Deloitte Exec: Decision To Split Consulting Group Made ‘With Some Regret’

Deloitte Touche Tohmatsu, the last of the Big Five accounting firms to say it would split accounting from consulting, made the decision "with some regret," said Stephen Sprinkle, Deloitte Consulting's global director of strategy, innovation and eminence.

Since 1995, Deloitte Consulting has been "a semi-autonomous unit" under the Deloitte Touche Tohmatsu umbrella, said Sprinkle. Global accounting practices bearing the Deloitte & Touche name are also under the Deloitte Touche Tohmatsu organization, he said.

On Wednesday, Deloitte Touche Tohmatsu said it will separate Deloitte Consulting from the rest of the business.

"Clients are on the horns of a dilemma" in that they believe they must choose between a partner's consulting services and its auditing services, Sprinkle said in an interview with CRN.

Splitting the consulting arm from the rest of the company aids clients that want to continue to work with Deloitte Touche Tohmatsu for accounting and Deloitte Consulting for other services, Sprinkle said.

As allegations pile up against Enron and Andersen, which provided the energy giant with both consulting and accounting services, Andersen's competitors are striving to distance themselves from the fray. Deloitte Touche Tohmatsu's news follows similar decisions from Ernst & Young and PricewaterhouseCoopers.

For its part, Deloitte Consulting is considering several options, Sprinkle said. "We could be purchased by, [or merge with], another firm, or form a private company, or have an initial public offering," he said. No option is likely to be completed before July, he added. Many of the choices have been "under consideration for some time," a footing that has aided Deloitte Touche Tohmatsu as it made the decision to break off Deloitte Consulting, he said.

Sprinkle said that Deloitte Touche Tohmatsu would retain no stake in Deloitte Consulting. Nor will the consulting company have a stake in Deloitte Touche Tohmatsu. "We could have an alliance where we refer clients to each other," but there would still be a perception problem to contend with, Sprinkle said.

"It hurts all of us to do this," Sprinkle said. Between the accounting businesses and the consulting arm, "we have a very collegial culture. We actually care a lot about our clients and each other. We will always look back on [the time when Deloitte Touche Tohmatsu encompassed all the businesses] with some nostalgia," he said

Sprinkle estimated that about 20 percent to 25 percent of Deloitte Consulting's clients also use Deloitte & Touche's auditing and accounting services.