KPMG Peat Marwick

The Shadow Partner

http://www.kpmg.com

Suggested Study Questions

• 1. What are the challenges that KPMG Peat Marwick faces over the next five to ten years? What are the organizational implications of these challenges?

• 2. How important is implementation of the Shadow Partner for KPMG?

• 3. Why is the Shadow Partner project facing so much resistance?

• 4. As Bob Elliott, how would you describe the benefits of the Shadow Partner to the partners?

• 5. As a member of the U.S. Operating Committee, how would you evaluate the investment in the Shadow Partner?

What is the Shadow Partner?

• An on-line “reservoir of practice and knowledge” (may be a vision or a system) - would provide partners of the firm with universal and immediate access to expertise currently contained in internal client reports, and external expertise contained in third-party data bases.

The objectives of the KPMG case:• Discusses a large professional (one of the Big six in

the accounting industry) service firm’s vision for using information technology (IT) to address the challenges it it facing.

• Confronted with over-capacity in its traditional audit business and a need to grow client-focused value-added advisory services, a senior management team develops an ambitious strategy for capitalizing on emerging networked IT capabilities.

Strategic Challenges

• As clients began to view audit as an undifferentiated commodity, loyalty declined and price competition increased.

• Increased pressures on the Big six to:– improve efficiency; - reduce litigation risks, – provide value-added services– reconcile conflicting cultures and business strategies– compete internationally– shift from current product-focused strategic and

organizational orientation to a client-focused one.

Figure: Hierarchy of Leadership Tools

Vision

Mission,Principles,and Values

Goals / Objectives

Strategies

Plans

Tactics

Hierarchy of Leadership Tools

Frame for Analyzing Organizational Impacts of the Shadow Partner

Frame for Analyzing Organizational Impacts of the Shadow Partner

DefiningDirection

Environmental Context and

Resources

Information Policy

Purpose Core Values, & Core Competencies

Strategy

Exhibit TN-3

Executing and Adapting

Units, groupings

Formal and informal power

Incentives Coordinating mechanismsAuthority

Boundary systems

operation, processes

Management processes

Control

People

Technology

Work

Values and

Behavior

Sustaining Value

Process PerformanceTimeQualityCostFlexibilityInnovation PotentialStakeholder SatisfactionEmployee/PartnersCustomersShareholdersSocietyBenchmarksBest of classBest of breadReputationOtherSustainabilityResiliencyFlexibility

Implementing the Shadow PartnerImplementing the Shadow PartnerIndividual

TechnologyTask

Information

ContextContext

EnvironmentOrganizationWork Group

EnvironmentOrganizationWork Group

Effectiveness

ResultIntervening

Factors

AlignmentCommitmentMastery/Competence

IndividualWork GroupOrganization

Level of FunctionalityDataInformationRulesDecision Making

Design IssuesHow knowledge is apportioned between machine and individualLevel of interactivity between machine and individualDegree & timing of feedback provided to individual

Roles of the Shadow Partner• The vision of the Shadow Partner (SP) was to efficiently

leverage the knowledge and expertise in the firm.• The SP would make available to all partners external

databases and an ability to communicate with each other any place at any time using e-mail and voice mail.

• SP would enable rapid development of value-added services that addressed client needs while also enabling management of the complexity that would come with customization.

Roles of the Shadow Partner (cont.)

• Enable client-centered rather than product-centered information management and access.

• Increase options for firmwide and external communication and coordination.

• Codify expertise of the firm through interactive training packages (e.g., interpretation of tax laws)

• Increase productivity through integrated management support tools (e.g., calendar and time management, project management tools etc.)

Sources of Resistance

• Should KMPG proceed with the implementation of the system?

• Resistance – costly?– risky? (experience with the technology)– benefits?– confidentiality and privacy (mutual trust)– sponsorship (from top management)– radical change (organizational culture ready?)– project size and structure

Recommendations

• The alignment of people, technology, and work (IS?) must be assured within the context of the organization and the environment.

• Changes may be needed in any one of the these areas to enable successful implementation.

• Examine ways to redesign the IT to decrease the technology risk.

• Implement the system as “revolution” or “evolution.”

