Accenture will never become Microsoft

Consulting makes money from chaos. Software makes money from order.

Consultants solve today’s fires. Software companies build tomorrow’s tools.

The consulting business model is addicted to urgency. It races to fix whatever’s broken for whoever’s paying. Software companies play the long game. They build products that define how markets work.

• Consulting: lives crisis to crisis, client to client, quarter to quarter.

• Software: Build, upgrade, extend and sell forever.

This difference is not small. But there’s a fantasy going around the “corporate world” right now amplified on LinkedIn that tickled me enough to write this meditation.

It goes like this…

“Accenture, a company that makes money by sending people to fix problems will somehow turn into Microsoft, a company that makes money by building software and selling it a million times. And Accenture is going to do it by productizing agents and creating knowledge graphs!”

Not only is it poignant delusion about what these companies do, it fundamentally misunderstands their DNA.

First, the dollars tell you everything

Let’s look at the numbers.

• Microsoft makes $282 billion a year and keeps $102 billion as profit.

• Accenture makes $70 billion and keeps $8 billion as profit.

Microsoft keeps 36 cents of every dollar. Accenture keeps 11 cents. Microsoft’s profit is bigger than Accenture’s entire revenue. What Microsoft has left over after paying all its bills is more than everything Accenture brings in.

More reality checks:

• Microsoft has $95 billion sitting in the bank and $619 billion in total assets.

• Their cash is more than Accenture’s total assets $65 billion.

• Microsoft spends $27 billion a year on R&D inventing new stuff. Accenture spends less than $1 billion.

Why such a massive gap? Because Microsoft builds something and sells it forever. Windows, Office, Azure: build, sell a billion times. Accenture has to rebuild its product (consulting advice or outsourcing operation) from scratch for every single client.

The Billable Hour Trap

For Accenture and other firms like it their entire business depends on problems staying complicated.

Accenture charges $500 an hour because your problem is special, unique, and requires their specific expertise. The second they try to package that into a one-size-fits-all product, why would anyone pay $500 an hour? You’d just buy the software for $50 a month like everyone else.

This is the trap: Consulting makes money from chaos. Software makes money from order.

When a company calls Accenture, it’s because something is on fire RIGHT NOW. “Our system crashed!” “The merger isn’t working!” “We’re hemorrhaging money!” Accenture shows up with fire extinguishers.

When Microsoft builds something, they’re thinking five years ahead. Azure took half a decade and billions of dollars before it made a penny. Accenture can’t wait five years for payment. They need billable hours this month to make payroll for their 779,000 employees.

The Billable Hour Trap

Accenture loses ~13% of its workforce every year. One in eight people quit.

When a Microsoft engineer quits, Windows still works. The code is still there. The next engineer can pick up where the last one left off.

When an Accenture senior manager quits, they take everything that matters:

• That relationship with the client’s CEO they built over martinis

• The knowledge that the client’s entire system is held together with digital duct tape

• The trust that lets them charge $500 an hour

Microsoft sells products. Accenture sells people. People quit all the time.

Accenture needs 779,000 people to make $70 billion. Microsoft makes four times that money with 228,000 people. Why? Because software scales. People don’t. You can copy Windows a hundred million times.

The Most Hilarious Contradiction

The funniest part of this whole story is that “some experts” who say Accenture will become Microsoft are actually predicting Accenture’s death.

They call it “Services-as-Software.” Sounds fancy, right? Here’s what it actually means: Replace expensive consultants with cheap software (agents). Charge based on outcomes! The analyst who who calls it this (and claims provenance to the term) is literally saying this model will “erode traditional IT services revenue.”

Translation: Fewer consultants. Less revenue. Smaller Accenture.

The whole point of this “Services-as-Software” thing is to eliminate the need for consultants. To replace Accenture’s army of MBAs with code mapped to workflows that actually works. Accenture embracing this at scale is like a Turkey voting for Thanksgiving.

Creators vs. Cleaners

Microsoft invents the mess. Accenture cleans it up.

Microsoft didn’t ask anyone if they wanted Windows. Bill built it and told the world “this is how computers work now.” Much to IBM’s dismay. Same with Office. Same with Azure. They create or enter the game that everyone else has to play.

Accenture shows up after companies buy Microsoft products and realize they have no idea how to use them. Many an Accenture project starts approximately the same way: “Help! We bought all this Microsoft stuff and nothing works!”

Think about what this means. Accenture’s entire business depends on other companies’ technology being confusing, misconfigured or inadequate.

You can’t build the future when your whole business model depends on fixing the present. While Accenture consultants are putting out today’s fires (and billing for it), Microsoft engineers are building the products that will cause tomorrow’s fires. And tomorrow’s Accenture revenue.

The Incentives are Totally Different

Walk into Microsoft and ask someone what they do. They’ll say something along the lines of: “I’m building software that will change how people work.”

Walk into Accenture and ask the same question. They’ll say: “I’m on the Johnson & Johnson SAP implementation. We’re behind schedule.”

That’s the difference.

You can’t change this by sending a company-wide email saying “We’re a product company now!” The entire machine is built differently. Microsoft rewards people for building things that last for decades. Accenture rewards people for being on the leaderboard of billable hours accumulated this month. This defines the entire nervous system of the each company.

If you can cut yourself—your mind—free of what other people do and say, of what you’ve said or done, of the things that you’re afraid will happen, the impositions of the body that contains you and the breath within, and what the whirling chaos sweeps in from outside, so that the mind is freed from fate, brought to clarity, and lives life on its own recognizance—doing what’s right, accepting what happens, and speaking the truth. XII. 3

The Verdict

Accenture will never become Microsoft for the same reason a taxi company can’t become an airplane manufacturer.

The stock market already knows this. Microsoft is worth $3.9 trillion. Accenture is worth $170 billion. That is a canyon. With an ocean at the bottom. Filled with sharks.

One way to think about it is: Accenture exists because Microsoft and other produce’s of software is complicated. Every confusing Microsoft product creates more Accenture revenue. They’re symbiotic. Microsoft creates the complexity. Accenture manages it. It’s a beautiful if dysfunctional relationship.

Microsoft will keep building products and platforms that confuse everyone. Accenture will keep charging Fortune 500 companies enormous fees to explain those platforms. The consultants will keep their PowerPoints even if agents start making them faster. Microsoft will keep its monopoly. And somewhere, a partner at Accenture will keep telling themselves that transformation is just one more framework away.