Accenture and Microsoft in $1 Billion Pact to Form Joint Venture and Expand Global Alliance
Firms to Deliver New Generation of Internet-Enabled Business Applications and Industry Solutions to Meet Burgeoning Needs of Enterprise Customers
NEW YORK CITY and REDMOND, Wash. - March 13, 2000 - Accenture and Microsoft Corp. today announced plans for the formation of a joint venture and the expansion of their existing relationship under an agreement designed to address the needs of enterprise customers. The two organizations will team to create business value for customers seeking to buy, build or integrate large-scale industry solutions, including eCommerce offerings, built on the Microsoft(r) enterprise platform and Windows(r) 2000 operating system.
Highlights of the pact, valued at $1 billion, include the following:
Forming a joint venture company named Avanade (av’ e nad) that, subject to regulatory approval, will deliver Internet-specific and other enterprise platform services based on the Windows 2000 operating system platform Creating a new organization within Accenture entirely dedicated to designing and building business solutions with speed and predictability, based on the Microsoft enterprise platform Providing joint programs for marketing, business development and the delivery of services that target Fortune 500 companies, new market entrants and Internet start-ups
Building on Accenture’s deep technology capabilities, approximately 25,000 Accenture professionals will receive enhanced training on the Microsoft enterprise platform, including Windows 2000, Microsoft SQL Server(tm), Exchange Server, eCommerce technologies, Windows DNA 2000 and Visual Studio(r) development system-based tools. In addition, Microsoft product groups will work with both Accenture and Avanade professionals as Microsoft develops next generation technologies and platforms.
"The combination of the respective capabilities of Accenture and Microsoft, together with the services Avanade will deliver, is a vivid example of the whole being greater than the sum of its parts," said Joe W. Forehand, managing partner and CEO of Accenture. "Microsoft’s ability to provide a scalable, cost-effective platform in combination with innovative Web services will help Accenture create customized eCommerce solutions that take customers to the next level."
"Windows 2000 changes the landscape for enterprise computing," said Steve Ballmer, Microsoft president and CEO. "By combining our technology strengths with Accenture’s recognized business and industry expertise, we can ensure that the most demanding enterprise customers receive all the benefits possible from Windows 2000 and Microsoft’s entire enterprise platform."
$1 Billion Pact
Under the $1 billion pact, Microsoft will contribute $385 million cash to support Avanade, as well as solutions development support and other intellectual capital. Accenture will provide intellectual capital, training, resources, solutions development and other services.
Avanade Will Focus on Services
With headquarters planned for the Seattle area, Avanade, which will be co-owned by Accenture and Microsoft, will provide Internet and technical services based on the Windows 2000 platform. Avanade, which is subject to regulatory approval, will specialize in developing the following:
Reusable eCommerce applications Windows DNA development and application integration Highly available enterprise and Web infrastructures Data center consulting services
Within the first 24 months, Avanade will hire a highly skilled team of more than 3,000 technologists with expertise in Microsoft’s products. Avanade will work directly with not only Accenture and Microsoft, but also with key Original Equipment Manufacturers (OEMs) and other technology providers. Accenture conservatively estimates that the customer segment for the services offered by Avanade could reach $15 billion by 2002.
Mitchell C. Hill, an Accenture partner with more than 20 years’ experience with the firm, will be Avanade’s CEO. The board of directors will comprise executives from both organizations, including Jack Wilson, managing general partner of Accenture Technology Ventures, John Connors, CFO at Microsoft, and Paul Maritz, group vice president, Developer Group at Microsoft. The new company will draw on talent from Accenture, Microsoft Consulting Services (MCS) and Microsoft Product Support Services (PSS) in its start-up phase and plans to expand its work force to 5,000 certified technical experts through aggressive recruiting.
In addition to its Seattle location, Avanade plans to open offices in San Francisco, Dallas, New York, Paris, London, Frankfurt, Sydney, Sao Paulo and Singapore in the next 18 months. Plans also call for taking Avanade public at some future date.
"The Internet creates unparalleled potential for customer and supplier intimacy through new business models," Hill said. "Avanade will help customers realize this potential by providing large-scale, highly reliable eCommerce applications based on the Microsoft Windows 2000 platform. Our skills will be coupled with the business and technical expertise of Accenture and Microsoft to increase speed-to-value for our clients."
Microsoft Solutions Organization Created by Accenture
As part of the expanded alliance between the two companies, Accenture is creating a dedicated organization of 3,000 business solution architects with deep expertise in Microsoft technologies and products to support the development of industry-specific and cross-industry solutions on the Windows 2000 platform. The new organization will be headed by Karl E. Newkirk, a senior Accenture partner and former global managing partner for the firm’s Enterprise Business Solutions (EBS) line of business.
Accenture’s Microsoft Solutions Organization, leading with Windows 2000, will define and build reference architectures, develop and distribute reusable knowledge capital, and establish eight new Microsoft solution centers to support its teams in delivering enterprise solutions. In addition, Accenture will leverage its business and technology expertise and experience to develop solutions across a variety of industries, including automotive, financial services, government, health care, manufacturing, retail, telecommunications and utilities. Accenture and Microsoft will also provide horizontal and vertical offerings based on the products of key Independent Software Vendors (ISVs), including Commerce One Inc., PeopleSoft Inc., Siebel Systems Inc. and SAP AG.
"The combination of Microsoft and Accenture - together with Compaq’s leading Windows 2000 platforms and market share with key ISVs - will enable a powerful new generation of scalable, highly available solutions," said Michael Capellas, CEO of Compaq Computer Corp. "As a worldwide prime integrator for Windows 2000, we look forward to working with Microsoft and Accenture to redefine price/performance while helping customers rapidly deploy eBusiness solutions based on Windows 2000."
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