deloitte

must significantly improve client perception of its ability to integrate risk awareness and

solutions within other consulting engagements and its ability to transfer knowledge to

the client. In addition, Deloitte should improve the perception of its ability to directly

improve clients' overall mission performance, integrate appropriate analytics into an

engagement, and leverage local and global staff appropriately.



©2013 IDC #242453 19

EY

According to IDC analysis and buyer perception, EY is an IDC MarketScape Major


EY is a partnership with 167,000 professionals as of June 2012 across 140 countries

globally. With the appointment of Mark Weinberger as the global chairman and CEO,

the professional services organization announced the adoption of EY as its global brand

name, unveiled a new logo, and adopted "Building a better working world" as its

purpose. EY's core business consulting services sit within EY's advisory organization

and include service lines of risk advisory and IT risk advisory, as well as performance

improvement (PI). EY also offers business consulting services beyond its advisory

organization, including post-transaction integration services (transactions), tax-effective

process advisory (e.g., supply chain and human capital) (tax), fraud investigation and

disputes management (assurance), climate change and sustainability, and financial

accounting advisory services (assurance). EY is well recognized for these capabilities in

assurance, tax, and transactions, which sit outside of its advisory organization.

EY is focused on growth in its business performance improvement and risk practices. Analytics is an important growth area to EY in both risk and PI, as evidenced by EY's

recent continued acquisitions in this space. In 2011, these acquisitions included ISA

Consulting (April — Americas) and Partake Consulting (May — Europe, the Middle

East, India, and Africa [EMEIA]). EY has a globally integrated practice that serves large

global companies as well as medium-sized global, regional, and national organizations

and strategic growth companies. EY relies on its extensive business network to

leverage long-term relationships with CFOs and other senior CXO executives. While EY

is not targeting specifically the strategy consulting or enterprisewide systems integration

markets, it considers its strategy and technology expertise as key enablers for its PI and

risk services. This approach is aimed at maintaining EY's objectivity in the advice the

company gives to clients. EY maintains strong relationships with and expertise in

leading technology vendors and their products to ensure the company's professionalshave the highest levels of technical expertise.

EY's global reorganization has helped the firm deliver on engagements with clients

globally. From 2009 to 2011, EY integrated its organization to form single

management units in its Americas, EMEIA, and Asia/Pacific regions. EY has been

investing in emerging markets and has built dominant practices in a number of

geographies. Within its advisory service line, in 2012, EY experienced tremendous

growth in Brazil, CIS, Korea, Sub-Saharan Africa, India, Mexico, Japan, Canada,

Latin America, Belgium, the Netherlands, Germany, and Nordics.

EY has continued to invest heavily in building its capabilities through bringing in

groups of partners and other senior professionals from other consulting firms. Thishas been particularly significant in EY's performance improvement business, where it

has increased staff numbers by over 40% without any large acquisitions. The

following organizations have been brought into EY in the past 12 months, bringing

key skills to specific geographies: Axia Value Chain — cross-performance

improvement (Brazil, December 2012), Resolve Group — HR and change

management (South Africa, October 2012), Q-Core Consulting — financial services

and analytics (South Africa, June 2012), Arrows Consulting — performance



20 #242453 ©2013 IDC

improvement and BI (Japan, January 2012), Life Time Partners — healthcare

(January 2012), Galgana — performance improvement (Spain, December 2012).

Through its Global Enablement Center, EY supports and leads global research and

innovation initiatives. EY also develops and delivers enhancements and extensions to

its core methodology and accelerator as well as enhancements in its process and risk

models. Four recent enablement center offering developments are enterpriseintelligence, risk transformation, cost of controls, and finance transformation.

EY has also established centers of excellence in its regions around specific services.

For example, in EMEIA, there are supply chain, customer, finance transformation, risk

transformation, IT transformation, information security, and outsourcing advisory

centers of excellence. EY has also developed strong collaborative relationships with

leading research/academic institutions, including the Risk Innovation Board, Tapestry

Networks, and Innovation Value Institute.

