Cloud Computing and the Innovation Process of Technology ... › smash › get › diva2:832420 ›...

CloudComputingandtheInnovationProcessofTechnologyConsultingServices:

thecaseofAccenture

BLEKINGEINSTITUTEOFTECHNOLOGY

MasterofScienceinBusinessAdministration

Writtenby:

JordiIsse

[email protected]

Supervisor:

PhilippeRouchy

June2010

MasterofScienceinBusinessAdministrationThesis2010 JordiIsse

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ABSTRACTTitle:CloudComputingandtheInnovationProcessofTechnologyConsultingServices:thecaseofAccentureAuthor:JordiIsseSupervisor:PhilippeRouchy.Department:SchoolofManagement,BlekingeTekniskaHögskola.Course:MasterofScienceThesisinBusinessAdministration,15credits.CloudComputing is heralded as the next big thing in enterprise IT. Itwill likelyhaveagrowing impacton ITandbusinessactivities inmanyorganizations. It ischanging the way IT departments used to work in order to get competitiveadvantages and meet the needs of the global economy. Accenture consultingcurrentlyhasanadvantagebecausetheyaredevelopinginnovationinsideandalsobringing innovation from outside to its current offer. However, what is ofparticularinterestinthisresearchistheimpactofnewtechnologysuchasCloudComputing toAccenture’sBusinessModelasaconsequenceof thematurationoftheInternetasanITplatform.Accenture isopening itsBusinessModel,usinganapproach of Open Innovation, accessing external knowledge in order to supporttheirR&Dprocesses.Thefirmisusingbothexternalandinternalideastodevelopnew technologies to take them faster to themarket, according to the studies ofHenryChesbrough.The intentionof this thesis is toaddressthe followingquestions;HowAccenturefocusesonnewmarketsandnewbusinesses(suchasCloudComputing),aswellastheircurrentbusiness(suchasSAP)?WhatkindofinnovationprocessisAccentureBM with SAP, according to the description made by Henry Chesbrough? HowAccenture by working on Cloud Computing is moving its BM from type 5 to 6accordingtothedescriptionmadebyChesbrough?Toanswerthesequestionsanexploratorycasestudyapproachwas takenwith the intention todetectpatternsand regularities thatwill help to precise the answers and capture the impact ofCloudComputingtoAccenturetechnologyconsultingservices.AccentureispassingfromaBusinessModeltype5whereintegratesitsinnovationprocessconnectedtoitsBusinessModelandwhereisusingIPasafinancialasset;toaBusinessModeltype6whereAccentureisabletochange,andischangedbythe market, in other words, Accenture is creating a Business Model which isadaptiveandwhereitsinnovationprocessidentifynewBusinessModels,usingitsIPasanstrategicasset.EventhoughCloudComputingisatanascentstage;tobesuccessfulorganizationsshouldtakesmall, incrementalstepstowardthisnewenvironmentsocanobtainearly benefits for applicable business situations, and learn how to dealwith theassociated issues and risks. While cloud computing still has a long way to gobeforeprovingitsfullvalue,AccentureismovingfasttomakeitavitalpartofitsvaluepropositionanditsBusinessModel.Key words: Cloud Computing, Accenture Consulting, Business Model, OpenInnovationandAlliances.


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ACKNOWLEDGEMENTSThis paperwas originated from the common interest ofme andmy supervisor,Assistant Professor Philippe Rouchy, in the area of Technology Consulting andCloud Computing. Many of the ideas presented here were discussed with himduring a course I took on Business Models for Software Platforms. Therefore Iwould like to warmly thank him for the constant guidance and constructivecriticism,whichhaveprovidedagoodbasisforthepresentthesis.Iwouldliketoexpressmydeepandsinceregratitudetomyparents.Theyalwaysencouragedme in my decision to have an experience in Sweden.Without theirsupport and understanding it would have been impossible forme to finish thiswork.IalsowishthanktomybrothersJonasandIrmin,andmynephewSantino,who have always been a good example of affection, courage, commitment andsuccess.I owe my most sincere appreciation to the master program of BusinessAdministrationatBlekingeTekniskaHögskola(BTH)andMastersofManagementUnion(MMU)inparticulartoMelissaEngelke,NellaMasinovicandEvaWittbom,who build and facilitate my integration with BTH and enriched my studies inSweden.Besides,itismypleasuretothankalltheteachers,fortheextraordinarydedicationtoallthecoursesIparticipated.Lastbutnotleast,IwouldliketothankallmyfriendsinSwedenforallthefunwehad together includingOscarKacprzak, Philipp Siedenschnur, ErikHultin,UlrichEngelke, Sebastian Larsson, Robin Gunnarsson, Daniel Blom and my specialgratitude to Therese Svensson and her family who has showed me the realSwedishexperience.


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TABLEOFCONTENTS

Chapter1–BackgroundandResearchContext..........................................................61.1Introduction.......................................................................................................................................................61.2Methodology ......................................................................................................................................................71.2.1DataCollection ............................................................................................................................................. 71.2.2SecondaryData ............................................................................................................................................ 71.2.3ResearchQuestions ..................................................................................................................................... 71.2.4ThesisLimitations ....................................................................................................................................... 8

1.3OverviewofConsultingServices:thecaseofAccenture ................................................................9

Chapter2–KeyConcepts:BusinessModel,OpenInnovationandAlliances............. 112.1BusinessModel..............................................................................................................................................112.2OpenInnovation............................................................................................................................................122.3Alliances............................................................................................................................................................15

Chapter3–TechnologiesinvolvedontheanalysisofAccentureBM:WhatisSAPandwhatisCloudComputing? ....................................................................................... 163.1SAP(Systems,ApplicationsandProductsindataprocessing) ................................................163.2CloudComputing ..........................................................................................................................................173.2.1SomePreliminarydefinitions .............................................................................................................. 173.2.2TypesofClouds .......................................................................................................................................... 173.2.3Public,PrivateandHybridClouds..................................................................................................... 183.2.4Cloud’sBenefits.......................................................................................................................................... 193.2.5Cloud’sSecurityandPrivacy................................................................................................................ 193.2.6CloudComputingSurvey ....................................................................................................................... 20

Chapter4‐AccentureBusinessModel,thecaseofSAP ........................................... 214.1Accenture’sBusinessModelwithSAP.................................................................................................214.2Offer....................................................................................................................................................................214.3Infrastructure.................................................................................................................................................234.4Customers ........................................................................................................................................................254.5Finance ..............................................................................................................................................................264.6WhatkindofinnovationprocessisAccentureBMwithSAP,accordingtothedescriptionmadebyHenryChesbrough? .................................................................................................27

Chapter5‐MovingtoanewBMwithOpenInnovation,thecaseofCloudComputing................................................................................................................................ 305.1Accenture’sBusinessModelwithCloudComputing.....................................................................305.1.1ScenarioA–AccenturedevelopsCloudTechnology ................................................................. 315.1.2ScenarioB–AccenturemakeallianceswithCloudProviders.............................................. 325.1.3Accentureusingexternalcloudsforitsowninfrastructure .................................................. 32

5.2NewOffer .........................................................................................................................................................335.3NewInfrastructure ......................................................................................................................................345.4NewCustomers .............................................................................................................................................355.5NewRevenues................................................................................................................................................365.6HowAccenturebyworkingonCloudComputingismovingitsBMfromtype5to6accordingtothedescriptionmadebyChesbrough?.............................................................................37Chapter6–RecommendationsandConclusions...................................................... 386.1References .......................................................................................................................................................406.2Appendixes......................................................................................................................................................436.2.1Appendix#1NotesonMethodologyfortheCloudComputingsurvey.......................... 43


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LISTOFFIGURESFigure1.SAPR3CoreBusinessProcessesModules .................................................................................16Figure2.GraphicdescriptionofAccenture’sBusinessModel(type5) .............................................21Figure3.Accenture’sOperatingandIndustryGroups,Source:FactSheetQ1Fiscal2010 .....25Figure4.Accenture’sIncomeStatementData,Source:SEC,form10K,fiscalyear31,2009 ..26Figure5.GraphicdescriptionofAccenture’sBusinessModel(type6) .............................................30Figure6.AccentureSaaSBusinessSolutionsSuiteSource:Accenture2009.Accelerating

BusinessValuewithSaaSforHighPerformance ...........................................................................34


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Chapter1–BackgroundandResearchContext

1.1IntroductionThis thesiswill discuss the capabilitiesofCloudComputing, both todayand intothefuture,andhowAccentureconsultingintegratesitscurrentactivitieslikeSAPimplementationswithnewbusinessactivitiesandinnovations likethecloudintoitsBusinessModel,offeringnewservicestoitsclients.CloudComputing is heralded as the next big thing in enterprise IT. Itwill likelyhaveagrowingimpactonITandbusinessactivities inmanyorganizations.CIO’sarelookingbeyondtoseewhatopportunitiesandchallengeslayinthecloudandhowitcanbeusetopromotetheorganization’sstrategy.CloudComputingisrealnow because of the maturation of the Internet as an IT platform. It allowscompanies toconsiderservices suchas,virtualization, standardization,andopensourcesoftwaretobeintegratedintotheirproductsorservices.Itallowsnotonlyenhancingtheirservices,butitallowstheusersofthoseInternetbasedproductstobebroughtintotheecosystemofaconsultingcompany.TheresearchcontextwillbebasedonHenryChesbroughandhisstudiesofOpenBusinessModelsandOpenInnovation.Thereasoningwillbemovingfromspecificobservations of how Accenture operates its current business model like SAP inrelationwithnew technologies likeCloudComputing inorder todetectpatternsandregularitiesthatwillhelptoprecisetheanswersabouttheimpactoftheCloudtoAccenturetechnologyconsultingservicesintermsofnewservicesforclients.More specifically, interpret changes in how Accenture consulting is securing itsbusinessfuturewiththeentranceofnewtechnologies.ItisdonebystudyinghowAccenture is passing from a Business Model aware of externalities: consultingworking for their own specific Business Model and partners (I will describe),towardintegratinginnovationprocesswithinitsBusinessModel:workingtowardanOpenBusinessModelandOpenInnovation,takingnewtechnologyfromoutsideitsboundaries likeCloudComputing fromsoftwareprovidersanddelivering thistechnologytoitsclients.I identify two possible models: a) one that built on the former Business ModelwhereCloudComputingworksasanewextensionwithoutdisruptingAccenture’sBusiness Model and b) Cloud Computing is part of a continuous and multi‐directional innovation strategy where Accenture adapts to the market and isadaptedbythemarket.In efficiency terms, with the introduction of new technologies, Accenture issupposetohelpsoftwareproviderstoreducetheircostsofdevelopmentbytakingthistechnologiesfastertothemarket;beenabletoofferthebenefitsofthecloudtoitsclientsandgaincompetitiveadvantages.


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1.2MethodologyThis thesis is a case study, which will investigate how Accenture consulting isofferingcurrenttechnologysuchasSAPandintroducinginnovationsuchasCloudComputingtoitsBusinessModelbyadaptingittoinnovationsinthemarketplace,inotherwords,howAccentureconsultingispassingfromaBusinessModeltype5toaBusinessModel type6according to thedescriptionofOpenBusinessModelandOpenInnovationmadebyHenryChesbrough.

1.2.1DataCollectionTheinformationwillbecollectedfromrelevantsourcesinthefieldofSAP,CloudComputing, Business Models, Alliances, Open Innovation and AccentureConsulting.Iamanex‐employeeofAccentureConsulting,andthatgivesmeapre‐understandingoftheindustryinquestion.ThisallowsmetohaveaccesstogoodsourcesofinformationandcreateaninformedassessmentofAccenture’sBusinessModel.Eventhoughthishasbenefititcanhavenegativeconsequencesaswell.OnepossibleweaknessisthatbecauseIusedtobepartoftheorganization,itmaybedifficult to preserve a neutral view.However, thiswill be regulated because theinformationcomingdirectlyfromAccenturesourcesandpersonalexperienceswillbeutilizedinconjunctionwithotherrelevantsources.

