Growing a global, client-focused consulting business - Spencer Stuart

Growing a global,
client-focused consulting business
An interview with Mark Foster, group chief executive,
Management Consulting & Integrated Markets, Accenture
Mark Foster
Accenture is a global management consulting, technology services and outsourcing
company, listed on the NYSE. It had net revenues of US$19.7 billion
for the fiscal year ended Aug. 31, 2007 and employs more than 158,000 people
in 49 countries. Accenture helps its clients perform at the highest levels so
they can create sustainable value for their customers and shareholders. It has
extensive relationships with the world’s leading companies and governments,
working with organizations of all sizes — including 91 of the Fortune Global
100 and two-thirds of the Fortune Global 500.
Mark Foster joined Accenture in 1983 and became a partner in 1994. As group
chief executive, Managing Consulting & Integrated Markets, he is a member of
Accenture’s executive leadership team.
Mark recently spoke to Spencer Stuart consultant Rob Wilder about how
Accenture is developing its solutions for clients in the light of globalization
and the quickening pace of organizational change.
Mark Foster at a glance
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Mark Foster has overall responsibility for the development of the company’s
management consulting capabilities, which include the customer relationship
management, finance & performance management, human performance,
strategy, and supply chain management service lines. Additionally, he has
oversight of all Accenture industry programs as well as its High Performance
Business Initiative, through which Accenture provides clients with a unique
blend of business capabilities across its three growth platforms — Management
Consulting, Systems Integration and Technology, and Outsourcing.
Mark was previously group chief executive of Accenture’s products operating
group. He leads Accenture’s involvement with the World Economic Forum: in
this capacity he serves as chairman of the non-executive board of the Global
Health Initiative against HIV/AIDS, TB and Malaria. He is also a member of
the board of the International Business Leaders Forum of the Prince of Wales
Trust, which supports business development in the developing world.

Q & A with Mark Foster
What is your view on the relationship
between IT services and software and how
the industries are converging?
Accenture’s model straddles the whole spectrum of
management consulting, IT services and software,
as well as outsourcing, and these fields are continuing
to converge. What’s driving our business at
the moment is our clients’ need to improve their
performance in the face of increased globalization
and customer-centricity. Leveraging global scale
and being very close to customers are two critical
areas of change for organizations, which in turn
fuel growth in the business change management
consulting industry and information technology
systems solutions backbones. And, as people
disaggregate their value chains in different ways,
the demand for outsourcing grows.
In terms of how IT services relates to software,
it’s clear that, as more and more functionality is
being built into software, incorporating some of
the IT services that were once provided separately,
productivity is rising. However, a new range of
complex IT-related issues is emerging with the next
level of integration and connectivity. The next wave
of change in IT services is coming from areas such
as Web 2.0, web enablement, open source, the
convergence of technologies and Service-Oriented
Architecture. Change needs to be purposeful, part
of an overall strategy to improve business performance,
so what we try to do is help our clients use
these technologies to respond to the issues of
competition, globalization and their customercentricity.
Are the larger enterprise clients moving
away from complex, bespoke deals with
you, or are you moving towards managing a
portfolio of services?
There are still plenty of large, transformational deals
to be done across the spectrum, although it is quite
hard to predict when they will come along. The
nature of the issues clients face, and their need for
pace, certainty and strategic flexibility, will inevitably
drive some to adopt our services in the form of
big, complex, integrated deals. With my integrated
markets responsibility, I make sure that we bring
all the best pieces of Accenture together in order to
serve clients in complex deals. We expect there to be
a continuing flow of these, whether they involve total
enterprises or key functional parts of organizations.
The bread and butter of our business is what I call
significant, complex change in a division, function or
area — projects worth between £20–50 million —
which compared to the big transformational deals
mentioned above, are somewhat medium-scale. We
also deliver point solutions to solve a specific business
issue: very focused insights, using our systems
integration consulting, technology consulting or
management consulting services. And then there are
what I like to call the service support models: staff
augmentation, and basic application outsourcing
representing another layer of our value proposition.
Our business has always been a portfolio of services
and it’s quite good from a risk mitigation strategy
that we’re not entirely dependent on the big deals,
though obviously we need a number of those to
maintain our scale and momentum.
Is Accenture looking over its shoulder at other
major software players, even those offering
different elements of the value chain?
We have focused on India and have been extremely
successful here, despite the competition from
Indian companies neutralizing the first wave of
attack on our value chain. Our objective has been to
connect an Indian capability to our global network
that is delivery- and outcome-based, rather than
simply about time and materials. Infosys and Tata
are showing signs that they will assume accountability
for delivery as opposed to simply offering a
cheaper cost-per-head; we fully expect them to build
the capability to do that globally, which will put competitive
pressure on us. However, we are moving
up the value chain all the time. We have been the
only Western-based company to grow our business
organically in India and to properly take the Indians

