KPMG Moves into Small Business Tax and Accounting Services with Spark — Accounting Today — Big 4 accounting and business consulting firm KPMG LLP, is making a play for the small business tax and accounting services market with the launch of a new online system called KPMG Spark. The service is the result of the acquisition by KPMG of the cloud bookkeeping system then known as Bookly.
Deloitte Joins Forces with Legacy Advantage to Grow Services in Western Canada — Legacy Advantage — Deloitte is acquiring specialized cloud-based bookkeeping firm, Legacy Advantage Chartered Professional Accountants Ltd. to grow bookkeeping, accounting and advisory offerings in Western Canada. Founded in 2015 and joining the ctrl by Deloitte practice, Legacy Advantage focuses bookkeeping and accounting services on not-for-profit organizations and private companies of various sizes.
QuickBooks introduces 'Backing You,' starring Danny DeVito — Accounting Today — Intuit QuickBooks’ Backing You campaign, now in its second year, has named Danny DeVito a partner for its latest videos. The initiative is aimed at helping self-employed, small business and mid-market enterprise customers succeed.
Universal income vs. the robots: Meet the presidential candidate fighting automation — MIT Technology Review — Andrew Yang announced he is vying for the 2020 Democratic presidential nomination back in February. His mission? Preparing America for automation.
140,300 new accounting and auditing jobs predicted by 2026 — Accounting Today — Approximately 140,300 new jobs for accountants and auditors are expected to be created by the year 2026, according to a new forecast.
Digital Divide Is Wider Than We Think, Study Says — New York Times — New research from Microsoft says that far fewer people have broadband internet access than government statistics have shown.
Cloud Accounting Podcast E49: KPMG and Deloitte are going after your small business clients (transcribed by Sonix)
Blake Oliver: Welcome to The Cloud Accounting Podcast. I'm Blake Oliver-
David Leary: And I'm David Leary.
Blake Oliver: So, David, what's new this week?
David Leary: The Big Four are going after cloud accounting, again, and small business, again.
Blake Oliver: Small-business accounting, and the Big Four? Wow.
David Leary: Historically, I think they've tried this a few times, right?
Blake Oliver: I've seen some news in the past about them getting into small business in Australia, New Zealand ... That makes more sense because the Big Four are not as big there, but I really haven't heard much about this in the US, so, I'm curious to hear about what's going on.
David Leary: Two articles this week; one with KPMG, another one with Deloitte. KPMG, a few months back, purchased a cloud-bookkeeping system called Bookly. This system was kinda like a hybrid; it's accounting software, but it also was combined with maybe some in-house accountants, and bookkeepers type of a service. KPMG purchased that. They've relaunched it now, and they call it KPMG Spark.
David Leary: This article was December 7th, so this just got announced last week. They're really coming down ... They're trying to come down-market, and they wanna offer a range of services. It's really just their cash-based accounting small businesses. They wanna get some consulting, some monthly bookkeeping, some tax prep, some tax planning, audit support, and payroll.
Blake Oliver: It looks like they are targeting pre-revenue to up to $50 million annually in revenue, so definitely on the small-business side, and focusing on the market that is traditionally served by accounting firms or Xero, and QuickBooks.
David Leary: Yeah, I went out to the site. It looks like they don't have prices. When you click the button to get more info, it just takes you into a Calendly appointment to book an appointment for a discussion. It's gonna be interesting to see what they're gonna do with this. Obviously, they're gonna keep trying. Long-term, they need to; they need to figure that out [cross talk]
Blake Oliver: I'm a little skeptical of this. I've always said I don't think the Big Four can do small-business accounting well, just given their focus on big business. If you go to the website right now, at KPMGSpark.com, at this moment, there is a Under Maintenance picture on the website. It says, "Be back soon. We're currently down for some short maintenance."
David Leary: It was just working five minutes ago, or like half hour ago, I swear; I was on the website.
Blake Oliver: Before we get into whether or not we think that the Big Four can actually do this, what is the news about Deloitte?