1.2.2SecondaryDataThedatawillbecollectedfromsecondarysources:ThedatawillbeobtainedfromasurveydevelopedbyKeltonResearchbetweenDecember15,2008,andJanuary8, 2009, where the target population was the 502 respondents include C‐levelexecutives(e.g.CEO,CFO,CIO,CTO),businessleaders(GMs,headsofdepartmentsand functions, etc.) and IT decision‐makers from 17 regions, including Austria,Australia,Belgium,Canada,Denmark,Finland,France,Germany,Italy,Netherlands,Norway, Singapore, Spain, Sweden, Switzerland, the United Kingdom and theUnited States. (See Appendix # 1 for more detailed information) and also thesecondary data will be a multitude of literature and research collected from:books (Henry Chesbrough), journals, articles, panel study, current surveys,financial reports and white papers (Accenture, SAP, SunMicrosystems, AmazonEC2,Force.com,etc.)

1.2.3ResearchQuestionsGeneral• HowAccenture focuses on newmarkets and new businesses (such as Cloud

Computing),aswellastheircurrentbusiness(suchasSAP)?Accenture’sBusinessModeldescribedwithSAP:• HowAccentureintegratesinternalandexternaldevelopmentactivitiesintheir

BusinessModel?


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• HowAccentureproceedwithitsInnovationprocessinrelationtoitsbusinessmodel?

• Whatkindof innovationprocess isAccentureBMwith SAP, according to thedescriptionmadebyHenryChesbrough?

Accenture’sBusinessModeldescribedwithCloudComputing:• HowAccentureistakingadvantageofCloudComputingandintegrateitintoits

BusinessModel?• HowAccenturebyworkingonCloudComputingismovingitsBMfromtype5

to6accordingtothedescriptionmadebyChesbrough?

1.2.4ThesisLimitations• Thiscasestudy is limitedtooneConsultingCompany,so itwillbedifficult to

use it to make generalizations about the Consulting Industry, however, it ispossiblethattheconclusionresultedfromthisanalysismaybeofinterestandhavesomerelevancetootherConsultingcompaniesandTechnologyproviders.

• The researchwillnot focusonevery typeof serviceofferedbyAccenture, asthescopewouldbetoo large, itwillonly focusonthegeneralconceptof twotechnologies(SAPandCloudComputing)

• The research will not describe in detail SAP technology but only use it asgeneralconceptinordertoexemplifyAccenture’scurrentoffer.

• Theresearchwillnotdescribeindetaileverytypeofclouds,asthescopewouldbetoolarge,butitwillfocusonthemainconceptsofCloudComputinginordertoexemplifytheintroductionofinnovationtoAccenture’sBusinessModel.

• Theresearchwillnotdescribe ifCloudComputing isa secure technologybutwillgiveageneralideaofthecurrentbenefitsandissues.


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1.3OverviewofConsultingServices:thecaseofAccentureAccenture'shistory1beganwiththebirthofArthurEdwardAndersen(1885‐1947)inPlano, Illinois.Hewas a sonof aNorwegian couple immigrated to theUnitedStates.Andersenattheageof23becametheyoungestcertifiedpublicaccountantinIllinoisandstartedworkingin1907for4yearsinPriceWaterhouseand1yearasacontrollerinJosephSchlitzBrewingCompanybasedinMilwaukee,Wisconsin.During1913attheageof28,AndersentogetherwithClarenceDeLanydecidedtofoundtheaccountingfirmAndersen,DeLany&CompanyinChicago.TheirfirstclientwasSchlitzBrewing,andsoonexpandedtoincludeInternationalTelephone & Telegraph, Colgate‐Palmolive, Parker Pen, and Briggs & Stratton,althoughtheirprimarybusinesswaswithutilitycompanies likeCincinnatiGas&Electric Company,DetroitNatural Gas Company,MilwaukeeGas Light Company,andKansasCityPower&LightCompany.In1918DeLanyleftthepartnershipandthecompanywasnamedArthurAndersen&Company, it startedgrowing fast inmanystatesacrossthecountry,providinglicensedaccountantsandauditorswithservices like financial and industrial investigation services for many largeindustrialenterprises.Andersenhadagreataptitudeofhiringtalentedaccountants;in1928thecompanyemployedapproximately400peopleandby1940it increasedto700.Hecreatedseveral literatures on accounting, including "Duties and Responsibilities of theComptroller" and "Present Day Problems Affecting the Presentation andInterpretationofFinancialStatements"whichgavehimanincreasingappreciationandrespectinfinancial,industrial,andacademiccircles.Subsequent to Andersen’s death in January 1947, the partner Leonard Spacek2tookoverthecompany,andgrewitintoaninternationalorganization,promotingacampaigntoimproveaccountingmethodsandpracticesbyemphasizingthevalueof implementing uniform accounting principles. He also creates the AndersenUniversity;a trainingcenter located inSt.Charles, Illinois;nowadays iscalledQ‐Centerandprovidestraining,methodologyandbestpracticesinmanagementandtechnology consulting fordifferent companies. Spacek got retired in1973,whenArthurAndersen&Companyhadopened18newofficesintheUnitedStatesandmorethan25officesaroundtheglobe.Andersen had grown into one of the world's greatest accounting firms. Thecompanyalso featuredaprofitableconsultingservice,helping largecorporationsinstall anduse their first computer systems in the1950sandbranchingout intoproduction control, cost accounting, and operations research in the 1960s. Inaddition,with audit and accounting revenues, the company's consulting servicesbegantorepresentanincreasingshareofAndersen'sincome.Inthe1970s,ArthurAndersen became involved in a multitude of consulting activities, including

1InternationalDirectoryofCompanyHistories,Vol.68.St.JamesPress,2005.2Spacek,Leonard,TheGrowthofArthurAndersenandCompany,1928‐1973:AnOralHistory,NewYork:Garland,1989


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systems integration services, strategic services, development of softwareapplicationproducts, andavarietyof additional technological services.By1988,40percentofthecompany'stotalrevenuesweregeneratedfromconsultingfees,makingArthurAndersenthelargestconsultingfirmintheworld.During this time, conflicts between the auditors and the consultants in thecompanycameout,centeringondiscrepanciesinthepayscaleanddisagreementoverthecontrolofconsultingoperations.Asaresult,ArthurAndersenwasdividedintotwoentities,anAuditingandTaxfirmknowsasArthurAndersen&Companyand a Consulting firm named Andersen Consulting. Also the traditionalmanagement hierarchy, inwhich consultants reported to auditors,was changed,allowingconsultantstoreporttomanagersintheirfieldallthewayupthroughthelevelofconsultingpartner.In 1999 Andersen Worldwide continued managing its two operating units andcontinued to lead theworld in Consulting Services. By 2000 had achievedmorethanadecadeofincrediblegrowth,withnetrevenuesexceedingUS$9.5billionandmorethan70,000professionalsin46countriesdeliveringtoclientsabroadrangeofConsulting,TechnologyandOutsourcingServicesandSolutions.Thedisputebetween theconsultantsand theaccountants reached its conclusionwhentheInternationalCourtofArbitrationinParisseparatedthetwogroups.AndinJanuary2001,AndersenConsultingchangeditsnametoAccentureLtd.Afteracentury of existence, the Arthur Andersen name was finished, ending with thecorporatelifeofoneofthelargestandrespectednamesinU.S.business.Accenturethencommencedoneofthelargestandmostsuccessfulre‐brandingcampaignsincorporatehistory.InApril2001,Accenture’spartnersvotedtopursueaninitialpublicoffering,andAccenturebecameapubliccompanyon July19,2001,when it listedontheNewYorkStockExchangeunderthesymbolACN.Today Accenture is a global Management Consulting, Technology Services andOutsourcing Company, who work in identifying new business and technologytrends;developingsolutionsandofferingservicesaroundtheglobe.AccordingtoAccenture’s Fact Sheet Q1 Fiscal 2010 (Nov. 30, 2009), Accenture hasapproximately177,000employees(includingmorethan4,600seniorexecutives)withofficesandoperations inmore than200cities in52countries,divided in3GeographicRegions includingAmericas,AsiaPacific andEurope /MiddleEast /Africa(EMEA)withNetRevenuesofUS$21.58billion for fiscal2009(12monthsendedAug.31,2009)


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Chapter2–KeyConcepts:BusinessModel,OpenInnovationandAlliances

2.1BusinessModelInordertoanalyzeAccenture’sBusinessModel,Iwouldliketostartbyclarifyingthe concept of Business Model (BM). It describes how an organization creates,delivers,andcapturesvalue(economic,social,orotherformsofvalue)3.Itfulfillstwocriticalfunctions: itcreatesvalueforthebusinessofferingtothevaluechainthat the focal firm seeks to serve (the firm’s suppliers, customers, distribution,partners), and itenables the firm tocaptureaportionof thevaluecreated for itself4.Inotherwordsis“HowaCompanyintendstomakemoneyoutoftheirideas,resourcesandtechnologies”5.ABMformsthefoundationforhowexecutivesmakedecisionsaboutopportunitiestopursue,businesstolaunchorbuy,activitiestoperform,talenttohireandwaystoorganizetodelivervaluetostakeholders.But,whytoopentheBM,accordingtoHenry Chesbrough, one reason is that technology and useful knowledge isincreasinglywidespreadanddistributedacrosscompaniesandindustriesaroundtheglobe,secondbecauseoftherisingcostoftechnologydevelopmentandthird,because a shorter product life cycles, which makes R&D investment under theclosedBMofinnovationdifficulttosustain.Ontheotherhand,anopenBMconfrontsthecostsideoftheequationbypullingexternalR&Dresourcestosavetimeandmoneyintheinnovationprocess.Italsoconfrontstherevenuesidebyenlargementthenumberofmarketstacklesbytheinnovation, in other words, leveraged cost and savings, combining with newrevenueopportunities.Whenthecompanyparticipatesinothersegmentsthroughlicensingrevenuesandjointventures,thenthedevelopmentcostofinnovationarereduced by use of external technology, saving time and money, as a result theinnovation process become attractive again evenwith a short product life cycle.Organizationsbyaccessing tomore ideas, andbyusing these ideas inmorenewproductsandservices,cankeeptempoandachieveandeconomicallyviablemodelofinnovation.One way to describe a BM is by identifying its basic core components. Thecompanycombinesthesecomponentsinordertocompletetheequationwiththeaimofgaincompetitiveadvantagesandcreatevaluetoitsstakeholders.Thebasiccomponents Iwould use in order to describe Accenture’s BM are infrastructure(capabilities, partners, key processes), offer (value proposition), customers

3BusinessModelGeneration,A.Osterwalder,YvesPigneur,AlanSmith,and470practitionersfrom45countries,selfpublished,20094 Henry Chesbrough (2006) Open Business Models: How to thrive in the new innovation landscape, HarvardBusinessSchoolPress,Boston,chapter7,page1825RaffiAmittandChristopheZott,“ValueCreationine‐Business,”StrategicManagementJournal22,no.6(2001)


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(relationships, segments, channels) and finances (cost, revenues, profits. In thenextchapterIwilldefineAccentureBMinagraphicanddescriptiveway.