EY's service lines are integrated in front of the client through the role of the client

service partner (CSP), a dedicated relationship management role. CSP's relationship

role helps bring together services from across the whole of EY. EY does bringtogether such integrated services that pull from across all of its services. An example

is tax-effective supply chain management that helps transform global supply chains

through a holistic approach, which spans operations, tax, and risk.

EY delivers through sectors and is deeply investing into sector-specific process and

risk models (which include benchmarks from external sources like APQC and EY's

own metrics) to deliver sector-specific value propositions. Consulting services most in

demand in the past six months have included comprehensive enterprisewide cost

reduction, analytics and enterprise intelligence, and information security and services

to support organizations looking to grow their emerging market presence.

EY has recently launched eight regional risk centers of excellence in growth andemerging markets that will act as hubs for services addressing strategic, operational,

financial, IT, and compliance risks across each region and offer insight into local laws

as well as local business and industry practices against a robust backdrop of global

risk methodologies and international standards.

EY acknowledges that policy makers are faced with rapidly evolving dynamics,

involving such long-range and systemic trends as changing demographics,

urbanization, and climate change. Add to this the ongoing fallout from the economic

crisis — tight budgets, slow growth and high unemployment — and policy leaders

must now make do with less, tasked with delivering services in line with rising

expectations, while somehow boosting productivity and efficiency. EY works with

clients in the government and public services sectors, with the aim of creating anentrepreneurial spirit, shaping policy and strategy, delivering performance

improvement and organizational change, and harnessing funding and procurements

through alliances with the private sector, as well as the full range of assurance, tax,

advisory, and transaction services.



©2013 IDC #242453 21

For business consulting overall, EY is seen as among the most capable of all firms at

challenging corporate culture and at supporting business changes across a client

organization.


In the U.S. Smart Cities sector, EY is seen as most capable of all firms at helpingenterprises create a more effective business and at leveraging local and global staff

appropriately. Additionally, EY is viewed as among the most capable at directly

improving a client's overall mission performance, providing industry insights and

competence, and offering the necessary spectrum of business consulting services.

EY is seen as better than many of its peers at helping drive innovation through an

organization, integrating appropriate analytics into an engagement, maximizing the

value of a project, and transferring knowledge to the client. Conversely, EY is seen to

need significant improvement in how clients perceive its ability to integrate risk

awareness and solutions within other consulting engagements.

IBM

According to IDC analysis and buyer perception, IBM is an IDC MarketScape Leader

for business consulting for U.S. Smart Cities projects.

IBM is one of the largest multidisciplinary consulting firms, with more than 200,000

employees globally in its combined services business and serves clients in more than

450 locations across 170 countries. IBM provides consulting services across a wide

range of topics, functions, and industries. IBM has over 4,500 dedicated public sector

professionals and provides consulting services to state and local agencies and

organizations. IBM provides planning and management services for smarter public

safety, urban planning, and building management, along with agency administration

using social collaboration and cloud computing. IBM's infrastructure services help

improve local governments' transportation, water, and energy systems. IBM's humanservices help improve agency social programs, healthcare, and education.

In November 2012, IBM debuted a perspective that the world has been fundamentally

transformed by rampant availability of data. This shift has created profound changes in

how enterprises engage with customers, citizens, employees, and partners. IBM calls

this new agenda "Front Office Transformation" and states it has two fundamental parts:

The Digital Front Office: Rethinking of everything related to how people

connect, transact, and engage with institutions, governments, and companies —

and how they create and capture value

The Globally Integrated Enterprise: Transforming operations and infrastructure

to optimize resources, enabling and funding these new ways of engaging, and

becoming integrated, flexible, streamlined, and agile

IBM proposes that market-leading enterprises of the future will focus in both areas —

improving service through a digital transformation of customer interactions and

improved productivity through global integration. IBM believes that clients started on

this journey from one of three points — some started, for example, with a predictive

analytics or digital marketing project to address a specific business concern, others



22 #242453 ©2013 IDC

started with a modernization project to find efficiencies to fund front-office innovation,

and some have boldly taken on both approaches at the same time.

