KPMG Peat Marwick

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KPMG Peat Marwick

• The Shadow Partner
• http//www.kpmg.com

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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?

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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.

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The objectives of the KPMG case

• Discusses a large professional (one of the Big
  six in the accounting industry) service firms
  vision for using information technology (IT) to
  address the challenges it is 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.

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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.

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Figure Hierarchy of Leadership Tools
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A Framework for Analyzing Organizational Impacts
of the Shadow Partner
Defining Direction and building infrastructure
Executing and Adapting
Creating and Sustaining Value
Value creation
Environmental Context and Resources
Units, groupings
Society and government loyalty
Partnter loyalty
Incentives
Coordinating mechanisms
Authority
Formal and informal power

Decisions Actions
Customer loyalty
Employee loyalty
Purpose Core Values, Core Competencies
Boundary systems
People
Strategy
Values and Behavior
operating, processes
Control
Work
Management processes
Technology
Organizational capabilities, resources, and
leadership
Shareholder loyalty
Information and communication infrastructure
Figure A-1
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A Framework for Analyzing Organizational Impacts
of the Shadow Partner
Defining Direction
Executing and Adapting
Environmental Context and Resources
Units, groupings
Incentives
Coordinating mechanisms
Authority
Formal and informal power

Purpose Core Values, Core Competencies
Decisions Actions
Boundary systems
People
Strategy
Values and Behavior
operation, processes
Control
Work
Management processes
Technology
Information Policy
Information and Communication Infrastructure
Exhibit TN-2
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Implementing the Shadow Partner
Effectiveness
Context

• Environment
• Organization
• Work Group

N
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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.

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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.)

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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

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Recommendations

• The alignment of people, technology, and work
  (organization) 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.

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VIRTUAL ORGANIZATION
TM -15
Dr. Chen, The Challenge of the Information
Systems Technology
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Characteristics of Virtual Companies
Excellence
Borderless
Adaptability
Six Characteristics of Virtual Companies
Opportunism
Trust-Based
Technology
N
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Virtual Companies (Portable Computing)
A Virtual Company is an Organization composed of
several Business Partners that Uses Information
Technology to Link/Share People, Assets, Ideas,
Costs, and Resources for the purpose of producing
a product or service. Virtual Companies are
Adaptable and Opportunity- Exploiting
Organizations Providing World-Class Excellence in
Their Competencies and Technologies.
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Success or Failure Factors of IS
Succeed
Continuous
Service speed quality innovation
or
Business
Improve
Change Management
Survive
Radical
Technology
Organization
Management
culture
(Behavior)
(Human)
(Strategic Advantage)

• Structure
• attribute
• decision-making
• operation

• Ethically Acceptable
• Socially Responsible
• Politically control

uncertainty
Risks
Benefit
overcome
enhance
strategy
I S
A Digital Society
Ability flexibility to compress time and space
and to expand organizational knowledge and then
increase
1) choosing strategy 2) organizing the
business 3) organizing the systems management area
The Driver Servant
HUMAN ADAPTABILITY
organizational change
------Radical Change
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Objectives of MIS (Contd)
organizational change
------Radical Change
Evolution of change
A FIRM/ORGANIZATION
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.
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IT Yesterday, Today and Tomorrow

• Yesterday
• Computer age
• Computer proc.
• Computing
• Accuracy
• Automation
• Efficiency
• doing things
• right

Today Information age People proc.
Communication Perspective
Information Effectiveness
doing
the right things
Tomorrow Knowledge age Knowledge
proc. Connectivity Reality Innovation Performance/
Innovation creativity
Dr. Chen, Information, Organization and Control
TM -20
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Figure Stages of Information-Systems
Strategic Planning
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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.

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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
  companys 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."

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• 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.

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• 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.

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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?

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(No Transcript)
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A Framework for Analyzing Organizational Impacts
of the Shadow Partner
Defining Direction and building infrastructure
Executing and Adapting
Creating and Sustaining Value
Value Creation
Environmental Context and Resources
Society and government loyalty
Partnter loyalty
Authority

Decisions Actions
Customer loyalty
Employee loyalty
Purpose Core Values, Core Competencies
Strategy
Values and Behavior
Control
Information and communication infrastructure
Organizational capabilities, resources, and
leadership
Shareholder loyalty
Figure A-1 (a)