The big 4 accounting firms are beginning to deepen their relationships with Microsoft as Microsoft comes up with more unique data & analytics platforms. Additionally, the big four are more interested in these partnerships as their clients become more interested in data & analytics solutions. The two most recent partnerships with Microsoft occurred between EY and KPMG. The details are below.
EY Workplace Insights
Workplace insights is an analytics solution that will help organizations gain insights into their workforces. It also promises to help improve those workforces’ well-being. As far as how that is measured, that is still yet to be seen.
EY will partner with Microsoft’s existing Workplace analytics platform.
This platform will mine data from existing organizations communication and collaboration systems. Think email and calendar invites. It will mine all of the metadata from these applications.
The analytics platform will generate an output from all that metadata and EY will use their consulting expertise to analyze all that data.
A few ways that the workplace insights solution will help clients is through
- organizational transformations,
- mergers and acquisitions,
- organization design
- and workplace and real estate planning.
The most interesting of these to me is the mergers and acquisitions. Mergers and acquisitions are good times to analyze this type of data because organizations always have trouble integrating. Mining data during this time to keep key talent and ensuring integration is a great idea by Ernst and Young.
KPMG and Microsoft partner up on KPMG Clara
In July of 2017 KPMG announced another partnership with Microsoft this partners is called KPMG Clara.
KPMG Clara provides clients with insights based on the audits that KPMG is already conducting. It turns these into insights for the audit committees and management.
It is also a general dashboard for your audit. It provides status updates on progress of the audit risks and findings.
This comes in light of investors basing decisions on unstructured data. What they mean by unstructured data is that it is not in a ledger or easily readable excel file.
The data that KPMG Clara will gather will be put into visualizations for whatever client tries to utilize KPMG Clara.
My thought on KPMG Clara. KPMG is obviously heavily invested in pushing Data and Analytics in the marketplace. This is just another data and analytics solution that they are offering clients.
The unique thing about this solution is that it is not necessarily a consulting offering. It is actually part of the audits, so one would think that it does not impair independence which is interesting. Another interesting thing about this offering is that it is one of the first times that I’ve seen an audit be used for the benefit of the client. The client will actually be able to use the data from an audit to learn more about their business. Audit firms typically use all the data from an audit for themselves and call it work product. They don’t let client usually see what they do because they are afraid that the clients will point out faulty assumptions in their work. This could enhance audit quality as well because clients might be able to point out faulty data and assumptions from auditors. One problem I can foresee is that audits are extremely limited in scope usually. They are limited by materiality. Therefore, they only offer small snippets of a company’s operations. CFO’s, CEO’s and stakeholders usually want a complete picture of their company’s and not an abridged version. This will only highlight how limited auditors scope is.
There will also be gaming of the system here. I don’t know how many times I’ve seen software solutions over the years that promise to give transparency on audit progress to the client. The progress bar always moves where the lead audit partner and the client want it to. The progress data in these type of audit software solutions is never realistic. Additionally, the reporting of risks seems a little shaky to me and that will also be gamed. Are you telling me that an audit associate, senior associate or manager is going to just plug in a huge risk and their findings real time? No way!!! It will have to be run past the audit partner first and by the time that time the partner will have already met with the client about it. In that case will it really be useful for most clients? I doubt it. It’s just another shiny tool that KPMG wants to have in their toolbox.
What do these partnerships mean for the big 4
All of the big 4 accounting firms have partnerships with Microsoft. These are just the two latest partnerships. KPMG has partnered with Microsoft in the past and most recently around blockchain solutions.
You can expect many partnerships in the future as Microsoft is a huge player in the software and corporate solutions space. Microsoft is competitor with IBM in this area. IBM has Watson that they are stuffing down everyone’s throat while it appears that Microsoft is coming up with many more ad hoc solutions. I’m also sure that Microsoft is pitching more solutions to the big 4 everyday. I am also sure that Microsoft gives work to every single big 4 accounting firm in exchange for them pushing Microsoft products. I don’t expect this stop, so make sure to come back to the big 4 accounting firms for the latest news and make sure to subscribe to our podcast on iTunes.