2. Key Issues
1. Choosing The Right Clients & The
Right Project
Profits/ Diversify Revenue Streams
Large Large Management
Tulane
Tl University Private Consulting
Client University Firm
2. Growth and Staying Ahead
Key Issues
3. Situational Analysis
Exclusively Exeter Inc
Exeter.
Quality Service
Service Oriented
1. Blended Teams
- Multidisciplinary
Offshoring Services
Service Oriented
- Strong Technical Expertise
2. Capable Consultants
p
4 Business Segments 3. Credible Reputation
Business Focus
Exclusively
Key Issues
Exeter
4. Situational Analysis
Exclusively Exeter Inc
Exeter.
Service Oriented India
I di
Benefits:
Offshoring Services A. Technical Expertise
A T h i lE i
Service Oriented
B. Substantial Savings
4 Business Segments
Business Focus
Exclusively
Key Issues
Exeter
5. Situational Analysis
Exclusively Exeter Inc
Exeter.
Service Oriented
Exeter’s Segments
• Government
Offshoring Services
Service Oriented
• Healthcare
• Finance
4 Business Segments • Higher Education
Business Focus
Exclusively
Key Issues
Exeter
6. Situational Analysis
Exclusively Exeter Inc
Exeter.
Service Oriented
Exeter’s F
E t ’ Focus
• Large-Client Approach
Offshoring Services
Service Oriented • Blended Teams
• Developing Individuals
4 Business Segments
Business Focus
Exclusively
Key Issues
Exeter
7. Strategy: E²
Focus
Quality Service India
Segments
Benefits: • Large-Client
•Blended Teams • Government
Approach
-Multidisciplinary
A. Technical
• Healthcare
-Strong Technical
Strong
• Blended
Expertise
Expertise
• Finance Teams
•Capable
B. Substantial
Consultants • Higher • Developing
Savings
•Credible Education Individuals
Reputation
Overall
Exclusively
Key Issues
Strategy: E²
Exeter
8. Strategy: E²
Enabling Education
Focus
India
Quality Service Segments
Benefits: • Large-Client
•Blended Teams • Government
Approach
-Multidisciplinary
A. Technical
• Healthcare
-Strong Technical
Strong
• Blended
Expertise
Expertise
•Tulane • Finance Teams
•Capable B. Substantial
Consultants • Higher • Developing
Savings
•Large University
Large
•Credible Education
E
Individuals
Reputation
Expanding I t I di
E di Into India
E
•Public Universities
•Private Universities
Exclusively
Key Issues
Exeter
9. Enabling Education – Tulane & The
Large University Option
Under O Sh
U d One Shared Roof
dR f
Tulane & Large University
1.
1 Similar Product
Product,
Implementation Project
2. Vendor Unable to deliver
3. Larger scale projects
4. Significant Risks involved
g
5. Significant Opportunities For Long Term Growth
Overall Strategy: E
Exclusively
Key Issues
Enabling Education
Exeter
10. Syne rgies
2. Knowledge
Sharing
across
working
teams
3. Higher cost
g
1. Same Product, savings
Same Issues, across with
Same twin projects
Problems
Overall Strategy: E
Exclusively
Key Issues
Enabling Education
Exeter
11. Human Talent Management & Training
Tulane Project
Benefits
a. 1 Senior Consultant
Human Talent Management 1. Cross Project
b. 10 Consultants
learning
1. 7-8 Senior Consultants
c. 10 Developers
2.
2 Interchangeable
2. 80 consultants
Large University Project team
3. 80 Developers in India
a. 2 Senior Consultant 3. Accelerated Training
and Development of
b. 20 Consultants
Staff
c. 10 Developers
Tulane/Time Frame 2 Months 6 Months 4 Months 6 Months Completion
1. Pre-Development
2. Project
Development
3.