IBM's ability to help clients achieve this new agenda is supported by a comprehensive

IT consulting services and industry-specific IT and business solutions, like business

analytics and Big Data, social business, smarter commerce, IBM's Intelligent

Operations Center for Smarter Cities platform, and IBM's interactive, enterpriseapplication, and application management services. At the forefront of IBM's

capabilities for Front Office Transformation is its Strategy and Transformation

practice, which has dedicated consulting teams for both the "front-office digitization"

and the "globally integrated enterprise." Additionally, Strategy and Transformation has

five functional areas: customer value strategy, finance and risk, operations and supply

chain, technology strategy, and organization and people.

IBM Strategy and Transformation consultants bring IP-based assets and accelerators

to client engagements to deliver tangible benefits and provide an integrated,

collaborative, and systematic approach to accelerate transformations. Unifying market

offerings with both a technology and a business perspective does benefit clients,

particularly when clients are faced with technology-rooted operational changes.

For example, IBM's offerings for the Globally Integrated Enterprise are based on a

four-phased methodology — integrate, standardize, optimize, and elevate through

analytics — each with specific assets created and harvested from client

engagements.

Additionally, IBM will deploy its own internal functional experts from within IBM's

finance, supply chain, and other departments to work directly with clients to share

best practices from IBM's own transformation journey. These capabilities are often

delivered to clients through Business Value Accelerator solutions, three- to six-week

engagements that align the client's business and technology priorities.

Through its Front Office Transformation strategy, IBM has expanded capabilities in

areas that align with IBM's Smarter Cities growth priorities. The focus on Front Office

Transformation is rooted in the explosion of data and opportunity resulting from the

widespread adoption of technologies, like social business and analytics, by

individuals and the instrumentation of business that is reshaping the possibilities for

business innovation. In 2012, IBM trained 1,000+ management consulting partners on

these growth initiatives, and that program is expected to grow in 2013.

IBM has also made significant investments in collaboration, knowledge management,

and assets by deliberately creating a culture of knowledge sharing and collaboration

that rewards consultants that contribute and reuse knowledge.

IBM has been at the forefront of the rise of new mission customers as influential IT

decision makers. In 2012, IBM launched a systematic effort to accelerate

development of the marketing function as a core buyer of technology-enabled

solutions. IBM hosted a series of CFO, CMO, and CIO Leadership Exchanges, which

brought together hundreds of senior client leaders in the United States, Europe, and

Asia/Pacific to better understand the challenges and opportunities presented by the

digitization of front-office functions. IBM has also developed a series of priorities for



©2013 IDC #242453 23

leadership in the new connected era, underscored by IBM's own leadership who's

taken a personal role in publicly shaping their profession.

IBM GBS continues to engage senior business leaders through its C-suite thought

leadership developed by the IBM Institute for Business Value. In 2012, GBS

published the largest ever study of CEOs/government leaders, finding that the issue

they believe impacts their enterprises the most is no longer macroeconomic trends or talent or regulations — but technology trends and the enterprise's ability to adapt

quickly enough to capture a competitive advantage.

For business consulting overall, IBM is seen as the most capable of all firms across

several categories. Clients consider IBM the most capable of all firms at challenging

corporate culture, delivering value-creating innovation, and providing functional or

technical insights and competence. IBM is also seen as the most capable in its ability

to help clients expand into new markets or geographies, drive innovation through their

organizations, and improve their operational efficiency.


In the U.S. Smart Cities sector, IBM is seen as better than many of its peers at

directly improving clients' overall mission performance, helping drive innovation

through an organization, helping enterprises create a more effective business,

integrating appropriate analytics into an engagement, and leveraging local and global

staff appropriately. IBM is also considered to be better than many of its peers at

integrating risk awareness and solutions within other consulting engagements,

maximizing the value of a project, providing industry insights and competence, and

offering the necessary spectrum of business consulting services. Conversely, IBM

should improve the perception of its ability to transfer knowledge to the client.

KPMG

According to IDC analysis and buyer perception, KPMG is an IDC MarketScape Major


KPMG is a global network of professional firms providing audit, tax, and advisory

services. The company operates in 156 countries and has more than 152,000 people

working in member firms around the world. The independent member firms of the

KPMG network are affiliated with KPMG International Cooperative ("KPMG

International"), a Swiss entity. KPMG's Advisory service areas include management

consulting, risk consulting, and transactions and restructuring.

