KPMG’S

Knowledge
Management
Analysis

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 CATALOG
1. KPMG ........................................................................................................................................ 3
1.1 COMPANY BACKGROUND .......................................................................................... 3
1.2 WHAT THEY DO ...................................................................................................... 4

2. DEMAND ANALYSIS OF KPMG’S KM .................................................................................. 5

2.1 THE DEMAND OF THE INTRODUCTION OF KM ............................................................... 5
2.2 KPMG’S VALUE PROPOSITION .................................................................................. 6

3. KPMG’S KNOWLEDGE MANAGEMENT ............................................................................. 7

3.1 THE DEFINITION OF KM IN KPMG ............................................................................. 7
3.1.1 Knowledge ...................................................................................................... 7
3.1.2 Knowledge management ............................................................................... 7
3.2 KM SOLUTION IN KPMG ......................................................................................... 8
3.2.1 Overview ........................................................................................................ 8
3.2.2 KWorld ............................................................................................................ 8
3.2.3 KClient........................................................................................................... 10
3.2.3.1 Collaborating Instead of Publishing ...................................................... 10
3.2.3.2 Powerful Collaboration ......................................................................... 11
3.2.3.3 KPMG’S Exchange 2000 Enables Key Functions .................................... 11
3.2.4 Summary of KPMG’s KWorld and KClient ..................................................... 14

4. CONCLUSION ......................................................................................................................... 15
4.1 THE CLEAR UNDERSTANDING OF THE VALUE OF KNOWLEDGE........................................... 15
4.2 THE SUCCESS IN THOSE KM PROCESSES ..................................................................... 15
4.3 THE EXCELLENT SYSTEMS FOR KNOWLEDGE MANAGEMENT ............................................ 16
4.4 THE SPECIAL ATTENTION TO THE KNOWLEDGE SHARING ................................................ 17
4.5 THE PECULIAR SUCCESS IN INTEGRATION WITH OTHER CONCEPTS ..................................... 17

5. PROBLEMS & FUTURE STEPS ............................................................................................. 17

5.1 CULTURE CHANGES ............................................................................................... 17
5.2 THE CAPTURE OF KNOWLEDGE ................................................................................. 18
5.3 TECHNOLOGY——XML......................................................................................... 19

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1. KPMG

1.1 Company Background

KPMG is a global network of professional firms providing audit, tax and advisory
services. It‟s part of the financial sector and is one of the largest professional services
firms in the world and one of the Big Four Auditors; it has more than 135,000 people
operating over 140 countries all over the world. Their firms‟ clients include business
corporations, governments and public sector agencies and not-for-profit organizations.
Sustaining and enhancing the quality of this professional workforce is KPMG‟s
primary objective and they offer a consistent standard of service based on high order
professional capabilities, industry insight and local knowledge.
The firm was established in London in 1870, when William Barclay Peat formed
an accounting firm. 7 years after, accountancy firm Thomson McLintock opened an
office in Glasgow and in 1911 William Barclay Peat & Co. and Marwick Mitchell &
Co. merged to form Peat Marwick Mitchell & Co. later known as Peat Marwick.
Meanwhile in 1917 Piet Klynveld opened his firm in Amsterdam and merged with
Kraayenhof to form Klynveld Kraayenhof & Co.
In 1979 Klynveld Kraayenhof & Co. in Netherlands) Thomson McLintock in the
United States and Deutsche Treuhandgesellschaft in Germany, formed KMG (Klynveld
Main Goerdeler) as a grouping of independent national practices to create a strong
European-based international firm.
In 1987 KMG and Peat Marwick joined forces in the first mega-merger of large
accounting firms and formed a firm called KPMG in the United States, and most of the
rest of the world, and Peat Marwick McLintock in the United Kingdom.

