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Accenture

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Accenture
Type Public
(NYSE: ACN)
(ISIN: BMG1150G1116)
Founded 1989 (as Andersen Consulting)
Headquarters Hamilton, Bermuda
Area served Worldwide
Key people William D. Green
(Chairman) & (CEO)
Industry Management consulting
Technology services
Outsourcing
Revenue ▲ US$ 25.313 billion (2008)
Operating income ▲ US$ 3.011 billion (2008)
Net income ▲ US$ 1.691 billion (2008)
Total assets ▲ US$ 12.398 billion (2008)
Total equity ▲ US$ 2.540 billion (2008)
Employees 186,000 (2008)
Website Accenture.com

Accenture Limited (NYSE: ACN, ISIN: BMG1150G1116) is a global management consulting, technology services and outsourcing company. It is registered in Hamilton, Bermuda but it was announced on the 27th of May 2009 that Accenture will be moving their incorporation to Ireland. It is said to be the largest consulting firm in the world.[1] Accenture is a Fortune Global 500 company[2] with more than 186,000 people in 52 countries. For the fiscal year ended 31 August 2008, the company generated net revenues of US$23.39 billion. Accenture's clients include 96 of the Fortune Global 100 and more than three quarters of the Fortune Global 500.[3]

Contents

[edit] History

[edit] Formation and early years

Accenture originated as the consulting division of Arthur Andersen, which Arthur Andersen and Clarence DeLany founded in 1913 as Andersen, DeLany & Co. Accenture's origins are in a 1953 feasibility study for General Electric. GE asked Arthur Andersen about the feasibility of automating payroll processing and manufacturing at GE's Appliance Park facility near Louisville, Kentucky. Arthur Andersen recommended installation of a UNIVAC I computer and printer, and GE agreed, which is the start of what became the first-ever commercial computer in the United States. Joe Glickauf was Arthur Andersen's project leader for the GE engagement and was responsible for the payroll processing automation, launching commercial data processing in the United States. Considered to be the father of computer consulting, Glickauf headed Arthur Andersen's Administrative Services division for 12 years.

[edit] Splitting from Arthur Andersen

In 1989, that division split from Arthur Andersen and began using the name Andersen Consulting. Both Arthur Andersen and Andersen Consulting consisted of groups of locally-owned independent partnerships and other entities around the world, each in a contractual agreement with Andersen Worldwide Société Coopérative (AWSC), a Swiss administrative entity.

By 2000, Andersen Consulting had achieved net revenues exceeding US$9.5 billion and had more than 75,000 employees in 47 countries,[4] whereas Arthur Andersen had revenues of US$9.3 billion with over 85,000 employees worldwide in 2001.

Through the 1990s there was increasing tension between Andersen Consulting and Arthur Andersen. Andersen Consulting was upset that it was paying Arthur Andersen up to 15% of its profits each year (a condition of the 1989 split was that the more profitable unit - AA or AC - paid the other this sum), while at the same time Arthur Andersen was competing with Andersen Consulting through its own newly established business consulting service line called Arthur Andersen Business Consulting. This dispute came to a head in 1998 when Andersen Consulting claimed breach of contract against AWSC and Arthur Andersen. Andersen Consulting put the 15% transfer payment for that year and future years into escrow and issued a claim for breach of contract. In August 2000, as a result of a conclusion of the International Chamber of Commerce, Andersen Consulting broke all contractual ties with AWSC and Arthur Andersen. As part of the arbitration settlement, Andersen Consulting paid over the sum held in escrow (then $1.2 billion) to Arthur Andersen, and was required to change its name, resulting in the entity being renamed Accenture.

Perhaps most telling about who had "won" the decision was that four hours after the arbitrator made his ruling, Arthur Andersen CEO Jim Wadia suddenly resigned. Industry analysts and business school professors alike viewed the event as a complete victory for Andersen Consulting.[5] Jim Wadia would provide insight on his resignation years later at a Harvard Business school case activity about the split. It turned out that the Arthur Andersen board passed a resolution saying he had to resign if he didn't get at least an incremental $4 billion (either through negotiation or via the arbitrator decision) for the consulting practice to split off, hence his quick resignation once the decision was announced.

Accounts vary on why the split occurred — executives on both sides of the split cite greed and arrogance on the part of the other side, and executives on the Andersen Consulting side maintained breach of contract when Arthur Andersen created a second consulting group, AABC (Arthur Andersen Business Consulting) which began to compete directly with Andersen Consulting in the marketplace. Many of the AABC firms were bought out by other consulting companies in 2002, most notably, Hitachi Consulting and KPMG Consulting, which later changed its name to BearingPoint.