KPMG firms focus on the needs of clients, assessing what they require to achieve

their objectives and then working across the globe to deploy the right skills and

experience to deliver consistent, measurable value. KPMG's network of firms brings

industry-specific solutions to address key client issues such as adapting to a

changing world, efficiency and cost management, customer growth, embedding

regulatory change, talent and human capital management, data, and insight and

technology. KPMG professionals can provide value to clients with a keen ability to

combine functional, operational, and technology consulting skills with deep

experience in audit, risk, regulatory, tax, and M&A issues.



24 #242453 ©2013 IDC

KPMG's State and Local practice's 1,400 professionals (across audit, tax, and

advisory) serve over 50% of the states, 60% of the largest cities, and 50% of the

counties in the United States, with particular expertise in the areas of finance and

accounting, transportation, health and human services, justice and security,

education, and public retirement systems.

KPMG assesses the needs of its state and local government clients by examiningthree main categories, namely:

Business and service strategies

Information technology enablers

Organizational enablers

Within each of these categories, KPMG has identified 20 electronic government

elements that can be rated in terms of five stages in a life cycle of maturity. This

framework demonstrates where state and local governments are in need of extending

their capabilities. The gaps in the "as-is" and "to-be" maturity assessment are thenused to assist clients in driving execution and transformation.

KPMG's Cities Global Center of Excellence is composed of a dedicated team that

brings together subject matter experts and industry professionals from around the

world to share leading practices, knowledge, and experience. The Cities Global COE

mission is to advise and support the sustainable development of cities and the

effective provision of city services. One of the key services offered to KPMG clients

through the Center is Information and Communication Technology (ICT) Innovation,

including support for Smart City initiatives.

KPMG's Cities Global COE uses an innovative Municipal Reference Model (MRM)

that was developed collaboratively by KPMG and numerous municipalities. MRMassists and guides the implementation of new municipal transformation solutions.

KPMG has demonstrated the use or application of the reference model on

approximately 60 engagements, ranging from initiatives looking to reorganize city

departments, to establishing a stronger governance framework, to developing Smart

City solutions. At the core of the MRM is the concept of a city service, such as

drinking water supply or garbage collection. One of the more progressive uses of the

MRM is its ability to assist in bundling services. A typical city, for example, can bundle

its services by several categories, including life-cycle stage (youth, adults, seniors),

target group (unemployed, property owners, homeless), life event (about to move, just

married, retiring), and needs (income, food, shelter). Service bundling for Cities

enables them to become more "client centric" by offering electronic services in a

manner that is more intuitive than traditional techniques.

For business consulting overall, KPMG is viewed as the most capable of all firms at

helping clients comply with regulations and at integrating risk awareness and

solutions within other consulting engagements.



©2013 IDC #242453 25


In the U.S. Smart Cities sector, KPMG is seen as among the most capable firms at

directly improving a client's overall mission performance, helping enterprises create a

more effective business, and providing the necessary spectrum of business

consulting services. KPMG is perceived as better than many of its peers at helping

drive innovation through an organization, integrating appropriate analytics into anengagement, leveraging local and global staff appropriately, and maximizing the

value of a project. KPMG is also viewed as better than many of its peers at providing

industry insights and competence and at transferring knowledge to the client.

Conversely, KPMG should improve client perception of its ability to integrate risk

awareness and solutions within other consulting engagements.

McKinsey

According to IDC analysis and buyer perception, McKinsey & Co. is an IDC

MarketScape Major Player for business consulting for U.S. Smart Cities projects.

McKinsey is a globally recognized strategy consulting firm that was founded in 1926.

McKinsey provides a combination of strategic and operations management services

and has approximately 9,000 consultants in 90 offices across 51 countries. McKinsey

defines its seven core functional practices as business technology office, corporate

finance, marketing and sales, operations, organization, strategy, and risk. The firm

organizes by industry specializations across 19 industry areas. Recently, McKinsey

launched a special initiative dedicated to sustainability. Additional offerings include

solutions that cover a range of current issues that are also organized by function and

industry: global banking pools, climate desk, granular growth, and 16 others.