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 1.2 What they do

Audit Tax Advisory

KPMG services
Audit. KPMG member firms can provide
independent audit services designed to enhance the reliability of information prepared
by clients for use by investors, creditors and other stakeholders, including
country-specific statutory requirements.
Tax. KPMG member firms understand of tax governance, specialist skills and
deep industry knowledge to help their clients to stay competitive and compliant.
Advisory. Advisory works with clients to tackle challenges in transactions and
restructuring, performance and technology and risk and compliance.
KPMG's advisory services are organized into three themes (growth, governance
and performance) and nine service lines:
 Accounting Advisory Services
 Business Performance Services
 Corporate Finance
 Financial Risk Management Services
 Forensics
 Internal Audit, Risk and Compliance Services (IARCS)
 IT Advisory
 Restructuring
 Transaction Services

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2. Demand analysis of KPMG’s KM
——Knowledge management is now a senior executive concern

2.1 The demand of the introduction of KM

KPMG starting its KM programme are mainly based on the social environment as
below:

 Relentless technology advancement

 e-commerce linking with c-commerce
 The value of „intangible assets‟ are greater than „tangible assets‟
 Business thrust is now “grow to success” not “expense to survival”
 New organizational dynamics
 The virtual & networked company
 The redefined employment contract
 The competition for talent
 Increased dispersion of expertise
 Global customers, suppliers and partners
 The worldwide web

Meanwhile, KPMG is Facing Many Knowledge-Related Issues:

- Information Overload
- Loss of In-House Knowledge
- Ineffective Decision Making
- Lack of Creativity
- Limited Sharing of Best Practices
- Lack of Customer Responsiveness
……

To KPMG, effective knowledge management is the key to success!!!

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 2.2 KPMG’s Value Proposition
What is a Value Proposition?
A Value Proposition articulates the fundamental business reasons and expected
benefits that drive the organization to pursue Knowledge Management. It is the driving
force ( the “business driver”) that provides energy to manage knowledge
systematically and fund KM initiatives, and the basis for measuring results. It also
states the payoff to the organization, focuses KM on the value chain, and leads to
senior leadership support.

What is KPMG’s value Proposition?

 Operational excellence
 Product leadership
 Customer intimacy
 Employee capability

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3. KPMG’s Knowledge Management

3.1 The definition of KM in KPMG

KPMG is the global advisory firm whose aim is to turn knowledge into value for
the benefit of its clients, its people and its communities. So firstly, they have given
their definition of knowledge and knowledge management.

3.1.1 Knowledge
Knowledge in KPMG can be seen as three parts as below:
1) Experience, facts, rules, assertions and concepts about subjects crucial to the
KPMG‟s business;
2) A key resource used throughout an organisation to support:
- decision-making;
- forecasting;
- planning; and
- assessment of projects, staff, etc.;
- design of products and services;
- analysis and benchmarking; and
3) Being formal, systematic and recorded, or alternately as informal, or even as
something held in a person‟s mind.

3.1.2 Knowledge management

Knowledge management seeks to capture knowledge, as defined above, into
sources of data and information that are easy to find and re-use. These sources make up
the “knowledge system”.
Knowledge management can be seen as consisting of two separate processes:
1) the gathering, capturing and formalising of knowledge;
2) the storing, organising, searching and harnessing of knowledge.
For KPMG, knowledge management is a business model embracing knowledge as
an organizational asset to drive sustainable business advantage. It is a management
discipline that promotes an integrated approach to create, identify, evaluate, capture,
enhance, share and apply an enterprise‟s intellectual capital.
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 3.2 KM solution in KPMG
3.2.1 Overview
As one of the world‟s leading providers of tax, consulting, and assurance services,
KPMG understands how cutting edge technology can be a powerful ally in making
businesses more competitive in the information-intensive global marketplace. The firm
demonstrated its own willingness to exploit the latest technology with the 1999 launch
of KWorld, an online messaging, collaboration, and knowledge sharing platform based
on Microsoft products. KWorld enables KPMG‟s 115,000 professionals in 160
countries to better serve customers regardless of their particular practices or geography.

