Technology outsourcing major Accenture expands its cybersecurity and retail capabilities to build digital trust and capture opportunities across the customer life cycle, says Bozhidar Hristov, senior analyst at TBR.
Robust account management and investments in industry-trained talent and diversified portfolio offerings positioned Accenture to deliver durable financial results and win market share in both CY3Q16 and FY16.
Accenture’s ability to execute at synchronized scale across its businesses while addressing client demand for mission-critical business and IT transformation services continued to act as a pivot, enabling the company to navigate the platform-driven IT Services market.
Additionally, ongoing consolidation and operations disruptions across its peers group is helping Accenture capture digital transformation opportunities from enterprises demanding secure and proven frameworks delivered at global scale through local integration.
Accenture ended FY16 on a high note, delivering sales growth at 5.9 percent year-to-year in U.S. dollars (USD) (10.5 percent in local currency), exceeding the initially announced range for FY16. Broad-based demand for digitally enabled cost rationalization services across all operating groups and regions bolstered Accenture’s performance during CY3Q16, which grew 7.6 percent year-to-year in USD (9 percent local currency).
As Accenture invests in both core and new capabilities (e.g., digital, cloud and cybersecurity) the company’s appetite for innovation backed by the streamlined communication between Accenture Research, Accenture Ventures and GDN helped the company generate 40 percent of digitally related services during FY16.
The Products’ group performance at 16.6 percent year-to-year in USD during CY3Q16 led by demand for customer experience solutions within Retail and Consumer Packaged Goods (CPG) helped offset headwinds within Resources (-2.8 percent year-to-year in USD) mainly due to challenges within Energy and Chemicals. Established relationships with clients in North America helped Accenture cross-sell and upsell digital transformation-related services and expand ahead of overall growth at 9.9 percent year-to-year in USD in CY3Q16.
Pricing power gained from Accenture Strategy and Accenture Digital helped the company offset pricing pressure in legacy outsourcing business, boosting margin 20 basis points year-to-year to 14.1 percent in CY3Q16 and meeting its FY16 guidance of 14.6 percent – 14.8 percent at 14.6 percent.
Accenture doubles down on cybersecurity to protect its brand as a holistic IT services provider among its Global 2000 clients
During CY3Q16 Accenture continued to expand the breadth and depth of its cybersecurity portfolio as the company realized the vulnerable position its client base of Global 2000 companies could end up in if not supplied with the proper level of threat detection and response services. Potential security breaches to any of its clients could impact Accenture’s IT services brand especially as the company aims to provide end-to-end services.
With its four-way partnership with Splunk, Palo Alto Networks and Tanium, (Accenture is integrating endpoint threat visibility from Tanium, network threat visibility and control from Palo Alto Networks, and a correlation engine from Splunk), Accenture is securing the three main technologies it needs to implement a basic threat detection, and to a lesser extent, response strategy. While this is a tactical rather than strategic offering, if priced properly, Accenture will be able to more easily set up threat detection and response and run it through its managed services facilities globally.
Accenture also acquired Australia-based identity and authentication management vendor Redcore, adding 130 cybersecurity professionals. Further, Accenture bolstered its portfolio to pursue premium security services, which are more personalized and advanced than basic outsourcing and managed security services, but less complex than security C&SI projects.
Accenture along with Endgame launched hunting as a Service, and released an incidence response service globally with FusionX. We believe the former will help Accenture better compete with SecureWorks and Crowdstrike, which recently launched targeted threat services, while the latter we see as a competitive stab at Mandiant, which is owned by FireEye and handles response engagements for FireEye customers.
Retail and CPG took center stage for Accenture’s digital services investments, addressing demand for personalized content solutions
According to TBR’s 1H16 Digital Marketing Services Customer Research, Accenture ranks as the third most adopted vendor within the Consumer Goods segment. To improve its position and take advantage of the increase in digital marketing services budgets in the vertical (3 percent on average according to the same research), Accenture accelerated its investments in retail and CPG capabilities, evidenced by the acquisition of retail-centric strategy consultancy Kurt Salmon and the co-development of a fashion management solution with SAP.
Additionally, Accenture partnered with advanced analytics startup for retailers, DynamicAction, and closed the acquisitions of dgroup and MOBGEN to support its efforts to deliver personalized content services at scale through local integration. As digitally related services take center stage in Accenture’s go-to-market messaging and portfolio development the company will continue to leverage its functional and technology industry expertise to secure revenues across the customer life cycle, as highlighted by the recent deal wins with Dixons Carphone and Charles Tyrwhitt.
Bozhidar Hristov, senior analyst at TBR