2.2OpenInnovationChesbroughworks on open innovation and provides a theoretical framework tounderstand how firms can access external knowledge in order to support theirR&Dprocesses.Theauthordefinesopeninnovationasamodelthatassumesthatfirms can and should use both external and internal ideas to develop newtechnologiestotakethemtothemarket.In order to use the Open Innovation Model, a company needs to create anarchitecture,which integrates internal and external technologies to complementeachotherandcreatestheproductorservicetoworkstowardaneffectiveBMthatwillcreatethevaluepropositionandwilladdvaluetothefirm.Chesbrough distinguishes 6 types6 of Business Models depending of its scale ofOpennesstoInnovation:Type1:CompanyhasanundifferentiatedBM.Type2:CompanyhassomedifferentiationinBM.Type3:CompanywithsegmentedBM.Type4:CompanywithanexternallyawareBM.Type5:CompanyintegratesitsinnovationprocesswithitsBM.Type6:Company’sBusinessModelisabletochange,andischangedbythemarket.TheobjectiveofthisthesisispreciselytoexplainhowAccentureisopeningitsBMandisdisruptedornotbynewtechnologies.Open Innovation is relevant to Accenture because its services; with this modelorganizations are able to complement its offer, services and products, by theintroduction of innovation from other sources than the portfolio of clients italreadypossess.Indoingthis,itdoesnotonlycomplementsitsoffer;theyalsohelptechnologyprovidersbytakingtheinnovationfastertothemarketcreatingawin‐winsituation.On the one hand, organizations that creates innovation only inside theirboundarieshavehighcostofdevelopmentandtherisktobecomeobsolete,ontheotherhand,organizationsaregettingbenefits fromopen innovationby reducingthe cost of research and development by making alliances and using its IP asstrategicasset.In the following chapters Iwill describe howAccenture is using an approach ofOpen Innovation in order to answer the complex question of how consultingtechnology providers (such as Accenture) are dealingwith current services andalso with innovations coming from inside and outside its boundaries, gaining

6HenryChesbrough(2006)OpenBusinessModels:Howtothriveinthenewinnovationlandscape,HarvardBusinessSchoolPress,Boston,chapter5,page110


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competitive advantagesbyusing and supporting technology trends andbringingnewproductstothemarket.Accenture current offer is taking innovation fromoutside to improve its currentservicesandproducts;thisdescriptioncanbeclassifiedasaBusinessModeltype5accordingtoHenryChesbrough.Accenturewiththe introductionof innovationsuchasCloudComputing istakingnew products to its offer, new clients, new strategies and new methodologies,trying toadapt itsmodel to themarketandalso is adaptedby themarket itself;thisdescriptioncanbeclassifiedintoaBusinessModeltype6accordingtoHenryChesbrough.The objective is to describe the Business Model type 5 and type 6 applied toAccenture and then analyzes how the transition is happening between the twotypes defined by Chesbrough. In other words, I will describe the impact ofinnovation such as Cloud Computing in consulting technology services bydescribinghowAccentureBMispassingfromtype5totype6withtheuseofanopeninnovationmodel.Bytheintroductionofnewtechnologyinafirmispossiblethatthistechnologydonot has an obvious BM to develop it, the idea is to find the appropriate one tocreatevaluefromitorasChesbroughmentioned,“amediocretechnologypursuedwithagreatbusinessmodelmaybemorevaluablethanagreatertechnologyinamediocrebusinessmodel”(Chesbrough,2006:124).WiththeintroductionofnewtechnologyispossiblethenecessitytomakechangestothecurrentBMinsomescale,withtheaimtogainabettermodel,whichadjusttothenewrequirements,newchallengesandthenewopportunities.Chesbrough identified two concepts that render difficult for organizations toidentifytherightBMfornewtechnology:In firstplace, themanagerbiases, it isacognitivetrapwherethemanagement isnotabletorethinkitsbusiness.Inconsequence,thefirmisunabletocomeupwithabettermodel,whichtheyseeinconflictwiththecurrentBM.In secondplace, the company’s dominant logic; this concept reflects the existingperceptiononhowtheorganization’senvironmentworksandhowitcompetetogenerate value, as a result when new technology comes into themarket/organization, employees do not revaluate their logical approach, insteadtheysearchforwaystoapplythedominantlogictointerpretthenewtechnology.The employee’s in the company are very accustomed to the current BM and isdifficultforthemtoidentifyadifferentandbetterBMfornewtechnology.According to Chesbrough, “Themost successful the current business model hasbeen over time, the stronger its influence over how to commercialize the newopportunity that arises. And the more successful the firms has been with its


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businessmodel, themorewedded to themodel it will be as new opportunitiesarise.”(Chesbrough,2006:120)In order to understand better these barriers for Innovation I would like tosummarizetheXeroxBMcase:XeroxcreatedaverysuccessfulBMbasedondeliveringexpensivecopymachinesto large corporations. Instead of selling the copiers, they offered a lease for 95dollars per month, paying 4 cents per copy after the first 2000 copies thecustomersmadeeachmonth,thismodelbroughtaninterestingvalueproposition.Oncetheequipmentwasinstalledonthecustomersfacilities,usersaveragedtwothousandscopiesperday,asaconsequenceofthecopies’quality;asaresultXeroxbecomeaglobalenterprisewith2.5billioninrevenuesin1972.ThisBMgeneratedmorerevenueswhenmorecopiesweremade,andthisestablishedthedominantlogicforXerox’sbusinessinthefuture.The company developed faster machines that make high copy volumes. After awhile Kodak and IBM entered to the market with a similar BM like Xerox,competing directly with them but after with the entrance of a JapanesemanufacturerwithdifferentBM,Xeroxstartedtosufferfromtherealcompetition.TheJapaneseattackedthesegmentofsmallbusinessandindividualsandcreatedaproductwithverydifferentcharacteristicsthatXeroxmachines.Thisnewproductcould be servicedwithout a trained company technician, theymade replaceablecartridge,themachineswaspricedatamodestgrossmarginandtheycreatedanindirectdistribution channelwhichenable to create anationalwidedistributioncapability.Xerox in order to respond to this challenge required them to abandon thedominantlogicofthesuccessfulBMtheyhadcreated.IttookadecadeforXeroxtomanagewiththethreatoftheJapaneseandthehome‐officemarket.The purpose of describing these barriers is to take them into account at themoment of describing Accenture’s BM with the entrance of new products andinnovationfromtheoutside,(Accenture’sBMpassingfromtype5totype6),andanalyze if the model is changing and adapting to the new necessities or if themodel is not changing as a consequence of manager’s biases or the company’sdominantlogic.ConcludingwiththeOpenInnovationmodelIwouldliketomentionthataccordingtoChesbrough,firmscreatesvaluefromtheirnewtechnologyin3basicways:First, by incorporating the technology in their current business, second, bylicensingthetechnologytootherfirms,orthird,throughlaunchingnewventuresthat exploit the technology in new businesses. Accenture in order to gaincompetitiveadvantages isusingnewtechnology in the3waysmentionedabove,doing this by using an Open Innovation model to source and exploit newtechnologies.Iwilldescribeinchapters4and5.


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2.3AlliancesAlliancescreatevalue(Chanetal.,1997;McConnellandNantel,1985).7Alliancesare complex organizational forms that are usefully viewed as incompletecontracts.8 They typically involve the transfer of know‐how between firms, aprocessthatisfraughtwithambiguity(JensenandMeckling,1991).Organizationscreate alliances with suppliers and customers in order to create competitiveadvantagesby complementing eachother.They also can findbetterways tousetheir products or services by changing experiences and innovation. Accenturemakes alliances to create value to its stakeholders by helping suppliers tocomplement its offer and differentiate their product or services from itscompetitors.Whetherandhowcompetitiveadvantagesareerodeddependsonthestabilityofmarketdemandandtheeaseofreplicability(expandinginternally)andimitatability(replicationbycompetitors).Successfulstrategicalliancesarehighlyevolutionaryandgothroughasequenceofinteractivecyclesoflearning,reevaluationandreadjustments.Ontheotherhand,commoncharacteristicsofunsuccessfulalliancesarehighly inertial,with littleordivergent learningbetweencognitiveunderstandingandbehavioraladjustments,orfrustratedexpectations.Accenture has developed a network of successful alliances withmore than 150market leaders and emerging players, expanding Accenture’s knowledge of thetechnology providers and products. Examples of Accenture’s alliances withtechnology market leaders and emerging players are: Microsoft, SAP, Oracle,Siebel,CiscoSystems,Dell,EMC,HP,IBM,Salesforce.com,SunMicrosystems,etc.SomeofthebenefitsthatAccentureclient’sgetswiththesealliancesare:enhancedvendor relationships with dedicated support resources and expedited vendorescalationprocesses.Accenture,bymakingthesealliances, isalsoabletooffertoitsclients,accesstodevelopmentsoftware,demonstrationhardware,architecturalexpertise,sizingandconfigurationassistance,creatingcompetitiveadvantagesforthepartiesinvolvedintheprocess.InadditionAccenture’scustomersareabletoreducetheriskandcostassociatedwith the technologyprocurementprocess aswell as the total cost of technologyownership. (I will describe on Accenture BM type 5 and BM type 6 with theexamplesofSAPandCloudComputingrespectively).

7Alliancesareorganizationalformsthatallowotherwiseindependentfirmstoshareresourcesofavarietyofsorts.Conceptually,wethinkofthemasintermediateorganizationalformsbetweenmarketsandhierarchies.8Thetradepresssometimesreferstoalliancesinthisfashion,e.g.,‘alliancesareincompletecontracts(which)leaveallsortsofroomformaneuverandinterpretation’(AllianceAnalyst,November25,1996).


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Chapter3–TechnologiesinvolvedontheanalysisofAccentureBM:WhatisSAPandwhatisCloudComputing?

3.1SAP(Systems,ApplicationsandProductsindataprocessing)SAP is an Enterprise Resource Planning (ERP) software product capable ofintegratingmultiplebusinessesapplicationsrepresentingaspecificbusinessarea,theseapplicationsupdateandprocesstransactionsinrealtimemode.SAPhastheabilitytobeconfiguredtomeetsbusinessneeds.SAPiscategorizedinto4corefunctionalareas:Logistics including: Sales and Distribution (SD), Material Management (MM),Production Planning (PP), General Logistic (LO), QualityManagement (QM) andPlantMaintenance(PM)Financial including: Financial Accounting (FI), Controlling (CO), EnterpriseControlling (EC), Investment Management (IM), Treasury (TR) and Fixed AssetManagement(AM)Human Resources including: Personnel Administration (PA) and PersonnelDevelopment(PD)Projectincluding:ProjectSystem(PS),Workflow(WF)andIndustrySolutions(IS)Figure1.SAPR3CoreBusinessProcessesModulesTheexplanationaboutSAPtechnologyisgiveningeneralbecausethisthesisisnotpretending to explain in detail SAP functionalities but to analyze Accenture BM(type5)byusingSAPasanexampleof current serviceandAccenture’s strategyused to innovate its current services but also how Accenture is integrating andadaptingitsBM(type6)withtheentranceofnewtechnologyascloudcomputingintothemarketinordertocreatenewservicesforitsclients.


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3.2CloudComputingThere ismuchconfusion surroundingcloudcomputing.What is it exactly?Someconsiderittobeareincarnationofgridcomputing;somebelieveittobevirtualiza‐tion;whileothers thinkof it asPlatform‐as‐a‐Service, Infrastructure‐as‐a‐ServiceorSoftware‐as‐a‐Service;orthatitissimplyutilitycomputing.Thereisanelementoftruthinallthesedefinitionsandtheaimofthisstudyistotacklesomeaspectofitregardingconsultingservices.Addingtothecomplexity, thedefinitionofcloudcomputingmaychangeover time.Confusion is tobeexpectedwhenmarketsarenascentandnewcomputingdeliverymethodsbecomeanoption.

3.2.1SomePreliminarydefinitionsAccording to John Foley’s definition9, cloud computing is the use of massivelyscaledoffsiteITresourcesassembledvirtually,accessedovertheinternet,usedondemand in real‐time or near real‐time on a pay‐per‐use or subscription basis,wheretheworkloadsaresharedamongmultiplecustomers.

• Offsite:youdon’towntheITresources,rathersomeoneelsehaspurchasedthemandyouusethemwhenneeded;

• Assembled virtually: virtualization technology allows multiple customerapplicationstoberunonthesystemoronamachine;

• Ondemand:theresourcecanbeturnedonoroffquicklyandasneeded;• Pay‐per‐use:useasneeded,theeconomicmodelisOpExandnotCapEx,pay

forwhatyouneed,notforunneededcapacity;• Sharedworkloads:scaleeconomiesexistbecauseofshareduseandbecause

client traffic may be non‐correlated from a time of year or day usageperspective;

• Massive scale: access to extremely large infrastructure that would bechallengingtobuildasasingleentity.

For an alternative definition, The Gartner Group defines cloud computing as, “Astyle of computingwheremassively scalable (and elastic) IT‐related capabilitiesare provided as a service to external customer using Internet technologies.”Accenture defines Cloud Computing as Cloud computing as the dynamicprovisioning of IT hardware, software and services from third parties over anetwork, is an important step in the continuing industrialization andstandardizationofIT.

3.2.2TypesofCloudsThere are different types of clouds, among which are included: Software‐as‐a‐Service(SaaS),Storage‐as‐a‐service,Database‐as‐a‐service(DaaS),Information‐as‐a‐service, Process‐as‐a‐service, Platform‐as‐a‐service (PaaS), Integration‐as‐a‐service, Security‐as‐a‐service, Management/governance‐as‐a‐service (MaaS andGaaS),Testing‐as‐a‐service(TaaS)andInfrastructure‐as‐a‐service(IaaS).Inorder

9JohnFoley,“ADefinitionofCloudComputing”,InformationWeek,September2008.


