KPMG Peat MarwickThe Shadow Partner

http://www.kpmg.com

Suggested Study Questions1. 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 firms 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 ChallengesAs 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 servicesreconcile conflicting cultures and business strategiescompete internationallyshift from current product-focused strategic and organizational orientation to a client-focused one.

Figure: Hierarchy of Leadership Tools

Frame for Analyzing Organizational Impacts of the Shadow PartnerDefiningDirectionEnvironmental Context and Resources

Information PolicyPurpose Core Values, & Core CompetenciesStrategyExhibit TN-3Executing and AdaptingUnits, groupingsFormal and informal powerIncentivesCoordinating mechanismsAuthorityBoundary systemsoperation, processesManagement processesControlPeopleTechnologyWorkValues and Behavior

Implementing the Shadow PartnerContext

EnvironmentOrganizationWork Group

Effectiveness

Roles of the Shadow PartnerThe 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 ResistanceShould 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

RecommendationsThe 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 ISBusinessSucceedSurviveorService speed quality innovationImproveContinuousRadicalChange ManagementTechnologyOrganizationManagementEthically AcceptableSocially ResponsiblePolitically control(Behavior)(Human)Structureattributedecision-makingoperationculture(Strategic Advantage)RisksBenefituncertaintystrategyovercomeenhanceI SA Digital Society1) choosing strategy2) organizing the business3) organizing the systems management areaAbility & flexibility to compress time and space and to expand organizational knowledge and then increase HUMAN ADAPTABILITYThe Driver & Servant[ organizational change]------Radical Change

Objectives of MIS (Contd)[ organizational change]------Radical ChangeA FIRM/ORGANIZATION:Evolution of changeRestructuring Competitive AdvantageRe-engineering Cooperative AdvantageElectronic 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.

IT Yesterday, Today and TomorrowYesterdayComputer ageComputer proc. ComputingAccuracyAutomationEfficiency

doing things rightTodayInformation agePeople proc. CommunicationPerspective InformationEffectiveness doing the rightthings TomorrowKnowledge age Knowledge proc.ConnectivityRealityInnovationPerformance/Innovationcreativity

Figure Stages of Information-Systems Strategic Planning

Three Types of PlanningStrategic PlanningIt deals with the development of an organization's mission, goals, strategies, and policies.Tactical PlanningIt involves the design of tactics, the setting of objectives, and the development of procedures, rules, schedules, and budgets.Operational PlanningIt is a planning done on a short-term basis to implement and control day-to-day operations.

Changes in

the Management

Leadership

Technical skills

Behavior traits, flexibility

Concern for excellence,

Learning and self-confidence

Management

1. Planning

2. Budgeting

3. Organizing

4. Staffing

5. Controlling

6. Problem-solving

Leadership

1. Establishing direction

2. Aligning people

3. Motivating

4. Inspiring

5. Empowering

Soft Interpersonal Skills

1. Effective communication

2. Deep listening

3. Facilitating

4. Negotiating

5. Working with conflict

6. Relationship building

7. Understanding how to work effectively in teams

8. Knowing when to say no

Planning TerminologyVisionA 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.MissionA 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. ObjectivesBroad 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. TacticsStrategies 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.

PoliciesGeneral 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 Questions1. 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?