One on One with KPMG’s Steve Hill

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Chances are you’ve heard of IBM’s cognitive computer system known as Watson, which first came to national attention when it dominated former champions on Jeopardy! In 2011. Since then it’s gone on to tackle real problems, such as making utilization management decisions in lung cancer treatment for Memorial Sloan Kettering Cancer. An impressive piece of technology to be sure, and KPMG has partnered with IBM to harness Watson’s cognitive power to not only transform KPMG’s internal processes, but help transform the very nature of work itself, one client at a time. Consulting sat down with Steve Hill, Global Head of Innovation and Investments for KPMG to talk about the possibilities for this emerging powerful technology.

Consulting: How did the agreement with KPMG and IBM to use Watson come to be?

Hill: We saw two things happen in the marketplace that correlated to becoming a phenomenon we call “digital labor”. The first was we started to see the use of process robotics to disintermediate BPO deals and call center deals as well as other types of rules-based labor. We also saw in the marketplace machines, oftentimes called either cognitive or AI, helping to augment expertise. Those two phenomena created a 2×2 maturation that we believe framed the notion of the digital labor marketplace. We realized pretty quickly through some analytics and research and strategy that there was an opportunity for our firm as well as a threat to our old business model around this phenomenon of cognitive automation Some parts of our business are very rules-based, parts that could benefit a great deal from an ability to ingest and apply judgment to large sets of data, and there are also a full portfolio of clients who are going through and contemplating their own process automation journeys. At the end of the day we believe this is a very important phenomenon. The World Economic Forum called this “the fourth Industrial Revolution”.

Consulting: How is KPMG getting involved with this digital labor marketplace? 

Hill: There are two things we’re doing relative to this digital labor concept. The first is helping our clients through their own journeys. A lot of time that conversation starts off as a Class 1 or Class 2 RPA conversation. For that we help our clients figure out what is the phenomenon, how does it apply to their business, what are the best places for them to seek that kind of value in their value chain, and what technologies or amalgamations of technologies might they consider. The other thing we’re doing at the high level is transforming our own organization. You could say we’re drinking our own Kool-Aid, or our own champagne, if you will.

Consulting: How will you be using these capabilities to transform KPMG internally?

Hill: We have a leadership position in this discussion; we have the right vision and strategy for ourselves and for our clients and how this is going to shape the future of work. That said, the other part of this is transforming our business. We’re not a BPO provider, but we were looking for a technology that was better shaped for augmentation of expertise than disintermediation of rules-based labor. In that context, it didn’t make a lot of sense of our own transformation. Some of our work is rules-based, but the vast majority is not that simple. It’s analytical, it requires judgment, it requires an incredible amount of data and experience. What we needed was a platform that can augment expertise much like you can see what IBM Watson did with Memorial Sloan Kettering and oncology, that’s more analogous to what professional services need than a back-office function.

Consulting: Why was Watson specifically such an attractive technology to weave into KPMG’s internal functionality as well as offer it to clients?

Hill: IBM has been a strategic partner of KPMG for many years now. We’re very close to IBM and have been for many years, when you couple the partnership we had with them and the Watson capabilities they had built over many years and many billions of dollars of research and development and leadership, we felt that it was a good fit. When we started having conversations with IBM we realized we both wanted to do something grand. IBM Watson wasn’t out peddling their technology to every Tom, Dick and Harry. They were looking for a mission-based, very impactful alignment. With Memorial Sloan Kettering for example they were trying to solve for cancer. The idea behind really scaling expertise of oncology is to help dramatically include outcomes with treatments and hopefully get us closer to the cure. We believe we can leverage this technology to fundamentally increase the confidence we have in the capital market system. At the end of the day, the ability to see all transactions instead of sampling, to see massive quantities of structured and unstructured data, all of these things I think can lend themselves to a stronger, more confident perspective on our mission, to reinforce through that assurance with capital market system.

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