Interview: Accenture exec: Company productizing some IP

As senior partner in charge of Accenture Ltd.'s Technology Business Solutions group, James Hall remains firmly planted at the very busy intersection known as Web services, where emerging technologies merge, and sometimes collide, with business solutions. Hall's group is largely responsible for Accenture's delivery of technology architecture, design and build, outsourcing and netsourcing.

Hall sat down with Ed Scannell to talk about a range of topics relating to Web services, including what success both artistically and financially the company has had over the past couple of years. He also discussed the company's renewed interest in turning its intellectual property, which includes software and best practices, into software that can be used to solve real-world problems.

Q: Can you talk about the thinking behind Accenture's push to turn its intellectual property into software that can be used for solving real-world solutions?Accenture has always valued our intellectual property, but to some extent it was intangible in that it was manifested mostly in the knowledge and experience of our people who come in to do consulting work with clients. But as the market has matured and as clients look for more than just bright consultants turning up, it has become increasingly important to us to take that intangible intellectual property and convert it into tangible assets we can use to shortcut our way to solutions for clients.

Q: Can you give me an example of how you might package up intellectual property?Assets would be preconfigured sorts of workbenches of development capability. Not because we want to replicate industry leading development tools but because we want to be able to package those up and make them available very quickly and effectively. Others include standard business systems architectures that provide common facilities and capabilities such as security, error logging, or program structures that would accelerate our client teams in delivering solutions whether that be on a Microsoft or J2EE set of environments. It would be our methods themselves.

Q: Are there specific markets you are targeting? Yes. We are doing exactly that as far as packaging up assets to solve vertical industry problems. For example, in our insurance industry practice, they have packaged up a whole lot of software assets around insurance claims processing. This helps to hugely drive down the costs and reduce the time scale of what it would cost if a major insurance company were to do property and casualty claims handling. But the point to make here is, we are not seeking to be in the software business by selling a product. What we are doing is creating enabling assets that allow us to deliver solutions much more quickly and cost-effectively than we would otherwise be able to do.

Q: So you see this as an opportunity because many of your larger competitors are not pursuing this? Or are they?The differentiated positioning of Accenture has always been our ability to sit at the intersection between business knowledge and technology capability. I think we have a unique positioning there. We are clearly not in a position to try and be in the volume software business, but we are in the position to be able to accelerate our clients toward unique but complex business solutions.

Q: Any ballpark estimates on what sort of financial opportunity this represents to Accenture?Well we feel it is simply a prerequisite to continued leadership in our industry. And so if we are to continue to grow and to take market share as we intend to, this is an absolute prerequisite to carry out.

Q: Is helping set standards with your unique technologies an issue? Like in the area of Web services?Standards are becoming absolutely critical. One of the things that the Internet did, and the take up of the Internet by commercial businesses, is it taught commercial businesses that open standards are a prerequisite towards the current and future generation of business systems. You can't build Web-based systems without standards, but the commercial marketplace has always been very skeptical about open standards. That was a wake-up call. Now we have had a massive economic downturn, CIOs are seeking to drive cost-effectiveness in their organizations and I see standards being absolutely critical there. Now are the next generation of standards all fully developed and rolled out? No, they are not. Does that mean players like us in the industry have a responsibility to help drive those? Yes, it does. Hence, we are a founding member of the Web Service Interoperability organization. I think we will see our customers increasingly focused on insuring that their solutions are standards-compliant because customers do not want to be locked into a single supplier. If they are locked into a single architecture, open standards are the only way out of that.

Q: With this push involving packaged-up assets, is Accenture focusing more toward back-end servers or the desktop?I think the sorts of solutions that our clients demand are end-to-end, actually. They go from the desktop to the back-end server. The interesting thing we are seeing about Microsoft, for instance, is Microsoft starts at the desktop and they are inextricably moving towards the back end. Just as Unix is in its current manifestations, whether you call it Java or J2EE or Linux.

Q: How much focus is Accenture placing on the outsourcing of business process management? What is the market opportunity there right now?We think the outsourcing marketplace has developed enormously over the last 10 years, and particularly over the past three or four. And information technology was the area in which the outsourcing marketplace came of age. It is clear to us that the process that we have been through with information technology will get repeated for a whole lot of other business processes as well. The three areas we are actively involved in are the outsourcing of accounting processes, the outsourcing of HR processes, and the outsourcing of customer contact management processes. Not so much the call centers, that is well established. We see a huge opportunity to use outsourcing as a mechanism for taking essentially important but non-strategic processes off our clients' hands and to drive efficiencies of processes. This would give clients access to global best-in-class practices and capabilities at a cheaper cost than they could ever manage themselves. This is one of the fastest-growing parts of our business today.

