Accenture on Tech Trend
Tech focused consultancy will keep ballooning with “New” domains
When I joined Coca-Cola in 1993, nobody knew what Yahoo! was. A new employee from IBM joined in the systems development department of Coca-Cola, a basement of Shibuya headquarters of Coca-Cola Japan. He said in the managers’ meeting that Coca-Cola should deploy the internet services immediately, nobody listened to his opinion. Six months later, Coca-Cola Atlanta launched its first website. Most senior programmers in Japan were writing codes in third generation language, COBOL, and they sat in front of the terminal without interacting others day after day. The meeting was boring, reading the agenda one by one. The question was subdued.
A few years later, the Corporate Office of Coca-Cola decided to launch a world-wide initiative, Project 2000, alternatively called SAP project to streamline operations and to enhance operational efficiency. This was another business game. Once again, forty engineers in the systems development didn’t know what to do with the project at all. They have never heard about ERP, enterprise resource planning. Corporate office hired Accenture, tech focused consultancy, to develop blueprint of the enterprise architecture of beverage firm. Except for a few, 700 Coca-Cola employees in Shibuya Office could not answer the questions from external business consultants. No in-house engineers had ever written the business processes. Coca-Cola ended up paying a lot of money to business consultants. Jokingly, a lot of employees had a relief when the project was renamed to Project Infinity in 1995.
Since then, Accenture rose to a top consultancy in the industry. The Economist reporter, who published a story, “The rise and rise of Accenture”, illustrates the sales pitch, critical success factors, and challenges of the consultancy for the future. As is with other consultancy like McKinsey, the sales pitch falls into one explicit push to a corporate decision maker before he signs a consulting contract with Accenture partners. After a long hearing of situation analysis, a partner of Accenture would say with rush and push, “Your firm will eventually reach the limit of growth and let us take care of you. We know how to fix your problem.” CEOs have signed in business proposal with endless legal agreements.
Accenture has grown big. It employs 500,000 consultants with 200 offices in 51 countries. The revenue reached $43bn in 2019 with the total shareholder returns recording 118% in five years as that of S&P 500 saw 56%. Market capitalization hit $137bn.
This rise is based on two factors, a paper says. One is that the information technology shifted from a mere back-office matter to the business process fiddling to the core competence to generate revenues and increase share values. In other worlds, the project with Accenture became more strategic orientation than operational efficiency. The other is that Accenture was very aggressive to acquire talents for new domains of business; data analytics, mobile, cloud computing, and cyber-security. They make huge investment in those domains by training and acquiring ventures to make it two-thirds of its sales. Clients will receive comprehensive IT solution as long as they pay an enormous amount to the consultancy. Today, a paper says, 200 clients pay at least $100m each year.
When I was in the Project 2000 at Coca-Cola Japan, external consultants were full of Accenture. They impressed me pretty hard. Later when I joined a management consultancy, Kurt Salmon Associates, in late 1990’s, the firms was filled with ex-Accenture supply chain consultants. Their work-style hit me very hard, again. They were demanding a lot to meet the same level of quality from the hard work. I worked from 7:00 am to 11:00 pm Monday through Friday until the huge collapse came on to me. I held up too tight. Simply put, I didn’t know how to work with those soldiers from Accenture.
One guy from Accenture ran into me one day while I was taking a leak at men’s bath room. He asked me, “What are you doing? I am sure that you are thinking about your client, aren’t you?” Later, I didn’t want to see his face again. The very obnoxious but hard-working ex-Accenture sent very offensive messages toward internal consultants. He was in his office on week ends. Clients as well as some partners liked him a lot.
When Coca-Cola engineers looked at the final document from Accenture, they smiled with grin to say, “What is it? Is this worth money spent?” The final document was called deliverable. It is a blueprint to implement SAP, a German enterprise software house. The numbers were not shown but the business process was elegantly described in the written document. A lot of engineers and marketing specialists in Shibuya office were upset about the outcome. Later, I found that nobody in Coca-Cola would have been capable of generating the blueprint like Accenture did.
The reason is that Accenture consultants are not just hard working talents. But the real core competence lies in their thinking processes to solve the business issues. The documents are blueprints of precision machines. The appearance of document look very pretty with fancy charts and graphs, but the flow of document is very persuasive. It took me a lot of time to learn how to generate such a document with other consultants in KSA. I often could not do it properly and struggled with it.
A British paper presents three challenges with questions. Can it keep growing in scale to compete with outsourcers? Are clients losing cash in the covid-19 crisis? Is technology the central source of generating revenues? These are very difficult questions to answer but my observation is that Accenture will keep growing to eliminate those concerns. The more complex the problem becomes, the more thinking methods with hard working talents are required to solve new problems. Accenture has an answer. Since a Chicago-based knowledge house installed a UNIVAC 1 in General Electric, the first computer in America, in 1954, the industry has never shrink. When the market grows steadily, Accenture will balloon. Ex-Accenture is a sort of prize on the resume. I am sure that Coca-Cola head office in Shibuya, newly renovated office building, is currently filled with Accenture consultants, who work on 5G networks, IoT, machine learning. Accenture consultants visit the head office for a kick-off meeting of the project. They open the cans of any beverage for free to meet Coca-Cola managers, who are ex-Accenture. Soldiers are reunited to head-to-head combat to finish the project on time. On both sides, the rules are shared. The only thing to do is to get the right job done.