Bucking the notion that IT should operate quietly in the background, Bob Kress has worked to raise IT's profile within his organization. In fact, they've been so successful in cutting costs, improving efficiency, and increasing customer satisfaction, IT is considered a model for how all business functions should be run.
Lately, a popular mantra among technology companies has been, "We will be successful when we make IT invisible." Bob Kress, Accenture's executive director of business operations, disagrees. While the delivery of IT should be invisible, much like the delivery of electricity, Bob has been working to make IT's contribution to Accenture's success more visible. And in this case, that has worked out pretty well.
This is not a fledgling company. Since 2002, Accenture's revenues have doubled to $23.5 billion, and its labor force has added a new hire for every employee of seven years ago, for a total of 181,000 people across 49 countries. Sitting in the midst of this phenomenal growth, and helping to drive and facilitate it, is a multi-million IT department. It's not a cost center. It's a profit center and a business driver.
Like many IT directors over the last seven years, Bob's strategy has been to measurably improve efficiency and lower costs at the same time. The difference is that he has done it better than anyone else, and he has done it by making his IT department's operations and performance more visible. His underlying objective is for his customers to become high performers as a result of the products and services he provides, and they are. What's his secret? Organizational discipline in the form of accountability, scrutiny, and realism.
Can other companies imitate Accenture's success? Bob Kress says they can.
Note: This interview is also available as a PDF download.
One of the reasons I'm here is that I grew up in Accenture's Consulting business, and I've done every job within IT at Accenture from infrastructure operations for wide area networks and datacenters to building applications and doing application support to creating our product management organization. So I can identify the fiction when I see it.
Accenture is focused on helping our clients become high-performing organizations. We study the sectors they operate in and work to put them at the top of their segment. Our work runs from setting the right marketplace strategy for our clients all the way through implementation and ongoing operations in a full-lifecycle approach. The internal IT function plays a critical role in giving Accenture the capabilities it needs to deliver value.2. Jeff: Your specific objectives for the IT department were around both greater efficiency and lower costs, and of course efficiency drives lower costs. But you were also targeting efficiency in terms of things like customer satisfaction? How did you measure these? Bob: We do that by measuring at what I call the enterprise-IT level with annual and sometimes more frequent sponsor satisfaction survey scorecards. Sponsors are the purchasing decision-makers in the business. Back in the early 2000s, two-thirds of our sponsors were either satisfied or very satisfied with our products and services. Last month, it was at 86%, and that change has come during the same period our business doubled and our IT costs per person were dramatically reduced.
We also measure the end-user satisfaction of our 180,000+ people within Accenture. What we do here is truly innovative; we actually survey 1/12 of our users every month. No one gets the survey more than once a year, and that gives us a continuous feedback stream. These cover things like satisfaction with your laptop, connectivity, and collaboration technology, and there is a product manager for each of those services. So we are able to provide product managers with current real-time satisfaction levels from around the globe.3. Jeff: Another significant reduction in complexity was in the number of applications being used, from about 600 to 356 globally and 1,500 to 195 locally, right? Bob: Yes. We knew we were highly decentralized, so a key piece of our IT strategy was to centralize, standardize, and consolidate to get to a single version of the truth. Accenture goes to market through five operating groups, but we truly operate our business on a global basis. So we started by deciding that we needed to align our technology not only with the business strategy but also with the business operating model.
Our redundant applications were coming from a range of geographies, so when we implemented SAP as our global ERP platform, for example, we eliminated more than 450 financial applications being used around the world. Another more recent example is our new recruiting system. As you mentioned, we've been in a significant growth mode for several years, and between 50 and 65 thousand people have come on annually for the last three years. We consolidated more than 40 office- and country-level recruiting applications down to two. We shed a lot of cost there, and the consolidation enabled recruiting standardization that made the business much more efficient. It also created a homogeneous look and feel, so all the applicants around the world get a consistent experience.
The focus in all of our change has been on making business sense and on speaking the same language and that single version of the truth. You inevitably have data integration and interpretation issues when you're trying to do consolidation and roll-up reporting. Application consolidation gives us a much greater ability for the business to understand what's going on around the world with consistent definitions and reporting data.4. Jeff: In two specific areas of measurement, you were able to cut total IT costs as a percentage of revenue by 56% and reduce IT spend per person by 60%. In comparing Accenture to other companies, what would you recommend as a good benchmark for the IT-centric category and otherwise? Bob: That is certainly something that will vary by industry. When you look at IT spend as a percent of revenue, what you see is that financial services companies, for example, are technology intensive, so it is fairly common to see 8 or 10% IT cost as a percent of revenue. By contrast, a manufacturing company can be down in the range of as little as 1/2 to 2%.
