Accenture's digital foresight continues to pay dividends
- Summary:
- Accenture continues to benefit from getting skin in the digital game earlier than some of its rivals.
Accenture’s investment in digital transformation is paying dividends according to CEO Pierre Nanterme, while the traditional outsourcing and ERP businesses continue to perform well.
Some core numbers:
- Net revenues for the quarter were $7.9 billion, a 10% local currency year-on-year rise
- Consulting bookings were $3.9 billion, up 7% year-on-year
- Outsourcing bookings were $3.8 billion, up 7% year-on-year
“Digital related services” added “very significantly”, while new divisions Accenture Analytics, Accenture Mobility and Accenture Interactive also contributed to overall growth.
Nanterme expanded on the various component divisions performances:
In Accenture Digital we continue to invest to expand our capabilities in Accenture Interactive to better serve Chief Marketing Officers. Earlier this month we announced acquisition of Reactive Media one of the Australia’s leading independent digital agencies. Reactive specializes in creating differentiated customer experiences through digital channels such as apps, and e-commerce websites.
In Accenture Technology we just announced a major strategic initiative with Microsoft to drive enterprise cloud adoption. The Accenture hybrid class solution for Microsoft Azure will provide a new wave for our clients to transform to a truly enterprise wide hybrid cloud environment. The unique solution is being co-engineered across Accenture, Microsoft and Avanade our joint venture to bring new capabilities and innovation to our enterprise clients.
In Accenture Strategy our unique approached combining business strategy and technology strategy is resonating well we see with executive. A great example is the work we are doing with one of the largest bank in Canada where our industry expels our designing and implementing a global technology strategy to drive 20% ongoing annual savings by optimizing the bank's portfolio of applications.
But with digital and cloud now accounting for 20% of revenues, Nanterre highlighted these:
Clearly digital related services are a business where we invested significantly [for] seven years and when we are getting a very significant return. Our digital related services are in the range of the $5 billion and indeed are growing in excess of 20%. So indeed it is an engine for growth. This is what that was supposed to be. We invested a lot, organic or through some very targeted acquisition.
We will continue moving forward to invest both in digital and both in our rationalization capability to do well, especially around the applications [which] we see growing double digit and operations growing double digit and we will continue having our large scale transformation programs.
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There’s also still a lot of life in the more traditional areas of Accenture business, such its ERP-related services:
We are extremely pleased with the traction we are getting. If I had to mention one, we are already leading on HANA implementation with SAP on a global basis.
[There’s also] the more classic legacy ERP to support the global expansion on very large clients. I have in mind two or three recent situations where we’ve been winning some very significant ERP [business] in finance and accounting, in supply chain to support the transformation and the expansion of leading global groups.
I have three illustrations in mind coming in Europe for very large global group and very large ERP. So we’re pleased with that business. Of course the digital related services are high per growth, are driving the growth and this is where we are investing. But we are pleased with where we are with our ERP business which has been stabilizing this last quarters.
All told, Accenture’s digital investment is paying off, reckons Bozhidar Hristov, analyst at Technology Business Research, with its “aggressive execution approach” helping it to stay ahead of competitors. Hristov says:
The permeation of digital services across all operating groups, markets and employees’ skills allows Accenture to capitalize successfully on demand for such offerings from mature and emerging market clients seeking to transform IT operations and/or create operational efficiencies.
The company has managed resources to market conditions and provided an agile structure in which pairing investments in digital with cloud delivery services and strategy consulting allows the company to develop and deliver market-relevant, price-competitive offerings showcasing business outcomes to IT budget keepers.
Moving forward, Accenture is positioned to stay ahead of rivals. In CY15, however, it will be required to deliver at speed ahead of the digitally enabled IT services market maturation as MNCs and India-centric competitors are investing increasingly in similar capabilities and hiring similar digitally experienced talent.
Digital is becoming the accelerated investment frontier for Accenture, as the company seeks to establish a foothold within the market, whose decision makers (CMOs) are increasingly becoming the core budget keepers.
My take
We’ve said it before and I’ll say it again now: as the outsourcing and services industry gets its head around the cloud and digital, Accenture’s foresight in getting genuine skin in the game is paying off in spades.