Accenture tops $1 billion in gen AI bookings in six months, but overall revenues remain flat as macro-concerns still hit hard

Stuart Lauchlan Profile picture for user slauchlan March 21, 2024
Everyone gets that generative AI is crucial, says CEO Julie Sweet, but the foundation work still needs doing even as discretionary spend remains elusive.

(Accenture's Julie Sweet)

Accenture has chalked up over $1 billion in generative AI bookings over the past six months, over half of which came in during the past three months. CEO Julie Sweet said gen AI is “core” to clients re-invention: 

There is now near universal recognition of the importance of AI, which is the heart of re-invention. The ability to use AI at scale, however, varies widely with clients on a continuum with those which have strong digital cores generally seeking to move more quickly, while most clients are coming to grips with the investments needed to truly implement AI across the enterprise and nearly all are finding it difficult to scale, because the AI technology is a small part of what is needed.

To re-invent using technology, data and AI you must have the right digital core, change your processes and ways of working, reskill and upskill your people and build new capabilities around responsible AI. All with a deep understanding of industry and function in order to unlock the value. And many clients need to first find more efficiency to enable scaled investment in all these capabilities, particularly in their data foundations.

Accenture continues to invest in its own AI capabilities, she added: 

We now have over 53,000 skilled data and AI practitioners against our goal of doubling our data and AI workforce from 40,000 to 80,000 by the end of fiscal year 2026.


She cited the example of AI work being done with bio-pharma giant, Merck to launch “a groundbreaking generative AI program for their employees: 

As a renowned thought leader in the biopharmaceutical market, Merck has long-led the way in investing in its people and helping them build the skills and expertise needed to develop breakthrough therapies. Digital, data, analytics and AI play a pivotal role in discovering, developing, manufacturing, and providing access for patients to medicines and vaccines. By once again investing in its people, Merck will be able to continue delivering on its promise to use the power of leading-edge science to save and improve lives around the world.

Sweet also pointed to Telstra, Australia’s leading telco:

We are modernizing and consulting over 50 disparate enterprise data sources into a small integrated set forming Telstra's governed and secure data and AI core, allowing Telstra to rapidly scale bespoke Generative AI capabilities in the future. Our work will also support the company's efforts to develop responsible ethic and secure market leading AI frameworks, while helping their teams provide quicker, more effective and more personalized customer interactions.

And she noted the work done with retailer Best Buy to re-imagine its customer experience: 

By leveraging data and generative AI, we are helping to transform their contact center operations and improve customer and employee experience.


But while the AI numbers are notable on the face of it, it remains important to note that the $600 million won in the past quarter is a small part of the overall total bookings. Other stats of note: 

  • Total revenues for the quarter came in at $15.8 billion, down 0.1% year-on-year. 
  • Net income rose year-on-year from $1.53 billion to $1.68 billion
  • There were 39 clients with quarterly bookings north of $100 million.
  • New bookings were down two percent year-on-year to $21.58 billion. 
  • The firm clawed in $10 billion of bookings in North America, the highest figure for that region. 

New bookings aren’t coming in as expected, said Sweet: 

We see clients continuing to prioritize investing in large-scale transformations which convert to revenue more slowly, while further limiting discretionary spending particularly in smaller projects. We also saw continued delays in decision-making and a slower pace of spending.

As to the outlook for 2024, Sweet predicts around 90% of opportunities are around AI and data: 

Where we really focused on is meeting clients where they are today. So they prioritize the large transformational deals and then [we are] positioned to capture the spending when it increases…$1 billion [AI] sales in the first six months of the year, that is the fastest we have ever built sales in an emerging technology. What it tells you is that, clients understand the importance of AI that they're going to have to re-invent every part of the enterprise

That means putting in a strong foundation, she added:

You have to remember that you can't just jump to the great data foundation. You need to be in the cloud. You've got to have modern platforms…There’s only still 40% of workloads [that] are in the cloud, 20% of those roughly haven't been modernized. Many of our clients haven't put in the platform. If you don't have the major ERP platforms that are modern, you don't create a data foundation to fuel gen AI in isolation. So you've got to build the digital core. 

And as we've said, there's a lot more to go. That's what's driving these larger complex transformations People will not like to do these big transformations…they’re hard, they're complicated and they need to do them in order to ultimately be able to use the AI, not just in a part of the business or as a proof-of-concept, but really to transform and get the value they now see. Again, you can't jump to AI, you've got to put all the pieces, and a lot of clients aren't there yet - which is our opportunity.

My take

Opportunity it may be, but Accenture’s flat revenues and downbeat outlook for spending in 2024 gave Wall Street the jitters. But Sweet is right to emphasize the importance of the foundational transformation work that clients need to be doing now - a long game, not a short term quick win. As ever, certain investors aren’t going to like hearing that, but that’s the harsh reality. 

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