Something is happening with prospects who are looking at accounting software, says Seth Pomeroy, something that has not happened before. Prospects are asking about Internet-based applications. “We work with a couple of lead services. We are now getting requests for information that will specify software as a software or Web-based only,” says Pomeroy, a CPA and partner-in-charge of CFO and accounting technology services at The NDH Group, based in Chicago.
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Years ago, the company provided client accounting services via the CheckBook Solutions, marketed by what was then Creative Solutions, now part of the tax and accounting business of Thomson Reuters. Pomeroy says it was a good program, but left the firm dealing with multiple databases.
It wanted to start providing client account services that enabled clients to enter data remotely. It tried using Thomson’s Write-up Solution and creating remote access through the use of Citrix, but found the environment was hardly ideal.
So when Intacct showed up at the Illinois CPA Society’s annual conference six years ago, NDH latched on to that product. And Pomeroy says it’s something that ensures better results for prospects.
“I am a big proponent of Web-based. The model is one of customizing the system rather than worrying about hosting or balancing software on somebody’s server,” says Pomeroy. “When we propose an engagement for a customer, it has nothing to do with setting up software on their server and doing desktop software. It’s a huge, huge help.”
And one of the advantages is that “it’s about a much less error-prone accounting process,” says Pomeroy.
Why have end-users become more comfortable with the Internet?
It may just be experience. Those interviewed point to the fact the business users are now accustomed to using sites like Amazon and eBay, perhaps they prepare their personal taxes online and they or the accounting professionals they employ utilize electronic filing.
“We’ve been doing a lot of focus group research. Independent of age, people are very comfortable now doing stuff online,” says Ridgely Evers, CEO of NetBooks. “It’s a big shift from a couple of years ago when I did similar research. I can’t tell you why it is, other than people are getting more comfortable doing things online.”
Evers, the author of the original QuickBooks, has put together his next venture, San Francisco-based NetBooks, which is aimed at product-based companies, willing to pay $300 a month for online sales, inventory, marketing and finance functions
Rich Walker, who handles communications and works with the QuickBooks ProAdvisor program, says he has also noted a change in the attitude of Intuit’s accountant advisory panel members over the last year.
“Their concern is not about security. It’s more about the reliability of their own ISPs,” says Walker. “And that has even lessened. We have seen a shift with our power users.”
The business advantages of online applications included the ability of firms to expand their search for clients to new areas, along with offering more changes for telecommuting. In Intuit’s case, the company says that is coming through its QuickBooks Online program.
“We see a lot of accountants who are expanding their geographical reach,” says Ed Mubraaten, the group marketing manager for online products. For example, Mubraaten says one QB online user is an accounting professional in Oakland who serves the nonprofit community.
According to Mubraaten, the QB customer reported, “I can deliver services affordable to nonprofit single mothers in the Philippines.”
Lack of Product
But to use online accounting solutions, customers must be able to buy them. And there simply isn’t an array line of Internet-based packages from the major financial software vendors, particularly those who provide mid-market ERP packages.
In remarks to an analyst conference, NetSuite CEO Zach Nelson described the online offerings for the mid-market with this. “There’s one ERP package and that’s for today and for the foreseeable future,” Nelson said, overlooking his competition at Intacct.
Offerings are thin. All applications can be Web-enabled through the use of Citrix or Windows Terminal Server. But among other major mid-market players, Sage, Microsoft, Epicor, Exact Software and Syspro, none has a truly native Web package available in the United States. Exact offers Exact Online, but only in the Netherlands where it is headquartered. The product has 4,000 subscribers.
Besides the anxiety companies had about putting their “data on the Internet,” the fact that customer relationship management data was considered less sensitive meant that it moved onto the Web more quickly.
Sage got into the business when it purchased Accpac, whose Accpac CRM Online product has become Sage CRM.com, which operates the same on the Web as in its desktop form. But most of its efforts are still in the research and development stages.
And while Microsoft puts such a high premium on online services that it recently reorganized a major division to emphasize that area, the company is also more active on the Internet with its Dynamics CRM, and will stay that way for a while.
“The three areas we are focusing on is hostablity of the product, attached services and finished services,” says Jennifer Burgoin, communications director for Microsoft Business Solutions. “We are making hosting our applications simpler and more cost effective with each release.”
In Microsoft’s language, attached services provide functionality that integrates with on-premise or hosted ERP systems or the CRM products. These include marketplace, payment and key word marketing services. The company will also offer credit card processing that integrates with Dynamics AX 2009 and the upcoming Dynamics CRM Online.
Burgoin says Microsoft still sees resistance to putting financial information in an online application.
“I think there is a different level of comfort in and around CRM data than there is with financials,” says Burgoin. “Analysts say ‘our customers wouldn’t consider having data hosted in some multi-tenanted fashion.’ There isn’t that same acceptance level around financials than there is around CRM.”
Not surprisingly, NetSuite reads the mood of the financial executives differently
“When we speak with CFOs and controllers, they definitely want on-demand. On-demand is a preference,” says NetSuite’s CFO Jim McGeever. “When you are on the road or at home in the evening, you don’t have to work through some slow Citrix solution.”
McGeever also cites online applications as having far greater security and reliability than on-premise IT. Running these applications online, he says, “is akin to keeping your money in the bank versus keeping it in the mattress.”
In fact, corporate IT departments have also had a change in attitude. Once, the IT staff was hesitant in adopting applications like NetSuite because of security concerns.
“What has changed in the last two or three years, is that the IT departments are the biggest champions of the online applications,” says McGeever.
Customers with small IT departments or just a one-person staff also are realizing that Internet-based applications cuts down on a lot of the grunt work in maintaining on-premise databases, he continues.
While Intacct is one of two online accounting applications serving the mid-market, it is the only one that has targeted accounting firms as both users and resellers.
One of the largest of accounting firms to join the Intacct program is LarsonAllen, the Minneapolis-based regional CPA firm, which has been handling Intacct since 2001 as part of its outsourced accounting operations.
“We have been a big advocate of online accounting. We try to put our clients on Intacct or other platforms,” says John Wooldridge, the Washington D.C.-based leader of the outsourced accounting group, who had been using the product in his own firm for two years before joining LarsonAllen.
Wooldridge rattles off many advantages which are also often cited by vendors who are promoting SaaS. These include the ability to work remotely, such as from the home or a client location. And it eliminates the need for firms to push upgrades out to all their users.
Security, however, is one of the major advantages.
“The security is top notch. Their security [Intacct’s] is far advanced of what most ordinary businesses can afford to have,” says Wooldridge. That includes such techniques such as multiple hand-scanning that Intacct requires for accessing data centers. Moreover, handing the data over to the vendor takes data out of clients’ hands so that the clients can’t damage the data.
In providing outsourced services, LarsonAllen handles all of a client’s data, and even though clients have different needs, there are several advantages in common with working with them via Intacct.