A Look at the Future of Consulting

IS578 Final Paper

Submitted by Armand Abaya Shakir Akbari Mariamma Kallanchira March 14, 2006

IS578 Final Paper (WQ 05-06)

Table of Contents
I. History..........................................................................................................................3 II. Organizational Structure..............................................................................................4 III. Culture........................................................................................................................6 IV. Recruiting Process......................................................................................................8 V. Training.....................................................................................................................10 VI. Accenture and Its Competitors.................................................................................12 VII. Future of Accenture................................................................................................13 VIII. References............................................................................................................16 IX. Appendix..................................................................................................................17

IS578 Final Paper (WQ 05-06)

I.

History

Accenture first started out as Andersen Consulting, the consulting division of Arthur Andersen. In 1989, a group of partners from the consulting division of Arthur Andersen firms around the world decided to separate from their mother company to form Andersen Consulting. The focus of the new organization was consulting and technology services related to managing large-scale systems integration and enhancing business process 3. Despite the split, Arthur Andersen and Andersen Consulting units worldwide were still connected through their contractual agreement with Andersen Worldwide Socit Cooprative (AWSC), a Swiss-based administrative entity tasked to coordinate the two separate firms. In December 1997, Accenture accused AWSC and Arthur Andersen of breach of contract and therefore sought to terminate all contractual ties with them. Accenture claimed that AWSC had not properly coordinated the practices between Arthur Andersen and Accenture units and that Arthur Andersen firms were guilty of directly competing with the Accenture firms. Accenture finally ended all contractual obligations to AWSC and Arthur Andersen in August 2000 after the International Chamber of Commerce decided in their favor. In January 2001, Andersen Consulting changed its name to Accenture as a result of its separation from Arthur Andersen. Accenture then undertook a massive re-branding campaign to promote its new name and image. To keep up with its rapid growth and to stay competitive in the market, the partners of Accenture decided to become a corporation. In July 2001, Accentures initial public offering finally materialized when it listed on the New York Stock Exchange.

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II.

Organizational Structure

Accenture's strong organizational structure has been a one of the key ingredients in the foundation of its success. As with all large companies, Accenture will occasionally fine-tune its subunits and reporting structure, in response to market demands and/or immerging technologies, but not even after going public in July of 2001, has it significantly changed the company-wide organization for a considerable period of time. The stability of this foundation has freed Accentures resources to stay focused on executing core business in the competitive market of Information Technology consulting. Accentures organization has evolved into a complicated matrix structure. This organizational method is common in the consulting world and has the following characteristics: each worker is assigned to two bosses in two different hierarchies. The first hierarchy is the executive aspect and is there to get projects completed using the resources that the company has. This is the top most level at Accenture, and is the aspect that did slightly change when Accenture became public in 2001 (partners became executives). The second kind of hierarchy in the matrix structure is the functional aspect and is to assure that every person in the organization is well-trained in an industry and is also measured by a boss who is the top-expert in the same field. At Accenture this functional aspect is also a matrix and is made up of five industry-based operating groups and three capability groups. The five operating groups are: Communications & High Tech, Financial Services, Government, Products, and Resources each with their own subgroups. The three capability groups are Business Consulting, Technology & Outsourcing, and Business Process Outsourcing. This matrix of operating groups (with their subgroups) and the capability groups can be seen in Figure 1.

IS578 Final Paper (WQ 05-06)

Figure 1. Accenture Capability Groups1

The highly intelligent and complex nature of the functional organization of Accenture has been one of its greatest strengths when it comes to implementing core business. In order to execute successfully, Accenture has organized its nearly 150,000 employees under 4000+ managing senior executives (known as partners prior to 2001). The characteristic of having so small business units lead by empowered senior executives makes it stand out from its competition and also leads to what the career path at Accenture is. The career path at Accenture is very straight forward and it is expected that the employees will climb to the top most rung on the corporate ladder. This is one of the reasons that Accenture has been able to attract and retain the some of the best people in the market. An entry level position at Accenture is an Analyst which is the front-line of the company. Their main responsibilities are to apply explicit knowledge to complete technical tasks for the client. The position up from analyst is a consultant; a consultants responsibilities are similar to that of an analyst but they also have a hand in directing the development of operations through out the duration of a project. Moving up from the consultant level is the manager and senior manager. Their job is to establish a sense of mission, vision and goals for each client or account, emphasizing improving workforce and service delivery, and to disseminate the message to the consultants and analysts