AC's change of name proved to be fortunate as it avoided the taint when Arthur Andersen was dissolved as a result of its role in the Enron scandal.

[edit] Emergence of Accenture

On January 1, 2001 Andersen Consulting adopted its current name, "Accenture". The word "Accenture" is derived from "Accent on the future". Although a marketing consultancy was tasked with finding a new name for the company, the name "Accenture" was submitted by a Danish employee from the Oslo, Norway office named Kim Petersen, as a result of an internal competition. Accenture felt that the name should represent its will to be a global consulting leader and high performer, and also intended that the name should not be offensive in any country in which Accenture operates.

[edit] IPO

Accenture's banner hanging on New York Stock Exchange (NYSE) building for its initial public offering on 19 July 2001.

On July 19, 2001, Accenture offered initial public offering (IPO) at the price of $14.50 per share in New York Stock Exchange (NYSE); Goldman Sachs and Morgan Stanley served as its lead underwriters. Accenture stock closed the day at $15.17, with the day's high at $15.25. On the first day of the IPO, Accenture raised nearly $1.7 billion.[6]

[edit] Controversy and criticism

[edit] Waste Management Scandal

In 2001, Arthur Andersen, the original name of Accenture, was investigated for accounting fraud at Waste Management [7].

The SEC's investigation stated that [8]:
— "[The] action arises out of Andersen's issuance of materially false and misleading audit reports on Waste Management, Inc.'s ("Waste Management" or "Company") financial statements for the period 1993 through 1996. During this period, the Company engaged Andersen to audit its financial statements included in its Annual Reports on Form 10-K filed with the Commission pursuant to the Securities Exchange Act of 1934 ("Exchange Act"). For each year 1993 through 1996, Andersen issued an audit report on Waste Management's financial statements in which it stated that the Company's financial statements were presented fairly, in all material respects, in conformity with generally accepted accounting principles ("GAAP") and that Andersen had conducted its audit of those financial statements in accordance with generally accepted auditing standards ("GAAS"). Andersen's representations were materially false and misleading."

Due to their involvement in the multi-billion dollar Waste Management fraud [9], Arthur Andersen paid a $7 million US SEC fine [10]. As part of the SEC fine and investigation, Arthur Andersen was operating under a cease-and-desist order barring them from further misconduct in relation to accounting standards [11].

[edit] Enron Scandal

In 2002, Time Magazine reported that an Oct. 12th, 2002 memo [12] ordered audit workers to destroy all materials related to Enron in the run-up to the SEC investigation that Arthur Andersen employees viewed as probable and imminent [13]. Three days before the order, an Arthur Andersen in-house attorney named Nancy Temple wrote a note: "Highly probable some SEC investig[ation]" [14][15]. Two days before the order, Arthur Andersen practice director Michael Odom gave a videotaped talk about document destruction in which he stated that "if it's destroyed in the course of the normal policy and litigation is filed the next day, that's great, you know, because we've followed our own policy, and whatever there was that might been of interest to somebody is gone and irretrievable" [16]. Michael Odom's taped address was delivered to 89 Arthur Andersen employees [17]. A Nov. 8th, 2002 statement by Arthur Andersen admitted that workers had destroyed "a significant but undetermined number" of documents related to Enron [18].

[edit] History of Scandal Under "Arthur Andersen" Brand Name

By 2002, Arthur Andersen had become well-known for their involvement in accounting frauds at Waste Management, Enron, Sunbeam and were coming under scrutiny for their involvement in accounting fraud at WorldCom [19].

In the aftermath of the Enron Scandal, the Supreme Court unanimously overturned the decision against Arthur Andersen [20] and acquitted the firm of wrongdoing in connection to allegations of evidence tampering and evidence destruction in connection with the case [21].

The ultimate vindication of Arthur Andersen came when the firm had been reduced to approximately 200 employees and was under continued legal pressure due to shareholder suits [22].

On March 5th, 2001, Arthur Andersen won the rights to the name Accenture and separated itself from its consulting arm [23].

[edit] Tax haven headquarters

In October 2002, the Congressional General Accounting Office (GAO) identified Accenture as one of four publicly-traded federal contractors that were incorporated in a tax haven country.[24] The other three, unlike Accenture, were incorporated in the United States before they re-incorporated in a tax haven country, thereby lowering their U.S. taxes. Still, critics have panned Accenture's incorporation in Bermuda, generally because they viewed Accenture as having been a U.S.-based company trying to avoid U.S. taxes.[25].

