In September 2020, Accenture launched a business group to offer customers a one-stop shop for cloud strategy, migration, cloud-native development and optimization among other services.
Accenture Cloud First, the subject of a $3 billion investment, pulls together 70,000 cloud professionals from across the company.
"Even though we had a big cloud presence in the past, we still created Accenture Cloud First … because we felt there was going to be an acceleration into cloud transformation," said Karthik Narain, the Accenture executive who leads the group.
That transformation, once thought to be a decade in the making, will transpire in three to five years, by Narain's reckoning. "I think we are witnessing one of the fastest, at scale, enterprise pivots in the history of this industry," he said in an interview.
In addition to cloud acceleration, Narain also shed light on Accenture's cloud acquisition strategy. Accenture has been snapping up companies at a roughly one-per-month pace.
Following are excerpts of that discussion, edited for clarity and length.
What have you observed in the market since September 2020? Have you found that you had to recalibrate any services based on the patterns you are seeing in the market?
Karthik Narain: Broadly, all the tenets that we have for Cloud First seem to be the right tenets. But in terms of calibrating, we knew that industry is going to play a significant role. What we are realizing is industry is becoming the tip-of-the-spear conversation in most places. What do I mean by that? Cloud is a technology topic, and, in the past, CEOs did not engage in a technology topic. But this is such a curious topic, the C suite is engaging.
When you go to an insurer, the first thing they want to know is, 'Tell me two or three things that are going to change in the insurance industry because of cloud.' When I go and talk to an industrial manufacturer and talk to the C suite, the first thing they want to know is, 'How could the industrial manufacturing industry take advantage of cloud capabilities.' So there, the conversation is not about, 'OK, you could use this server, or you could go serverless, or you could use this data center service.' The conversation is about how the industry is pivoting and how that industry could take advantage [of cloud] and who is doing what within their industry.
Given the number of cloud-related acquisitions Accenture has made just in the first quarter and continuing into the second quarter of 2021, how are those companies being integrated into Accenture Cloud First? What are the issues for service delivery when you have so many companies you are onboarding?
Narain: Accenture has a very strong and mature V&A team -- we call it ventures and acquisitions, rather than mergers and acquisitions. Acquisition is where we are acquiring, and ventures is where we make investments in early stage technology or certain IP organizations where we believe their capability is going to be relevant for the future.
Karthik NarainLead, Accenture Cloud First
We have created a ventures-and-acquisitions strategy just for Cloud First from three different dimensions. Dimension No. 1 is we have created a heat map of what are all the important capabilities that are needed to succeed in the cloud world. Dimension two is, what are the white spaces of our capabilities vis-a-vis that heat map? In what geographies or markets do we need to have that capability? In what geographies do we need critical mass of certain capabilities? The third dimension is -- in these markets with these white spaces -- is it a build or is it a buy? If it's a build, we are going to invest dollars and build certain IP and capability or hire talent. If it's a buy, we are going to go and look for those organizations.
[Recent acquisitions are] not giant sizes, the largest being slightly over 1,000 people and the smallest would be less than 100 people. We take a bespoke approach to integrating these companies because, [even] with giants like Accenture and some of our competitors in the market, these small companies have succeeded. There's a secret sauce to it, and certain clients are looking for this niche, boutique style of working for them to get help in the world of cloud.
So, we look at each one of them. We assign a sponsor from the Cloud First organization for each of those integrations. We don't have a hard and fast integration timeline. We learn from their styles, and we adopt to our overall style on, how do you go and do design thinking? How do you go and create proofs of concept in the way they are doing it? What are the ways we could learn from them? And also bring standardization: In all large clients … there is an Accenture standard service delivery mechanism.
Going back to the Accenture Cloud First sponsor, what roles does the sponsor play?
Narain: The first thing is understanding the culture. Every organization has a culture, and a small organization that has survived this giant competition … believes in their culture. They are proud of the culture, and that has worked for them. So, the sponsor understands that culture and makes the acquired organization believe that we appreciate that culture. No. 2, [the sponsor] educates [an acquired organization on] this vastness of Accenture and how people can navigate Accenture and take advantage of the broad career opportunities or the market opportunities that Accenture brings to them. The third element is we make sure this talent is managed. Everybody in Accenture has a career counselor. In certain cases, it could be your reporting manager, but, in a lot of cases, it is not your reporting manager. We create those career counselors for them and make sure they have somebody that they will go to.
Finally, we will make sure that they get access to all the opportunities that we are seeing, and they are able to operate, at least, at the same speed at which they were operating, but giving them the enablement in terms of recruiting, in terms of investing in new capability, capacity. If they want investment dollars to build new assets, we will check where that fits with our asset strategy and enable them to build that, or tell them, from our library of assets, we already have that asset. You don't need to build that yourself.
That's a pretty serious role, and, when we assign a sponsor, we put a time commitment, depending on the size of the acquisition, the complexity, and the multiple countries and regions that they are in.
What commonalities are you seeing among your recent cloud customers?
Narain: The one commonality we are seeing is it's a C-suite topic. Digital transformation leveraging cloud is going into some document that is presented to the board of the company. That's a pretty common, consistent path that we are seeing.
No. 2, two-thirds of the companies that moved to cloud or started their journey to cloud, say, two or three years ago, said that they have not realized the full value from cloud. That is also another common theme that we were hearing. But if you look at the misalignment between point one and point two … it's a C-suite agenda, but the folks who have been doing that for two or three years are not seeing full value. And the reason for that is it's become a C-suite agenda in the last six months. When [organizations] started doing cloud two years ago, it was considered as an IT project to reduce cost or close down data centers and move it to cloud-based services. So, there was not a lot of alignment between business and IT.
Without stepping back and making this a C-suite priority -- and both a business priority and an IT priority -- the divide keeps on growing. And that is why organizations that are looking at this as not just a cost reduction lever, but also as a business reinvention lever, are the ones that are getting value out of cloud.