6 Questions For Accenture's Cloud Computing Captain


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Accenture has a multi-pronged plan of attack for cloud computing. The solution provider is attacking the cloud on several fronts, whether it's from strategy, consulting, systems integration or its own brand of software, Accenture has a cloud offering for all clients.
 
But along with making it perfectly clear what it is in the cloud, Accenture is also quite clear on what it's not: "We are not and will not be a provider of raw infrastructure services. The public providers - the Googles, Amazons and [Microsoft Windows] Azures of the world; as well as a lot of the former hosting companies like Terremark, Rackspace and some of the telcos; HP and the like - are in much a better position to do that and we're going to let them do that and use those services on behalf of our clients," said Jimmy Harris, Accenture's managing director of cloud computing.
 
CRN caught up with Harris recently to discuss Accenture's perception of the cloud, the cloud's future and it's relationships with the major cloud players like Microsoft, Google, Amazon, VMware, Cisco and others. Here are excerpts from that conversation.
 
Accenture is looking into the different industries and verticals and what they're doing with the cloud. Accenture also has its hands in nearly every facet of cloud computing. What industries are seeing the most cloud uptake and the most deployment; and what segment of your business is seeing the most deployments in the cloud? Where are you seeing the most traction and interest?
 
What we're seeing is a lot of interest in the communications industry, in high tech, in pharma -- we've done a lot of Salesforce deployments in pharma for instance -- and in financial services and retail. Those are probably the leading industry segments. There is a lot of talk in other industry segments -- the government is one. There's been a lot of talk in that there have been some RFPs but there's probably been more talk than action in my view, at least right now.

From a geographic standpoint … the uptake is actually greater in parts of Asia and Europe, excluding China, than it is in the U.S. and the U.K. We just looked at the adoption rates and the U.S. and the U.K. were sixth and seventh, respectively, country by country. That is reflective also in our pipeline for cloud services.

From a scope of service point of view I would say there is a lot of focus on the infrastructure space, at least in terms of total dollar value of potential contracts … A lot of energy is being spent by our clients on figuring out what it means to manage -- and mostly at the infrastructure level but increasingly they're asking about applications - in this new world that's introduced by the integration of cloud services in their legacy environments. That's probably half of what we're seeing in terms of demand. That is followed by SaaS implementations.

We do an awful lot of SaaS implementation work. I think what we're beginning to see is a great amount of interest in this whole application re-platforming and revitalization/optimization area. Clients are coming to us and saying, 'That's great, but I could build new applications on a cloud platform but I still get this giant legacy lump in the background, what do I do with that?'

We actually have an assessment tool to help them work with clients and learn how they can re-architect their application portfolio to take advantage of the cloud. That will probably grow to be a larger part going forward. The infrastructure stuff, I don't think it will run its course, but I think that as people begin to understand that the real value is in optimizing the application portfolio we're going to see more demand for that. We're beginning to see it now. It's just right now today probably not the largest portion of what we do.

What are some of the roadblocks you've been seeing keeping clients from adopting the cloud? Early on it was security it was data control. What are some of the reasons clients are putting behind not deploying the cloud?

[Security and data control] are still the big ones. It's hard to say that the performance isn't there. These things are highly available, high performance environments, so that was an early sort of issue that's gone away by the waters. People still - when they think about it, and I think this is probably the largest conceptual roadblock - say 'Yeah, we want the cloud but we want it to work exactly like our old stuff works.' The fact is it doesn't, and it doesn't for a reason.

A highly virtualized environment with massive capacity and shared resources just doesn't work like a traditional app server/database server kind of environment that is cordoned off and you're managing actual physical boxes. It will never work like the traditional environment, but people still want it to.
 
I was looking at an RFP [recently] from a very large global player for infrastructure management services and they say 'We want infrastructure management services in the cloud' and they list 10 pages of requirements. They want data assurance, they want to know what the server builds look like and you just don't get that. We can give you a specification for a service and we can tell you how it will perform. In time, I think the understanding will get better and people will start to ask the right questions and think about how to use it.
 
The concerns around security and data privacy are the big ones and that's evident from my discussions with perspective clients and survey data.
 
A lot of public providers are reticent to take on the kinds of responsibility and liability that the outsourcing business had for years around that. The guys who were product providers, like Microsoft for instance, are now service providers and data custodians and they never had to step up and guarantee contractually that they would maintain and handle with care the customer data to the same extent that the customer does. I think they've got some maturation to do in that space as well. Amazon is the same way. The Force, Salesforce, is different because they have a track record of performance that gets customers over the hump more quickly. They're beginning to deploy some very large scale deployments of Salesforce, which of course has customer data in it, but clients seem to be less worried about Salesforce for some reason.

Having said all that, I think the economics, the flexibility, the speed of implementation and all of those things are going to win the day and in time these issues will be cured through commercial measures, through technical measures and through changes in attitudes, but they still remain today as extensive roadblocks.

If security and data privacy are the biggest roadblocks, what are some of the key things you see driving clients to cloud computing offerings?

It's cost. Cost. Cost. And cost.

I don't think any of our colleagues in the enterprise IT world have been relieved of the responsibility to continue to drive down costs in the enterprise. It's a permanent condition. While we talk about agility and so on the first question is: Can I do something I'm doing today for less? Or can I do something in the future that I'm not doing today for less than I think it would cost me under conventional means? That's confirmed by surveys and confirmed by the work we're doing with our clients.

