Hitachi Consulting, the business and information technology consulting unit of the giant Hitachi Ltd., has acquired the consulting company Dove Consulting Group Inc. of Boston.
Michael Travis, the president and chief operating officer of Hitachi Consulting, said the deal, which is expected to be announced today, "allows us to get a foothold in financial services, and specifically in the payments industry."
He would not say how much Hitachi paid.
Hitachi Consulting, which operates only in this country, had $163 million of revenue in fiscal 2004, he said. "We did not have a significant consulting capability like the one that exists at Dove Consulting."
Dove has four major consulting areas: financial services, consumer broadband, packaged goods, and government and non-profits.
At least for now, Hitachi's focus in the U.S. financial services industry will be to sell more consulting services, not hardware, Mr. Travis said.
David Dove, who founded Dove Consulting in 1981, said his new title is managing vice president of Hitachi Consulting's strategy and organizational effectiveness national consulting practice. His operation will be called "Dove Consulting, a division of Hitachi Consulting," at least for now.
But, "we've built a pretty strong equity in payments and retail banking around the Dove brand, and both Hitachi and we were loath to give up that equity," Mr. Dove said. "Whether or not we migrate to the Hitachi Consulting brand sometime in the future is a question, but at least for the next year we'll be going to market as Dove Consulting."
Mr. Dove said that he had rejected several suitors in recent years "because we didn't see a strategic fit, nor did we see a cultural fit."
"When Hitachi Consulting came to us, the first thing we saw is that we liked their people a lot," he said. "We saw a good cultural fit."
Dove is at least the third prominent financial services consulting firm to be bought out by a giant enterprise since early last year. In February 2004, MasterCard International bought the Needham, Mass., market research firm TowerGroup. In September the international management consulting firm McKinsey & Co. bought the payments consulting company Global Concepts Inc. of Atlanta.
Richard K. Crone, the founder of Crone Consulting of San Carlos, Calif., who worked for Dove from 2000 to 2003, said more consulting firms that specialize in banking niches are likely to be bought up.
"Dove could be the first step in that rollup," he said.
Dove's strength is in the payments and automated teller machine markets, Mr. Crone said. Its clients, he said, have included most of the top 50 banks in the country as well as debit networks and payment processors, including Pulse EFT Association, which is owned by Discover Card; NYCE Corp., now owned by Metavante Corp.; and First Data Corp.'s Star network.
Dove will bring Hitachi the market intelligence it needs to expand in the United States, Mr. Crone said. "Certainly Hitachi has deep pockets" to expand that way, he said.
For Hitachi, he said, the Dove deal is "about increasing sales and using Dove's expertise and relationships and market intelligence to drive more value for their customers."
Hitachi Ltd. had $84.4 billion of revenue in its fiscal 2004. It sells electronic devices ranging from semiconductors to computers to automated teller machines.
It is divided into seven broad business units, one of which is financial services. It founded Hitachi Consulting in 2000 and spent more than $200 million on acquisitions to expand the unit.
Gwenn Bezard, a research director for the Boston market research firm Aite Group LLC, said the best way for Hitachi to "put a foot in the door" of the U.S. financial services market is to acquire a U.S. technology company or a consulting company. He also noted that Dove could help Hitachi identify additional acquisition targets in the financial services industry.
Sam Radwan, the managing partner of TowerGroup Global Consulting, said that technology vendors are focusing on developing consulting skills.
"Almost every single vendor organization that we're working with is looking to crack the nut on 'How can we be business- and solutions-driven, as opposed to widget- and technology-driven?' " he said.
