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Accenture

Accenture is a global management consulting, technology services, and outsourcing company. It is registered in Hamilton, Bermuda. It is said to be the largest consulting firm in the world. Accenture is a Fortune Global 500 company with more than 186,000 people in 49 countries. For the fiscal year ended 31 August 2008, the company generated net revenues of US$23.39 billion. Accenture's clients include 94 of the Fortune Global 100 and more than two-thirds of the Fortune Global 500.

History

Formation and early years

Accenture originated as the consulting division of Arthur Andersen, which Arthur Andersen and Clarence DeLany founded in 1913 as Andersen, DeLany & Co. Accenture's origins are in a 1953 feasibility study for General Electric. GE asked Arthur Andersen about the feasibility of automating payroll processing and manufacturing at GE's Appliance Park facility near Louisville, Kentucky. Arthur Andersen recommended installation of a UNIVAC I computer and printer, and GE agreed, which is the start of what became the first-ever commercial computer in the United States. Joe Glickauf was Arthur Andersen's project leader for the GE engagement and was responsible for the payroll processing automation, launching commercial data processing in the United States. Considered to be the father of computer consulting, Glickauf headed Arthur Andersen's Administrative Services division for 12 years.

Splitting from Arthur Andersen

In 1989, that division split from Arthur Andersen and began using the name Andersen Consulting. Both Arthur Andersen and Andersen Consulting consisted of groups of locally-owned independent partnerships and other entities around the world, each in a contractual agreement with Andersen Worldwide Société Coopérative (AWSC), a Swiss administrative entity.

By 2000, Andersen Consulting had achieved net revenues exceeding US$9.5 billion and had more than 75,000 employees in 47 countries, whereas Arthur Andersen had revenues of US$9.3 billion with over 85,000 employees worldwide in 2001.

Through the 1990s there was increasing tension between Andersen Consulting and Arthur Andersen. Andersen Consulting was upset that it was paying Arthur Andersen up to 15% of its profits each year (a condition of the 1989 split was that the more profitable unit - AA or AC - paid the other this sum), while at the same time Arthur Andersen was competing with Andersen Consulting through its own newly established business consulting service line called Arthur Andersen Business Consulting. This dispute came to a head in 1998 when Andersen Consulting claimed breach of contract against AWSC and Arthur Andersen. Andersen Consulting put the 15% transfer payment for that year and future years into escrow and issued a claim for breach of contract. In August 2000, as a result of a conclusion of the International Chamber of Commerce, Andersen Consulting broke all contractual ties with AWSC and Arthur Andersen. As part of the arbitration settlement, Andersen Consulting paid over the sum held in escrow (then $1.2 billion) to Arthur Andersen, and was required to change its name, resulting in the entity being renamed Accenture.

Perhaps most telling about who had "won" the decision was that four hours after the arbitrator made his ruling, Arthur Andersen CEO Jim Wadia suddenly resigned. Industry analysts and business school professors alike viewed the event as a complete victory for Andersen Consulting. Jim Wadia would provide insight on his resignation years later at a Harvard Business school case activity about the split. It turned out that the Arthur Andersen board passed a resolution saying he had to resign if he didn't get at least an incremental $4 billion (either through negotiation or via the arbitrator decision) for the consulting practice to split off, hence his quick resignation once the decision was announced.

Accounts vary on why the split occurred — executives on both sides of the split cite greed and arrogance on the part of the other side, and executives on the Andersen Consulting side maintained breach of contract when Arthur Andersen created a second consulting group, AABC (Arthur Andersen Business Consulting) which began to compete directly with Andersen Consulting in the marketplace. Many of the AABC firms were bought out by other consulting companies in 2002, most notably, Hitachi Consulting and KPMG Consulting, which later changed its name to BearingPoint.

AC's change of name proved to be fortunate as it avoided the taint when Arthur Andersen was dissolved as a result of its role in the Enron scandal.

Emergence of Accenture

On January 1, 2001 Andersen Consulting adopted its current name, "Accenture". The word "Accenture" is derived from "Accent on the future". Although a marketing consultancy was tasked with finding a new name for the company, the name "Accenture" was submitted by an employee from the Oslo office named Kim Petersen, as a result of an internal competition. Accenture felt that the name should represent its will to be a global consulting leader and high performer, and also intended that the name should not be offensive in any country in which Accenture operates.

