What happens when the mom and pop businesses grow up to become mid-market companies? Conventional wisdom dictates that they graduate to an enterprise resource planning (ERP) application like Microsoft Dynamics GP, Sage MAS90 or an on-demand service from NetSuite.
Increasingly, these folks are swapping one from QuickBooks to another version--QuickBooks Enterprise.
We recently spoke to Gary Wiessinger, director of product management and development at Intuit’s mid-market group, about how his company plays in the ERP space. Here are some highlights:
On why Intuit focused on the mid-market: Wiessinger says Intuit's plan is to stay focused on mid-market companies looking for simplicity. The division started in 2001 following numerous customer surveys. What Intuit discovered was that more mid-market companies were maxing out QuickBooks as their firms grew.
"From those surveys, we realized we had to put a focus on (QuickBooks Enterprise) so we launched enterprise solutions," says Wiessinger. "Our original goal was to keep them in QuickBooks family. Now we're focused on meeting needs of more complex companies by offering greater scale and power."
On the mid-market landscape: Wiessinger notes that Intuit is looking to occupy the space for larger companies that don't need a lot of complex functionality. He reckons that it's going to be tough for SAP and other large enterprise software vendors to tailor products to the mid-market. "It's difficult to take complex software and dumb it down," say Wiessinger.
Meanwhile, Wiessinger estimate that NetSuite will continue to move upstream as it competes with SAP. NetSuite has said it looks to occupy the space between QuickBooks and SAP, but Intuit can also move upstream a bit.
On functionality: Intuit isn't looking to match Microsoft Dynamics GP and others feature for feature. The goal is to give midsized companies only what they really need. Intuit's QuickBooks Enterprise supports up to 20 concurrent users compared to five for regular QuickBooks. It also has a Sybase SQL standard database, advanced user permissions and inventory functionality. QuickBooks Enterprise also allows companies to map permissions based on job function, say accounts payable and accounts receivable clerks. The biggest pitch for Intuit though is ease of use. Installing QuickBooks Enterprise is the same as installing QuickBooks. Pricing, which includes one year of support, online backup and data and upgrade, is based on users:
- 5-user $3,000
- 10-user $4,500
- 15-user $6,000
- 20-user $7,500
"Mid-market companies have IT departments so we've done what we can to make it easier to administer," says Wiessinger.
That appeal is apparently working. Intuit's QuickBooks Enterprise has landed 6,000 switchers from higher-level ERP suites from Microsoft and Sage.
On defining the mid-market: Intuit doesn't define the mid-market by employees or revenue per se. "Those measures don't reflect mid-market customers. Mid-market companies are really about the type of business they are and how they run. How is decision making is made?" says Wiessinger.
In other words, mid-market companies are defined by complexity. For instance, a general contractor could have 100 employees, but be run by a sole proprietor that calls all the shots. That's not a complex company. A 20 employee company may have two tiers of management with a CEO and a CFO and a board of directors and require more automation. The second company would be better suited for QuickBooks Enterprise. "A services or manufacturing company can be complex relative to others because they need to automate workflow," says Wiessinger.
What mid-market values: Wiessinger argues that a long list of application features isn't much of a sell. "There's a big part of the mid-market that doesn't want that complexity. A lot of companies are spending $100,000 or more for an implementation for functionality they don't use. The things most companies need can be done in a simple way," says Wiessinger. "We don't have anywhere near the functionality of Great Plains. If I could build in all that functionality I wouldn't do it."
What QuickBooks Enterprise isn't good for: Wiessinger doesn't pretend that Intuit's enterprise unit will appeal to every mid-market company. For instance, if your company needs automated inventory replenishment or materials management QuickBooks Enterprise won't solve your problems.