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The Truth About Foolish Forecast: Intuit Closes the Books

Foolish Forecast: Intuit Closes the Books is the title of one of two recent foolish Motley Fool article on Intuit. The Fool clearly did not get it, with statements like “Time to go back into wait-and-see mode”  and “Honestly, I'm not quite sure what Intuit means when it says it's "embracing social networking and mobile technology trends."

Mike Block, a Fort Lauderdale CPA, has an national reputation for QuickBooks. Unlike the author of the Foolish Forecast: Intuit Closes the Books, he knows investors and Intuit product users can rely on Intuit CEO Brad Smith. For investors, the Intuit small temporary earnings drop was due to, “The 2008 loss includes a $23 million pretax charge for severance and facilities closures. The 2007 loss includes a pretax gain of $31 million from the sale of outsourced payroll assets.” Intuit would have $58 million more comparative profit if it did not substantially increase future earnings (with a one-time severance) and did not previously make money by dumping a bad business. This  is far more than the loss, which the Fool did not mention.

Also unlike the author of Foolish Forecast: Intuit Closes the Books

, Block knew how social networking will soon give QuickBooks, Quicken and TurboTax users much faster and better service, while substantially cutting costs. He built his QuickBooks reputation with 9,000 web forum and newsgroup answers, after seeing that many QuickBooks users prefer answers from other users, not Intuit. The Intuit focus has been  on consumer-directed innovation since its initial usability tests revolutionized software development. Brad Smith spoke about new examples of this at a recent Fortune Brainstorm Tech Conference (see linked video). Surveys made Intuit gave 7 million TurboTax users in-program forum links to each other. Users then helped with 40% of questions from other users, before Intuit personnel could help. Intuit also found that average user answers were better than average Intuit answers.

 

The real Foolish Forecast would be that Intuit would keep paying employees and deny users the satisfaction and fame they get by helping other users. Instead Intuit will cut costs by emphasizing user-to-user help. It also is helping former employees run a new company. They will be able to support those who do not want user-to-user help. Block expects the 40% user answer share to rise substantially, as knowledge of the availability, speed and quality of user-to-user help spreads beyond traditional early adopters. He also expects natural language technology to soon suggest answers, even before other users see questions. Optional detailed user, program and system profiles and filters should lead to much better answers, including guaranteed paid answers from Intuit and third parties. The many users who should be available from all geographic areas, at both offices and homes, also should facilitate answers during extended periods. 

Embedded Intuit-assisted remote computer control software, web calls and web video also should soon facilitate the fastest and easiest quality user-to-user help.

 

Again, unlike the author of Foolish Forecast: Intuit Closes the Books, Block and Smith know all about Metcalfe's Law. It says that the value of a network is proportional to the square of the number of users of the system. Intuit has around 15 million users, employees, ProAdvisors and developers of companion programs. Connecting many of them in these and related ways will greatly instant increase the value of intuit products, for a company already dominant in consumer tax, home - investment accounting and small business accounting.

 

This is not theoretical. Intuit is now helping solve what has long been the biggest problem for CPAs, by matching accountants with too much work with those wanting work, regardless of location. It also is not theory to an army of more than 75,000 third-party program developers, who have been making QuickBooks add-ons for up to 7 years. QuickBooks add-ons lets users never enter data twice, while making sure QuickBooks data matches data in other programs. Intuit avoids related developer programming, administrative and sales expenses, while advertising and support charges to developers more than cover related costs. This helps Intuit decide how to update QuickBooks, while serving small companies with diverse needs and larger companies than it otherwise could. It also has long known that QuickBooks add-ons users update QuickBooks more than twice as often as non add-ons users.

 

The current Intuit Connected Services effort also is not theoretical. It involves the use of the fast growing Software as a Service (SaaS) sector. This is not to replace programs, but to use Intuit and third-party web services to vastly increase user choices and the security of data. Intuit already has some SaaS revenue that is increasing 50% a year, partly due to its unequaled privacy and security reputation.

