KPMG LLP’s purchase on Monday of Ottawa-based IT consultancy IT/Net Group Inc. was in part motivated by increasing customer demand for expertise spanning a complete range of IT management services in the Ottawa region, said a KPMG executive.
“From a business transformation capability, we’ve had some of the capabilities all along but we really are being asked by our key clients, both public sector and private sector, to provide the full lifecycle,” said Yvon Audette, senior leader with KPMG’s IT advisory services group.
Clients were looking for services anywhere from business visioning to operational strategy to business process re-engineering, said Audette.
Prior to the acquisition, KPMG would utilize the expertise it had in other areas in Canada, in particular the GTA practice, but Audette said the challenge was that clients would expect local access to skills.
The IT/Net acquisition brings to the mix a good depth of skill in business transformation, while KPMG adds senior leadership experience in government. Besides broadening business transformation capabilities, KPMG’s goal is to broaden its IT advisory portfolio globally.
KPMG prefers not to call the acquisition an integration. Rather, the goal of the “operations and alignment project” is to allow IT/Net to operate as a wholly-owned subsidiary and take the best of both organizations in terms of systems, people processes, and business processes, said Ken Cochrane, senior leader with KPMG’s IT advisory services group.
Cochrane said there won’t be a reduction in the 70-member staff during the merger. “We are actually adding to our capabilities. There is no plan to rationalize out employees. We want this capacity,” he said.
The plan for IT/Net’s president and CEO, Alex Beraskow, will be to initially assist with the merger but he stopped short of discussing potential longer-term plans with KPMG. “Thereafter, I guess we’ll see how the world plays out,” said Beraskow.
While it was decided to allow IT/Net to operate as its own entity, that’s not necessarily always the case with KPMG’s acquisitions, as it depends on how well it’s deemed the best synergies will be reaped.
One analyst expressed concern that because a global professional services firm like KPMG already has an established philosophy and set of practices in terms of how it assigns and manages staff, the integration of new IT/Net employees would be a challenge.
The test will be KPMG’s ability to “leverage the agility and capability of individual people,” said Andy Woyzbun, lead research analyst with London, Ont.-based Info-Tech Research Group Ltd.
“I doubt very much that in the medium term that KPMG would give IT/Net a tremendous amount of empowerment in terms of doing things different,” said Woyzbun.
However, Woyzbun said IT/Net employees will gain greater professional opportunities they otherwise wouldn’t have had as a result of joining a global organization.
Culture aside, KPMG stands to gain a “fairly impressive” set of Canadian customers with whom IT/Net has developed strong relationships, said Woyzbun. “If (IT/Net’s) Web site is to be believed, they have an exceptional level of confidence in those customers,” he said.
Cochrane said IT/Net’s wide range of Ottawa-based clients with a focus on public sector is broader than KPMG’s coverage in the same city despite the bit of overlap. “They are in fact similar customers to the ones we work with and want to work with,” said Cochrane, listing public sector agencies including Health Canada, Public Works, National Defence.
IT/Net also has an office in Toronto. The transaction closed Sept. 27.
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