Wyższa Szkoła Przedsiębiorczości i Zarządzania im. Leona Koźmińskiego w Warszawie

1. an EDS company Wyższa Szkoła Przedsiębiorczości i Zarządzania im. Leona Koźmińskiegow Warszawie Presentation “Strategic management consulting – the A.T. Kearney perspective” Warsaw, May 28, 2001

2. Agenda • Overview of management consulting • A.T. Kearney as a strategic management consulting firm • Consultant’s role in A.T. Kearney • The future of management consulting

3. Overview of management consulting

4. Overview of management consulting Today, one is confronted with a variety of consultants . . . . • Tax “consultants” • Hair “consultants” • Image “consultants” • Color “consultants” • Catering “consultants” What then, is “management consulting?

5. Overview of management consulting One definition . . . . Management consulting = assisting management in facilitating change to gain and sustain competitive advantage

6. Overview of management consulting Companies engage management consultants for several reasons — some good, some not so good Some reasons why companies hire consultants • The company does not have the necessary skills internally - Good reason • The company has never confronted this situation before - Good reason • Management needs fresh ideas and a new perspective - Good reason • Management wants the consultant to confirm its ideas - Not-so-good reason • Everyone in the company is too busy - Not-so-good reason • Management needs a “tie breaker” - Not-so-good reason

7. Overview of management consulting Why does management consulting seem to be growing in importance? • The nature of business is changing so rapidly that companies • Cannot provide for every eventuality in the organizational structure • Find it difficult to maintain permanent staff functions • Companies need “tailored” solutions to remain competitive in an increasingly global marketplace • The high cost of what management consulting provides can only be justified by companies on an outsourced, as needed basis

8. Overview of management consulting Why does there continue to be a demand for management consulting? • Most companies do not know how to • Analyze „themselves” in an objective way when business situations change significantly • Operate in a temporary, project mode • Unfortunately, most business schools do not • Prepare managers for “exceptions” in business situations • Teach real project management

9. A.T. Kearney (EDS) Overview of management consulting The major global management consulting firms concentrate in three areas of consulting; A.T. Kearney, together with EDS, cover the whole spectrum Operations Information technology Strategy • Process optimalization • Change management • Business process reengineering • Strategic sourcing • Supply chain management • Service level improvement • Benchmarking • Organization restructuring • Corporate strategy • Strategic business units • e-business strategy • Production strategy • Distribution strategy • Market entry strategy • Restructuring • System strategy creation • Information systems market analysis • Selecting appropriate IT solutions • Inplementation of selected IT solutions Accenture McKinsey CSC Index Monitor, BCG, Bain IBM Consulting Booz Allen “Big Five” firms

10. Overview of management consulting The world consulting market is estimated at $ 117 billion and is characterized by a double-digit annual growth. Consulting Industry Market Size and Growth Rates Per Annum Growth Rate (%) Market Size ($ B) IT projects to represent over 50 percent of the market Source: The Global Consulting Marketplace: Key Data, Forecasts & Trends 2000 Edition, Kennedy Information Research Group. Chart pertains to the market for consulting firms independent of hardware/software organizations

11. 1997 1999 1998 1996 1995 1994 2000 1992 1991 1990 1989 1993 Overview of management consulting The consulting services in Poland emerged after the transformation in 1989 with privatization; other segments of the market developed later Development of the consulting market in Poland Privatization consulting Audit and legal services IT consulting High value added consulting Start of the economic transformation

12. Overview of management consulting The development stages in Poland were significantly different than in Western Europe 1990 - 1993 1994 - 1997 1998 - 2000 External trends • Start of economic transformation • Privatization of state own enterprises • Fast growth of the economy • Development of the free market institutions (e.g. stock exchange) • Acquisitions by foreign investors • Consolidation of the economy • Increased competitive preasure • Acquisitions and post merger integrations • Big ticket privatizations Consultants’ value proposition • Privatization • Financial valuation • Privatization/Due Dilligence • IT consulting • Restructuring • Efficiency improvement • Reorganization/Reengineering • Strategy • IT consulting Major client group • State administration • Largest Polish state-owned enterprises • Foreign investors • Foreign investors • Largest Polish, privately owned corporations Key players • Small Polish companies • Smaller foreign companies specialized in financial / privatization consulting • Big five • Specialized Polish companies • Big five • A.T. Kearney • McKinsey • BCG, ... Key factors for success • Relationships • Prices • Local knowledge • Quality standards • Value added • Global network • Relationship Source : A.T. Kearney

