Accenture moves to embrace cloud ‘at tipping point’

SUMMARY:

Cloud adoption is ‘at a tipping point’ and that’s why Accenture acquired Cloud Sherpas this week, says the services giants’ cloud first chief

Saideep Raj Accenture 250px
Saideep Raj, Accenture

For many of us who’ve been watching the inexorable growth of cloud computing and the Salesforce ecosystem, this week’s move by Accenture to acquire one of the largest pureplay cloud integrators seems long overdue. But there’s a reason why it makes sense to acquire Cloud Sherpas now, as Saideep Raj, Accenture’s global MD of SaaS and emerging platforms, told me this week.

We see this as one of our most significant acquisitions. We see it as powering what we’re calling our Cloud First agenda.

We’ve seen a tipping point where more of our clients are moving and accelerating in this direction.

Our clients are in a mode where this is becoming predominant and we now are positioning these solutions proactively. In the past it may have been more passive, depending upon what part of the world you’re in, or what industry you’re in. Now Accenture’s taking a very proactive stance with Cloud First.

Our customers want us to bring new innovation to them and bring Cloud First as part of that.

When the acquisition is complete, the 1100-strong Cloud Sherpas team will join the existing SaaS practice, which will be renamed the Accenture Cloud First Applications Team, with Raj continuing at the helm, as he has done since 2008.

Although the name is new, it reflects a stance that the practice has always held, he told me, even to the extent of running its own project delivery processes on a Force.com platform it developed in-house right from the start. I first heard him talking about the power of iterative development in Accenture’s SaaS engagements as early as 2010. This philosophy was an important differentation against other established professional services firms at the time, he said:

Others were tweaking what they were already doing rather than reengineering the model.

More than bulking up numbers

Whereas SaaS back then was of interest to just a few, the scale of growth today has now prompted the Cloud Sherpas acquisition. But it’s about more than simply bulking up in numbers, said Raj.

One of the reasons for buying Cloud Sherpas and investing in it is because we like the growth engine that they’ve created. It’s a very creative model. That’s a reason for their uniqueness in the market.

So we don’t want to turn that off and just say that this is a staff haul and we’re bringing them to Accenture as a group of bodies. What we’re saying is, how do we create this within Accenture’s context?

The Cloud Sherpas customer base ranges from small businesses that Raj said may bring innovative approaches as early adopters of technologies such as Wave, through to very large enterprises. Cloud Sherpas has strength in specific verticals such as financial services, where it has earned Salesforce’s Fullforce Master certification in recognition of specific industry expertise.

Google and ServiceNow

Nor is the acquisition solely about bulking up Accenture’s Salesforce resources, with Cloud Sherpas adding particular strengths in Australia and in the Service Cloud market. It is also a leading ServiceNow and Google Apps integrator, as CEO David Northington reiterated in conversation yesterday:

We create the Google business from Accenture’s point of view. Our Google team in the UK really is the Google business. We’re bringing Google to the table across the board.

If you go deeper into Salesforce, both organizations drove down the industry path early, even before it was the hottest thing that Salesforce was doing. In the case of financial services, we’re bringing quite a lot of strength.

Both Google and ServiceNow represent up-and-coming opportunities, said Raj.

Google of course is early in the enterprise in the larger Global 2000 segment. We see this aspect that they’ve got very innovative people, they’re obviously getting a deeper enterprise focus now, and it’s very likely that a few of these very large tier-one Global 2000 accounts are going to go in the mode of going fully on a Google for Apps model. We see ourselves very well positioned for that.

ServiceNow for us is actually a very strong growth engine for us. We look at it as parallel to where Salesforce was a few years ago.

They are in a mode where in the IT service management space, we’re seeing an expansion into other business processes like HR, like legal, which go beyond the core and so we’re rotating to that as well.

An arm and a leg?

Should enterprises worry that Accenture’s drive into cloud heralds an era of the same high professional services fees that were previously associated with the worst days of ERP? Raj answered the question before I had chance to raise it, when discussing the advent of industry cloud providers such as Vlocity, which package up vertical capabilities so that enterprises don’t have to custom build them from scratch.

People often ask us then this question, and I shall be very blunt, what does that mean for your services? You used to get all these customization services around a solution that Vlocity’s now built.

I’ll tell you this. The reason we’re so confident in that model is because, when there’s class A software that solves the industry need, we generate more services from all the other things that frankly our clients need to do beyond just going and customizing the solution. Frankly it’s all around the business process change, the change management, the transforming of services, the integration with all the back-end systems that these things are part of. What we find is that those are very significant services opportunities.

Northington explained that the cloud project delivery model is different, too, in a way that allows enterprises to test the value they’re getting as they go.

In the days of big ERP, it was not out of the question for a project to extend beyond the original timeline, to extend beyond a year.

Our projects don’t look like that. We may work with a client over that long period of time but by the time we’ve done that we’ve done multiple and in many cases numerous projects, all of which have created their own return, created their own benefit, in three months, six months, nine months, seven months, whatever the case may be.

The decision to fund the next phase is predicated on the benefits obtained in the first phase. And so there’s a very different feeling when you’re the client and you see something coming back through very quickly that you can rely on and count on and see your people using, see adoption happening, versus working on it night and day for a year and a half, two years, before you can really count any benefits, and then only to find out maybe that you don’t like it. That’s actually 180 degrees different.

But it does cost money. Our clients understand that if they’re going to get a truly innovative, quality result, they want us to bring the right kind of people, with the right skills, with the right consulting talent, to really do and create that transformation, that innovation, that changed way of doing business that produces the results.

Reactions from Bluewolf and Appirio

Meanwhile, other specialist cloud integrators generally welcomed the acquisition news as a validation of their own approach. Eric Berridge, CEO of Bluewolf told diginomica that he felt it will help his company demonstrate its differentiation:

We are 100 percent focused on Salesforce. If you look at a company like Sherpas or Appirio, they’ve built practices around Workday and ServiceNow and all these other tangential applications that to us really don’t have a whole lot to do with customer experience. We think Salesforce is the customer experience engine that organizations need to embrace.

We invest in resources that know the ecosystem technologies, like an Apttus, or a Steelbrick, or InsideSales. We don’t invest in technologies that we consider to be outside of the ecosystem.

The good news for us is, if you work with a client, the difference between an Accenture and a Bluewolf is fairly easy to discern, whereas the difference between a Bluewolf and a company that’s closer to our size is a little bit more difficult to discern. It’s more apples and oranges. So we think it’s a positive.

Appirio CEO Chris Barbin took a similar line in a statement issued by the company:

For Appirio, these are exciting times as we’re now one of the only truly independent services providers that customers can come to for a unique delivery experience.

My take

Accenture has played an astute hand to build a strong presence in the Salesforce ecosystem that will have rivals looking to play catch-up. But the ecosystem is expanding at such a strong rate that it’s by no means game over yet.

For enterprises, the main takeaway is that there’s substance in this ecosystem, which provides confidence in its ability to deliver the goods.

Disclosure: Salesforce is a diginomica premier partner. My travel to attend Dreamforce has been funded as part of a paid consulting engagement with Vlocity, a Salesforce ISV partner.

Image credits: Headshot by Accenture, feature photo of businessman standing on cloud © TSUNG-LIN WU – Fotolia.com