In the preceding chapters, I have attempted to set forth the basic principles required to run IT like a business by drawing on lessons we learned at Accenture over the past decade, as we worked to transform our own IT operation. Along the way, we have talked about IT strategy and governance, managed services, and performance metrics, among other topics.
By now, a reader will quite rightly want to know how all this learning at Accenture translated into actual performance. You might be thinking, “What results did you actually achieve when you ran IT like a business?” In this chapter, I will endeavor to answer that question.
When we at Accenture began building what we think of as a high-performance IT operation back in the year 2000, we did not clearly see our destination. So this has very much been a journey. In retrospect, the journey may appear to be neat and clean, but there were many twists and detours along the way. So it is useful to take the measure of where we were when we began, and where we stand today.
We began the journey with one major advantage and one potentially greater disadvantage. Both were related to our origins as a company, so allow me to begin the story with a little corporate history.
Our great advantage is that, at Accenture, technology in general and information technology in particular is part of our corporate DNA. The history of Accenture is, to a great extent, the history of global business consulting and information technology services over the past half century.
The creation of Accenture
The newly created company named “Accenture” came into being on a very rapid timetable. Inside the IT function, we had begun preparing for independent systems as early as 1999. Nevertheless, with legacy systems inherited from our former parent company, we faced the immediate need to define our IT strategy going forward and to build entirely independent technology capabilities. You might think it an exaggeration to claim that we had to start a new IT function from scratch, but apart from our making a copy of business applications, that was essentially the case. We had to put in place a new network, new data centers and hosting capabilities, help desks and all the other things required for a fully-functioning IT department.
In 2001, we had about 75,000 employees. We had absolutely no idea that Accenture would go on to have upwards of 215,000 employees, but we had ambitious growth strategies, and we knew we needed the IT infrastructure to support that growth. So we went to work.
The timeline shown in Figure 17 traces the journey we set off on, beginning with the immediate tasks related to the establishment of an independent base technology capability. Creating a solid foundation consumed a significant amount of energy and resources over the next few years, on top of which we, along with everyone else, also had to contend with the explosive growth of the Internet, the intensive countdown to the non-event that was the millennium bug, and the dot-com boom and bust.
From efficiency to effectiveness
After we had addressed the immediate priorities, the emphasis within the IT function shifted to running the IT function as efficiently as we possibly could. Many of the principles that drive running IT like a business were first formulated, tried and refined during this period. We were supporting some 600 global applications, over 1,500 local applications, multiple networks, a large number of data centers, and multiple technology platforms. We therefore set out with a vengeance to centralize, rationalize and standardize, because we saw how burdensome this complexity already was, and we knew the problems would only keep multiplying over time. Major progress was made when we moved Accenture to a single-instance global ERP platform in 2004-5 – initially for financial management, but eventually to encompass other business processes, such as human resources, sales, and legal.
With the IT function already showing measurable operational gains, we began in 2007 to switch our strategic focus to how we could help make Accenture more effective as an enterprise, while continuing to make the IT function more effective itself. A company-wide network transformation initiative set the stage by combining data and voice onto a single network, and dramatically increasing our bandwidth capacity. We launched a major effort to raise collaboration among Accenture professionals – a program that continues today. In areas from new business development to engagement management, we leveraged IT’s power to craft new applications, which are helping Accenture professionals deliver more and higher quality services to Accenture clients by executing their work more efficiently and effectively.
The rework versus replace debate
At the outset of the decade, and at many points along the timeline, we found ourselves repeatedly coming up against the same core strategic decision: should we rework, or replace? When the time comes to upgrade equipment and systems, is it better to rework what you have – patching and tweaking systems and software to keep things running – or should you replace the old technology entirely and start with a clean IT slate?
This “rework versus replace” debate is familiar to every IT executive. Many businesses today are still using production software dating from decades past. A philosophy of “it works, so don’t touch it” inevitably leads to hybrid IT environments, in which multiple conflicting systems co-exist, and documentation and qualified programmers are hard to find. It usually appears to be cheaper and always seems safer to patch than to risk transformational change. But is it?
Accenture’s sudden creation as a free-standing company cast the issue in dramatic relief. Although we certainly did not plan it that way, our journey effectively became an accidental test of the “rework versus replace” debate. When we started, we did not intend to replace everything; but over time, we consistently chose to jettison the old in favor of the new. We did not want to be encumbered by the conflicts between old and new technologies, which impose massive burdens on business performance. Looking back over 10 years of work, we discovered that we changed absolutely everything. Today, the oldest application running in Accenture’s production environment is just 10 years old – and we are replacing it.
Figure 18: Accenture IT then and now
The comparison highlights the dramatic growth experienced by Accenture over this decade, as its workforce expanded from 75,000 to over 215,000 in 2011, and revenues nearly doubled to US$21.6 billion in 2011 from US$11.4 billion 10 years earlier.