 

A U.N. Committee report long ago outlined the ultimate Metcalfe effect on the value of Intuit. The report said Electronic Data Interchange and standard forms would save trillions of dollars annually. Big businesses increasingly use EDI and require if for suppliers. The EDI to communicate to and from big and small businesses has long been available to QuickBooks users. However, Intuit only recently helped to  integrate it with its high-end Enterprise product. Intuit already supplies easily customized switchable forms. The QuickBooks market share of small business accounting program sales at retail is now 94.2%. Microsoft Money, the one significant Quicken competitor, recently ended retail sales. This means users will have few problems in trying to communicate with users of other programs. QuickBooks add-ons already include web records to facilitate customer and vendor communication. Therefore, Intuit Connected Services inevitably will involve integration of EDI, standard forms, ACH and credit card payments, the Google - Intuit - Yahoo Product Listing Service and using Intuit user-to-user help networks to automate finding customers and suppliers and integrating them into supply chain networks. Intuit's low priced approach may then lead to it becoming the preferred small business click by click paymaster for its users.

 

Finally, unlike the author of Foolish Forecast: Intuit Closes the Books, Block knows why Intuit often gets mutually beneficial results like this. An inspiring Intuit Mission and Operating Values statement concludes, "Simply put, living and working by our operating values will create customer wow and shareholder value." Intuit should derive unique benefits from this company-assisted / user-to-user help and exchange model, due to the passion of many of its customers (witness this article) and top NetPromoter scores. However, this also should revolutionize the efforts of many software and non-software companies, in ways that will involve much more than money. That is is one example of why Block has been asking Brad and Intuit founder Scott Cook to make a small change in the Intuit Mission,

 

“Revolutionize how people manage their financial lives.”

 

Intuit pushes deeper into cloud, points to its track record. #2 of 5

As Intuit pushes deeper into cloud computing (Software as a Service or SaaS) its Intuit Connected Services plan is drawing increasing attention. This is #2 of of five daily articles on this important plan. It will connect many QuickBooks small business users to exciting new services and QuickBooks add-ons. QuickBooks add-ons transparently connect to QuickBooks, so users can do many things QuickBooks cannot do. Users never enter data twice and avoid many Excel, Word and pencil errors.

 Intuit already said it will open its QuickBase web database, used by half the Fortune 500, to third-party programs. As Intuit pushes deeper into cloud computing it should vastly expand choices for users and create a very valuable big SaaS business for it and its supporters. This will let small business mobile users increasingly use desktops, laptops, and handheld devices to manage more effectively.

As Intuit pushes deeper into cloud computing industry estimates also project up to 30% in annual SaaS growth. All say SaaS will grow far faster than desktop software sales. This will be very good for Intuit for many reasons. Many more QuickBooks users will connect to new services and each other. QuickBooks recently had 94.2% of small business accounting program sales at retail, around four million users and 50,000 registered ProAdvisors. There also are around 75,000 developers of QuickBooks add-on programs. These . Metcalfe's Law says the value of a network is proportional to the square of the number of users of the system. The many QuickBooks users, ProAdvisors and developers, plus the exponential growth of increasing connectivity, will create very large increases in value.

This is not theoretical. Intuit CEO Brad Smith recently spoke about using this social networking with millions of TurboTax users. Intuit research shows that program users prefer answers from other program users, not Intuit, especially if answers come from those in the same industry. Such a network already connects TurboTax users with in-program links. Many TurboTax users gave answers to more than 40% of  the questions of other TurboTax users. Intuit experts found that average user answers were faster and better than average Intuit support answers. This cost Intuit almost nothing, improved service and cut costs. Further service improvements seem likely, with natural language processing supplying possible answers even before posting questions in user forums. Intuit has long been a leader in customer satisfaction, so this should further revolutionize the software industry.

The Intuit pushes deeper into cloud effort is like the very successful effort it made its #1 corporate priority in 2001. This let developers use a Software Development Kit to access QuickBooks desktop files. Mike Block, an independent Fort Lauderdale CPA and nationally known QuickBooks guru, with many years of heavy computer use, management and security experience, became a QuickBooks add-on consultant in 1998. His QuickBooks-Add-ons.com site soon had 10,000 links to these programs, with up to 75,000 hits a day. Many of the links are now dated, but Google now has more than two million comparable QuickBooks Add-ons links. The new SaaS offerings also will be very good for Intuit due to QuickBooks upgrades. Intuit has long known that QuickBooks add-ons users upgrade QuickBooks about twice as often as other users.

Block says this partly relates to why Inuit points to its track record for add-ons and points to its track record for online security. He once sold accounting software with source code. Users of the programs found that most software updates made add-ons not work. However, in the seven years that Intuit has had the SDK there has been no known case where a QuickBooks or SDK update made QuickBooks SDK add-ons stop working.

