Strategic IT Transformation at Accenture Case Analysis

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.