Xero strikes alliance deal with KPMG UK

New Zealand accounting software company Xero has bolstered its presence in the United Kingdom, striking a strategic alliance deal with business consulting heavyweight KPMG UK.

The strategic alliance, announced on 31 March, sees Xero's online accounting platform play a central role in the development of a new KPMG division, designed to offer select online accounting and tax services to small and medium-sized enterprises (SMEs) using the cloud.

According to Xero's founder and chief executive Rod Drury, the alliance is expected to build its standing in the UK market by thousands of customers.

"The alliance represents thousands of new customers and, of course, it will grow over time," said Drury.

As of September last year, Xero claimed more than 30,000 customers and over 1,200 accounting and bookkeeping partners in the UK.

Not only does the deal with KPMG UK represent a boost to Xero's customer numbers, which stand at over 250,000 worldwide, but it also represents a burgeoning adoption of cloud accounting solutions in the UK market.

"This is a signal that in the UK, cloud accounting has become serious," said Drury. "We're past the early adopter phase in the UK market, which is six times the size of the Australian market."

While Xero already claims a collection of high profile partners such as Deloitte Private in Australia and New Zealand, Drury says the deal with KPMG UK is expected to open the floodgates for further alliances with other big players in the UK market.

"We're already working with most of the big organisations here in Australia and New Zealand, but this is the first big one for the UK," said Drury. "The UK is a bit behind with cloud accounting compared to Australia."

"In Australia and New Zealand, the big four firms are already down the cloud accounting journey. It's good to see the UK coming up to speed," he said.

For Gary Turner, Xero UK managing director, the KPMG alliance reflects a greater trend towards cloud accounting as the default option for small and medium businesses.

"It is very gratifying that an organisation of KPMG's standing selected Xero to be its technology platform partner for their online services, confirming our belief that cloud accounting is fast becoming the default platform for both accounting firms and small business," said Turner.

According to Simon Collins, KPMG's UK chairman, the company's decision to partner with Xero in the development of the new division to service SMEs was prompted by the desire to support small and early stage businesses.

"Today's partnership further demonstrates our commitment to small and early stage businesses that form the backbone of the UK economy and its future growth," said Collins. "Xero is an impressive software platform, supporting delivery of our services to this segment where technology is increasingly transforming the way we do business."