Q & A with Mark Foster
on in their home territory with a degree of success.
But we have to stay vigilant, particularly if they move
into areas like management consulting, which they
will try to do. It’s going to be a struggle for them,
but they will have some natural advantages which
we respect, including their access to a great talent
pool of very bright people.
The environment in which Oracle and SAP operate
is always of interest to us, not so much because
it’s a competitive threat per se, but because the
new wave of solutions arising from those platforms
— and indeed from Web 2.0 and service-oriented
architecture technologies — create more areas for
us to become expert in and help us serve clients in
unique and differentiated ways. It does mean that
some of the things we would have done five to ten
years ago are now inside the software, but that’s
life — things move on. As complexity, process and
integration issues become critical for organizations,
so we gain opportunities.
How has the thinking of your larger
enterprise clients evolved over the years?
Most of them are still putting in their Enterprise
Resource Planning backbones, which is easier said
than done. We help guide them through organizational
and operating model barriers particularly
when done on a global basis; this is a huge wave
of activity and will remain so for four to six years.
Of course, some companies got there early, maybe
because their industries were more global or they
were just ahead of the curve. They are now starting
to build on top of those platforms and think about
how to use the internet more effectively, how they
can create more flexible models for interacting with
their business partners, multi-channel customers,
and so on. As a result, CIOs and the rest of the
C-suite are now worrying about analyzing and drawing
insight from their vast databases of information.
The value-added services area of IT is going to be
critical for us.
After the dot com bubble burst, the
Accenture strategy group retrenched,
along with a number of other Accenture
consulting practices, but it has now come
back with force. What has this been a
response to?
During the consulting downturn in the early part of
this decade we refocused ourselves on two things.
First, we built a scale outsourcing business in BPO
and applications that went from 15 to 40 percent of
our practice in three years. Second, we reinvented
our systems integration practice by creating a truly
global delivery network which was plugged into
Latin America and Manila as well as India. Today we
have 44 centres in 30 cities.
What clients need in terms of business advice and
services goes beyond systems integration, technology
and outsourcing. We have always had a strong
management consulting capability, but this now
needs to be ramped up to match the scale of the
issues that our clients are facing. The consulting
market is very hot right now. The audit firms have
come back into the marketplace very strongly off
the back of the Sarbanes-Oxley, and the traditional
strategy consultants have carried on in the direction
of operational consulting. We remain in a sweet
spot in what I call operating model change —
organizational change, executional strategy and the
connection between management consulting and
technology systems.
Clients have to be equipped to be high performing
in a world in which economic activity comes from
multiple locations around the globe, flowing in
every direction. With our global footprint we are
uniquely placed to take advantage of this trend,
so long as we can deepen our skills; developing
industry-specific as well as platform points of view
is important for us.

