Intuit launched QuickBooks® in 1998, building off the success of their home financial software, Quicken. Since then, QuickBooks has dominated the small business accounting software market. Just 10 years after being rolled out, QuickBooks claimed 94% of the market.
And that would be the end of the story if not for a little (or rather big) thing called the cloud. Software as a service (SaaS) is revolutionizing the way people use accounting software. While QuickBooks was quick to offer an online version, a number of new vendors are using the cloud to innovate rapidly and address the perennial challenges of ease-of-use and affordability in the small business accounting software market.
Ironically, while Quickbooks has succeeded due to its low price point and ease of use, these new online accounting vendors are demonstrating that small business accounting software can never be cheap enough or easy enough to use.
Pushing the Limits of Ease, Affordability & Functionality
QuickBooks’ main offering, its on-premise line of software, is a bit on the pricey side for many small business owners. Also, to access the latest features of on-premise software usually requires an annual reinvestment to upgrade to the newest version – another added expense. Contrast this with the offerings of a company like Outright, which may not provide all the bells and whistles of a QuickBooks, but the core functionality is there – and at a price point that small businesses can handle (a flat $9.99 per month).
Moreover there are plenty of people who have tried QuickBooks or other traditional accounting programs and found them to be hard to use. For very small businesses, freelancers and self-employed professionals, Quickbooks can be more complex and time-consuming to learn for their accounting needs. In fact, in a discussion with Kashoo CEO Jim Secord about his client-base, he explained that, approximately
“50 percent of our existing customers have used Quickbooks before and switched to Kashoo because it was easier to setup and use.”
Helen Matterson, Communications Manager at another online accounting vendor, Xero, agrees: “The small business segment is crying out for functional software that is easy to use.” And web-based accounting software vendors are poised to deliver the best technology in ways that support the needs of an increasingly global workforce. For example, in many of these SaaS-based accounting applications features like multi-currency support are the norm, not the exception.
Other vendors, like Yendo for instance, are looking to target non-English speaking businesses in the United States – filling the gap in a way that many of the bigger players have overlooked. One of the more novel, but logical features that many web-based accounting apps offer is unlimited user access, allowing multi-party collaboration. Even with their online software, QuickBooks still limits the maximum user number to five.
Outright makes small business management easy with clear visuals
Beyond features, the web-based accounting companies are aggressively using social media to advertise and connect with customers. These channels give the developers dynamic data and user feedback, which companies, like Xero for instance, then use to perform software updates every three to six weeks.
How Does QuickBooks Online Measure Up?
While these agile web-based vendors are certainly putting pressure on Intuit, don’t count QuickBooks out – as their online version offers a competitive range of features and functionality. Recently, Intuit demonstrated that they are taking cloud-based accounting seriously when they rolled out a QuickBooks Online version for the United Kingdom this spring. Although, by comparison, Kashoo is used in 60 different countries with 100 different currencies.
When it comes to price, QuickBooks Online offers five packages – ranging from $12.95 to $78.95 a month. QuickBooks Online has some of the cool features that its hipper, newer rivals have, and even some they don’t – like iPhone and Android apps – while still providing roughly 80 percent of the functionality found in the traditional on-premise QuickBooks product.
However, some have accused Intuit of more or less porting over their old on-premise QuickBooks system, and making few, if any, innovations based on the cloud. In fact, industry expert Dennis Howlett described some of the QuickBooks Online features as being “so 1990s”. Intuit has also had a lot of trouble with outages in its QuickBooks Online servers.
While firms like Outright or Clear Books might offer an innovative take on accounting software, QuickBooks still has something many of these new web-based rivals don’t – a big brand. And honestly it is the QuickBooks name, which buyer’s have come to know and trust, that will most likely help QuickBooks withstand the pressure from this newest wave of competitors.
Plus, as Kashoo’s Secord explained, accountants and bookkeepers usually put pressure on small business owners to use a system that they know their way around – systems with names like Peachtree, Simply Accounting and QuickBooks, not Yendo or Xero.
Cloud Apps Keep Accounting Software Interesting
Despite the increasing traction in the cloud, there are still plenty of reasons why accounting software heavyweights will remain focused on the on-premise world. Wide-scale migration to the cloud isn’t happening at a pace that will create a large enough market to justify a massive shift to focus on the cloud yet. So, according to Yendo’s managing director Morgan Lynch:
“It doesn't make sense for them [Intuit] to embrace cloud accounting as it is a high-volume, low-margin business.”
It will be a long time before any one company can threaten QuickBooks’ position in the small business accounting market. Not only that, but on-premise versions of QuickBooks are still wildly popular with small business owners and accountants. Even still, cloud application vendors are still carving out niches for themselves – and making enough waves to shake up the market and keep on-premise vendors on their toes. In fact, just last week Sage announced greater investment in cloud services and a major re-branding of their products, including renaming their Peachtree accounting line.
This is a move that some analysts view as a way for Sage to stay relevant with increasing competition. At the end of the day, however, when venerable names like Peachtree – one of the oldest brand names in accounting software – are being retired, it makes clear that change is underway.
How do you think newer web-based applications will impact traditional on-premise accounting programs in the years to come? Share you thoughts below.
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