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The evolving face of Intuit in Australia

The US-based accounting software giant Intuit with its cloud accounting software QuickBooks Online is gaining momentum in its quest to acquire market share in Australia. The company made its initial forays into Australia back in 2012 and the next 12-15 months saw it create the necessary building blocks needed to operate as a viable cloud accounting software provider here. Specifically it:

  • Hired local employees to replace the fly in, fly out employees from both Singapore and USA.
  • Customised the software for Australian requirements.
  • Rolled out a revamped and modernised User Interface.
  • Integrated third party Payroll software.

By late 2013/early 2014 with those initial building blocks in place Intuit was poised to compete with the current incumbents in the cloud accounting software space. It was never going to be an easy battle; first off there was Xero which had been in Australia since 2008. Xero has some fundamental differences from Intuit; it was a single product start-up cloud accounting software company which meant that it was both developing a product from scratch and had no desktop customers it could convert across. However it did have one major advantage – it was here first. This coupled with Xero’s down to earth approach (have you ever seen a male Xero employee wearing a tie?) helped it to quickly win the hearts and minds of the first wave of early adopter accounting and bookkeeping businesses that appreciated the benefits the of a cloud solution and realised that cloud was the business model of the 21st century. And these early adopters were a forgiving group – they coped with the lack of in-depth functionality and waited for the promised delivery of enhancements (which did come thick and fast in those early years).

Then there were the two major desktop accounting software players – MYOB and Reckon, both of which were somewhat slow to deliver a meaningful cloud option. However in the last twelve months we have seen MYOB provide both a stable cloud option for its flagship desktop product and a solid entry-level browser-only offering – MYOB Essentials. Reckon has long fought with its demons to do the same with less success to date but it is still trying. Both of these companies had two advantages over Xero – they had an established desktop user-base that they could cannibalise and they could easily mirror a lot of the desktop functionality in the cloud options. They weren’t starting from scratch but they weren’t there first and bled substantially to Xero while they were preparing their cloud solutions.

There are a few other software suppliers operating on the peripheries – in particular Saasu which got off to a good start early in the piece but has long since wallowed in the doldrums and Sage that has recently migrated to this space – neither of which currently pose a real challenge to Intuit, Xero, MYOB or Reckon.

So back to Intuit. It had some of the advantages of Reckon and MYOB in that it had an existing desktop product on which to base its online offering but like Xero, it did not have an existing user base in Australia to convert to cloud. However apart from not being the first on the scene, Intuit does have a couple of advantages over Xero. Firstly it is not listed on the ASX so is not required to be as transparent in its numbers of customers, revenue received from and cost of acquiring those customers and is remarkably reticent when it comes to disclosing customer numbers preferring to lump Australian customers in its ‘rest of the world’ total. Xero is listed on ASX, has to report every 6 months, cannot conceal its numbers and to quote CEO Rod Drury has ‘nowhere to hide’. It has to report both exponential revenue and expense growth. Secondly Intuit can cross subsidise the costs of developing QuickBooks Online with costs associated with the desktop product and can fund its Australian operations from sources that remain hidden in its financial results.

Despite the disadvantages and the cost, a number of factors indicate that Intuit is committed to its Australian operations and is coming of age in its start-up operations here including:

  • The number of employees has increased to around 80 across three states providing Intuit with the capacity to resource all required functions
  • Late last month the company recently moved its 60+ Sydney-based staff to high profile iconic offices in the Sydney CBD with views and employee amenities to wish for. The fit out of the offices is very much in keeping with its head office in Mountain View, CA and regional head quarters in Singapore.
  • Intuit announced that its introductory lifetime guaranteed pricing of $4.99 per month will finish on 30th June – indicating that although the product will remain competitively priced compared to Xero, it is well enough established to be able to complete on functionality rather than price.
  • There have been some welcome product functionality enhancements that enable the QBO to at least equal Xero.

So where to from here? Intuit’s traditional marketing model in the US is to operate via accountants but Xero had already done that here and although there were opportunities to visit accounting practices that had not hopped on the Xero bandwagon, the Australian market is so much smaller than in the US. So how will Intuit overcome the odds and increase its market penetration here? We have seen Intuit looking outside the square for alternative opportunities.

There are a huge number of small businesses in Australia that do not use accounting software – the Triple S businesses that use Spreadsheets, Shoeboxes or are Start-ups. Recent research commissioned by Intuit indicated that more than 500,000 Australians are involved in start-up business activity at any point in time and more than 50% of these business owners lacked basic financial knowledge, didn’t use accounting software and didn’t use an accountant or bookkeeper. This means that not only are they flying blind when it comes to business finances but are potentially jeopardising their opportunities for success.

This is a great sphere for an accounting software business to move into, to partner with small businesses to provide an affordable, user friendly, easily accessible software solution. This month Intuit announced a major initiative becoming the national sponsor of Start-up Weekend Australia and is developing a Financial Fitness Bootcamp programme. If this programme is successful we could not only see Intuit attracting a large number of customers but also an increase in the number of small businesses using cloud based accounting software to help them manage the business more effectively.

We may even see Intuit openly divulging the number of customers in Australia and joining other accounting software providers in hosting national conferences and roadshows.

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One comment on “The evolving face of Intuit in Australia

  1. Hi Margaret

    As always, you did a great job! I love to read your articles and I would love to share them on LinkedIn but you only twitter link on your website so I did that.

    If you ever add LinkedIn to your website I will be happy share your posts.

    Have a great weekend!

    With regards

    Judit Nagy

    0413 353 938

    eTrack Logo FINALxero-logokerekes email signature SMALL.pngBas agent logo 96184006email logo linkedin logo.jpgMYOB approved partner

    DISCLAIMER: This e-mail and any files transmitted with it are confidential and intended solely for the use of the individual or entity to which they are addressed. If you have received this e-mail in error please notify the sender immediately and delete the message from your system. Confidentiality and legal privilege are not waived or lost by reason of mistaken delivery to you. The sender does not accept any liability for the contents of this message including but not limited to any computer viruses

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