Two years in the making, the unit aims to help KPMG's enterprise clients maintain a competitive edge by building the means within their organizations to exploit intellectual capital.

Initially, New York-based KPMG sees three main areas where companies can benefit from knowledge management applications: customer management, new product development and supply chain management, said Jay Michaud, director of KPMG's knowledge management solutions practice.

"Knowledge management is a business model for sustainable business advantage that leverages an organization's intellectual capital," Michaud said. "It is a management discipline for identifying, evaluating, capturing, enhancing and sharing a firm's intellectual capital."

GartnerGroup Inc., Stamford, Conn., has estimated that the enterprise service provider portion of the knowledge management market is growing at 84 percent a year and will grow to between $2 billion and $3 billion in 2000.

"Today there are very few external service providers who can provide [knowledge management] services," said Kathy Harris, a GartnerGroup analyst who covers knowledge management.

Within two years, most of the large consulting firms will have knowledge management capabilities, Harris said. "We believe that the external service provider [knowledge management] market will sort out much faster than the product providers," Harris said.