13. Overview of management consulting The consulting market in Poland is still significantly different than in other countries Drivers Differences • Low sophistication of the market. Many potential clients do not recognize the need for consulting services • Brand names of global players not known • Consulting fees relatively higher in relation to personal costs • Two groups of clients: • International companies entering Poland • Largest Polish companies of which many are state owned • Local shortage of consulting and industry knowledge and experience • Market dominated by financial and tax advisory • Local consultancies enjoy important market position in Poland • Different product offerings and selling strategies for domestic and for international clients • Need to transfer knowledge and experience from developed markets

14. Overview of management consulting Consulting market in Poland is still dominated by financial and tax advisory services Percentage of companies using different consulting services Financial and tax advisory Quality management Business strategy Human resources Public relations Other Do not use consulting services Source : BOSS-Gospodarka

15. Overview of management consulting In parallel to world-wide brands, local consultancies enjoy important market position in Poland Polish subsidiaries of global consultancies Local companies • Dominant strategies: • Focus on long-term relationship with client • Focus on several key products / industries • Key success factors • Global network • Combination of industry and local knowledge • Tangible results • Targeted client segment • International companies • Largest Polish corporations from strategic industries • Products • Value added projects • Dominant strategies • Niche players • Specialization in one product / industry • Key success factors • Price • Personal relationships • Targeted client segment • Small and medium enterprises • State and local governments • Products • Off-the-shelf reports • Company valuations • Issuing prospectuses • Feasibility studies

16. Overview of management consulting Clients can be split into two groups having different expectations regarding consulting services Local clients International clients • Products • Market entry strategies • Distribution strategies • Post merger integration of acquired local companies • Efficiency improvement in acquired companies • Projects sold mostly outside Poland (at the HQ level) • Co-operation characteristics • Used to work with consultants • Used to consulting fees • Expect involvement of own staff • Value added driven • Products • Strategy development • Marketing strategies • Restructuring • Cost reduction • IT systems • Projects sold in Poland • Co-operation characteristics • Used to work with consultants • Used to consulting fees • Expect consultants to do “everything” • Price driven

17. Overview of management consulting Global high-value-added consulting companies will have an advantage over local consulting companies because global companies - Can leverage worldwide intellectual capital and experience-Still have necessary local capabilities Global capabilities and support Training and global project experience for local consultants On-line access to intellectual capital, data bases, benchmarks

18. A.T. Kearney as a strategic management consulting firm

19. Founded in 1926 International scope 65 offices in 34 countries Over 3000 consultants Since 1996, A.T. Kearney is the second largest strategic management consulting firm in the world Over 3000 projects engagements per year 1,4 bln USD turnover in 2001 Since 1995, A.T. Kearney is part of EDS, the international leader in technology information 80% of work for repeat clients Average consultant work experience: 17 years San Francisco Los Angeles Phoenix Dallas Mexico Atlanta A.T. Kearney as a strategic management consulting firm A.T. Kearney is one of the leading high-value-added strategic management consulting firms in the world Paris Brussels Amsterdam London Warsaw Madrid Düsseldorf Toronto Oslo Cleveland Milan Washington Copenhagen Hong Kong New York Stuttgart Singapore Boston Stockholm Tokyo Munich Beijing Berlin Prague Chicago Sao Paulo Melbourne Sydney

20. Post merger integration Business and marketing strategy Strategy sourcing Transforming the enterprise Restructuring Physical distribution & logistics Technology management Operations redesign – Process & structure Change management Multi-functional bemchmarking A.T. Kearney as a strategic management consulting firm A.T. Kearney is one of the few high-value-added management consulting firms which possesses the full range of consulting services Core competencies Complete set of consulting skills

