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The Big 6 accounting firms have been hitting the news recently, with both proposed mergers and divorces highlighting some of the pressures on the industry. The firms say the proposed mergers – between Ernst & Young and KPMG, and Coopers & Lybrand and Price Waterhouse - are largely driven by client demands for a greater breadth and depth of services, and globalisation, which communications technology has finally made a reality rather than simply marketing jargon. And the rift between Arthur Andersen and Andersen Consulting has provided a dramatic illustration that what were once accounting firms are now broad-based professional services firms, well established in consulting, and more recently making forays into legal advice and other services.

One of the key issues affronting these global firms – which are essentially groupings of local partnerships – is how much to centralise functions and standardise policies and procedures globally, and how much to allow local partners to do things as they see fit. Accountants and consultants are usually pretty smart people, and are often keen to go off and do things their own way, however sometimes the effectiveness of the global firm requires common approaches and procedures. Balancing these demands is a major challenge for global partnerships.

This is particularly relevant in trying to manage a professional firm's knowledge – which is by far the greatest asset it holds. Knowledge management – approaches to maximising the productivity of the knowledge held in organisations - is one of the hottest management trends in the US, and is rapidly growing currency in Australia, with conferences on the topic turning up every fortnight or so.

While knowledge management is applicable across all industries, particularly in the professional and service sectors, the Big 6 accounting firms and the top management consultancies such as McKinsey & Co and Booz-Allen & Hamilton are probably the organisations which have embraced the practices most completely, recognising that their competitiveness is based on how effectively they can tap the combined knowledge and expertise of their partners and staff around the world.

John Peetz Jr, Chief Knowledge Officer of Ernst & Young in the US, was in Australia recently in his role as Chairman of Ernst & Young's Global Knowledge Steering Committee, which every two months gathers the chief knowledge officers of the firm's nine largest country organisations to set global initiatives in managing the knowledge of the firm.

"We do four things," says Peetz of Ernst & Young. "We sell work to clients, we deliver work, we manage people and manage knowledge. Knowledge management in itself is nothing; it enables us in doing the other functions."

Peetz notes that knowledge management is nothing new – it has always been part of the professional services environment. "In the old days we used to yell down the hall, 'has anyone done this before?'," he says. "But you can't yell down a hallway of 75,000 people."

In global firms such as the Big 6, technology plays an important role in allowing rapid and effective communication between professionals. Each of the major firms has developed intranets which are intended as repositories for the collective stored knowledge of the firm, each with curiously similar names: Ernst & Young has its KnowledgeWeb, Arthur Andersen its KnowledgeSpace, McKinsey its Knowledgenet, Booz-Allen & Hamilton its Knowledge-On-Line and so on.

Many managers and consultants who have latched onto the ideas of knowledge management seem to think that it's all about using intranets, groupware and other gleaming technology to share information. Peetz says it's only part of the picture. "We look at technology as a platform for us to build what we want to build. The trick is not to let technologists lead – 'Ooh goody, let's go build an intranet'."

The value of technology is that it makes ways of sharing information scalable – what you can do with 75 people you can also do with 75,000 people. Giving people the means to share information, however, doesn't mean that people will do it. Far more of the battle is in building a culture in which people want to and have the incentive to share knowledge and contribute to the broader firm, rather than hoarding. Peetz believes that Ernst & Young has effectively addressed these issues, and points to information overload as the key issue before them.

"The cultural scenario – the battlefield – is helping people cope with overload, helping them deal with time management in the digital age, helping them to do their work without having to work 16 hours a day," he say. If people perceive their knowledge management functions - what they have to do to contribute to others – as adding to their workload rather than complementing it, they simply won't do them, which will mean a less competitive firm. Peetz says it is much more difficult than everything else put together to teach practitioners skills to help them to deal with the information coming at them from all sides, how to ignore what they should ignore and use what they should use.

In building a culture and skill-base which supports knowledge sharing, you need to consistently integrate the right messages and approaches into the workplace. Peetz says, "Part of it is to bake technology and knowledge training into everything we do. There should be no training course, no meeting, no anything which doesn't involve these two elements."

Peetz says the toughest part of implementing knowledge management in his firm was deciding on what to standardise and centralise, and what to allow people free rein to implement and experiment with. Knowledge management was a central function which hadn't existed before, and many partners around the world were reluctant to cede local power. "We had some battles, we had some ugly meetings, but by and large we got through that period." reports Peetz. "It's more important that we all do things one way, than it is debating which particular way we do things."

Ernst & Young now refers to itself as a professional services firm, with divisions including audit, tax, corporate finance and consulting. Much of the infrastructure for managing and sharing knowledge is common across the functions – Peetz's committee manages these firmwide operations. The content of the knowledge is quite different, however. Auditing, for example, is very formalised and structured, so procedures and best practice can be quite easily captured in a usable form, while consulting is far more free-form, so the practitioners need to have a lot of scope to work with the tools and content in the way they see fit.

The proposed merger of Ernst & Young and KPMG has put the firm in the same situation as many of its clients: in the recent swathe of global mergers of knowledge-intensive organisations such as banks and publishers as well as accounting firms, the most important issue is often how to bring together disparate cultures in a way which maintains the propensity to share knowledge and contribute to colleagues across the new organisation.

If merging companies have different cultures Peetz believes you need to adopt one practice across the firm, starting at a policy and strategic level. "If one firm is more open than another in terms of who can see what, then that needs to be reconciled. With all other things being equal, you want the more open approach." Peetz says that based on early talks with KPMG he doesn't believe they differ a lot in those respects. "I'm not losing a lot of sleep over that – so far."

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