Comment by Ken_At_EM
4 years ago
Said another way, I think this covers “how they got so big” but not “how do they provide value.”
I guess I have to admit they provide some value, but capture 99% for themselves?
Makes me wonder if they’re actually destroying value overall?
ERP implementations likely provided value because of the lack of bespoke systems, instead people standardized and gained efficiencies. That was the value I would guess.
Outsourcing? Did it provide value? Maybe immediately on the books, enough to cook to hit the stock options and cash out.
Could companies have built internally? In an ideal world that's definitely a yes. Amazon sucks in so many ways, but one thing they don't is the fundamental value they place on their IT systems and workers.
Old school companies could not handle that culturally. Ugly nerds? Paid more than managers would be several levels up? Treat them respect? Structure the business around them? They couldn't handle it.
Accenture had the organizational gravitas with the execs. Through that came the temporary infusion of valued IT change. Were they vastly overpaying? Yeah. But that price tag meant they needed to take the implemented system seriously.
Ultimately Accenture kept showing up and selling services somehow, despite many many many other options. Should there be a kick-ass IT consultancy that competes with them and embarrasses them? Probably, but ... where are they? If Accenture was charging 250/hr for 50/hr talent, why didn't some leaner org at 150/hr with 100/hr talent (a fundamentally different tier of worker) vastly outperform them?
Well, the world is run by the rich, and they only respect the rich. It might be as cynical as they respect how Accenture rips off its workers and still delivers acceptable product, exactly like the execs in the companies like their companies to be run: extracting maximum value from the plebe workers.
Marketing and connections are so so powerful. As stated elsewhere, Accenture is generally a "safe" choice for an "important" project. And don't forget those "approved vendors" rigamarole that companies have. Because Accenture and their ilk extract so much excess from clients and labor, they can buffer the failure scenarios and throw more labor at the problem.
In large companies where budgets are abstract in relation to value, more that budgets align with how much power and influence a subsection of the org has, cost can become secondary.
And sweet jesus would I like to know how much kickbacks and the like exist in IT procurement. It must be extensive, based on the mystifying decisions I've seen in my career.
Thank you for yet another detailed reply.
Reading the linked article all I could think was: Hertz doesn’t deserve to exist. It just seems like they’re a Frankenstein of 30 years of mediocre to poor decisions.
Ultimately I think a lot of companies that use Accenture don’t deserve to exist, and ultimately will be outcompeted.
You assume an approximation of a free market.
In the US, most "markets" are largely dominated by monopoly, duopoly, or cartel conditions, and thus rent extraction. Combined with the efficacy and returns of lobbying congress for market barriers and subsidies, most companies are entrenched.
There are so many reforms needed in the US, but breaking up monopolies, or just stopping mergers, would be task #1. Price, creativity, options, innovation, worker empowerment, amount of employment, wages, all improve with more companies, more options, and more competition.
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