Deloitte UK is the latest Big Four to target the SME market through the launch of a cloud-based service, but do the Big Four firms have what it takes to service the smaller clients?
Deloitte UK has launched Propel, a cloud-based service to help start-ups and SMEs which costed the firm a £2.5m investment. Propel essentially provide accounting services but also a "dashboard that gives real time view of how their business is performing, from cash position to web traffic".
Katie Houldsworth, Deloitte’s innovation partner for audit, said: "We’ve built this service to help start-ups and SMEs grow. It is designed to deliver insight and address some of the longstanding headaches entrepreneurs and their management teams can face."
When developing Propel, Deloitte UK collaborated with 20 pilot clients to understand what makes a difference to their businesses, she continued. "As a result, we now offer additional business planning support to supplement the dashboard and core accounting service. For example, we can help with cashflow forecasting, creating budgets and attracting investment."
Deloitte UK follows in the footstep of KMPG and PwC who have already set up similar services. With KPMG advertising their services at a starting price of £125, which seems a good catch for SMEs’ squeezed budgets.
However when it comes to the SMEs market price might not be the only consideration. "With everyone able to crunch numbers at low prices – the winner will not be based on price," Kreston CEO Jon Lisby said. "The winner will be who is really able to provide the SME/Entrepreneurial business with what they really need – and what they need is a trusted advisor."
Building trust doesn’t come with the software however good it is or from reputation or solely from expertise, Lisby continued. "It comes from taking time to listen and learn about the SME client – to really understand the business strategy and to really understand the personal strategy of the client."
"That’s where the Big 4 providers will struggle to move into this market place that has been so well served by the mid-tier," he concluded. "our members are accustomed to building trust with the SME clients – this is not an area that the Big 4 are good at – they know how to serve the FTSE 100/Fortune 500 but building trusted relationships with SMEs is an entirely different business."
This thought was widely shared by mid-tier firm leaders at a roundtable organised by International Accounting Bulletin earlier this year. Asked if they felt nervous about the Big Four openly targeting their market, one replied: "I’d love to know what’s beneath the lid, because KPMG reported a profit per partner drop of around $93,000 in the UK. It’s a really brave move to go for the SME clients, and I don’t know whether they’re at the bleeding edge or the leading edge. I’m not completely sure whether KPMG have got it right. I suspect they probably haven’t. But one of the Big Four will get the automation of the accounting process right and I suspect we’ll all transform our accounting offering."
However another participant tempered that KMPG had partnered with very credible organisations in the likes of Xero and Receipt Bank. "I don’t think they can offer the level that our firms can offer in terms of face-to-face. I know on their website you get your own manager, but it’s very different speaking to someone on the phone than having an on-the-door kind of thing. I think that’s where I don’t fear what KPMG are doing," the participant concluded.
Full transcript of the round table can be found here: Roundtable: The knowns and unknowns part II