The small business accounting market has heated up with the Microsoft's launch of Small Business Accounting as Microsoft tries to compete with market-leader QuickBooks.

Scott Cook, co-founder and chairman of Intuit Inc.'s executive committee, launched the company in 1984 to offer software and online products to help individuals, tax professionals and small companies manage their finances. Today Intuit -- with about $2 billion in annual revenues and $8 billion in market capitalization -- is one of the largest software companies in the world, and continues to market the name brands its built, such as QuickBooks, ProSeries, Lacerte, Quicken and TurboTax.

Cook recently talked with Accounting Technology's Robert Scott about the changes to his company's software and the direction of market.

With Microsoft's re-entry into the small business market, what are the trends in this area?

SC: One major trend is the need for simplicity. What the small business and individual customer wants if for it to be simple right out of the box. We are on a campaign to simplify everything right out of the box.

What are some examples of the simplification effort?

SC: It begins with the start-up interview, enabling users to start up rapidly. The payroll setup is dramatically easier so the customer doesn't make mistakes. We put the relevant information -- the contact and transaction information -- on one page. We are doing the same thing for all the vendors. It is simple in setup and operation.

Were there areas in which Intuit believed that QuickBooks needed improvement?

SC: For accountants, we put in an always-on audit trail. It's easy to go back and see what transactions have changed. Another problem was that accountants had to support multiple versions of QuickBooks in order to support their clients. Now, that is easy because the QuickBooks Accountant Edition includes all the premier flavors, Pro and SimpleStart. The accountant can hit a toggle switch and use the different versions. Also, accountants also could not recommend QuickBooks for all their customers. That included product-based businesses and middle-market businesses. We have added massive product functionality, inventory functionality and warehouse functionality. There is functionality there now that is not found in products costing thousands of dollars more.

Vendors have put a lot of effort into building an accountants' program. But there are those who feel that users pulled accountants into QuickBooks. How would you respond to that view?

SC: You are certainly right that the way the accounting products get established with the accountant is when their customers use [those products]. That is the way the winners get decided. Then, it becomes useful for accountant to use the accounting application. However, accountants are among our most important customers. They buy more of our stuff than almost any other group.

One of the criticisms of QuickBooks has been that it is not a multi-user system. How do you respond to that?

SC: It has always been multi-user. Its database wasn't multi-user. We changed the database underneath. We have built modern-day technology. For enterprise users, it makes it easier for them to go in and get the raw data. That is the reason that we have held off a major marketing push on QuickBooks Enterprise Solution because we wanted to solve the No. 1 request, which was to make QuickBooks faster.

How well is QES performing?

SC: The business is almost doubling almost every year. I don't think any mid-market solution comes close. We are now ready to go further to help middle-market businesses.

How important is "real accounting" to small business users?

SC: The situation is that SBA is much more like Peachtree. It's a matter of whether you have rigid accounting or not. Users don't want rigid accounting.

How quickly are users moving to QuickBooks Online?

SC: Online is another of the major trends in affordable computing and software. On-demand systems are in demand. That was not true in 2000, 2001, and 2002, QB Online Edition has gained more users than it gained in the prior four years combined.

Do you think Sage made a mistake in dropping One-Write Plus? Did that open opportunities for QuickBooks Simple Start?

SC: Yes.

Microsoft says about 45 percent of small businesses do not use accounting software. Do you share that view?

SC: They are 100 percent correct. Quicken and QuickBooks work in 6 million businesses. There are seven or eight million businesses that don't run on anything. That's the growth opportunity for us.

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