Unhappy Memories

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What's going on?

Accenture reported better-than-expected results on Thursday, as more and more businesses ruthlessly scrap their once-beloved hardware in favor of cloud computing. N’aww.

What does this mean?

At a time when “flexibility” has become the hot new business buzzword, companies specializing in everything from healthcare to financial services have been scrambling to shift their centralized IT operations to the cloud – and they’ve been turning to Accenture to help them do just that. The company, for its part, is feeling so confident that everyone’s going to keep asking for help that it even raised its full-year forecast: the firm’s expecting sales to grow by around 7.5% compared to the year before, up from its previous forecast of 5%. That’ll do, Accenture: investors sent its shares to all-time highs on Thursday.

Why should I care?

Zooming in: Small acquisitions > big acquisitions.

Accenture’s strategy for staying at the cutting edge of tech – across everything from digital marketing to industrial automation – is to buy other businesses and soak up their talent and ideas. The company’s announced at least 65 takeovers in the last two years alone – more than any other major business, and an average of one every week and a half. Most of the deals are small in size, sure, but that might be to Accenture’s advantage: research from McKinsey suggests that lots of smaller acquisitions over time add more value than one tentpole buy.

The bigger picture: Accenture is spreading its bets.

Cloud computing is big business: $1 trillion big. And while Accenture’s cloud software segment might not be anywhere near as substantial as, say, frontrunner Amazon, it has settled into a snug position as both cloud consultancy and cloud provider. In other words, it both advises clients on how to implement cloud computing and offers services of its own – meaning it’ll get paid even if they end up plumping for one of the bigger players.

Originally posted as part of the Finimize daily email.

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