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Monday, November 08, 2004

Accenture's New High-Wire Act via Bweek

Businessweek says, Accenture's CEO Green is going after bigger, longer contracts and guaranteeing results. Excerpts:

The ambitious vision is based on an audacious concept that Green calls "high-performance business." The idea is that Accenture will dream up and build services so powerful and so exceptional that they will be required to compete in any industry, from financial services to manufacturing. Green figures that if Accenture can deliver, the firm will be able to produce double-digit earnings leaps and revenue growth that outstrips the tech-services industry. "We want to become part of the fabric of the industries we serve," says Green. "How do you become the de facto standard for a set of products or services that an industry uses to operate? How do you become not optional?"
Traditionally, tech consultants have helped companies install computer systems and got paid for getting the gear in place. Green is trying to lead a shift away from using tech for tech's sake and instead use it to achieve specific business goals. Want to cut costs 25%? Improve customer satisfaction 10%? Accenture will guarantee that you get there -- or forgo a chunk of its pay. Under a contract with British travel company Thomas Cook, Accenture's bonus depends on reaching five metrics, including cost-cutting targets. So far, so good. "We're achieving a greater level of productivity than our competitors," says Ian Ailles, managing director at Thomas Cook. Today, 30% of Accenture's contracts include quantitative measures -- and that number is growing.
Green is betting big that Accenture can become the must-have adviser for Corporate America. The company is boosting research and development and adding staff by the truckload. It raised headcount by an astonishing 20,000 during the fiscal year ended on Aug. 31, to 103,000 employees. It expects to add another 20,000 workers by next August. It's also bidding for multiyear, multibillion-dollar contracts that are much larger than those the firm has taken on in the past. Such contracts have become major money-losers for some rivals. But Accenture believes that, by blending outsourcing and other work, it can provide even more value to its clients.

The tech-services industry has been whipsawed as the red-hot demand of the late 1990s turned into the deep freeze of the past few years. At the same time, competition is getting fiercer. A pack of scrappy rivals from India are starting to encroach on Accenture's turf, big kahunas such as Hewlett-Packard Co. are entering the market, and Green's most fearsome rival, IBM (IBM ), is pushing hard to convince clients that its legions of scientists and engineers make it a more valuable partner than any stand-alone consultant. "Our competitors don't have the capabilities to address the market the way we can," says Laurie Tropiano, an IBM vice-president.

He was a proponent of outsourcing 15 years ago, when few at the firm believed in the nascent business.That's the kind of bold thinking Green needs to make his high-performance initiative pay off. The concept grew out of a research effort that found that fewer than 1 in 10 companies outperforms its peers over a 10-year period. The goal is to use Accenture's business and tech knowhow to help clients become those superstars. Accenture is definitely making headway in the marketplace - be it cutting edge work or leveraging offshoring or in attracting talent, in tradeshows, they are definitely felt by competition in the marketplace.
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