So with the real Governator fully onboarded (not the fake flabby Austrian one with the marital issues), we sent him for his first experience of an “analyst event”… one of those experiences where providers try and convince industry analysts that they’re that little bit different, that little bit unique, that little bit nicer, and that little bit more special that the rest of the pack. And where better to start him off than with Accenture… over to you Mr Tony Filippone:
When I learned that I could attend Accenture’s annual industry analyst event with my fellow HfS Research colleagues, I was intrigued. See, for most of the last 15 years, I’ve had tangible first-hand experience with one of the largest outsourcing firms. In fact, HfS keeps careful tabs on Accenture. Late last year, we featured an in-depth interview with Mike Salvino, Accenture’s Group Chief Executive for BPO where Salvino detailed Accenture’s focus on outsourcing as a growth strategy, the change in multi-tower BPO, and what it takes to meet the real expectations of clients [links here and here]. Could a well-orchestrated industry analyst event tell me anything about Accenture that I didn’t already know?
Accenture’s Discussion Themes
Accenture is very focused on mixing their management consulting, outsourcing, and technology strengths. In fact, that was the day’s primary message delivered in the first two hours by Pierre Nanterme (CEO), Sander van ‘t Noordende (Group Chief Executive – Management Consulting), Kevin Campbell (Group Chief Executive – Technology), and Salvino. Take a leading ERP system integrator, mix it with a BPO powerhouse (see our FAO report), and sprinkle on 16,000 management consultants and, at least in Accenture’s perspective, their clients will get “High Performance. Delivered.” It’s an aspirational, three-star Michelin recipe. However, during the course of the day, Accenture didn’t cite a case study of a client who ordered the multi-course menu. One manufacturing client presented a one-course menu with a light dessert. A healthcare client presented a plain one-course menu. Did these enthusiastic clients get “High Performance. Delivered.”, “High Performance.”, or just “Delivered”?
It may be that Accenture’s BPO clients like amuse bouche with their entree. By this, I mean they want “Delivered”, but they also want improved analytics or business insight. However, they don’t or can’t buy the portion of services that drives exceptional business performance. It is like ordering, “A sugar-free, flourless, vegan cupcake. Hold the sprinkles please.” It probably tastes great, but something is missing. Don’t blame the results on Accenture – their clients’ diet fads are driving the menu.
In fact, Salvino presented a thoughtful generational theory on outsourcing deals that suggests that the first generation multi-tower mega-deals failed, second generation lift-and-shift deals delivered only labor arbitrage, and current generation third generation process-focused-BPO left clients wanting more transformation. Salvino’s team’s perspective is that clients need to focus more on outcomes, not on the transactions, and Accenture’s capabilities can deliver improved business outcomes to their clients. As suggested by one global accounts receivable client, we should care less about transaction timeliness and more on improving Days Sales Outstanding (DSO). I’ll toast to that.
One thing was made very clear: Accenture is going to take big bets on industry-specific process BPO. Their deep industry experience (100,000 internal resources aligned to industries, global scale, and history of organization structure by industry) positions Accenture well to move beyond the standard fare of HRO, FAO, and ADM. Accenture can support complex manufacturing, supply chain, engineering, and healthcare value chains. The question Accenture’s competitors will have is how will Accenture position itself in these industries. As transaction efficiency engineers or industry intermediaries?
Takeaways and Thoughts about Selecting from the Menu
Accenture has the capability to deliver, but clients need to be bolder if they want to get results that go beyond transactional efficiency. They need to consider their corporate strategies, technology platforms, and global delivery model. Clients should consider ordering multiple course menus, although they’ll need to weigh the benefits of one-stop shopping or using different providers for different courses. Even if they don’t want to do it all on day one, buyers should consider a multi-step transformation. I would advise anyone considering selecting a business outcome-based sourcing strategy over transactional efficiencies to order both. And then come back for a second serving of business outcomes.
Accenture has the industry experience to deliver industry-specific BPO, but will Accenture make the investments in industry-specific technology and services? It is one thing to acquire Ariba’s sourcing services business to create a more robust procurement offering that can appeal to all industries, but it is entirely different to compete in industry-specific solutions. Will differentiated industry competitors order the exact same cupcakes? History tells us that HRO mega-deals suffered from resistance to this objective.
If Accenture wants to profitably and impactfully deliver BPO as a utility model, Accenture should consider dropping their agnostic stance regarding technology. They may also need to consider how far they’ll pursue clients with lower aspirations. Will Accenture dispense with its technology agnosticism and quit prettying-up its clients’ processes with improved analytics and wrappers, and instead position itself as a leading service and technology provider for process-specific or industry-specific BPO? Maybe the bigger questions are “When will clients stop ordering single course menus?”, “Will clients order off the menu without customization?”, and “Will competitors eat at the same restaurant?”