Another week, another new entrant in the accounting software market. Wiise is, however, a little different. It is backed by three of the largest and best-known companies in Australia with an enormous customer base among them.
KPMG Australia, Microsoft and the Commonwealth Bank of Australia all have their names right at the top of the press release announcing this new program, which is due for release in July. The software is built on Microsoft’s latest cloud-based ERP for SMEs, released just last month, and will be developed by teams from all three companies.
The second line of the release reads, somewhat ominously: “The venture represents the first time that a leading professional services firm, a major bank and a global technology company have come together in Australia to start a fintech venture targeting SMEs.”
Evidently a powerful triumvirate with hundreds of thousands of businesses in their combined customer list – but also a highly bureaucratic one. No matter how many Post-It notes you can afford, bureaucracy is anathema to agile software development. So will this alliance prosper? And who exactly is the father?
Let’s take it apart, starting with the software.
What is Wiise?
Wiise is a step up from small business accounting software such as Xero, QuickBooks Online and MYOB. It is an ERP, a business management platform that encompasses complex inventory, supply chain management, warehousing, marketing and sales, as well as financials.
The software is a modified version of Microsoft Dynamics 365 Business Central, previously known as Microsoft Dynamics 365 for Finance and Operations Business Edition, which itself was modelled on the ERP Microsoft NAV.
Microsoft Dynamics 365 Business Central is a brand new SaaS platform (here’s quite a good roundup) with a user interface similar to the rest of the Microsoft Office 365 suite.
KPMG owns the Wiise brand and company, and will use its accounting smarts to customise elements such as supply chains for Australian SMEs. KPMG will also develop machine learning and other AI tools for Wiise using Microsoft products such as Cortana and Power BI.
CBA has added its own integrations such as bank feeds and a payment gateway for online invoices which automatically reconciles payments to the general ledger. Future versions will add the ability to make payments from within the software (no more ABA file) and to request instant loans from the Big Four bank.
From CBA: “Customers will be also able to send enquiries around CBA products and services (working capital / lending, cash management, merchant) from within Wiise. Through this, they will have the option to attach relevant financial and business information to streamline the approval process.”
The goal is to combine the business expertise and software development teams of the three partners to produce an end-to-end business management platform for SMBs.
Who is behind Wiise?
One of the principal architects of this deal is John Munnelly, a KPMG partner who joined the firm when it acquired his tech consultancy, Hands On Systems. (He recently made partner a month ago.)
Munnelly was behind the launch of Microsoft Financials for Office 365, a rebadged version of Microsoft NAV aimed at smaller businesses. KPMG will retire Financials and migrate customers to Wiise.
Steven Miller, Microsoft Australia’s director of education, was also involved in launching Wiise.
Wiise itself is a standalone company based at Stone & Chalk’s Sydney fintech hub.
Who is Wiise for?
Wiise is chasing the NetSuite market: Fast-growing SMEs that have hit the limits of their accounting software, are sick of using multiple apps to get things done, and want a single platform to drive the growth of their business.
The ideal customer is best defined by the complexity of a business rather than its size, said CBA in a written statement attributed to Adam Bennett, group executive for Business and Private Banking, Commonwealth Bank of Australia.
“For example, they might have high a stock turnover, multi-locations, be a retailer and distributor, and have a high volume of transactions... anywhere from three to 300 users is a good fit for Wiise,” Bennett wrote.
Microsoft’s IT consulting partners will sell Wiise, or SMBs can buy the software direct online. CBA customers will see offers within their NetBank and CommBiz portals.
KPMG will sell Wiise through its technology consulting arm, which already includes a team selling Microsoft Dynamics ERP and CRM. Though its worth noting that Business Central, although part of the Dynamics family, has a different code base.
The word on the street is that KPMG will encourage its clients in the accounting division to migrate to Wiise too.
Although the initial launch is in Australia, KPMG and Microsoft have a global partnership and intend to sell this software in other markets.
