Thursday, May 16, 2013

Strategic IT Transformation at Accenture



Key Problem
In the Accenture study, Andersen Consulting separated themselves from Arthur Andersen, their parent company, in 2001. Andersen Consulting changed their name to Accenture and rebranded their organization. It was clear that Accenture needed to rebrand their IT infrastructure and that Accenture was allowed to use Andersen’s technology for only one year. There was a bigger problem as Andersen’s technology had several issues: 1) a legacy system that didn’t interconnect well with each site, 2) obsolete software platforms and 3) no global infrastructure with accounting and human resources software systems. Overall, the key problem was Andersen’s technology was obsolete and it required Accenture to create a new IT infrastructure in a short amount of time.


Assessment of the Three Alternatives
            The first alternative is to use the old legacy systems and software system programs that Andersen was using. Each country would use its own platform and to continue to have difficulties with compiling data in a timely fashion. It is evident that archaic software system would only continue to hurt the business due to its complex solution. Overall, this approach of using Andersen’s product is the least attractive method and would add no value to the company.   


            The second alternative is adopting best-of-breed approach. The best-of-breed approach has several pros: The most up to date applications and more depth and functionality than peer functionality. There are several cons for implementing the best-of-breed approach: Many applications, numerous vendors that need to work together, and a lack of cost effectiveness. The cost is a major concern as there would be numerous applications that would require additional headcount in specialists and an increase in training. I don’t recommend the best-of-breed solution, as it too risky with numerous applications and high expenses. I am looking for an IT solution that provides a less complex solution, which is one of your requirements.


            The third alternative is a one-platform approach. The one-platform approach would resolve the problem of the Pareto effect created by the company’s requirement where there would be less complexity with multiple solutions.  SAP has the capabilities of having a one-platform that provides financials and HR applications. It would be accompanied by Microsoft software and HP and Cisco hardware. Accenture has done a superb job on using Microsoft Visio with a timeline (See exhibit 3). The visual shows the IT transformation program timeline for the last ten years and the significant improvements that were made.     There are two options within a one-platform approach: Cost Center and Running IT like a business. In my opinion, a cost center is outdated and doesn’t provide value for the company. Also, the term cost center makes employees in that department feel like a liability or feel like a “cost” rather than asset. IT running like a business is better approach as it has advantages especially in its e-mail infrastructure. The new e-mail infrastructure is a managed service approach and wouldn’t have high costs in increased storage space and IT staff.        


Recommendation
After reviewing the three Accenture alternatives, I would recommend the one-platform approach. In my opinion, SAP would be the one-platform worldwide application. It would be accompanied with Microsoft software and HP and Cisco are the hardware providers that would enable Accenture to run as one global solution. SAP would add a significant value in the long run for company that was uncommon at Andersen.  There is a significant amount of pros: 1) Integration & consolidated financial statements 2) Global cash flow and 3) Integration of HR applications.


The first pro is the integration of financials. Andersen’s weakness was integrating financials, causing headaches for financial users. The integration of financials creates an easier and time effective workflow for the day to day users. Andersen had a major challenge to reconcile financial data in a timely manner and the consolidated financial statements will save a significant amount of time. The SAP consolidated financial statement will give the CFO and the finance team a clear understanding of the business (1 P/L and 1 Balance Sheet). Also, the consolidated statement will give the finance team data to focus on challenging areas on where the company can improve on expenses globally.   The second pro that SAP provides is a global cash flow, which is imperative for the Treasury department. A global cash flow will enable Accenture to prepare a global cash forecast, which was too complex at Andersen.  The third pro, the SAP HR application, gives visibility for entire company. The HR applications solution will give the HR director and staff a global visual for headcount, timesheets, new projects, and healthcare benefits.


IT Governance
I received the memo from the Accenture Chairman in regards to adopting the Control Objectives for Information and Related Technologies (COBIT).    COBIT’s business framework provides the governance and management of enterprise IT[1]. COBIT’s benefits are the following:  maintain high-quality information to support business decisions; achieve strategic goals and realize the business benefits; achieve operational excellence through reliable, efficient application of technology; maintain IT-related risk at an acceptable level; optimize the costs of IT services and technology; and support compliance with relevant laws, regulations, agreements and policies[2]. Your current practice is projects must be approved through the IT committee team showing a Return on Investment (ROI) analysis. Once a sponsor’s project is approved the project has to be audited three times a year. Management has to audit the projects and they clearly don’t have the time. The manual input and time from managers is an area where you can approve if you chose COBIT. In Exhibit 7, there is a plethora amount of tedious work that is being done in the executive level which COBIT can accommodate. COBIT’s global experts support your goals with the following:  information security, intellectual property protection, compliance assurance, business continuity and risk management[3]. I can prepare a ROI analysis with more data and resources. The ROI shows the value and cost savings that Accenture will have. Overall, I recommend COBIT as the new IT governance, as this will eliminate the manual work that needs to be done by the business sponsors and managers.          


IT Transformation Results
In Exhibit 8, the IT transformation results are outstanding. Accenture’s went from $11 billion in revenue in 2001 to $21 billion in revenue in 2010. The increased revenue can be contributed not only to the hard work of dedicated employees but also the IT infrastructure. The percentage of satisfied sponsors went from 67% to 87%. There are major IT expense reductions in the last ten years that make the Accenture’s transformation a true success: 1) IT spend reduced by 22%, 2) IT spend as % of revenue reduced by 59% and IT spend person reduced by 69%.  It is unbelievable that Accenture added 100,000 employees in 10 years and reduced IT spend. This is a truly an amazing accomplishment and an excellent achievement to add to the CIO’s resume. It is evident that SAP is the one technology platform that raises the bar for Accenture’s IT infrastructure. This is impressive and remarkable that a company can make this progress and cost reduction in ten years. Well done to the CIO!!!  


Final Thoughts
It’s imperative for Accenture consultants to have the most updated technology as 75% of the employees spend time outside of the office and traveling to client locations. These road warriors need an aggressive advanced technological platform to meet a high level of customer service. SAP, along with Microsoft as the software provider and HP and Cisco as the hardware providers, are an excellent fit for Accenture. The three products meet the companies’ requirements with less complexity.  The reductions in IT costs in the last 10 years are outstanding and the CIO has provided SAP as the perfect IT fit with a one-platform solution. I wouldn’t look anywhere else, as SAP has proven itself as the “number one-platform” with an excellent financial solution, technological service and human resource applications.    


References

[1] http://www.isaca.org/COBIT/Pages/default.aspx
[2] http://www.isaca.org/COBIT/Pages/default.aspx
[3]  http://www.isaca.org/COBIT/Pages/default.aspx

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