IPO

On July 19, 2001, Accenture offered initial public offering (IPO) at the price of $14.50 per share in New York Stock Exchange (NYSE); Goldman Sachs and Morgan Stanley served as its lead underwriters. Accenture stock closed the day at $15.17, with the day's high at $15.25. On the first day of the IPO, Accenture raised nearly $1.7 billion.

Organizational structure

Its organizational structure includes divisions based on client industry types and growth platforms.

Service areas

Consulting

  • Strategy
    • Corporate Strategy
    • Growth and Innovation Strategy
    • Pricing & Profitability Optimization
    • Organization Strategy
  • Finance & Performance Management
    • Corporate Finance
    • Enterprise Performance Management
    • Finance Operations
  • Customer Relationship Management
    • Marketing Transformation
    • Sales Transformation
    • Service Transformation
  • Talent and Organization Performance
    • Change Management
    • Human Resources Management
  • Marketing Sciences
  • Service Management
  • Supply Chain Management
  • Workforce Performance

Systems Integration and Technology Consulting

  • Application Renewal
  • Enterprise Architecture
  • Enterprise Solutions
    • Oracle Solutions
    • SAP Solutions
  • Information Management
    • Business Intelligence
    • Data Management & Architecture
    • Portals & Content Management
  • Infrastructure Solutions
    • Data Center Operations
    • Data Center Rationalization
    • Infrastructure Transformation
    • Network Infrastructure
    • Security Solutions
    • Workplace Technology and Collaboration
  • IT Strategy and Transformation
  • Microsoft Solutions
  • Mobile Technology Solutions
  • Project Management
  • Program Management
  • Performance Engineering
  • Radio Frequency Identification
  • Service-oriented Architecture
  • Systems Integration

Outsourcing

  • Application Outsourcing
  • Business Process Outsourcing
  • Infrastructure Outsourcing

Controversy and criticism

Enron scandal and the Accenture name

There is a misconception that the name change from Andersen Consulting to Accenture was simply the consulting firm's attempt to "hide" from the Enron scandal. This is not accurate given the timing of events. The split from Arthur Andersen was requested by the consulting side in 1998, and finally awarded in 2000; the Enron scandal (starting with the reporting of the infamous "LJM Partnerships") did not occur until well into 2001, with the scandal culminating in the months after that.

In reality, planning for a new name was underway before the arbitration decision was announced (Andersen Consulting partners felt that the word "Consulting" in the name was a drawback, since the firm was moving into non-consulting work such as outsourcing and ventures). Interestingly, internal Arthur Andersen emails in 2001 sent to all employees discussed future plans for Arthur Andersen to move ahead in the market with 3 names: Andersen Tax, Andersen Audit, and Andersen Consulting now that they had ownership over the name. Arthur Andersen was never able to revive the "Andersen Consulting" name since it was brought down by the Enron scandal before doing so. Accenture is typically listed in the top 100 corporate brands, so the name change appears to have been a positive for the consulting firm. The fact that it is disassociated from the Arthur Andersen name certainly proved to be a positive after the Arthur Andersen/Enron scandal.

In addition, Accenture was absolved and not held liable of any involvement in the Enron scandal in court.

Accenture partners voted on a new name after the result of the international arbitration awarding Andersen to AA & Co. Accenture was one of a number of names suggested by a marketing firm after an exhaustive search -- the name had to be both available and be acceptable in all the countries in which Accenture does (or did) business. There was no public discussion of the alphabetical position of the name (which would have little relevance to competition). The primary discussion had to do with the sound of the new name and the source. One of the strongest factors favoring the selection of "Accenture" was that the name came from an internal suggestion, and that many partners felt good about the source of the necessarily made up word -- taken from "Accent on the Future". The other names considered were names coined by the naming consultant. Many of them had a "dot.com" feel that might have had less appeal to non-American partners, who made up 60% of the voting partners and the meeting.

Tax haven headquarters

In October 2002, the Congressional General Accounting Office (GAO) identified Accenture as one of four publicly-traded federal contractors that were incorporated in a tax haven country. The other three, unlike Accenture, were incorporated in the United States before they re-incorporated in a tax haven country, thereby lowering their U.S. taxes. Still, critics have panned Accenture's incorporation in Bermuda, generally because they viewed Accenture as having been a U.S.-based company trying to avoid U.S. taxes. The GAO itself did not characterize Accenture as having been a U.S.-based company; it stated that "prior to incorporating in Bermuda, Accenture was operating as a series of related partnerships and corporations under the control of its partners through the mechanism of contracts with a Swiss coordinating entity."