3 Testing
18 Months
4. Systems Roll-Out
Large University/Time 3 Months 10 Months 6 Months 6 Months Completion
1. Pre-Development
2. Project
j
Development
3. Testing
25 Months
4. Systems Roll-Out
Overall Strategy: E
Key Issues Exclusively
Enabling Education
Exeter
12. Potential Issues in taking up Tulane
Reallocation “Star
Human
from Managers”
Resource from
Foregone
F
Staffing Chicago/Boston
Project
Opportunity to Gaining
Increase Scope Competency in
New Product
of Revenue New Segment
Streams
Increasing
Opportunity KEY driver to
capability in
Cost – 6 propelling Long
current
months
ots Term G o t
e Growth
Strength Area –
Education
Growing at 6%
Overall Strategy: E
Key Issues Exclusively
Enabling Education
Exeter
13. Convincing the Large University
Right tool will
Firm’s KEY
Project only yield when
STRENGTH lie
used by the right
Management in Proprietary
team
Methodology
Fixed fee ALONE Payment period
Value-Added to include stretched out +
Performance Key Performance
Competition
Based Fees Indicators
Collaboration Microsoft
Vendor
& Key Partner
Issues
Alliance Program,
Program SAP
Development Certified
Key Issues Overall Strategy: E¹
Exclusively
Enabling Education
Exeter
14. Solving the Issues
1. Choosing The Right Clients & The
Right Project
Right Project
Large
University
Tulane
Client
Adding g
Interesting work
Value to Future Potential
in new segment
Client
Strategy: E¹
Exclusively Overall
Education
Exeter Enabling
15. Expanding into India
Why India?
Fastest
F t t growing market for IT
i k tf
•
consultancy services estimated
CAGR of 6.8%, US$22 billion
Demand growth for IT services
•
30 - 32%
Leverage on current presence in
•
India’s offshoring operations
Trends
•Huge growth i headcounts and investments towards high
H th in h d t di t tt d hi h
valued consulting
•IBM Global Services, Tata Consulting Services, Accenture,
Fujitsu C
F jit Consulting, Wipro Consulting
lti Wi C lti
Key Issues Exclusively Overall Strategy: E¹ Overall Strategy: E²
Enabling Education Expanding India
Exeter
16. Expanding into India - Education
Entrance into Education Market
Average public spending
Segment
US$ per student
•India lagging in public spending
4000
on higher education per student
3500
3000
•Fiscal spending to counter
2500 India
economic recession – 6% of GDP,
Russia
2000
USD$1440 million on higher
China
1500
Brazil
education
1000
500
•Lucrative Private education –
0
growth USD$40bn to US$120bn in
2007
10 years
Key Issues Exclusively Overall Strategy: E¹ Overall Strategy: E²
Enabling Education Expanding India
Exeter
17. Expanding into India
India Headquarters
Bangalore
•Open new Exeter.Inc Office
O E t I Offi
•Hire 4 senior consultants and 30
junior consultants
Bangalore
Key Issues Exclusively Overall Strategy: E¹ Overall Strategy: E²
Enabling Education Expanding India
Exeter
18. Expanding into India
India Headquarters
Bangalore
Client Selection Criteria
Variables Weighted Private Higher Education
Average
310 Private Universities
Annual IT Spending
Annual IT Spending 30%
•13 Indian Institutes of
Technology (IITs)
Size of Client 15%
•3 IITs to open in 2008 and 3
3
Allows for blended
Allows for blended 15%
more slated in the next 5 years
teams
•Set up cost per IIT: USD$625
Opportunities for 25%
million to USD$1 billion
$
future endeavors
•High growth market segment
Developing 15%
Individuals expected to triple in size by 2018
Key Issues Exclusively Overall Strategy: E¹ Overall Strategy: E²
Enabling Education Expanding India
Exeter
19. Expanding into India
Public Higher Education
200 U i
Universities and 8000
iti d
colleges
•Services in excess of USD$5bn
•3 states with top literacy rates:
Kerala, Goa, Tamil Nadu
Higher Education Information
Systems Project (HISP)
•Grants Management, Integrated
g , g
System for Admissions, Central
Knowledge Bank, Research
Projects
Key Issues Exclusively Overall Strategy: E¹ Overall Strategy: E²
Enabling Education Expanding India
Exeter
20. Expanding into India
US and Bangalore
Headquarters
Team Blending
New hires: 4 Senior Consultants and 30 Junior Consultants from IIT
Madras and IIT Bombay over 4 years
Job Rotation
80 consultants from US
34 consultants in India
Average project(10-12) requires: 10 consultants
Target 20% US-based consultants to work in India