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toillustratethistechnology,IwoulddescribeSaaS,PaaSandIaaS,whichformsthearchitecturalserviceslayersofcloudcomputingaccordingtoSunMicrosystems:SoftwareasaService(SaaS),thehighestlayer,isacompleteapplicationofferedasaservice,ondemand,viamultitenancy;meaningasingleinstanceofthesoftwarerunson theprovider’s infrastructureandservesmultiple clientorganizations, inotherwords,isanyapplicationthatisdeliveredovertheplatformoftheWebtoanend user, typically leveraging the application through a browser, for example:Salesforce.comorGoogleApps.Platform as a Service (PaaS), the middle layer, is the encapsulation of adevelopmentenvironmentabstractionandthepackagingofapayloadofservices,in other words, is a complete platform, including application development,interfacedevelopment,databasedevelopment,storage,testing,deliveredthrougharemotelyhostedplatform,forexampleGoogleAppEngine.InfrastructureasaService(IaaS), the lowest layer, isameansofdeliveringbasicstorage and compute capabilities as standardized services over the network.Servers,storagesystems,switches,routers,andothersystemsarepooled(throughvirtualizationtechnology),tohandlespecifictypesofworkloads,inotherwords,isthe ability to remotely access computing resources, for example Amazon WebServices.The purpose of this thesis is not to analyze in detail each type of cloud but todescribe in general themain concepts of this technology in order to analyze theintroductionofittoAccenture’sBM.

3.2.3Public,PrivateandHybridCloudsThecommoncharacteristicofallofthesetypesofcloudsisthattheycaneitherbepublic, private or hybrid clouds. Third parties run public clouds where manydifferent customersmay bemixed together on the servers and storage systems,withinthecloud.Ontheotherhand,wehaveprivatecloudswhichareon‐demandinfrastructureownedby a single customerwho controlswhich applications run,andwhere.Onemore last classification is the hybrid clouds,which combine thepublicandprivatecloudmodels,offeringtheguaranteeofon‐demand,externallyprovisioned scale, but adding the complexity of determining how to distributeapplicationsacrossthesedifferentenvironments.The technology behind the cloud is virtualization, which is the abstraction ofcomputerresources; this is the foundationtechnology forallcloudarchitectures.TheuseofthistechnologywasallowedasaresultofthehighbandwidthofferednowforthemajorityofInternetusers.Thisallowsmassivecomputationanddataresourcestobeaccessedfromthebrowser.


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3.2.4Cloud’sBenefitsSomeof thebenefitsofcloudtechnologyare:1) ITEfficiency,because ithelpstominimize costs where companies are converting their IT costs from capitalexpensestooperatingexpenses.2)BusinessAgility,becauseithelpstomaximizereturn using IT as a competitive advantage through rapid time to market. Butbasically cloud computing enables IT organizations to increase hardwareutilization and to scale up tomassive capacities in an instant,without having toinvestinnewinfrastructure,trainorhirenewpersonnel,orlicensenewsoftware.Italsocreatesnewopportunitiestobuildbetternetworkservices,inlesstimeandlessmoney.

3.2.5Cloud’sSecurityandPrivacyBut how secure is to use cloud technology? Security risks and privacy areimportant subjects for end‐users to feel comfortable with a cloud solution thatholds their software, data and processes, reason why, there should existconsiderableassurancesthatservicesarehighlyreliableandavailable,aswellassecureandsafe,andthatprivacyisprotected.Thepurposeofthispaperisnottoanalyze if cloud computing is a secure technology or not, but I would like tomention the most important security benefits and risks for cloud computingaccordingtoENISA10inordertohaveageneralideaaboutthistopic.Relevantsecuritybenefitsare:economiesofscale(allkindsofsecuritymeasuresare cheaperwhen implemented on a larger scale),market differentiator (strongdriverforcloudproviderstoimprovesecuritypractices),standardizedinterfaces(offer a standardized, open interface tomanaged security services), rapid‐smartscaling of resources (the ability to dynamically reallocate resources for filtering,traffic shaping, authentication, encryption,etc, todefensivemeasures), auditandevidence‐gathering (images of virtual machines which are accessible withouttaking infrastructure off‐line, leading to less down‐time for analysis), and thebenefits of resource concentration (it has the obvious advantage of cheaperphysicalparameterizationandphysicalaccesscontrol).Ontheotherhand,ENISA(2009)identifiedrelevantsecurityrisksincluding:lock‐in(littleonservices interfaces thatcouldguaranteedata,applicationandserviceportability), isolation failure (shared resources and the failure of mechanismsseparating storage, memory, routing and reputation between different tenants),management interfacecompromise(customermanagement interfacesofapubliccloud provider are accessible through the Internet andmediate access to largersets of resources), dataprotection (poses several dataprotection risks for cloudcustomersandproviders),incompletedatadeletion(therequesttodeleteacloudresource, may not result in true wiping of the data), malicious insider (thedamage,whichmaybecausedbymaliciousinsiders,isoftenfargreater)andlossof governance (the client necessarily cedes control to the cloud provider on anumberofissues,whichmayaffectsecurity).10EuropeanNetworkandInformationSecurityAgency(ENISA),CloudComputing,Benefits,risksandrecommendationsforinformationsecurity,November09


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The risks of cloud computing must be compared to the risks of staying withconventionalsolutions.Cloudcustomertransferrisktocloudproviders,howevernot all risks can be transferred, if a risk leads for example: to the collapse of abusiness,seriousdamagetoreputationorlegalimplicationsthenitishardforanyother party to compensate this injure. In the end, it is possible to outsourceresponsibilitybutisnotpossibletooutsourceaccountability.

3.2.6CloudComputingSurveyIn order to understand what is happening in general in the market with CloudComputingtechnologiesIwouldmentionsomeconclusionsandkeyfindingsfromthe 2009 Cloud Computing survey, conducted by Kelton Research, where theresearchorganizationinterviewed502C‐levelexecutivesandITdecisionmakersacross17countriesinNorthAmerica,EuropeandAsia‐Pacific.Keydatafromthesurveyshows:The majority of companies surveyed (54%) use technology to cut costs. 60%report that existing internal IT systems are too expensive. The majority ofrespondentsagreedcloudcomputingcanlowerup‐frontandongoingcosts.Theybelieve Cloud Computing allows their companies to react quickly to marketconditionsandcompetitorsusingtheabilitytoimmediatelytapcomputingpowerandsoftware,helpingthecompanytofocusonitscorebusinessDespite this common recognition that cloud computing is real and has thepotentialtoimproveacompany’sfinancialpositionandcompetitiveness,theclearmajority(61%)arenotusingcloudcomputingtechnologiesat this time.Andthemajority (84%) of those that currently depend on internal IT systems have noplanstoswitchtocloudcomputingtechnologiesinthenext12months.Thesurveyshowsastrongunwillingnesstochangedrivenbyfearsofsecuritythreatsandlossofcontrol.Ontheotherhand,thosecompaniesthathaveovercomeskepticismorresistancedue to security and control issues associated with cloud computing reportbusinessbenefits.Specifically,companiesthathavemigratedtocloudcomputing,use it tomanageanddeliverbusinessapplicationssuchasCRMandHRservices.Whatitisclearfromthesurveyistheenormousinterestinthecloud.Companiesingeneralarenotrunningtheirbusiness inthecloudyet;only5%ofcompaniessurveyedrelyexclusivelyoncloudcomputingfortheirITneeds.Aswecannoticecloudcomputingasanevolvingtechnology,hasadvantagesanddisadvantagesbutasitmatures,thebattleisontodeveloplong‐termstrategiestocapitalizeonit.DependingonthecompanythiscanbedonebyadaptingtheBMtothe best way to gain competitive advantages. In chapter 5, I will describe howAccenture is changing its BM to incorporate this technology and how is linkingpartners,providersandclientsintotheecosystemofaconsultingcompany.


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Chapter4‐AccentureBusinessModel,thecaseofSAPThis chapterwill discussAccenture’sBM firstwith its general services and thenexemplifiedwith a current business technology such as SAP. Also I will explainhowthisBMliesintype5accordingtothedescriptionandcharacteristicsgivenbyHenryChesbrough.

4.1Accenture’sBusinessModelwithSAPThe main components I will use in order to describe Accenture BM are: Offer(value proposition), Infrastructure (capabilities, partners, key processes),Customer(relationship,channels,segments)andFinance(cost,revenuesprofits).

Figure2.GraphicdescriptionofAccenture’sBusinessModel(type5)

4.2OfferAccenture’s general value proposition is a global Management Consulting,Technology Services and Outsourcing Company, who works in identifying newbusiness and technology trends; developing solutions and offering consultingservicesaroundtheworld,basedonits“highperformancebusiness”strategybuiltonitsexpertiseinconsulting,technologyandoutsourcing.Accentureoperatesgloballywithonecommonbrandandbusinessmodeldesignedto enable to provide clients around the world with the same level of service,


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offering a combination of industry expertise, functional capabilities, alliances,global resources and technology, competitive priced and with a global deliverymodelbydrawingonitsglobalresources.Accenture split his offering in three growth platforms: Management Consulting,TechnologyandBusinessProcessOutsourcing.A) Management consulting platform is responsible for the development anddelivery of strategic, operational, functional, industry, process and changeconsultingcapabilities.It includes six services lines: Customer Relationship Management, Finance andPerformance Management, Talent & Organization Performance, Process andInnovationPerformance,StrategyandSupplyChainManagement.B) Technology consulting platform comprises three service areas: SystemsIntegration,TechnologyConsulting,andInformationTechnology(IT)Outsourcing.Systems Integration consulting services include: Enterprise Solutions andEnterpriseResourcePlanning(includingOracleandSAPamongothers), Industryand Functional Solutions, Information Management Services, Service‐OrientedArchitecture, Custom Solutions, Software as a Service (SaaS),Mobility Solutions,MicrosoftSolutions.Technologyconsultingservicesinclude:ITStrategy&Transformation,EnterpriseArchitecture, Infrastructure Consulting, IT Security Consulting, ApplicationPortfolio Optimization and Renewal, Digital Solutions, Research & DevelopmentandMicrosoftSolutions.IT Outsourcing consulting services includes: Application Outsourcing andInfrastructureOutsourcing.C)BusinessProcessOutsourcingconsultingplatformprovidesbusinessprocessestotransformbusinesses,achievehigherlevelsofperformanceandresults,and/orreducecosts,forexample:businessfunctionsand/orprocesses, includingfinanceand accounting, human resources, learning, procurement and customer contact,amongothers.For the services mentioned above, Accenture applies a systematic approach tocreate and capture proven, repeatable processes, methodologies, tools andarchitectures.Accenture’sgeneralofferwasdescribedabovebut inorder tonarrow itsoffer, Iwould like todescribeoneservice in theTechnologyconsultingplatform,withintheareaofSystemIntegrationconsulting,specificallywithanEnterpriseResourcePlanning:SAP.AccenturedividesitsSAPcapabilitiesin3solutions:first,theFunctionalsolution,which includes: Enterprise PerformanceManagement, Business Intelligence (BI),


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Customer Relationship Management (CRM), Duet, Finance and PerformanceManagement, HR Transformation and Talent Management, Master DataManagement,SupplyChainManagement,Service‐orientedArchitecture(SOA)andSAPNetWeaverSolutions.Insecondplace,theIndustrySolutions,whichincludes:Automotive, Chemicals, Communications, Consumer Goods and Services,Electronics and High Tech, Energy, Financial Services, Health and Life Sciences,Industrial Equipment, Metals, Public Service, Retail, Transportation & TravelServices,Utilitiesandlastly,theOutsourcingSolutions,whichincludes:ApplicationOutsourcing,BusinessProcessOutsourcing,InfrastructureOutsourcingandSharedServices.These are the services that Accenture offered for SAP implementations to itsclients. Accenture has a 30‐year history of working with SAP, deliveringapproximately 1,500 SAP projects each year for leading companies and publicserviceorganizations.