3.2.2 KWorld

What is KWorld?
KWorld is a messaging, collaboration and knowledge-sharing system that:
 Becomes our universal business management tool integrating all other
knowledge and information systems
 Integrates client and team collaboration tools with global repositories of the
firm‟s intellectual capital
 Becomes KPMG‟s digital nervous system
 Enables people and processes to get to content via technology

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KWorld Architecture & Process

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 3.2.3 KClient
Now KPMG is taking the powerful business logic of KWorld to the next level
with KClient, a secure extranet designed to revolutionize the way KPMG does business
with its clients. KPMG created KClient as a companion product to its successful
KWorld environment. KPMG expects KClient to set a new standard in communicating
and sharing real-time knowledge on projects with customers – around the clock and
around the world. KPMG has been gradually evolving KClient to integrate it with a
variety of additional technologies, legacy systems, and client collaboration tools. To
support its collaboration environment, KPMG is working with Microsoft in finding the
most effective way to use Microsoft Exchange 2000 Server, using such features as the
Web Storage System, powerful search and indexing functions, and security options.
Exchange 2000 enables a secure, Web-based environment so that the company can
centrally manage a huge array of information from many different sources and of many
different types, such as e-mail, Web content, and Microsoft Office documents.

“By integrating project activities and products within a globally accessible

environment, KClient delivers a powerful and innovative solution for creating
team-wide participation, relevant knowledge sharing, and relationship building with
our clients,” says Mike Turillo, the chief knowledge officer for KPMG International,
who is responsible for the deployment of both KClient and KWorld. “We are
committed to creating a very powerful collaboration space that allows for interaction in
a secure environment. Exchange 2000 Server provides the foundational tools that allow
us to create this environment without having to create all the code ourselves.”

3.2.3.1 Collaborating Instead of Publishing

The Exchange 2000-based version of KClient is the latest evolution of a product
suite that had its first iteration in early 1999. Using the tools available at the time,
including prior versions of Exchange Server, the initial versions of KClient were
introduced by KPMG to create more efficient and effective ways of communicating
with clients and within globally deployed engagement teams.
“The early versions of KClient helped us share information and collaborate
internally on very large projects. We also had clients where we used the technology to
publish the information to them rapidly and categorized in a manner that allowed more

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efficient analysis,” says Simon Catley, a KClient project manager in Great Britain.
“The problem is that we were publishing to the client, not collaborating with them. It
was a starting point for enhancing our relationships with clients, but we wanted
technology that would take this further by really drawing us closer into client
relationships through true collaboration.”
To illustrate what KPMG was trying to achieve, Catley cites a typical scenario: an
engagement that is being conducted for a global corporation with many dispersed
divisions. In the “publishing” model, KPMG can get information faster and more
efficiently to interested members of the client firm‟s management, but it has been
difficult with the current technology to engage with the many individuals at the client
who need to be consulted about findings prior to sending reports to headquarters.

3.2.3.2 Powerful Collaboration

“We are committed to creating a very powerful collaboration space that allows for
interaction in a secure environment. Exchange 2000 Server provides foundational tools
that allow us to create this environment without having to create all the code ourselves,”
says Mike Turillo, the Chief Knowledge Officer of KPMG International. “One of the
key drivers behind the creation of KClient is that it gives us a tool to communicate
faster, more efficiently, and in more detail with more parts of an organization,” Catley
says. “We want to enable true discussions and collaboration that, in the long term,
mean better service for our customers.”

3.2.3.3 KPMG’S Exchange 2000 Enables Key Functions

KPMG „s Exchange 2000 Server version of KClient uses many new and enhanced
features enabled key facets of a secure, smoothly functioning extranet. The
requirements for KClient to become an effective customer relationship tool included:

