Accenture CEO Julie Sweet - how we're dealing with Coronavirus and how it's impacting our clients needs

Services behemoth Accenture turned in a strong set of Q2 numbers yesterday, but lowered guidance for the rest of the year as the Coronavirus crisis continues, although CEO Julie Sweet argued that the firm is well-placed to ride out the storm.

For Q2 FY20, total revenues were up 8% year-on-year to $11.1 billion, more than 65% of that coming from the so-called The New, Accenture’s catch-all terms of digital, cloud and security services. By sector, Products accounted for the largest chunk of that at $3.2 billion, but Health and Public Services showed the highest annual growth rate, up 15% to $1.9 billion.

But across all of this hangs the spread of Coronavirus and the still-unknown impact that it will have on spending decisions. For her part, although guidance, has been lowered, Sweet  picks out five key factors that she believes positions Accenture well:

(1) Virtual team structure

Our global management committee already operates our business as a virtual team. We do not have a headquarters, our top leaders are spread across the globe and Accenture has operated this way as a management team for over three decades. And so mobilizing to address this situation has been seamless.

(2) A standing crisis management committee, led by Chief Operating Officer, Jo Deblaere

As designed, we were able to quickly activate our protocols and a team of our most senior leaders, who under the leadership of Jo and with support from across Accenture has done what can only be called a truly remarkable job. We have had these protocols in place, which we have tested and we tested for years through real and simulated crises and they are focused in our people, business continuity, facilities management and financial impact, among other things.

While we had not planned for a global pandemic, the ability to trigger these protocols and then adapt for this unprecedented situation is allowing us to move rapidly. For example, we have restricted travel and asked people to work remotely from home where possible. As of today globally, we have already enabled a very significant percentage of our people to work from home, including approximately, 60% of our people in our centers in India and the Philippines. 

Some of our work cannot be done from home given the nature of the work and some employees do not have the ability to work from home. In these cases we have reduced the density of the people in our offices and centers and instituted extra hygiene procedures and social distancing protocols. We are working closely with our clients every step of the way as they also adapt to remote working environment and to-date, have not experienced any material service interruptions.

(3) Virtual working expertise.

We are deeply experienced in working virtually and already have deployed at scale in the normal course in our business collaboration technologies and infrastructure for remote working. For example, we are the largest user of Teams by Microsoft in the world and in the last few weeks as we rapidly ramped more people working remotely from home, Teams audio usage has almost doubled from our typical 16 million minutes per day to almost 30 million minutes per day. We are using our deep experience of working together virtually across Accenture and with our clients to help adapt how we work together from home.

(4) Staff retention.

Our strong corporate functions and investments we have made to digitize Accenture have always been key to our attracting and retaining talent and operating Accenture with rigor and discipline. Our top notch professionals in Finance, HR, Operations, Geographic Services, Marketing and Communications and CIO, enabled by these significant investments in our own digitization, are making the critical difference in how we are responding agility to the crisis and we are deeply grateful for their dedication and hard work.

(5) Services relevance.

As our record bookings in Q2 demonstrate, our services are highly relevant to our clients. Our rotation to The New over the last several years, now at over 60% of our business, our deep clients’ relationships with the world’s leading companies and our unique business model will enable us to help our clients succeed in this uncertain period and continue to position us strongly for the long-term.

Client behaviors

Sweet said that Accenture is already seeing changes in client behavior:

Our clients are focused, as a first priority, on the safety of their people and adjusting to the need to have remote working, which for many of our clients is very new and we’re helping many of our clients make that adjustment. So, for example, we have a client who asked us literally to go, when we partnered with Microsoft to do this, to go from zero people using Teams to in five days it’ll be their entire 61,000 workforce. So, in 5 days zero to 61,000. So as we look at it, our clients are very much focused on how to adjust to remote working.

The ease or otherwise of doing this varies according to the sector in which an organization operates, she added:

Our clients, for example, in the public sector are having to respond not only for their own work forces, but to what they need to do for the public. So, for example, we’re working with some of our public sector clients to deploy more virtual agents that are pre-configured with COVID-19 advice to continue to free up capacity, to add to the more critical questions in our call center.

The second activity centers on mission critical services, said Sweet, which again varies by company and sector:

But if you look at the work that we’re doing with our clients, we’re working very closely to them on mission critical services. We do the settlement of services of trades for major banks. We do payroll services. We support many different healthcare services. We’re doing trust and safety services, keeping the Internet safe. So there is a big focus in this first phase on mission critical services, working together with our clients, being able to do that in some cases remotely, in some cases continuing to go into the centers.

The third thing that Accenture is seeing among clients is ongoing impact assessment of both the global health crisis and the disruption in the economy. This takes into account travel restrictions, the restrictions of people needing to shelter in place:

As you might imagine, that assessment occurs along two vectors. It comes at the intersection of industry, technology and geography, as well as the individual circumstances of the clients. I have a client in the utility industry that is of course dealing with the macro environment. But in my discussions with the CEO just this week, the first question was, ‘Hey, how do you feel Accenture, about your COVID-19 arrangements, because you do a lot of work for us?’. And then we went right back to our usual touch point on the ERP system that we are putting together, which they consider to be mission critical for how they operate.

On the other side of the spectrum, you have a client in the automotive industry, that has been hard hit. We are executing our strategy beautifully there, because we’re helping them with enterprise transformation and they are making choices in this environment, given what they’re facing. So in that case, for example, they said, ‘Look our HR transformation is mission critical. We may need to and are likely to postpone the finance transformation’. They’re working with us and their other partners, as they make the essential choices you would expect in this environment. 

If you go to a consumer goods client, that has less expectation of significant impact, our conversations with them are, ‘Help us understand how you are going to adjust and can we move even faster, because we think there is a competitive advantage in putting in place the ERP system that we’re helping them do’. And then of course you have something like travel, where what is critical at this time is very, very significantly different than many of the other industries for the obvious reasons.

Knowledge transfer

With organizations forced to come to terms with remote working at a rate outside of their own control, there’s also the questions of skilling up workforces and knowledge transfer to be addressed. This again Sweet pitches as a strong point for Accenture:

Because we are so familiar with how to do virtual, what we have done is rapidly look at…how do you do knowledge transfer remotely? Some of it is already there and to be honest, we have had a lot of that. Oftentimes our clients have wanted to do it onsite even though we said it could be done much more efficiently [remotely]. This is really going to be helping accelerate also the digital transformation of our clients, because clients…who don’t themselves work remotely, who aren’t using collaboration technologies, are now being forced to. The upside for them is really the opportunity to accelerate the cultural change and the digital transformation.

There are some new knowledge transfer initiatives, she added:

We have put in place new ways of doing that, but it’s based on thinking that in this case we have already done. If you think about SAP, one of the first things we did - [for] SAP, Oracle, any of our systems - is that we have looked at all of our methodologies. Obviously our methodologies today do involve being onsite and so we are converting them and then pushing that out across our workforce and helping our clients understand it. We are rapidly doing testing of those methodologies.

At some point of course there are limitations. You do need to be able to get together for some pieces of it. And of course just remember, today, we have people working in offices, as do our clients, for essential work. So, on balance, we have rapidly moved to use all of our knowledge to be able to convert, to help our clients do that, to change our methodologies and then as we continue forward, depending on the duration and the magnitude, our expectation today is we will get into a rhythm that continues to allow the essential things to happen over time.

My take

Some good advice based upon some practical learnings. How organizations behave and react on the supply side will undoubtedly influence reciprocal activity on the buy side. Learning from and supporting both sides of the equation will be critical and once the crisis is past, how we all conducted ourselves is something that will be taken into account.