4.3InfrastructureCapabilities: Accenture network combines people and delivery centers withmethods, tools and metrics that collectively enable to deliver consulting,technologyandoutsourcingservicesandsolutionswithmorethan175,000peopleworldwide. Its workforce includes business consultants, technologists andspecialistsonbusinessfunctionsandprocesses.Thenetworkiscomplementedbymorethan50DeliveryCentersin30cities.Partners:Accenturehasdevelopedanetworkofalliancesworkingwithmorethan150 technology market leaders and innovators, complementing and extendingAccenture’ssolutionandcapabilitiesbyenhancingaserviceoffering,deliveringanewtechnologyorhelpingthemextendtheirservicestonewgeographies.Some alliances are aligned with one service lines, adding skills, technology andinsights thatareapplicableacrossmanyof the industries.Otheralliancesextendand enhance the offerings specific to a single industry group.Almost all of theiralliancesarenon‐exclusive.Thesealliancescangeneratesignificantrevenuesfromservices to implement partners’ products. Accenture also receive some directpayments,whicharenotmaterial to itsbusiness, from their alliancePartners ascompensationformarketing,technicalandotherassistance.KeyProcesses:Inrecentyears,avarietyofsourceshaverecognizedtheimportanceofcreatingrepeatableprocessesfordeliveringinnovation.TheCapabilityMaturityModel Integration (CMMI) developed by the Software Engineering Institute ofCarnegie Mellon is an example of this. Accenture recognize the benefits ofapproachingworkwithaconsistentandstandardizedmethodology.ThebenefitsofthisaccordingtotheCMMIwebsite11are:1)Moreexplicitlylinkingmanagementandengineeringactivities to theirbusinessobjectives,2)Expandingthescopeofandvisibilityintotheproductlifecycleandengineeringactivitiestoensurethatthe

11CMMIhomepage‐http://www.sei.cmu.edu/cmmi/general/


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product or service meets customer expectations and 3) Incorporating lessonslearnedfromadditionalareasofbestpractice.Accenture has expended an enormous effort to accumulate a repository ofdocumentstobeusedinallofitsprojects.Employeesaccesstothissetoftoolstoreduce the time required to work successfully in a project, ensuring a constantlevelofqualityandperformanceacrossallindustriesandregions.The Methodology is online and contains information for all kind of projects,industries, services and solutions. The methodology is based on global bestpractices,passingthroughthedifferentphasesofaprojectincluding:plan,analyze,design,build, testanddeploy; forexample:AccentureDeliveryMethods (defineswhat work needs to be done and how it can best be accomplished), AccentureDelivery Processes (supports the steps or tasks defined by the methods),AccentureDeliveryTools(automatesactivitiesdefinedbymethodsandprocesses)and Accenture Delivery Architectures (provides a platform for net‐centricsolutions).Following the example with SAP solutions, I would describe Accentureinfrastructureinrelationwiththistechnology.Capabilities:Accenturehasmorethan30,900SAP‐skilledprofessionalsglobally(asof August 31, 2009). Also counts with 2 Centers for Innovation for SAP inHeidelberg‐WalldorfandinBangalore.Partners:oneofthemostimportantAccenture’sallianceswithsoftwareprovidersiswithSAP.KeyProcesses:AccenturehascreatedamethodologyinconjunctionwithSAPtouseit with its client’s implementations; the methodology provides a framework forsolutiondeliverythroughouttheprojectlifecycleandiscomposeby4tools:AccentureDeliveryMethods for SAP: is utilized to provide an approachover sixphases,fromplantoanalyze,throughdesign,build,testandontodeploy,coveringthefullproject lifecycle.Tasksaredescribedforeachworkstream, forexample:projectmanagement, application, technical architecture, training& performance,etc.Accenture Delivery Estimators for SAP: provides bottom‐up and top‐downestimatingapproachesbasedonactualdatacapturedfromAccentureSAPprojects.Thesepredict forexample: theworkloadandtheresourcesrequiredtocompletework.Accenture Delivery Tools for SAP: is the team workbench, accessible on teamdesktops, used to execute daily tasks. For example: project deliverables(requirements,processdescriptions,configurationdocumentation,functionalandtechnicalspecificdevelopmentdocumentation,end‐usertrainingmaterial).


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Accenture Business Process Repository: is a collection of SAP and businessprocesses content embedded with Accenture’s best practices and knowledgecapital.The facts mentioned above about the alliance with SAP, demonstrated howimportant is forAccenture to partnershipwith softwareproviders andhow thisrelationcreatescompetitiveadvantagesandalsocreatesastrongerinfrastructureforbothcompaniestoaddvalueforclients,suppliersandtheconsultingbusinessingeneral.

4.4CustomersAccenturehasrelationshipswiththeworld’sleadingcompaniesandgovernments.Accenture revenues are derivedprimarily fromFortuneGlobal 500 andFortune1000 companies, medium sized companies, governments, government agenciesandotherenterprises.TodayAccentureservesmorethan1,500clientsworldwidewithofficesandoperationsinmorethan200citiesin52countries.Thecompanydividesitsoperationsin3geographicregions:Americas,Asia‐PacificandEurope‐MiddleEast ‐Africa (EMEA),providingconsultingservices through the followingfiveoperatinggroupsandtheir18industrygroups.

Figure3.Accenture’sOperatingandIndustryGroups,Source:FactSheetQ1Fiscal2010WithSAP,Accenturedivideshiscustomersinthreeareas:bysubject,byindustryandbygeography.(Alreadymentionedabove).AsanexampleofAccenture’sSAPcustomer I would like to mention Nordic Investment Bank, Subject: FinancialManagement, Industry: Banking; Financial Services and Geography: Norway,where Accenture implemented a SAP Banking Solution. The Nordic InvestmentBank (NIB) is an international financial institution owned by eight membercountries: Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway andSweden.Thebankfinancesprivateandpublicprojectsinandoutsidethemembercountries.Itoffersbusinessesandorganizationsintheprivateandpublicsectorslong‐termloansandguaranteesoncompetitivemarketterms.TheNordic InvestmentBank’s financialmanagementsystemwasbasedonagingtechnology and needed renewal. In choosing a new system, themost importantcriteriafortheNordicInvestmentBankwerefunctionalcoverageofthepackagedsolutionandInternationalFinancialReportingStandards(IFRS)compliance.


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AccentureandSAPwaschosentodeliverandimplementanewaccountingsystemfor the Nordic Investment Bank. SAP delivered the software: finance andcontrollingmodulesoftheirenterpriseresourceplanningsoftware.Accenturewasresponsiblefortheimplementationofthesolution.Theprojectdeliveryincluded:plan,design,build, testanddeployphases.Accenture’sproject teamconsistedofFinnish and international SAP and financial services professionals. After theimplementation of the new accounting system, cooperation with Accenturecontinues into themaintenance phase duringwhich Accenture provides hostingservices.This is an exampleof howAccenture in alliancewith SAPdelivered a successfulERP implementation, doing this by complementing each other and creatingcompetitive advantages. As a result Accenture and SAP are adding value to thecustomer and also are taking a portion of this value creation for their own,demonstratingthatitsbusinessmodelisworkingproperly.

4.5FinanceAccordingtoAccentureAnnualReport2009,TheAccenture2009LetterfromOurChairman & CEO, Accenture generated: Net Revenues for: US$21.58 billion forfiscal2009 (12monthsendedAug.31,2009).Earningsper share:US$2.44.FreeandCashFlow:US$2.9billionIn the following table I showed the Income Statement Data for the years endedAugust31,2009,2008,2007,2006,2005arederivedfromtheauditedAccenture’sConsolidated Financial Statements, according to Securities and ExchangeCommission,form10‐K,fiscalyearendedAugust31,2009.Figure4.Accenture’sIncomeStatementData,Source:SEC,form10K,fiscalyear31,2009By analyzing Accenture’s report I found that their operations are expose to beaffected by economic conditions, including: macroeconomics, credit market andlevels of business confidence. Accenture’s revenues are driven by the ability oftheirexecutivestosecurenewcontractsandtodeliversolutionsandservicesthatadd value to clients’ current needs. Accenture adds value to clients and driverevenuesbasedon their ability to deliver service offerings and todeploy skilledteamsofprofessionalsonaglobalbasis.


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Accordingtothefinancialreport,theglobaleconomicdownturninfiscal2009waswidespread, leadingtoeconomiccontractioninmanyindustriesandgeographieswhereAccentureoperate.ThesechangingdemandpatternshavehadanadverseeffectonAccenture’snewcontractbookingsandrevenuegrowth,comparedtotheprior fiscal year, as we can notice in its revenues before reimbursements (“netrevenues”) for fiscal 2009were $21.58 billion, comparedwith $23.39 billion infiscal2008,adecreaseof8%inU.S.dollars.(Figure7)The primary categories of Accenture’s operating expenses include in first place,cost of services, which consists of compensation, sub‐contractor and otherpersonnelcosts,andnon‐payrolloutsourcingcosts;primarilydrivenbythepricesobtained for solutions and services, utilization of the client‐service personnel(percentageofprofessionals’timespentonbillableconsultingwork),andthelevelofnon‐payrollcostsassociatedwiththegrowthofnewoutsourcingcontracts.In second place, sales and marketing expenses, are driven primarily bycompensation costs for business‐development activities, development of newservice offerings and client‐targeting, image‐development and brand recognitionactivities.And lastly, the general and administrative costs primarily include costs for non‐client‐facing personnel, information systems and office space, which Accentureseeks tomanage, as apercentageof revenues, at levels consistentwithor lowerthanlevels inprior‐yearperiods.Operatingexpenses infiscal2009also includedrestructuringcostsof$253millionrecordedinthefourthquarter.Withtheendofthishighlevelfinancialanalysis,IconcludewiththedescriptionofAccenture BMwith SAP technology as a portion of its current business activity,where we found how Accenture is generating revenues by combining the mainelementsof itsBMandcreatingvaluefor itsstakeholders,demonstratingthat itsmodel is working positive in accordance with its mission. Now is moment toreefersthisBMtotheliteratureofHenryChesbroughandexplainwhyIconsiderthatAccenture’sBMdescribedaboveiswithintheclassificationofaBMtype5.

4.6WhatkindofinnovationprocessisAccentureBMwithSAP,accordingtothedescriptionmadebyHenryChesbrough?Accenture can be found using a business model type 5 according to HenryChesbrough because in a BM model type 5, “Innovation is a businessfunction”(Chesbrough,2006:126).Accentureistakingresearchandinnovationasabusinessfunctionbecausetheybelievethese2subjectshavebeenmajorfactorsintheirsuccessandwillhelpthemcontinuetogrowinthefuture.AproveofthisistheinvestmentAccenturemadeinresearchanddevelopmentduringthelastthreeyears:$435million,$390millionand$307millioninfiscal2009,2008and2007,respectively, to help create, commercialize and disseminate innovative businessstrategiesandtechnologysolutions.Staffmembersfromeveryfunctionalareaanddifferent levels, from Analyst to Senior managers and Partners feel that theycontribute to the innovation process and the development of the services and


