Sometimes an energetic focus on the new can be a way to mask what is and is not happening with the old. In Accenture’s case, a vigorous presentation of five distinct businesses showed a company so confident in its strategy, performance and potential that it can almost take for granted its core strengths, such as industry knowledge and operations expertise, competency and delivery. Accenture barely touched on foundational strengths at its Industry Analyst Conference, instead repeatedly promoting its “rotation to the new,” particularly around digital and cloud. TBR believes Accenture has earned its reputation as the IT services vendor to beat in 2016.
TBR analysts met with several Accenture executives during the two-day event, including:
Mark Knickrehm, group chief executive, Accenture Strategy
Mark Willford, senior managing director, Accenture Technology James Crowley, managing director, Accenture Strategy, Life Sciences Matt Devost, president and CEO, FusionX
Shelly Swanback, group operating officer, Accenture Digital
With a constant emphasis on “rotation to the new,” Accenture’s top executives, including CEO Pierre Nanterme, described the company’s five distinctive businesses in refreshingly straightforward terms:
- Strategy: new to Accenture, but old-school strategy consulting
- Consulting: core of Accenture and where industry expertise matters most
- Digital: new; what clients want
- Operations: also at Accenture’s core; once you transform, you need to operate
- Technology: backbone to everything
Clear set of investment priorities
Accenture also revealed a clear set of investment priorities: digital, cloud and security capabilities; deep industry skills; and “scale to lead,” in areas where Accenture currently leads, the company wants to scale and lead by more.
TBR analysts explored a wide range of issues with Accenture, including digital marketing services, multispeed IT, the future of cybersecurity, and challenges in strategy consulting and offshore staffing, but three areas stood out: operations, cloud and Accenture’s special alliances (or “business groups”).
Even for Accenture Operations, a self-described core competency, the company emphasized the new, noting how Operations looks to incorporate five elements into every engagement: plug-in technology and processes; consumption-based pricing; start small, scale fast expectation; success defined by business outcomes (e.g., grow revenue or decrease costs); and the emerging technology suite of digital, cloud and cybersecurity.
Accenture noted multiple times over the two days that cloud engagements are tipping toward public cloud, with the company placing big bets on the biggest players: Microsoft, Amazon Web Services (AWS) and Google. Accenture is uncertain which vendors will rise to the top in the next few years, but it maintained market forces will narrow the large field to a few winners. Accenture noted not all clients are ready to move to public cloud, which could hinder ROI. TBR believes, while the majority of customers are buying public cloud directly from the vendor, there are still concerns around interoperability, customization and integration, and pain points, and Accenture is well-positioned to help. For example, Accenture’s consulting capabilities are important for AWS as it needs Accenture to win large enterprise clients that might otherwise adopt AWS’ solutions one by one.
Expanding on the company’s bets in cloud, Accenture explained new and established special alliances, typically called business groups and sometimes including formal joint ventures, allow the company to make its partners’ technology seamless to clients. By Accenture’s account, AWS, SAP and Oracle need the company’s assistance in leading clients through the emerging technology maze. “We help make technology easier to consume,” said Willford. Layering in the Accenture Digital growth platform, the company’s strategy hinges on creating hybrid environments open enough to leverage legacy systems.
TBR Perspective
Less than 18 months after reorganizing around five distinctive businesses, particularly Accenture’s move to bring strategy consulting to the forefront, Accenture appears calm and confident in its strategic direction and the potential pay-offs from investments in digital, cybersecurity and management consulting. Accenture’s emphasis on horizontal offerings has not resulted in a lack of focus or consistency — notable for a company organized and run by industry-focused groups. Accenture believes the company’s strengths will not be compromised as it increases focus on digital, analytics, mobility and software.
In the coming quarters, TBR will track three distinct developments to mark Accenture’s continued success or potential landmines:
- Acquisitions to add scale in cybersecurity
- Accenture Digital replacing legacy ad agencies for creative-through-analytics work with the company’s Diamond clients
- Expanding its portfolio of proprietary IP to reduce its reliance on a partner-sharing revenue model
Accelerated execution on all three fronts will solidify Accenture’s position as a market maker. The challenge, however, could come from clients’ hesitation to embrace business transformations, especially around change management.
Technology Business Research, Inc. is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, professional services, and telecom vendors and operators. Serving a global clientele, TBR provides timely and actionable market research and business intelligence in a format that is uniquely tailored to clients’ needs. Our analysts are available to address client- specific issues further or information needs on an inquiry or proprietary consulting basis.
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