David Leary: Deloitte, in Canada, purchased ... I think some people may know Bob Wang. His firm, Legacy Advantage Chartered Professional Accountants ... They are a cloud bookkeeping service that offered some bookkeeping, accounting, and advisory services, there in Western Canada. They're fairly young. They were only founded in 2015. He's grown his firm ... I think it said he has 25 employees that are gonna now become Deloitte employees. That's pretty fast, in three years, to grow his firm from himself to 25 employees. Deloitte acquired them because Deloitte wants to get into the small-business cloud ... It's almost an identical article, it's just they acquired a firm, and not really a product.
Blake Oliver: Deloitte and KPMG getting into small business. Here's my prediction for 2019: that we will not see a lot of news come out of this, because the cost structure of the Big Four makes it unaffordable for most small businesses, who are pretty price-sensitive, when it comes to their bookkeeping, and tax, and accounting.
Blake Oliver: I just don't see how they're gonna be able to compete with small firms, small local firms, with cloud firms, and still deliver a good, quality service without some amazing automation technology, which I don't think is involved in any of this.
David Leary: If I'm hearing you, I'm a small business owner, Joe Small Business. If I wanted to be with Deloitte, I would have been with Deloitte. Now, I'm at Deloitte. Now, I'm like, "All right, I'm gonna go find other accountant." Is that kind of where this is gonna head?
Blake Oliver: Well, it's just gonna be so expensive. It's just not gonna be affordable. Look at marketing, look at businesses, overall. How many businesses are good at serving the entire market, all the way from small up to enterprise? Nobody can do it really well. Very few companies can do it, so, I don't know why Deloitte, and KPMG think they can do it.
David Leary: In general, it's very hard to serve small business. Intuit's an exception to this. Over the last 40 years, Intuit's really been an exception.
Blake Oliver: It's a huge challenge, and any firm owner, anyone who has served small businesses will tell you that it's a real challenge to meet their expectations at the price point that they're expecting. I'm skeptical.
David Leary: I think if you have a firm, and you're doing awesome - a cloud firm - there could be a chance you could get acquired, too.
Blake Oliver: Yeah, that's the good news. Build up an awesome cloud firm, and then you'll become a partner at one of the Big Four, because they're desperate to grow.
David Leary: Actually, I don't think it'd be ... It looks like Bob Wang, he's not gonna be a partner. I actually noticed that. He's going to be a senior adviser.
Blake Oliver: Oh, interesting.
David Leary: He was not a partner. Even though it looks like a fairly big acquisition - 25 employees - but, yeah, it's not enough to get him to be a partner. That may not be a strategy.
Blake Oliver: Got it.
David Leary: I think, kind of in a loosely related here ... I kinda mentioned Intuit just now; Intuit has reached small business, and they're the exception. Maybe KPMG, and Deloitte could pull a card out of Intuit's playbook. I don't know if you saw the news this week? Intuit is releasing a series of commercials, "mini-films," starring Danny DeVito. I don't know if you saw that?
Blake Oliver: Yeah, I'm really glad that you found this article in Accounting Today, and sent it to me, because I was watching YouTube, I think it might have been yesterday, and I saw this really weird 15-second spot, where it was Danny DeVito sleeping. Somebody asked him, like, "Danny, what are you doing?" He says, "I'm updating my inventory," and then the QuickBooks logo ... Apparently, Danny DeVito is the new spokesperson for QuickBooks?
David Leary: Yes, and he has a background. For him, it's personal. His parents had a small business. He watched his sister build a small business. He's really connected to that, and wants to help.
David Leary: The way they're doing it is ... I don't know if anybody's seen the commercials yet, or any of these videos? He's almost like a coach. He's coming in, and he's giving small-business owners like a dog ... I don't know if it's a dog walker, or maybe a dog groomer ... Tips on not having to manually type in receipts, doing zero data entry, getting paid instantly. He's giving a lot of coaching like that.
David Leary: I think, for me, the big takeaway is, and this is something I saw in a Slack group, really talking about how this is an example of marketing. No other accounting software, nobody else in the small-business game is doing this. Nobody's doing any TV. They're not doing Super Bowl ads. They're not doing anything, and this is why Intuit keeps winning. They play the game, and they spend.
