by Roger Russell

The rush to be the first kid on the block to offer application service provider capabilities to tax preparer customers has slowed considerably. Vendors are finding that the technical aspects are less daunting than convincing CPAs to sign on.

When Carrolton, Texas-based RIA’s GoSystem introduced its ASP-hosted tax prep program five years ago, industry observers predicted that other software vendors would quickly jump on the bandwagon. But times have changed.

"It’s the next big thing to still be coming," said Bob Dias, director of marketing for Torrance, Calif.-based CCH Tax Compliance. "I’m a fan of things that drive ASPs. But there are varying degrees of comfort in integrating online data - practitioners worry about who owns the data, and whether their own clients are ready for it."

Global fx, CCH’s Web environment for applications, released an electronic organizer last year, and a Web-based time entry system, Global Time Entry, last month. Global fx Tax, its tax prep ASP, was beta-tested earlier this summer, and will be rolled out later this month.

According to Jack LaRue, Creative Solutions Inc. vice president of marketing, the market is still not moving into ASP technology en mass. "It requires specialized cases for a true value proposition for the accounting firm. The major barrier that exists today are that not all accounting applications are available in an ASP version, so that requires a firm to operate with some locally installed software and some software remotely. Some of them feel that in that case they might as well stick completely with the local environment."

Nevertheless, LaRue said, Dexter, Mich.-based CSI has hundreds of users of its ASP version, and "it’s only a matter of time before the market catches up with it. We’re not trying to push the market, but we’ll definitely be there."

CSI recently announced an alliance with Microsoft Business Solutions, the business applications software unit of Microsoft, to develop an integration link connecting Small Business Manager accounting software with some of CSI’s software line, and have CSI’s users make that solution available to their clients.

Meanwhile, GoSystem continues to tinker with its ASP model. "We can process everything from a Form 1040 EZ to a multi-divisional consolidated return with hundreds of subsidiaries," said Lilly Smith, vice president of professional service marketing for GoSystem. "No one can handle the most complicated returns but us, although a lot can handle the middle market. We anticipate more than one million returns to be processed on GoSystem RS next tax year."

RIA, CSI and Accounting Today are all owned by Thomson Corp.

San Diego-based Intuit has made its consumer version of TurboTax available online on a pay-per-return basis. Although Intuit’s Lacerte division rolled out its ASP model, NetTax, in January 2002, it has put aside the model for the time being. "A lot of people loved NetTax, but there just wasn’t enough critical mass behind an ASP-based tax solution, so we’re shelving it for now," said Intuit spokesman Tyson Heyne.

Dr. Chandra Bhansali, president of Hauppauge, N.Y.-based Micro Vision, said that a lack of bandwidth is an issue. "We’ve always believed that there was not yet enough bandwidth to justify tax preparation in an ASP model for accountants," he said, "but we do offer what really takes advantage of the Internet - client organizers. Clients can enter data anytime at their leisure, and it saves the accountant work because it flows right into our tax prep program."

Bandwidth is increasing, said Bhansali, "but not at the rate we anticipated it would. That is one reason the ASP model hasn’t advanced as much as it could have."

The reluctance of wide ASP acceptance is also due to concerns about security, according to John Vora, president of Randaloph, N.J.-based TaxSimple. "People are concerned about the security and the privacy of their data," he said. "That’s one of the main stumbling blocks in the way of full scale acceptance." Nevertheless, all 94 of its programs are fully Internet functional.

While the concept of an Internet-based tax organizer is attractive, allowing client data to flow seamlessly into the tax prep program, Vora doesn’t see a huge demand on the part of taxpayers. "I’m not sure that clients will be happy to go through all of the trouble just to make the CPA’s life easier," he said. "We have it as part of Tax Simple because of a ‘me too’ mentality - our policy is to offer everything that our competitors offer."

Seattle-based Orrtax also has the technology in place, but will focus on its existing business rather than an ASP, according to Paul Slagle, director of product management. Orrtax, which was purchased earlier this year by Houston-based TRE Financial Services, has already tested an ASP version at its filing center. "ASP is on hold for now, but we’ll probably resurrect it in a year or so," said Slagle.

Other vendors with some form of an ASP model include Anaheim, Calif.-based ExacTax, which offers its software on a remote access, pay-per-return basis, and Franklin, N.C.-based Drake Software. "We’re offering a targeted version of ASP on a site for consumers," said company spokesman Mike Wooten. "This is for do-it-yourselfers, where taxpayers go through our preparers’ own Web sites. The preparer gets the credit."

Rome, Ga.-based Universal Tax is working on a Net-based tax organizer and the capability to backup data using .NET technology. "Vendors are rethinking their motivation as to why they built these products," said Joe Angebrandt, vice president of professional products. "It was one of those things where a vendor would build an ASP and pray the customers show up."

"The conditions have to be right for a firm to want the ASP model," said CCH Tax Compliance president Kevin Robert. "The drivers for ASP are typically a multi-office firm and the need for data mining. A hosted environment makes sense because it gives the firm anytime-anywhere access. If there’s no burning need on a load level or for data mining, it doesn’t justify the increased price."

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access