| | By Mick James
One of the adages
about consultancy that
has stood the test of
time is that “it’s tough
in the middle”. The
medium-sized consultancy
runs the risk of having
its lunch stolen from
both sides. Either
smaller rivals can
cherry-pick projects and
undercut its rates, or,
if its chosen niche
attains critical mass,
the big boys can swoop
down to collar both
clients and staff with
their marketing muscle
and salary cheque books.
The answer, according
to Dai Bedford, European
executive vice-president
of Capco, is to dig deep
and build an impregnable
position based on content
knowledge and thought
leadership. This is what
Capco, “the capital
markets company”, has
been trying to do ever
since its inception in
1998.
“When we started,
capital markets was an
industry in transition,”
he says. “There was
no-one who was serving
that market – it was
dominated by the big
systems integrators but
no-one was really in the
core operating model.”
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During the difficult
post-dotcom boom,
post-9/11 period, Capco
also broadened its offer,
moving into private
client and asset
management work and more
recently into
reinsurance. However, its
point of view – that
financial clients need to
compete at the level of
operating model, has, in
Bedford’s opinion, been
vindicated.
“The internet bubble
disturbed the natural
evolution of the industry
and the creation of
processes and utilities,”
he says. “I did projects
in the 1990s with clients
who assumed the rate of
innovation products and
services would slow down,
but in fact it has
accelerated.”
The result is an
industry in desperate
need of operating models
which can enable it to
segment customers and
switch products and
services accordingly.
Capco has
conceptualised this
approach as “The Finance
Factory”, the application
of manufacturing
principles to financial
products and, through the
Institute, has brought
together leading-edge | |
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| | academic thought and
practice. This is what
Bedford believes gives
Capco the edge over the
big players.
“The question for
clients is do you want
systems integrators and
outsourcers or partners
helping you design the
future?” says Bedford.
“We do tend to run into
the big players but,
where content is the key,
Capco wins every time.”
Capco balances its
consulting work by
offering managed services
that are both highly
niched and content
specific, such as
managing client reference
data.
“This creates a high
barrier to entry, as we
combine the specialisms
of specific industry
expertise with the
operations management
expertise,” says Bedford.
Capco regularly moves
its staff between managed
services and consultancy
work. Generally, it takes
staff equally from
consultancy and industry,
but always recruits
people with financial
services experience.
Apart from high-level
recruits to spearhead its
drive into new areas such
as retail banking and | |
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| | reinsurance, all Capco’s
UK partners have been
internally promoted.
“The more senior
people are, the more
difficult it is to find
the Capco profile,” says
Bedford. “Our model of
success is to grow your
own, we recruit at the
lower end of the pyramid
and promote from within.”
The result is a very
stable workforce.
“It’s very rare for
someone to leave Capco to
go to another
consultancy, they tend to
go back into the
industry,” says Bedford.
“It’s the classic
consultancy profile,
people either leave at
three years or after five
or six, either because
they’ve got what they
wanted or because they
don’t like the lifestyle.
After that they last for
ever.”
Will Capco last for
ever?
“It’s an interesting
question. How do you
survive as a medium-sized
consultancy?” says
Bedford. “We like to play
on the edge of what the
industry is thinking –
that’s our proposition to
clients – that we’re at
that edge.” | |
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Capco came out with a
clear vision of the
future structure of the
industry, which stood it
in good stead during the
tough times which
followed.
“We survived where
others disappeared
because of our closeness
to industry and our
content focus,” says
Bedford. This focus is
expressed through the
Capco Institute, a
think-tank which brings
together the views of
academic and professional
experts in finance and
publishes them in the
Capco Journal.
“It’s our R&D, it’s
the one thing that never
got cut in all the hard
times,” says Dai. “We
might travel by Easyjet
but we would never lose
the Institute, it’s our
lifeblood, it’s what we
are.”
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