Nov 21, 2004 (07:11 PM EST)
New Horizons For Intuit

Read the Original Article at InformationWeek

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In the fall of 2003, Michael D'Amico was managing huge projects for key clients using spreadsheets and Microsoft's Access database and Project software. But those tools weren't providing the kind of nimble access to data the executive project manager and his team in NCR Corp.'s retail professional-services unit needed to help clients. These include Wal-Mart Stores Inc., which is upgrading scanners at thousands of stores, and Starbucks Corp., which is retrofitting point-of-sale terminals chainwide.

Then D'Amico heard about a Web-based database, collaboration, and project-management application from Intuit Inc. called QuickBase, which a colleague was using to manage sales orders. He signed up for a subscription for 10 concurrent users and 5 Mbytes of online database storage, paying just $250 a month. QuickBase caught on quickly, and use of the software grew to 50 users, then 100, eventually leading to the current subscription for as many as 500 named users and 55 Mbytes of storage for $1,500 a month. "You couldn't get a shareable database backed up on a nightly basis for anywhere near that price" anywhere else, says D'Amico, whose team has used the software as a simple development tool to create 71 password-protected applications, each representing a single customer's project. The modest investment is providing a big payback, he says, delivering productivity benefits worth 25 times the cost of the software.

If you didn't know that Intuit was in the database and project-management business, you're not alone. The $2 billion-a-year company is best known for its popular tax and accounting software for consumers and small businesses. But in the past few years, it has engineered a stealth acquisition strategy to expand into new markets and to add bigger companies to its customer base. It acquired QuickBase by buying Turning Mill Software Inc. in 2000, before the company even released the product. "QuickBase is clearly our best-kept secret, and that's our fault," says Intuit chairman and founder Scott Cook. "Clearly, we haven't explained what a breakthrough it is." Nor has the company much talked up the fact that its acquisitions also have secured it footholds in real estate, electrical-parts distribution, and construction, as well as IT-asset management. Its flagship Quicken software for consumers, Cook says, "is now 5% of our revenue. It was 100% at one time."

Intuit's quiet entry into these markets is in keeping with the personalities of both the company and Cook. Located on a quiet street in a sleepy Silicon Valley business park, Intuit's headquarters stand in sharp contrast to the more ostentatious homes of the valley's other big-name companies. Visitors are welcomed into a small foyer, not a lobby with soaring ceilings, and may meet with the company's decidedly unostentatious founder in a modest office that seems more suited for a midlevel manager than a billionaire chairman.

The vendor's aspirations as it plunges into new markets are seemingly modest, too. Intuit isn't aiming to become a big enterprise player like SAP or Oracle, Cook says. "The reason why these businesses are succeeding is because we're not an enterprise-software company," with its attendant cost structure, Cook says. "The personal intimacy and drop-dead ease of the solutions is only possible if you're a consumer-driven company."

It's a smart approach, Forrester Research analyst Bob Anderson says. "A lot of folks say Intuit is a big company with a lot of money in the bank, so why don't they move up in the market?" he says. "In fact, they have, in what some would say is a more enlightened way. They've realized that they have the capability to go to the special solution market and find vendors with strong brand loyalty."

Intuit has plunked down just over $400 million on five key acquisitions since 2000, all except Turning Mill being small companies that were growing increasingly important in their niche markets: OMware, a maker of software for managing small construction businesses; Management Reports, which was a rising power in the nascent property-management software market; Eclipse, a long-established distribution-management software provider in the wholesale durable-goods sector; and Blue Ocean Software, an IT asset-management vendor that had a growing presence in midsize companies. (During the same period, it also bought seven other software companies, most of which brought additional capabilities in the areas of financial management and tax preparation.)


'We're not an enterprise-software company,' chairman and founder Scott Cook says--and that's a good thing.

"We're not an enterprise-software company," chairman and founder Scott Cook says--and that's a good thing.

Photo by Markham Johnson
It has left each of the acquired companies pretty much intact, allowing them to run as independent business units. Integration efforts haven't gone much beyond ensuring that each of the new products is compatible with Intuit's QuickBooks software line, and development efforts aren't being advanced beyond what the acquired companies already were doing themselves. "We're never going to put them all on the same code base," says CEO Steve Bennett, who joined the company in January 2000. "That's not what customers want us to do."

What the acquired companies do gain is the ability to tap into Intuit's mature human-resources and financial processes and its expertise in developing simple user interfaces. Where Intuit has invested--although it won't divulge to what extent--is in the areas of marketing, customer support, and customer-driven innovation.

That philosophy seems to sit well with Intuit's acquired customers. Van Meter Industrial Inc., a $200 million-a-year electrical wholesaler with locations throughout Iowa, runs its entire business on Eclipse's software, now a part of Intuit Distribution Management Solutions, from finance to purchasing to inventory control, spending more than $200,000 a year on maintenance, support, and custom modifications for the company's 350-seat deployment. "When Intuit first purchased Eclipse, it ran through my head, 'What are they going to do to this company?'" VP of IT Dave Cahill says. But the last couple of years have allayed his fears. "They can bring some of their software-development processes to Eclipse," says Cahill, whose company has adopted some of the newer innovations of Distribution Management Solutions, including its radio-frequency technology and an XML-based transactional application that lets it connect to customers while saving the network fees associated with EDI.

There's been a noticeable improvement in how product-enhancement requests are handled since Intuit bought Eclipse, says Jeff McCamy, executive VP in charge of IT for Roden Electric, an electrical wholesaler serving Alabama, Georgia, and Tennessee. "In the past, if you needed something, you'd ask for it, and Eclipse would say, 'OK, that'll be $5,000,'" McCamy says. "Then they went off and came back with a product that may or may not have been exactly what we needed. Today there's a process that ensures we're going to get what we paid for." Among the processes Intuit's Six Sigma approach has introduced: more extensive beta testing and reviews of specifications before enhancements become part of the code base.