IS578 Final Paper (WQ 05-06) that report to them. At the top of the ladder in Accenture is the senior executive,

previously called partner. The senior executives are constantly looking for innovative ways to help the client; they become a type of executive coach. Senior Executives help and lead the managers in what Accenture is willing to offer the client; they delineate which teams will do what work. They write the contracts and see to it that the bigger plan is being carried through. The organizational structure at Accenture is a complex one. There are many different sectors that an employee might work in and in their time at Accenture they will likely work in many of them. To address the management issues that go along with the many different ways to be an expert, Accenture has spread much of the decision making to the levels of personnel in the firm who would be best equipped to make or influence those decisions (i.e. consultants help with the micro management and senior executive the macro). This separation of power has enabled and will continue to enable Accenture to survive in even the worse business conditions. It gives them the advantages of a big company (lots of resources) and the efficiency of a small company.

III.

Culture

Accenture has a high performance culture. The corporate culture is rather unique, because they often hire college graduates who are sharp and then train them to specialize in a demanding skill. One of Accentures assets is having the Best People. Most employees are very active within in the firm; its highly encouraged to participate in special interest groups, and recruiting within the firm. Being a global firm, the diversity of its employees is tremendous. There is an expert in almost everything within the firm and there are resources within the firm to locate these experts.

IS578 Final Paper (WQ 05-06) A high-performance business like this brings strong returns to shareholders, achieves consistent and solid revenue growth, maintains a high return over the cost of capital, and so are rewarded with valuations that indicate strong growth expectations. The organization has a leadership culture that unleashes the business's energies and capabilities. They are not only skilled in just developing strategies but also in executing them. That is the key factor to manage the balance between the responsibilities of today and the challenges of tomorrow. In turn, employees are associated with the goals of the organization, and they are highly competent with the right skills. The culture of individual offices is ultimately determined by the managing partner. Though the number of employees is large, they maintain an organization wide culture. This is possible due to the common training. Employees who do well at Accenture should pay attention to the organizational structure with its specified practices, specific hierarchy, and defined code on how to do the job the Accenture way. Accenture can be a very demanding place to work. The employees are usually categorized as work hard, play hard. Performing for the client is always demanding, especially when there are tight deadlines. It is rare to see a consultant put in 8 hours of work and call it a day; their day will go home with them. But at the same time the firm prides itself in having a good work/life balance for its employees. Accenture is a company that has very high standards and they require dedication and self-discipline on the part of employees who have the commitment and initiative to perform. This hard work is paid back in advancement based on merit not necessarily based on seniority. There is an appreciation of co-workers. Theyre fun to be around; they work hard. They have very talented people who are concerned and united and smart, who know their stuff and contribute. Most projects allow employees to work from home on Fridays or even not work at all on Fridays if all the hours for the week have been put in.

IS578 Final Paper (WQ 05-06) Accenture works hard to achieve and maintain a diverse workforce. Company leadership supports and works hard to bring diversity among employees. Diversity plays an important part in its culture. The firm offers internships, jobs, and scholarships regardless of nationality and other background. Accenture also provides its employees with workshops and training programs such as Valuing Diversity and Men and Women as Colleagues. They have many programs for women and minorities. Accenture's reasons for diversity are sound: We want to continue bringing in the best and the brightest, and retain them, so we want to make sure that if minorities come in, they see people like them in the higher ranks. And we serve clients, so we want to show our clients a diverse team. Accenture also tries to achieve diversity within its network of affiliates and alliances.

IV.

