Accenture accelerates application-led

transformation in Asia-Pacific
Analysts - Agatha Poon

Publication date: Friday, June 14 2019

Introduction
Accenture continues to make steady strides when it comes to aligning its strategy with industry-wide
consolidation and transformation, rotating approximately 60% of its $39.6bn business to what the
company describes as 'new' services – namely digital, cloud and security projects. From a geographic
standpoint, North America continues to be a key revenue generator, accounting for 45% of total
revenue. However, markets such as Asia-Pacific, Latin America, Africa and the Middle East have
experienced the highest growth (increasing 16% in local currency), driven by transformational
changes in a number of Asian economies, including Japan, China and Singapore.

The 451 Take

Accenture proved itself to the market when it successfully rotated more than half of its business to
digital, cloud and security offerings ('new services'). Its continued investment in adding cloud
specialized skills has helped, as has the company's ability to guide customers through their journeys
with a fully managed hybrid or multi-cloud strategy. After all, Accenture's customers among the
Fortune Global 500 are now looking to reap the full benefits of cloud deployments for agility and
added value. Additionally, it is implementing an engagement model with a flexible commercial
construct in mind. Overall, industry-wide consolidation in the region is working in the company's
favor, and its integrated approach to infrastructure and application management may help smooth
the transition.

Context
Although Accenture doesn't have a regional headquarters in Asia-Pacific per se, it does invest
considerably to support its global clientele operating in the region, as well as APAC MNCs growing
beyond their home turf. Aside from having a large pool of cloud professionals in Asia-Pacific
(exceeding the 40,000 mark, and more than half hold an industry/vendor-specific certification), the
company has also invested in developing its own cloud IPs and fostering innovation in the region. At
present, half of its roughly 50 global innovation/delivery centers are located in Asia-Pacific, and six
liquid studios (Bangalore, Manila, Melbourne, Singapore, Sydney and Tokyo) are made available for

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 Accenture accelerates application-led transformation in Asia-Pacific

Asian businesses to work side-by-side with the Accenture team, to turn ideas into service
deliverables.
At the global level, digital services (45%) make up the largest share of the company's overall
revenue, followed by cloud (23%) and security (5%). Accenture does not provide revenue breakdown
by geography, but indicates that the global breakdown has roughly reflected the revenue split in
Asia-Pacific. Taking an integrated approach to service development and delivery, the company
demonstrates its capability with five core business practices: Accenture Strategy, Accenture
Consulting, Accenture Digital, Accenture Technology and Accenture Operations. Intelligent Cloud &
Infrastructure services are from within the company's technology business. In order to fuel cloud
specialized skills and enjoy the speed-to-market advantage of new offerings, developing an effective
acquisition strategy is an integral part of the company's operational imperative. In less than five
years, Accenture has already acquired nearly two dozen companies that have a physical presence in
Asia-Pacific, including three (Caltec Scube, PrimeQ and Redcore) that are headquartered in Asia-
Pacific. It has also established a number of innovation hubs for R&D in China, India and Japan,
investing in building out its capabilities in cloud, fintech, analytics and ERP (SAP and Oracle).

Regional demand and offerings

In Asia-Pacific, demand for infrastructure cloud is accelerating, the company says, and there is a
significant interest in cloud-native development and the DevOps model. However, business
organizations are primarily in the stages of strategic planning rather than actual implementation.
In Accenture's experience, there are a lot of regional variations when it comes to cloud deployments.
Australia, for instance, is far ahead in the region. Australian companies tend to be the early adopters
of new technologies upon the successful implementation of their counterparts in the US and Europe.
By a rough estimate, approximately 80-90% of Australian enterprises already have significant cloud
components in their IT environments. Meanwhile, Japanese businesses are catching up fast,
migrating workloads to third-party public clouds for agility and scalability. MNCs in Singapore are
major cloud users; however, indigenous businesses are slow to embrace the cloud, Accenture says.
Companies in the ASEAN region have expressed strong interest, although the move to actual
implementation has been slow. For now, early adopters are derived from vertical segments that
have less-restrictive regulatory requirements, such as the e-commerce sector. With that said, there
is a newfound interest in cloud migration for security purposes, particularly in developing Asia, such
as India and Indonesia, where companies don't have the resources and skills to harden their IT
infrastructures. In most cases, the only impediment to widespread public cloud adoption stems from
regulatory compliance, technology incompatibility and sunk costs (for capital investment), Accenture
reckons.
Accenture's Intelligent Cloud & Infrastructure offerings include assessment and strategy,
transformation and migration, management and optimization, application modernization and cloud-
native applications, and cloud security services. The technology provider says it can offer 'end-to-end
management,' including support for provisioning and governance across third-party cloud platforms,
with its proprietary cloud management platform that is backed by an integrated control plane for
service automation and support. There are blueprint templates for accelerated deployments, and
approximately 90-95% of workload migrations are completed through automated toolsets,
Accenture notes. In terms of new offerings, the company has a comprehensive service roadmap that
is intended to build up its strengths and capabilities in multiple areas, including datacenter and cloud
managed services, cloud transformation and optimization services, and security offerings.

