‘We must all view ourselves as brand champions in establishing Accenture,’ it urged. ‘I encourage you to begin proudly using Accenture. Each of us has the responsibility to live our brand each day.’
Scary stuff. But this has always been the Andersen/Accenture way – stringent training methods; moulding its bright and able recruits into reliable mouthpieces of the central Andersen philosophy. But with the marketplace going through changes it’s time for the rebranded consultancy to make its way in the new economy.
Enterprise resource planning was a huge revenue source throughout the 1990s, but has since run out of steam. The internet meanwhile presents a huge opportunity.
How successfully Andersen (as it was) managed to grab a piece of new economy action at the end of the 1990s is open to debate. The company makes a big deal of how it had traditionally been ahead of the IT game, becoming known as the ‘consultancy with a computer’ in the 1980s. Others remark that rivals such as IBM Consultancy, now Global Services, began to reposition itself far earlier and is now reaping the rewards.
‘In the fourth quarter of 2000 we began to see evidence that IBM was gaining traction from its repositioning and seeing results,’ says Martin Zook, editor of the Global IT Consultancy Report. Accenture is starting the same manoeuvre. When you reorganise it takes you away from the market, it will be interesting to see if Accenture can still compete.’
It’s a far cry from the days when Andersen Consulting stood head and shoulders above the competition, Zook says. ‘Andersen dominated ERP in the 1990s. It shouldered everyone else out of the way. What made it excel was it had the methodology down so well it worked.’
One of the firm’s lowest points was in 1999, when it faced claims for $50m a year for the two-year delay implementing NIRS2, the UK’s national insurance system. The Commons Public Account Committee claimed that some pensioners were losing £100 as a result.
Virginwines.com hired Accenture to convert Virgin’s wine division into a fully functioning e-commerce operation. Despite the wide choice of consultants, Accenture was a clear choice for Rowan Gormley, Virginwines.com’s managing director.
‘Everyone said it could do it, but Accenture could show us the work it had done for others. When Accenture pitches up, you get a 45-year-old who used to run the warehousing for a FTSE-100 company,’ he says. ‘When some of the others pitch up, you get a 22-year-old who still has acne. The advantage with Accenture is that you trust it.’
Where Gormley had to tweak the relationship was in timescales. ‘Out of a 100-day contract, Accenture would expect to spend 15 days on management, 25 on analysis and 10 days testing, because that’s what you do with a multinational client,’ he says.
Virginwines.com reduced the contract to 55 days. ‘It was a question of raising the bar and saying ‘you have to come with us on this’, says Gormley.
This type of contract will become increasingly common as chief information officers become more savvy, says Zook. ‘They’re putting IT consultants on a very short leash,’ he says. ‘There’s no more giving them a blank cheque and wondering what they’re doing, and then wondering what they’ve done when they’ve gone.’
Consultants are expected to produce measurable results within a timeframe with plenty of communication.
While Accenture’s operations include change management and all the various aspects of improving a business’s efficiency and profitability, Gormley wanted none of this.
‘We had a clear idea of the functionality we were after, so we weren’t looking for creative input, just to implement our ideas and plug into a fulfilment system. I certainly didn’t want to adopt the Accenture culture,’ stresses Gormley.
‘I’ve never seen people work like that before,’ he says. ‘We’d turn up at 8am and they’d already be here; they’d still be here at 8pm and work all weekend. We thought we worked hard, but its culture seems to be to work yourself to death. Great for the client, but I’m not sure it’s good for the people.’
This culture creates a uniquely reliable service, according to Gormley and others. ‘It can deliver,’ he says. ‘The firm is a lot more expensive than others, but it gets things done and it does work.’
Part-way through, Accenture had put in the maximum number of days and not everything had been built, due (as Gormley admits) to insufficiently detailed specifications.
‘They were very amenable,’ he says. He now quotes a conversion rate on the site of 8.9%, three times the average rate of most consumer sites.
‘We’re turning over #1m a month and should be in profit by mid-2002.’
Virginwines.com’s relationship with Accenture was unusual in that it started off with a significant amount of outsourcing – Accenture took on everything except marketing – but then Virginwines took back many functions.
Gormley believes that this helped the company to avoid many of the mistakes of the dotcoms.
Outsourcing is one of the five prime areas for the reborn Accenture, says UK managing partner Ian Watmore. He lists traditional business consultancy, technical capabilities, venture capital and separate ventures and alliances as the remaining four. Of these, the final one is perhaps the most vibrant.
Over the past year, a string of joint ventures, alliances and new partnerships has been compiled. Multinational organisations including Microsoft, Nokia, BP, Barclays, Compaq, BT and Baltimore Technologies have lined up to do business with Accenture.
One recent partnerships is with e-commerce software developer Commerce One. The company came into contact with Accenture when it was selected by a client to provide e-commerce software, and Accenture was selected as the systems integrator.
‘As Accenture saw more and more Commerce One-based systems, it scaled up its skills sets,’ says marketing director, Chris Phillips. Commerce One has a series of partners dedicated to managing clients using its systems.
