Accenture’s Big Gamble on – Is it Worth the Risk?

accenture blog picLast week, Accenture was awarded a contract facilitating repairs on the website. This is clearly one of the highest profile contracts the company has taken on in recent years. Jimmy Kimmel even discussed Accenture’s contract award in his opening monologue.

High profile contracts can irrefutably be high risk, high reward. On the upside, Accenture has an opportunity to grab a foothold in federal healthcare services that they do not have today. Not only is there opportunity to establish footing, but also there is the opportunity to build new relationships with insurance companies and healthcare providers. If done correctly, Accenture will build its brand image as a top integrator, and perhaps install future price premiums across all clients.

On the downside, failure could mean significant damage to the Accenture brand. By fixing the current mess, Accenture stands to be a hero. But failure to bring the right solution could completely tarnish the Accenture brand.

The selection of Accenture appears to have been nothing more than a hastily arranged beauty contest. One has to wonder if Accenture properly considered the risks associated with this contract or, more to the point, did the other competitors take a step back leaving Accenture as the only company standing in front?

How did Accenture Win the Contract?

A bit of history is in order on how Accenture landed this gig. CGI was awarded the prime integrator contract in September 2011 through a questionable bidding process. When the site went live in October 2013, all of the inadequacies of the website were fully exposed to the public. The “tech surge” effort put forward by the Obama administration brought in the likes of the best and brightest from Oracle and Google and focused on fixing the consumer related portion of the website. This preliminarily stemmed the tide of criticism that circled HHS (Health and Human Services) like a ring of fire last fall.

In mid-December, senior HHS officials concluded CGI had not been effective enough in fixing the integrated computer systems that were the underpinning of the federal website. It was determined that CGI needed to be replaced. The process to select Accenture was outlined in this posted procurement justification document.

The document states the accelerated selection process was required as “there is limited time to build this functionality and failure to deliver the functionality by mid-March 2014 will result in financial harm to the Government”. The process conducted over the last weeks of December consisted of shortlisting twelve companies, and then informal discussions were held with four of the twelve, followed by the selection of Accenture.

Accenture was selected to lead the effort despite having no previous federal healthcare experience, which makes you wonder about the qualifications of the other contenders. Perhaps the other contenders took a different view of the risk associated with the effort and determined the best course of action was to take a step back.

The Risks Accenture Faces

The potential effects of this engagement on Accenture are clear: opportunity for a gain in market share and price premiums vs. significant damage to the Accenture brand. So was taking this contract a good call on the part of Accenture? UpperEdge has identified seven significant risks associated with successful execution that Accenture must overcome to achieve success with this effort.

Risk #1 Schedule

The justification for the method to select Accenture was based on the lack of time available to meet a pending deadline. By mid-March, Accenture must complete the construction of the primary applications that track eligibility and enrollment, account for subsidy payments to insurance plans, and clean up those 834 enrollment transmissions that in October and November transferred garbage data to the insurance companies. To compound the issue, implementation of these adjustments must be completed while the volumes on the website are expected to peak as all those that could not sign-up in 2013 attempt to sign-up before the new deadline at the end of March. Eight weeks to meet a deadline that, if missed, will result in financial harm to the government – no pressure there.

Risk #2 Unrealistic Estimates

CMS (Centers for Medicare & Medicaid Services) has estimated the value of the Accenture engagement at $93.1 million. The initial contract reported by both the government and Accenture was set at $45 million. Accenture has not made public comment on the total expected costs to fix all the problems, and it is likely they are unable to provide an accurate estimate at this time. Given the lack of a competitive bid process and only informal discussions were held, it would be impossible for Accenture to assemble its own estimate for the fixes. However, Accenture will have to deal with the fact that the $93 million price tag is now public and the estimate will be anchored in the minds of those who will pass judgment on the success of Accenture. 

Risk #3 Complexity

This link provides an overview of the complexity that Accenture will need to deal with not only from a technical perspective, but organizationally as well. Accenture must deal with the government agencies, and also the sub-contractors that have been engaged, and the insurance companies that have been required to interface with the website. All of this complexity must be dealt with having no prior experience with the Federal Health Care systems. Accenture argues that they have dealt with this kind of complexity before in the federal government, and they might be right. However, a common failure point of major IT programs is to under-estimate complexity of processes not fully understood.

Risk #4 Condition of the Legacy System

In this case, the legacy system is the existing website and the underlying integration platform. Accenture is taking over a system that by every account is full of problems, and these are only the problems that have been identified. There is also a reasonable probability that the existing system has less than accurate and current documentation. Given the pressure, the development teams were under to deliver a working system by October, and the firefighting that has been going on since, it is very likely documentation was sacrificed in an effort to solve more problems. This leads to the next risk.

Risk #5 Appropriate Talent

CGI’s contract on this engagement will expire at the end of February. Accenture will likely have access to the CGI talent up until that point. It is also probable there could be some Accenture sub-contracting to CGI to retain knowledgeable talent. But, keep in mind this is the talent responsible for the project’s current condition.

Accenture will also bring its own talent to the table. This talent will probably be drawn from the pool of personnel familiar with Accenture’s methods and accelerators associated with state level health care sites. The team could bring a set of biases of how things should be done and there is potential for conflicts with the CGI talent as well.

Risk #6 Oversight

As we have seen, the Congressional Oversight Committees can be brutal on vendors, and inclined to ask questions to simply grandstand for political purposes. Consider Accenture’s starting position:

  • They will be viewed as a foreign company based out of Ireland
  • They recently settled a whistleblower lawsuit with the government to the tune of $67 million
  • They carry a reputation for enabling the off-shoring of American jobs

There is a decent chance Accenture will be called to testify in the future if things don’t go well. Accenture will need to be prepared to deal with both the issues along with the items above.

Risk #7 External Distractions

External distractions are the hidden consumer of time and a blocker for efficient decision making. In the case of this engagement effort, there are at least three external distractions that need to be on the radar:

  • The HHS is obligated to execute a full bid process for continued support for the website. Accenture will likely participate in this bid which will consume resources assigned to the project. Also, consider that the firms bidding on this will likely require access to the same resources Accenture will need to fix the existing problems.
  • 2014 is a mid-term election year and the risks associated with oversight will be amplified.
  • The press. There were no less than 100 stories published regarding Accenture taking the contract for, and it will continue to be a hot topic for the next year. Accenture’s media relations will need to be geared up to address requests for information and positioned to respond to potentially negative press.

To recap, Accenture signed up for somebody else’s plan to fix an incredibly complex system with talent that is unfamiliar with the design and oversight likely to be confrontational. It is probably a good thing this is only a one year contract. That pot of gold better be worth it considering the risk to the brand.

If you would like to learn more about how UpperEdge has helped companies assess and avoid large IT transformation project risks, or if you have any questions or comments, please do not hesitate to contact [email protected].


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