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Accenture Technology: Innovation-Led Application Services

 

In the last few years Accenture has executed a wholescale reshaping of its portfolio towards what it terms ‘The New’ (digital-, cloud-, security-related services) and has managed to keep ahead of the pack in staying relevant. NelsonHall recently attended an event hosted by Accenture Technology on the theme of innovation-led applications services.

Accenture Has Repivoted

CEO Pierre Nanterme opened the one-day session describing how Accenture started preparing for a major transformation of the company’s service portfolio toward ‘The New’ back in 2011.

In FY15, ‘The New’ accounted for 30% of Accenture’s total revenues; in FY16 this proportion moved up to 40%, or ~$13.5bn, progressing in H1 FY17 to ~45%. Nanterme shared his ambition that Accenture will exit this fiscal with activities in “The New” representing over 50% of the company’s total revenues—a milestone Accenture achieved in 3Q FY17. Given the accelerating rate of both acquisition activity and organic investments – and the accelerating pace with which organizations are embracing digital - this looks probable. If so, Accenture will have achieved something of a coup – and the right to make the bold statement on its website “New Isn’t On its Way: We’re Applying It Right Now.”

 While an increasing number of services providers are sharing what proportion of their revenues are coming from “digital”, there is no clarity of what this can encompass, and as such comparisons are not possible (is Vendor A, calculating Digital accounts for 16.7% of its revenues, lagging Vendor B, who claims 22.1%, or are they simply classifying differently?) Nevertheless, Accenture’s bold claim of over 50%, and its ability to point to the size and scale of its Accenture Interactive, Accenture Analytics and Accenture Mobility units (which together are now over $10bn in revenues) put it in a position that no other IT services vendor is currently anywhere near. As for Accenture Technology, which remains the company’s largest SBU, accounting for an estimated 50% of total revenues, it estimates that over 45% of its revenues related to SAP, Oracle, and Microsoft are now around The New. This is a very significant achievement.

Accenture Technology and Innovation

Creating Accenture Digital as a greenfield organization was, arguably, easier than realigning an existing massive organization such as Accenture Technology around digital. So how did Accenture Technology shift towards The New?

There are several elements to this transformation: adoption of new technologies: agile, DevOps and automation, application migration to the cloud; partnerships with the likes of salesforce.com and Workday; and realignment of major partnerships with SAP, Oracle, and Microsoft toward the cloud.

As with the other Accenture divisions, Accenture Technology has been very active in recent years in acquiring to expand or build capabilities in ‘the New’. To give just one example, expanding the Salesforce capabilities of Accenture Technology, since 2014 Accenture has acquired seven specialists: Media Hive, New Energy Group, CRMWaypoint, Cloud Sherpas, tquila and ClientHouse, and most recently federal sector specialist Phase One.

Accenture is redeploying the client base of acquisitions such as Cloud Sherpa towards large enterprises, bringing more interfacing/integration work with other enterprise applications. The size of some of their deal wins is increasing.

Another element is the expansion of what Accenture now calls the ‘Accenture Innovation Architecture’, which comprises Accenture Research, Accenture Ventures, Accenture Labs, Accenture Studios, Accenture Innovation Centers, backed up by Accenture Delivery Centers in its Global Delivery Network.

Liquid Studios…

Accenture Technology has been investing in opening client-facing Innovation Labs and Liquid Studios. Liquid Studios use rapid application development principles, microservice-based architectures, and technologies such as IoT and wearables. The focus is on ideation using Design Thinking, “pre-totyping”, prototyping, and solutioning, delivering a MVP. The first Liquid Studio opened in Silicon Valley just over a year ago: 2017 has seen a spate of openings of Liquid Studios in European cities such as London, Paris, Kronberg, Milan, Stockholm, and Helsinki, not to mention a Digital Hub in Madrid, with more to come.

Another key element of Accenture Technology’s investment in pivoting to the new is the Accenture myWizardcloud-based (hosted on Azure) intelligent automation platform to support the delivery of application services, first announced last April. MyWizard comprises Accenture proprietary industry assets, machine learning, and analytics tools and methods, plus tools from its alliance partner ecosystem. It currently comprises 6 virtual agents that analyze data (and mine Accenture’s cumulative knowledge base) and identify patterns to support the following roles: architect, scrum master, testing advisor, data scientist, project manager and modernization analyst. Clearly, MyWizard has the potential to turbo charge Agile projects; just a year after its launch, it is apparently gaining traction: Accenture claims MyWizard has been used in over 2,300 engagements and currently has over 12,000 active users.

At the corporate level, Accenture has a venture arm targeting tech start-ups. The $100m funding is relatively limited given Accenture’s size we think, but the ambitions are bold. The company has a partnership with Partech Ventures, which itself has €850m of investment. Partech screens ~7k start-ups every year, expanding the reach of Accenture, from 1.5k a year.

… and Liquid Talent

The naming of Liquid Studios also included a reference to talent. In its ambitions to increase the level of millennials in its workforce, Accenture is envisaging different sourcing (“liquid”) models: by 2020, Accenture believes 43% of its personnel in the U.S., including traditional sub-contractors, will be a liquid workforce. Accenture is using crowdsourcing and has made a minority investment in Applause; it is also integrating its HR systems with those of other crowd-testing vendors.

Accenture is also becoming more social. An example of this is its partnership with a start-up, Simplon.co, to develop application development skills among non-IT workers. Is this a communication tool or a true corporate citizen involvement? Time will tell, but numbers are at scale: globally, Accenture wants to bring back to work 3 million people by 2020.

In a nutshell: Execution of strategy

So, what does Accenture’s reinvention of recent years reveal?

Firstly, there is no magic but a systematic redeployment of efforts, in a disciplined manner. Such a transition requires strong vision, systematic and significant investments and purposeful, sustained drive. Having said that, Accenture plans to invest in the range of $1.8bn in acquisitions this fiscal year, which is accessible to many of the top fifteen global IT service vendors, and its vision of the future of IT services is one held by all vendors. This story is all about execution of strategy.

A final comment: one side heading above that “Accenture has repivoted” is just the start of a journey, as Accenture acknowledges in one of its current slogans: “We are continuously evolving”. As more disruptive technologies gain traction over the next few years, and as cognitive technologies generally become more sophisticated, the ability to continue to harness new developments in technology within the frameworks it has developed and the business and industry expertise it has amassed over the years, will continue to be a key differentiator.    

Dominique Raviart and Rachael Stormonth

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