Target 50% Indian based consultants to work in US
Key Issues Exclusively Overall Strategy: E¹ Overall Strategy: E²
Enabling Education Expanding India
Exeter
21. Financials
Beta of Exeter – .981
Obtained from 3 competitors
•Accenture
•Oracle
•SAP
Market Rate of Return – Annual
Return of S&P 500
Risk Free rate – 20 Year T-bill Rate
Weighted Average Cost of Capital
(WACC) of Exeter – 10.6%
Overall Strategy: E²
Key Issues Exclusively Overall Strategy: E¹ Financials
Expanding India
Exeter Enabling Education
22. Financials
Key Assumptions
Cost: Initial Investments
•Education $4 1 million
Ed ti $4.1 illi
•Opportunity Cost $4 million
•Factory Investment $10000
Other Assumptions
•Office Supplies $10000
•Tax rate 35 05%
35.05%
•Recruitment $0 5 million
Recr itment $0.5
•Depreciation accounted for
•Exchange rate Rupee/USD
Revenue Streams
50.65
50 65
•Tulane
Tl
•Large University Client
•New Domestic Market
•India Private Education Sector
•India P bli Ed
I di Public Education S t
ti Sector
Overall Strategy: E²
Key Issues Exclusively Overall Strategy: E¹ Financials
Expanding India
Exeter Enabling Education
24. Implementation
2009 2010 2011 2012 2013 2014
1st Phase of Tulane
Enhancing
Education
Large university
Tulane over 1 ½
years
New Domestic Market
Large university of 2
g y
¼ years
New Domestic
Market open
p
Overall Strategy: E²
Key Issues Exclusively Overall Strategy: E¹ Implementation
Financials
Expanding India
Exeter Enabling Education
25. Implementation
2009 2010 2011 2012 2013 2014
2nd Phase: Tulane
Expanding into India
Hiring and Job Large university
Rotation
4 Private University New Domestic Market
Seize P bli
S i Public
University Market Hiring and Rotation
Private University
Public University
y
Key Issues Exclusively Overall Strategy: E¹ Overall Strategy: E² Implementation
Financials
Exeter Enabling Education Expanding India
28. Complimentary
Slides
1. Comparison between 4 options
2. Why not Large private university?
3. Why not the management consultancy?
4. Key Assumptions for cost savings to Large University
5.
5 Issues Pertaining to Synergy (TU + LU)
6. Cooperation with Competing with Vendor
7. Customer Relationship Management for Rejected Projects
8. Economic Downturn affecting Consulting
9. Off shoring is not a main strategy in The Short Run
10. Country Comparison for Offshore options
11. Offshoring Options: China in the Long Run
12. Jonathan & Mark do not interact with each other’s clients
13. Decentralized nature of Healthcare & Education Group
14. Financials
15. Why not the financial industry?
29. Complimentary Slides
1. Comparison between options
Variables/Options Tulane Large University Private University Management Consulting
Project Type Systems Integration + Systems Integration of Strategy + Customized System
Implementation of New New Product Implementation Development
Product
Ease of Relatively Harder Relatively Harder Medium – Hard Relatively Easier
Implementation/Succ
ess rate
Concurrence with true No – attachment of staff to No – attachment of staff to No – attachment of staff Yes, blended team
Business Model organization organization to organization development project
Revenue $5M over two years $7M over 4 years NA NA
Significant Preferred manager’s transfer NA NA NA
Opportunity Costs issues
1. Need to manage 3rd
Other Issues 1. Losing capability for 6 mths
gp y g 1. Constantly acceding
y g 1. Communication issues
party staff to requests on projects
2. New product 2. Differing cultural issues
2. New product 2. Small project & 3. No new development, old
margins
3. Client’s preferred capability
engagement method
1. Synergy with 2nd option
Positives 1. Previous working Maintaining Client New segment, new set of
relationship relationship customers
2. Higher margin, bigger
2. Synergy with 2nd option project
3. New Revenue Stream 3. New Revenue Stream
Longer Term potential Potential Future projects with Potential Future projects Can remain positive Basic exploration stage, non‐
Org and other org in new with Org and other org in despite not picking up committal
Product
Pd new Product
Pd project
j
30. Complimentary Slides
2. Why not large private university?
a. Always been taken advantage off, need to bend over
backwards
b.
