No. 9: Booz Allen adapts to stay on top

It's only logical ? Change is constant, so staying current requires constant change

Booz Allen Hamilton Inc.

Prime IT contracting revenue: $1.6 billion

Location: McLean, Va.

Leader: Ralph Shrader, chairman and CEO

Employees: 17,000

URL: www.boozallen.com

2005 revenue: $3.6 billion

2004 revenue: $3.1 billion

Booz Allen Hamilton's Managing Director Dennis Doughty (right) and global government markets Managing Director Mark Gerencser

Rick Steele

Say you're quite a successful company ? when it comes to the Defense Department, you are Mr. DOD Consultant, but you also have an oar in civilian agency waters and many oars in private and other public sector waters worldwide. You're respected in the industry for doing well by doing good, and doing so for more than 90 years.

Do you continue with such a business plan, or do you mess with success and add systems implementation to your advisory role and reorganize your governing structure?

If you chose the latter, you're Booz Allen Hamilton Inc.

And if you're the company's new ? as of April 1 ? global functional capabilities Managing Director Dennis Doughty and global government markets Managing Director Mark Gerencser, you couldn't be happier with the change.

"We had been operating as two independent businesses: commercial and public sector," Gerencser said. "With everything integrated under four directorships, we can optimize our business approach at the firm level."

The company's drive for success has helped land it at No. 9 on the Top 100 list with $1.6 billion in prime IT contracting revenue.

Booz Allen's problem-solving methods are unique in the industry, Gerencser said. "We tend to be holistic in the way we think about an organization or process."

In a technique the company calls "campaigns," it brings together experts and representatives from all aspects and components, such as finance and IT, and in health care, for example, the Food and Drug Administration, drug companies, health insurance providers and health care providers to look at all facets of an industry's past, present and future. Solutions and strategies derive from such campaigns.

It was turning that thinking on itself that resulted in the reorganization.

"Clients seek results, not just advice, and need a synthesis of strategy and execution to solve their most challenging problems," said company Chairman and CEO Ralph Shrader in announcing the reorganization.

"It has created some stress in some situations," Gerencser said, "but we're getting excellent results."

That comes down to the company's employees, he said. "We don't just want people who are good at what they do," he said. "We also want people to have passion both for what they do as well as to make a difference, to leave the world a better place than they found it."

With the move into implementation, the range of skills represented by Booz Allen staff, as well as the number of employees, grew by 6 percent in 2005.

"Booz Allen's culture, like the firm itself, is vast and varied," said business research provider Vault Inc. of New York. The motto for private-sector staff might be "work hard, play hard," while public-sector staff are "more conservative," and in some areas, even "stodgy," Vault said.

"It's been an active decision not to try to homogenize everyone into one corporate culture," Doughty said. "We want to create an environment that lets different viewpoints thrive. The interaction you get, the ideas, it's very dynamic. And I don't feel stodgy at all."

In some ways, the reorganization isn't something new, Gerencser said.

"When a client calls us in to work with them, we don't just go in, do it and leave," he said. "We stay for a lifetime, not just to solve the one problem but to solve new problems as they come up."

The company's private- and public-sector divisions contribute to each other, as with the company's transformation of the U.K. Work and Pensions Department, Gerencser said. The company cut operating costs by half while enhancing the program.

"Before, it took an average of six weeks to apply for a pension," he said. "Now it takes an average of 20 minutes."

Lessons learned with U.K. pension systems likely would apply in the Social Security Administration pensions, he said.

Another fertile area for the company lies with the Federal Enterprise Architecture, Doughty said. "We've been involved in enterprise architecture since it began, and that puts us in a strong position to help agencies address all elements of the FEA."

Because Booz Allen is a private company, its degree of success is difficult to quantify precisely. But annual revenue, $2.5 billion in 2003, was $3.6 billion in 2005.

Defense Department spending played a major role in that growth. Last year's win on the Air Force's $9 billion Network Centric Solutions contract would change the way clients and potential teammates viewed the company, Doughty predicted. That "absolutely" has happened, he said.

A major win for the company came in August, Gerencser said, with a $250 million, five-year contract from the Homeland Security Department for systems engineering and technical assistance for the Science and Technology Directorate.

Last month, Booz Allen won a spot on the Army's $20 billion IT Enterprise Solutions-2 Services contract; in March, it was the Army Communications Electronics Life Cycle Management Command' $19.3 billion, 10-year Strategic Services Sourcing contract; in January, the Army's $450 million Engineering, Technical and Operations Support Services contract.

"If you look at the kinds of demands government is placing on industry for high-level professional services, it's a good match for what Booz Allen is offering," said IT analyst Ray Bjorklund of Federal Sources Inc., McLean, Va.

"I think its close competitors are concerned about the company," he said. "And rightly so."

Additional 2006 Top 100 Profiles
  • No. 1: 12 times the fun for Lockheed

  • No. 2: Northrop takes aim on health IT

  • No. 3: SAIC prepares for public debut

  • No. 4: Revving the acquisition engine

  • No. 5: CSC holds a lure for a buyer

  • No. 6: Raytheon works the system

  • No. 7: L-3 cuts bigger slice of govt pie

  • No. 8: For EDS, steady as she goes

  • No. 9: Booz Allen adapts to stay on top

  • No. 10: Dell solutions get superpowered

  • No. 11: BAE keeps acquisition fires burning

  • No. 12: Despite sale, Anteon's vision lives on

  • No. 13: Intelligence work fuels CACI's growth

  • No. 14: Verizon-MCI combination packs a punch

  • No. 15: Restructured IDS lets Boeing help clients

  • No. 16: ITT Industries aims for the sweet spot

  • No. 17: IBM Corp. steps up as a subcontractor

  • No. 18: Sprint Nextel goes for convergence

  • No. 19: For SRA, the profit is in its people

  • No. 20: It's always mission possible for Unisys

  • Overview: The Billion-Dollar Club

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