‘We work with a number of consultancies, but I’d say that we do more work with Accenture,’ says Phillips. ‘It has invested more in skills and training consultants. The quality of the people they attract is high.’
At human resources software supplier Personic, the relationship has gone deeper still, explains Gareth Robinson, vice president of European operations.
Not only has Accenture begun to offer Personic’s software, but it has also taken an equity stake in Personic, and become involved in change management in the company.
‘We found that 80% of our clients were using only about 30% of our technology,’ says Robinson. ‘So we looked for a partner to go through change management with our clients.’
At the same time, Accenture was looking for a reliable recruitment software provider that it could offer to clients. Personic was chosen from a basket of 122 potential providers, based on the criteria of scalability, pedigree and reputation, says Robinson.
Accenture now uses Personic’s software for its own recruitment, and offers clients software and online training.
Using an online learning solution to help these managers assimilate the software has saved time and money by allowing managers to remain on site, says Robinson.
One of Accenture’s strengths, from Personic’s point of view, was the company’s knowledge of its technology.
‘It understood electronic recruiting and the customer relationship management space. In addition, it wanted to “put some skin in the game”, by investing in equity,’ says Robinson.
Accenture also advised Personic on ways to focus its operations internally and externally. ‘Technology companies are good at making things, but they’re not particularly good at dealing with people or the marketplace,’ adds Robinson. ‘Accenture made us target our audience and showed us the most efficient way to go after large corporate business.’
The Accenture/Personic relationship demonstrates a sort of virtuous circle of business improvement: Personic gets management consultancy advice and major new contracts with Accenture’s client base; Accenture gets great human resources software and added value for its clients; the clients save money through online learning and quicker recruitment times.
It’s exactly the sort of step change in business practices that Accenture has made it an article of faith to promote. After a lacklustre 2000, there are rumours that 2001 is already shaping up to be a bumper year, with a potential 30% increase in profits.
This is despite a Morgan Stanley Dean Witter CIO report in March 2001 which cited spending on consultancies as the budget item most likely to be cut in 2001.
The big question now is whether Accenture can succeed with its initial public offering planned for this summer. Some observers, such as Zook, have reservations.
‘I have a ton of questions about the IPO,’ he says. ‘There is a culture of secrecy in Accenture: it doesn’t want information to get out. It’s very different when you’re a publicly-quoted company. There will be a clearer picture of where Accenture is spending its money, which competitors can use.’
An IPO could also distract the company from its market-facing position at a crucial time, although Watmore stresses that many of Accenture’s recent shifts are market-oriented.
On the issue of venture capital projects, Watmore says: ‘We’re beginning to put our money where our mouth is, to invest in projects that we think the market needs, so we’re taking more of a return. That’s a major shift.
We’re creating new markets and companies and extending our skill sets and hiring people from outside with more deal-making skills.’
Watmore cites the range of Accenture’s clients as its defence against economic hardship. ‘We’ve always gone for a balanced portfolio,’ he says.
‘So we can follow a boom, but if it falls off we always have a large volume of contracts in recession-proof sectors such as government.’ One recent contract was the outsourcing of Sainsbury’s IT department, with 1,000 staff transferring to Accenture.
Despite Watmore’s bullishness, analysts have noted Accenture was slightly slow off the mark in recognising the fundamental importance of e-commerce and adapting to the new economy. There was, in late 1999 and early 2000, a risk that the company was losing ground to smaller, more nimble rivals, such as Cambridge Technology Partners, Icon Medialab and Razorfish, with innovative, laid-back and technologically imaginative attitudes.
‘When it comes down to it, Accenture has the established long-term relationships with the major companies, and breaking into those relationships is not easy,’ explains Parker. ‘The breakdown of the dotcom market has left many smaller firms over-exposed.’
But Parker believes IBM Global Services and PricewaterhouseCoopers were both quicker to recognise the new realities than Accenture. Although Parker still sees a role for the smaller IT consultancies for companies that want to be at the cutting edge, Accenture could be in a stronger position than it realises. ‘If you’re moving at a more sedate pace, Accenture may be just the ticket.’
For all the reservations voiced over Accenture’s strategic direction, there is general unanimity that the company remains a formidable, reliable force in global business.
Calling itself Accenture may feel strange, but when chief executive Joe W Forehand wrote employees in January to say: ‘I guarantee that in time you will be more comfortable with the name,’ something tells you that they nodded vigorously and set back to work with renewed zeal.
– For more on Accenture visit www.accenture.com
JOE W FOREHAND
Title: Managing partner and chief executive, Accenture.
Education: Bachelor of Science, Auburn University, Masters industrial administrations, Purdue University, 1972.
Family life: Married with twin sons and lives in Texas.
Brief history: Joined Arthur Andersen in 1972, became a partner in 1982 and was regularly promoted until he reached his current position in November 1999.
IAN WATMORE Title: Managing partner, Accenture UK. Education: Maths and management at Trinity College, Cambridge, where he ran the student disco. Family life: Has four sons, lives outside Manchester but supports Arsenal. Brief history: Joined Arthur Andersen on graduation, and was made a partner in 1990. His work has covered financial services, government, utilities, large-scale IT systems and outsourcing.
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