Don't mention the outsourcing, but dig deep into digital at Accenture

Stuart Lauchlan Profile picture for user slauchlan June 25, 2015
Summary:
Accenture's not talking about outsourcing so much these days, but can pitch a strong digital message, says CEO Pierre Nanterme.

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Pierre Nanterme

Accenture’s early investment in digital services capabilities continues to pay off with the firm reporting a 30% increase in digitally-derived revenues for its latest quarter.

Digital work now accounts for 20% of overall revenues of $7.8 billion, says CEO Pierre Nanterme:

Demand for digital is pervasive across the entire business. And we’re leveraging our digital capabilities in the services we provide to clients in every industry around the world.

The digital revenue total comes from all the digital activities across the firm’s five businesses - Accenture Strategy, Accenture Consulting, Accenture Digital, Accenture Technology and Accenture Operations.

He cites a number of use case examples to make his point:

We are helping Pizza Hut, build and operate the new cloud-based digital ordering platform to transform its customer experience and boost online sales. The new platform will also enable Pizza Hut to expand its digital marketing capabilities through enhanced customer segmentation, analytics and mobility programs.

We are working with a leading global shipbuilding company to deploy an Internet of Things connected platform to enable real-time monitoring of its shipping fleet. We will use over 100 different kinds of sensors to provide predictive maintenance and spare parts optimization.

And we are helping Rio Tinto, the global mining company, accelerate its journey to become a digital business by migrating its enterprise IT systems to an as-a-service solution on the Accenture Cloud platform.

Rio Tinto expects to realize significant cost savings, as well as increased agility, from the consumption-based pricing model. At the same time, we continue to invest to further differentiate Accenture and to scale our capabilities in order to capture new growth opportunities in the marketplace.

Healthcare and federal government are highly receptive to digital offerings, he adds:

In healthcare, we decided to be extremely digital, which we call connected healthcare and a very significant differentiation in healthcare. If you look in terms of public sector, we have been among the first to launch the local exchange insurance centers .

In Federal, we recently invested in Agilex to bring more digital rich services in the context of our Federal business. So, again, for us the name of the game is always the same is to avoid commoditization and low value services in each and every industry, and to relentlessly focus on where we could bring innovation and differentiation in each and every industry at Accenture.

Digital direction

Some key digital stats of note:

  • Accenture now has 28,000 people working in digital services.
  • There are now 15 Fjord digital design centres around the globe and more to come.
  • Accenture Mobility has developed 1000 apps to date, across multiple industry sectors.

The firm has made strategic investments and acquisitions to flesh out its digital portfolio. During the past quarter, it bought retail player Javelin and Salesforce consultancy Tquila as well as Swedish e-commerce consultancy Brightstep.

Nanterme states:

We are looking in acquisition in some very specific areas as you know, from deep expertise in consulting and strategy for an industry standpoint to digital native organization to companies with a deep footprint in operations, I’m thinking about procurement as administration and we will continue to do so. And look at the kind of acquisition we believe we could get an excellent return and they’re going to further improve our differentiation, our competitiveness and our relevance in the business.

We are in the range of 45 [acquisitions in the past 3 years] and we are pleased with the companies we integrated. It’s a very competitive market, because everybody is looking to buy company who are going to bring differentiation.

I think we are differentiating ourselves in this acquisition market with our brand.

While acquisitions bring with them talent, there’s also the need to bring in new skills. Here Accenture is doing well, argues Nanterme:

I tend to believe, without being arrogant at all, that our brand is serving us very well as a magnet for talent.

That magnet is attracting a wide range of skills, says Nanterre:

I'm thinking about the business scientists we are hiring. I'm thinking about the PhDs we are hiring to drive algorithms in Accenture Analytics. And I'm thinking as well about some leading edge designers, we all hiring for Fjord.

At the other side of this spectrum, we are now one of the largest enterprise apps developer sin the world. All this apps development is done in our centers from India as an illustration. And they are marvellous app developers from India.

I’m thinking about analytics. We have very strong people in our delivery centers, who are everyday doing analytic work from a lower cost location. So it’s not different in digital from the rest of Accenture, where we are always looking to put the right people at the right place with the right cost. We make sure that we have the right skills that we are cost competitive. It’s exactly the same with digital.

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One interesting side effect of Accenture’s drill-down on digital is a change in the internal and external lexicon of the company. Nanterme explains:

We’re not using any more, or much more, the terminology of consulting and outsourcing.

When we created Accenture Operations, we created a very unique capability in the marketplace. I don't believe that anyone else has been building a similar capability with two major capabilities in it, one, which is around infrastructure services, where you will find as much consulting and outsourcing in it.

So it's a combination of services from cloud-related services leveraging the Accenture Cloud platform from high value services in security and from indeed infrastructure outsourcing.

The other significant capability is going to be around business process management. We are providing business process more and more as a service platform based in the cloud. What we are doing is extremely leading edge with procurement, where we’re probably the first in the industry to provide aprocurement-as-a-service platform based with an economic model on the consumption and on the pure transaction.

Overall, the course set for Accenture remains clear, concludes Nanterme:

Our strategy of rotating the Accenture business to be more digital rich and cloud services rich is paying off. Today the right entry point around the world is this unique combination of digital-related services and cloud-enabled services. So if you’re digital rich and cloud rich then you have probably the right formula to drive more growth in each and every market.

My take

As we’ve said before, that early investment in digital offerings has given Accenture a competitive edge in what used to be the outsourcing and consulting market.

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