Blake Oliver: Well, they're the only big player in the small-business technology space, so they're the only ones who can do it. Maybe if KPMG, and Deloitte use some of their profits to invest in some marketing to small businesses, they would be successful.
David Leary: I think KPMG, and Deloitte, and [Censhare], they all do marketing, it's just they sponsor golf tournaments. I don't think they're speaking to ... They're not speaking to small-business owners.
Blake Oliver: They're marketing in CFO magazine, or Journal of Accountancy, or ... They're not finding small-business owners where they go, which is like Office Depot.
David Leary: No, totally agree. What do you have this week?
Blake Oliver: Getting into politics, because it's always a political season here, I came across an article in Technology Review, MIT Technology Review, about a presidential candidate. His name is Andrew Yang. He has announced himself as a 2020 US-presidential candidate. His main platform is universal basic income, and he believes that automation is the greatest threat facing the country, over the next decade.
Blake Oliver: If you haven't heard of Andrew Yang, and I'm sure you probably haven't, he was the CEO of Manhattan Prep, which, over the course of his tenure running that company, became the number one test-prep company in the country.
Blake Oliver: His platform is really interesting. He sat down for an interview with Technology Review. They asked him why is he focused on universal basic income, which is sort of a niche topic ... By the way, if you're not familiar with that concept, UBI - universal basic income - basically, this idea that we should provide everybody in the country, every citizen a guaranteed income, every month, of some amount. The amounts vary; some people say it should be a few thousand dollars. The idea is that you would be able to then pay for food, and housing and not have to worry about any of that stuff.
David Leary: I'd get enough to opt out of working. The assumption is there's not gonna be jobs, as many jobs, so I can just get enough basic income to opt out.
Blake Oliver: You would get enough that if you couldn't find a job, you would be able to survive. Of course, this gets people really riled up, because it smacks of Socialism, right? You think, "Oh, gosh, what would we be doing?"
Blake Oliver: Some Libertarians actually really like the idea, because at least if you're a Libertarian, you would be able to get rid of the entire Social Security infrastructure, all of the food-stamps programs, everything that we do. You would simply replace all of that with a check that everybody gets every month. It would basically be like everybody gets Social Security, every month.
Blake Oliver: The proponents of UBI - universal basic income - including Andrew Yang, say this is necessary to do, because we are approaching a point at which we will automate most of the jobs that people are doing now, and there simply won't be new jobs for a lot of people, because if you don't have a college degree, you won't be able to get a job.
Blake Oliver: Something like only 30-40 percent of people have college degrees, so a huge portion of the country is under threat of losing their jobs. He cites, actually, the election Donald Trump. He says that the reason that Donald Trump got elected is because we automated 4 million manufacturing jobs in Michigan, Ohio, Pennsylvania, Wisconsin, Missouri, and Iowa - all the swing states he needed to win, and did win. He says that actually automation was responsible for all of that discontent, and Donald Trump took advantage of that.
Blake Oliver: He says that's just a preview of what's to come, and he uses truck driving as a great example. There are 3.5 million Americans who drive trucks for a living, and an additional 5 million Americans who work at truck stops, motels, and diners, who rely on the trucks stopping by. That's 8.5 million jobs.
Blake Oliver: If you if you follow any of the automation trends with self-driving cars, and trucks, it's pretty easy to see all of those jobs, or most of those jobs going away in 10 years. He says when that happens, we're gonna have an even bigger backlash than we saw with the folks supporting Donald Trump. Whether or not you agree with them, or with the administration, this is something we have to deal with. He says you know creating a universal basic income is the only way to handle it.
David Leary: I get the gist of this, and I get the gist of it, in the short term. Yes, jobs are going away, especially for some, like truck drivers. It's very obvious; the writing's on the wall. Semis are just gonna drive themselves. But, I kind of think people miss the point that, 20 years from now, 30 years from now, 70 percent of jobs are gonna be ... They're gonna new. They don't even exist yet.
David Leary: Really, go back 30 years ago, nobody was a web developer; nobody was a full stack developer. There was no such thing as SaaS, or cloud. Nobody was a cloud accountant. I don't know. I think a lot of this is like the sky is falling type stuff. There's gonna be new jobs that we can't even imagine yet.
