As everyone knows, the technology world is moving aggressively and consistently to the cloud - leveraging the accessibility and scalability of web programs/databases to:
With over four million registers users of QuickBooks desktop financial software and thousands of registered users of Intuit's desktop tax preparation software (Lacerte and ProSeries), this pendulum shift away from desktop applications presents some incredible challenges and equally incredible opportunities for Intuit. How Intuit meets those challenges - how they make the most of those opportunities - will, in my opinion, determine the future landscape of accounting technology for the small to medium business market (SMB).
So, it is my intention in this article to make projections - projections borne out of my years of experience working within the Intuit ecosystem as a QuickBooks ProAdvisor, a QuickBooks trainer to over 20,000 accounting professionals, a former Intuit contracted author and trainer and current host of a national conference for QuickBooks ProAdvisors called Scaling New Heights. It is important to note here that my opinions are based solely on information Intuit has released to the general public. In as much as I do not have inside information on Intuit's corporate direction related to the cloud (or a crystal ball), my thoughts here are one person's learned projections only.
QuickBooks Online is an obvious and natural place to begin.
I have a saying - a life mantra: "If you are one step ahead you are probably a leader. If you are more than one step ahead you may end up a martyr." Though QuickBooks Online isn't a "martyr" (in that it never "died" for its cause) it was nonetheless ahead of its time. When Intuit introduced this product in the year 2000 they employed cutting edge technologies to produce a functional (though simplified) edition of QuickBooks. QuickBooks Online was a product full of promise and also a product shackled by the market's inaccessibility to broadband Internet and the populace's general distrust in the security and stability of web-hosted applications.
So, for many years it seemed Intuit sidelined product development in favor of the more lucrative and immediate returns from QuickBooks desktop box sales.
But, Intuit recently began pouring tremendous marketing and R&D dollars behind the product. At Scaling New Heights 2010 BJ Schaknowski (Director of Intuit's Solution Provider Channel) announced "big and exciting changes" for QuickBooks Online coming very soon. I can tell you (with Intuit's permission) that these developments are under way and they do show incredible promise for the application. The additions of inventory, payroll processing and an SDK within the past few years are just a sign of Intuit's overall investment in the product.
There are currently 147,000 subscribers to QuickBooks Online. I project by the year 2020 Intuit will have over one million users of QuickBooks Online - representing at least 20% of its QuickBooks user base.
In my opinion hosting is Intuit's strongest and most immediate response to the cloud movement. The technology is fully developed and is readily available within the market. And, Intuit's current desktop product is fully supported in a hosted environment without any R&D on Intuit's part.
Intuit's plans to leverage hosting technology require no projection - and the ability to see their direction with hosting requires no significant insight. It is happening even as I write this article - with Right Networks way out in front of other hosting providers.
Right Networks is clearly the leading hosting company is a new program recently established by Intuit called the Intuit Commercial Hosting Program.
So, the question is not if Intuit will leverage hosting technology. The question is how they will do so. It seems the partnership approach is the direction Intuit is taking at this point.
Why wouldn't Intuit simply build their own hosting technology? They could - certainly - but I do not project that will happen. Their corporate direction right now is squarely focused on the development of "true" web-hosted products/platforms (as described in the sections below). Also, hosting is outside their core business model, will divert R&D dollars from other more pressing cloud strategies (detailed below) and will, in the end, not generate as much profit as building partnerships with existing hosting companies.
The QuickBooks hosting industry is a key strategic technology for both Intuit and its customers. I believe this technology will remain the cornerstone of Intuit's cloud strategy until at least the year 2020 and that Intuit will leverage third parties (and predominantly Right Networks) in an Intuit managed ecosystem through at least the next 5 years.
Absolutely nothing. Intuit is already leveraging hosting technology and has already made hosting technology the cornerstone of its current cloud strategy for QuickBooks financial software. In my opinion Intuit will be extremely successful with its current hosting strategies if they:
As with the hosting model, this strategy is already underway and it is clear Intuit is making a tremendous investment in web-applications that synchronize with the QuickBooks desktop database (.QBW).
This is a two prong strategy for Intuit:
Web-hosted applications that integrate with QuickBooks are just part of the strategy. Intuit is making a much larger play within the space - the development of a platform on which third parties can host their QuickBooks-integrated applications.
I believe the IPP is Intuit's largest web-based initiative - larger than QuickBooks Online, larger than its strategic relationships with third parties and even larger than its own cloud based applications.
The IPP is not unlike the Apple App Center. In fact a highly marketed Intuit App Center (branded name) is one of the benefits of developing an application on the Intuit platform.
Without going into alot of technical detail (which is outside the scope of this forward-thinking article), developers can build their applications on Intuit's platform using Intuit's proprietary code (native applications) or they can build their applications through standard technologies like Java, .NET, PHP, etc. (federated applications). Native and federated applications receive the same marketing and service benefits.
Intuit's play here is multi-faceted:
Intuit's cloud strategy will always involve web-hosted applications that integrate with QuickBooks. Over the next several years these web applications will predominantly integrate with QuickBooks desktop - creating hybrid environments comprised of both cloud and desktop technology. I believe many QuickBooks users will leverage hosting technologies in conjunction with these web-hosted applications over the coming 10 to 15 years in order to fully leverage the cloud.
Then, by the year 2020 I project Intuit will begin to get a critical mass of users who operate on a combination of whatever web-hosted core application they provide (QuickBooks Online or some back-office IPP database). However, I believe this critical mass will still represent less than 40% of total QuickBooks users.
Intuit must expand programming options for native applications on IPP and create innovative ways to lure developers onto the platform as federated applications. In my opinion the Intuit App Center must have over 1,000 market-ready solutions - each with its own sustainable user base - before the platform will have staying power.
Then, Intuit must determine a strategy for leveraging its own technology to replace much (if not all) of the functionality of QuickBooks desktop. Whatever replacement system they create (QuickBooks Online or an entirely new offering) the solution must reside on a highly scalable database and must completely integrate with Intuit's own IPP technology.
I believe Intuit is taking the cloud movement very seriously and that they believe cloud technology is the future of both personal and business computing - as shown by the way the company is investing tremendous dollars in developing, expanding and acquiring cloud technologies. As long as they invest their resources carefully, Intuit will not only maintain its position as the leader in SMB accounting technology, they will also expand their reach into other areas of small business operations.
Through the IPP Intuit is ultimately working hard to be in the platform business - a web-based "operating system" so to speak - and this represents a critical and highly significantly expansion of reach for a company whose DNA is firmly rooted in the management of financial information.
The great unknown is whether Intuit will be a successful web-hosted platform company. They have the drive, and they are continuing to increase the quality of their platform, but will that be enough?
Intuit's success or failure in this critical cloud strategy will perhaps have the greatest impact on the "Intuit World of Tomorrow."