Q: Over the past year or two are larger accounts gravitating more toward offloading mission-critical applications?A few years ago people would have been very concerned about perhaps outsourcing mission-critical activities. But now they would probably tend to put a higher priority on outsourcing their mission-critical activities. Because they are mission-critical, that means it is most important to get the best quality and service focus, best management capabilities attached around those processes.

Q: Apple appears to be positioning itself for a more serious push toward the enterprise with products such as Xserve, Mac OS 10, and open-source strategies. Do you see any growing interest among your larger customers in Apple's corporate computing strategies?I have not been conscious of any increased interest or awareness of Apple in the corporate computing environment. I think you have to put all they are doing in the context of a broader thing that is happening in the technology industry. Essentially, what is happening is, the entire industry is consolidating around two key platforms: one of which is .Net and the other of which is J2EE. Whether that has to do with the underlying operating systems like Solaris or HP-UX or Linux, it doesn't really matter actually. I think customers are very focused on that middleware layer and that platform layer and making sure they are making the right decisions. Beneath that layer, it is a commodity business environment now. Customers buy whatever makes the most commercial sense on a case-by-case basis. And the reason they are so focused on standards is because they want to be able to do that. They want to be able to make a series of individual commercial decisions with a high expectation that it will all fit and work together.

Q: How has the downturn in IT spending the last 12 to 18 months been affecting your business?Every individual client is in a slightly different position. But clearly there are still clients making significant IT investment decisions in order to pursue a business opportunity or solve a problem. But if you look at it in aggregate, you would say that IT spending is at best flat. I think it will remain flat for the foreseeable future. Smart CIOs faced with a situation where spending is flat but they still have investment needs are now focusing very hard on driving down the costs of their IT operations in order to create pools of money they can reinvest and respond to those needs. That is why you see a lot of activities with CIOs looking at server consolidation, data storage consolidation, datacenter consolidation. And this is why you still see a lot of activity in the IT outsourcing marketplace, which drives down the costs of applications management, for example. We see that, by the way, as a big opportunity for many of our customers.

Q: Are you seeing a trend among systems integrators to roll out frameworks that give users a rolling start toward developing their own Web services? I am thinking of the sort of framework now being offered by Data Dimension.Web services is a critical area of growth for us. We do believe the whole movement towards standards I have mentioned is driving towards Web services. I think Web services will become the dominant architectural style for the next generation of business applications. So we have put a lot of effort into building up our own Web services capabilities. We have some great case studies to point to now where we have built and delivered industrial scale Web services systems for clients. A great one is SMCS, a French national Railway -- third largest consumer Web site in France. It has a Web services link dynamically to Expedia to do hotel bookings and car rentals. These are the sorts of applications getting rolled out. Not only are we building this with clients, we just launched something called the Accenture Web services development platform, which is a set of development tools to facilitate the development of Web services applications. This one is focused on developing .Net applications. But we will by the end of the year be launching a J2EE version that has the same capabilities.

Q: Do you see Web services as something that will be wrapped in with the hardware and software bundles?I think you will see Web services application components being made available from software companies that you can wrap into your application either on a permanent or on an as-required basis. I think you will start to see a lot more things like the example with Expedia, where Expedia wraps some of their capabilities in Web services as a wrapper so that other people can access them dynamically if they need them. I think, by the way, that is a completely separate issue from wrapping into a particular hardware component.

Q: After such an aggressive push with Web services over the past 12 to 18 months, can you say it has been a profitable initiative?We don't measure our revenues in quite that way, but I can tell you that our proportion of our work related to Web services is growing the number. The number of industrial Web services applications in various countries around the world is grown. We have some good client credentials. Is it yet the dominant development environment? No. But we are making good progress and I am confident that it will become so.

Q: What did you make of Bill Gates' recent comments about his disappointment in the traction Web services has gained so far?I saw them. I would say that part of the reason is that perhaps the whole debate about Web services got diverted by two things. First, there are issues like personal consumer applications. Stuff from Microsoft like My Wallet and My Passport -- good stuff -- but they very much focus on the consumer rather on the corporate marketplace. And with that came some concerns around Microsoft-based Web services as holding a lot of personal data on them and whether that was appropriate. I think some of those issues were frankly red herrings. The real issues around Web services is about building corporate applications and meeting corporate business needs. Arguably if some of the energy focused on the personal marketplace had been driven towards the business marketplace, we would be in better shape now. I don't want to talk on behalf of Microsoft, but from what I observe I think they are much more focused on the corporate solutions and I think that will hold them in good stead.

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