Blake Oliver: That is true. The challenge is you can't look at job creation, and job destruction in aggregate. If you look at it, overall, it actually looks good. There are studies that show that more jobs will be created than are destroyed by automation. The problem is when you dig into it, you see that the jobs that are created require a lot more education, and skills, in general, than the jobs that are destroyed.
Blake Oliver: This is why we have this weird dual economy going on, right now, where you have so much opportunity in the tech world, in the professions. Accounting unemployment is like below two percent. It's impossible to hire a software engineer, these days.
Blake Oliver: It's not like a guy working in a factory, or driving a truck is going to be able to retrain, and learn those skills. At a certain point, you're kinda locked in. You can gain some skills, but if you didn't learn how to be a critical thinker, or to do high-level stuff in school, by the time you're 30, it's a challenge. It's really hard. That's the problem that we have.
Blake Oliver: Actually, this ties in with another article that I ran into, on Accounting Today this week. The headline is, "140,300 New Accounting and Auditing Jobs Predicted by 2026." It's featuring a recent study by the Pew Research Center, which found that 48 percent of Americans are somewhat worried that their job could be taken over by a robot, and 25 percent are very worried about this prospect.
Blake Oliver: Despite those fears, the unemployment rate is at its lowest point since 1969. Accounting and auditing jobs are in the top, something like five, of fast-growing professions, which is topped by home-health, and professional-care aides, waiters, food service, and cooks, software developers, operations managers, nursing assistants, construction laborers, and then, accountants, and auditors.
Blake Oliver: Going back to that universal basic income/automation fear, accounting, and auditing is one of those professions, where we actually don't have to worry about automation stealing our jobs. As long as we can continue to learn new skills, we can ride on top of that automation wave, and we can get rid of the boring stuff that we have been doing, historically. We can do much, much more interesting work.
Blake Oliver: It's not hard for an accountant to learn new skills; not nearly as difficult as, say, a truck driver to become an accountant, or to become a software developer, or something else. Even a truck driver retraining to be a home-health-care aide ... The kind of person that would wanna be a truck driver, can you see them necessarily wanting to be a home-health-care aide? It's a challenge.
Blake Oliver: We're developing into this bifurcated economy, where there's so much opportunity for people in one side, and everybody else is getting left behind. I'm not saying I necessarily agree with Andrew Yang's universal basic income platform, but I find it appealing, because I don't see how else we're going to overcome all the social unrest that will come from tens of millions of people losing their jobs, and not being able to find new ones, while the rest of the economy just hums along, and people continue to get richer, and richer.
David Leary: I think it's one to watch. I do think there's a little over-fear happening, but his argument makes sense. The universal basic income is interesting, because if you [go universal], you could really save a bunch of government money, because instead of having 15 different programs, which we do now, we'd have this one program to rule them all-.
Blake Oliver: A lot of the programs that we have now are very localized. If you live in a city where you have access to all sorts of housing assistance, and food stamps, or whatnot, it might be easier to actually get those services; whereas, if you live out in rural America, it could be challenging.
Blake Oliver: Actually, I got another article that ties into this, which is in the New York Times. It's called, "Digital Divide is Wider than We Think, Study Says," and it is all about a Microsoft study that found that a lot of people in this country, especially in rural America, don't have access to broadband internet. Microsoft said that 163 million people do not use the internet at broadband speeds, which is just a shocking number to me.
David Leary: That's like one-third of the country, right?
Blake Oliver: It's crazy. I can't remember how many people live here, but it's like ... We're at least 300 million people in the US, right?
David Leary: Yeah.
Blake Oliver: Here's the thing is that the FCC says that broadband is not available to about 25 million Americans. Something about how the FCC is calculating broadband availability is different than what Microsoft found, and the discrepancy is really stark in rural areas.
Blake Oliver: The article cites an example in Ferry County, where Microsoft estimates that only two percent of people use broadband service, versus the 100 percent the Federal Government says have access to this service.
