Accenture’s quarterly numbers this week re-affirmed the transformation at the heart of the firm’s business mode. Quarterly revenues came in $11.1 billion, of which traditional outsourcing delivered $4.9 billion.
It was to Accenture Technology that interim CEO David Rowland pointed in the post-results analyst call, pitching it as "the engine of our strong leadership position in "The New’". 'The New' is a catch-all Accenture term for the likes of AI, analytics, automation et al, the ingredients of digital transformation.
Rowland expanded on three key focus areas for Accenture Technology, usefully back with client exemplars, beginning with Intelligent Platform Services:
We apply our digital capabilities, innovation and industry expertise on top of the leading core platforms, SAP, Microsoft, Oracle, Salesforce and Workday to help clients drive large scale enterprise wide transformation. We are proud to be a leading partner of all the key players and we see continued strong demand for intelligent platform services which again grew at a double-digit rate in quarter three and accounts for about 40% of our total revenues.
As one example, we're helping a leading fashion retailer with a global implementation of SAP S/4HANA that leverages myConcerto. Our proprietary AI powered development platform, myConcerto brings together our deep industry knowledge and differentiated tools and methodologies to help clients innovate and accelerate platform implementation. Our work is driving greater synergies across the retailer's global brands and building a strong foundation for future growth.
Next up was Intelligent Software Engineering Services AKA developing custom systems for clients:
With more than 30,000 people, we have one of the largest teams of specialized software engineers and architects solving the most challenging problems in agile and creative ways using data, the cloud, Artificial Intelligence and other new technologies.
As an example, we're helping Swisscom, Switzerland's leading telecom company transform into a digital service provider by leveraging our proprietary digital omni-channel platform with AI, machine learning and analytics. We are increasing the precision and personalization of the customer experience across all their channels.
Finally, there’s the category of Intelligent Cloud and Infrastructure Services. Claiming the status of the “leading partner” to Microsoft Azure, Amazon Web Services and Google Cloud Platform, Rowland said:
To-date, Accenture has worked on more than 25,000 cloud computing projects for clients including 80% of the Fortune Global 100 and we have more than 77,000 people trained in cloud technology. A good example is our work with Del Monte Foods to unlock innovation and streamline their operations by migrating hundreds of servers and critical SAP Enterprise wide applications to the cloud in less than four months. They're benefiting from a more agile operating environment, real-time customer insights and a 35% reduction in IP cost freeing up resources to grow the core business.
To bolster its capabilities in ‘The New’, Accenture has invested in acquisitions, nearly $1.3 billion to date in the current fiscal year. For example, this past week it announced its intent to snap up BCT Solutions, a privately-held Canberra-based cyber-security firm, with an eye to beefing up its government-targeted offerings in Australia.
Rowland reckons that around 80% of such acquisitions are focused on “The New’ technologies, although there have also been deals to purchase software engineering capabilities or to address vertical market needs, such as banking. Accenture Interactive, the firm’s ‘Experience Agency’ focused on marketing and design services, has clocked up nine deals alone this year, with Rowland commenting:
I'm particularly pleased with the acquisition of Droga5, by far our biggest of the year, which has a large New York based creative agency that significantly strengthens our capabilities to design, build and run customer experiences that grow brands and businesses.
The focus on ‘The New’ doesn’t mean an abandonment of what some might define as ‘legacy’ services, he adds, but rather a new approach to tasks such as legacy application migration:
We are introducing new technology to do that work in a more innovative way. And in doing so, you see those legacy services in application maintenance as an example of decline, but that is by design. You might say we're cannibalizing ourselves, which is in support of our strategy, but we also do it in delivering value to our clients.
He added that ‘The New’ also has implications for what he called “more traditional classic consulting services”, arguing:
While there's still demand for some of those classic consulting services, where our real opportunity is and where we're really focusing on our skills capabilities and serving our clients is the strategy and consulting service tied to work that we do in ‘The New’. And so the classic services have less focus, therefore less growth because we're doing everything rotated to ‘The New’.
As to the future, while ‘The New’ is going to remain the focus for now, there’s also the idea of Industry X.0, beyond the Fourth Industrial Revolution that has attracted so much attention in recent years, a world of 3D Printing, robotics et al. It’s early days, said Rowland, but:
We're super excited about the potential of Industry X.0 We've said that many times before. Relative to Accenture Interactive which still has a big growth proposition in front of it, X is lower on the maturity curve if you will. There's a lot of runway in front of Industry X.0. In many ways it's still relatively immature. But we are working hard to be positioned right at the heart of that wave.
We’ve said many times before that Accenture, under the leadership of its late CEO Pierre Nanterme, saw the writing on the digital wall before many of its rivals and invested early in capabilities that a lot of its competitors are now playing catch-up on. I’ve been in this game long enough to remember when CEOs and CIOs regarded Accenture as the definition of a ‘big ticket’ outsourcing firm. Those days are long gone. In a world of digital transformation, Accenture has done ‘eating your own dog food’ to considerable effect.