Following closely after that is the growing realization that you can do things faster. It's not only cheaper, but you can do them faster and you can do some things you couldn't do before. If you're in the pharma industry and you want to do some analytics on clinical trials and you want to go to Amazon and spin up 1,000 concurrent servers and use it to process a data set in 15 minutes -- it might have taken you a month in the old world -- at a cost that is a fraction of what it would cost to outfit and provision that same function in the old world then wow that's good. I think people are seeing that the software and the applications themselves are pretty good. They're next-generation, they're more easily integrated, they're pretty functionally rich and they're highly configurable.

Cost is compelling, but increasingly, as people kind of get their heads around what the opportunities for the use of these technologies and business models are -- and in cost there's the change from capital to operating expenses -- there's a continuing wave of demand for it.

Vendors And The Channel Accenture is partnered with most of the main players in the cloud. Are there any vendors that really 'get it' and get how to play cloud computing in the channel with solution providers? What is it that makes a difference in a vendor relationship?

Understand where a lot of these companies came from and what their channel strategies have been to date. I would argue that the cloud is just another thing. It's a different thing. They have to behave somewhat differently because they're moving to becoming service providers.

Even Cisco has CCaaS and UCaaS and their conferencing services. There's an adjustment for them to become a services provider, which they're working through. If they were good at doing channel stuff before they're good at doing channel stuff now. And if they weren't -- Google didn't really have a channel partner strategy, Amazon never really used channel partners -- they're learning how to do that as well. You can kind of take a page from where they've been historically in terms of how they've used partners and resellers and the like, which will form what they are today.
 
Each company has a different strategy. We all lump them into the cloud, but if you look across the patch at all of the various players and up and down the stack from infrastructure all the way up to applications they each have somewhat different strategies in terms of where they think it's important for them to play and the kinds of things they're going to be doing.

Salesforce is at the applications level; Microsoft is all the way up and down the stack and is even into cloud hosting now; IBM is up and down the stack; HP is somewhat lower in the stack; with Cisco UCS/VMware the control point is really at the hypervisor and potentially moving up into a platform. Each potential partner has a different view of what's important in the enterprise. For us, that will inform how we work with them as channel partners and where we can add the most value. When they understand that we can work better together.

Does Accenture break out its revenue for cloud-related services or cloud offerings? Over the next year how much of Accenture's revenue will come from the cloud?

No, not publicly. I can tell you we've commissioned work to look at the market itself and where the growth is likely to come. What sorts of services and at what pace and in what geographies and so on. The growth will be greater than the traditional IT services market, significantly greater in some instances. That was done from a top down meets bottom up estimate of IT spending, the kinds of things that companies spend on, some public information from companies that are already in the cloud space and their projected growth rates.

So we're looking at growth in general in the cloud services that are offered probably 25 percent to 30 percent for the foreseeable future. That information is confirmed by self-reported information from our survey participants, 80 percent of whom are planning on increasing their spending on cloud-based services going forward and one-third of those looking to double spending on cloud based services in the next 24 to 36 months. While we don't divulge Accenture specific statistics we believe it's a significant growth area and it will continue to outpace the growth of the general technology market.

What's the next big services opportunity as it pertains to the cloud?

I think we'll see continuing demand in how to manage infrastructure better.
 
Personally I think that misses the point, because it's an old construct. By definition, in the cloud the infrastructure is abstracted. You don't really care about it and you don't want to care about it. What you really want to care about is the actual applications and services.
 
I think it's going to be about 'What do I do with my application portfolio?' I mentioned before this re-platforming and optimization opportunity. What do I do to simplify, make more flexible and significantly lower the cost of managing my legacy portfolio? What kinds of new applications are possible that I can rapidly deploy to support the business? The platform wars will continue and we'll probably see new entrants in that space.
 
What we're betting on and what we're interested in understanding is how we expand the use of cloud services and the intended business models beyond infrastructure and how we move and how our clients move up the stack to optimize at a much broader level their application portfolio.
 
I'm personally interested in spending more time creating real business process utilities. There are some interesting things in the BPU space that we're doing. We have a thing called Premium Tech Services where essentially we can offload for the average provider or OEM who provides digital services to their clients a lot of their problematic call volume very rapidly at very low cost through the use of a shared platform and people. When you think about BPO for instance, you're generally talking about it taking six to nine months to do an RFP and another six to nine months to affect the transitions.
 
So somebody has an idea and if they're really good two years later they have a result. I'm interested in exploring opportunities where you have an idea on a Monday, you can look at it on a Tuesday, you can do some transaction mapping and determine where you think the value is and within a couple of weeks after that have it arrive in full production and actually be offloading work from your contact center, for instance. I think that's when it gets really interesting from a service provider perspective and from an enterprise perspective.
 
Interesting stuff is going to be if there are any industry utilities that are going to come out of this that are driven by this phenomenon.
 
Are there applications and functions that would have previously been put into the too-hard pile that because of the economics and architecture of the cloud -- having everyone be able to access applications via the Internet and being able to run very large scale applications with good performance and so on? Are we going to create utilities that we didn't see before? Or extend certain functions and services to geographies or industry segments that were previously deemed too hard? Can I do mobile banking in Asia where they only have mobile phones? Because suddenly it doesn't cost me that $3 to manufacture a transaction, it costs me 3 cents. What about electronic health records? Does this publicly available infrastructure suddenly make it easier to contemplate a certain nationally consistent, or globally consistent, electronic health record?
 
A lot of people are thinking about that. Those are kinds of things too that certainly are going to be of interest to us going forward because we would like to be right in the middle of those industry plays.
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