a) Gathering and organizing large amounts of different information from

disparate sources in one location
“Having a single, secure repository for all types of information is our Holy Grail,”
says Paula Paul, lead developer and architect on the KClient project. “Exchange 2000
gives us a way to organize and find information in one place very quickly.” For this
functionality, KPMG is relying on the centerpiece of Exchange 2000 Server‟s
collaboration functionality – the Web Storage System. The Web Storage System creates
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a central, Web-based location for storing and managing email, documents such as Word
articles or Excel spreadsheets, Web content, and applications.
The Web Storage System, which supports offline access, remote client access, and
a range of APIs(Application Programming Interface), provides the tools to build
Web-based collaboration applications. This will help the company access data across
the enterprise, including information contained in a KWorld, a SQL Server 7.0-based
intranet that includes catalog and meta-data information and documents stored in an
NTFS file system. The Web Storage System provides the optimal, integrated and
secure solution for accessing all types of information. “Our goal with the Web Storage
System is to create a place for sharing knowledge and discussions both internally and,
with their permission, our clients,” Paul says. “This will be a very powerful tool, and
we hope to make it even better by tailoring content to the particular needs of the end
users.”

b) Enabling efficient workflow

Exchange 2000 Server has new and enhanced features that allow the creation of
efficient workflows to manage complex projects and to communicate between different
offices and clients. These include integration with Windows 2000 Internet Information
Services (IIS) and Active Server Pages (ASP) for creating business logic and workflow
functions, and CDO Workflow Objects that can be used for creating simultaneous and
synchronized events for high-performance workflow and tracking.
“We relied on the Exchange 5.5 Event Service and Scripting Agent for our
workflow processes in previous versions of KClient,” says Charles Festel, senior
developer and project lead in KPMG‟s Global Knowledge Exchange. “As we tried to
scale the application, we soon had thousands of agents on a single server, backing up in
the single-threaded Event Service process.
The Web Store and the workflow engine of Exchange 2000 will make it much
easier to create and manage workflow processes – for example, getting approval from a
manager when an employee finishes a particular project will be much faster and more
efficient.”

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c) Enhanced searching and indexing:
Exchange 2000 provides built-in indexing and search capabilities, enabling
high-speed and accurate full-text searches across the diverse information types used by
KPMG. “Performing searches in previous versions of KClient was quite difficult,” says
Festel. “Exchange 2000 will allow us to tag documents with meta data and custom
properties that will not only let employees and customers find information more
quickly, but it will also enable applications that will work with documents with specific
properties, such as geography or company.”

d) Security for sensitive information:

Festel says Exchange 2000‟s new and enhanced security features are critical for
the viability of an extranet application containing sensitive customer information.
“Exchange 5.5 only had folder-level security, which was a problem when we had to
restrict access on certain documents within the folder to just one or two people,” Festel
says. “We had to duplicate content between multiple folders to apply different levels
of security to a single document, which resulted in a predicament we call „folder
madness.‟ We ended up with thousands and thousands of nested public folders to
accommodate our security requirements. “Now, Exchange 2000‟s item-level security
can apply security settings to any documents that need it within a folder.” Exchange
2000 is also integrated with the Access Control Lists in Windows 2000, providing easy
central management of security to Exchange-based information. Exchange 2000 also
includes other security features such as S/MIME with digital certificates, public-key
encryption, and integration with general Windows 2000 security measures, such as user
group permissions.

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 3.2.4 Summary of KPMG’s KWorld and KClient
KWorld KClient

Network Type a SQL Server a secure, intergrated

7.0-based intranet extranet

Software Microsoft Exchange Microsoft Exchange

5.5 2000

Knowledge sharing faster and efficient powerful collaboration

model publishing

Information’s gathering a SQL Server 7.0-based the Web Storage System

and organizing intranet which is creating a central,
comparatively slow, Web-based location for
inefficient and storing and managing
single-functional information including that
contained in a KWorld

efficient workflow tools none IIS, ASP and CDO

Workflow Objects
searching and indexing performing searches is built-in indexing and
difficult search capabilities

Security for sensitive folder-level security item-level security

information integrated with the Access
Control Lists

Benefits
 Supporting KPMG strategy
 More enabled & quicker decision making
 Increasing revenues & margins
 Higher client value added through greater innovation & synergy
 Quality of life - staff more effective
 Leveraging of corporate expertise
KWorld and KClient are becoming the digital nervous system of KPMG!
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4. Conclusion

After the introduction of KPMG‟s knowledge management, we have concluded the

five major factors leading KPMG‟s KM to success.