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technologies offered by Accenture. For effective innovation across differentbusinessfunctionsAccenturehasteams,projectsandoperatingplatformsworkingtothesamecorporatestrategicgoal.AnothercharacteristicofaBMtype5isthat“TheCompany’sinternalandexternalR&D activities integrated through the company’s BM” (Chesbrough, 2006: 126).Accenture is fulfilling this characteristic by supporting the creation and theutilizationofinnovationbothfromtheinsideandfromtheoutside.Firstlyfromtheinside with its technology R&D organization called Accenture Technology Labs,particularly in 5 areas: a) R&D teams ‐ who explore innovations and deliversolutionsthatleverageemergingtechnologiesandtrends,b)researchoninternetcomputing ‐ cloud computing which enables technical capabilities (hardware,softwareandstorage)tobesourcedthroughtheInternetacrosscompanyfirewallsand boundaries, c) research on data and decisions – using of data in decision‐making, business analytics and intelligence and other new technologies that letusers access live data from multiple sources, and data visualization tools, d)researchonmobiledevices,whichwillsupplantpersonalcomputersasthenewe‐business channel for employees and customers and e) the convergence ofcommunication, collaboration, communities and content, which has givencompanies different technological options, enabling them to rethink theirworkforcesandworkpractices.Accenturebelieves thatbysupporting innovation,more fresh thinkingwill comefrom sources outside the company, including customers, suppliers and otherstakeholders.InadditionoftheTechnologyLab,AccenturehascreatedotherLabsto develop more innovation in different areas, for example: Workforce Lab,Customer Lab, Enterprise Lab, Infrastructure Lab and the Software EngineeringLab. These are some examples of how Accenture is developing new technologyinsidetheirboundaries.SecondlyAccentureisdevelopingnewtechnologiesbytakinginnovationfromtheoutside by organizing innovation workshops with executive leaders fromenterprises, where participants explore topics such as: cloud computing, datacenter, virtualization, enterprisemobility, green IT, etc. These facts demonstratehowAccentureisintegratingbothinternalandexternalR&DactivitiesintoitsBM.AthirdcharacteristicofaBMtype5isthat“Theinnovationroadmapsaresharedwith suppliers and customers, and this access is reciprocated by those parties”(Chesbrough, 2006: 126); what Accenture is doing to this respect, is takinginnovation from outside by creating alliances and partnering with softwareproviders and clients, exchanging ideas, complementing technologies,methodologies, experiences, resources and creating competitive advantages forbothparties.Morespecifically followingwith theexampleofSAP,AccenturehadcreatedtwoInnovationCentersforSAPinHeidelberg‐WalldorfandinBangalore.They focus their efforts on innovation and development, supporting continuousinnovation and industrialization around existing and emerging SAP‐basedtechnologies. The centers work with clients to develop client‐specific solutions(such as SOA‐based solutions) and are an innovationhub for learning,modelingand developing new SAP technologies. One way they achieve this is creating


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developmentandtechnologyandarchitecturetemplates.AccordingtoAccenture,the new ideas often come from client ideas as well as being created by theInnovationCentersforSAP.Accenture is using its understanding of clients and suppliers to identifydiscrepancies and disconnection between the customer’s or supplier’s BM andAccenture’sBMbothincurrentandinnewbusinessareas.Accentureofferstoitsclient’s executives to collaborate, facilitating discussions on how SAP‐basedsolutions can realize specific client value. Clients are encouraged to use theseworkshopsas a startingpointwhen thinkingaboutbusiness transformationandvaluerealizationtoexplorehowSAP‐basedsolutionscandeliverbetterresultsinindustry‐specific scenarios. For example, SAP ismarketing a newproduct calledNetWeaver, that pretend to help customers and third‐party software companiesconnectR/3 and other SAPproducts to these architectures. SAP is now looking,instead of being the leading business applications software provider, now seesitself as delivering tools for connecting business processes and precisely in thistransitionAccentureisworkingtogetherwithSAPandclientssharinginformationwiththeaimtoexecutethistheinnovationprocessfasterandsuccessfully.Understanding the Innovationprocess thatAccenture is sharingwith clientsandproviders (in this caseSAP) I cansay thatAccentureBM isnow focusedonnewmarkets and new businesses (internal and external R&D for SAP), as well ascurrent businesses (current SAP offer, services). The company strives to aligncustomersandsupplierswithitsBM,whichisanothercharacteristicofaBMtype5 (Chesbrough, 2006: 126). Accenture is involving other parties for developingnewproducts,newservicesandtechnologies,doingthisbycooperationwithotherfirmsintheirsector(competitors),suppliersandpartners(technologyproviders)andend‐users(customers).The last characteristic of a BM type 5 is that “IP ismanaged as another kind offinancial asset, managed within a profit center” (Chesbrough, 2006: 126).AccenturetakesitsIPmanagementasstrategic,usingexternaltechnologies(IP’s)for strengthening it internal IP supporting licensing as a business. Accenture’ssuccess is resulted in part from their proprietary methodologies, software,reusable knowledge capital, assets and other intellectual property rights12. Theyrelyuponacombinationofnondisclosureandothercontractualarrangementsaswell asupon trade secret, copyright, patent and trademark laws toprotect theirintellectualproperty rights and the rightsof thirdparties fromwhomAccenturelicense intellectual property. Accenture also enter into agreements with itsemployees. Accenture manage IP as financial assets by looking for optimize itsvaluebylicensingitsinternalIPandalsoseekingtouseexternaltechnologies.AboveIhaveexplained,howAccenturecurrentBMmeetsallthecharacteristicsofaBMtype5accordingtothedescriptionmadebyChesbrough.Inthenextchapter,IwillexplainhowAccentureispassingfromtype5totype6BMbychangingitsmodelaccordingtothemarket,asaresultof the introductionofnewtechnologysuchasCloudComputing.

12Accenture2009,SECform10‐K,p.14


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Chapter5‐MovingtoanewBMwithOpenInnovation,thecaseofCloudComputingThischapterwilldiscusshowAccenture’sBMismovingfromtype5totype6withthe use of open BM and open innovation according to the description given byHenryChesbrough.AccentureistakinginnovationsandnewtechnologiesfromtheoutsidetointegrateitintheirBM,withtheaimtosurviveandstriveinthehighlycompetitive consulting industry.This thesis is consideringCloudComputingasamajor force that demand a re‐examination ofAccenture’sBM (development of aBM type 6). In other words, how Accenture’s BM is disrupted or not with theintroductionofnewtechnologysuchasCloudComputing.

5.1Accenture’sBusinessModelwithCloudComputingInorder todescribeAccenture’sBusinessModelwith the incorporationofCloudComputing, I identified two possible scenarios: A) Accenture develops its owncloud technologies, offering new services to his clients and B) AccenturemakesallianceswithCloudComputingproviders(asothertechnologies),developingnewoffers and services, in a continuous innovation process, helping clients bycapitalizing cloud computing potential and also utilizing external clouds for itsowninfrastructure.

Figure5.GraphicdescriptionofAccenture’sBusinessModel(type6)


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5.1.1ScenarioA–AccenturedevelopsCloudTechnologyInthefirstscenario,AccenturedevelopsCloudtechnologyinordertocreatenewproducts and new services for its clients. Accenture focus its cloud computingdevelopingeffortsonprocessandindustrycloudsincludingAccenture’sNavitaireforairlinereservationSystems.Navitaire’sonlinebooking system isoneexampleof cloud technologydevelopedbyAccenture.This technology isenabledbySaaS tosupport theairline industry.Navitaire helped airlines to increase operational efficiency, enhance customerserviceandoptimizeprofits.Other example of Accenture’s internal platformwas rolled out five years ago byaddinganewcapabilityforemployees.ThiswastheMicrosoftSharePoint,whichisa simple cloud platform that allows any group in Accenture, or client’s team, toaccess a template to quickly build a web site for collaboration and documentsharing.Alsoin2003,Accenture’sITorganizationmovedtoMicrosoftExchangee‐mail,whichoffersascalableinfrastructurethatcanbeself‐provisionedandpricedonaper‐usebasis.One last examples of Accenture’s cloud development is the IT organization’sinternal SaaS offerings, which also include two applications for the AccentureBusinessProcessOutsourcing(BPO)Servicesunit.TheBPObusinessaccessesbotha work queue and help desk management tool and a document scanning andstorageapplicationinAccenture’sapplicationcloud.Accenture’s cloudhasmany of the characteristics of external clouds, including aone‐to‐manymanagementapproach,sharedinfrastructure,useofvirtualizationtooptimize utilization and charges based on usage. The cloudmodel developed byAccenture brings advantages to the IT services for example; it makes tools andapplicationsmoreefficientandeffective.AccentureiscreatingitsownCloudtechnologybutisfindingdifficulttomatchtheeconomiesofscaleofInternetcompanieslikeMicrosoft,GoogleandAmazon.ForexampleGooglehasmorethan1millionserverscomparedtoAccenturewithafewthousand servers. Another issue is the utilization. For example: Accenture’sserversrunflat‐outtwodaysamonthwhenemployeesfiletheirtimereportsandthemachinesarecompletelyactive.Fortheother28daysamonth,themachinesarelargelyinactive.Ontheotherhand,cloudproviderscansecurehighoperationbyhavingmultiplecustomerssharetheirserversandtheycanjustifyinvestmentindatacenters.InthenextscenarioIwillexplainwhatAccentureisdoinginordertomitigatetheeconomies of scale inequality’s with technology providers such as Google andAmazon,doingthisbymakingallianceswithcloudprovidersandcomplementingeachotheroffer;Accenturebymakingallianceswith cloudproviders isnotonlyoffering new products and services, but using external technology into its owninfrastructuretoobtainimmediatecostsavingsandgreateragility.


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5.1.2ScenarioB–AccenturemakeallianceswithCloudProvidersInthissecondscenarioAccenturemakeallianceswithcloudprovidersinordertooffer new technology and new services to its clients, and also to use externalcloudsintheirowninfrastructure.Accenture in addition of developing their own cloud technology is also makingallianceswithcloudproviders,helpingthemtobringthecloudfastertothemarketandalsotoimprovethetechnologybydevelopingnewservices,newsolutionsandnewways to apply it. Some examples of theses alliances is Salesforce.com,whoannouncedapartnershipforimplementationservicesandhavebeencollaboratingfrom 2004. Accenture has created a methodology for delivering salesforce.comsolutions,includingassets,capabilities,tools,andaccelerators.Other alliance is with Sun Microsystems, this collaborative effort alignsAccenture's people, processes and technology with Sun's vision next‐generationfor cloud computing. Accenture is also conducting a pilot with Amazon WebServices,withitsmovetoAmazon’sinfrastructurecloud.Accenture’s team of AmazonWeb Services has developed applications and datacenter solutions that lay the foundation for cloud computing, including: elasticdata center (consolidate servers as a first step in adopting cloud computing),orchestration and provisioning (automate the provision of a number of ITcomponents,suchasserverandstorageenvironments)andcloudmigration(intra‐enterprise and extra‐enterprise clouds, thus enabling end‐to‐end IT serviceprovisioning and management). One last example is with Avanade whom arecommittedtodeliverCloudComputingsolutionsontheWindowsAzurePlatform.InsidethecontentofAccenture’sinfrastructureBMtype6,Iwillexplainwithmoredetail how these alliances are creating value to the ecosystem of Accentureconsultingservices.

5.1.3AccentureusingexternalcloudsforitsowninfrastructureAs a consequence of Accenture’s difficulty to match the economies of scale ofInternet companies like Microsoft, Google and Amazon. Accenture see asreasonably to don’t have any data centers in five years and run most of theirapplications on external clouds. Hence making alliances with cloud providers,developingnewwaystouseitstechnologyinitsowninfrastructureandcreatingcompetitiveadvantagesbycomplementingeachother.For exampleAccenture’s IT organizationmoved to an application cloud in 2006when they adopted Taleo’s global recruiting tool. Taleo offered a single globalplatformthatallowedeachcountrytoconfiguretheirapplication.Accenturerolleditoutglobally,completing theshift in2007,andnowusesTaleo in46countries.Thecompanysaved$1millionayearbyeliminatingmaintenanceafterretiringitsdozensofrecruitingsystems.AccordingtoKenCorless,(Accenture’sEnterpriseBusinessApplicationsexecutive


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director),thehalfofAccentureapplicationswillberunninginthecloudby2012.External cloudsallowAccenture’s ITorganization to focuson its strengthswhileshifting low or no‐valued‐added operations or capabilities to lower‐costspecialists.Theyalsobenefits fromcloudproviders’ lowercosts,otheroperatingsavings while cutting capital expenses and improving efficiency by transferringmostofitsapplicationstorunininfrastructureclouds.These are some examples of howAccenture is using external clouds on its owninfrastructure, reaping thebenefitsof cloud technologyandalsodevelopingnewproductsandservicesinconjunctionwithcloudprovidersbyopeningitsBMandbyusinganapproachofopeninnovation.ThetwoscenariosdescribedabovearedisruptingAccenture’sbusinessmodel,byaffecting and changing in some scale itsOffer (valueproposition), Infrastructure(capabilities, partners, key processes), Customer (relationship, channels,segments)andFinance(cost,revenuesprofits).(Iwilldescribe).