McKinsey is often recognized as a leader among strategy firms. However, it is the firm's

operations management consulting work that is growing as a result of client interest in

the implementation of "actionable strategy." McKinsey responded to this demand with

its recently launched McKinsey Solutions. This group of services is based on the firm's

most distinctive and "packageable" proprietary knowledge (i.e., services based on

proprietary databases, models, tools, and insights). These packaged services typically

include an online service delivery platform (software as a service), enabling clients to

make informed business decisions on a variety of topics in different functions (e.g.,

pricing), sectors (e.g., banking), and regions (e.g., China). This globally operating group

within the firm has a central hub in Europe (Brussels/Louvain-la-Neuve, Belgium) and a

rapidly increasing presence in North America and India.

McKinsey serves numerous clients in the banking and financial services sectors. The

financial services practice provides deep functional and regional expertise and

capabilities that address strategic needs for all types of financial service institutions,from small banks to large investment institutions. McKinsey's Branch Insights solution

area provides retail banks with an online platform to track and manage branch

performance, providing actionable change based on utilization metrics. Within its

functional areas of expertise, McKinsey remains relevant with thought leadership and

studies focused on cost cutting in the finance organization. For instance, McKinsey

draws comparisons between cost-reduction strategies and building appropriate

functional competencies in its May 2010 research titled Five Ways CFOs Can Make

Cost Cuts Stick.



26 #242453 ©2013 IDC

Through the McKinsey Center for Government (MCG), McKinsey brings external

experts together with its own practitioners to create a network for research,

collaboration, and innovation in government. Fusing both new and proven knowledge

and tools, MCG works with governments and agencies dealing with limited resources

to overcome challenges, build capabilities, continuously improve performance, and

deliver more to constituents, all in an environment of limited resources. McKinsey

believes that the execution issues in IT and infrastructure can be only partly solved by

employee training; what's perhaps even more essential is enabling a shift in mindsets

and behaviors. Additionally, overreliance on contractors can hamper the skills

agencies need to build in their organizations; therefore, McKinsey believes agencies

must learn how to work effectively with contractors, not be wholly dependent on them.

Governments need to excel in four areas, according to McKinsey: project

management, purchasing, process and customer service, and strategic planning. By

building strengths in those functions, governments can avoid the most common

stumbling blocks in IT, operations, and strategy.

One of McKinsey's areas of focus is regulation in the field of public protection, including

both regulatory and law enforcement agencies. As these organizations come under

increased scrutiny with regard to their ability to anticipate threats, balanced with

concerns about costs to tax payers and potential invasion of privacy, McKinsey believes

they must rethink core management functions — such as strategic planning, risk

management, performance management, and recruiting and hiring — to make better

decisions and improve cost effectiveness. In concert with these practice areas, KPMG is

studying in depth two areas critical to preserving public safety. The first area is

cybersecurity; securing cyberspace is of paramount importance to governments, yet

they have an insufficient understanding of the scale of the challenge. McKinsey believes

that attacks on government data and systems, critical national infrastructure, and private

enterprises' intellectual property carry the most risk, and the company has identified the

elements of a next-generation cyberdefense and is conducting ongoing research on the

primary threats that governments face as well as the various levers (such as taxstrategy or civil litigation) they can use to counter these threats. Second, the company is

researching connectivity with food and drug regulation in a global benchmarking and

knowledge-development effort that covers topics important to food and medical-

products regulators, such as inspection programs, the root causes of product recalls,

and approaches to managing drug shortages. In medical-products regulation, MCG

focuses on a number of specific issues, including enhancing human-subject protection

in clinical trials and improving the security of the supply chain.

With governments facing significant fiscal concerns, public finance is under intense

pressure to increase transparency and improve performance. McKinsey's work in

public finance addresses a broad array of issues, from examining macroeconomic

trends and performing expenditure analysis to assessing and quantifying risk,redesigning IT infrastructure, and exploring new methods of revenue generation.

Recent projects include developing a compliance and collections improvement

strategy for a national tax authority and helping a government lender streamline the

loan-approval process, yielding a 70% decrease in backlogs as well as an increase in

employee morale and customer satisfaction.

