by John M. Covaleski

Monterey, Calif. - Three years after being launched along with hundreds of other Internet-based businesses, Intacct Corp. demonstrated several signs that it is poised for growth in the months and years ahead at its partners conference, here.

The meeting sent a clear message that Intacct, which began primarily as an accounting software application service provider, is more than just a dot-com survivor. It is positioned to become a force in accounting and business services.

The company further expanded its growth from its accounting ASP roots by announcing a marketing alliance with vendor BNA Software, under which Intacct’s suite of hosted applications are available and integrated with BNA’s fixed-asset computation products. That adds fixed assets computation to a core of applications that also includes general ledger, accounts receivable and payable, order entry, inventory control, and payroll services.

Intacct boasts integration alliances with more than 20 third-party vendors, including payroll service firms Automated Data Processing, of Roseland, N.J., and the CBS Payroll division of Mountain View, Calif.-based Intuit Inc., and Big Four firm Deloitte & Touche, developers of an assurance services module. Tax preparation product integrations are with Intuit’s Lacerte line unit and Pro System fx from CCH Inc.

Intacct also used the conference to announce and demonstrate new functionality added to its core applications system, including a job costing function, multiple-entry capability added to its general ledger, and a client write-up application with a built-in trial balance. Intacct said that this is the first write-up application designed expressly for use on the Internet.

"We are now big enough as a group with a network of accounting firms that we can go to the next level and capture our strength to bring the power of the group together in delivering solutions to the market," Intacct chief executive and founder David Thomas said at the conclusion of the conference, the company’s largest to date.

Representatives from approximately 150 of Intacct’s 400 "partner" accounting firms were on hand at the three-day show a few miles from Intacct’s base in Los Gatos. Intacct makes its technology systems available primarily through accounting firms, who use the systems to work with their clients. Those accounting firms use Intacct to serve a combined total of about 3,000 businesses, a number that’s growing by about 500 per month, according to Thomas.

Accounting firm partners range in size from one- and two-person shops up to some large regional/national firms and the Big Four. Client companies are predominantly under 100 employees in size, although about 12 are larger.

Accounting practitioner partners and third-party vendors at the conference roundly praised Intacct.

"This conference really impressed me with how they are providing the service details and processing capability CPAs need," said Rusty Pickens, partner in Pickens, Snodgrass, Koch & Co., a 45-person firm in Arlington, Va., which has been an Intacct partner for about a year.

Mike Smith, manager with Langan Associates of Arlington, Va., said the fixed-asset software integration should help his clients, many of whom compute depreciation in Microsoft Excel. Smith’s CPA firm, which specializes in serving nonprofits, has some 30 clients on Intacct solutions.

To be sure, Intacct is still funded by venture capital and, according to Thomas, will not be cash-flow positive until the end of 2003. Also, its marketing is very dependent on signing up CPA firm partners and it still has a relatively small portion of that universe.

Application vendors hailing Intacct include BNA Software. In announcing the company’s new alliance, BNA Software general manager David Wilkes praised "the rapidly growing family of Intacct E-Practice Partner experts."

He also noted that the alliance would help BNA further expand its fixed-assets software presence from very large companies to the small and mid-sized companies that are targeted by Intacct.

Kevin Robert, president of CCH’s Tax Compliance Group, said that Intacct’s strategy is comparable to original plans for CPA2Biz, the practitioner-focused Internet portal conceived by the American Institute of CPAs. "But," Robert added, "Intacct is showing that it can execute its strategy."

"We see CPA2Biz as just a delivery arm for the AICPA," Thomas said. "It doesn’t have anywhere near the technology infrastructure we’ve built to support practices." (For an update on CPA2Biz, see the AICPA conference roundup story on page 1).

Thomas has plans to build the bases of both accounting firm partners and end-client companies. On the client side, Intacct is negotiating with franchise companies on deals in which it would implement a corporate-wide Intacct management system for the franchiser and leave the door open for accounting firm partners to implement and manage systems for the franchiser’s franchisees in the partners’ markets.

Those franchise deals will work off of Intacct’s new M-Console platform, which allows each business unit within a multi-entity organization to work from the same Intacct accounting system by having local market systems integrated to the system at their parent organization.

Thomas said he expects to announce several deals with national companies that will include restaurant chains, but declined to identify any at this time.

On the accounting firm side, Thomas said that Intacct is developing programs under which it could deliver consulting services on behalf of accounting firm partners that want to avoid consulting with their assurance service clients.

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