Why Accenture Strategy makes sense

By Fiona Czerniawska

Will it get off the runway?

Accenture Strategy doesn’t, at first glance, look as though it will fly.  True, if we ask clients which firm is best positioned to bridge the gap between business and technology, they’re more likely to name Accenture than any other firm.  But they’re equally likely to complain that a conversation with an Accenture management consultant, while it may open with a business discussion, rapidly morphs into a technology one.  Indeed, when we surveyed clients recently, the ~250 people who talked about Accenture clearly associated the firm more with technology than they did with anything else, even though we made it clear we were asking about Accenture's consulting business.  So does it really make sense to bracket strategy with a name so inextricably associated with technology?  It’s a bit like taking the two most extreme points on the spectrum of consulting services and pulling them together.

But let’s not forget that Accenture has form.  More than any other consulting firm it’s periodically been able to take a long, cool look at the consulting industry and reinvent its business model.  Whether that was moving into outsourcing in the late 1980s or spotting the potential for offshoring a decade later, the firm has always been one step ahead.  Now, at a time when many firms are agonising about their business models and are so ensnared by vested interests of their existing set-ups that they can’t be objective, Accenture may again be signalling the way forwards.

At the heart of all the discussions around the business model of consulting lies commoditisation.  The ‘race to the bottom’ is a feature of most mature industries as organisations offering undifferentiated products or services compete on efficiency and price.  For the consulting industry, though, it’s not so much that firms have been competing to move downmarket (increasing the efficiency of consulting without destroying its value to clients is difficult), but that the ‘bottom’ has been moving up.  Compared to a decade ago, a greater proportion of consulting work has been commoditised, leaving firms scrabbling to compete for a smaller pool of high-margin projects.  Left to its own devices this situation will only get worse.  Our research suggests that twice as many organisations are going to increase their expenditure on commodity than will do the same for ‘classic’ consulting.  We regularly hear partners in consulting firms saying, “We had an argument about whether we should be doing that type of work, but it was a big project so we said yes.”

At the same time, fixating on what’s happening at ground level can blind you to what’s going on above it.

We think there are two trends that matter here.  The first is the growing distance clients see between (what we’ll call) commodity and strategic consulting.  We see this with almost everyone we talk to, whether they’re forward-looking marketing and strategy executives or more internally focused people in IT, HR and finance.  “We buy two types of consulting…” is typically how the conversation starts.  That distinction has been there since the dawn of consulting, but the gap between the two has suddenly become bigger and, as a consequence, much clearer in clients’ minds.  The second is the convergence between strategy and technology, driven by new technology which may help organisations grow.  CSOs are just as likely to talk about technology as strategy; CIOs will talk about strategy as much as technology.  Digitisation, big data and analytics, although we should be wary of over-hyping their benefits to clients, are important to consultants because they bring these two trends together.  They’re clearly – again, in clients’ eyes – high-margin, strategic consulting work, to be delivered by onshore experts rather than an industrialised, even offshore, model.  Equally clearly, they combine business and technology – you can’t do one properly without the other, clients tell us.

Which is why Accenture Strategy, strange though it may sound, makes sense.  In a world in which technology is impacting so many sectors and business models, it becomes important for business strategy to be informed by, and integrated with, technology strategy and expertise.  Rather than having traditional and separate strategy, operations, HR, technology practices,each with its own strategy and implementation components,  you take the strategy layer from each of them, separate them from the more commoditised aspects, and combine.  It may look like a strange contraption and it will – we predict – be difficult to control, but so did the Wright Brother’s machine…