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Accenture to Expand IaaS Solutions with Oracle Partnership


Global IT services provider, Accenture plc ACN recently joined forces with Oracle Corp. ORCL to make infrastructure-as-a-service (IaaS) solutions available through Accenture Oracle Business Group. This alliance will further strengthen their longstanding partnership. However, financial aspects of the deal were not disclosed.

Accenture Oracle Business Group has been offering software-as-a-service (SaaS) and platform-as-a-service (PaaS) solutions, which help Accenture to meet the growing demand in the public cloud sector. The extension of the IaaS offering will place “Accenture as Oracle’s largest global systems integrator (GSI) and a leader in Oracle Public Cloud.”

Formed in Apr 2015, Accenture Oracle Business Group has been developed on Oracle’s Public Cloud Platform. It helps enterprises extend SaaS, IaaS and PaaS applications and migrate from existing on-premise applications to the cloud. The latest offering will enable users to better manage their digital assets on Oracle Public Cloud and help reduce risk.

The public cloud offering will provide more choice and flexibility to customers. Now both the companies will be able to provide solutions for Oracle applications, middleware and databases. The partnership will allow both the companies to compete effectively with local cloud-based software providers.

According to Paul Daugherty, Accenture’s chief technology officer, “Oracle is expanding their cloud capabilities at an impressive pace, and we are pleased to now provide joint clients with a complete suite of offerings and industry solutions through the Accenture Oracle Business Group.” Further, “The addition of new IaaS offerings reflects our ongoing commitment to help clients achieve value through Oracle’s cloud solutions and solidifies Accenture’s position as the first managed services provider for Oracle’s cloud portfolio.”

Though Accenture has been offering Oracle cloud solutions for a long time, the company did not have adequate solutions to meet the growing demand from the public sector. The latest partnership will allow Accenture to significantly expand its IaaS offerings to the public sector across the globe. We believe that this partnership will substantially add to the company's cloud capabilities, giving it an edge over its peers.

With this acquisition, Accenture will be better positioned to leverage the latest technology for its clients, provide enhanced performance and strengthen its position as a global leader in IaaS based applications as well as SaaS and PaaS services. The acquisition will also help Accenture to improve its customer relationships and expand market share by solving business critical issues.

Accenture currently has over 52,000 skilled Oracle consultants worldwide. Moreover, as Oracle is one of the largest providers of cloud-based applications and software, it becomes necessary for Accenture to enhance its capabilities in delivering Oracle-based business solutions.

Cloud Computing Trends to Watch For

According to a recent Forbes article that gathered data from research firms such as International Data Corporation, Forrester, Gartner, Ovum, Wikibon and others, the global SaaS marketing will grow to $67 billion in 2018 from $49 billion in 2015. The article also indicated that IaaS spending was $16.5 billion in 2015, up roughly 33% from 2014.

According to Centaur Partners, SaaS and cloud-based business applications are likely to grow from $13.5 billion in 2013 to $32.8 billion in 2016, reflecting a compounded annual growth rate (CAGR) of 19.5%.

Another research firm, IDC projected last year that public IT cloud services spending will grow at a five-year CAGR of 22.8% to over $127 billion in 2018. The growth rate is six times that of the broader IT market. In 2018, public IT cloud services will make up more than 50% of global software and storage development.

The exponential growth in the amount of data, complexity of data formats and the need to scale resources at regular intervals compelled several companies to turn to cloud computing vendors. Therefore, considering the growing need for cloud-based applications and software, we expect Accenture’s investments in this space to boost long-term growth.



Bottom Line

We are encouraged by Accenture’s strategy of growing through acquisitions and partnerships. These have enabled Accenture to enter newer markets, diversify and broaden its product portfolio and maintain a leading position. We believe that the company’s regular acquisitions and partnership strategies will significantly contribute to the revenue stream.

However, we remain slightly cautious about the intensifying competition from Cognizant Technology Solutions Corp. CTSH and an uncertain IT spending environment, which may undermine the company’s near-term performance.

Currently, Accenture carries a Zacks Rank #4 (Sell). A better-ranked stock in the technology sector is Cirrus Logic Inc. CRUS, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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