21. Federal Express >$500 Million Sears >$750 Million Rolls-Royce $750 million Marks & Spencer $250 million General Motors >$3.5 Billion A.T. Kearney as a strategic management consulting firm A.T. Kearney is committed to delivering tangible and measurable “bottom-line” results for our clients Sample of Recent Clients Representative Annual Results Achieved • “A.T. Kearney has helped enormously to address our key issues… We have planned and implemented cost reduction programs that will return over half a billion dollars” • Fred Smith, CEO, Federal Express • Ameritech • Anglian • BT • Carrefour • Casino • Euro Disney • Galeries Lafayette • General Motors • House of Fraser • Johnson & Johnson • Keebler • Kellogg • Metro • Monoprix • Nabisco • Nomura • PepsiCo • Promodes • Prudential • Quelle • Sears • Shell • Sprint • Unilever • Wal-mart • “…in sharpest contrast… A.T. Kearney consultants helped engineer one of the most stunning corporate turnarounds in recent memory” • (Excerpt about Sears success working with A.T. Kearney, review of Dangerous Company in Fortune, August 18, 1997) • “We wanted consultants who wouldn’t just give us advice and walk away” • John Rose, CEO, Rolls-Royce • “The Kearney work has made us radically re-think our approach to the business. We wouldn’t have done that otherwise” • Marks & Spencer Supplier • “A.T. Kearney is really the father of our global purchasing system.” “They are our achievement consultants” • Jack Smith, CEO, GM

22. A.T. Kearney as a strategic management consulting firm A.T. Kearney is the global leader in client satisfaction Source: Louis Harris Survey, 1998

23. Selected Examples A.T. Kearney as a strategic management consulting firm A.T. Kearney is a leader in the field of Integrated Supply Chain Management Seminars, Research and Leadership • Delivered keynote address at the 1999 NRF annual conference on and leadership practices in driving success through consumer-focused supply chains • Co-sponsored Asia LOGICON conference for senior logistics professionals (1999) • Addressed supply chain strategies and overcoming logistics obstacles for the Asia-Pacific region • Presented research findings on issues, bottlenecks and IT-related concerns of the Asian supply chain • Featured presenter for the Council of Logistics Management: “Why Effective Partnerships Require a Clear Supply Chain Strategy” • Delivered keynote address at 1999 Strategic Electronic Commerce Conference, an EDS-sponsored conference • Featured speaker at AsiaPorts 1998 conference - “How Shifting Global Sourcing Patterns Are Impacting Port Operations” • Hosted CEO Forum on “Challenges in the Digital Future in the 21st Century”, with topics including digital supply chain opportunities and digital demand management • Sponsoring future supply chain industry seminars: • "Global Excellence in Operations" with Fortune (2000) • "2000 Supply Chain Management Conference” (2000) • A.T.Kearney/European Logistics Association: "Insight to Impact. Results of the Fourth Quinquennial European Logistics Study 1999“ • White papers and research studies • A.T. Kearney has been cited in several articles on supply chain management • Leadership • Past President of Council of Logistics Management • Past President of Canadian Association of Logistics Management

24. Selected Examples A.T. Kearney as a strategic management consulting firm A.T. Kearney facilitates new thinking on the future of the Retail/Consumer Products industry through several forums Thought Leadership • Lead the EDS/GMA Future Forces Roundtable, held annually • Bring together the CEO’s and Presidents of the leading grocery manufacturers and retailers • Facilitate discussions on future of technology and science • Help to bring together new ‘breakthrough’ thinking e.g. UCCNet was formed based on the actions set out in the 1998 Future Forces meeting. • A.T. Kearney is active with the World Economic Forum on several levels • A.T. Kearney leads the Food and Beverage Governor's Meetings in Davos Switzerland as part of the World Economic Forums annual meeting • Publishes annual white papers on advanced topics of interest to food and beverage executives as part of the World Economic Forum proceedings • A.T. Kearney participates with Grocery Manufacturers of America on several fronts • Facilitate Top-to-Top meetings at the annual Greenbrier CEO Conference (1999, 2001) • Master of Ceremonies at the annual Information Systems, Logistics and Distribution conference (1997, 2001) • Facilitate key issues forums with executive members (Presidents meeting (2000), Board of Directors (1999,2000) World Economic Forum

25. A.T. Kearney as a strategic management consulting firm In addition to a market leading reputation in supply chain, A.T. Kearney has also delivered significant IT enabled transformation initiatives • Assessed Delphi Automotive in implementing a “value capture” program for all modules of SAP/R3, for 50 sites throughout Europe, identifying over $28MM in incremental savings • Aligned business and IT strategies with core processes, and leveraged existing ERP investments to derive additional business value; Leveraged IT assets by establishing IT shared services capabilities • Developed a comprehensive E-Business “landscape” and competitive strategy, then assessed and realigned ERP priorities to support global purchase order management and supply-chain strategies • Assisted HP in conducting an SAP post-implementation audit, recapturing over $19MM in net savings • Identified over $250MM in unrealized business benefits in operations optimization, fleet productivity, staff reduction and sourcing as a result of their SAP implementation • Pre-merger assessment including the ERP integration of two global multi-billion dollar organizations and creation of financial and HR shared services organizations; identified $52MM in IT run-rate reductions • Restructured and consolidated IT organization to improve efficiency and effectiveness • Assisted with functional and operational requirements analysis, ERP program management, global ERP consolidation, and ERP global template design and integration • Assisted with global restructuring and consolidation of IT organizations and systems, to improve operational efficiency and effectiveness • Reinvented IT organization, processes, and infrastructure as part of post-merger integration with Bank of America • Aligned and streamlined business and IT processes and systems; developed an IT architecture “blueprint” for all enterprise applications • Restructured business and IT processes for better alignment, and assisted in outsourcing certain IT functions to modernize the IT infrastructure; developed the IT blueprint to leverage ERP systems