Q & A with Mark Foster
How do you see Accenture’s position with
the big strategy firms moving aggressively
into the marketplace?
It depends on the area. Take McKinsey, for example.
We respect them and believe they have a big part
to play in the world — indeed, they are the catalyst
for a lot of our business development. Their work
often prompts an executive team to change strategy,
but since they do not handle the execution side of
things, this is where we come in. Because we are
so firmly grounded in the pragmatics of execution,
running clients’ HR, finance or supply chain
operations, etc., we bring unique and valuable
insights to clients. Our style of consulting is more
organizationally collaborative, partnering not just
with the client’s senior team but also with the rest
of the organization — that’s a very different model.
We are credible because we are playing the same
game as our clients. We are a public company, we
are leading globalization and facing the rigours of
clear reporting; like our clients, we are having to
re-engineer our own talent force and realign it with
the global economy. From a consulting perspective I
find myself talking to clients about what we’re doing
in our own $17 billion global enterprise. They see us
as a model.
When you became Accenture everybody was
watching to see what was going to happen.
Now the business is going well and you
have a great brand. Do you think going
public has improved your credibility and
brand with clients?
In some cases it has, but not all clients really
understand what’s happened or how far we’ve
come. Our own transition has been important for
us; we have learnt a great deal just by having to do it
ourselves. We understand the pressures of being a
listed business: every day we deal with the markets,
with analysts, balancing shareholder returns with
internal imperatives, which is what every publicly
traded company in the world has to do.
Many of our competitors still run on partnershipbased
models and have different frames of reference
for some of the things we’re doing. Being a corporate
player of scale is part of our differentiation and
at the heart of our business is a success story.
Do you find that collaboration is an issue,
particularly between your various businesses?
With a number of different agendas at play
do you find the collegiality is still there?
It’s still there. Certainly, the leadership team is closely
connected. And as we continue to scale our business,
we are conscientious about removing barriers to
collaboration, focusing on teamwork, and integrating
diverse points of view from across the business. In
my role, I not only drive our key differentiation — our
High Performing Business Initiative, but I also have
responsibility to ensure we have layered offerings
that glue us together so that our teams continue
to make connections with each other by sharing
knowledge and expertise with other groups and
actively developing internal and external networks —
that’s still a strong, natural tendency at Accenture.
What is your growth strategy, and does
it mainly involve organic growth or
acquisition?
Both. We have announced our strategy to spend
money on M&A. We have to find the right properties
to buy across all of our growth platforms, in
business process outsourcing (BPO), management
consulting and systems integration. We have made
a small and selective number of acquisitions in specific
areas (our “tuck-in” strategy)…We are feeling
more confident following the successful integration
of Capgemini’s North American healthcare consulting
practice in 2005, and have since made a couple
of other small strategic acquisitions to enhance our
services and capabilities — for example, with our
recent acquisition of the George Group.

Q & A with Mark Foster
What is Accenture’s strategy for acquiring
and managing talent over the next three to
five years?
Each of our businesses has a talent and human capital
strategy. We will remain the place that has high
quality people who bring outstanding intellectual
content to everything we do. We will be focusing on
industry experts and raising the bar so that we have
more people who can go toe-to-toe in the board
room with our clients. We will bring more people
into operational consulting so that we can help
clients re-engineer critical processes, and massively
enhance our global insights. Our dominant experience
is what you might call the ‘Western capitalist’
perspective of a high performance organization, but
as we start to do more work with Islamic, Chinese,
African and Latin American organizations, we need
to deepen our understanding of different business
cultures and have greater insights to offer. We have
been in India since 1987, and China since 1988, but
we want to aggressively grow our business in these
and other fast-growing economies.
The systems integration practice will have a strong
focus on technology skills and capabilities, ideally
bringing on board world-class architects who understand
how these new technologies are used to effect
business change. We need people who can manage
complex, end-to-end programmes, and people who
can run and manage operational excellence in the
area of BPO.
Would Accenture consider bringing in senior
executives without a consulting background
to work alongside clients in a given sector?
Yes, I think we would, although the transition from
being a business person to being a consultant is not
straightforward. The ideal person would be someone
like a transformation director who has successfully
driven a change programme from within
a large organization. There are also many people
who have gone back into business from consulting.
Our own alumni and alumni from other firms are
attractive prospects — people who have consulting
experience and insight, but also the pragmatism
that comes from having practical business experience.
We will continue to lean towards people with
industry experience, although of course we will carry
on building talent and recruiting on a massive scale.
This year alone at Accenture we’re hiring 60,000
people.

About Spencer Stuart
Spencer Stuart is one of the world’s leading executive search consulting firms.
Privately held since 1956, Spencer Stuart applies its extensive knowledge of industries,
functions and talent to advise select clients — ranging from major multinationals
to emerging companies to nonprofit organizations — and address their
leadership requirements. Through 51 offices in 27 countries and a broad range of
practice groups, Spencer Stuart consultants focus on senior-level executive search,
board director appointments, succession planning and in-depth senior executive
management assessments. For more information on Spencer Stuart, please visit
www.spencerstuart.com.
IT & Business Services Practice members
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©2007 Spencer Stuart.
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