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CLIENT CASE STUDY


Accenture: Running IT like a business begins with IT governance

Accenture’s internal IT team defined a new strategy: to become a true service organization that operates like a business within the business.

Overview

Accenture’s global success lies in collaborating with its clients to help them become high-performance organizations. A cornerstone of this success has been its internal technology leadership—and a pioneering new model for governing IT resources.

Opportunity
As Accenture prepared to spin off from its parent company in the late 1990s, it created its own internal IT organization. In the words of Frank Modruson, Chief Information Officer (CIO): “We set out to create a new model for delivering value and providing better support for the growing Accenture enterprise.”

To transform its operations, Accenture’s internal IT team defined a new strategy: to become a true service organization that operates like a business within the business.

This strategy called for an IT governance model that would involve Accenture’s top business leaders in planning and aligning IT initiatives with corporate priorities.

To more closely link IT to the business, the challenge for the CIO Organization was to develop a new governance model with the support of the company’s senior management.

While the CIO and his team would remain responsible for developing the IT strategy and plan, major IT decisions would be shaped and vetted by the IT Steering Committee, which is chaired by Accenture’s COO and includes the chief operating officer of every business line.

We set out to create a new model for delivering value and providing better support for the growing Accenture enterprise.

Solution

Accenture’s CIO Organization recognized that effective IT governance is principally an issue of alignment: getting the IT strategy aligned with the business strategy, having the right people lined up to make the necessary decisions, and aligning IT spending with critical business priorities.

In this case, devising the right IT governance structure for the enterprise required an element of trial-and-error experimentation, and ultimately included four key roles:

  • IT steering committee: Has authority to review, endorse and commit funds for IT investment.

  • Stakeholders: Owns the opportunities representing changes in business capabilities.

  • Sponsors: Stewards of business capabilities and applications, be they global, regional or local.

  • CIO: The CIO and his/her organization includes all executives who will be held accountable for IT capabilities.

The IT governance structure at Accenture also includes a fifth group, the Global Management Committee, comprised of senior corporate executives who can provide IT investment funding guidance.

Says Modruson: “This level of participation has been critical in reaching consensus for investments in differentiating technology.”

The process of making decisions about IT investments is central to the IT governance process. In any given year, Accenture generates nearly 200 requests for IT investment, but typically only half to two-thirds will come to fruition.

Once the short list of initiatives is determined, detailed planning begins to estimate one-time costs, ongoing costs, hard and/or soft benefits, and timelines for development and implementation. Business cases are then assembled for each initiative.

Results

Sound IT governance has been an indispensable pillar in Accenture’s transformational approach to IT. Combined with other actions—such as IT strategy, building a managed-services approach, setting and tracking key metrics, and communicating with customers—IT governance has helped to fundamentally improve the company’s IT efficiency and effectiveness while significantly lowering IT costs.

By every measure, Accenture’s CIO Organization has achieved dramatically improved performance since it began running IT like a business. Its most noteworthy operational gains include:

  • Reducing IT spending by 15 percent between 2001 and 2013.

  • Cutting IT spending as a percentage of net revenues by 64 percent since 2001.

  • Lowering IT expense per person by 73 percent in the same period.

Perhaps most impressive of all is the fact that these dramatic economies of scale were achieved while Accenture’s global workforce grew by 248 percent—from 75,000 employees in 2001 to some 261,000 today.

Putting a solid IT governance mechanism in place has given the CIO Organization the essential platform for meeting Accenture’s complex and expanding technology requirements.

“By running IT like a business, we have become much more strategic in our decision-making, more efficient in our governance, and more responsive to our customers’ needs,” says Frank Modruson.

“Best of all, because we can accurately monitor and measure the business value we deliver, we are able to improve our operations to support Accenture’s efforts to sustain its high performance. At the same time, this enables us to help our clients to become high-performance businesses.”

Podcast

RUNNING IT LIKE A BUSINESS STARTS WITH IT GOVERNANCE

Accenture managing directors Chris Crawford and Bob Kress discuss the merits of IT governance and structure, as well as the challenges in decision making and gathering business support.

Industry & topics highlighted

Technology