Cracking the top 10
- By Graeme Browning
- Sep 17, 2001
Accenture is the major new player this year in General Services Administration schedule sales, and by all accounts, it got there by putting its money where its mouth is.
For the first time, Accenture ranks among the top 25 GSA schedule holders, with sales of $183.7 million between July 1, 2000, and June 30, 2001, the latest 12-month figures available. Those sales signal an eye-popping 213.5 percent increase over the company's GSA schedule sales of $58.6 million in the previous comparable 12-month period.
While most of the "established" GSA schedule players, such as Dell Computer Corp., IBM Corp., Electronic Data Systems Corp., Science Applications International Corp. and Oracle Corp., are still ensconced at their traditional positions at the top of the schedule list, Accenture landed in sixth place and is now a major challenger by offering government agencies cutting-edge services such as share-in-savings contracts, said Steve Rohleder, managing partner of Accenture's USA government division.
In a share-in-savings contract, the vendor pays for all or most of the costs to develop an agency's information technology system — an investment that can run into the millions of dollars — and then recoups that cost by taking a percentage of the expected savings the new system generates for the agency.
Such contracts are popular among state agencies but have yet to be widely used in the federal government, despite enthusiastic support from GSA's Federal Technology Service. Even President Bush proposed in his fiscal 2002 budget that federal agencies expand the use of share-in-savings contracts.
The Education Department's Office of Student Financial Assistance Programs took a leap of faith in July 2000, however, when it awarded Accenture a share-in-savings contract to modernize its loan systems, which handle $52 billion annually. Under the contract, Accenture paid the estimated $10 million to $18 million in upfront costs and hopes to recoup its investment from a portion of the estimated $30 million in savings.
Accenture has also been active in two other share-in-savings arrangements, including an integrated logistics management system for the State Department and a contract to modernize the Defense Logistics Agency's supply chain operations, according to Rohleder.
Share-in-savings contracts represent "a change in the traditional procurement mentality and in the relationship the government has typically had with contractors," Rohleder said. "If we can't deliver the results that the government wants, we don't get paid.... I think we've shown through new business models like this that the contractor community needs to share the risks and, frankly, be accountable for these programs. That's hit a nerve with our clients."
Accenture has also ridden an upward trajectory in GSA schedule sales because of what Rohleder calls "the continuing desire of government to pull in private-sector and commercial best practices." In July, the Internal Revenue Service awarded Accenture a five-year, $33.6 million contract to modernize the IRS Web site, making it easier to navigate and more accessible to people with disabilities.
"I think that contract is a recognition that we're able to pull from our experiences with commercial organizations and really make major improvements and modifications in government's operation," Rohleder said.
In the next year, Accenture will focus on e-procurement and on customer relationship management, which Rohleder calls "an absolute growth area for us."
The firm has done a robust business in customer relationship management on the commercial side in the past few years, and he believes that government will soon follow the same path. "There have been fundamental changes in the way services are going to be delivered through our government clients," he added. "Once government takes advantage of Web portals and opens up other channels to the public like that, that will drive a need for CRM."
In the future, Rohleder hopes to see government move toward transformational outsourcing," where agencies use outsourcing to change not only the way they interact with citizens and business, but also how they run entire operations. Accenture currently has two application service provider agreements — with the Federal Energy Regulatory Commission and the Minerals Management Service — that could be considered prototypes of this new business model, Rohleder said.
Browning is a freelance technology writer in the Washington, D.C., area.