Non-US partners made up the majority of owners at the time Accenture split from Arthur Andersen & Co. In determining where to establish headquarters for an international company with very large operations in North America, Europe, Asia and South America the Firm presumably looked for the most favorable legal and tax environment. Historically, the physical location of the Managing Partner had determined the headquarters location at any given time. For example, under George Shaheen headquarters were in New York/Palo Alto, while under Joe Forehand the location moved to Dallas.

While Accenture has its roots in a Chicago audit firm, more than 50% of its clients, work, and employees are outside of the United States. At the time of the split from Arthur Andersen & Co., 60% of its partners were from outside the United States, with particularly large practices in Spain and the United Kingdom.

Movement of jobs outside the U.S.

Accenture has been criticized repeatedly by Lou Dobbs of CNN and others for moving some jobs outside the U.S., resulting in loss of work and employment for some U.S. citizens. This is because Accenture utilizes Global Delivery Centres in South Asia and Southeast Asia (such as Bangalore, Pune, Hyderabad, Chennai, New Delhi and Mumbai in India, and, Manila and Cebu in the Philippines) to reduce cost and increase profit margin in outsourcing deals with major U.S. companies. This enables Accenture to perform work (such as software development and call centre support) at a greatly reduced employee cost as compared to U.S. employees.

As of October 2007, Accenture employs more people in India than in the U.S.

As a balance to the criticism about movement of jobs outside the U.S., Accenture's employee population in the U.S. has increased from 28,000 in 2005 to 33,000 in 2008. According to the map of Accenture’s Delivery Centre locations, the Delivery Centres are evenly distributed across the world with 7 centres in Europe, 7 centres in South East Asia and 7 centres in North America. There are no operations in Africa.

Loss of sensitive data

In September 2007, Accenture was implicated in a high-profile case of loss of sensitive data (sometimes referred to as a "data spill") on individual American citizens. The information was contained on a backup computer tape being used in the development of a government information system for the state of Ohio which was stolen on June 10, 2007. The stolen tape contained the names and Social Security numbers of every Ohio state employee, more than half a million people owed tax refunds by the state of Ohio, 602 Ohio Lottery winners who had not cashed their winnings, 84,000 welfare recipients, tens of thousands of other individuals, taxpayer identification numbers for Medicaid providers, and bank account information for school districts and local governments.

In addition to the Ohio data, the tape also contained a great deal of information related to the state of Connecticut, also an Accenture client, including "information on nearly every bank account held by state agencies – including checking accounts, money market accounts, time deposit accounts, savings accounts, trust fund accounts, treasury and certificates of deposit – which could total billions of taxpayer dollars. The tape lists agency names, account numbers, bank names and types of accounts ... the account numbers of numerous state procurement cards – known as ‘P-Cards’ – most of which were fortunately out of date ... the names and Social Security numbers of dozens of Connecticut taxpayers ... [and] numerous detailed documents from the development and implementation of the CORE-CT project," according to a press release by Connecticut governor Jodi Rell on September 16, 2007. Governor Rell stated that the Connecticut data was being used in Ohio by Accenture to aid in the development of a similar state government information system.

The tape was stolen from the car of 22 year old Jared Ilovar, a $10.50 an hour intern in the Ohio Office of Budget and Management, who had been assigned to take home a backup computer storage device as part of a data security program, quickly terminated by Ohio governor Ted Strickland during the storm of public indignation after the theft became public on June 15. Ilovar was fired when he refused to resign, stating that he had been made a scapegoat for this questionable policy when his car, along with four others, was broken into outside his apartment complex outside Columbus, Ohio; "I was a victim of a random car theft, and now I am the scapegoat for the state of Ohio. On the subject of instructions, I was never instructed by my employer on how to properly secure, store or watch over the data tapes at night. ... I was the newest person in the door, so I inherited the job of taking the data tapes out of the building. That was the extent of my instructions."

Connecticut State Controller Nancy Wyman reported that Accenture would pay for two years of identity theft protection for the 57 Connecticut residents and one from out of state whose lost data originated in her office.

Subsidiaries

Visual identity

The typeface used in the Accenture wordmark is Rotis Semi-sans. The right-pointing carat character over the t is intended to indicate the company's orientation to the future. The character is similar to an accent mark in music. The corporate descriptor for Accenture is "High performance. Delivered.", which replaced the previous slogan "Innovation. Delivered." in 2004.

Tiger Woods is a celebrity spokesperson for the company. The campaign uses the service mark "Go on. Be a Tiger," and the ancillary statement "We know what it takes to be a Tiger."

See also

References

External links

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