Block was personally involved in the one widely reported case of a non-SDK add-on that did not work after an update. It involved a payroll tax report program competing with an Intuit offering. Despite this, Intuit fixed the problem five days after Block wrote Brad Smith, counting the weekend before Christmas.

Safest Place for Data, QuickBooks Terminal Server, Intuit Pushes Deeper Into Cloud

I am an experienced CPA, with many years of computer management and security experience. It sad for me to see head-in-the sand prejudice concerning the online privacy and reliability of THE SAFEST PLACE FOR DATA: online. It is especially sad when a computer publication sensationalizes risks, without considering alternatives. Online storage is unquestionably THE SAFEST PLACE FOR DATA.

Personal computers are one of the least secure places for your records. Fire, flood, employee errors or malicious acts, storms, thefts, accidents, utilities, hacking and program failure (sometimes due to insecure, incompatible and less tested programs) all affect this. Such systems fail often. Their lack of adequate backups then destroy many businesses and lives, so this is not news. Your only real guarantee with local systems is a guarantee that they will fail, often at the worst possible time, destroying all the data you did not back up. Local systems also almost universally lack the virtual images that quickly reset programs, program preferences and data in THE SAFEST PLACE FOR DATA.

New INTUIT CONNECTED SERVICES will soon integrate your QuickBooks program with many of the fastest, easiest, least expensive and most comprehensive QUICKBOOKS ADD-ONS, in THE SAFEST PLACE FOR DATA: online. A ZDNet story about INTUIT CONNECTED SERVICES (Intuit pushes deeper into cloud) warns about security and reliability, when INTUIT CONNECTED SERVICES and QUICKBOOKS ADD-ONS will use THE SAFEST PLACE FOR DATA by far.

You can run QuickBooks and QUICKBOOKS ADD-ONS more securely and reliably if they are online under a QUICKBOOKS TERMINAL SERVER, Citrix or Linux system. This is a simple case of your relative risk. The safety, security and reliability of your online records and programs are generally far better than the safety of local system data. Online systems often use better computers, facilities, power protection and security. 256 bit National Security Agency encryption seems to be more common among online QuickBooks hosting companies than it is for banks. We all have had online bank and credit card records for many years. The main issue is the track record of our partners. Intuit has long documented better security than most banks and credit card companies. Anti-virus, anti-spyware and backup programs are usually better online, where they also run far more often. New online programs also tend to have more secure designs and run with policies that limit or prohibit many programs that might compromise security and reliability. They are also more likely to allow operation of user programs in a connected or offline mode, with fast batch updates when they reconnect. Security professionals also test and maintain programs and systems. Offsite storage of extra backups is the rule, not the exception.

This guarantees that INTUIT CONNECTED SERVICES and QUICKBOOKS ADD-ONS will increasingly use the most reliable and THE SAFEST PLACE FOR DATA. Online systems like QUICKBOOKS TERMINAL SERVER also will increasingly replicate equipment and services to insure reliability. Duplicate drives, power supplies, computers and utilities will keep making INTUIT CONNECTED SERVICES, QuickBooks and QUICKBOOKS ADD-ONS more reliable. THE SAFEST PLACE FOR DATA also will be even more reliable if you can quickly take your portable out of areas with no power or phone service, especially if your INTUIT CONNECTED SERVICES, QuickBooks and QUICKBOOKS ADD-ONS are on a remote QUICKBOOKS TERMINAL SERVER or Citrix system.

For the ultimate in security and reliability your QuickBooks, QUICKBOOKS ADD-ONS and other programs can be on a multi-location replicated or co-located QUICKBOOKS TERMINAL SERVER, Citrix or Linux system. You do not need to be be computer expert for such QUICKBOOKS TERMINAL SERVER systems, as our experts make this easy. They can host QuickBooks Terminal Server for as little as $29 per user per month, half the price some charge, with fast 24/7 support. This also can support of your local or remote QUICKBOOKS TERMINAL SERVER with many INTUIT CONNECTED SERVICES and QUICKBOOKS ADD-ONS, so it is THE SAFEST PLACE FOR DATA and the most reliable.

All this is why the news media already finds only the very rare cloud system failures to be  newsworthy. Further improvements in design and replication will soon make effective failures almost non-existent. By the way, please note that I have been using my QuickBooks insider connections since 2001 to regularly review QuickBooks Privacy and Intuit Privacy.