KPMG in NZ confirms intent to join new KPMG Consulting

KPMG consulting operations in New Zealand and Australia will join the newly-incorporated multinational KPMG Consulting later in the year.

KPMG consulting operations in New Zealand and Australia will join the newly-incorporated multinational KPMG Consulting later in the year.

The new entity will be 80.1% owned by KPMG and its partners and 19.9% by Cisco Systems, which last year agreed to invest $US1 billion. At present, the new organisation comprises KPMG Consulting's US and Mexico operations. KPMG Consulting became a separate unit in the group in 1997.

As part of the agreement with Cisco, KPMG Consulting agreed to add 4000 Internet consulting professionals over the next 18 months to help support Cisco's enterprise and service provider customers. KPMG Consulting has agreed to provide Cisco with an exclusive consulting organisation to help develop and deliver Internet-based data, voice and video services for clients secured by Cisco's 6000-strong sales force.

This has raised questions of independence and has caused delays in issuing an IPO (initial public offering) in the US. New Zealand head of consulting Peter Kane says the Securities Exchange Commission has referred the issues to the Independence Standards Board. "They are considering not only Cisco owning a share but, more importantly, our clients owning shares once the company is listed. We will need to consider their views and will comply with their directions."

The IPO is planned for mid-year, subject to the board's requirements.

Kane says the New Zealand consulting organisation will join the Americas practice, which will include Latin America and Australia. "It's driven by the need for us to provide global consulting and skills. The world is changing so quickly, particularly on the consulting front. In theory we could do this before but the exchanges will become much smoother with one structure rather than independently owned organisations."

He says the consulting direction focuses around e-business because the Internet has become so pervasive as a business medium.

KPMG is the first of the Big 5 to hive off its consulting arm as an independent business, though Kane says he believes some of KPMG's competitors have similar plans.

"We're issuing an IPO for two reasons: the ability to attract and retain first-class people by offering options and shares as part of their remuneration; and the ability to generate funding to grow the business."

The recent purchase of Wellington-based The Web is indicative of a strategy of acquiring skills where necessary, he says.

"There'll be another [acquisition] in Asia-Pacific in the reasonably near future."

For some time, consulting has been the largest part of KPMG's business in New Zealand, he says.

KPMG Consulting's international member organisations have 17,000 staff in 160 countries.

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