Let's ponder some of the recent events surrounding Intuit, maker of QuickBooks--the de facto ERP system for small enterprises.
--Today: Intuit acquires Digital Insight, an on-demand applications provider for the banking industry, for $1.35 billion. Cost synergies: None. Revenue growth: Some. The combined companies will have access to 5,000 financial institutions, 25 million consumers and 7 million small businesses. Digital Insight's technology is likely to be integrated with Quicken and QuickBooks.
--Sept. 13: Intuit acquires StepUp Commerce. The deal allows Intuit's QuickBooks customers to upload real-time inventory data to the Web.
--Sept. 13: Intuit teams with Google to integrate the Web giant's marketing tools in QuickBooks 2007.
The big question: What does all this add up to? On the surface, Intuit is acquiring revenue growth as CEO Steve Bennett noted on the company's conference call. "The acquisition is a continuation of Intuit's new philosophy to develop, partner, or acquire in order to drive revenue growth," says Prudential Equity Group analyst Bryan Keane.
But there may be a little more to it than that. With each new service and acquisition Intuit adds an element that could feed other parts of the business. It's a small business halo effect if you will. Quicken online financial management feeds into QuickBooks services as more people run side businesses or go out on their own.
Sure, these incremental acquisitions revive the Quicken franchise, which has been hampered by online banking, and bolster QuickBooks. But these deals also put Intuit in the middle of numerous transactions. With StepUp, it becomes involved with mass real-time inventory data. With Google's partnership, it gets involved with small business marketing. And now with Digital Insight it can launch what Intuit describes as killer financial apps.
If you look at how QuickBooks is developing it's quickly becoming a portal to all the services needed to run a business. As more services develop Intuit stands to gain in multiple ways to create its own halo effect.