Accenture: a brand new adventure

Following a major rebranding exercise, Accenture (formerly Andersen Consulting) looks set to prove that slow and steady may win the race against the new economy upstarts.

Renamed, redefined, reborn. In January, just as a $175m advertising campaign kicked off, 70,000 Accenture employees around the world were invited, via an internal mail, to attend events to "celebrate and communicate" Andersen Consulting's new name.

"We must all view ourselves as brand champions in establishing Accenture," it urged. "I encourage you to begin proudly using Accenture as the name of our firm and sharing our name change with clients, family and friends. Each of us has the responsibility to live our brand each day."

Scary stuff. But this has always been the Andersen/Accenture way. From its beginnings in 1913 as the brainchild of Chicago professor Arthur Andersen, the company has prided itself on stringent training methods; moulding its bright and able recruits into reliable mouthpieces of the central Andersen philosophy.

With almost Messianic zeal, employees were sent out to client businesses clutching their bibles of best accountancy and business practice.

Engineers and systems experts were hired as early as 1919 to identify company strengths and weaknesses. By the 1930s, Arthur Andersen had established an Industry Competence Programme, among the first of its kind, to collate business information on industrial sectors, accounting regulations, and tax issues.

In 1952 Arthur Andersen established an 'electronic computer' dedicated to business functions for General Electric, which the consultancy now claims was the first of its kind in the world.

In 1989, the burden of sharing a corporate identity became too much for the accountancy and consulting divisions: a distinction was made between Arthur Andersen the accountant and Andersen Consulting. A decade later, the consultants were accused of withholding fees from the accountants and a lawsuit resulted.

After much public mud-slinging, Andersen Consulting was allowed to keep its money (as much as $14bn, according to some industry estimates), in return for changing its name.

Corporate brandstorming

Then came the farcical but predictable spectacle of a giant multinational worrying about its identity, pondering over more than 5000 suggestions, conducting a "Brandstorming" process, engaging an expensive brand consultancy, market testing the 51 names which survived trademark and linguistic screening (one proposed name meant 'dreadful' in Greek) and checking for URL availability.

Eventually, the successful name was suggested by one of their own: Kim Petersen of Andersen's Oslo office, with his explanation of combining 'accent' and 'future' to form a word which reminded him of 'adventure'. He was rewarded with a golfing holiday in Australia.

The name hasn't pleased everyone. "It sounds like a dental appliance," said one employee. Edward Saenz, of Gravity Branding in San Francisco, who thought up Coca Cola's Frutopia name, has other objections. "I really struggled with it," he says. "It violates so many rules. It's difficult to spell. I don't believe it's compelling."

Neither does Andrew Parker, senior analyst at Forrester Research. "I'm very cynical and dog-eared when it comes to branding; I don't find the name compelling and I'm not convinced by the way they found it. No intelligent self-aware individual is going to buy that."

What else could the company do? It has at least found a name that begins with AC, jogging people's memories of its parentage. "Since mid-1999, all large IT consulting groups have had an imperative to reposition themselves," Parker points out.

Web-based opportunities

"Enterprise resource planning [ERP] had been a huge revenue source throughout the 1990s, but it was plainly running out of steam. They were looking for a new area of growth. The net came along as an opportunity to be grabbed."

How successfully Andersen (as it was) managed to grab a piece of new economy action at the end of the 1990s is open to debate. The company makes a big deal of how it had traditionally been ahead of the IT game, becoming known as the 'consultancy with a computer' in the 1980s. Others remark that rivals such as IBM Consultancy, now Global Services, began to reposition itself far earlier and is now reaping the rewards.

"In the fourth quarter of 2000 we began to see evidence that IBM was gaining traction from its repositioning and seeing results," says Martin Zook, editor of the Global IT Consultancy Report.

"Accenture is just starting the same manoeuvre. When you reorganise it always takes you away from the market, so it will be interesting to see if Accenture can compete. IBM has overtaken Accenture to claim the title of largest IT consultancy."

It's a far cry from the days when Andersen Consulting stood head and shoulders above the competition, Zook says. "Andersen just dominated ERP in the 1990s. It came in and shouldered everyone else out of the way. It had the reputation of being the firm that would send a school bus full of young consultants into a company. What made them excel was the way they had the methodology down so well that it worked."

At a low ebb

One of the firm's lowest points was in 1999, when it faced claims for $50m a year for the two-year delay implementing NIRS2, the UK Government's National Insurance system. The Commons Public Account Committee claimed in 1999 that some UK pensioners were losing £100 as a result of the fiasco.

Virginwines.com hired Accenture in the summer of 2000 to convert Virgin's wine division into a fully functioning ecommerce operation. Despite the wide choice of consultants, Accenture was a clear choice for Rowan Gormley, Virginwines.com's managing director.