5.2NewOfferWiththeintroductionofcloudcomputingtoAccentureBM,theyoffertohisclientsan assessment in order to help identify cloud‐ready enterprise applications andpilot a candidate application with one or more cloud providers. The Accenturecloud computingassessment tool isused tomodel applicationsusageand trafficpatterns inordertoavoidover‐provisioningofcloudcomputingresources,whilemaintainingdesiredservice‐levelrequirementssuchasredundancyanduptime.After the Cloud Computing assessment applied to a client, Accenture is able torecommend or not the implementation of cloud technology. Besides theAssessment,Accentureoffers to itsclientsaCloudComputingAccelerator,whichexplore the potential power of cloud computing from assessment through pilot,whilefocusesontheinfrastructureclouds,platformcloudsandapplicationclouds.This tool take enterprises from a standing start to a pilot in a short time byworking through three defined phases: the discovery is the phase one whereAccentureworkswiththeclient’steamto identifyapplicationsthatcouldbenefitbyrunningonacloud,thisisdonebyidentifyingtheclient’sbusinessgoalsandITstrategy.Inphasetwo,Accentureworkstoprioritizetheapplicationreadiness,andcreatedetailedmapsformigrationopportunities,defineamigrationstrategy,andbuild an implementation roadmap. And in the final phase, Accenture works toconduct a workshop pilot that will prove out a functional cloud to client’smanagement, and then build a business case and implementation plans for aproductionrollout.Accenture has different methodologies to implement its partner’s clouds likeAmazon or Salesforce.com and the service covers from the Analysis to theDeploymentandalsothesupportinmanydifferentcloudsolutions.Asmentionedbefore Accenture also offers its own SaaS cloud technology andmethodology toimplementinternallyorexternallydevelopedcloudstoitsclients.


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Figure6.AccentureSaaSBusinessSolutionsSuiteSource:Accenture2009.Accelerating

BusinessValuewithSaaSforHighPerformance

5.3NewInfrastructureCapabilities: Accenture has participated in more than 100 big‐size cloudimplementations. They have people to bear on cloud engagements, across 17industries and functional domains. The company has developed the CloudApplicationFactory,anindustrializeddeliveryapproachthathelpsclientstoeithermigrateexistingapplicationsorcustombuildnewonesonacloudplatform.TheAccentureTechnologyLabs aredoing researchon Internet computing and cloudcomputingwhichenablestechnicalcapabilities(hardware,softwareandstorage)tobesourcedthroughtheInternetacrosscompanyfirewallsandboundaries.Partners and alliances: Accenture has developed a network of allianceswith theobjective of helping clients getting value out of technology investments. Thisalignment with technology providers enables Accenture to deliver completesolutions and help clients to achieve IT cost reduction; reduced total cost ofownership; reduced delivery risk; and accelerated vendor identification andevaluationcycletime.Accenture’scloudalliancesinclude:AccentureandEloquaThey collaborate with clients to provide SaaS‐based solutions in customerrelationship management, demand generation, marketing automation and leadmanagement. Eloqua on‐demand software allows executives to track campaignsuccess, lead quality and flow, and monitor the needs of their sales prospects.Accenture implement and integrate customer relationshipmanagement systems.Together,thetwocompaniesprovideasolutionthatdeliversvaluetocustomers.AccentureandAvanadeAvanade is a business technology provider dedicated to using the Microsoftplatform to help enterprises achieve growth, are committed to delivering CloudComputing solutions on the Windows Azure Platform that can help improveperformance and reduce costs. In addition, Accenture is delivering MicrosoftDynamicsCRMasanenterprise‐wideSaaSsolutionviaAvanadeOnlineServices(anew business, which focuses on helping organizations use SaaS as a strategicmeanstoachievekeybusinessobjectives).


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AccentureandOracleTheyareteamingtodeliveron‐demandsubscription‐basedscalableCRMsolutionsthat allow to leverage and customize different services at a per‐month, per‐userfeewhile efficientlymanaging and protecting business information. On Demandsoftwareincludesdatabase,middlewareandapplications,alsooffersflexibleSaaSdeployment options such as multi‐tenant, single‐tenant and "at customer,"allowingtailoredservicesbasedonbusinessneeds.Accentureandsalesforce.comTheyarecollaboratingtohelpuseCloudComputingtechnologiesandservicestoenterprises for faster application deployment, greater flexibility and lower totalcost of ownership. Working together since 2004, Accenture and salesforce.comhave helped customer relationship management Software as a Service (SaaS)solutionsachievemarketmaturity.Nowtheyarefocusedonshapingotherareasofthebusiness,includinghumanresources,supplychain,assettrackingandcontractmanagement.With Force.com, salesforce.com’s cloud platform, Accenture clientscan also run complete enterprise resource planning solutions, as well as anynumberofcustomapplications.AccentureandWorkdayTogether theyarehelpingorganizations improve theirreturnon investmentandoverall business performance through superior HR and financial managementsolutions. Workday Human Capital Management and Workday FinancialManagementuse,standards‐basedtechnologiestoprovidealevelofagility,ease‐of‐use,andintegrationcapability.AccentureandVeevaThey are working together to develop customer relationship managementsolutions built on Force.com (salesforce.com’s cloud platform) for the global lifesciencesindustry.KeyProcesses:Accenturepossesdifferentmethodologiestohelpitsclientstotakeadvantage of cloud technologies amongwhich are: the Accenture SaaS BusinessSolutionssuite(aniterativeapproachfordeliveringSaaSandcloudTechnologies),Accenture Cloud Computing Accelerator (focuses on infrastructure and platformclouds,helps toanswerquestions inashortperiodof timeviaadefinedprocessusingproprietary tools, thusaccelerating theclient’s first cloudpilot),AccentureCloudOpportunityAssessmentTool(isdrivenbyarepositoryofcloudcomputingresearch and resources, it also factors in application use cases to support thedevelopment of cloud computing solutions that leverage Infrastructure‐as‐a‐Service,Software‐as‐a‐ServiceorPlatform‐as‐a‐Service).

5.4NewCustomersAs a result of the entrance of Cloud technology to Accenture’s BM, some newclients have arrived to its business. The following are some case examples ofpreviouscloudimplementationsmadebyAccenture:


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WithLawson,Inc.Accentureandsalesforce.comworkedwithLawson,Inc.inJapanto rebuild and migrate 400 Notes applications, including workflows, ontoForce.com,(salesforce.com’scloudplatform).With a Global High Tech Organization. Using its SaaS methodology, Accenturehelped this organization improve productivity and sales performance byintegratingSalesforceCRMwithcriticalsalessystemsaroundtheworld—armingthe company with a closed‐loop marketing process and its sales team with thetrainingandtoolsneededtoaccelerateROI.Accenture helped Ashoka implement a Salesforce customer relationshipmanagement solution that delivers up‐to‐date information, greater employeeeffectivenessandreducedITeffort.With a French Communications Company. Accenture worked with thisorganization to align sales processes and integrate legacy systems withsalesforce.com for improved performance, following a recent acquisition.Accenture used its offshore development team to overcome the complex datamigration, cleansing and integration challenges for hundreds of thousands ofrecordsstoredindatawarehouses.AlloftheseprojectsdescriptionswithdifferentclientsaresomeexamplesofhowAccenture is offering new services to new customers and helping them tocapitalizeonnewtechnologysuchasCloudComputing.

5.5NewRevenuesAccenture’sITorganizationbytheuseofcloudtechnology,estimatesasaveupto50percentofitshostingcostswhichcanbetranslatedontensofmillionsofdollarsannually.Accentureissavingmoneybyimplementingcloudtechnologyinitsownarchitecture and also is acquiring new projects and new clients, which will betranslatedinmoreincomesandprofits,butthisisstillinanearlystage.ToconcludewiththedescriptionofAccentureBMtype6withCloudComputingIwouldliketomentionthatAccentureistestinganddevelopingamixedapproachfirstwith itsR&Ddepartmentbydevelopingcloudtechnology, implementing thecloudonitsowninfrastructureandalsoofferingthisinnovationtoitsclients;andsecond by making alliances and creating new products and new services inconjunctionwith technology providers doing this by opening its businessmodeland incorporating innovation from outside his boundaries in order to createcompetitiveadvantages.Cloud computing can speed time tomarket andprovideimportant flexibility, enabling greater responsiveness to customer, market andeconomicchanges.Now is moment to explain why I consider that Accenture’s BM with theintroductionofnewtechnologysuchasCloudComputingmeetthecharacteristicsofaBMtype6,accordingtothedescriptionmadebyHenryChesbrough.


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5.6HowAccenturebyworkingonCloudComputingismovingitsBMfromtype5to6accordingtothedescriptionmadebyChesbrough?These companies drive the business model of its key suppliers and customers,(Chesbrough 2006: 130). Accenture has changed its BM to form alliances withmajorCloudproviders,withtheideatoprovideitscustomerswithcloudexpertise.One of the future services Accenture is working on in collaboration with othercompaniesisthetransitionfromheavyservercomputedependencetoweb‐basedapplications. As a result Accenture is creating new methodologies andcomplementing Cloud providers offers, driving in some scale suppliers BM. Andalso by offering new services and implementing cloud technology to customer’sinfrastructure,AccentureischangingclientsBMbydeliveringandhelpingthemtocapitalizethebenefitsofCloudComputing.Innovating the company’s business model, which is widely shared across thecompany,itselfispartofthecompany’sinnovationstask,(Chesbrough2006:130).AccenturewiththeintroductionofnewtechnologysuchasCloudComputingintoits BM is innovating its own BM, this requires an experimentation with one ormore BM variants and a motivation to invest some amount of fund andmanagementattentiontoexplorealternativeBM’sinsmallstart‐upcompaniesforexample Accenture’s Navitaire SaaS, an industry clouds for airline reservationsystems. Other examples of this is the joint ventures that Accenture is creatingwithcloudproviders(Accenturewithsalesforce.comorAmazonWebServices)asameanstocommercializetechnologiesoutsidetheirowncurrentBM,cultivatingideasthatarenotyetreadyforhigh‐volumecommercialization.External partners share technical and financial risks and rewards with thecompanyintheinnovationprocess,(Chesbrough2006:130).Accenturewithcloudproviders and clients are becoming partnerswhere both technical and businessrisksareshared.TheBMofsuppliersare integrated intotheplanningprocessofAccenture and also has integrated its BM into the BM of key customers, forexample: Accenture and salesforce.com collaborate to help clients use cloudcomputing technologies and services to transform the enterprise for fasterapplication deployment, greater flexibility and lower total cost of ownership.Accenture Development Partnerships helped Ashoka improve its ability toleverage its social network. Accenture helped Ashoka implement a Salesforcecustomerrelationshipmanagementsolutionthatdeliversup‐to‐dateinformation,employeeeffectivenessandreducedITeffort.Lookingforward,Ashokaintendstofurther streamline and automate business processes through Salesforce CRM asthe organization’s needs continue to grow and change. This allowsAccenture tocreateitsBMasaplatformtoleadCRMSaaSimplementationswithSalesforceandcustomers.IPismanagedasastrategicasset,helpingthecompanyenternewbusinesses,alignwith suppliers and customers, and exit existing businesses, (Chesbrough 2006:130). Accenture recognize the increasing value of intellectual property in themarketplace, as a result, Accenture create and protect its intellectual property.ThisenableAccenture toenterorexitmarkets,buildecosystemswithinmarkets


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andcreatevalue.Patentmappingisusedtomanageriskandtoidentifypotentialreward within current and possible future markets. As of August 31, 2009,Accenture had 2,080 patent applications pending in theUnited States and otherjurisdictionsandhadbeenissued393U.S.patentsand318non‐U.S.patentsinthefollowing areas: web visual navigation technology; healthcare solutionframeworks; online banking models; line‐item data processing; investor profilemethodologies; marketing analytics; inventory management; location‐basedservices; goal‐based educational simulation; virtual call centers; hybridtelecommunications networks; development architecture frameworks; emotion‐based voice processing; mobile communications networks; location‐basedinformation filtering; and computerized multimedia asset systems. As a resultAccenture enjoys a preferred relationshipwithmarketmakers, enabling it to bepresentedwithopportunitiesaheadmostothercompetitors.Accenture intend tocontinue to identify, createandprotect intellectualpropertyand to leverage there protected, differentiated assets and methodologies toprovidevaluetoitsclients,complyingwithanothercharacteristicsofaBMtype6.Themanagementof innovationandIP isembedded ineverybusinessunitof thecompany,(Chesbrough2006:130).Accenturemaychooseacompanytoempowera business partner to take over the business, while earning revenues for itstechnology and know‐how. In some cases, IP may be bundled in as part of thetermsof a purchase or a sale of a product or service. For example,Accenture isoffering a bundled approach, similar in principle to the supermarket concept,whereshopperscansavevaluabletimeandmoneywhilegettingmoreconsistentandpredictablequality andavailability fromstoreswith abroad rangeof goodsand services, including groceries, prepared meals, pharmaceuticals, financialservices, even clothing and automotive services. This dynamism and agilitycombined with the close collaboration with key partners that they invest inconjunctionwiththefirm,separateatype5andtype6BM.

