Three Factors That Will Catalyze KPMG’s Data & Analytics Growth

Last week KPMG held an analyst day event after a five-year gap, connecting analysts with global practice leaders from across its member companies. KPMG has been working to modernize and broaden its brand beyond being a big 4 tax and accounting firm. We heard about big bets on products and services, such as doubling down on its Cynergy acquisition to grow capabilities in customer experience design consulting. Another new initiative, KPMG Spectrum, will bring business applications together with analytics and emerging technologies in three areas—supply chain risk, regulatory, tax, and operational issues.

HfS felt that the biggest source of company excitement and momentum, however, is undoubtedly with KPMG’s Data & Analytics (D&A) practice. Here are three factors that we believe will shape the D&A business for KPMG in the next few years:

1. $250 million investment in analytics services and solutions this year: In three years of global operations, KPMG has racked up a 57% CAGR and annual D&A revenues of $1.3 billion, with 4,300 FTEs. KPMG has historically done a lot of work in consulting and information management and is now seeing greater demand for managed services and advanced analytics solutions. It is investing $250 million in the D&A practice in the next year, as a strategic growth initiative that works across borders, functions and sectors of the many KPMG member companies.
2. A direct plug into the D&A startup ecosystem with KPMG Capital: KPMG has started a wholly owned investment fund that invests exclusively in data and analytics startups globally. The fund gets its strategic direction from the D&A practice’s global leadership team. The team is interested in proprietary, patent-protected IP – unique algorithms, data and logic – that it can bring to its client base through exclusive partnerships. A recent example is KPMG’s investment in Bottlenose, a sentiment analysis tool that can track real-time technology trends for multiple industry sectors.
3. A solid partnership strategy for asset-led growth: KPMG has forged some strong partnerships as a way to package analytical IP into assets for licensing and for offering as-a-service. One example is the recently announced Microsoft partnership which will offer prebuilt analytics modules over Microsoft’s Azure cloud platform such that clients can subscribe to services like tax analytics. KPMG has also partnered with the McLaren Group to take McLaren Applied Technologies predictive analytics and technology to KPMG’s audit and advisory services.

KPMG has recognized that at the breakneck pace of the analytics market, it needs to place its bets carefully and play in its sweet spots.

Its asset-led growth plans are now in line with its competition. The D&A strategic growth initiative will create a real differentiation for the company if they continue to build these assets into KPMG’s overall ‘DNA’ – that of leveraging its c-suite relationships for next-gen audit, advisory, tax and risk services.