Intuit's Demandforce purchase: A strategic game changer?

Summary:The acquisition of Demandforce is the largest in Intuit CEO Brad Smith's tenure. It remains to be seen if the deal transforms Intuit, but analysts appear to be sold so far.

Intuit's $423.5 million acquisition of Demandforce may indicate that the future of enterprise software is about thinking small---as in SMB.

Last week, Intuit's purchase of Demandforce put an exclamation point on the company's move into software as a service and the SMB market. Demandforce provides email, mobile and social tools to better connect small and medium sized enterprises with customers.

Also: Intuit to acquire Demandforce for $424m; SaaS for SMBs

Demandforce server more than 35,000 small businesses. Analysts say that the Demandforce purchase is a strategic acquisition that could ultimately reshape Intuit.

In a research note, Cowen & Co. analyst Peter Goldmacher said:

Our view is that the next decade of growth in software will come from small businesses who can now buy enterprise class software at very compelling prices. This market remains wide open and very competitive. Intuit has already established itself as the 800 pound gorilla in the space and trusted brand for accounting and payroll solutions to small businesses. By layering in Marketing Automation, a category that has massive growth potential, the company should be able to cross sell into its 5M strong installed base and build on its brand for continued market domination.

Indeed, Demandforce can bolster Intuit's average price per customer since Demandforce costs about $200 to $300 a month, said Goldmacher.

For Intuit, Demandforce also allows it to target larger customers. Look for Intuit to pitch Demandforce along with QuickBooks Enterprise.

Barclays analyst Raimo Lenschow said:

Details of Demandforce's fit into the Intuit family of products have so far been limited, but it is likely this will be another opportunity for Intuit to cross sell into its large SMB user base. We view the acquisition as a positive for Intuit as it is another step towards monetizing the existing SMB relationships Intuit has developed with their core tax and accounting software.

The acquisition of Demandforce is the largest in Intuit CEO Brad Smith's tenure. It remains to be seen if the deal transforms Intuit, but analysts appear to be sold so far.

Topics: Enterprise Software, Banking

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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