Success or Failure Factors of IS

Business

Succeed

Surviveor

Service speed quality innovation

Improve

Continuous

RadicalChange Management

Technology Organization Management

Ethically AcceptableSocially ResponsiblePolitically control

(Behavior) (Human)Structureattributedecision-makingoperation

culture(Strategic Advantage)

Risks Benefit

uncertainty

strategyovercome enhance

I SA Digital Society

1) choosing strategy

2) organizing the business

3) organizing the systems management area

Ability & flexibility to compress time and space and to expand organizational knowledge and then increase flexibility

culture

HUMAN ADAPTABILITY The Driver & Servant

[ organizational change] ------Radical Change

Objectives of MIS (Cont’d)

[ organizational change] ------Radical Change

A FIRM/ORGANIZATION: Evolution of change

Efficiency(Automate)

Effectiveness

(Informate)

Innovation

(Innovate)

[Doing the things right]

-Proper utilization of resource

{Save Money}

[Doing the right things]

-Attainment of goals

{Make Money}

Restructuring

Competitive Advantage

Re-engineering

Cooperative Advantage

Electronic Market: flatten the organizational hierarchical structure

“ Revolutionary significance lies in generality” e.g., steam engineers--triggered the first Industrial Revolution Computers--Seem to be triggering a second one.

- property of culture

- creativity

IT Yesterday, Today and Tomorrow

YesterdayComputer age

Computer proc.

Computing

Accuracy

Automation

Efficiency

“doing things

right”

TodayInformation age

People proc.

Communication

Perspective

Information

Effectiveness

“doing the right

things”

TomorrowKnowledge age

Knowledge proc.

Connectivity

Reality

Innovation

Performance/

Innovation

“creativity”

Vision

Mission

Policies

Goals

Metrics Values TimeHorizon

Objectives

Metrics Values TimeHorizon

Strategies

Tactics

Figure Stages of Information-Systems Strategic Planning

Three Types of Planning• Strategic Planning

– It deals with the development of an organization's mission, goals, strategies, and policies.

• Tactical Planning– It involves the design of tactics, the setting of objectives,

and the development of procedures, rules, schedules, and budgets.

• Operational Planning– It is a planning done on a short-term basis to implement

and control day-to-day operations.

Changes inthe Management

Leadership

Technical skillsBehavior traits, flexibilityConcern for excellence,Learning and self-confidence

Management1. Planning2. Budgeting3. Organizing4. Staffing5. Controlling6. Problem-solving

Leadership1. Establishing direction2. Aligning people3. Motivating4. Inspiring5. Empowering

“Soft” Interpersonal Skills1. Effective communication2. Deep listening3. Facilitating4. Negotiating5. Working with conflict6. Relationship building7. Understanding how to work

effectively in teams8. Knowing when to say “no”

Planning Terminology• Vision

– A vision is what an organization wants it to be, and it is a message that every employee should not only hear, but should also believe in. The company’s vision is about its values, beliefs, quality, and the future.

• Mission– A statement of the basic purpose or purposes for which the

organization exists. It tell an organization what it is, why it exists, and the unique contribution it can take (what it does not do, as well as what it does). For example, the utility company could be: "To supply energy to consumers."

• Goals vs. Objectives– Broad statements of the ends the organization intends to accomplish

in order to fulfill its mission. Objectives are more specific, measurable elements of a goal. For example, the utility company might have increased profitability and energy utilization as goals, measured by objectives such as specific increases in earnings per share and kilowatt hours used.

• Strategies vs. Tactics– Strategies are general approaches that show how goals should be

achieved, and tactics are more specific guides to actions that would implement strategies. For example, a company strategy of "becoming the low-cost producer in its industry" would probably require a tactic such as increasing investments in automation.

• Policies– General guidelines that direct and constrain decision

making within an organization. For example, many organizations have a policy of "promoting from within" that guides managers in filling job openings that occur. Policies are implemented by rules and procedures which are more specific statements that direct decision making. For example, procedures to follow in hiring employees, and rules protecting employee job rights, would help implement a policy of promoting from within an organization.

Suggested Study Questions

• 1. What are the challenges that KPMG Peat Marwick faces over the next five to ten years? What are the organizational implications of these challenges?

• 2. How important is implementation of the Shadow Partner for KPMG?

• 3. Why is the Shadow Partner project facing so much resistance?

• 4. As Bob Elliott, how would you describe the benefits of the Shadow Partner to the partners?

• 5. As a member of the U.S. Operating Committee, how would you evaluate the investment in the Shadow Partner?

• 6. What advice would you give Tony Sapienza? What advice would you give Jon Madonna and Jim Brocksmith?