"Everyone said they could do it, but Accenture could show us the work they'd done for other people. We looked at Razorfish and IXL, but when Accenture pitch up, you get a 45-year-old who used to run the warehousing for a FTSE 100 company," he says. "When some of the others pitch up, you get a 22-year-old who still has acne. So the big advantage with Accenture is that you trust them."

Where Gormley had to tweak the relationship was in timescales. "Out of a traditional 100 day contract, Accenture would expect to spend 15 days on management, 25 on analysis and 10 days testing, because that's what you do with a multinational client," he says.

Virginwines.com reduced the contract to 55 days, with a limited amount of time spent of management, joint analysis and massively compressed testing. "It was a question of raising the bar and saying 'you have to come with us on this'," says Gormley.

No more blank cheques

This type of contract will become increasingly common as chief information officers (CIOs) become more savvy, says Zook. "They're putting IT consultants on a very short leash," he says. "There's no more giving them a blank cheque and wondering what they're doing, and then wondering what they've done when they've gone."

Consultants are expected to produce measurable results within a timeframe with plenty of communication. CIOs have learned that "I'll get back to you on that" is not an acceptable response.

While Accenture's operations include change management and all the various aspects of improving a business's efficiency and profitability, Gormley wanted none of this for Virginwines.com.

"We had a very clear idea of the functionality we were after, so we weren't looking to Accenture for creative input, just to implement our ideas and plug into a fulfilment system. If I wanted management consultancy I'd go to Bain or McKinsey. I certainly didn't want to adopt the Accenture culture," stresses Gormley.

A culture of hard work

"I've never seen people work like that before in my life," he says. "There were Swedes, Germans, Philippinos, Americans - we'd turn up at eight in the morning and they'd already be here; they'd still be here at eight in the evening and work all weekend. We thought that we worked hard, but their culture seems to be to work yourself to death. It's great for the client, but I'm not sure it's good for the people themselves."

This culture creates a uniquely reliable service, according to Gormley and others. "They can deliver," he says. "They're a lot more expensive than others, but they get things done and it does work."

Part of the way through the process of setting up Virginwines.com, Accenture had put in the maximum agreed number of man-days and not everything had been built, due (as Gormley admits) to insufficiently detailed specifications.

"They were very amenable," he says. He now quotes a conversion rate on the site of 8.9 per cent, three times the average rate of most consumer sites. "We're turning over £1m a month and should make a profit by mid-2002."

Virginwines.com's relationship with Accenture was unusual in that it started off with a significant amount of outsourcing - Accenture took on everything except marketing - but then Virginwines took back many functions after a period of time. Gormley believes that this helped the company to avoid many of the mistakes of the dotcoms.

Outsourcing is one of the five prime areas for the reborn Accenture, says UK managing partner Ian Watmore. He lists traditional business consultancy, technical capabilities, venture capital and separate ventures and alliances as the remaining four. Of these, the final one is perhaps the most vibrant.

Alliances and partnerships

Over the past year, a string of joint ventures, alliances and new partnerships has been compiled. Multinational organisations including Microsoft, Nokia, BP, Barclays, Compaq, BT, Dow Chemical and Baltimore Technologies have lined up to do business with Accenture.

One of Accenture's recent partnerships is with ecommerce software developer Commerce One. The company first came into contact with Accenture when it was selected by a client to provide ecommerce software, and Accenture was selected as the systems integrator.

"As Accenture saw more and more Commerce One-based systems, it scaled up its skills sets accordingly," says Chris Phillips, marketing director at the ecommerce company. Commerce One has a series of partners dedicated to managing clients using its systems.

"We work with a number of IT consultancies, but I'd say that we do more work with Accenture than the others," says Phillips. "They have invested more in skills and training consultants. Accenture consultants tend to be very structured and methodical. The quality of the people they attract is high."

Human resources

At human resources software supplier Personic, the relationship has gone deeper still, explains Gareth Robinson, vice president of European operations.

Not only has Accenture begun to offer Personic's human resources and recruitment software to its clients, but it has also taken an equity stake in Personic, and become involved in change management within the company.

"We found that 80 per cent of our clients were using only about 30 per cent of our technology," says Robinson. "So we were looking for a partner to go through change management with our clients."

At the same time, Accenture was looking for a reliable recruitment software provider that it could offer to clients. Personic was chosen from a basket of 122 potential providers, based on the criteria of scalability, pedigree and reputation, says Robinson.

Accenture now uses Personic's software for its own recruitment needs, and offers clients software and online training for executives. Robinson quotes the example of a multinational client with 3000 recruitment managers that has taken on the system.

