Jan 6 2014, 11:38am CST | by Forbes
That’s because, if you’re like most small and medium sized businesses, you’re likely using an on-premise accounting application. And most likely that on-premise solution is QuickBooks. QuickBooks is by far the most popular accounting application for SMBs and deservedly so – it’s full featured, easy to use and well supported by Intuit. My company is an Intuit partner. We sell QuickBooks. But this year we’re going to look into selling other products as well. Why? Because as good as QuickBooks is, I believe that many of my clients are going to dump it starting this year and over the next few years. You too.
That’s because the cloud has caught up to the accounting world. And there are many competitors to QuickBooks standing by to pounce.
My consulting firm serves about 600 active companies. More than 90% of them currently use an on-premise accounting (or financial management or Enterprise Resource Planning/ERP) application. Isn’t it ridiculously obvious that within the next few years just about all of those companies will be using a cloud-based application instead? Of course it is. I’ve watched the enormous growth of software-as-a-service applications for customer relationship management, human resources and payroll. I’ve noticed the faster performance. I’ve witnessed their ease of access from tablets and mini-laptops and even smartphones. I’ve watched companies move more and more of their in-house systems to hosted ones, eliminating their servers and IT infrastructure. And I’ve seen my own clients, small business owners who look at any new relationship or technology with a wary eye, grow more comfortable letting other companies handle their data on managed servers over the past few years. We admit that though no one’s infallible, the security that they provide are better than our own. The environment is perfect for cloud based accounting applications.
And it’s a perfect environment for software developers too. “Most of the large software companies aren’t putting many resources into on-premise solutions any more,” Brian Jacobs, a partner at venture capital firm Emergence Capital told me recently. “They are basically pushing their customers into a software-as-a-service environment.” This is true. Emergence Capital invests in cloud based business applications and Jacobs believes the market is in its infancy. Ask anyone at Microsoft, Sage, Oracle or SAP and they’ll tell you what the guys at Salesforce.com have been saying for years: the cloud is the future for them. It’s a more profitable and more productive business model for a software company to distribute their products. “There are so many advantages of a cloud solution that I personally don’t see how these on-premise systems can move into the future,” said Rob Reid, CEO of Intacct, an online financial management application. “VCs are not investing in premise software companies any more.”
Which brings me back to QuickBooks. In the next few years it’s inevitable that you’re going to replace your on-premise QuickBooks system for something cloud-based. You won’t have much of a choice. And you’re going to take that opportunity to look around. And you’re going to discover there are some interesting alternatives.
There’s Xero, which just raised $150 million in October. And Intacct, which has received multiple rounds of financing over the past few years. There’s FreshBooks. There’s NetSuite and of course there’s QuickBooks Online. There are others but these, in my opinion, are the big players right now in the cloud accounting/ERP market. To oversimplify, Xero, FreshBooks and QuickBooks Online are arguably geared to the basic bookkeeping/invoicing/bill-paying customer – the startup, the very small micro-business, the mom and pop. Intacct and NetSuite are targeting the next level – those companies that employ controllers or CFOs, are growing, have multiple users and need advanced tools like sales order processing, purchase order, inventory and warehouse management, workflows, automation and more complex reporting for cash flow and consolidations.
These applications have been built from the ground up and support a better, more flexible web-based architecture. Smelling the opportunity, resellers and partners for these products (like me) are popping up everywhere. Migration tools to move away from QuickBooks are available. Deals have been struck to integrate these products with other popular online services and collaboration tools like Dropbox, Zoho, PayPal and Bill.com.
So what will happen? Many current QuickBooks customers (perhaps you?) who are frustrated with the software’s older architecture but have suffered with it because they/you did not feel the need (or were just too lazy) to change will now be forced to change in the next few years. And they/you will be looking at other alternatives. And, for the first time in a long time, there are many great other options to consider. “50% of the customers we are getting are coming from QuickBooks,” Intacct’s Reid told me. “And we’re expecting a tornado wave of activity in the next few years.” The company has experienced a 150% growth in bookings over the past year alone.
So be prepared: maybe this year, but certainly during the next few years you will be part of this enormous trend. That’s a certainty. Will you be one of the many who decide to dump QuickBooks?
Source: Forbes Business
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