Opportunity Knocks: QuickBooks Consultants Grow Into VARs

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• August 2007 Issue
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From the August 2007 Issue

Okay, so I’m no economist, but in my view, the evidence is overwhelming that we must be in the midst of a boom (hopefully not a short-lived bubble) in the SME (small to medium enterprise) accounting software marketplace. While the strength of the boom may not be obvious by analyzing public company quarterly reports, I believe most of the growth and demand is in the private sector. I see it coming from small, private companies with $5 million to $20 million in sales — companies that are dramatically increasing spending on services from other small, private companies such as tax and accounting firms, IT consulting firms, and Value Added Resellers (VARs) who combine off-the-shelf software and hardware with customized software, installation and training.

What’s driving this boom? Several factors are contributing, including a relatively strong economy. However, I see a very specific set of “drivers” for this new boom:

The Internet has now reached critical mass. For years, I’ve been talking to accountants and their clients about moving many business-critical systems to the Internet. But until recently, I encountered stone-faced, heals-dug-in-the-ground responses, mostly related to information security and availability of high-speed access issues.

Accounting software is now “open” to third-party developers. Since 2002, when Intuit opened up QuickBooks with its SDK (Software Developer’s Kit), which allows third-party developers to read and write data to the QuickBooks database, we have seen a steady flow of new solutions that are now reaching maturity. And since QuickBooks has become a “platform” for other applications, many other vendors are following suit. For example, both Sage Software and Microsoft have open platforms with Peachtree and Office Accounting. So while the mid-range software market has always been more open as far as add-on integration is concerned, this new development in the low-end spectrum is finally beginning to pay dividends in the broad low-to-middle market.

Several mature, vertically focused software companies have begun targeting the small business world, specifically the QuickBooks market. The list includes companies like Business Objects (Crystal Reports), MISys (SBM), Alterity (Acctivate), Exact Software (Job Boss), Salesforce.com, eBay, Yahoo!, Google, Sage Software (ACT! and Timeslips) and several others. What’s interesting here is that since these companies have developed links to QuickBooks, the whole ecosystem of QuickBooks add-ons has benefited. For example, just simply the existence of a QuickBooks link in Crystal Reports gives rise to a whole submarket of opportunities for end-user customers, consultants, custom developers, and even other commercial software companies.

Consultants, specifically QuickBooks consultants and tax and accounting firms that either employ consultants or refer clients to such consultants, have started to fully embrace the idea of recommending and installing add-ons to solve many of the previously unsolvable client problems. Many have begun specializing in add-on integrations such as QuickBooks Point of Sale, BillQuick, Fishbowl, Legrand CRM, PDG Software’s Ecommerce Storefront, Cabinet NG’s CNG Books, Personable’s SourceLink, Alterity’s Acctivate, MISys, and Truecommerce EDI. In addition to these, there are many more REAL applications that solve real customer problems and yet still allow the client to keep their QuickBooks installation in place. This is a compelling story for the consultant because it allows them to expand on existing skills while maintaining an advantage over other consultants, for whom QuickBooks expertise is lacking. Of course, it takes a QuickBooks expert to know one, so this advantage does not necessarily translate into competitive success because the client usually doesn’t have a clue about why your expertise is so valuable until they try the other guy and experience failure. However, QuickBooks expertise is a huge advantage and a barrier to entry for those new to the game.

Re-engagement with the existing client base. With more integration options from which to choose, many consultants are going back through their client base and initiating new projects to tackle problems around advanced inventory management, CRM, POS, mobile solutions, or advanced construction management. Additionally, these new technology options allow consultants to engage new, larger clients with a broader set of needs than that of the typical QuickBooks client a few years ago.

So with all these factors driving the current boom, what are the challenges of these new realities?