Intuit Quickbook Desktop OR Quickbook Online – what to choose?

Intuit Inc. is a leading financial software company that develops and sells accounting and tax preparation software and services for small businesses, accountants and individuals. They have an array of products such as TurboTax, QuickBooks, ProConnect Tax Online and others. There is an interesting trend that the company has followed to introduce their QuickBooks offering – which started out as a product but soon became available as a platform too. Through this blog post, I wanted to evaluate this move of the company and assess scalability and sustainability going forward for QuickBooks.

Product or Platform or both?

In the early 2000s, Intuit started offering a payroll processing platform through its QuickBooks Desktop software. This software helped unsophisticated small and medium businesses to easily process payroll for its employees. In September 2005, QuickBooks had 74% of the market in the US. Over the next few years, QuickBooks Desktop became a mature product with many add-on services such as automatic payments and reports, history tracker and others. Even with many add-on services, Intuit realized that it won’t be able to satisfy every small business need, and hence there was a need for introducing a platform version of the offering. In the early 2010s, as the customers became more accustomed to cloud-based offerings, the Intuit started offering QuickBooks Online. The cloud version, i.e. Quickbooks Online is a distinct product from the QuickBooks Desktop and has many features that work differently than they do in desktop versions. Intuit strategized to move as many customers from QuickBooks Desktop (the product version) to QuickBooks Online (the platform version). As of May 2014, QuickBooks Online had the most subscribers for an online accounting platform, with 624,000 subscribers.

Value creation through QuickBooks Online

In QuickBooks online, the user pays a monthly subscription fee rather than an upfront fee and accesses the software exclusively through a secure login. Intuit provides patches, and regularly upgrades the software automatically, but also includes pop-up ads within the application for additional paid services. Overall, it is a less-sophisticated offering as compared to QuickBooks Desktop with few add-ons services, however, it has an unparalleled edge of being a ‘platform’ rather than just a ‘product’ sitting on a desktop.

Quickbooks online has strong same-side network effects as many customers have business-to-business (B2B) relationships with other customers. Intuit introduced a feature called ‘Intuit Commerce Network’ which helped in making intra-platform transactions feasible and cost-free. This led to more and more small businesses signing up for QuickBooks Online. QuickBooks online also enabled Intuit to collate customer’s data easily and then they could leverage that data to upsell additional relevant services. This will lead to more customer stickiness and strong same-side network effects. Overall, Intuit has several online communities that offer integration across many Intuit products. For e.g., there is a discussion group and forum available for interaction between QuickBooks online community Quicken Online Community. This leads to enhanced strong-side network effects as customers have B2B relationships with other products on the platform.

QuickBooks online encouraged third-party software developers to create programs that fill niche areas for specific small businesses, in addition to third-party services and platforms to be hosted on the platform. Intuit partnered with Lighter Capital to create a $15 million fund for developers designing apps for Quickbooks. The Intuit Developer Network provides marketing and technical resources, including software development kits (SDKs), which is designed to facilitate the writing of applications using the Quickbook APIs. The platform also offers integration with other third-party software and financial services, such as banks, payroll companies, and expense management software.

Was moving to Platform a good decision?

In Aug 2019, Intuit’s QuickBooks Online had 4.5 Million customers (facilitated with same-side network effects), with ten folds more add-on services built up by third-party developers (facilitated cross-network effects). Currently, Intuit serves a whole spectrum of small business owners leveraging its platform offering, which services more niche customers as compared to QuickBooks Desktop. In addition, the platform offering was easily scaled and has higher customer stickiness.  Overall, it was a great decision of Intuit to offer QuickBooks Online.

Source:

  1. https://en.wikipedia.org/wiki/Intuit
  2. How To Face Off Against Microsoft”. Businessweek. September 4, 2005. Retrieved October 31, 2013.
  3. http://investors.intuit.com/press-releases/press-release-details/2014/Intuit-Reports-Third-quarter-Results-Revenue-Grows-14-Percent-Led-by-Cloud-Solutions/default.aspx
  4. “Accounting Software for Small Business – Intuit QuickBooks”. Oe.quickbooks.com. Retrieved October 31,2013.
  5. “Intuit Launches the Completely New QuickBooks Online”. Intuit. September 23, 2013.
  6. Howlett, Den. “Intuit Q3 FY2016 provides important insights about SMBs and the cloud”Diginomica. Retrieved September 3,2016.
  7.  “Lighter Capital Announces New $15 Million Fund to Help Developers Grow Apps Designed for Intuit QuickBooks Platform”. Intuit. Retrieved January 24,2019.
  8. https://www.zdnet.com/article/intuit-delivers-solid-q4-cuts-q1-earnings-outlook-finishes-with-4-5-million-quickbooks-online-subscribers/

 

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