Recruiting Process

Like most consulting firms, Accenture aims to recruit the best and the brightest. To identify candidates who can potentially fit well into the organization, Accenture has a rigorous and thorough recruitment process. Although this process may differ slightly from one Accenture country office to another, the basic recruiting components and criteria are the same. Since the company culture is fairly consistent across offices, Accenture seeks professionals who can fit and complement their culture. Accenture identifies schools at which they would like to recruit students. Once these schools have been identified, a representative is sent to establish contact, perform marketing roles and conduct interviews at the campuses. Students at schools where Accenture does not directly recruit from are still encouraged to apply by sending their applications online or contacting their respective campus career centers. Once applications and resumes have been screened, applicants that have been initially identified to have potential are invited for the first-round of interviews. The first

IS578 Final Paper (WQ 05-06) interview deals with a very basic assessment of the applicant. Accenture will more often than not ask the following questions during the first interview4: Ive seen your resume; Can you make it come alive? Why consulting? Why Accenture? What groups within the firm are you interested in? Why? What do you know about Accenture?

The second-round of interviews will consist of behavioral questions that will determine if an applicants personality type will fit well into the company culture. The interviewer will be asking questions about previous work or school experience that may imply how well the applicant can perform at Accenture. One common behavioral question is Tell me about a time that you solved a challenging problem. Depending on your answer, the interview can ask several follow-up questions such as What made it challenging? What were your thoughts as you were facing this problem? How did you attempt to resolve it? Accenture seeks professionals who are well-rounded with strong communication skills, problem-solving abilities, an interest in technology, determination, a strong learning capacity, a willingness to work hard and flexibility. The second-round interview will likely deal with the following areas: Goal-Setting Proactive approach Critical thinking Thoroughness Forthrightness Self-control Interpersonal flexibility Self-starting ability

The number of interviews and type of questions can vary as it also depends on the needs and nature of the position being applied for (experienced or entry-level, technical or non-technical, strategy or service line, etc.). The various service lines of Accenture normally hire people with educational backgrounds related to their area of expertise. Solution operations, for example, usually

IS578 Final Paper (WQ 05-06) hire professionals with degrees in management information systems, industrial engineering, math and economics. Tech-oriented service lines have professionals with computer science, electrical engineering, computer engineering and computer information systems degrees. The Human Performances service line, on the other hand, seek people with backgrounds in organizational design, organizational behavior and industrial or organizational psychology. Strategy professionals normally possess MBAs, other advanced degrees or undergraduate degrees from top universities.

V.

Training

Accenture is very concerned about training and increasing ones skill set. The firm has a knowledge base that is dedicated to computer based training, also known as CBTs. There are CBTs for all facets of the work. In addition they regularly offer web seminars that multiple people can log into and participate in. Much training is done on site, by shadowing an expert or someone with a good amount of experience. An person in Accenture's training department says, Any software that you'd be expected to work on, you're going to get trained on it. It's very well organized. Another employee thinks Accenture tries to stay on the cutting edge of software: Training is changed on a regular basis. When I started, it was all COBOL. Then it went client server, then HTML. Now it's Java, ASP, and other Internet-based e-commerce languages. Live training courses are arranged by employees within in the firm and offered to all employees. The firm also sends its employees to vendor training if there is no training that the firm can provide within. Each employee has a training budget and it is up to him/her to take the initiative to use it. Accenture provides technical and managerial skills development, and in 2000 the firm spent nearly six percent of its revenue on training. Entry-level employees get an

IS578 Final Paper (WQ 05-06) average of 750 hours of training during their first five years. The firm used to share training space with Andersen at St. Charles, but now most of the training is offered online. Consultants can now register for a wide range of online classes. The goal of Accenture's massive training efforts is to enable its numerous specialty groups and many international offices to work together to offer its business integration solutions to clients. One person says, You speak the same language as far as what you're trying to achieve with a client. The training puts you on the same page. At the same time, new consultants learn how to use the Knowledge Exchange, Accenture's internal information management system, which enables them to tap into mountains of data from all the firm's consulting assignments, regardless of business group or geographical location. The goal is to create a global business situation for Accenture consultants. The training programs are often taught by Accenture's own consultants. A recruiter says, Our people, as part of our culture, have always been encouraged to participate actively in training opportunities. The participation involves not only taking the training but a responsibility later in your career to teach others.4 The coming years should focus on competencies that have the most significant impact on driving business results such as specific functional competency requirements. Moving beyond functional skills, workers will be trained in a knowledge-based economy. Some other skills like critical thinking, creative problem solving, and the skills required to establish and grow social networks which will bring success. Accenture has developed a core prospectus for Enterprise workforce professionals that offer a regular and multitiered approach to professional development. Each business practice or workgroup builds on the core Enterprise workforce curriculum by developing, selecting and providing learning solutions that meet their specific business needs.