For business consulting overall, McKinsey is seen as among the most capable of all

firms at helping clients expand into new markets or geographies.



©2013 IDC #242453 27


In the U.S. Smart Cities sector, McKinsey is seen as better than many of its peers at

integrating risk awareness and solutions within consulting engagements. In terms of

opportunities for advancement, McKinsey must significantly improve client perception

of its ability to deliver value-creating innovation, directly improve a client's overall

mission performance, help drive innovation through an organization, and helpenterprises create a more effective business. With regard to the assets its teams

bring to an engagement, McKinsey must significantly improve client perception of its

ability to integrate appropriate analytics, leverage local and global staff appropriately,

maximize the value of a project, and transfer knowledge to the client.

PricewaterhouseCoopers

According to IDC analysis and buyer perception, PricewaterhouseCoopers (PwC) is

an IDC MarketScape Leader for business consulting for U.S. Smart Cities projects.

PwC is a Big Four global professional services organization, established as a global

network of member firms, with more than 30,000 people in 77 locations across the

United States. PwC serves client organizations across all industry sectors andfunctional areas. PwC provides services through three divisions or "lines of service":assurance, tax, and advisory. From strategy through execution, PwC Advisory helps

clients build their next competitive advantage. Its Assurance practice collaborateswith clients so that the financial information they report to the investing public and

other stakeholders is clear and reliable. Through its Tax practice, PwC assistsbusinesses, individuals, and organizations with tax strategy, planning, andcompliance, while also delivering a wide range of business advisory services.

PwC's Center for State and Local Government is organized within the Public Sector

Practice. Nearly 10,000 PwC partners and staff around the world are servinggovernment and public services clients.

PwC's vision for its State and Local Government Practice is to "help state and localgovernments connect citizens to government, plan and drive investments, and increaseefficiency to promote long-term economic, environmental, social, and culturalprosperity." Within the execution of this strategy, PwC focuses its service offerings onthe trends that impact all levels of state and local government around the nation:

Economic development focuses on driving action to promote economic growth

and sustainable development, generate employment opportunities, and realizesustained economic development.

Sustainability focuses on promoting sustainability, integrating sustainable

development concepts into broader operations, and realizing cost efficiency andshort-term and long-term benefits from sustainability initiatives.

Health focuses on understanding changing demographics, innovation in care

and management, cost pressures, and legislative change and managing care for millions of citizens, including paying, providing, measuring, and regulatinghealthcare through regulatory and policy analysis, business processreengineering, health IT systems design, and strategic program management.

Utilities focuses on strategy, planning, and implementation advice to utilities that

receive public funds, including large power, water, and energy companies.



28 #242453 ©2013 IDC

Transportation focuses on working collaboratively to rethink service delivery

models, plan for future investments, and deliver on the promise of technology

and innovation through strategy, analytical, and program management services,as well as specific support in key areas such as transportation payments, asset

management, customer engagement, capital improvements, technologymanagement, and operational efficiency.

Fiscal management focuses on wide-reaching financial implications of state and

local government decision making, including expenditure analysis, revenueanalysis, investment optimization, sourcing strategies, and public/privatepartnership structuring.

Program management focuses on a strategic approach to managing projects

across agencies and organizations, program management, project management,quality assurance, vendor management, procurement management, andprogram management competency design.

Technology focuses on how to get the most of technology assets, ensureorganizational and technology goals are aligned, plan for future technology

investments, address enterprise architecture planning needs, develop focusedtechnology strategies, conduct transparent technology selections, execute

technology organizational improvements, deliver technology projectssuccessfully, evaluate information security, and ensure business continuitymanagement.

Operations and organization focuses on efficient operations, aligningoperations with organizational goals and executing on operational improvements

through supply chain optimization, customer contact operations, maintenance,asset management, payment processing, and administrative functions.

Additionally, it focuses on understanding staff ing needs to design more effectiveorganizations and to manage organizational change, as well as specializedshared services, talent management, and compensation planning services.