Using an online learning solution to help these managers assimilate the software has saved vast amounts of time and money by allowing managers to remain on site, says Robinson.

Strong knowledge base

One of Accenture's strengths, from Personic's point of view, was the company's knowledge of its technology.

"It really understood electronic recruiting and the customer relationship management space. In addition, it wanted to 'put some skin in the game' as we say, by investing in equity," says Robinson.

Accenture also advised Personic on ways to focus its operations internally and externally. "Technology companies are good at making things, but they're not particularly good at dealing with people or the marketplace," adds Robinson. "Accenture made us target our audience and showed us the most efficient way to go after large corporate business. We hadn't necessarily been building what the market wanted."

The Accenture/Personic relationship demonstrates a sort of virtuous circle of business improvement: Personic gets management consultancy advice and major new contracts with Accenture's client base; Accenture gets great human resources software and added value for its clients. The clients save money through online learning and quicker recruitment times.

It's exactly the sort of step change in business practices that Accenture has made it an article of faith to promote. After a lacklustre 2000, there are rumours that 2001 is already shaping up to be a bumper year for the firm, with a potential 30 per cent increase in profits.

This is despite a Morgan Stanley Dean Witter CIO report in March 2001 which cited spending on consultancies as the budget item most likely to be cut in 2001.

IPO doubts

The big question now is whether Accenture can succeed with its initial public offering (IPO) planned for this summer. Some observers, such as Zook, have reservations.

"I have a ton of questions about the IPO," he says. "There is a culture of secrecy in Accenture: it doesn't want information to get out. It's very different when you're a publicly-quoted company. There will be a clearer picture of where Accenture is spending its money, which competitors can use."

An IPO could also distract the company from its market-facing position at a crucial time, although Watmore stresses that many of Accenture's recent shifts are heavily market-oriented.

On the issue of venture capital projects, Watmore says: "We're beginning to put our money where our mouth is, to invest in projects that we think the market needs, so we're taking more of a return. That's a major shift. We're creating new markets and companies and extending our skill sets and hiring people from outside with more deal-making skills."

Watmore cites the range of Accenture's clients as its defence against economic hardship. "We've always gone for a balanced portfolio," he says. "So we can follow a boom, but if it falls off we always have a large volume of contracts in recession-proof sectors such as government." One recent contract was the outsourcing of Sainsbury's IT department, with 1000 staff transferring to Accenture.

Sluggish in the new economy

Despite Watmore's bullishness, analysts have noted that Accenture was slightly slow off the mark in recognising the fundamental importance of ecommerce and adapting to the new economy.

There was, in late 1999 and early 2000, a risk that the company was losing ground to smaller, more nimble rivals, such as Cambridge Technology Partners, Icon Medialab and Razorfish, with innovative, laid-back and technologically imaginative attitudes.

"When it comes down to it, Accenture has the established long-term relationships with the major companies, and breaking into those relationships is not easy," explains Parker. "The breakdown of the dotcom market has left many smaller firms over-exposed."

But Parker believes that PricewaterhouseCoopers and IBM Global Services were both quicker to recognise the new realities than Accenture.

Although Parker still sees a role for the smaller IT consultancies for companies that want to be at the cutting edge, Accenture could be in a stronger position than it realises. "If you're moving at a more sedate pace, Accenture may be just the ticket."

For all the reservations that analysts and industry observers have voiced over Accenture's strategic direction, there is general unanimity that the company remains a formidable, high-quality, reliable force in global business.

Calling itself Accenture may feel strange, but when chief executive Joe W Forehand wrote to his 70,000 employees in January to say: "I guarantee that in time you will be more comfortable with the name," something tells you that they nodded vigorously and set back to work with renewed zeal.

SUMMARY

  • Accenture was slow to spot the economic changes brought by the web, but it has made up for lost time
  • It is valued more as an IT consultancy than as a management consultancy
  • Accenture employees are seen as hardworking, methodical and very bright
  • The company has embarked on dozens of joint ventures and alliances in recent years.

ALTERNATIVE CV: JOE W FOREHAND

Title: Managing partner and chief executive, Accenture.

Education: Bachelor of Science, Auburn University, Masters industrial administrations, Purdue University, 1972.

Family Life: Married with twin sons and lives in Texas.

Brief History: Joined Arthur Andersen in 1972, became a partner in 1982 and was regularly promoted until he reached his current position in November 1999.

ALTERNATIVE CV: IAN WATMORE

Title: Managing partner, Accenture UK.

Education: Maths and management at Trinity College, Cambridge, where he ran the student disco.

Family Life: Has four sons, lives outside Manchester but supports Arsenal.

Brief History: Joined Arthur Andersen on graduation, and was made a partner in 1990. His work has covered financial services, government, utilities, large-scale IT systems and outsourcing.