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Accenture's New High-Wire Act


In late 2000, storage giant EMC Corp (EMC) was battening down the hatches for the tech tsunami that lay ahead. But a project to install a critical new software system at the Hopkinton (Mass.) company had fallen behind schedule, threatening to hamper its operations. So EMC's then-Chief Operating Officer Joseph M. Tucci put a call into William D. Green, chief of the tech group at Accenture Ltd. (ACN), the consulting firm managing the installation. Could Green help? The Accenture exec took over the project himself, pulled in three senior partners to help the one who had been on the job, and stayed in regular contact with Tucci to make sure things were on track. The result: EMC had the software to coordinate manufacturing, sales, and finance in place by the original deadline of October, 2001. "He went over and above," says Tucci, now EMC's chief executive. "He will find a way to get his goals done and make you happy."

Now Green faces the ultimate challenge. In September, the 51-year-old son of a plumber became CEO of Accenture, the world's second-largest stand-alone consulting company. In his first in-depth interview since, the little-known exec laid out his ambitious vision to remake the tech consultant. The crux of his plan is an audacious concept he calls "high-performance business." The idea is that Accenture will dream up and build services so powerful and so exceptional that they will be required to compete in any industry, from financial services to manufacturing. Green figures that if Accenture can deliver, the firm will be able to produce double-digit earnings leaps and revenue growth that outstrips the tech-services industry. "We want to become part of the fabric of the industries we serve," says Green. "How do you become the de facto standard for a set of products or services that an industry uses to operate? How do you become not optional?"

A GRAND VISION

One way is to put skin in the game. Traditionally, tech consultants have helped companies install computer systems and got paid for getting the gear in place. Green is trying to lead a shift away from using tech for tech's sake and instead use it to achieve specific business goals. Want to cut costs 25%? Improve customer satisfaction 10%? Accenture will guarantee that you get there -- or forgo a chunk of its pay. Under a contract with British travel company Thomas Cook, Accenture's bonus depends on reaching five metrics, including cost-cutting targets. So far, so good. "We're achieving a greater level of productivity than our competitors," says Ian Ailles, managing director at Thomas Cook. Today, 30% of Accenture's contracts include quantitative measures -- and that number is growing.

Green is betting big that Accenture can become the must-have adviser for Corporate America. The company is boosting research and development and adding staff by the truckload. It raised headcount by an astonishing 20,000 during the fiscal year ended on Aug. 31, to 103,000 employees. It expects to add another 20,000 workers by next August. It's also bidding for multiyear, multibillion-dollar contracts that are much larger than those the firm has taken on in the past. Such contracts have become major money-losers for some rivals. But Accenture believes that, by blending outsourcing and other work, it can provide even more value to its clients.

Such a grand vision would be no small feat in the best of times. But Green is assuming control during a period of sweeping change. The tech-services industry has been whipsawed as the red-hot demand of the late 1990s turned into the deep freeze of the past few years. At the same time, competition is getting fiercer. A pack of scrappy rivals from India are starting to encroach on Accenture's turf, big kahunas such as Hewlett-Packard Co. are entering the market, and Green's most fearsome rival, IBM (IBM), is pushing hard to convince clients that its legions of scientists and engineers make it a more valuable partner than any stand-alone consultant. "Our competitors don't have the capabilities to address the market the way we can," says Laurie Tropiano, an IBM vice-president.

UNLIKELY CAPTAIN

Can Green deliver on his ambitious plans? An industry downturn or a problematic megacontract certainly could trip him up, but early signs are promising. Clients say Accenture already is proving itself an invaluable partner in everything from drug development to asset management. And as the firm adds staff and invests in research and development, its momentum is likely to continue. Goldman, Sachs & Co. (GS) expects the firm to boost revenues 11% over the next fiscal year, to $15.1 billion, while increasing net income 11%, to $1.35 billion. "You have to know the client's business well, and that's what Accenture does better than anyone," says Goldman analyst Gregory Gould.

Green is an unlikely captain in the cerebral world of consulting. Born into a close-knit Irish family in Hampden, Mass., he showed more aptitude for hard work than schoolbooks as a kid. Since the age of 9, Green took odd jobs, looking after horses and working with electricians. The first in his family to go to college, he almost didn't make it. He worked in construction for a year after high school before enrolling in a small two-year school, Dean College. It was there that Green began to show his potential. "He was soaking up ideas like a sponge," says Charles M. Kramer, who taught Green economics. Green later earned an economics degree and an MBA from Babson College.

At Accenture, the only place he has worked since college, Green has succeeded by bucking conventional wisdom. He was a proponent of outsourcing 15 years ago, when few at the firm believed in the nascent business. That helped Green report healthy revenue hikes for the New England office he ran at the time, despite the recession of 1990-91.

That's the kind of bold thinking Green needs to make his high-performance initiative pay off. The concept grew out of a research effort that found that fewer than 1 in 10 companies outperforms its peers over a 10-year period. The goal is to use Accenture's business and tech knowhow to help clients become those superstars.

Here's the tricky part: There's no cookie-cutter recipe. Accenture needs to develop a unique formula for each client. That begins with defining the factors necessary for superior performance in a client's industry and then leads to a detailed blueprint for how a particular client can climb to the top of its hill.

While the concept is still new, Accenture is delivering results for some pilot clients. The firm started working with pharmaceutical giant Wyeth (WYE) in 2001 to find ways to improve its performance. They quickly agreed that a key factor for success was the pace of drug development. That led Accenture to create scorecards that hold Wyeth scientists accountable for meeting research objectives. The consulting firm also took over the process of managing clinical trial data -- the first time a drugmaker has entered into such a deal. The result? Wyeth is now moving 12 drugs into development every year, up from three in the past. The results have "really been phenomenal," says Robert R. Ruffolo Jr., Wyeth's research president.

The riskiest part of Green's strategy is his determination to win larger, higher-profile deals. Such contracts require multimillion-dollar up-front investments -- and payments can be delayed because of faulty technology, poor performance, or government red tape. Huge losses can result. Rival Electronic Data Systems Corp. (EDS) took a $559 million hit on one contract with the U.S. Navy and said that toll could rise with its quarterly earnings announcement on Nov. 5. While Accenture hasn't had any serious problems, it's too early to tell how the firm will fare. "Accenture is in a honeymoon period," says analyst Frances Karamouzis of researcher Gartner Inc. (IT).

Green is well aware of the high wire. That's why one of the first things he did was appoint former high-tech operating group COO Robert N. Frerichs to a newly created job: Chief Quality & Risk Officer.

It's quite a balancing act. But Green is confident in his strategy and his army of consultants. "I would never trade our hand with anyone," he says. Now he'll have to parlay that hand into a winning performance.

By Spencer E. Ante in New York


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