There’s no love lost these days between Andersen and Accenture. That much is clear from the most cursory of glances at the two firms’ websites.
Until last year Accenture was, of course, Andersen Consulting. But under the terms of its bitter divorce from the accounting side of the business, it lost the rights to its name.
Today you will find just two mentions of the word Andersen on its site. And both are mere passing acknowledgments of the firm’s former moniker from distant outposts of the Accenture empire in Australia and Argentina. This is clearly a firm that does not want to be reminded about, nor remind others of, its past.
Nevertheless these mentions smack of a profound interest in genealogy compared to the level of recognition of Accenture on the Andersen site.
Type Accenture into the search engine and all you get is the chilling message: ‘No pages were found containing Accenture.’
Acrimonious split in 2000
The corporate history of Arthur Andersen and the two firms it would spawn has been rewritten. In many ways it’s not surprising. Following their acrimonious split in 2000, both parties sought to claim victory and the moral high ground. But since the turn of this year the differences between the two firms could not be more pronounced.
While Andersen stands accused of failures in its audit of Enron, the collapsed US energy giant and one of the biggest corporate bankruptcies of all time, Accenture has busied itself by winning plaudits for its innovative business strategy and, with revenues up 6%, announcing quarterly results ahead of analysts’ expectations.
No wonder Ian Watmore, UK chief executive of Accenture, is smiling.
A youthful 43-year-old as keen to talk football (well, Arsenal) as he is consulting, Watmore has seen more changes in his 18 months in charge than many CEOs see in a lifetime. In that time the business he leads in this country has changed its name, gone from a partnership to a listed company and, with the Andersen split, effectively shed half its service lines. ‘It’s quite frighteningly recent how different we were,’ he says.
But Watmore – who has risen through the Andersen Consulting and Accenture ranks – is not thinking about the recent past. Not when, with a 26% rise in European revenues over the quarter ending 30 November 2001, the future appears so bright.
Watmore is particularly pleased with achievements in Accenture’s second biggest market. ‘In August in the UK and Ireland we hit the #1bn barrier mark,’ he says. ‘The previous year we just hit $1bn. So we grew by 40% in one year which was the biggest growth of the major areas of our firm. And that’s continued in the first quarter.’
Move into ‘business transformation outsourcing
The key to the firm’s recent success has been its move into ‘business transformation outsourcing’ – effectively a marriage of outsourcing services and consulting.
‘It’s the combination of the two that we think makes us unique,’ Watmore says. ‘That’s a very saleable service line in today’s market. In a downturn market or an uncertain market companies obviously want to do cost cutting and retrench to their core which is where the pressure to do outsourcing builds. But at the same time leading companies want to protect their futures and position for the upturn.’
It’s a business area Accenture has been in for two years. The strategy was pioneered at the London Stock Exchange in the wake of the Taurus debacle, pursued at Sainsbury’s and BP and extended this year at Cable & Wireless in an £80m deal.
The firm also has a reputation for its work within government, though in this arena it has received as many brickbats as plaudits.
Watmore acknowledges that the national insurance recording system contract – one of the most controversial of any government partnership with the private sector – has been ‘difficult’. The pained history is well documented.
Countless committees have slated Andersen and the civil servants who signed the deal. But Watmore says both the parties are now benefiting.
Both Accenture and government are benefiting
‘We’ve actually turned what was a difficult contract into a real value added contract for both sides,’ he argues. ‘Before it was very good for the government and disastrous for us. It was contractually and financially very onerous for us in the early years.
‘We just took three years of losses, delivered on our early commitments and once we delivered on those commitments we stopped haemorrhaging money.’
This now means the systems built by Accenture can be used elsewhere within Whitehall. ‘It has been possible to deliver stakeholder pensions from an IT perspective in the timeframe envisaged by government because we had built the NIRS system,’ he says. ‘Government is now getting its policies and programmes implemented quickly and at affordable cost because of the investment that we turned through the PFI deal in the first three years. In return, in a going forward position, we are able to charge a commercial rate for doing that development work.’
Becoming a public company
While the split with Andersen has brought improved focus to Accenture, it is the ‘liberating’ decision to become a public company last July that has had the most impact. ‘The reason for going public was fundamentally to raise capital in order to pursue deals,’ says Watmore.
‘A lot of these transformation deals are quite capital hungry in the early years because that’s the period in which you’re giving your client the immediate win on his cost line. It might be two to three years before the new stuff begins to kick in and he gets his benefits through. In that period those are very difficult to fund if you’re a cash-based partnership.’
And as well as being able to motivate staff with a share participation scheme, Watmore says that being listed also helps the firm understand clients better.
‘We’re now on the same side of the table as them,’ he says. ‘They can see in our participation in some of these big partnerships that we’ve got as much to win or lose.’
Senior Andersen partners – Watmore’s former colleagues – must be green with envy.