In my experience, there are still substantial opportunities for companies not only to reduce costs but simultaneously to improve services and service quality almost across the board. Is it possible for other companies to cut costs in half? I do believe in many cases they can. But even if not, there is potential to substantially improve the quality of what they are providing.5. Jeff: Of the five pillars of measurement you targeted — tying IT to macro-business goals, involving leadership in connecting IT to business priorities, offering greater customization, showing value with solid metrics, and regular communication with customers — how many of those are now at acceptable levels and how many are still in an ongoing process? Bob: They're all still ongoing. When I look at this today versus our initial thinking in 2002, we exceeded all of our initial goals. We talked with the overall COO of Accenture at the time, and his stretch goal for us was to get a 33% reduction in IT cost as a percent of revenue. Today, we've reduced 56%. But on the other hand, it never ends. The marketplace is changing, technology is changing, and our business is changing. So today, we have different expectations for what we're capable of. Certainly from those early days, we've achieved all of our goals. But now we've updated them; otherwise, we would have nothing to do. 6. Jeff: I notice one of the changes Accenture has made is described as moving jobs to lower-cost locations. Is that both domestic and offshore? Bob: Yes, another tenet of our IT strategy is that we need to be the best-practice example of what we recommend to our clients. We have three primary businesses within Accenture; consulting, systems integration, and outsourcing. People laugh at this, but we "outsource" a good part of our internal IT to our go-to-market units that provide those same services to other clients. For example, our infrastructure service delivery, which includes running our wide area network and local area networks, datacenters, hosting, and providing technology support, is all done through our go-to-market outsourcing unit. We have a formal agreement with them, which is actually less than a contract in legal terms but has defined products and services, prices, service levels, and year-on-year productivity and efficiency gains. They are required to deliver those just the way they do with their other clients.
We've now gone outside for some of our services as well. For example, in the past we did our Internet e-mail spam scanning on our own. But things are changing so quickly that threats and trends can be spotted much more easily by a service provider because of the range and volume they are seeing. Some companies experience up to 90% spam e-mail, which is staggering. We're using a third-party service to do most of the filtering for us, and about 80% of the 5.9 million e-mails we get each day are being eliminated.7. Jeff: Another interesting area is in the choices and customized selection of IT services. In the case of e-mail, for example, you defined a five-option selection and got a savings of 76% in cost per user. Have the savings you realized there resulted in a lower level of satisfaction? Bob: That's a part of the big umbrella we call our managed services approach, which is a defined catalog of IT products and services we provide to our customers within Accenture. There are seven major categories; one is around communications — data, voice, remote access, and teleconferencing. The others are technical support, which covers desktop management and mobility, hosting, messaging and collaboration, business applications, and portals. Within each of those is a menu of products and services. For example, e-mail is a service in the messaging and collaboration category. We work with each business to understand what their requirements are and define offerings to meet their unique needs. With e-mail, we said, "You can select the offering you want for your people, and here's the associated cost."
Before, we were looking at the costs of e-mail capabilities growing exponentially with no incentive for anyone to manage them. So we said rather than mandate something, let's tell the business what the cost is to provide the capabilities. Keeping in mind the need to be cost-competitive with other providers, we let the business decide the right offering to meet their business needs. In the case of e-mail, what happened is the business determined that senior executives may need one type of mailbox and someone else may need a different type, depending on the nature of their work. Doing that reduced the size of the average mailbox by more than half. It wasn't a mandate from us, it was a business decision.
That's the approach we've taken — to put as many of those decisions as we can in the hands of the sponsor. At the same time, it has allowed our business to have visibility into costs. If the business doesn't know or understand the cost, there's going to be endless demand. Once you have cost transparency, all of a sudden you can make a valid business decision based on the relative cost-benefit value and make an informed choice.
Part of our governance process is requiring sponsors and business cases for all investments in new technology capabilities. The business case not only requires a description of need and rationale, but also the initial cost, ongoing operating costs, and business benefits for three years after the technology capability goes into production. We also have Internal Audit review the benefits realized from the IT investments. Internal Audit comes in with a benefit-realization analysis where we say, "This is what you said you were going to achieve. What are you actually achieving?" As soon as I did that, it took the fiction-writing out of the business case process.
