There’s still a great sense of caution and fragility about the economy, but we can all take heart from the bullish attitude of the Big Four accountancy firms. KPMG is the latest to announce that they are scaling up their recruitment again, with a return to pre-recession hiring levels and more opportunities for graduates.
Within this story of course is the continuing strand of the revival of the Big Four as consulting entities. When I met Scott Parker, UK head of performance and technology (KPMG have avoided using the word “consultancy” in their rebuilding), he confirmed that the ambition to become a dominant player was very much on track.
Of course, when you use the “Big Four” phrase with respect to consultancy it becomes much more imprecise, with the dominant players by size—many of who have roots in the “old” Big Four consultancy culture—now being predominantly focused around systems integration and outsourcing. So how big is the potential cake for the “real” Big Four”?
“We were one of the first to build up the consultancy capability again and we’ve gone from zero to a thousand consultants and from zero to £200m,” says Parker. “You might say, isn’t that fantastic, but then you look at the market opportunity. We do believe that there’s a section of the market that’s only accessible to those capable of providing IT and business process outsourcing, that’s only accessible if you do end-to-end projects. But if you discount that and a few other things we don’t want to do it’s still a £5bn opportunity.”
The key, says Parker, is for KPMG’s new consulting play to draw on its unique strengths as a complete professional services entity, rather than just have a “me-too” consultancy arm.
“In our environment we can draw on sector expertise as well as the general expertise plus embed tax in that, as well as thinking about transactional aspects, risk management and compliance,” he says. “There are only four firms in the world that can pull all these people together.”
However, he acknowledges that in the past “none of the Big Four firms have been the best at being joined up.” This has partly been a consequence of their size, and partly the consequence of the networks of multiple partnerships that lay behind the global brands—KPMG UK is a subsidiary of the KPMG Europe Limited Liability Partnership, and says Parker: “it really does make a difference if people feel there’s a common financial interest.”
Even more important he fells, is that the firm be organised around its clients, which is why when KPMG moves into its swish new offices in Canary Wharf, you won’t be able to find the consultants in any particular location. Instead, they’ll be distributed around the sector teams, sitting alongside their colleagues in tax and audit.
“I’ll be travelling in the lift a lot,” says Parker, but adds that the new sector structure, as well as allowing the firm to build compelling, multi-disciplinary solutions, will make the logic of the expansion of consulting even clearer.
“There are definitely gaps to fill,” he says. “What we have built so far is a very strong capability around a series of functional skillsets. What we don’t have yet is consistency across all sectors, so there’s a big opportunity to fill in those gaps.”
In addition to gap filling, the firm is also launching two new strands in its consultancy offerings. The first is an operational strategy capability.
“This is not going to be ‘blue sky’ stuff, but aimed at the organisation that has a clear idea of where it wants to be and wants us to help them with the best way of achieving that,” says Parker. KPMG’s strategy advice will be “fact-based” and operate at “deal speed”: “Within 8-10 weeks we can look at any business and give it some very challenging hypotheses on how to do things differently and how to take strategy through to execution.”
The second strand is building technology capability with an initial focus on SAP and Business Intelligence, although not in a repeat of the move that led the Big Four to dominate SAP implementation in the 1990s.
“We’re not trying to establish a build capability,” he says. “Building systems is very commoditised nowadays, but there’s still a lot of risk attached. It’s pretty hard to make substantive change in any organisation without technology and SAP is by far and away the biggest ERP platform in Europe. At a later date we’ll build up our Oracle capability.”
This will inevitably bring KPMG into range of the big guns of the systems integrators, but Parker is not worried.
“Clients still value independent and objective advice,” he says. “We’ve already had an example of one client where an integrator had offered to do a seven-figure piece of work for free—but they said no, we want KPMG to give us independent advice. We will have to partner with other firms more often—that is one of the things we are very, very clear on.”
The firm is also adopting an interesting and unusual offshore strategy.
“We also have a genuinely market leading offshore capability which is not about back office, knowledge management or research but full-time client facing consultants,” he says. “It’s not so much about having an offshore capability but being able to tap into a pool of high-quality people—they are an integrated part of the UK team and part of the same management structure.”
Parker says, however, that offshore resource will never account for more than 15% of the advisory workforce, so the key to KPMG’s growth in the UK will be its ability to attract talent. Here Parker believes that the strong culture and values that are persistently associated with KPMG will be a trump card. A “returnee” from the former KPMG Consulting himself, he points to a string of high profile appointments the firm has recently made, from industry, the public sector and rival firms.
“We can go out and pick the very best on the market at a senior level,” he says, and now the challenge will be to replicate that at all levels. “That’s something we are good at—we do have a very strong people brand. Our people really do matter to us, we want the people we have to fit in and be successful.”
At the moment KPMG are in the privileged position of starting from a blank sheet of paper and moving into a market space where there is a lot of headroom—even with the other Big Four firms making similar plans. It will be interesting to see what will happen as the competition heats up.
“We’re very similar to PwC and have very similar growth ambitions,” he says. “But anyone can drum up a strategy—in the end it all comes down to who executes best.”
All views expressed in this article are those of Mick James and do not necessarily