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 Accenture accelerates application-led transformation in Asia-Pacific

Use cases and engagement model

Accenture primarily focuses on serving the Fortune Global 500, including 95 of the Fortune Global
100 companies. While its cloud infrastructure business is designed to provide horizontal offerings,
the company claims to have a unique blueprint and cloud vision for each of the 19 industries it
serves. For example, using Industry X.0, a service tailored to manufacturers, Accenture is working
with Airbus to integrate wearable technology into its assembly lines.
The trend in data explosion has accelerated in APAC as regional and local businesses have
undergone consolidation via acquisitions. The idea of deploying a 'data lake' is gaining popularity
among Asian enterprises. More specifically, the typical scenario is the requirement of processing
real-time data at the edge, while running non-time-sensitive data (such as batch work and marketing
campaigns) centrally.
Having deployed more than 400 cloud projects in Asia-Pacific, the company says a hybrid model is
the common mode of IT adoption, with application-led transformation driving cloud usage. Some
companies are looking to architect and design the entire IaaS using a third-party public cloud – AWS
and Microsoft Azure are in high demand – while others prefer to deploy private clouds with a high
level of self-service and automation capabilities. One example involves an international mining
company looking to move its applications to SAP HANA to support its business into the future. In
essence, the company's entire 120TB system was migrated to a new private cloud based on VMware
technology, and was integrated with 600 interfaces, including critical payroll and finance systems. Its
SAP Fiori platform has also been upgraded, and ERP systems have been consolidated and hosted in
one datacenter.
For managed public cloud offerings, the company's key partners include AWS, Microsoft, Google,
Oracle and Alibaba Cloud. It also works closely with Microsoft (Azure Stack), HPE and VMware for
private cloud deployments. For integrated offerings, SAP, Oracle and ServiceNow are the tactical
partners. In SaaS, Salesforce is the primary delivery partner.
According to 451 Research's Voice of the Enterprise: Cloud Hosting & Managed Services, Workloads
and Key Projects, 2018 report, many organizations that pursue an IaaS strategy plan to adopt cloud-
native features, such as machine learning, containers, data analytics and serverless, in connection to
IaaS/public cloud deployments. Accenture seems to be on the same wavelength in this regard. In the
company's view, deploying infrastructure as code will be the future of cloud deployments as
enterprises continue to transition to the DevOps culture.
Given that Accenture is not selling one-off, stand-alone tools/platforms, it is taking a project-based
approach to service delivery, with flexible commercial constructs in mind. In most cases, customers
work with the Accenture team for multi-year (five to seven years) transformation projects, with an
opportunity to review their contracts every 18 months.

Competition
Accenture competes with rival systems integrators and global technology providers. IBM, HPE, DXC
Technology, Capgemini, Atos, Deloitte, Dell EMC, Fujitsu and NEC are in this group. Additionally,
Indian-heritage firms HCL, Infosys, L&T Infotech, Mindtree, TCS and Tech Mahindra continue to
invest in boosting their capabilities to support transforming enterprises. Others, including Huawei,
Red Hat and Rackspace, are looking to accelerate hybrid and multi-cloud adoption with open
infrastructure and technology innovation. Regional and local systems integrators, such as PCCW
Solutions, JOS (a member of the Jardine Matheson Group), NCS in Singapore and Datacom in
Australia, are well-established players in the region.

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 Accenture accelerates application-led transformation in Asia-Pacific
SWOT Analysis
Strengths
The company has an established brand and a growing
footprint in the region. Investing in adding cloud
specialized skills through strategic acquisitions allows the
company to jumpstart new initiatives in a timely
manner.
Opportunities
Industry-wide consolidation and transformation work in
the company's favor by demonstrating its integration
capability through the right mix of its own IP and
partners' offerings.
Source: 451 Research, LLC
Weaknesses
With a primary focus on supporting Fortune Global 500
companies, it risks missing out on opportunities to serve the
fast-growing midmarket segment that is increasingly turning
to innovative technologies for competitiveness.
Threats
Rivals such as IBM and Capgemini are equally enthusiastic
when it comes to harnessing hybrid IT/multi-cloud
strategies across the board. The company could find itself
competing against regional SIs with a deep vertical
knowledge.
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