26. A.T. Kearney as a strategic management consulting firm A.T. Kearney is the recognized European leader in several industries Major clients per practice Aerospace Comm/hi-tech Financial inst. • Rolls Royce plc. • France Telecom • Siemens • Deutsche Telekom • Lucent • Philips • Deutsche Bank • BNL • Barclays • Societe Generale • AXA Transportation Consumer/retail Automotive • SAir Group • Air France • Lufthansa • KLM • Deutsche Bahn • Carrefour • Marks &Spencer • Galerie Lafayette • Unilever • Auchan • FIAT Group • VW • GM Europe • Daimler Chrysler • Renault Pharma/health Utilities Chemicals/O&G • Gambro • Quintiles • Merck • Henkel • VEBA/VIAG • Drewag • Mainova • ENEL • ENBW/Neckar • Rohm&Haas • Arjo Wiggins • BASF • Pechiney • BP/Amoco

27. A.T. Kearney as a strategic management consulting firm A.T. Kearney has wide experience in many industry sectors in Poland • Automotive • Energy • Chemical • Banking • Insurance • Telecommunications • Logistics and distribution • Publishing • Steel • Fast-moving consumer goods • Retirement funds • Food • Mining • Shipbuilding • Capital markets • Media • Real estate • Government institutions

28. Selection A.T. Kearney as a strategic management consulting firm Examples of projects realized by A.T. Kearney in Poland Industry Client Project • Business planning for regional markets • Project management Alternative fixed line telephony provider Telecom • Operations improvement • Business market diagnostics • Loyalty program Mobile telephony provider Telecom • Strategy • MIS • Organisational structure Number one Polish publisher Publishing • Governmental assistance programme development Transportation Leading shipping company Financial Institutions Major Scandinavian bank • Market entry strategy Leading automotive components manufacturer • SAP implementation Automotive

29. Consultant’s role in A.T. Kearney

30. Consultant’s role in A.T. Kearney Becoming a good management consultant requires time, experience and certain key skills Business education Creative thinking Business experience Management Consulting Capability Analytical skills Management background Technical background Written and oral skills Consulting experience

31. Consultant’s role in A.T. Kearney Six key rules* must be followed by every good management consultant • Know what you’re doing! • Don’t act beyond your capabilities • Continually add value commensurate with your skill and client expectations • Keep to the agreed-upon project scope • Hold client information strictly confidential • Be ethical at all times *Source: Andrew Thomas Kearney, founder of A.T. Kearney

32. Consultant’s role in A.T. Kearney In addition to “time”, experience and basic skills, the good consultant requires three disciplined core consulting capabilities • Proposal writing = selling the assignment • Project management = conducting the assignment • Report writing = the product

33. Consultant’s role in A.T. Kearney A.T. Kearney adheres to four key points to hire and retain the best consulting talent • “Constantly grow, learn and develop” • Interesting mix of work • Good project experiences • Constructive feedback • Understanding the measurement • process • Opportunities to develop • Upward feedback initiatives • “Feel that I belong and am part of something good” • Reliable network of people • Appreciation of unique talents • Communicate ATK’s direction and strategy to all employees • Explaining how to get problemsresolved • Respect employees by providing timely and intelligent information Pride Growth • “Work hard; be rewarded well” • Provide appropriate compensationsacknowledges the demands of thebusiness • Being recognized for outstanding performance • Provide input into compensation initiatives • Salary increases for mid-year promotions • Service incentive programs • Principal LTI options • “Be able to balance work and life” • Provide a more balanced quality of life • Tailor work requirements to individual needs • Services to help balance workand personal life • - 434U - Vacation buy-back program • - Part-time program • - Concierge services Wealth Teaming Source: GPTW

