Accountants in rush to build online muscle

By ADAM GIFFORD

Big-five accounting firm KPMG Consulting has moved to lock in web development expertise by buying New Zealand internet solutions integrators The Web and by forming an alliance with Clearview Zivo, which has a presence in Australia and New Zealand.

Internationally, KPMG is scrambling to build its internet skill-base to meet the terms of the deal, under which networking giant Cisco Systems has invested $US1 billion ($2.04 billion) into the newly incorporated firm.

Consulting partner-in-charge Peter Kane said much of KPMG's work now had a web component.

"We are increasingly helping our clients transform their businesses to suit the internet environment.

"This involves finding new ways for clients to build and maintain relationships with customers, suppliers, partners and employees.

"To offer end-to-end solutions we need delivery capabilities as well as strategic skills."

While the firm had expertise in-house, "the speed the market is changing and the way opportunities are arising, there is the question of whether growing organically will get you the resources you need quickly enough?"

With The Web's 15 developers, KPMG would have a solutions integration team of 32 people.

"We have worked with them before so we understood them.

"They're very professional. They have a good reputation in the market, and we have clients in common."

These clients included the Dairy Board, Trade New Zealand, Telecom and the National Bank.

Mr Kane said KPMG had also worked closely over the past year with internet development firm Clearview Zivo, a subsidiary of Liberty One.

"The strategic alliance is an exclusive arrangement where we will partner to deliver services."

The incorporation of KPMG Consulting gave it access to capital for expansion, "so it makes it easier to contemplate acquisitions than if we were a New Zealand firm, based on its partners' capital."

KPMG Consulting was incorporated in the United States last month as a company owned 80.1 per cent by KPMG and 19.9 per cent by Cisco.

Other KPMG Consulting regions are joining the company during the year, with New Zealand expected to join by March 31.

Mr Kane said payment for The Web was a mix of cash and shares, so the purchase would also be finalised on March 31.

The Web managing director Kate Frykberg said the move was a way to deliver the potential of e-business to clients, by combining her firm's strengths with KPMG's strategy and business realignment experience.

"We already have a great reputation for implementing smart internet solutions."

She said the acquisition was consistent with KPMG's e-business expansion in the US and Britain.

Last year, KPMG Consulting joined with user interface firm Studio Verso and technology developer WebVibe to form an entity called Metrius. Its clients include Amazon, Apple, Cisco, Disney, Sony and Motorola.

In return for Cisco's $1 billion investment in the firm, KPMG must add 4000 Internet consulting professionals over the next 18 months to help support Cisco's enterprise and service provider customers.

The firm will also 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.

Meanwhile, another big five accounting firm, Deloitte Touche Tohmatsu, is also trying to secure internet expertise.

Its Australian arm has bought 20 per cent of Eclipse Group, one of Australia's largest web design firms with 170 staff and a $10 million turnover.

Deloitte's chief executive Lynn Odland said the Eclipse investment was likely to be replicated as the company sought to buy in new skills and entrepreneurial spirit.

"Firms like ours sometimes can't act with great speed and we're seeing that we'll have to change that."