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VI.

Accenture and Its Competitors

Accenture strives in the industry of information and management consulting. It has maintained a compound annual growth rate of 16% for the last 15 years (source Annual Report), and has grown into one of the largest service providers in the global markets of management consulting, technology services and outsourcing companies. But the industry of external service providers is a very competitive environment. The major players in the industry share the same small targeted market; they make it their business to deal with the largest of contracts and tend to ignore small to mid sized projects. One can also expect a response to most of the government RFPs (request for proposals) from all of these companies, as they all have government initiatives within their firms. As a result these companies confront each other and vie for the same contracts on a frequent basis. Gartner, an independent research and analysis firm, specializing in global information technology has ranked Accenture very well in Magic Quadrant Business Intelligence Implementation Services, North America, 2006. Their graph is a relative representation of how companies compare to each other. It places Accenture in the leader quadrant for this study. The main evaluation criteria for the completeness of vision factor is; Market Understanding, Offering Strategy, Business Model, Industry Strategy, Innovation, and Geographic Advantage. The evaluation of vision measures the firms depth of

knowledge specific to the business intelligence markets, market trends and knowledge of its customers. Accenture has shown that it has the vision and ability to succeed in this market. The goal of the ability to execute factor is to evaluate the service provider's ability and history of implementing the services described in its strategic plan and in clients' proposals and contracts, it is mainly measured in; Product/Service, Overall

IS578 Final Paper (WQ 05-06) Viability (Business Unit, Financial, Strategy, Organization), Market Responsiveness and Track Record, Marketing Execution, Customer Experience, and Operations. Accenture was placed as the victor in all elements of Gartners study: Magic Quadrant for North American CRM (customer relationship management) Service Providers, 2005. Accenture also shares strong relationships with a few of the key

vendors of the leading CRM software. This has given Accenture broad and in-depth knowledge of this niche software and the ability to combine strong on-site functional and industry-specific skills with a knowledge base of strategy skills. Accenture emerges as the leader in all factors because it has been able to succeed where others failed. Half of all CRM installations are reported to fail, but Brian Crockett, an associate partner at Accenture, says that it is because executives are realizing the CRM isn't simply a matter of screwing in some software. They understand that it's not just a capability fix but that effective CRM requires a vision, an understanding of what you are trying to accomplish -- what business outcomes CRM can support, and how you can drive value as well as effective execution. We define execution not just as technology but also as the process. This is part of the approach Accenture has taken to all of its clients needs, to create vision, and drive value at the bottom line. Accenture emerges as a leader because of its ability to satisfy client needs through the use of its tools, techniques, and methodologies. This knowledge developed in house delivers a long term cumulative advantage to the company through training and knowledge management initiatives.

VII.

Future of Accenture

Accenture has indeed come a long way since its separation from Arthur Andersen in 2000. It has evolved into a mega-external service provider with in-depth presence in

IS578 Final Paper (WQ 05-06) various markets, industries and regions around the world. Since going public in 2001, Accenture has raised vital capital that has helped it expand its services and coverage therefore positioning the company as one of the leading management and technology consulting firms. According to the current CEO of Accenture, Bill Green, Accenture will continue growing in all three of their strategic growth platforms namely consulting, technology and outsourcing. Due to the rapid growth of outsourcing, there will be a shift in the companys revenue mix - half will be derived from its outsourcing business while the other half will come from its consulting, technology and systems integration practices. Green also believes that Accenture has many opportunities to increase their presence or gain market leadership in various countries. Small- or medium-sized acquisitions will also be looked into to help the company expand its services, capabilities and presence worldwide. Furthermore, Accenture plans to expand its BPO business as the company views it as one of the most important areas for future growth.

120% 100% 80% 60% 40% 20% 0% 200 2001 2002 2003 2004 2005 Year
Figure 2. Consulting/Outsourcing Revenue Breakdown10.

