[IMGCAP(1)]Imagine a visionary entrepreneur like Richard Branson deciding to deliver unbelievable experiences for small businesses in the client accounting services space. Would it change the way you approach your practice? It’s a good question, and one I ask frequently of U.S. firms.
How about if KPMG decided to enter the client accounting services space for small businesses? What if they were doing it at scale and what if they were offering $200-per-month plans for small businesses? That’s not something you would typically think of when you think of KPMG, is it?
Well, think again.
KMPG recently launched KPMG Enterprise to go after the 4.9 million small businesses in the United Kingdom and is investing approximately $60 million into the strategy.
This type of business unit would not have been possible before the cloud. By applying cloud economics, the margins become attractive and the market size vastly increases. In the new world, technology specifically cloud technology can make the processing and management of small business accounting, bill payment, payroll and monthly reporting incredibly efficient. And with more centralization of the administrative side, comes greatly improved economies of scale.
We’ve been hearing for several years now that growth among accounting firms is going to come from advisory services. The back and forth of audit contracts is a losing proposition, which many in our industry are calling a zero-sum game. Fighting over the same pie is not a good strategy so why not go after the advisory services blue ocean?
We’ve already seen a proliferation of accounting firms in Australia and New Zealand make this move. We’ve also seen it take hold in the U.S. across a growing number of larger firms like Armanino LLP. Armanino is the largest independent accounting firm in California and the 29th largest in the U.S. Over the past two years, they have built an outsourced accounting division based on cloud technology with Xero at the core. Tom Mescall, Armanino’s practice leader, says that with cloud solutions, they can be more efficient and deliver a better service to their clients and expect more than 30 percent growth from this practice area in 2015.
Keeping an eye on what’s happening around us and capitalizing on the opportunity is ever-more important as cloud technology changes our industry landscape—just as it has so many other industries.
Jamie Sutherland is the president of Xero US.
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