KPMG: UK businesses reluctant to stick head in cloud

09 March 2015

Despite the clear advantages of Cloud services, UK businesses show reluctance ‘sticking their head in the cloud’, research by KPMG shows, with 71% of these companies spending 10% or less on the cloud. According to the research, one of the main reasons for this is the security issue, which, according to KPMG, may be disproportionate as cloud technology is as safe as other outsourcing solutions.

Professional services firm KPMG recently released its 8th annual ‘IT Outsourcing Service Provider Performance & Satisfaction Study’, which covered almost 2,100 contracts held by over 450 clients of outsourcing service providers. By examining more than 330 UK-based contracts, the firm was able to come to a detailed analysis of the current corporate IT spend in the UK.

KPMG - IT Outsourcing Service Provider Performance & Satisfaction Study

The underutilised cloud
In this analysis, the consulting firm, among others, focussed on the use of cloud technologies*, which according to the researchers, present a wide range of cost saving opportunities. The research, however, shows that these opportunities are not met as UK businesses are reluctant to use cloud services. Almost three-quarters of UK businesses (71%) are spending a meagre 10% or less of their IT budget on cloud services. This number is even lower than the global average, with 60% of companies spending 10% or less and 71% spending a fifth (20%) or less.

The top three reasons for the hesitation to use cloud services cited by the UK respondents included  data location, security and privacy risks, cited by just over a quarter (26%), concerns over regulation and compliance, named by 16%, and cynicism about integrating cloud services with legacy IT (15%).

Commenting on the UK analysis, Jason Sahota, Director in KPMG’s Shared Services and Outsourcing Advisory, says: “Despite widespread acceptance that cloud services offer access to the latest technologies, and make IT more accessible, adoption remains relatively sluggish. While concern about the security risks surrounding new technology is understandable it may also be disproportionate, as Cloud options are just as safe as other outsourcing solutions.”

Jason Sahota, KPMG

Looking forward, Sahota adds: “Of course, investors and stakeholders will welcome caution on the part of the buyers, but they also want to see innovation, meaning that UK will need to find the right balance to remain competitive.”

* In the report, when using the term Cloud technologies KPMG refers to Software as a Service (SaaS), Infrastructure as a Service (IaaS) and Platform as a Service (PaaS).



KPMG withdraws SME cloud accounting service from UK

26 February 2019

Big Four firm KPMG has announced it will withdraw a digital accounting service line targeting small businesses from the UK. The move comes as KPMG UK attempts to consolidate on its highest growth in a decade, dropping aspects of its business which are slower to grow. While the offering will no longer be available in the UK, it will remain on the table for clients outside of Britain.

According to a poll of small and mid-sized enterprises (SMEs) four years ago, 72% viewed digital innovation as important to the future of their businesses, while 43% said it was either high or very high priority as they sought to work smarter and faster in order to make ground on large market incumbents. The research was released by KPMG, and coincided with the firm’s launch a of small business accounting (SBA) service in the UK, which sought to tap into the desire among SMEs to leverage digital technology to improve efficiency.

The service would go on to provide cloud-based bookkeeping to SMEs and micro businesses, and saw KPMG become one of the first of the Big Four to go after the SME market. The move also saw KPMG sink a £40 million investment into a technology platform – as well as 20 Partners and 50 Directors to help grow the offering – to enable the firm to deliver accounting services to small and start-up businesses at a fraction of its usual fees. This included online accounts preparation, bookkeeping, payroll, VAT and corporate tax returns.KPMG withdraws SME cloud accounting service from UKAfter less than five years, however, the project is due to come to an end in the UK offices of the Big Four firm. According to industry news hub Accounting Web, the service had faced closure since the Autumn, and the closure will not result in job losses, as the SBA service professionals will instead by re-deployed in areas where KPMG hopes to grow in 2019. This comes on the back of KPMG UK reporting its highest level of revenue improvement in a decade at the end of its FY19 cycle, with fee income rising 8% and underlying profits jumping up 18%.

The move will likely play a part in the company’s efforts to consolidate on those positive results, especially as KPMG prepares to launch its legal consulting line in the UK. KPMG said it is contacting its existing SBA clients to inform them of its decision. Meanwhile, despite these services being withdrawn in Britain, the Big Four firm confirmed that the SBA line would still be available in other countries.

A KPMG spokesperson said of the news, “Discussions with staff is on-going and we are supporting them and keeping them informed of their options as we wind down SBA. We are looking to redeploy a large number of SBA staff into other roles within KPMG whilst keeping a small number of advisors to work with existing clients until they have found alternative providers for their cloud-based accounting requirements.”

2019 looks set to be a difficult year for UK businesses, with the economic uncertainty brought on by Brexit likely to impact many of the Big Four’s clients. As a result, KPMG is not the only member of the quartet to announce changes to its set up, designed to play to its strengths in the UK, early in the year. A week before, EY announced that it would be relocating its European entity to the mainland, as it sought to circumnavigate potential disruptions in its talent pipeline brought on by the UK’s divorce with the bloc of 27 remaining EU states.