Fujitsu, Accenture to form consulting tie

Fujitsu and the Japanese unit of IT services and consulting giant Accenture will tie up to strengthen their IT service businesses, the two companies announced Tuesday.

With this tie-up, the companies will offer IT consulting services, including system integration, management, business operation and strategic outsourcing, they said. The joint consulting services will be available to Japanese corporations that operate global businesses.

There are three areas the companies will concentrate on at the beginning of their partnership. Firstly, offering comprehensive IT consulting services to global companies that are based in Japan, secondly, electronic government systems and thirdly, providing strategic IT outsourcing that follows Japan's corporation culture and tradition, they said.

"Japanese companies, especially in the manufacturing industry, are not good at indirect business management," said Masakatsu Mori, country managing director of Accenture Corp. in Japan. "For example, if a company has 20 plants in Japan, each plant tends to have a personnel office. But that administration sector can be rationalized by outsourcing, using IT. This is needed in order to survive in the global market."

Fujitsu, having been hit by the global IT slump last year, is in the course of shifting its business strategy. Like other major electronics makers in Japan, such as NEC Corp., the giant hardware vendor is now focusing more on software and system integration businesses and is already seeing results. During the last three months of 2001, the software and services sector was one of the few that was profitable at Fujitsu.

In Japan, corporations which were left behind in the race to adopt IT are starting to catch up now. According to Gartner Japan Ltd., Japan's IT service market is expected to have grown 7.2 percent to ¥7.8 trillion (US$58.4 billion) in 2001.

For Fujitsu, the tie-up with Accenture is expected to add value to its software and services business and also expand its own consulting business, said Yuji Hirose, Fujitsu's senior executive managing director. "Not only Accenture, but if there are other consulting companies that can enhance our added values, we will seek more partnerships," he said.

However, an IT vendor and a consulting company are not always a perfect match.

If Fujitsu and Accenture's tie-up becomes successful, Fujitsu will be able to gain more strength to compete with its rival IBM Corp. in the global IT service market, according to Gartner Japan analysts Satoshi Yamanoi and Rika Narisawa. However, at the same time, it would also be a big challenge for Fujitsu, which has maintained its unique strategies in its IT service business until now, because the company now needs to cooperate with Accenture as a global player, the analysts said.

As a matter of fact, IT vendors tend to establish their own IT consulting services within their companies, rather than tying up with consulting companies. In Japan, IBM, Hitachi Ltd. and Fujitsu all have consulting divisions.

Accenture also faces challenge on this tie-up.

The company expects the partnership with Fujitsu will gain more recognition in Japan, and expand their client network through Fujitsu, Mori said. However, "this kind of tie-up can be good or bad. From now on, we do have an advantage of having products available to our clients. But until now, we also had an advantage of not having hardware and software, so that we had a choice," he said.

Gartner Japan analysts Yamanoi and Narisawa also point out three other issues:

-- When this tie-up brings Fujitsu close to Accenture, Acceneture needs to adjust the balance of other tie-ups, such as with its global partner Hewlett-Packard Co.

-- As both companies have their own IT consulting service units, in some areas, such as development and outsourcing, it would be difficult to segregate which company will take in charge of which operation.

-- If the two companies' work share could not be clearly segregated, it would be difficult for the companies with two different colors to work together on a development project.

In terms of segregation, Mori predicts that Fujitsu will provide hardware infrastructure, but for applications, each company will take charge of areas it has expertise in, he said.

As of Tuesday, Fujitsu and Accenture formed a joint team to work on several projects for the coming three months. Although Fujitsu is expecting to receive ¥200 billion-worth of orders in three years from this tie-up, the first three months will be more of a trial to see if this project team works, it said.

They will determine whether to form a joint venture after three months and have not yet had a plan for expanding their partnership outside Japan, Mori said.

"This tie-up does need the three-month-trial period in order to go further in detail on the partnership," Yamanoi and Narisawa said.