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I just got back from QuickBooks Connect, the first ever Intuit conference for the entire QuickBooks ecosystem , including small business owners, accountants and app developers. I attended the conference because I wanted to assess the relevance of this 30-year-old company in the age of the cloud. Given the current wave of disruption in the small business accounting space, the big question many are asking is: Will QuickBooks continue to be the dominant accounting software for the SMB market? Here’s what I found.
Desktop vs. Cloud and Mobile
Much of the recent disruption that has resulted in the overthrow of market leaders is generally due to a dominant player’s lack of ability, desire or urgency to disrupt itself before competitors can. The tech company graveyard is littered with the corpses of companies whose complacent and even clueless leaders stood idly by while hungry upstarts ate their lunch with cloud-based, mobile replacements of legacy applications. But Intuit has not been guilty of this kind of sluggish response to the SaaS phenomenon. It first launched the online version of QuickBooks in 2000, after a two-year development cycle. While the level of functionality was initially not on par with the desktop version, those discrepancies are almost all resolved, and several aspects of the online version now surpass desktop function. In 2009, Intuit doubled its online product investment, followed closely by heavy investments to make QuickBooks Online accessible on mobile devices.
Intuit’s Achilles’ heel in its transition from desktop to cloud is the inherent disadvantage of being the long-established leader. New competitors start with a clean slate while Intuit migrates from an older platform to a newer one. But Intuit has been here before—moving from DOS to Windows to IOS to mobile. Platform shifts should be a routine part of a technology company’s long-term strategy. So far, Intuit has managed these transitions well.
Many current and new users will be happy with the desktop version of QuickBooks for some time to come, and others will start with or migrate to the cloud. Intuit supports either choice. Tayloe Stansbury, Intuit’s CTO, is clear about his dedication to both current and future customers. “We will continue to offer desktop as long as there are users who want it—and we’ll continue to invest in it. That said, we’re committed to the enhanced collaboration, better workflow, and more frequent upgrades we can deliver to QuickBooks Online users.”
Earlier this year QuickBooks Online sales surpassed desktop sales for the first time, marking a new and probably permanent trend. Intuit has brand recognition, access to capital, and a sense of urgency, so it may be difficult to beat at the game it has played so well for so long.
While attending the conference in San Jose I observed other factors that may prove to be even more important to Intuit customers and prospects than the question of cloud or mobile access.
Customer-Centricity
Customer focus is paramount in the decision to buy from and stay with any vendor. Intuit CEO Brad Smith is quite passionate about why his company does what it does, and for him it’s all about the customer. He has a vision of customer outcomes that would transform the larger economy if realized, and he’s suggesting that QuickBooks can be a catalyst for that change. “If the average small business could raise their profit margin by just 2.5%, that would generate an extra $500 a month for every small business, and that would add over $300B directly to all of our local economies,” declares Smith. “If one out of three small businesses could hire just one more employee we would totally eliminate unemployment in the United States. And if we could increase the survival rate of small companies by 5% over the next decade we would see another quarter-million small businesses create 5M new jobs, and that’s more jobs than have been created in the entire economy over the last several years.”
Hmm. Making more money, growing, and staying in business…all outcomes entrepreneurs want , and Smith is wise to sell the hole and not the drill. Small business owners enjoy getting paid quickly, but don’t want to be bothered with the complexities of creating, sending and collecting invoices. They want to have a record year of sales without having to spend days documenting those activities for accountants. In short, owners want the benefits of entrepreneurship without the attendant accounting hassles. “Our goal is to make accounting invisible and painless for small business owners,” vows Smith. “And as a thirty-year-old startup, we’re just beginning.”
In my interview with Smith, I was struck with his fusion of charisma and authenticity—a refreshing combination of normally opposing traits. Still, I was looking for some tangible evidence (separate from the CEO’s passion) that this thirty-year-old company is indeed in startup mode. That proof came in the form of investment dollars. According to Smith, “Intuit spent $300M in small business product development and innovation last year alone.” That is probably more product development money than is being invested by all of Intuit’s competitors combined.
Developer Network
Aside from Intuit’s internal innovation efforts, over 400 apps from top developers make up an important part of the QuickBooks ecosystem. Intuit has built QuickBooks to be more than an accounting system; it is also a development platform, and many of those developers attended the conference. Intuit has renewed its commitment to an open platform through which these developers build value for QuickBooks users. At the beginning of the conference Intuit held a 36-hour Developer Hackathon. A total of $100,000 in prize money was awarded to the top five winners. Method:CRM won the grand prize of $55,000.
Method:CRM Founder and CEO Paul Jackson reports, “There is no way we could have created this app in 36 hours without the truly open platform that Intuit provides. We are excited to be a part of the QuickBooks family of app developers.”
Another company that has prospered through its relationship with QuickBooks is Fishbowl, creator of the number one requested inventory management app for QuickBooks. If Fishbowl president Mary Scott is any indication of the relationships Intuit builds with its outside developers, end-users should enjoy a vibrant app market for years to come. “We love working with Intuit because they only want one thing—for their customers to succeed,” declares Scott. “We don’t create products that are cool for the sake of technology. We create what makes sense from a user standpoint, and Intuit supports our efforts 100%.” Scott also talks about the mutual respect between Fishbowl and Intuit, and how there is less of a sense of competition and more of collaboration to solve customer problems.
Terry Hicks, VP and General Manager QuickBooks Online Ecosystem, has a pragmatic view of how well Intuit is doing in the area of app coordination. “Most small businesses use 15 to 20 apps to run their operations. We’ve made a lot of progress toward getting those apps to connect with each other, but we still have a lot to learn about harnessing the power of this ecosystem.” I like Hicks’s stated position of not yet being there. In my opinion, QuickBooks should have a lot more than 400 apps orbiting it, all with greater connectivity, adding value to end-users. Compared to Salesforce.com’s AppExhange (2,000 apps), QuickBooks has some ground to make up. We’ll see if Intuit’s new emphasis has the desired effect of quickly enhancing this part of its customers’ experience.
Accountant Network
Many of the 4,000 attendees at the conference were accountants. There are over 100,000 accountants using QuickBooks to better serve their clients, and expand their own accounting revenues. Kevin Simister, Partner at Hawkins, Cloward & Simister in Utah, shares a CPA’s perspective. “QuickBooks is a great tool that has a broad base of users in the market. We recommend that our clients use the online version so they can automatically interface with our office.” Simister also cites how his firm uses QuickBooks Online to expand their own offerings. “Intuit has made it easy to automate just about every back office function our clients could outsource to us. These services now make up the fastest growing part of our accounting business.”
Company Culture
Perhaps the most important factor that will determine Intuit’s future growth and success is its continued ability to engage the hearts and minds of its people. To do that there must be dedication to innovation and entrepreneurship at the very top of the organization. Scott Cook, Founder and Chairman of Intuit’s Executive Committee, describes why entrepreneurship is valued so highly. “Look, CEOs make a choice: you either float on the tides subject to ebbs and flows of markets and the wakes of others…or you power ahead like a speedboat powered by engines of innovation. Ultimately, it reflects Brad's and my own personal belief that the role of business in society is to improve the lives of those we serve. You can’t copy your way to improving lives; you create new and better ways to live. That’s what entrepreneurs do.”
The answer to the question posed in the title depends on changes in offerings in the industry, of course. But based on what I learned at QuickBooks Connect from the leadership at Intuit about their commitments to self-disruption and innovation, as well as from end-users, developers and accountants, it is clear that Intuit is working hard to stay ahead of the competition and keep your business.