b Resulting in significant opportunity costs of tied up senior
staff
c. Senior staff assigned on projects with low margins
d. No adherence to core business model
e. No new development, traditional business segment
f. Hinders long term growth – opportunity costs, no new
development
31. Complimentary Slides
3. Why not Management Consultancy?
a. No new development, same traditional business
b. Culturally and subsequently working relationship issues in
two high performance organizations
c. Potential for poaching of current staff and lost of proprietary
intellectual property
d. Does not support long term growth, no diversification of
f f
income streams
33. Complimentary Slides
5. Issues Pertaining to Synergy (TU+LU)
a. Proprietary information, methodologies and solutions
to be kept private and confidential
b. Only generic common information, solutions,
problems encountered, learning points that are cross
platforms will be shared
34. Complimentary Slides
6. Cooperation with Competing Vendor
Collaboration Plan
1. Select and pick key industry software vendors
2. Enter into exclusive strategic alliances as sole preferred technical
partners (For. E.g. SAP)
3. Alliance will see Exeter being certified technical p
g partners for key
y
software products (SAP certified gold partner)
4. Exeter will serve as marketing agent for their products in relevant
and appropriate projects
5. Giving vendors more reach
35. Complimentary Slides
7. CRM for Rejected Projects
a. Convey the company’s concern of why they elected not to
undertake the engagement
b. Convey
b Con e possible alternati e firms that can undertake the job
alternative ndertake
c. Actively engage these firms on the longer term basis and
convey latest developments, capabilities and to not lose future
engagement opportunities
36. Complimentary Slides
8. Economic Recession affecting Exeter’s Segments
a. Education, government & Healthcare sectors are core public
services that require high reliability and delivery rates
b.
b IT is a long term capital expenditure and in estment that is
e pendit re investment
beyond economic cycles
c. Government’s fiscal policies spend on these 3 sectors to
stimulate economy, in a slowdown, it would in fact drive even
economy slowdown
more engagements to be made available
37. Complimentary Slides
9. Offshoring is not a main strategy in S.R.
Variables India Others
Approximately 55.4 Approximately 58.5
Wages
g
USD/day USD/day
Set to Increase by 15%:
63.71 USD
•Existing Physical New Market
Initial Capital
Infrastructure a) New Facilities
Investments
•Require only 3-4 b) New consultants
Additional Consultants
Additi lC lt t
Consequences •Strengthen Core •Disruption to
Competencies Business Operations
•Fertile Ground for Talents (Existing Projects)
•Disadvantages
Price Differentials: 8.9%
8 9%
Offshoring is not a option in the short run
as the SMALL cost savings cannot
mitigate the BIG costs involved.
38. Complimentary Slides
9. Country Comparison for Offshoring
Variables India China Asia Eastern
Europe
Industry Wages Low Wages Low Wages Low Wages
Trend
T d
Ease of Experienced •No Prior •No Prior •No Prior
Experience Experience Experience
Entrance Existing Physical
Infrastructure •Open Economy •Some Countries: •Politically
Politically Unstable:
•Government
Unstable Changing Market
Encourages
Reforms
Investments
Education High •Increasing Low •Increasing
Standards of Standards of
Education Education
•Government •Government
initiatives to initiatives to
Promote English Promote English
Proximity to Nil Close Far Far
India
Capital Increasing costs Very Low Low Low
Outlay
y A)Proximity to India
) y
B)Favorable factors
39. Complimentary Slides
9. Offshoring Options: China in the Long Run
Variables India China Asia Eastern
Europe
Low Wages
Industry Wages Low Wages Low Wages
Trend
T d
•No Prior
Ease of Experienced •No Prior •No Prior
Experience Experience Experience
Entrance Existing Physical
•Open Economy
Infrastructure •Some Countries: •Politically
Politically Unstable:
•Government
Unstable Changing Market
Encourages
Reforms
Investments
Education High •Increasing Low •Increasing
Standards of Standards of
Education Education
•Government •Government
initiatives to initiatives to
Promote English Promote English
Close
Proximity to Nil Far Far
India
Very Low
Capital Increasing costs Low Low
Outlay
y A)Proximity to
) y
India
B)Favorable
factors
40. Complimentary Slides
10. Country Comparison for Offshoring
(NOTE: HYPER LINK)
Assuming 8 Work Hours
India: 2,800 Rupees ≈ 55.4 USD China: 400 RMB ≈ 58.5 USD