35. The future of management consulting

36. The future of management consulting North America and Western Europe are projected to be the leading growth markets 1998 2003 CAGR The Global Consulting Market by Major Region Market Size ($ B) CAGR (%) North America Western Europe Asia-Pacific Latin America Rest of World Region Source: The Global Consulting Marketplace: Key Data, Forecasts & Trends 2000 Edition, Kennedy Information Research Group. Chart pertains to the market for consulting firms independent of hardware/software organizations

37. 2003 Industry Consulting Market Size Early E-Business Adopters The future of management consulting Traditional industries will continue to grow . . . . Global Consulting Market Size and Growth Rates by Vertical Industry ($ Billions) 20 Utilities $7.3 High Technology $8.0 Communications $19.8 Wholesale/ Retail $11.9 15 Financial Services $33.8 Energy/Oil and Gas $9.9 Med./Ent./Pub. $2.9 Business Services $3.6 1998 – 2003 CAGR Manufacturing $33.2 10 Healthcare $7.9 Government $15.3 Transportation $2.5 Miscellaneous $2.4 5 $15 $20 $5 $10 1998 Industry Size

38. The future of management consulting . . . . but, e-Business will be the main driver of future growth Breakdown of Global Consulting Market Segments (U.S.$ Billions) Total Global Consulting Market (U.S.$ Billions) Share of Consulting Market: Type of Service All Clients Brick and Mortar Dot.com Pure E-Business • Start-up e-business • Web strategy, design and implementation • E-strategy, marketing, operations $16.0 $11.0 $5.0 $1.5 $0.5 $1.0 10% 1998 2003 1998 2003 1998 2003 E-Business Related • Traditional consulting services with e-focus $75.0 $56.0 47% $24.0 $19.0 $19.5 $4.5 1998 2003 1998 2003 1998 2003 Traditional Consulting • Strategy • Operations • IT • Change management $68.0 $63.0 $63.0 $48.0 43% $20.0 $0 1998 2003 1998 2003 1998 2003 Sources: E-commerce Consulting Kennedy; A.T. Kearney analysis

39. B2C (Business to Consumer) B2B (Business to Business) The future of management consulting The B2B market appears most attractive B2B Is Eclipsing B2C: Expected Growth in E-Business Expected Growth in E-Business B2B Services 1999 – 2002 Annual Growth Rate (%) Revenue ($ Billions) Internet Software and Services Internet Strategy/ Advice Internet Outsourcing(1) Digital Value Chain (2) • Higher barriers to entry than B2C • More sustainable business models Notes: (1) Internet outsourcing includes Internet project management and web-hosting services (2) Digital value chain includes supply chain, ERP, integration, CRM, business intelligence and ASP services Sources: Forrester Research, IDC, A.T. Kearney analysis

40. Client-Market Positioning Matrix New Client Base Pure E-Business Venture Capitalist /Incubators Services E-Business Related Management Consultants Traditional Traditional Client Base Brick & Mortar (incl. Dot Corp’s) Dot.com’s Clients The future of management consulting Therefore, the new Economy requires a new positioning and new innovative client-service relationships „New Economy Consultants“

41. The future of management consulting End-to-end e-services will have a competitive advantage over functional specialists Paradigm shift in IT -services provision Traditional IT-services delivery chain e-businessdelivery chain Plan Vision Build Implement

42. The future of management consulting So, A.T.Kearney and e-solutions are implementing the e-business solutions for start-ups and established clients to provide truly end-to-end capabilities End-to-End Solution Process Stategy Marketing Operations Implemen-tation Web-Design E-Business Solution A.T. Kearney EDS e.solutions/Kearney Interactive • e-Space (incubator) • E-Business Practice • A.T. Kearney together with e.solutions is enabling the enterprise to offer end-to-end e-business solutions - from strategy to implementation • EDS e.solutions/Kearney Interactive need to have a broad range of design and implementation services - including branding/marketing, web design and e-solution implementation

43. A.T. Kearney Start-up Network Shares $ The future of management consulting A.T.Kearney offers comprehensive support to start-ups and new ventures. A.T. Kearney New Ventures Support through all business phases • Comprehensive • strategic and operational support BusinessPlan Launch Growth IPO/ Sale … A.T. Kearney Start-up Service Practice • Dedicated team + Others • Long-term commitment and flexible compensation Source: A.T. Kearney Start-up

44. an EDS company Questions & Answers