Not long ago, Intuit was a traditional software vendor, selling boxed desktop programs like TurboTax, Quicken and QuickBooks. With that business fading, however, and company has been retooling itself for the era of mobile computing, cloud-based services and big data. It’s a neessary transition for old-school software makers hoping to remain relevant in an increasingly networked world.
Intuit Didn’t Bring It’s “A” Game
At the company’s Investor Day on Tuesday, president and CEO Brad Smith acknowledged that fiscal 2012 “was not our best year” and that the company “didn’t bring our A game.” But Smith said Intuit had identified what was going well, and “where we have to double down” in 2013 and beyond.
Smith told press and financial analysts gathered at the company’s Mountain View headquarters that Intuit had made progress toward managing the 8,000-person company like a start up (divided into “teams no bigger than two pizzas can feed”). The aim is to “de-risk decisions" by running "very lightweight experiments to prove that there’s a there there before we plunk down millions of dollars" to develop new features and products.
Where Intuit Needs To Double Down
But the company still needs to work on extending its mobile momentum, increasing the power of its platform to gain “network effects” from users and partners extending the company’s reach.
Not surprisingly, those are some of the same issues facing software publishers from Adobe to Microsoft as they face startup competitors that leverage advanced mobile and social capabilities like GPS and cameras from the get-go. “The mobile experience has won,” Smith declared.
Unlike many of those startups, though, Intuit charges for its products. So the goal is not necessarily to generate huge numbers of registrations. The “issue is converting first-time users into second-time and ongoing users,” he said. “If you don’t have an amazing first-use experience, you're out of the game” - a huge change from the dynamics of selling software in a box.
The Network Effect
One way to do that, Smith said, is to extend the network effect by enticing others to help develop the company's products “while our engineers sleep.” Intuit has reached a point where “it’s not enough to do it ourselves,” when there are 60 million Intuit users and developers who could be “active contributors.”
“End users no longer want to be consumers, we want to be participants,” Smith said. “Companies that win going forward have to have platforms that let users and partners contribute.”
The Intuit Partner Platform isn’t new, but Smith is hoping to extend the concept. Also on Tuesday, Intuit formally announced that QuickBooks Online has expanded from four countries to more than 130 in 40 languages.
According to Alex Lintner, president of Intuit’s Global Business Division, the company is counting on users - and eventually developers - to improve the translations and add local tax rates. Intuit is working on incentives to encourage that process, Lintner said.
And last week, Intuit opened up the application programming interface (API) to its financial data service in the US and Canada.
Cloud Computing Yields Data
Now that Intuit has 45 million customers in the cloud, Smith said, “the next chapter in growth is data.” This is the “era of big data for the little guy,” Smith said, giving Intuit the chance to “capitalize on data that no one else has.”
Hugh Molotsi, Intuit's vice president of technology innovation, is working on an experimental Data Connection effort to analyze and derive value from data collected from Intuit customers. (Intuit says the data is "anonymized and aggregated.") Molotsi demonstrated a program - not yet available to customers - that graphs connections among QuickBooks and Mint users to help them find customers and suppliers. For example, a home improvement company might be able to find out what areas have the most consumers who spend more than $500 per year on home products, leading to more efficient marketing efforts. It could also help create vendor ratings based on repeat business (“loyalty scores”) instead of anonymous reviews.
Is It Working?
Intuit’s transformation is working, in Smith's view. In fiscal 2012 the company earned “$100 million in revenue from products that didn’t exist three years ago - way up from 2010.” It has 7 million customers on mobile devices, and is making $70 million in profitable revenue through those devices. “Almost every new customer we bring in is a connected services customer,” Smith said, meaning they’re using Intuit’s newer online services (not the packaged software) which deliver predictable, recurring revenues.
There’s 50% more lifetime value in each QuickBooks Online customer, said Kiran Patel, executive vice president of Intuit’s Small Business Group.