Innovation delivered at scale shapes the course of KPMG’s next chapter

Relying on strong governance capabilities to bridge relationships between IT and business will enable KPMG to drive new opportunities in the ESG domain

With KPMG CEO Bill Thomas kicking off the two-day Global Analyst Day it was evident that KPMG’s approach to clients’ changing business models due to COVID-19 has compelled the firm to also transform its own operations to better protect and expand client mindshare. KPMG’s internal transformation began well before COVID-19 when in 2019 the firm announced a $5 billion investment in technology, people and innovation.

Two years and a pandemic later, KPMG is accelerating this transition with the latest examples focused on expanding cloud, environmental and social capabilities, bringing the latter two under one umbrella and committing to zero emissions by 2030. With KPMG working toward establishing a bridge between business and IT stakeholders, the firm also continues to invest in its global team of data and analytics professionals, many of whom focused on translating the business value of IT using low-code and no-code technologies. The strategy — folding analytics within its core offerings — reflects strategies of the Big Four and some of its multinational peers.

But KPMG has an opportunity — and a responsibility — to carve a niche in emerging areas developing frameworks for clients that do not report against financial metrics, particularly within the environmental, social and governance (ESG) domain. With KPMG relying on its robust governance, risk and compliance legacy capabilities, the firm is now focused on the “E” and “S” parts of the three-legged framework, and its clients’ stories provided strong examples of how well the firm handles the change and expectations, from finding the right partners to introducing the most suitable solutions, among others.

Clients are eager to innovate; KPMG knows this and executes against it

With innovation — amplified through KPMG’s global network of Ignition Centers — becoming the connective tissue between the firm’s legacy and new business model, KPMG now has the opportunity to drive change at scale. Peers have often pursued acquisitions that have served as the catalyst of change (think Accenture’s purchase of Fjord and PwC’s buy of BGT that later led to the launch if PwC’s BXT framework). KPMG, however, relies on its organic investments, suggesting the firm is taking a measured but strategic approach, trusting that its own capabilities and culture are strong enough to affect change. A successful execution of this strategy requires broader buy-in across all stakeholders, especially member firm partners who are closer to retirement age and might be more resistant to change.

One group of stakeholders that is open to change is KPMG clients, especially those that are also facing pressure from their end customers that have largely been impacted by the advent of digital. According to TBR’s May 2021 Digital Transformation: Voice of the Customer Research, COVID-19 accelerated demand for services supporting both ongoing and new programs. As cloud continues to be the main technology driving digital transformation investments, buyer-vendor relationships are entering the next phase, where parties must account for new ways of engaging and delivery and opportunities are pivoting from projects to products.

In a use case discussion centered on KPMG’s work at the Johan Cruijff Arena in Amsterdam, TBR heard echoes of similar digital transformation engagements, which encompass innovation, emerging technologies and ecosystem collaboration all within a constrained environment but with implications and lessons for smart city transformations. Arenas can provide a useful test bed for emerging technologies, new business models and digital transformations given the mix of activities that take place inside, the opportunities for customer engagement — from before people arrive through to when they leave — and, of course, the opportunity to gather massive amounts of data.

KPMG’s role, as explained by Sander van Stiphout, head of innovation for the Johan Cruijff Arena, included orchestrating the ecosystem by helping the arena find suitable technology partners; ensuring compliance, particularly around the General Data Protection Regulation (GDPR); and providing staff as the arena’s innovation team grew. Most notably for TBR, van Stiphout said KPMG also helped his team create a “new value model,” to include turning the stadium into “a platform for innovation.”

In TBR’s view, shepherding a client’s innovation and digital transformation so successfully that the client becomes an innovation hub for others sets this engagement apart. Van Stiphout added that the arena and KPMG’s partnerships with the city of Amsterdam had been critical to the transformation’s success, and his team and KPMG were now helping Amsterdam officials “get the learnings in place, pave the way for scaling in other cities.” With “lots of demand for an ecosystem approach,” van Stiphout said the arena could now offer consulting to other stadiums on how to run more efficiently, create an environment, and then take transformation to scale.

Turning back to his own staff and echoing a detail provided by Red Hat in TBR’s most recent Innovation and Transformation Centers Market Landscape, van Stiphout noted that his employees now constantly interact with new technologies on a daily basis, which changes their mindset. In TBR’s view, this kind of change, coupled with new and innovative business models, serves KPMG well in describing the impacts the firm can have on clients’ digital transformations.

KPMG 2021 Global Analyst Day: In early June KPMG hosted analysts, clients and executives for two 90-minute virtual sessions during which KPMG demonstrated its evolving value proposition toward becoming a technology-enabled consultancy backed by its ability to trade on trust. KPMG used the time allocated for the presentations wisely and amplified its messaging through four client use cases that not only told the “Why KPMG?” part of the story centered on innovation but also connected to broader societal implications including ever important topics around environmental

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