Blake Oliver: Going back to the idea of we have two different economies, two different Americas, there is the America of the coasts, of the cities, where we have access to ... I have gigabit internet in my office, right here, and it's necessary for us to do our work, because we're a cloud accounting company. You go out to a rural county, and you can't even get broadband. You're stuck with dial-up, or DSL, or something like that.
David Leary: I don't know how much I agree with numbers here, because I think it's how you define broadband. You can get high-speed cell phones everywhere, now, and I would argue that's broadband.
Blake Oliver: Well, here's the thing. High speed for a cellphone, that's 4G, right? I don't think 4G is really all that prevalent outside of cities.
David Leary: I've been to Podunk, South Dakota, and I have 4G there, and anywhere I've connected into. These numbers don't ... I feel like the FCC number might be more accurate - 24 million.
Blake Oliver: Really? You think Microsoft is being self-serving here? It's not like they're ... They're not a provider of broadband.
David Leary: It looks like Microsoft's counting it a little bit different, because they're saying people don't use it. It could be available, but only two percent are choosing to use it-
Blake Oliver: But, maybe-.
Blake Oliver: They can afford to pay for it, or whatever that might be.
Blake Oliver: Yeah, and maybe that's the problem is that out in rural America, broadband is really expensive. I've actually heard this from a few folks, a few prospects of FloQast. We have actually heard this around the office, where one of our sales reps will call out to somewhere in South Dakota, for instance.
Blake Oliver: They will be explaining the value, pitching the value of using cloud software, of cloud ERP in accounting to a controller, or an accountant. That accountant will say, "Well, how am I supposed to use cloud software, Software as a Service, when I don't have reliable broadband internet?"
Blake Oliver: It just blows our minds. That's the problem. They would love to switch to a cloud product, but they can't rely on the fact that everybody will have access to it at reasonable speeds.
David Leary: I've heard from a couple accountants, and bookkeepers that have maybe some clients, either at a bar, or restaurant, and they can't really go to a cloud point-of-sale, just because it's not reliable enough.
Blake Oliver: And I think that Rachel Fish has talked about this being an issue in some parts of Canada. You can't switch to a cloud accounting system, because you need to stay on-premises, because if you've got a bunch people out in the field in rural areas, they aren't necessarily going to have a good connection with their phone, or mobile hotspot.
David Leary: That makes sense.
Blake Oliver: I don't know, maybe this is the theme of this episode, which is the digital divide; the digital divide, in terms of automation; whether that's going to take your job, or keep your job, or help you improve your job, or whether or not you're gonna have a job.
Blake Oliver: I feel like broadband is the key. If you don't have access to broadband internet, how do you get any of these new jobs that are being created, which all tend to be online, unless you want to be a home-health-care aide?
David Leary: I think that goes back to your presidential candidate. Maybe he should be running on, "I'm gonna deliver broadband to ... " Everybody should just get broadband, maybe, instead of universal basic income, and the rest will just happen naturally.
Blake Oliver: I would definitely support free broadband internet for everybody over free college tuition. I think that would be much more valuable.
David Leary: Wow. All right. We're getting very political, like two weeks in a row. Last week, it's like we should have cloud bookkeepers in Congress; now, we're saying we should give broadband internet over college tuition. We're tipping to new areas on The Cloud Accounting Podcast. If anybody wants to disagree with you, or agree with you, online, what's the best way to do that, Blake?
Blake Oliver: Please tweet at me. I'm @BlakeTOliver, or connect with me on LinkedIn. I would love to hear your opinions on universal basic income, whether or not automation is going to take all of our jobs, and whether or not we are in for even more political dissension, and disconnect than we have, already, right now.
David Leary: If you wanna get a hold of me, I'm @DavidLeary on Twitter. I think that's a wrap.
Blake Oliver: Great talking with you, David, and I'll see you here next week.
David Leary: Bye, Blake.
The above audio transcript of "Cloud Accounting Podcast E49: KPMG and Deloitte are going after your small business clients" was transcribed by the best audio transcription service called Sonix. If you have to convert audio to text in 2019, then you should try Sonix. Transcribing audio files is painful. Sonix makes it fast, easy, and affordable. I love using Sonix to transcribe my audio files.
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