Point of View

Bolster your digital manufacturing capability through acquisitions—the Accenture way

May 21, 2020

HFS recently published an article on how acquisitions can be a tool for augmenting capability and delivering Industry 4.0 services. We discussed that Accenture is pursuing a ruthless acquisition strategy to augment its Industry X.0 practice capability. We also published an article exploring the rationale behind Accenture’s acquisition of ESR Labs, another Industry 4.0-related acquisition, this time in the automotive domain. More recently, Accenture acquired Callisto Integration (“Callisto”), a Canada-based provider of consulting and technology services. The acquisition also includes Callisto’s MeasureTek subsidiary that leverages internet of things (IoT) technology to provide precision farming services, such as dynamic field monitoring and irrigation information. In this PoV, we discuss how this latest acquisition is a win-win scenario for both Accenture and Callisto. Service providers must realize what benefits are on offer through acquisitions (and partnerships for that matter) when looking to build a practice and compete in the Industry 4.0 space. Companies often pursue Industry 4.0 as a strategy or roadmap encompassing any, all, or a select few emerging technologies to help industrial firms meet evolving market demands and competition; acquisitions and partnerships are a vital part of building the necessary, comprehensive toolbox to hit the market.


Accenture’s latest acquisition aligns with Industry 4.0 principles


Industry 4.0 encourages manufacturing digitalization, flexible manufacturing, and improved control and decision making, among other benefits. Callisto’s solutions occupy the same areas, including controls and automation, MES, IoT, and digital manufacturing, and they encompass the manufacturing supply chain from materials receiving through manufacturing, warehousing, and distribution centers, enabling operational efficiency and productivity improvements.


“Digital technologies are fundamentally transforming the factory floor. The combination of our Industry X.0 capabilities with Callisto’s digital manufacturing expertise can help our clients make their production processes more efficient and flexible. It can also help them produce higher-quality products and increase the safety and sustainability of their plant operations.”


—Craig McNeil, Managing Director at Accenture and leader of its North American Industry X.0 practice


Two main reasons for Accenture’s acquisition of Callisto are domain competency and technology expertise. Digital manufacturing and Industry 4.0 involve numerous technologies (both core manufacturing operating technologies and emerging digital technologies), and the value chain encompasses R&D, design, operations, and support services; service providers can access the best technology capability available through niche acquisitions and partnerships to keep up with the market and technology’s rapid, continuous evolution.


Callisto will enhance Accenture’s capabilities across all of manufacturing’s sub-sectors


Although most digital manufacturing applications cater to discrete industries (like automotive), process industries are also gunning for Industry 4.0. Accenture’s Industry X.0 practice serves many diverse clients, and Callisto brings experience with large companies in food and beverage, chemicals, utilities, and other sectors. The acquisition will create positive synergy for both firms’ clients, as Accenture stated, “The acquisition expands Accenture’s capabilities to help clients in North America ensure the timely production of orders, increase their yield, and enhance the quality of their products.”


Jimmy Etheredge, CEO, North America at Accenture, added, “Our clients, who include the leaders in virtually every industry, are under tremendous pressure to harness the power of disruption for competitive advantage…Our acquisition of Callisto shows how we continue to scale our digital manufacturing capabilities to help our clients innovate and succeed in an environment of accelerating digitization.”


Similarly, Jeffrey Russell, President, Accenture in Canada, observed,With Callisto, Accenture will offer a unique combination of manufacturing, technology and analytics services.”


Accenture provides a platform to scale Callisto’s innovative solutions globally


Callisto offers digital manufacturing solutions and services to large companies across industries. As a part of Accenture, it now has the opportunity to access many more clients. Also, as a part of the acquisition, Callisto’s 160 employees will join Accenture’s Industry X.0 practice, building a strong portfolio of skills and expertise.


“Becoming part of Accenture Industry X.0 and Accenture’s global organization is an incredible opportunity. It allows us to bring our digital manufacturing solutions to more clients at a scale that hasn’t been possible before and presents new opportunities to our people.”


—Mike Grasley, Callisto Integration’s Chief Innovation Officer


Accenture’s competitors are also augmenting their Industry 4.0 capabilities through acquisitions


Other service providers are seeking acquisitions based on their portfolio needs. Capgemini, one of Accenture’s close competitors, recently acquired Altran, a French Engineering and R&D services company, for more than $4 billion. This is a big-ticket acquisition compared to Accenture’s niche acquisition strategy. As a part of the acquisition, the 50,000 Altran employees will join Capgemini. Altran has engineering capability and a client base in the automotive, aerospace, and telecom sectors. With Capgemini’s strong domain knowledge and services portfolio, the new entity will be in a leading position to support industrial and technology players in their digital transformation journeys. Accenture needs to take a closer look at this type of scaled acquisition, as this new Cap-Altran entity will be a serious competitor.


Other service providers have acquired companies in different domains that they can leverage for manufacturing transformation. For example, Atos acquired Miner & Kasch, an artificial intelligence (AI) and data science consulting firm, in April 2020. Leveraging Miner & Kasch’s data analysis capability along with Atos’ domain competency and existing data science skillset, new solutions will be particularly strong for IoT data-related decision making.


The Bottom Line: Accenture Industry X.0 vacuums up another firm into its portfolio; competitors must keep their Industry 4.0 capabilities both broad and deep.


Callisto joins a long list of Accenture Industry X.0 acquisitions, including Silveo, Enterprise System Partners, ESR Labs, VanBerlo, Nytec, Happen, and Zielpuls. Accenture has successfully integrated all these companies to create diverse Industry 4.0 solutions for sectors. Competing service providers must target the same synergy in their acquisitions if they hope to compete and offer the service breadth and depth required to meet the variation between firms’ Industry 4.0 strategies.

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