Intuit FundWare: Double the Clout


by Richard McCausland

When Intuit disclosed in May its plan to buy American Fundware, "We had some resellers ask, 'Does this mean we have to start selling QuickBooks?'" recalls Jan Groth, Fundware president at the time. Her answer: "That's not what this acquisition is all about."

Rather, it’s about leveraging Fundware’s not-for-profit fund accounting expertise in tandem with Intuit’s brand and channel strengths to more deeply penetrate the NFP sector, she insists. "Look at the [product] name Intuit chose to continue with"--namely, Intuit FundWare.

Partner Insights

Now operating as Intuit Public Sector Solutions, the Denver-based operation continues under Michael Potts, formerly American Fundware’s chief executive and now an Intuit vice president. Groth’s new title is director of public sector strategy. Head count, standing at about 75, is essentially intact, although expected to increase fairly quickly to 100 or so.

Intuit’s plans for growth are shown in its expectation that FundWare will contribute $15 million to $20 million in revenue in fiscal year 2003, which started August 1. FundWare’s previous owner, The Flagship Group, had sales of $10.1 million in the year ended June 30, 2001, up from $9.7 million the prior year. It earned $1.1 million in fiscal 2001. Revenue was $8.4 million for the nine months ended March 30, 2002.

Before the acquisition, FundWare had struggled to get its Windows program to market and lost resellers. It had 120 resellers four years ago, and a staff of 106 early in 2000. But the staff was trimmed in fiscal 2000, a year in which it lost $9.5 million.

Intuit quickly began building programs to grow the business. The unit recently launched the Connection to Partners program, targeted to CPA firms, consultants, systems integrators, and vertical specialty houses.

There are currently 37 certified FundWare resellers, "maybe only five" of whom are not affiliated with a CPA practice, notes Groth. Those five are system integrators, "who are dedicated to this [nonprofit] market."

CPA technology divisions will continue as a primary focus for VAR recruitment, according to Groth. "That has always been the best [reseller] source for fund accounting products," she observes. After all, "Every nonprofit, from the smallest to the largest, must be audited." Groth says FundWare wants to have about 200 partners.

Initially, that will mean standard Value Added Resellers for the Microsoft Data Engine-based, one-to-five-user FundWare Pro edition, and Premier resellers authorized for both Pro and the SQL Server-based Enterprise version. There are now only five Premier VARs for the two-year-old, client/server Enterprise model.

Also in the works is a recommender program for CPAs that don’t want to sell or implement the software. They will be encouraged to partner with a reseller.

Under the Connection to Partners framework, the initial certification fee is $6,000, with an annual renewal fee of $1,000. Partners must commit to a minimum annual net license revenue (software resale price minus reseller discount) of $25,000.

There’s a four-tier discount schedule: 25 percent off suggested resale price for an NLR of $25,000 or less (Bronze level); 35 percent for an NLR of $25,000 to $50,000 (Silver); 45 percent for $50,000 to $100,000 (Gold); and 50 percent for over $100,000 (Platinum).

Authorized resellers will receive five days of sales and product training, a collateral demo kit, software, 2 percent co-op marketing funds, and a pass to the annual Connections conference. VARs, in turn, must maintain their training certifications, provide corporate with sales forecasts, and have at least one dedicated FundWare staffer. (Premier partners need at least two dedicated staffers, one for sales and one for implementation/training.)

For "a pretty small organization," an entry-level, one-to-three-user Pro install that includes the core modules (GL, AP, Project/Grant, and Payroll) along with Report Manager would run $10,000 to $15,000 (both software and services). An Enterprise install starts at about $35,000, but "a more typical" client with five or more users is apt to spend from $50,000 to $75,000, according to Groth.

The operation remains committed to a "blended" model of channel and direct sales, which stands at "probably 50/50" at the moment. With partner recruitment, she expects the channel to grow to 70 to 75 percent of sales.

The direct sales force will continue to hold sway in areas lacking a reseller. Groth further notes that some clients, particularly some governmental entities, don’t want bids from resellers but rather from the software publisher. In those instances, "we will put [the local Premier partner] in the bid as a subcontractor."

Intuit, whose financial software products include QuickBooks, Quicken, TurboTax, ProSeries, and Lacerte, purchased American Fundware for $22 million in Intuit stock and $4 million cash. Approximately 265,000 Quicken and QuickBooks customers are NFP organizations, or more than 16 percent of the U.S. total. They are obvious candidates for migration to Intuit FundWare Pro or Enterprise.

However, average sales price for a FundWare package now ranges from $12,000 to $15,000, which might prove too steep for many local NFPs with annual budgets under $1 million. Intuit has indicated it will bring out a stripped-down edition for this market segment.

Linda O’Neal, manager of the business systems consulting division of Finley & Cook, a CPA firm in Shawnee, Okla., confides she was "a little bit skeptical" when first hearing of Intuit’s plans to market into its extensive QuickBooks installed base for potential FundWare users. Her skepticism quickly turned into delight. "In the last three weeks, I’ve seen probably a 50 percent increase in prospects compared to six months ago," she reports.

She’s already closed on one deal, and expected to close on another four or five in the next sixty days. All were QuickBooks users, and all but one was migrating to the Pro version.

Longtime FundWare reseller S. Hellman and Company in New York has done about 185 implementations to date, approximately a quarter of them Enterprise installs, according to president Stan Hellman, CPA.

Following completion of the Intuit/Fundware deal in early June, "we’re just now seeing the effect on our phone traffic," says Hellman, adding, "I expect there will be a gradual increase [in leads] over the remainder of the year."

He’s enthusiastic about Intuit’s plans to bring out a product more suited to the lower end of the NFP marketplace. "Part of the difficulty of selling FundWare downstream is the price point," he says. "We expect FundWare, because of this new relationship, will have the resources to be more salable at a lower price point."

Richard McCausland is Senior Editor of Accounting Technology and can be reached at

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