Accenture said that big technology projects---such as enterprise resource planning implementations and systems integration efforts---are starting to come back.
Accenture executives outlined their outlook in an analyst powwow on Thursday. A bevy of analysts reported Friday that Accenture seemed more upbeat than it was just a few weeks earlier when it reported fiscal second quarter earnings.
Stifel Nicolaus analyst George Price recapped said that consulting, systems integration and application outsourcing were held out as Accenture's growth pillars. The company expects to deliver growth of 7 percent to 10 percent in fiscal 2011. Price noted:
“Growth” and “transformation” initiatives are “back on the table”, and while large, multi-year deals are not yet back in general, discretionary demand is certainly better. Accenture is also starting to see ERP work come back – clients slowed or stopped ERP work in the downturn, but now want accelerated deployments.
Cowen analyst Peter Goldmacher said in a research note that Accenture's comments about pent up ERP demand is likely to translate into solid license growth for Oracle and SAP. Specifically, a 10 percent growth rate at Accenture translates into 8 percent to 12 percent license growth at Oracle in SAP. Goldmacher added:
It's also important to keep in mind that not all Accenture ERP related projects come from new license sales. Large companies often do large enterprise license agreements where they buy everything up front in exchange for a bigger discount, and deploy the software over time. So, for many reasons, the correlation isn t perfect. But the math is interesting and the Oracle and SAP models don t appear to be wildly out of sync.
Accenture's conference call transcript had a bevy of notable points. CEO Bill Green riffed on the following:
Indian rivals---Tata, Wipro etc.---are landing bigger deals, but not necessarily moving up the food chain to higher value projects. Green said:
Moving up the food chain is incredibly hard to do because people are betting their business. There's tons of business moving meat. I mean just straight up -- putting resources in places, putting bodies in places -- there's lots of businesses there.
When you're about delivering outcomes, it's a different sort of thing. It's a different collection of skills you need and a different outcome focus you need. And the skin-in-the-game focus -- one of the things in consulting that -- since the last time we did this, we looked at how many of our deals are value-based, skin-in-the-game -- it's gone up dramatically.
On analytics, Green noted:
I think when you stand back from it -- the analytics thing is interesting because a lot of companies are focused on that. The software guys will talk a lot about it -- and SAP's business-objects thing, and, then, how all that's going to work -- obviously, IBM will talk a great deal about it.
There's garden-variety analytics, and then there's the stuff that matters. And what we have chosen to do is to put our focus on the predictive analytics, because we think that's where the value is. And the de facto, standard, best guys on the planet have been, are today, and always will be SAS. And that's why our alliance with them is so distinctive and important.
The jury is still out on the Feds stimulus and a direct impact on infrastructure spending. Green said:
I think, by and large, anyone who says stimulus is going to save their day is nuts, because in the system, the stuff is held up. And a lot of the stimulus money, quite frankly, has been used just to top up budgets that used to be there, that disappeared because of low revenues and things like that.
But there are things that matter -- certainly, the Smart Grid thing. The stimulus thing actually slowed down Smart Grid initiatives as people waited to see if they could get stimulus money to spend that, instead of their own money. And so there's just some interesting phenomenas. The health thing really hasn't hit yet. How the money transfers into education hasn't hit yet -- and in other public services.
And then I think the people's great disappointment in North America was how it transferred into the infrastructure build-out, whereas China, on Friday -- they said they were going to stimulate. And, on Monday, they started building bridges. And so if you look at it around the world, it's impacted in a very different way.
I think what the thing is -- maybe what's more important is -- isn't the stimulus per say. It's the focus on what we need to be investing in. And one of the things we've done is -- we believe there is a wave of infrastructure spending across the globe.