1.
Case Name: Strategic IT Transformation
at Accenture
2.
Problem Statement
The main problem of the case is:
When Accenture split from Arthur Andersen in 2001 and
wanted to build their IT infrastructure, whether they
·
Should continue
managing IT platforms with a decentralized approach or take a mixed or a
centralized approach?
·
Should retain its
conception of IT as a cost center or should it regard IT as a service provision
center?
3.
Background
a.
Describe the company/department
1)
History
i Accenture, previous called as Anderson
consulting, was formed due to the split of Arthur Anderson accounting firm into
two separate entities.
ii At its inception in 2001, Accenture was
a large organization with 75000 employees, 50 offices around the world and 11
billion in revenues.
2)
Conditions
i Prior to 2001, technology platforms are
managed with a decentralized approach with divisions in each country chose
their own IT systems and have an autonomy to run them.
ii 75% of the Accenture’s employees work
outside Accenture offices, mainly at client locations.
iii IT infrastructure is a key in the global
integration of Accenture.
iv Internal IT systems are treated as cost
centers with an assigned budget. They are largely run by tech-savvy engineers
with little management involvement.
v IT expenditures are prioritized based on
the high ranking of the stakeholders’ and few minor decisions were made by
offices at different countries with little input from firm-wide experts.
vi Arthur Anderson’s legacy systems do not
interconnect readily and cannot be accessed through internet. Expensive
networks are needed to do interconnect various systems and sometimes had to be
manually compiled to aggregate data from various offices
vii It was very complex to get whole
organization’s status due to the individual accounting and HR systems in the
Anderson’s offices around the world.
4.
Issues faced by Accenture
Issue #1: Opting for “best-of-breed”
approach or “one-platform” approach
Issue #2: Forming a centralized, single
system approach
Issue #3: Managing applications
5.
Strategy followed by Accenture in
resolving these issues:
a. Changing its IT Philosophy/ IT
management’s new vision:
i Accenture’s IT management followed a
different approach of considering IT as a business within a business rather
than a cost center.
ii They designed IT in such a way that the
products and services will be
iii Created and developed IT tools that
provide different levels of services for a particular technology.
iv They Monitored prices with third-party
providers to ensure that IT services were delivered at fair price and at a
world class level.
v IT spending determined by a panel of
c-level executives from different realms of business
b.
Best-of-breed vs One-platform
1)
Best-of-breed strategy:
i Strengths:
(i)
Would
acquire best available tools in the market
(ii)
Would
make internal stakeholders very happy
(iii)
Would
provide more in-depth knowledge than peer applications
(iv)
Companies
which provide applications can incorporate latest technology and process trends
ii
Weakness:
(i)
Ends
up with a variety of applications that do not necessary “communicate with each
other”
(ii)
Not
cost-effective
(iii)
Requires
multiple specialists which increases the training costs and IT personnel count
(iv)
Might
affect the ability to consolidate and share information
(v)
Might
cause costly maintenance issues and staffing issues
2)
One-platform approach:
i Strengths:
(i)
Applications
will be compatible with one another and allow the seamless flow in a real-time
(ii)
Resolves
the problem of Pareto effect
(iii)
Possibility
to extract best terms in license agreements and have deeper discounts for
cost-effectiveness
(iv)
Effectively
operate with less IT staff, reducing training costs
(v)
Leveraging
economies of scale through the establishment of global support centers
ii
Weakness:
(i)
They
acquired applications might not necessarily be best in the class
(ii)
Might
lower the negotiating power of Accenture
(iii)
If
the vendor is not financially strong, Accenture can have a risk of vendor
failure.
Conclusion: They analyzed the pros and cons of both the
approaches and finally chose the one-platform approach.
3)
Managing Applications:
They believed that having a single platform and common global applications would help reduce overall expenditures and allow for flexibility and scalability
i To run most of the back-end operations
and to provide basic communication, Accenture chose Microsoft as a partner.
ii Accenture chose SAP as its worldwide
application provider for financial and human resources solutions.
iii Accenture chose HP for its computers and
servers and Cisco for its network-related equipment
4)
Leveraging Global Presence/ Outsourcing:
i Accenture placed 68% of its IT staff in
lower-cost regions such as India, China and Latin America
ii They also shifted to a core-light
personnel strategy with only 14% of the Accenture’s IT staff worked directly
and remaining 86% through GDN and IO groups
iii Accenture outsourced data-center
management, storage, hardware maintenance and the development of most of its IT
applications
iv Project management and functionality
guidance were maintained in-house
v Accenture decided to outsource its data
storage and backup needs and to appoint a third party to run its network
infrastructure
Conclusion: They followed a centralized approach and managed everything globally. They also made use their global presence successfully by moving various activities to different countries to reduce costs
5)
Big-Bang, Single Instance Approach:
i Accenture identified two principles in
implementing this single-platform application, which are
· Implementing the upgrades based on the mission critical basis.
· Ensuring that right projects were taken at right time through an approval process driven by ROI and business benefits
ii They chose SAP’s business technology for
their finance management to manage its 200 different financial applications.
iii They implemented SAP using Microsoft
technologies and reduced technology costs and gained better integration across
its financial environment
6.
Conclusion:
Accenture’s new strategy is a success and was quite
logical at every level. The management team of Accenture focused highly on
their important customers and their applications. They considered the split
from Arthur Anderson as an opportunity to improve the company technologically
and in a collaborative way. The company mainly reduced their costs while
improving their profits and customer satisfaction.
I wouldn’t give any new recommendations as the
approach seems correct and was fairly successful.