Strategy focuses on organizational mission, vision, and high-level goals and

translates these into tangible strategic plans and specific actions throughexecutive working sessions, extensive benchmarking, organizational analysis,

and performance management to build strategies, plan for execution, andevaluate progress.

Through a continually evolving project created for cities, their leaders, businesses,

and citizens seeking to improve their economies and quality of life, PwC developed

the comprehensive study, Cities of Opportunity, which provides a framework for

thought and action among the world's and the United States' most significant cities.

The latest fifth edition includes analysis of 27 cities that exemplify a key capital

market center, represent a broad geographic sampling, and comprise both mature

and emerging economies.

For business consulting overall, PricewaterhouseCoopers is seen as most capable of

all firms at helping clients reduce costs and at leveraging local and global staff

appropriately.



©2013 IDC #242453 29


In the U.S. Smart Cities sector, PwC is seen as most capable of all firms at

integrating risk awareness and solutions within other consulting engagements and at

providing the necessary spectrum of business consulting services. Additionally, PwC

is considered to be among the most capable at helping drive innovation through an

organization, leveraging local and global staff appropriately, maximizing the value of aproject, and providing industry insights and competence. PwC is perceived to be

better than many of its peers at directly improving clients' overall mission

performance, helping enterprises create a more effective business, integrating

appropriate analytics into an engagement, and transferring knowledge to the client.

E S S E N T I A L G U I D A N C E

G u i d a n c e f o r B u y e r s o f C o n s u l t i n g S e r v i c e s

f o r U . S . S m a r t C i t i e s P r o j e c t s

Business requirements demand solutions that work holistically within an enterprise.These solutions are often complex and require a multiple domains of expertise and

stakeholders from a variety of areas to ensure success. As a result, consulting projects

are often complex. To maximize value and minimize disruption enterprise leaders must:

Assure project is strategically valuable to assure full organizational commitment

to change.

Create visible links between project strategy and "mission execution."

Integrate all impacted departments/LOBs throughout the project to ensure

stakeholder needs are fully satisfied.

Anticipate and address the common obstacles to successful consulting projects.

Avoid scope creep.

Plan for sufficient organizational change.

Commit sufficient internal resources to the project.

As Smart City projects often have a transformational component, it is also important

that city buyers begin to explicitly state the need for innovative solutions or ideas in

RFPs and throughout the procurement process. Cities often complain that consulting

firms do not bring innovation into the process as they would in private sector

accounts; this may be true, but part of the onus for this is on city buyers themselves.With procurement processes that are highly specific and often with rigid paperwork

requirements, cities must ensure that innovation and transformation are integrated in

to Smart City project requirements.



30 #242453 ©2013 IDC

L E A R N M O R E

R e l a t e d R e s e a r c h

IDC MarketScape: EMEA Business Consulting Services 2013 Vendor Analysis

(IDC #239504, February 2013)

IDC MarketScape: Worldwide Business Consulting Services 2013 Vendor

Analysis (IDC #239484, February 2013)

IDC MarketScape: Americas Business Consulting Services 2013 Vendor


IDC MarketScape: Asia/Pacific Business Consulting Services 2013 Vendor


IDC MarketScape: Worldwide Financial Services Consulting 2012 Vendor

Analysis (IDC #236018, July 2012)

IDC MarketScape: Worldwide Strategy Consulting Services 2012 Vendor


IDC MarketScape: Worldwide Operations Consulting Services 2012 Vendor


IDC MarketScape: Worldwide Finance and Accounting Consulting Services 2012

Vendor Analysis (IDC #236122, July 2012)

S y n o p s i s

This IDC study uses the IDC MarketScape model to provide an assessment of anumber of providers participating in the U.S. business consulting services for Smart

Cities market. The IDC MarketScape is an evaluation based on a comprehensive

framework and a set of parameters that assesses providers relative to one another

and to those factors expected to be most conducive to success in a given market

during both the short term and the long term.

"While consulting providers are generally perceived as capable, buyers of consulting

services believe consulting vendors sometimes fail to meet their projected return on

investment. This vendor analysis shows that some vendors are better able to produce

meaningful results than others." — Cushing Anderson, vice president, Business

Consulting Services research



C o p y r i g h t N o t i c e

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