Business Model for Providing Statistical Services

[Steve Prevette]

Fluor, my employer, has asked me to come up with a business model for providing statistical services.

Over the past several years, I've been informally doing work outside of Fluor in providing statistical training, and some mentoring. Fluor management is now looking at this and wants to evaluate could this be a business line.

What I'd like to ask the Covers-

Does anyone have experience with large corporations (Fluor is 50,000 employees world wide) providing consulting services to others? I know DuPont does that in the safety world, and Motorola and GE did to a certain extent with six sigma. What are the potential strengths and weaknesses for a large corporation versus just setting up a small consulting shop?

Any thoughts on the viability of doing this from the corporation's perspective? What I face with Fluor is my routine work takes maybe 10 - 12 days a month - and they are very happy with what they get. But, that does leave some "excess capacity" that perhaps could be used to serve other companies. And the 10 - 12 days of work is a good safety valve compared to just leaving Fluor and trying to set up shop myself.

Primarily we'd be focusing on the Department of Energy, and nuclear power initially, so I don't think this would be a competitor to anyone on the Cove. Of course, if the idea does somehow take off, I may be able to justify hiring in an extra statistician or two.

[Duke Okes]

The internal QM/stats group at Eastman Chemical Company tried this a few years ago, but I don't think it's still part of their strategy. Personally I believe that anyone who has skills of such high caliber should be able to find more than enough opportunities within his/her own organization. However, your industry, if I understand it correctly, is probably less amenable to rapid process changes (thank goodness for stable nuclear plants!).

Given the amount of competition out there in the consulting world I don't know that the opportunities would be so plentiful, but certainly by focusing within a particular industry you would have an advantage in that niche.

[Bill Pflanz]

DuPont was an early leader in the chemical industry (and maybe in the U.S) in providing consulting services for ISO 9000-1994. They started the services to educate their suppliers on the standard so they would adopt them. They were very successful and even attracted people from outside the industry.

Eventually, the demand decreased as their own internal needs were satisfied and others began offering similar services. I think what eventually happened is that those doing the training split off as independent consultants and no longer were employed by DuPont. Considering the size of DuPont, I doubt if this consulting business was large enough to be a significant income generator for them which means that it never became a strategic business.

If your outside training demand gets large, I would suspect the same thing could occur for you at Fluor. It is something to be considered unless you want to use this opportunity to build your own business.

Bill Pflanz

[Steve Prevette]

Thanks, good comments Bill and Duke. For me personally, outside consulting would be good networking, experience, and resume building. Fluor does have a fairly agressive "publications and presentations" program where they are trying to get the Fluor name out there in professional society conferences and publications. So, even if on a small scale it could be beneficial to Fluor.

There are also the unique characteristics of the government contracting world - there are some considerations made in government contract awards for innovation, and is the corporation seen as a "leader".

[Tim Folkerts]

How much more could be done within the corporation, or for clients?

According to the corporate website...

"Fluor Corporation is one of the world's largest, publicly owned engineering, procurement, construction, and maintenance services companies. Over the past century, Fluor, through its operating subsidiaries, has become a trusted global business leader by providing exceptional expertise and technical knowledge across every phase of a project. Clients rely on Fluor to deliver world-class solutions that optimize their assets, improve their competitive position, and increase their long-term business success."

Within the corporation, statistical/safety consulting could help ensure that construction projects are completed in a safe and efficient manner.

For clients, SPC could be built in as a "valued added" service. As a new resort or research lab or hospital is turned over to the owner, some SPC features could be built in to monitor key parameters. Training would then be provided to operators on how to interpret and use this information.

It seems that both of these would - in the long run - enhance Fluor's reputation: "Consistently rated as one of the world's safest contractors, Fluor's primary objective is to develop, execute, and maintain capital projects on schedule, within budget, and with operational excellence."

Tim F

[Steve Prevette]

Thanks Tim, I'll put that in my proposal. I do need to spend some time looking at the existing Fluor business lines and seeing how SPC fits in.

One story - when Fluor took over the Hanford operating contract 10 years ago, the first manager I met representing Fluor stated - Steve, we don't know why Westinghouse employed a statistician - Fluor doesn't do statistics. It took a while, but I was successful with Fluor Hanford (a subsidiary of Fluor) and there is quite a market within Fluor itself.