On the face of it Wiise looks competitive. Microsoft Dynamics Business Central was only released last month. There aren’t any reviews out yet but it’s built on a very solid platform. Microsoft CEO Satya Nadella has made the company an exciting powerhouse and Microsoft has a large and experienced network of partners who can install CRM and ERP. And then there’s the size of that combined customer base.
And yet it’s one thing to launch a product, another to run it. Big Four firms have had a number of tech blowouts which began promisingly then faded quickly. So have the banks, for that matter. KPMG is in charge of the global roadmap and decides which country comes next.
Plus the competition is ferocious. Sage Intacct, NetSuite, Salesforce.com variants, Accumatica, MYOB Advanced, etc. The list is long and growing longer.
Wiise will either emerge as a killer marketing strategy for big banks and the Big Four that brings them closer to their business customers than ever before. Or it will become the butt of jokes that begin with: “So a partner, a banker and a software guy walk into a bar…”
I just had a chat with Microsoft’s Steven Miller who had some interesting points about why this came about.
“We have been amazed at how much interest has come from global banks. We have tapped into a nerve that is there for a lot of financial institutions about how they think about and support their customers.
“The financial services industry is looking for more than just banking transactions and credit support. They are looking for value added services that can help their customers grow. Increasingly, fintech solutions are emerging as a really critical way to do that.
“The very fact that we’ve been able to get Wiise to this point – (despite) a huge amount of complexity, as you identified – (shows) there is a huge opportunity and potential for this type of model.
“It’s been really encouraging and refreshing to see two giant organisations think deeply and design deeply on making things simpler and better. That’s what people are demanding and when they do that either the incumbents follow or others will disrupt it.”
I asked Miller whether Microsoft head office was into this idea. His response: “Big time. For all three organisations.”
Wiise is an unconventional play. But perhaps the banks and Big Four are committed to making it work.
Here’s the transcript of the interview with John Munnelly, KPMG. What do you think?
Digital First: Is Wiise ERP or accounting software?
Munnelly: It’s in between. One of the challenges we have are clients outgrowing accounting software but they don’t want ERP. They need something else. Small businesses don’t understand ERP as a concept but they want the functionality.
It really isn’t a competitor to Xero or QuickBooks Online. It’s actually about customers who have outgrown that, using three or four apps and spending a lot of time making sure it all works and every time it upgrades it breaks. But I’m not 300 users and need SAP or Oracle.
We think a lot of our market is using a server in the corner of their office that they installed in Y2K and they haven’t had anything to migrate to.
Digital First: What type of software would they be using?
Munnelly: I suspect Accpac, Attaché, Arrow. They have continued to operate their business on that. They may have attempted to move to Xero for the general ledger but haven’t been able to move the rest of their business across. We’re trying to use the term “graduates from cloud accounting”. They need business management software.
Digital First: What’s missing from an ERP in Wiise?
Munnelly: There’s actually not anything that’s missing from ERP. We are taking a mid-market ERP and bringing to downstream. You can move up over time. You can start with something basic with inventory management, then add warehousing and then servicing and manufacturing. It allows you to move onto the platform as a very small business and continue to operate. It’s about complexity, not about size they need more than what you can get from cloud accounting.
Digital First: Who do you see as Wiise’s competitors? MYOB Advanced, NetSuite?
Munnelly: Yes, that sort of market.
Digital First: So Microsoft provides the platform. What does KPMG provide?
Munnelly: KPMG own the business, and for us it’s about using our strengths in accounting, our advisory skills to take that Microsoft platform and tune it for small business in Australia. For CBA it’s about bringing the banking integration to the party.
Digital First: Is Wiise the same as Microsoft Financials for Office 365?
Munnelly: It’s the next generation version. We have taken what we built and added a whole heap of layers to integrate with the bank. A code layer sits on top of the Microsoft product and has layers around payments, transactional banking, and then in the future we can start looking at offering additional financial services from CBA.
Digital First: What do you mean by “transactional banking”?