[edit] Subsidiaries

  • Avanade is a joint venture between Microsoft and Accenture. It is dedicated to enterprise business solutions on the Microsoft platform.
  • Navitaire [2] is a subsidiary of Accenture, dedicated to providing specialized solutions to airlines.
  • Accenture National Security Services is a subsidiary of Accenture, dedicated to providing services directly to United States government and military agencies. It was specifically incorporated as a US subsidiary to meet a congressional mandate that defense contractors be based in the US.
  • Accenture SAP Solutions is a subsidiary of Accenture, dedicated to providing SAP solutions to the client. It has taken Coritel BPM SAP resources and turned it into this new unit called: ASAPS.

[edit] Visual identity

The typeface used in the Accenture wordmark is Rotis Semi-sans. The right-pointing carat character over the t is intended to indicate the company's orientation to the future. The character is similar to an accent mark in music. The corporate descriptor for Accenture is "High performance. Delivered.", which replaced the previous slogan "Innovation. Delivered." in 2004.

Tiger Woods is a celebrity spokesperson for the company. The campaign uses the service mark "Go on. Be a Tiger," and the ancillary statement "We know what it takes to be a Tiger." Another commonly used service mark is "Just another day in the office".

[edit] See also

[edit] References

  1. ^ Yahoo! - Accenture Ltd Company Profile
  2. ^ Fortune Global 500 - Accenture Company Profile 2008
  3. ^ Company Description Accenture website; retrieved April 7, 2009
  4. ^ Accenture: The Growth of a Global Leader; Accenture website; retrieved June 19, 2007
  5. ^ Arbitrator's Ruling Goes Against Accounting Arm: Consultants Win Battle Of Andersen; International Herald Tribune
  6. ^ Accenture IPO gains in first trades - Jul. 19, 2001; CNN Money
  7. ^ [http://www.sec.gov/litigation/admin/34-44444.htm ORDER INSTITUTING PUBLIC ADMINISTRATIVE PROCEEDINGS, MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONS PURSUANT TO RULE 102(e) OF THE COMMISSION'S RULES OF PRACTICE]; Securities and Exchange Commission; June 19, 2001
  8. ^ [http://www.sec.gov/litigation/admin/34-44444.htm ORDER INSTITUTING PUBLIC ADMINISTRATIVE PROCEEDINGS, MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONS PURSUANT TO RULE 102(e) OF THE COMMISSION'S RULES OF PRACTICE]; Securities and Exchange Commission; June 19, 2001
  9. ^ Waste Management Settles; CNN; November 7, 2001
  10. ^ McLean, B, and Elkind, P.: The Smartest Guys in the Room, page 381. Updated Ed. Penguin Group, 2004.
  11. ^ McLean, B, and Elkind, P.: The Smartest Guys in the Room, page 381. Updated Ed. Penguin Group, 2004.
  12. ^ Enron: Who's Accountable?; Time Magazine; January 13, 2002
  13. ^ McLean, B, and Elkind, P.: The Smartest Guys in the Room, page 381. Updated Ed. Penguin Group, 2004.
  14. ^ McLean, B, and Elkind, P.: The Smartest Guys in the Room, page 381. Updated Ed. Penguin Group, 2004.
  15. ^ ARTHUR ANDERSEN LLP, PETITIONER v. UNITED STATES; Supreme Court of the United States; May 31, 2005
  16. ^ McLean, B, and Elkind, P.: The Smartest Guys in the Room, page 382. Updated Ed. Penguin Group, 2004.
  17. ^ ARTHUR ANDERSEN LLP, PETITIONER v. UNITED STATES; Supreme Court of the United States; May 31, 2005
  18. ^ Enron: Who's Accountable?; Time Magazine; January 13, 2002
  19. ^ Arthur Andersen At Center Of Scandal Again; CRN, June 28th, 2002 Issue; June 28, 2002
  20. ^ Arthur Andersen Case; Washington Post; June 1, 2005
  21. ^ McLean, B, and Elkind, P.: The Smartest Guys in the Room, page 381. Updated Ed. Penguin Group, 2004.
  22. ^ Arthur Andersen Case; Washington Post; June 1, 2005
  23. ^ COMPANY NEWS; ARTHUR ANDERSEN ANNOUNCES NAME CHANGE; New York Times; March 6, 2001
  24. ^ Information on Federal Contractors That Are Incorporated Offshore; United States General Accounting Office; October 1, 2002
  25. ^ Con. Larua DeLauro's Statement on Award of Homeland Defense Contract to Accenture

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