Strategic IT Transformation at Accenture - Preparation

Strategic IT Transformation at Accenture

Arthur Andersen accounting firm, established in 1913, provides financial audit services to its clients. In 1989 the company branched off its consulting services division to newly formed Andersen Consulting that eventually formed itself as a separate entity now known as Accenture.

At the time of its inception at a cost of $1B, the world’s largest management consulting company, Accenture had $11 billion in annual revenues, 75,000 employees and more than 50 offices around the world. Immediately after its formation, Accenture’s CIO, Frank Modruson’s main challenge was to replace Arthur Andersen’s legacy IT infrastructure

Issue Description:

Over the span of many decades, the IT infrastructure in Arthur Andersen had spread vastly over the globe and had also become very complex. After the separation from Andersen, Accenture had a one-year time period to plan, design and implement the new IT infrastructure within the new firm. Current technology was deficient in many ways. Over the course of almost a century, Andersen had acquired many legacy applications that did not interconnect with each other. Key systems and databases resided on very old software platforms that could not be accessed easily over the internet without using costly private networks. Financial information had often to be compiled manually. Also, offices around the world had adopted their own individual software systems for accounting and HR systems, dividing information into small, regional reports rather than an “At-a-glance” whole firm’s financial status at any given time.

Situation Assessment:

The enormous challenge that Accenture faced was to build the entire IT infrastructure from scratch, using the latest technologies, software and systems available at the time. Access to information in real-time, from anywhere was an important requirement of the technology system since 75% of employees spent significant amount of their time working outside of their offices, either in travelling or in meetings with their clients.

The management relied heavily on IT governance system to Control Objectives for Information and Related Technologies (COBIT 5) to face the challenge. The adoption of COBIT 5 standards can support the management to do more informed and calculated decisions. COBIT 5 can help implement the numerous regulations and compliance standards across the globe.

The CIO also took this opportunity to bring a conceptual change in the way Technology was viewed in most large companies at that time. Rather than classifying IT as a cost center with an assigned budget, the management transformed it as a ‘business within a business’, responsible for providing IT products and services driven by the needs of internal customers and stakeholders. It must provide measurable service levels for products and services that it offers driven by the users’ needs. The management also changed the way budgeting was prepared for IT. Rather than the traditional approach where the IT department defined its own budget, a panel of C-level executives from strategic, financial, operational and technical areas of the business would set the priorities for the Technology budget. These priorities would be directly related to the economic value or significance of each IT project and value that it brings to the company.

The decision whether to have COBIT 5 certification or not depends on many factors such as training staff for having the system, cost involved in implementing and training. This change will embrace the change in firm’s culture, employees and business procedures globally. COBIT 5 standards should be adopted if it will improve the alignment of IT with firm’s corporate strategies while optimum utilization of the existing resources.

A project approval process was implemented in Accenture in order to ascertain that they were taking right project according to the priority and at the right cost. The basis of this process was business benefits and ROI. It required top management along with IT professionals to work as committee and form the strategic direction of their IT for the next three years. Under this new governance, all projects have to have a senior business sponsor, ROI analysis and annual audit up to three years.

Alternatives:

There were two alternatives such as:

COBIT 5:

PROS:

One approach would be to implement a COBIT 5 framework by altering existing controls, applications and general IT processes. The framework for COBIT is available free online. It would address the governance of the IT with a firm’s prospective. It is based on IT best practices. COBIT seeks to enact is a common denominator of platforms and processes throughout organization. Accenture’s adoption of the one vendor single platform approach has greatly accomplished this objective of our company by overall reducing and streamlining of our applications. It can be used as a complimentary to other practices such as ITIL, ISO 27000 etc. It provides a comprehensive framework that assists enterprises in achieving their objectives of governance, managing the firm’s information, and technology assets. It helps the management in prioritizing the project in right order and cost effectiveness.

Cons:

Employees would resist new system. COBIT is not detail oriented in case of certain functions. It covers the scenario in broader context. There is cost associated with internal training sessions in house, workshops. There could a consultant cost and rollout cost. Cost associated with material is COBIT 5 for Risk $35 for members and $175 for non-members for book, for COBIT 5 information security $ 50 for members and $205 for non-members for book & PDF, for COBIT 5 implementation $35 for members and $ 180 for book & PDF.

Current IT system:

Pros:

There is no additional cost or material required. From 2001 to 2008, Accenture was able to reduce its spending per employee by 60 percent and reduce overall IT expense. Current system is operating efficiently since 2001. It increased customer satisfaction.

Cons:

It is not sophisticated, detailed and complex as COBIT 5. There are gaps in IT system. Measuring tools may or may not be good enough. There is no surety of assessing the accurate risk of different projects.

 Evaluation & Recommendation:

There are two alternatives, while choosing between them, one should consider that which one is the cost effective, user friendly, aligned with Accenture’s decision criteria. Whether COBIT can fill in the gaps of existing IT governance system or it can add value to Accenture in comparison to the cost incurred in training. The after effects in case of adopting COBIT 5 are unknown so Accenture should be very careful while taking this decision.

After analyzing both alternatives, I think that Accenture should keep on using its current IT governance system.  When we combine COBIT 5 training cost, material cost, employee resistance with unknown after effects of this new system on firms productivity, it is not advisable to adopt COBIT 5. When we compare the cost associated with value COBIT can add to Accenture, we realize that Accenture has already achieved greater control over IT standards.

Presentation:

If I were presenting this case as a consultant I would describe the current issue and I would assess COBIT 5 Costs and benefits as well as I would discuss current IT system. I would recommend the best alternative as per stated criteria of the IT system which is according to company’s needs. I would give the presentation through power point slides.