UK’s operations have taken a pasting in the last couple of years. The firm was
unceremoniously dumped by Sainsbury in 2005 and found itself back in the
headlines last September when it withdrew from its £2bn NHS contract.
Results have not been good either. The firm doesn’t publish UK numbers but
analysts at Ovum had seen enough to conclude in a recent report: ‘Europe is
under-performing, and the UK is having a terrible time. Revenues have declined
over the first three quarters of FY 2006, thanks in part to the NHS fiasco.’
So perhaps we shouldn’t be too surprised that when the firm came to appoint
its latest UK and Ireland MD it resisted taking a leap into the unknown and
instead turned to an insider, a 20-year veteran of the firm.
In a way it has always been thus. Accountancy Age has interviewed
the firm’s last two MDs and both have been Accenture born and bred. But the
appointment of David Thomlinson last September marked more than just a new face
at the top (and the continuation of a long-established promotion policy), it
marked a significant structural shift for the firm.
Like many organisations of its type, Accenture has been run on industry
verticals: resources (which Thomlinson himself previously headed), financial
services, communications, government and products – covering consumer, retail,
manufacturing and the like.
This will continue but now the firm is focusing on three of what it calls
‘growth platforms’. First up is business consulting covering strategy
consulting, financial performance, supply chain, customer relationships, human
performance and so on. ‘Maybe more classic consulting in terms of working to
identify opportunities to create value for our clients,’ explains Thomlinson.
Then comes systems integration technology where its teams develop large
technology solutions. ‘In that area we have people both working onshore and
increasingly working through what we term our global delivery network which
includes people offshore,’ he says. ‘The biggest offshore location is our
multiple centres in India where we have 25,000 to 30,000 people.’ It’s an area
that’s expanding; since our interview the firm has talked of scaling up to
15,000 workers in the Philippines and it’s growing its offshore development
operations in China.
Third, and no prizes for guessing, is outsourcing. ‘Obviously we’ve been doing
all that work for a number of years,’ Thomlinson adds. ‘But what we’re now
saying is we’re having our people specialising around those three horizontals
which go across industry.’
Talk of structural reform is obviously Thomlinson’s bag. He has that classic
consultant’s air to him; detailed, ordered and slightly nerdy. You could say the
same of engineers, which is where Thomlinson began his career, spending five
years working in a team with Norman Foster on the iconic Hong Kong and Shanghai
Bank building in Hong Kong.
He joined Accenture in the mid 1980s, initially drawing on his knowledge of
the construction industry before moving into the utilities business as the
privatisation process kicked in.
Having made partner in 1992, he worked in different parts of the firm before
moving to the US in 2001 to apply his utility experience. After a spell in a
similar European role he became chief executive of Accenture’s global resources
operating group, serving
the mega markets of oil and gas, utilities, chemicals, forest products, and
metals and mining and a member of the company’s executive leadership team.
That sort of heavyweight CV adds weight to Accenture’s insistence that its
restructuring is also about putting more emphasis on individual countries, not
just vertical markets and current areas of growth.
Thomlinson cautions against reading too much into this: ‘It’s not a case of
the power has moved from industry back to geography. Our CEO, Bill Green, would
say that you know what he wants us to do is have all three dimensions working
Thomlinson’s brief is a big one; he oversees a business that turned over
£1.3bn in 2006 (the firm does publicise its latest UK and Ireland figures),
employs more than 12,000 people in the UK and Ireland and works for 80% of FTSE
100 companies. It’s a big deal for Accenture worldwide too; the UK is its second
largest market in revenues.
Thomlinson won’t be drawn on UK results – or one consultant’s view that
Accenture’s business actually contracted by 18% last year – but he does offer
more on the turbulence that has afflicted the firm. ‘If you look at the two
issues we faced in the UK last year which was the position around the NHS and
Sainsburys, you can imagine that year-on-year comparisons become quite
Nevertheless in a bid to switch into breezier mode he all but concedes
when he says: ‘I’m certainly very happy to say that, yeah I’m very confident
on our current trajectory that we are very much back into a growth position.’
The collapse of its IT transformation outsourcing contract agreement with
Sainsbury caused particular pain. The supermarket had signed a £1.7bn seven-year
deal in 2000, before renogiating terms in 2003 and extending the contract until
2010. However in 2005 it decided to call time.
‘We had a relationship with Sainsburys over a number of years – probably four
or five,’ says Thomlinson. ‘We actually delivered some great results in terms of
building new IT capability – really improving the performance of their business.
In our business, in professional services, management changes happen. People
decide they want to do some things. Taking an outsourcing business back in-house
happens. We are quite relaxed in terms of confidence in the work that we did and
let’s move on.
‘Clearly, in running a large business in the UK do you want things like that
in the press? Of course not. But they have actually had minor impact in terms of
our business. Do I want other ones to crop up? No.’
Yet challenges aside (that’s surely the word a consultant would use to
describe the tale of the health service and the supermarket, though Thomlinson
does use ‘turbulence’ too) there are reasons to be cheerful.
Outlining the challenges facing Thomlinson last year, Ovum said: ‘We
nevertheless think the UK is over the worst. Accenture is often at its most
aggressive when bouncing back.’
Among his priorities is a recruitment campaign, though he doesn’t share the
view of the Big Four that a lack of good people has held the firm back in recent
years. ‘We’re looking to very aggressively recruit people,’
he says. ‘I wouldn’t say that our ability to recruit people is a constraint
to our growth. It’s clearly a very important factor and I’m not saying it’s
easy. But it’s not actually a constraint to our growth.’
Thomlinson is surprisingly dismissive of the Big Four’s return to the
consulting market. ‘If you really look at it, the Accenture business is quite
different to the big accounting companies starting up their consulting business.
The business they’re doing now – advisory services, added-value and an
accounting base – almost reminds me of looking back 10 to 15 years ago in
He continues: ‘If you contrast the business they’re in to Accenture’s, we
have clearly much greater breadth and depth. Breadth of services is not just
around providing advice, providing reports. But in our long-term relationships
we really aim to deliver values.
‘On the edge when we are doing some upfront work, do we compete with them?
Sure. Is the business we’re really set up now to deliver to our clients the same
business? I think we’ve moved on.’
Accenture’s withdraw from its £2bn contract to upgrade hospital and GP systems
across parts of the NHS profoundly affected the business. The firm has retreated
in terms of revenues (it forecast a loss on the contracts of £80m in 2005 alone)
and profile (it generated acres of less than complimentary newsprint). But the
deal also knocked its confidence too, forcing it to review the way in which it
goes about drawing up deals.
‘The contract and the way it was executed, created an unacceptable risk for
what is obviously a very large company,’ explains Thomlinson. ‘On these very big
programmes you need to have commercial arrangements which create both the right
incentives and the right and acceptable apportionment of risk.’
The contracts transferred in January and Thomlinson acknowledges the
withdrawal forced the firm to think again. ‘We’re a large company. We’re
absolutely willing to take on risk in delivering results, delivering high
performance for our clients where that risk can be managed. Clearly as a
responsible company to our shareholders we need to be able to manage that risk.’
‘We have reinforced our checks and balances for major contracts. So we have a
formal approval and review process for all large deals which is done on a
consistent basis across the firm. And as part of that approval process, we would
have our own independent review of the commercial terms. And it is not a case of
avoiding risk but its being able to identify and have the confidence that we can
manage risk to deliver results for our client.’
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