My Take: Accenture Buys CAS

November 24, 2010
1:45 pm

Last week, Accenture announced the purchase of CAS, a trade promotion technology provider in consumer products, for 1X revenue. CAS, a German company, is a niche solution vendor for the consumer products manufacturing market. The company’s solution has two distinct product sets: trade promotion management (TPM) and mobility for retail execution. The CAS solution has limited functionality for Trade Promotion Optimization (TPO). To get the scoop, we spoke to Accenture, CAS clients and implementation partners. Here we explore the why, what and so what of the purchase.

The Why

A year ago, and unknown to many, Accenture started a software practice. While we associate the selling and development of software to IBM, it is not a normal association for the Accenture brand. Yet, Accenture has 2000 employees focused on the development and selling of industry software solutions. However, being a software for the consumer products industry with the acqusition of CAS is new. In conversations with Accenture, their goal is to combine the assets of CAS with Accenture Analytics to launch a Business Process Outsourcing (BPO) offering for the front office within the next year. The belief is that the global reach of Accenture will allow the global scale of the CAS assets that was not previously possible. Accenture is especially bullish about business opportunities in Latin and South America regions. They hinted that this may be the first of many acquisitions to meet this larger goal. I agree with the goal.
The purchase of CAS is not all roses for Accenture. (Hence, the sale for 1X revenues.) There are several deep issues with the CAS purchase including customer satisfaction and management of the North American office. Last year, the company launched a new release–CAS8– to improve usability. While the product is easier to use, the change in platform is difficult for many CAS customers. Why? It is not a maintenance upgrade. It is a new installation. This worries CAS TPM clients. Historically, CAS implementations have been difficult to install (6-8X license costs) and CAS consulting/implementation resources have been unequal to the task. This coupled with the closure of the North American office and firing of the North American CAS president for the fourth time, North American customers have lost confidence in CAS. To be successful, Accenture will need to make the upgrade easier, stabilize and improve CAS consulting resources and bolster global presence.

The What

It will be some time before we understand what impact, if any, the acquisition will have on the TPM market. The market is complex and is not served very well by existing offerings. However, to accomplish their goal, Accenture faces four major challenges:

How to serve the market? Inherent in the market, there is a conundrum. The processes have changed, and the requirements have become more complex. Implementations require deep and specialized resources. As consumer products manufacturers consolidated through M&A and become more global, the addressable market has become smaller and more diffcult to penetrate. As a result, it is harder for a niche vendor like CAS to serve the market. Due to the need for industry-specific requirements in a niche market, it has also been difficult for large software companies like Oracle and SAP to provide the talent to be successful. And while the Oracle solution is deeper and a better solution fit, the majority of the customers in the consumer products industry are strong SAP shops that have been trying to work through the issues of the multiple SAP TPM release with limited success. The costs for SAP TPM are high and the implementations are risky. …a sticky conundrum.
How to provide a complete solution? A complete solution also requires working with multiple parties. This includes traditional customer relationship management providers like Oracle and Salesforce.com, syndicated data providers like IRI and Nielsen, downstream data providers like Retail Solutions, RSI, Shiloh and Vision Chain; analytics providers like IBM (Cognos), Microsoft, Microstrategy, Netezza, Qlikview, and Teradata; market-mix optimization vendors like M-Factor, optimization vendors like DemandTec, Promax and Synectics, and deduction solutions like Adesso and MEI. The existing implementations are very regional, and the global consumer manufacturers have at least three TPM solution providers.
How to build a BPO practice? Recent buying preferences have been for Software as a Service (SAAS) solutions like DemandTec and M-Factor. The BPO market for trade analytics or mobility is a new concept and will need time to incubate. It is a new market. The most successful BPO offering that I have seen in consumer products is Cap Gemini’s work on deduction management. (One success among many.) This is not a slam dunk.
How to build the bench strength to be successful? While Accenture has deep analytics capabilities, their understanding of trade promotion processes and their ratio of successful projects is lower than its competitors of Booz orDeloitte. Booz is the leading CAS integrator. To be successful, Accenture will need to invest in deeper consulting skills, and partner with Booz, Oracle and SAP. At the same time, they will need to right the ship with current clients and hone their software selling skills in a turbulent market. This will not be easy.

The So What

I have long believed that the answer to the needs in the front office of consumer products manufacturing is an ecosystem play– the coalescing of over 50 vendors– for a complete industry solution. However, there has been no one willing to step-up to the plate to make it happen. Accenture has that chance, and they also have the breadth and scale to be successful; however, the challenges are many.
I like Accenture’s vision of providing a BPO offering. I agree that Accenture has the global presence and the understanding of the BPO market to make this successful. The vision is right. The question in my mind is does Accenture have the stomach and expertise to work through the many short-term execution issues of this software provider to make this successful? We will know in 6-9 months. Meanwhile, it is my recommendation that customers of CAS proceed with caution and that buyers of TPM solutions delay purchases until the market stabilizes.
For more on the trade promotion management market, reference these articles:
http://www.supplychainshaman.com/demanddriven/turning-up-the-heat-a-hot-topic-on-a-hot-afternoon/
http://www.supplychainshaman.com/supply-chain-excellence/crossing-the-great-divide/

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