August 1998 Issue


Knowledge management (KM) is hot, according to a recent study by Kennedy Information, a publisher of newsletters, directories, and research on management consulting. The survey found that the Big Five accounting firms have the largest practices. However, small and medium-size firms can profitably share in the KM pie.

Defining Knowledge Management

No single firm offers all of the possible service offerings that come under the KM umbrella and some are involved primarily in niche areas. Service offerings that coincide with the broadest definition of knowledge management include data warehousing, systems integration, and intranet consulting--the information technology (IT) aspects.

While KM is often thought of as a big-company concern, the increasing power of computers is making KM techniques increasingly available to small CPA firms and their small-business clients. Knowledge management IT concerns organizing and analyzing information in a company's computer databases so this knowledge can be readily shared throughout a company, instead of languishing in the department where it was created, inaccessible to other employees.

A classic example of the type of problem solved by modern KM techniques that applies to a small or medium-size CPA firm is tax research and analysis performed for a specific client. Often, the only copy of this research sits in that client's file. If another client has the same issue shortly thereafter and the partner or staff involved with the second client is unaware of the research, time may be wasted on redundant work. KM techniques would make such research readily available and searchable through a firm intranet.

An often-encountered client problem is how to maintain the procedural knowledge of a key employee who retires or dies. KM techniques can be used to build searchable databases of such procedures that can be updated so they are not lost.

Future of Knowledge Management

Most KM practitioners expect the field to grow rapidly. Arthur Andersen predicts its KM practice will outpace the overall growth of the firm's business consulting group. The KM practice at IBM Consulting has doubled in size since last September. IBM Consulting views KM as a management/strategic issue rather than a technology one despite the firm's IT background.

What does this mean for CPAs? The broad definition of knowledge management gives CPA firms of all sizes the opportunity to market many of their existing consulting services under the KM umbrella and the ability to develop a KM consulting practice that directly relates to the client's needs and the firm's strengths.

The success of the Big Five underscores the opportunities available. As with many "hot" management trends, the details often are not distinct, "new" services but redefined and repackaged consulting services that CPAs have provided for years, given their intimate knowledge of their clients' businesses. *

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