Chapter6–RecommendationsandConclusionsAccenture,asoneof themost important technologyconsultingserviceprovidersaround the globe is doing all kind of efforts to stay ahead of technology trends.They areopening itsBusinessModel andusing an approachofOpen Innovationwith theaimnotonly toshareandoffer to thirdparties its internal innovations,but also receiving and using new technologies and products from outside,complementing suppliers and customer’s requirements; also its own valueproposition.Accenturehascreatedarepeatableandconvincingprocessbydevelopinganauto‐strengthen process full with training, continuous methodology improvement,creationand sharing ideas, and constant applicationof these componentsacrossindustriesandregions.Withintheconsultingindustry,thisisakeydifferentiator,andthecompany’sCMMIcertificationisoftenleveragedduringthesalescycletogain competitive advantages. Accenture’s success in this area go further thandiscussingprevious credentialswithnew clientsbyproviding tangible facts that


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similar successwill be achieved in future assignments, because it is the processandmethodologyitselfthatcreatesvalueanddeliversuccessfulprojects.Accenture is passing from a BM type 5 where integrates its innovation processconnectedwith itsBMandwhere theyuse IPasa financialasset toaBMtype6whereAccentureisabletochange,andischangedbythemarket,inotherwords,Accenture is creating a BMwhich is adaptive andwhere its innovation processidentifynewbusinessmodelsandalsouseIPasanstrategicasset.AccentureundertheBMtype5isofferingitscurrentservicessuchasSAPandisdeveloping innovation from inside with technology R&D organization calledAccentureTechnologyLabsbutalsoistakinginnovationfromoutsidebyOpeningits Business Model, enriching it offer by creating alliances with suppliers andcustomers and identifying new products and services that are relevant in themarket. By continuing its interactionswith a larger supplier and customer baseandwith its strategy of partnerships, the organization is effectively updating itsvalueproposition,infrastructure,suppliersandcustomers,mitigatingbythisway,theriskofobsolescence.The entrance of new technology such as Cloud Computing shows an example ofhowAccenture’sBMispassingtoaBMtype6whichadaptstothemarketandisalso is changedby it.The changingbusinessmodel, underlying technologies andarchitectureswilllikelycreateanewwaveofinnovations.ForenterpriseITusers,thecloudembracesgreatpotentialinprovidinglowercostservices,ITagilityandmore flexibility. The cloud also presents a number of new challenges in datasecurity,privacy,control,compliance,applicationintegration,andservicequality.Ingeneral,cloudcomputingwillactasanacceleratorfororganizations,facilitatingthem to innovate and compete more effectively with elastic and unlimited ITresources. By utilizing the right cloud capabilities, companies can quickly enternewgeographicalmarketsorlaunchnewproductsorservicesinexistingmarkets.Eventhoughcloudcomputingisstillatanascentstage;organizationsshouldtakestepsnowtoexperiment,learn,andobtainsomeimmediatebusinessbenefits.TobesuccessfulOrganizationsshouldtakesmall,incrementalstepstowardthisnewenvironment so can obtain early benefits for applicable business situations, andlearnhowtodealwiththeassociatedissuesandrisks.Whilecloudcomputingstillhasalongwaytogobeforeprovingitsfullvalue,AccentureismovingfasttomakeitavitalpartofitsvaluepropositionanditsBusinessModel.


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6.1References

1) What toExpect fromCloudComputing2009.An Internet.comNetworking

eBook,WebMediaBrandsInc.2) Armbrust Michael, Fox Armando, Griffith Rean, Joseph Anthony D., Katz

Randy, Konwinski Andy, Lee Gunho, PattersonDavid, RabkinAriel, Stoica Ion, andZahariaMatel2009,Above theClouds:ABerkeleyViewofCloud Computing,UCBerkeleyReliableAdaptiveDistributedSystemsLaboratory pp.1‐23

3) Accenture’swhitepaper2009,AccentureDrivesHighPerformance ITwith CloudComputing

4) Accenture and Software as a Service whitepaper, 2009. Accelerating BusinessValuewithSaaSforHighPerformance

5) Accenturewhitepaper2009,CloudComputing6) Accenturewhitepaper2009,CloudComputingAccelerator7) Amazonwhitepaper2009,OverviewofAmazonWebServices8) Vouk Mladen A. 2008, Cloud Computing – Issues, Research and

Implementations, JournalofComputingand InformationTechnology ‐CIT 16,2008,4,235–246

9) EuropeanNetwork and Information SecurityAgency (ENISA)2009, Cloud Computing,Benefits,risksandrecommendationsforinformationsecurity

10) Accenture whitepaper 2009, What the Enterprise Needs to Know about CloudComputing

11) SunMicrosystemswhitepaper2009,Takeyourbusinesstoahigherlevel12) Stiffler Dana and Bois Rob 2008, Consulting in the Cloud: The Emerging

SaaS Consulting, Product Development, and Outsourcing Ecosystem (Excerpt),ApplicationConsultingandOutsourcingServicesReportExcerpt, LandscapeSeries,AMRResearch,Inc.

13) David S. Linthicum2009, CloudComputing and SOAConvergence inYour Enterprise: A Step‐by‐Step Guide, Addison‐Wesley Information TechnologiesServices

14) Swaminathan,KishoreS.2008,Computingintheclouds,Accenture15) HayesBrian2008,CloudComputing,vol.51,no.7,communicationsof the

ACM16) Samuel Greengard 2010, Cloud Computing and Developing Nations,

CommunicationsoftheACM,vol.53no.517) Michael Cusumano 2010, Cloud Computing and SaaS as New Computing

Platforms, Technology Strategy andManagement, Communications of the ACM,vol.53no.4

18) ErikBrynjolfsson,PaulHofmann,and John Jordan2010,CloudComputing and Electricity: Beyond the Utility Model, Economic and Business Dimensions,CommunicationsoftheACM,vol.53no.5

19) Michael Armbrust, Armando Fox, ReanGriffith, AnthonyD. Joseph, Randy Katz,AndyKonwinski,GunhoLee,DavidPatterson,ArielRabkin,IonStoica, andMateiZaharia2010,AViewofCloudComputing,Communicationsofthe ACM,vol.53no.4

20) Global Survey of Cloud Computing 2009, Kelton Research on behalf of


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Avanade21) HeuserLutz,AlsdorfClaudia,andWoodsDan2008,InternationalResearch

Forum2008,EvolvedTechnologistPress,NewYork,NY22) MatthewsChris,CoadyYvonne2009,VirtualizedRecomposition:Cloudyor

Clear,UniversityofVictoria,ICSE’09Workshop23) Teece David J., Pisano Gary, Shuen Amy 1997, Dinamyc Capabilities and

StrategicManagement,StrategicManagementJournal,Vol.18:7,509‐53324) Accenture whitepaper 2009, Accenture helps Ashoka achieve high

performancewithsoftwareasaservice(SaaS)salessolution25) Accenturewhitepaper2009,AccentureUsesCloudComputing toCreate a

Social‐media Platform for the Green Guardians Team in the Shell Eco‐ marathon2009Challenge

26) Navitaire whitepaper 2008, Navitaire— its like adding winglets to your entireairlineoperation.

27) Accenture inAlliancewithSalesforce.comwhitepaper2009,Transforming theEnterprisewithCloudComputing

28) AnandBharatN. andKhannaTaruni2000,DOFIRMSLEARNTOCREATE VALUE? THE CASE OF ALLIANCES, Harvard University, Boston, Strategic ManagementJournal21:295–315

29) DozYvesL.1996,Theevolutionofcooperationinstrategicalliances:initial conditionsorlearningprocesses,StrategicManagementJournal,Vol.17,55‐ 83

30) Accenturewhitepaper2008,AccentureDeliveryMethodsandToolsforSAP31) M.A.Rappa2004,Theutilitybusinessmodelandthe futureofcomputing

services,IBMSYSTEMSJOURNAL,VOL43,NO1,32) HenryChesbrough2006,OpenBusinessModels:Howtothriveinthenew

innovationlandscape,HarvardBusinessSchoolPress,Boston33) Osterwalder A., Pigneur Yves, Smith Alan, and 470 practitioners from 45

countries2009,BusinessModelGeneration,selfpublished34) Amitt Raffi and Zott Christophe 2001, “Value Creation in e‐Business,”

StrategicManagementJournal22,no.635) Tim Cooper, Christopher Hilson, Katharine Hirst, Mark Purdy, Matthew

Robinson 2010, From global connection to global orchestration, Future business models for high performance where technology and the multi‐ polarworldmeet,Accenture

36) Moore, JamesF.1993,PredatorsandPrey:ANewEcologyofCompetition, HarvardBusinessReview

37) JohnsonMarkW., Christensen ClaytonM. and Kagermann Henning 2008, ReinventingYourBusinessModel,HarvardBusinessReview,pp.51‐59

38) Magretta Joan 2002, Why business models matter? Practical Strategy, HarvardBusinessSchoolPublishingCorporation

39) HenryChesbrough2003,OpenInnovation:thenewimperativeforcreating andprofitingfromTechnology,HarvardBusinessSchoolPress,Boston

40) Accenture whitepaper 2009, Accenture CIO Organization 2009 IT Report Innovationthroughcollaboration

41) KoetzierWouter2009,Innovation:aPriorityforGrowthintheAftermathof the Downturn Management Shortcomings Hinder Results, According to AccentureResearch

42) Accenture whitepaper 2009,Working on technology’s frontier, Accenture


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TechnologyLabsfindsnewpathstohigh‐performancebusiness.43) Accenture2010,FactSheetQ1Fiscal2010(Nov.30,2009)44) Acceturewhitepaper 2008, Accenture Global DeliveryNetwork, Powering

highperformance45) InternationalDirectoryofCompanyHistories,Vol.68.St.JamesPress,2005.46) Spacek, Leonard, The Growth of Arthur Andersen and Company, 1928‐

1973:AnOralHistory,NewYork:Garland,198947) Accenture Annual Report 2009, The Accenture 2009 Letter from Our

Chairman&CEO48) SecuritiesandExchangeCommission,Washington,D.C.20549,FORM10‐K,

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6.2Appendixes

6.2.1Appendix#1‐NotesonMethodologyfortheCloudComputingsurveyTheCloudComputingsurveywasconductedbyKeltonResearch,anindependentresearch firm, between December 15, 2008, and January 8, 2009, on behalf ofAvanade.The502respondentsincludeC‐levelexecutives(e.g.CEO,CFO,CIO,CTO),businessleaders (GMs, heads of departments and functions, etc.) and IT decision‐makersfrom17regions,includingAustria,Australia,Belgium,Canada,Denmark,Finland,France, Germany, Italy, Netherlands, Norway, Singapore, Spain, Sweden,Switzerland,theUnitedKingdomandtheUnitedStates.Largeenterprises(similarinsizetocompaniesintheFORTUNE1000)madeupthemajorityofrespondentson a global basis. Respondents from the United States, Canada and the UnitedKingdomoriginate fromthe top1percentof the largest companiesbyemployeeheadcountwithintheirrespectivecountries.Respondentsfromallothercountriesoriginatefromthetop5percentofthelargestcompaniesbyemployeeheadcountwithin their respective countries. Nearly a fourth (23 percent) of respondentsworkatthelargestcompanieswith10,000ormoreemployees.Companies surveyed span major industries, including: Aerospace, Defense,Telecommunications, Energy, Healthcare, Financial services, Government,Non‐profit,Media,LogisticsandManufacturing.Results of any sample are subject to sampling variation. The magnitude of thevariationismeasurableandisaffectedbythenumberofinterviewsandthelevelofthepercentagesexpressingtheresults.Inthisparticularstudy,thechancesare95 in 100 that a survey result does not vary, plus or minus, by more than 4.4percentagepoints fromtheresult thatwouldbeobtained if interviewshadbeenconductedwithallpersonsintheuniverserepresentedbythesample.

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