Accenture, Salesforce Extend Ties

Information technology (IT) services provider Accenture plc (ACN - Snapshot Report) is set to strengthen its long-standing business relationship with the ace cloud vendor Salesforce.com Inc. (CRM - Analyst Report). In an attempt to expand its breadth of cloud offerings (which will be developed by Salesforce) via its global delivery network, Accenture recently announced that it will open new Cloud Centers of Excellence across the U.S. and U.K.

The relationship between Accenture and Salesforce goes way back to 2004, when the former identified the relevance of cloud computing for businesses and tried to deliver suitable services in conjunction with Salesforce. Accenture delivers various Software-as-a-Service (SaaS) solutions developed by Salesforce.

The duo’s combined capabilities produced a number of management-oriented solutions that have helped organizations to achieve business excellence and cost optimization in the areas of customer service and support, sales force automation, and supply chain and human resources management.

Accenture and Salesforce.com has transformed the way of handling customer service through salesforce.com’s “Service Cloud 3.” This application helps organizations to identify and solve customer issues on a timely basis. Not only this, but respective customers are provided with the option of communicating their problems via phone, email, or even via popular social networking platforms such as Twitter and Facebook (FB - Analyst Report).

Accenture affirmed that Salesforce’s solutions drive most of the growth at its SaaS business. There is no doubt that the new cloud centers will attract new businesses through the development of advanced solutions.

Apart from this, the company announced its intention to open an Innovation Center in London, which will showcase any upcoming solution jointly developed by the two. This would boost cloud-consciousness and create a prospective market for the solutions, in our view.

Accenture’s cloud venture is appreciating, which shows that the company’s fundamentals will remain solid even in the face of economic uncertainty. We notice that Accenture is keen on expanding its business in Europe too.

In its second quarter 2012 ending February, Accenture generated roughly 40.0% of its revenue from Europe. In fact, the contribution from European increased 8.0% year over year. The statistic is quite encouraging, especially at a time when Europe is in the midst of economic turmoil.

This apart, we see continuous product launches and deal wins as positives. However, low-margin government deals, foreign exchange fluctuations and stiff competition from IBM Corp. (IBM - Analyst Report) keep us on the sidelines.

Currently, Accenture has a short-term Hold rating, denoted by the Zacks #3 Rank.