Accenture’s (NYSE:ACN) consulting business has seen slower growth in the past few quarters as clients have held back on spending, but that hasn’t stopped Accenture from looking at ways to invest in this business to boost its future growth. Recent acquisitions have helped the firm enter different business verticals and bolster its technology offerings, which can support its long term outlook.
In line with its acquisition strategy, Accenture announced its plan to acquire Germany based PRION group, a leading consulting and systems integrator that specializes in Siemens Product Lifecycle Management (PLM) Software. The acquisition will strengthen Accenture’s PLM skills by enhancing its ability to help clients deliver products to customers faster and more efficiently.
PRION To Bolster Accenture’s PLM
According to an Accenture analysis, companies spend nearly 25% of their revenues each year on innovation and product development.  However, nearly half of this ends up wasted on products that do not meet market needs or timing. The primary reason for this is the deeply fragmented systems of 20 or more applications that cause efficiency and effectiveness drags.
Considering the demand for product innovation, PLM has huge market potential. According to recent statistics compiled by CIMdata, the comprehensive PLM market experienced 11.3% growth in 2012 to $33.3 billion.  Although a number of software vendors provide PLM applications, none of them have end-to-end business process coverage. With the acquisition of PRION Group, Accenture will expand its end-to-end PLM offering by combining PRION’s full range of PLM services with its existing PLM capabilities.
PRION Group provides PLM process for consultancy, system implementation, data migration, application management and as a managed service. Upon the completion of the acquisition, PRION Group’s 330 employees are expected to join Accenture. Moreover, PRION Group’s clients encompass a range of industries, including automotive, aerospace and defense, transportation and engineering and consumer electronics. While the financial figures for PRION group are not available, we expect its revenues to grow substantially backed by Accenture’s global reach.
The company did not disclose the terms of the deal which has to undergo regulatory review and other customary closing conditions. However, we will continue to follow up on this acquisition.
We currently have a $74 Trefis price estimate for Accenture which is in line with its current market price.Notes:
- Product Lifecycle Management (PLM) – The Billion Dollar Lever, www.accenture.com [↩]
- CIMdata Releases PLM Market Analysis, April 11 2013, www.cimdata.com [↩]