4.1 The clear understanding of the value of knowledge

KPMG has realized the value of the knowledge, and has clear understanding of the
definition of knowledge.
People always neglect the knowledge of their own, and never take advantage of
the value brought by the management of knowledge. In a global survey, more than 50
percentage of the companies had never heard about Knowledge Management, not to
say implement KM (In that era). KPMG noticed the importance of managing the
knowledge in its employees‟ mind, also called tacit knowledge which others always
paid no attention, and invested a lot on its knowledge system. And the KM brought
KPMG a lot of added value in return.
Meanwhile, people always think KM is a tactical program, or a single technique or
technology, or a mature science, but this thought is uncompleted, or sometimes may be
totally wrong. However, KPMG knows KM better. He views KM strategically as a
long-term proposition, an environment that leverage assets and an embedded process.
KM is not only a system, but one of a company‟s ultimate strategies. It is hard to
define, and hard to do well.

4.2 The success in those KM processes

As we have learned in the class, KM processes can be concluded into four levels:
Knowledge discovery, Knowledge capture, Knowledge sharing and Knowledge
application. In the cases, we can find out the fact that the KWorld and KClient provide
KPMG‟s staff a convenient platform for easily implementing those processes.

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 Let‟s see the processes of Knowledge Management in KPMG. Firstly, when the
KPMG‟s contents, such as work product and specific practice and other external
contents occur, they will be paid attention and sent to the knowledge manager.
Secondly, the manager will do the value, quality and security assessment and start to
assign the classifying and filtering jobs. After that the explicit or tacit knowledge will
be filtered, aggregated and sorted into the data center. Sometimes the knowledge will
be added commentaries internally or externally and may be involved into deeper
analysis. Finally the processed knowledge will be used in KWorld or KClient or
sometimes on KPMG.com.
From this we can see the effectiveness of KPMG‟s KM workflow. It concludes and
take seriously of the all four KM processes, which guarantee the success implement of
KM in KPMG

4.3 The excellent systems for knowledge management

As we have mentioned above, KPMG uses Microsoft Exchange 2000 in their KM
system, which provides a lot of powerful functions that strongly backs the KM
processes. For example, the Web Storage System in KPMG creates a central,
Web-based location for storing and managing email, documents such as Word articles
or Excel spreadsheets, Web content, and applications, and meanwhile, enables the
gathering and organizing large amounts of different information from disparate sources
in one location. Furthermore, Exchange 2000 provides built-in indexing and search
capabilities, enabling high-speed and accurate full-text searches across the diverse
information types used by KPMG. All of those above created an excellent environment
and basis for knowledge capturing and knowledge seeking. We have learned in the
class before that the easy access to the knowledge, or the efficient knowledge seeking,
will lead to the more smooth implement of KM among the staff, and as a result it will
cultivate the culture of knowledge sharing in the company more effectively. The
high-quality performance of KPMG‟s knowledge system is an important factor of its
success.

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 4.4 The special attention to the Knowledge Sharing
It is obviously that the core of KPMG‟s KM system is the collaboration. KWorld
and KClient offer the employees powerful functions of communicating, such as
e-mails, instant messaging, video meeting and other telecommunications. These
functions group the people more closely and consequently it is more favorable to share
tacit knowledge, which is always the most difficult knowledge to share. On the other
hand, the close relationship between the staff may also lead to the CoPs‟ emergence.
We have been taught that CoPs, although usually hard to form, can be an efficient form
for knowledge sharing. KMPG is on the way to it.

