With the cloud, businesses can reduce their hardware and IT costs by leveraging Web-hosted applications and Web-accessible data centers, and increase system scalability without a proportional increase in software and hardware costs. The cloud provides businesses with anywhere, anytime access to shared data sources without the need to support costly intranet systems

With over 4 million registers users of QuickBooks desktop financial software and thousands of registered users of Intuit's desktop professional tax preparation software Lacerte and ProSeries, the pendulum shift away from desktop applications presents some incredible challenges and equally incredible opportunities for Intuit. How Intuit meets those challenges—how the company makes the most of those opportunities—will, in my opinion, determine the future landscape of accounting technology for the small to midsized business market.

I have a saying—a life mantra: "If you are one step ahead, you are probably a leader. If you are more than one step ahead you may end up a martyr." QuickBooks Online is one of the key components of Intuit’s cloud strategy. Though QuickBooks Online isn't a "martyr" (in that it never "died" for its cause), it was nonetheless ahead of its time. When Intuit introduced this product in 2000, the company employed cutting-edge technologies to produce a functional (though simplified) edition of QuickBooks. QuickBooks Online was a product full of promise and also a product shackled by the market's inaccessibility to broadband Internet and the populace's general distrust in the security and stability of Web-hosted applications.

So, for many years it seemed Intuit sidelined product development of QuickBooks Online in favor of the more lucrative and immediate returns from QuickBooks desktop box sales.

But Intuit recently began backing the product with a significant increase in marketing and R&D dollars. At the Scaling New Heights 2010 conference, B.J. Schaknowski, the former director of Intuit's Solution Provider Channel, announced "big and exciting changes" for QuickBooks Online coming very soon. At Scaling New Heights 2011, both B.J. Schaknowski and Jill Ward, senior vice president and  general manager of Intuit’s Accounting Professionals Division, continued to emphasize the importance of QuickBooks Online for Intuit —as well as the significance of the cloud movement and its impact on the accounting technology market.

Since 2010 Intuit has made good on its promise to our conference registrants, rolling out a wide range of product enhancements, especially in the areas of inventory, payroll processing and collaborative tools for accounting professionals.

I project by the year 2020, QuickBooks Online will have well over 1 million users, representing at least 20 percent of its QuickBooks user base. To get there, Intuit must do the following:

• Allow users to navigate throughout the product with multiple open records. In other words, the user needs to be able to start creating an invoice, navigate to the customer list, and then navigate back to the invoice without saving the invoices or losing their data.

• Allow the user to view multiple screens at the same time without the need to open the screens in new browser windows or tabs.

• Significantly enhance the product's internal reporting capabilities.

• Increase database scalability so users can upload the entire QuickBooks database.  Currently the QuickBooks database (before converting the data for import) must be no more than about 70 megabytes to upload the data. Intuit also needs to support databases well over 1 gigabytes, or even up to 10 GB in size. The software should also support at least 30 simultaneous users.

• Expand the feature set, in the general, so QuickBooks desktop users lose no more than 10 to 15 percent of the features of QuickBooks desktop when migrating to QuickBooks Online. The system should also provide more features that are not available in the QuickBooks desktop software—features that will lure the desktop user to the Web-based edition. Intuit has some features now that are exclusive to QuickBooks Online, but they will need many more to lure users away from the desktop.

• Continue to expand its ecosystem of third-party applications. Intuit has already begun an aggressive campaign to recruit developers into the QuickBooks Online ecosystem, but the scope of integrated products will need to become much broader to accommodate larger businesses and businesses with complex business processes.

QuickBooks Hosting
In my opinion hosting is Intuit's strongest and most immediate response to the cloud movement. The technology is fully developed and is readily available within the market. And, Intuit currently supports the use of QuickBooks in hosted environments, in a broad range of remote access technologies including Remote Desktop Protocol, TS Remote App and Citrix desktop virtualization.

Intuit's plans to leverage hosting technology require no projection on my part. The ability to see their direction with hosting requires no significant insight. It is happening even as I write this article.
Intuit has a hosting program that includes two tiers:

• Self-Hosting – for businesses that build and maintain their own hosting of QuickBooks for use within their organization.
• Commercial Hosting – for businesses that sell hosting services to QuickBooks users.

So, the question is not if Intuit will leverage hosting technology. The question is how the company will do it. It seems the partnership approach is the direction Intuit is taking at this point.

Certainly Intuit could offer hosting services directly. But the company will not do so for at least the next five years—if ever. In my opinion, Intuit’s corporate direction right now is squarely focused on the development of "true" Web-hosted products and platforms. Also, hosting is outside Intuit’s core business model, will divert R&D dollars from other more pressing cloud strategies, and will, in the end, not generate as much profit as building partnerships with existing hosting companies.

The QuickBooks hosting industry is a key strategic technology for both Intuit and its customers. I believe this technology will remain the cornerstone of Intuit's cloud strategy until at least the year 2020 and that Intuit will leverage third parties in an Intuit-managed ecosystem through at least the next five years.  The chances of Intuit building its own hosting technology within the next five to 10 years are about 20 percent. The chances it will partner with existing hosting companies are 100 percent (and are already happening).

Intuit is already leveraging hosting technology and has already made hosting technology the cornerstone of its current cloud strategy for QuickBooks desktop. In my opinion Intuit will be extremely successful with its current hosting strategies if it:

• Effectively regulates—but doesn’t over-regulate—the hosting of QuickBooks by third-party companies;
• Empowers rather than competes with its third-party hosting partners;
• Ensures the Intuit Web Connector remains "hosting friendly" so hosted users can fully leverage a wide range of Web-hosted products that integrate with QuickBooks; and,
• Uses hosting as a starting place for a larger cloud strategy that leverages web-hosted applications.

Cloud Applications that Integrate with QuickBooks
As with the hosting model, this strategy is already underway and it is clear Intuit is making a tremendous investment in web-applications that synchronize with the QuickBooks desktop database (.QBW).

This is a two prong strategy for Intuit:

1. Cloud applications developed by, acquired by or branded by Intuit. Intuit is actively (and aggressively) acquiring cloud applications, developing cloud applications and branding cloud applications as part of a strategy to seed a growing community of cloud users from its extensive QuickBooks desktop user base. Some examples include:

• Intuit Field Service Management ES (branded application developed by Corrigo)
• Intuit Proline Practice Management (Intuit developed - pilot)
• Intuit Shared Booked (Intuit developed - pilot)
• Intuit Online Payroll (acquisition of PayCycle)
• Intuit QuickBooks Connect (Intuit developed)
• Intuit Merchant Services

2. Cloud applications developed by third parties. This strategy is nothing new for Intuit. Third parties have been developing Web-based applications that tie to QuickBooks since the 1990s. But within the last few years these Web-hosted applications have begun dominating much of the third-party market. This presents a viable, diverse and highly scalable slate of cloud options for users of QuickBooks desktop.

Perhaps the most game-changing solution on the market is a product called Method. Method stores the QuickBooks data in its own Web-hosted SQL database and synchronizes this database with the QuickBooks database in real time, using proprietary synchronization technology. Effectively, QuickBooks desktop begins to function as both a desktop application and a Web-hosted application simultaneously (within the limits of Intuit's SDK), where the Web-hosted application is highly scalable and supports an unlimited number of simultaneous users.

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