The problem I see in many organizations is that it is easy upfront for a sponsor to wax eloquent on the potential benefits, particularly if no one is going to be checking up on them after the fact. As soon as I initiated the random audits of the benefits achieved, the business cases and the benefit claims began to line up much more closely. It comes down to organizational discipline; strategy, and governance to decide who is accountable for making the IT investment decisions, for achieving the associated benefits, and delivering the products and services we're committed to at the right price and service levels.8. Jeff: In measuring your effectiveness, what macro-level metrics were you paying closest attention to? Bob: There are three major IT strategic imperatives and a number of key metrics within each one. The first overarching imperative is IT's contribution to the success of Accenture's business, which measures sponsor and employee satisfaction, and the benefits enabled and realized.
The second imperative is IT operational excellence: What are we doing to ensure that we are running the IT shop as efficiently and effectively as we can? That would include IT expense ratios, service-level delivery performance, targets around productivity, and cost-effectiveness year on year. So we've got a set of metrics that tell us whether we're making progress.
The third is providing a best-in-class workplace for our IT people. The measures of whether we're doing a good job there are employee attrition, employee satisfaction, percent of training budget used, and other similar measures. I've created a strategic IT performance scorecard, which is literally one piece of paper with the three imperatives and these critical metrics. We run those on a quarterly basis and it goes to the overall COO of Accenture as well as to our IT steering committee. That's the way they look at our success within the IT function.
In terms of external measures, I've asked for an assessment for the last nine years from a leading analyst firm in a custom benchmarking survey against our competitors. This is reflected in the IT services business in IT cost as a percent of net revenue, IT cost per person supported, and IT workforce as a percent of the total workforce. In each of those three key areas, we are below any of our competitors, so we're recognized as the market leaders here.9. Jeff: Aside from those metrics, what kind of change have you noticed in the perception and the appreciation of IT within the Accenture culture? Bob: Overwhelming! When we started this journey, I would characterize the perception of IT as too expensive and generally not supporting the business as well as we should have been. Right now, I would tell you it's just the opposite. We are regularly held up within Accenture as an example of how we should be running our business functions. In fact, even in this economic downturn there is a strong desire to make more of an investment in technology because of the value we have delivered to the business. Those are the sentiments now and the way IT is valued within the company. We are contributors with a demonstrated track record of being able to add value to the business.
We've increased satisfaction levels from 67% to 86% with the business sponsors and then for general customers, from 71% to 83%. That is a significant change in perception, and it's a key measure of our contribution to Accenture's overall success. One of the key indicators is how satisfied our sponsors are — because they are assessing our business value for the cost. The products and services we are providing enable them to do their jobs every day. If we're providing the right technology, their job should be easier and more productive, more efficient, and able to deliver a higher level of service to Accenture's clients. Not only that, we are providing more services to more people at the same time that our satisfaction numbers are going up. So that has been huge for us.10. Jeff: As you look back over these last seven or eight years at the significant improvements you've seen, where did the biggest reductions and cost savings come from? Bob: I would characterize them as both macro-level changes that drove reductions and more specific actions. At the macro level, I believe the major driver at the foundation of any cost reduction is a clearly articulated IT strategy tied closely to the business strategy. Second is having clear governance and accountability for IT decision making. A third thing is our managed services approach, which has enabled the right decisions and incented the right decisions to be made. And a fourth driver is our performance measurement, both in metrics and reporting, because you tend to focus on what you measure.
If I drop beneath that and get more specific, there are application consolidation, datacenter consolidation, network revamping that lowered costs and improved capability, and process reengineering. In our technology support six or seven years ago, we were heavy on in-person support. Now we have three channels for people to get tech support: in-person, which is relatively small; a global 24x7 help desk, which is a follow-the-sun approach; and e-support, which is the vast majority of our technology support. People calling us with questions or password resets are now handled by e-support. Sourcing is another major area. We've taken advantage of labor arbitrage and getting critical mass on skills by outsourcing.
The improvements in all those areas have contributed to the overall savings. We're very pleased with the progress, but going forward we're continuing to look for ways we can make the technology side of the business continue to be even more efficient and provide better quality service. I believe that's the way any company should be looking at it.
Jeff Cerny has written interviews with top technology leaders for TechRepublic since 2008. He is also the author of Ten Breakable Habits to Creating a Remarkable Presentation.