Accenture says enterprises are directing IT spending towards artificial intelligence and data

This sound is generated automatically. If you have any comments, please let us know.

Brief description of the dive:

Enterprises are shifting IT spending to investments supporting data modernization and artificial intelligence technologies rather than increasing overall budgets, said Julie Sweet, president and CEO of Accenture, on a Q4 2024 earnings call for the three months ending Aug. 31.
“What we see is that as they save money, they want to invest it in things like artificial intelligence and data,” Sweet said Thursday. “There really is a dynamic going on: save to invest.”
Sweet said that generative AI, while still a small fraction of total revenue, drove $1 billion in new bookings in the quarter and $3 billion in the fiscal year. The company’s revenue rose 3% year-over-year to $16.4 billion and just 1% year-over-year to $64.9 billion.

Diving Insights:

As budget season approaches, enterprises are laying the foundation for generative AI. According to Accenture, this technology is shaping spending priorities, driving investments in cloud and data.

Sweet said CEOs have not expressed a willingness to increase discretionary spending. Instead, executives are focusing on key digital capabilities.

Enterprises looking to make AI easier to implement are investing in mainframe and data object modernization projects. According to Sweet, even applications that have already been moved to the cloud require attention.

“We have those who are further along who are now reaching into more difficult applications like mainframes, and we still have a lot of modernization ahead of us,” Sweet said. “During the pandemic, people who were trying to get into the cloud for infrastructure savings haven’t modernized yet.”

Raising employee qualifications is also one of the priorities of Accenture’s management and its clients. In March, the company acquired online training platform Udacity as part of a $1 billion investment in talent assessment and skills development platform LearnVantage.

“Companies need to focus on talent,” Sweet said. “Their ability to unlock talent potential is key. We believe that talent is the most important item on the executive agenda today.”

Last year, Accenture increased its number of data and AI specialists to 57,000 specialists. Employees logged 44 million training hours, an increase of 10% year-over-year, which Sweet attributes mainly to upskilling in artificial intelligence.

Accenture is working with S&P Global to equip the financial data company’s 35,000 employees with generative artificial intelligence skills in a partnership announced last month. Last month, TIAA also tapped the investment firm to enhance its cloud and digital capabilities.

“One of the biggest limitations to using GenAI today, and the reason it will take some time, is that our customers need the data,” Sweet said. “Our customers do a lot of work with data, which is obviously a big opportunity for us.”