Accenture Bets Big on Cloud with New Energy Group Buy

Acquisition encompasses broader strategy to expand capabilities in the European region

a1Global professional and consulting services company Accenture PLC (NYSE: ACN) announced on September 8th, 2016, that it has entered into a definitive agreement to acquire Italian firm New Energy Group, a multinational consultancy that specializes in Salesforce solutions. New Energy Group offers services in several fields, and was particularly attractive to Accenture because of its cloud services segment.

a2New Energy Group, a 10-year-old company with over 450 employees, has its operative headquarters in Rome, Milan, London, and Barcelona. The probable deal is seen to be a strategic fit for Accenture’s Cloud First agenda, which offers comprehensive, industry-focused cloud services including strategy, implementation, migration and managed services, and assets including the Accenture Cloud Platform that can drive broader transformational programs for clients. Accenture has so far completed over 20,000 cloud computing projects for clients, and has more than 21,000 professionals trained in cloud computing.

Saideep Raj, Managing Director of Accenture’s Cloud First Applications unit, said that the potential acquisition is part of Accenture’s broader strategy to expand its capabilities in the European region. The potential acquisition would also reinforce Accenture’s position as a leading provider of Salesforce capabilities in Italy and Spain.

a3Following the potential acquisition, New Energy Group’s team is expected to become part of Accenture’s Cloud First Applications unit, which delivers cloud services for Salesforce, Workday, ServiceNow, Google, Pegasystems and other pure play cloud technologies. As part of the deal, Accenture would gain all the branded organizations of New Energy, including the New Energy Salesforce services team in Italy, the New Energy Salesforce services Aborda team in Spain, and the digital services team Mind in Italy. In addition, Accenture would also take over Bit2win, New Energy’s suite of products and solutions based on Salesforce, which enables companies to transform their front office with simple, agile and digitally-enabled sales solutions.a4

The potential acquisition will propel Accenture as a leading enterprise cloud services provider. Accenture was one of the first global companies to establish a strategic alliance partnership with Salesforce and has leading Salesforce capabilities with more than 3,700 certified professionals. After its potential merger with New Energy Group, Accenture will add to its global team another 200 certified professionals from Italy and Spain, with more than 300 Salesforce certifications.

Accenture on an acquisition spree

In the highly competitive IT services domain, Accenture mainly competes with International Business Machines Corporation (NYSE: IBM) and Infosys Ltd. (NYSE: INFY). To effectively compete with these global rivals and build its cloud services capability in the developed markets, Accenture has been adding to its products and services portfolio through acquisitions in recent years.

In February 2014, Accenture acquired ClientHouse, an independent provider of salesforce.com and Veeva Systems solutions based in Jena, Germany. Since the beginning of 2015, Accenture has acquired nine other companies: smart grid company Structure; supply chain analytics company Gaspo; strategy consulting companies Axia and Javelin; Salesforce consulting services provider Tquila UK; digital design company Reactive Media; and digital solutions companies Agilex, Brightstep, and PacificLink Group.

a5In July 2015, Accenture agreed to take the entire ownership of its enterprise cloud and mobile services joint venture with Spanish BBVA, Solium. Accenture previously owned a 33.3% stake in Solium, which provides technical services in the areas of private cloud, hybrid cloud, and mobile infrastructure management services. Also in July 2015, Accenture agreed to acquire EnergyQuote JHA, a London-based energy management services company with 279 employees in Europe and India. In October 2015, Accenture acquired Cloud Sherpas, a leader in cloud advisory and technology services specializing in Google, Salesforce and ServiceNow, in the U.S., and CRMWaypoint in the Netherlands in January 2016.

All of these acquisitions have strengthened Accenture’s position in the IT services domain, while boosting its top-line and bottom-line growth. Between 2010 and 2014, Accenture’s annual revenues rose 38% while its net income improved 54%. By comparison, IBM’s annual global business services and global technology services revenue slipped 8% and 2%, respectively, between 2010 and 2014.

Stock Performance

a6Accenture’s stock ended the day at $109.80, slipping 0.66%, at the close on Wednesday, September 14th, 2016, having vacillated between an intraday high of $111.54 and a low of $109.29 during the session. The stock’s trading volume was at 2,328,011 for the day. The Company’s market cap was at $72.68 billion as of Wednesday’s close.

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