Andersen Wins in State and Local Markets

Frank Rovinski hates to admit it, but even though he's managing partner for Andersen Consulting's Revenue Practice in the Americas, he still writes computer code.

Andersen relies heavily on its employees. They are one of the company's "three pillars of success," said Douglas Ryckman, managing partner for Andersen's Government and Health Services Division. Those pillars form the basis of the company's strategy for each market niche it competes in. The company strives to find the best people for a job and will invest heavily in training them, said Ryckman.

The other pillars are the right clients and the right kind of work. Andersen likes clients that are committed to change and with which it can form an ongoing relationship. As for the work, "Andersen does complicated, important things well," said Ryckman. The firm won't just install a computer network, because that doesn't fit its profile. It's looking for opportunities where it can help clients really change the way they do business.

For example, Andersen helped Merced County, Calif., tackle a welfare crisis. The county had more than 65,000 public assistance recipients, and case loads were increasing 9 percent annually. Staff turnover exceeded 35 percent annually, and customers received poor service because of the increasing time constraints on a limited number of employees.

Andersen helped the county re-engineer its work flow and devised a computerized system to help manage case loads. The result was a $10.5 million decrease in agency costs. The waiting time for eligibility determination dropped from 30 or 45 days to four days or less. The county also was able to absorb a significant case load increase with far fewer workers.

In the state and local market, word of a successful job gets around. States feel comfortable with Andersen because they are a strong performer with a solid reputation in many areas, said Bill Loller, an analyst with G2 Research, a Mountain View, Calif., market research and consulting company specializing in state and local markets.

The company recently won a $35 million contract from New York to electronically link every child welfare agency in the state. It also has a contract with the Indiana Department of Revenue to develop an individual tax collection system expected to increase revenue collection by $16 million annually. The company has a presence in just about every state capital.

Andersen houses its state and local niches under its government services division. In the state and local arena, Andersen focuses on human services, revenue and taxation, justice and public safety, and treasury and resource management. The company also is starting to enter the education market and is pursuing electronic government initiatives.

Because of the company's intimate understanding of state functions and how to improve those functions, "survival in a block grant world is going to be a major opportunity for Andersen," said Ryckman.

Another area that is increasingly a part of the firm's business is creating sources of revenue for governments, such as improving tax collection from corporations and citizens. "We can help states find funds to pay for programs," Ryckman said.

Other corporate divisions are based on industry segments and include products, telecommunications, utilities, finance and health services.

G2 rates Andersen as the fourth largest services vendor for state and local governments. Annual revenue from U.S. state and local government contracts is approximately $140 million. The unit has grown at a rate of about 25 percent annually for the last several years and doubled its size every three to four years, Ryckman said. In the last two years alone, the U.S. state and local practice grew by 70 percent.

Revenue for the Worldwide Government Practice grew by 17 percent in 1995, to reach $396 million. Total company revenues for 1995 were a record $4.22 billion, a 22 percent increase over 1994.