Intuit Keeps QuickBooks Relevant with New Cloud Offering
Intuit exemplifies a PC software maker rushing to the cloud to grow its business. While it's a necessary move to stay relevant in a world where people increasingly want to access web services on smartphones and tablets, Intuit's new QuickBooks offering also risks confusing its current small-business customers.
Intuit adapts to a changing customer base
Over the last three fiscal years, unit sales of QuickBooks, the company's flagship small business accounting software, dropped from 1.8 million in 2009 to 1.5 million in 2011. (Intuit's fiscal year ended at the end of July.) During the same three years, subscriptions of QuickBooks Online, a separate product, grew from 147,000 to 283,000. Intuit currently has a total customer base of 5 million small-businesses customers.
Since fiscal year 2008, Intuit's mix of new small-business customers has gone from 60% QuickBooks and 4% QuickBooks Online to 32% and 14%, respectively. The online product doesn't have all the features of QuickBooks, particularly for manufacturers and retail stores. But the online version is gaining traction with service-based businesses, such as freelance writers, plumbers, or graphic designers. The service starts at $12.95 a month.
Despite the growth trends, Intuit remains dedicated to its sizable base of customers that still use the desktop version of QuickBooks. To help them take advantage of the cloud, and to draw more revenue from this declining customer base, Intuit now gives QuickBooks customers the option of uploading all data onto the company's servers, giving them access to the software through a web browser, smartphone or tablet.
"The hybrid approach is key, especially when you're dealing with small businesses that may have different levels of comfort when dealing with resources delivered through the cloud," Justin Jaffe, analyst for IDC, says.
QuickBooks in the cloud: A hybrid approach
Adding QuickBooks to the cloud doesn't replicate all functionality. Dan Wernikoff, senior vice president and general manager of QuickBooks and other Intuit financial management products, acknowledges that customers can't pay vendors online. However, they can send electronic invoices to customers or accept payments with Intuit's credit-card swiping hardware that attaches to a smartphone or tablet.
QuickBooks customers who want all the available online features will have to pay an additional $29.95 a month.
QuickBooks 2012, which is available for download starting this week and in retail stores on Oct. 9, offers a new collaboration feature called Contributed Reports that lets users upload and share reports they've created. The report templates are available through Intuit's online library.
Small businesses are using software delivered as a service in growing numbers, although the percentages vary widely depending on how an analyst firm defines a web service. IDC say the number is roughly 14%, while Nemertes Research says it's 84%, if you count any service, including web mail services such as Google Gmail.
"Adoption of cloud-based resources is definitely increasing every time we run a survey," Jaffe says, "But it's evolutionary, not revolutionary."
Nemertes analyst Ted Ritter has some advice for small businesses when the software vendors they deal with nudge them to make the transition to the cloud: demand a big incentive in the form of price discounts or new features.
"There needs to be that compelling reason to move to the online version, if you've already made that big investment in the desktop software," he said.
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