4.5 The peculiar success in integration with other concepts

We have learned KM for a whole semester, but we seldom notice the integration of
KM with other fields of management in the company. KPMG do. Its KM system is
serving not only for the staff internally, but also for its customers externally. They want
to know better about their needs and the value KPMG can bring to them. More
importantly, they want to know their customers better and tailor content to the
particular needs of the end users. They want to satisfy the customer needs better so
they can keep a long relationship with them. From this we can see the concepts of
CRM, Customer Relationship Management. In other aspects, the powerful support of
telecommuting and experts‟ decision making is also to some extent the integration of
KM, DSS (Decision Support System) and ES (Expert System).

5. Problems & Future Steps

5.1 Culture Changes
As we know, one of the biggest challenges to creating a knowledge sharing
organisation are the cultural changes that need to be undertaken by all persons working
in the firm. Unfortunately-perhaps due to the limited information we can find-KPMG
didn‟t pay much attention or do something special to contribute the changes of its
culture. However, KPMG will eventually pay for their ignorance if they keep
processing KM without taking culture changes seriously.
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 In our opinions, the traditional resistance to change on such a large scale needs to
be managed by the sponsors and the Knowledge Managers. There needs to be “buy
in” to the process from all persons in the firm, and the attitude that “my knowledge is
what sets me apart, making me invaluable and promotable” needs to be challenged and
replaced with tangible rewards for sharing of expertise and knowledge.

A knowledge organisation is founded upon four principles:

 Sharing;

 Trust and confidence;

 Open communications;

 Learning.

In order to ensure that these four principles become entrenched within the way
KPMG operates, management practices and processes will need to be examined to
ensure that staff are rewarded for team work and contributions of knowledge.
Knowledge, and its sharing, must become a core competence, an integral part of the
business processes. Contributions and use of knowledge should be recognised through
the appraisal process, job review structure and the bonus scheme. Promotion should
hinge upon a person‟s ability to demonstrate that they are contributing and using the
firm‟s knowledge bases.

This drive needs to be led by senior management, supported by the Human

Resources department, as well as Knowledge Management. Each person within KPMG
must take responsibility for their knowledge contributions. Line managers and partners
must take responsibility and play an active role through managing, encouraging and
promoting this behaviour.

Furthermore, some people may be resistant to trying new things. This trouble may
be overcome with adequate training & the utilization of user-friendly interfaces

5.2 The capture of knowledge

Another problem-perhaps due to the limited information we can find again-lies in
the fact that KPMG didn‟t think a lot about the initial source of knowledge. The
process of transferring information into the knowledge sharing system may be
comparatively smooth, but they didn‟t realize the difficulties in capturing knowledge
and consequently didn‟t have related capturing process or guidelines and rules. The

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channels of getting information or knowledge can be divided into external content and
internal content, but how to master them on our own initiative?
Guidelines and rules, as just mentioned above, will do some good to the capture of
knowledge. Culture changes can be another way. Staff can be stimulated to offer
knowledge forwardly by appraisal, bonus and promotion, or even better, by instilling
the idea of important social capital and civic voluntarism into their minds.

5.3 Technology——XML
As the KClient deployment moves forward, the KPMG team is also looking at
the use of other features and technologies supported by Exchange 2000 Server, such
as XML.
“We‟re very excited about the strong integration of XML with the native
capabilities of Exchange 2000. We can use XML and WebDAV (Web-based
Distributed Authoring and Versioning) to manipulate Web Store objects
programmatically,” says Dr. Mark Post, director of Application Development for the
Global Knowledge Exchange. “By putting content into XML format, we will be able
to re-purpose documents across our intranet, extranet and internet sites. As XML
becomes adopted more widely throughout our industry, the benefits will become
even greater on the content end, and the tight integration of Exchange 2000 and
XML will make for a very powerful tool.”
That is one of the many ways, Turillo adds, in which KPMG will be able to
remain competitive in the years to come.
“The conditions of rapid growth and intense competition for talents have pushed
us to create a process that can accelerate innovation and allow us to work smarter,
better, and faster,” Turillo says. “Using the Exchange 2000 Server platform, we can
provide the solution that will deal with the marketplace demands we face:
collaborating among ourselves and with our clients in a secure fashion, which gives
us a significant competitive advantage in the professional services industry.”

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