Four key IT metrics reflect the results of running IT like a business:
- Our percentage of satisfied sponsors, as measured during our annual surveys, rose over the decade from 67%, in 2001, to 92% in 2011.
- Accenture’s annual IT spend in terms of absolute dollars declined over the period by 22%, despite the fact that our workforce increased by nearly 300%.
- Accenture’s annual IT spend as a percentage of company revenues declined by 59% over the period.
- Finally, Accenture’s annual IT spend per person fell by 70%.
These metrics offer clear confirmation of the positive impact that a business approach to IT can have on user attitudes toward IT services, on IT’s efficiency as a function, and on IT’s ability to make significant contributions to bottom-line profits. Based on our audits of industry benchmarks, we can confidently say that, in terms of IT spending, Accenture’s performance meets or beats the lowest readings for other IT operations of comparable size in the marketplace today.
Other statistics in Figure 18 track other changes to the way we organised IT over the course of the decade. When we began, all our resources were full-time employees of the internal IT function; by 2011, as many as 2,900 of our professionals were variable resources working in Accenture delivery centers off-shore, or consultants seconded to the IT function for a specific initiative. The 600 global applications we began the decade with had decreased to 267, and the 1,500 local applications had been reduced to 255, dramatically simplifying our operation and reducing the demand for skilled resources. Moving away from multiple technology platforms, we gradually standardized our operations on a single architecture platform – a simplification that delivered significant operational benefits. For those who believe in best-of-breed solutions, we point to these metrics as evidence that, in our experience and with very few exceptions, simpler is almost always better. Lastly, we have seen benefits realized exceed benefits expected by 124%. So not only were we able to confirm 100% delivery of the benefits promised by our IT investments, but we actually exceeded our own projected returns by 24%, as measured by the rigorous and independently audited tracking system described in Chapter 3.
Accenture invested approximately US$1 billion in the hundreds of transformational projects and individual initiatives represented by the timeline shown earlier in Figure 17. If US$1 billion was the total cost of our transformational journey, what was the benefit? The metrics just outlined clearly confirm operational benefits and spending reductions. But what were the total dollar savings on Accenture’s investment in high-performance IT?
Figure 19: Accenture savings from IT investments
Figure 19 plots the savings over time resulting from Accenture’s cumulative US$1 billion investment in transformational IT between fiscal year 2001 and the present day. The top line in this figure plots the IT expense per person supported, based on Accenture IT’s pre-transformational operating model. If we had made no changes at all in our IT operations, and Accenture’s workforce from 2001 through 2011 had grown as it did – from 75,000 to over 215,000 – we would have seen a gradual and entirely expected decline in the IT spend per employee; as the total workforce had expanded, the fixed cost portion of IT spending would have been distributed across a growing number of Accenture’s professionals.
The bottom line in the same figure plots the actual IT expense per employee supported from fiscal years 2001 through 2011, with projections to fiscal year 2012 and beyond.
Once again, the total Accenture workforce over the current period will grow from 75,000 to over 215,000 – just as in the prior plotting. The quite dramatic declines in the early years, shown by the lower curve, reflect the success of our early efforts to run IT like a business. After fiscal year 2007, the declines were recorded at a more gradual pace, but they continued year after year, and will continue to save money for Accenture well into the future. We have moved the IT function to an entirely new cost curve.
The difference between the two lines – highlighted by the shaded area – represents the savings resulting from the transformational IT investments of approximately US$1 billion. In dollar terms, these savings total over US$3 billion for a three-to-one – or 300% – return on Accenture’s investment in IT over the past 10 years.
Figure 20 provides a statistical snapshot of Accenture IT operations in the year 2011.
Figure 20: Accenture IT operations in 2011
Accenture’s experience with IT transformation may be atypical, and there can be no assurance that every organization’s IT transformation will be as productive as ours. The unusual circumstances of Accenture’s creation in 2000-2001 provided us with a “burning platform” that forced decisions and actions. Now, as we look back over the ground we traversed, our results force us to conclude that, had we to do it all over again, we would do everything the same, only faster – so we could have realized the benefits sooner.
Whatever your situation, this much is beyond argument: the longer you retain obsolete technology, the more it drags down your performance, and the higher the price you will pay in innovations sacrificed; the faster you leverage the latest innovations in IT, the more you will benefit, and the sooner you will deliver the full advantages of high-performance IT to your organization.
You may well want to consider the promise of a transformational IT initiative, regardless of the size of your IT organization. Certainly, not every enterprise faces the urgency we felt to change the IT function from the foundations up. Different organizational structures will also have a bearing on how quickly or how radically you implement change. But even if your IT team chooses to pursue incremental rather than transformational changes, our experience does indicate that you can more than recover your investments in high-performance IT.