Set to Increase by 15%: 63.71 USD
Source: Pay scale,
http://www.payscale.com/research/CN/Country=China/Hourly_Rate/by_Job
41. Complimentary Slides
11. Jonathan and Mark do not interact with
each other s clients
other’s
1. Need to for both managing partners to critically client
relationship management system
2. Best to involve both or even more staff in interaction
3. Aids Business Continuity System in times of emergencies
4. Double perspective from 2 or more partners would improve
decision making
1. Decentralized nature of Healthcare & Education Group
42. Complimentary Slides
12. Decentralized nature of Healthcare
& Ed
Education Group
ti G
• Hinders disciplined client portfolio management
• To circumvent, beyond the traditional weekly meetings and follow up
circumvent up,
Exeter should actively involve Group managers and senior consultants to
not just weigh in but be part of the decision process
• Ensure entire organization understands and is committed to Exeter’s
Exeter s
43. 13. Complimentary Slides – Beta
All numbers in thousands
Levered Beta Tax Rate Value of Debt Value of Equity Unlevered Beta
Accenture 0.77 29.30% 1087952 16880000 0.736
Oracle 1.09 29.53%
1 09 29 53% 10235000 89750000 1.009
1 009
SAP 1.05 32.23% 24000 42060000 1.050
Accenture Oracle SAP
Income Before Tax 3107762 7834000 4173000
Income Tax Expense 910574 2313000 1345000
Tax rate 29.30% 29.53% 32.23%
Average Unlevered Beta 0.932
Average value of Debt 3782317
Average value of Equity 49563333
Debt/Equity Ratio 0.0763
Average Tax rate 30.35%
Implied Beta for Exeter 0.981
Values obtained from Yahoo! Finance
47. Complimentary Slides – Projected
I/S
Calculation of Terminal Value
Terminal Growth Rate 5.5%
Terminal WACC 10.6%
Terminal Value 21901276
Discount Factor at year 5 1.654
PV of Terminal Value 13242619
2011 2012 2013 2014
Growth Rate 6% 13% 19% 3%
NPV 12262826.59
12262826 59
Achieve Positive NPV of 12.262 million and
Tripled Growth rate by 3 X
48. Complimentary Slides – Projected
I/S
Depreciation Figures
Depreciation
Book Value (Beg) 11000 10000 9000 8000 7000 6000
Depreciation 1000 1000 1000 1000 1000 1000
Book Value (End) 10000 9000 8000 7000 6000 5000
Initial Book Value 11000
Depreciate over 10 years
Salvage Value 1000
49. Complimentary Slides – Cost
Education Cost for new software
Adminstration Cost 40914.326
Faculty Cost 40914.326
Student Cost/Opp. Cost 4091432.6
Materials Cost 40914.326
Total Cost 4214175.578
4214175 578
No. Of Employee
Senior Consultant 3
Consultants 30
Developers 10
Total N
T t l No. of Employees
fE l 43
Student Cost
Revenue per Consultant 113023 50% of Senior
Revenue per Senior 226046
Revenue per Developer 2260.46 1% of Senior
Obtained from http://www.reuters.com/finance/industries/benchmarks?industryCode=57211
Total Student Cost
30 Consultant 3390690
3 Senior 678138
10 Developer 22604.6
Total Student Cost 4091432.6
No. of People in Office
Indian Consultants 4
American Consultant 2
Developers
p 10
Total 16
50. Complimentary Slides – Revenue
No. of Staff Accenture 160000
Accenture Revenue 25313826000
No. of Staff Exeter
US 80
India 80
Puerto Rico 9
EGS 80
Total No. of Staff Exeter 249
Revenue Exeter
Re en e of E eter 39394642
Gross Margin of Industry 4.15%
Obtained from reuters.com
51. Complimentary Slides – Revenue
%Government
%Go ernment Spending on Ed cation
Education 3.80%
3 80%
GDP of India 2008 USD 3311900000
Government Spending Education USD 125852200
Obtained from www.everonn.com. Report by Credit Suisse
% on Tertiary Institutes 0.09
Govt Spending on Tert Education
Tert. 11326698
Year 1 Year 2
Assuming Exeter obtains 50% 75%
Revenue 5663349 8495023.5
No. Of Private Schools 50000
% that are tertiary Institutes 9%
No. Of Private tertiary Institutes 4500
No. Of Private tertiary Institutes in Region 310
Amt Private School in US Spend on IT USD 2000000
Amt Private School in India Spend on IT
Rupees
p 2000000
Exchange Rate ruppe/USD 50.6454
Amt Private School in India Spend on IT
USD 39490.25973
Assume Private School Contract Growth rate of 50%
2012 2013 2014
52. Complimentary Slides – Why not the
financial sector?
1. Recognize the opportunity during this current economic
crisis
2.
2 Increased number of consolidation of banks through
mergers and acquisitions (M&A)
3. Not Exeter’s expertise
4. Exeter specialises in investment management and hedge
funds
5. Strong competitions among incumbent firms e.g. Tata
Consultancy
6. These M&A are a current trend, not sustainable
7. Not in line with our long term goal