Munnelly: Transactional banking is bank feeds. It’s slightly different whether you’re a cash or accruals customer. When you’re doing accruals accounting we call it transactional banking because you’re matching transactions rather than building your general ledger from transactions that hit the bank.
Then there’s the “get cash from customers quickly” function. We have built in Commbank Simplify so clients can click on invoices and pay with a credit card immediately. That will be integrated in the back end so reconciliation is done automatically.
You will also be able to initiate payments to vendors from within Wiise if you're a CBA customer.
Digital First: Do you mean by batch pay?
Munnelly: Yes. People would traditionally do it through their ABA file and do authorizations. We are just trying to remove points of friction where people have to move from one system to the next. The vision for the future is embedding other financial services such as short term cash loans or funding loans. If your cash flow is strained, we will get to a point where you could click on a button, apply for a loan from the bank, submit the data from your system and the bank will provide an automated response and provide the money immediately.
Digital First: When will this feature come out?
Munnelly: From July we will have transactional banking and payments, the others will follow soon after.
Digital First: Is Wiise exclusively for CBA customers?
Munnelly: No, absolutely not. Can be any bank and all the transactional banking will work. For the invoice payment you would need to sign with CBA, but bank feeds are fine. Paying vendors from within Wiise will be with CBA to begin with before we open up to other banks. That requires a fair bit of technology on the bank side to allow for that.
Digital First: How many banks are ready?
Munnelly: We’ll start with CBA. it does require a fair bit of security, so it will be the ones (banks) who can pay for it.
Digital First: This software is built on Microsoft NAV?
Munnelly: The platform we are building on is Dynamics Business Central. We have been working quite closely with Microsoft on the build out of that. The platform will be released in Australia in July.
Digital First: Is there a global strategy?
Munnelly: Yes. We are starting in Australia. The KPMG and Microsoft relationship will take it global. Business Central is already global.
Digital First: No plans for KPMG to sell (technology) services with the software?
Munnelly: Yes we will but at this scale we need partners and we are using the Microsoft channel to provide services such as configuration, implementation and training.
Digital First: Is KPMG using this as a vehicle to win SME clients or is it just a tech play?
Munnelly: They want both. These are the clients of the future. KPMG is already in the SMB space for our enterprise practice. We have a division called Private Enterprise for privately owned companies and growing businesses. We are already in that space and offering advisory to those clients. This gives us a technology option as well.
Digital First: Does KPMG have targets for advisory and accounting clients through Wiise?
Munnelly: No, it’s subscriptions. It's an opportunity to digitise our advisory services. When we go to offer them cash management services we have access to the data. When we offer them supply chain services we have access to the data. It should help KPMG digitise our advisory services.
Digital First: So software not clients is the focus?
Munnelly: Yes. There is a licence play, but we believe we can over time digitise those services a a lot more effectively and we have clients on platforms, especially with things like benchmarking.
Digital First: And Microsoft will use Wiise to sell Office 365?
Munnelly: Yes, I suspect.
Digital First: It’s an unusual bunch of partners, don’t you think? A bank, a Big Four firm and a software company?
Munnelly: We came to the conclusion that you can’t do this as a tech platform alone. You need a strong technology partner, an accounting partner and a bank. The bank provides distribution and integration (of financial services).
A technology partner alone can’t provide the advisory services and extract significant value out of the data. The KPMG piece is about translating clients requirements into the technology platform.
Digital First: And KPMG has control over the software development?
Munnelly: Yes. It's about building that intelligent advisory capability into the product. We understand how a supply chain should be built to be efficient. That’s not necessarily Microsoft(‘s strength).
Digital First: What other areas will KPMG develop?
Munnelly: From accounting cash flow management to supply chain, the whole gamut of the product. How do you take this great technology platform and tune it for small businesses in Australia to help them grow? Often a small business owner will have an accounting firm advising them, a technology partner for applications and a bank.
Digital First: Will you be using IBM Watson for analytics, given KPMG's existing relationship?
Munnelly: We will use Cortana Analytics and Microsoft AI. It’s early days.
Image credit: Wiise