16% 18% 24% 32% 37% 39% outsourcing consulting 84% 82% 76% 68% 63% 61%

IS578 Final Paper (WQ 05-06)

To remain a leader in their market, Accenture must grow and adapt to the changing needs of the market but should also maintain its best practices, tools and models. One such practice is Accentures industry verticalization strategy which has been a key element in the companys success. This strategy involves internal performance metrics and a profit and loss structure within a framework that is organized by industry sectors specifically Communications and High Tech, Financial Services, Products, Resources and Government. Accentures vast industry knowledge has put the company ahead of its competition and made it a top choice for leading companies around the world. Industry Communications and High Tech Financial Services Products Resources Government TOTAL Revenue FY05 $4.00 billion $3.41 billion $3.57 billion $2.39 billion $2.17 billion $15.5 billion Percent of FY05 Revenue 26% 22% 23% 15% 14% 100% Percent Growth From Last FY 7% 23% 20% 10% 9%

Table 1. Accenture Fiscal Year 2005 by Industry

Another significant practice of Accenture is their global presence and penetration. Accenture has offices in 47 countries and is considered a major player in all of their regions Americas, EMEA and Asia/Pacific. Its choice of foreign locations is based on market sizing and potential for profitability10. Accentures brand and reputation have been major factors in increasing the companys penetration in markets and industries around the world.

Geographical Region Americas EMEA Asia/Pacific TOTAL

Revenue FY05 $6.64 billion $7.81 billion $1.10 billion $15.5 billion

Percent of Revenue 43% 50% 7% 100%

Table 2. Accenture Fiscal Year 2005 by Geography 10.

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Furthermore, the Accenture Global Delivery Network is one such model that Accenture must continue to make it a formidable global service provider. The Global Delivery Network has around 24 centers in countries like India, Philippines, Spain and China that provide low-cost development and support to local client-facing personnel in a given domestic market. To become highly competitive, external service providers such as Accenture must possess strong global capabilities to manage clients and engagements worldwide. By 2008, Accenture plans to increase its low-cost center workforce from the current total of 35,000 to as many as 50,000 personnel.

VIII.
[1]

References

Accenture at a Glance, Official Website of Accenture

http://www.accenture.com/Global/About_Accenture/Investor_Relations/Annual_Report/A ccentureAtAGlance.htm [2] [3] Accenture Ltd, Hoovers.com http://www.hoovers.com/accenture-ltd/--ID__43516--/free-co-factsheet.xhtml Accenture: The Growth of a Global Leader, Official Website of Accenture

http://www.accenture.com/Global/About_Accenture/Company_Overview/History/Accent ureLeader.htm [4] [5] Accenture: WetFeet Insider Guide. WetFeet Inc., 2002. Anonymous. Facing the Future: 5 Questions. American Society for Training and Development, January 2006

IS578 Final Paper (WQ 05-06) Analyst, Official Website of Accenture http://careers3.accenture.com/Careers/CzechRepub/OpenPositions/Consulting/A nalyst.htm [7] [8] CEO Bill Green leads Accenture into the future, Official Website of Accenture http://careers3.accenture.com/Careers/US/billgreen.htm [6]

Client Service Manager, Official Website of Accenture http://careers3.accenture.com/Careers/SlovakRepublic/OpenPositions/outsourci ng/Client+Service+Manager.htm [9] Hines, Matt. Accenture fingers blame for CRM failures. SearchCRM.com, 10 September 2002. http://searchcrm.techtarget.com/qna/0,289202,sid11_gci850058,00.html [10] Karamouzis, Frances. Accentures Strategic Positioning and Future Growth. Gartner, December 2005.

[11] Karamouzis, Frances, et.al. Vendor Rating: Accentures Position and Presence Continue to Grow. Gartner, December 2005. Philip Jones, Senior Executive, Official Website of Accenture http://careers3.accenture.com/Careers/Global/AboutAccenture/CaseStudies/WR C/MeetWRC/wrc_philjones [13] Professional Training: Business Skill and Professional Development Training at Accenture, Official Website of Accenture. http://careers3.accenture.com/Careers/Global/CareerOptions/corpfunctions/training.htm [12]

IX. A.

Appendix
Magic Quadrant for Business Intelligence Implementation Services, North America, 2006. www.gartner.com

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B.

Magic Quadrant for North American CRM Service Providers, 2005 www.gartner.com

IS578 Final Paper (WQ 05-06)