Google has begun to nibble at the business market, introducing its $50-per-employee-per-month package of personal productivity applications, Google Apps, and buying up some little companies like JotSpot, a purveyor of corporate wikis. Now the time has come for the fast-growing company to take a bigger bite out of the enterprise pie. And the best way to do that would be to buy Intuit. I would argue, in fact, that there’s no company that provides a better immediate fit with Google than does the maker of QuickBooks, Quicken, and TurboTax.
Google’s strategy in the enterprise market is the same strategy pursued by most software-as-a-service companies: start by serving small and medium-sized companies, then work your way up into larger corporations. The core software program used by smaller companies is the bookkeeping and accounting application. Intuit’s QuickBooks holds the dominant position in this market and, as Larry Dignan notes today, Intuit has quietly been moving up into the middle market with its more powerful version of QuickBooks, QuickBooks Enterprise, which provides basic enterprise-resource-planning (ERP) functionality. As Dignan writes:
[QuickBooks executive Gary] 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.”
What Dignan doesn’t mention is that Intuit also happens to be a major, if largely unacknowledged, player in the software-as-a-service business. It offers a SaaS version of QuickBooks called QuickBooks Online Edition which has more than 85,000 subscribers (growing at a 50% annual clip), making it one of the most popular Web-based business apps. QuickBooks Online is a fairly rudimentary accounting program, though it has become steadily more sophisticated over the years with the addition of various features such as payroll management. Right now, it would be an ideal complement to Google Apps. Roll an accounting/payroll service into Google Apps, and you have a suite that literally covers all the software required by a whole lot of small businesses. And you have a strong base for moving up into the mid-market.
Intuit also, of course, has Quicken, the leading personal finance program, which is another natural for moving onto the Web. And it has the leading tax preparation program, TurboTax, which has already moved to the software-as-a-service model with the popular TurboTax Online. Weave this stuff together with Google Finance, run it on Google’s infrastructure, and you’ve got the makings of the dominant personal finance service.
If Google were to buy Intuit, it would also fulfill another of its core goals: annoying the hell out of Microsoft. You’ll remember that, back in 1995, Microsoft tried to acquire Intuit, only to be thwarted by the Justice Department’s antitrust regulators. (That marked the real beginning of Microsoft’s legal woes.) Even though, in the long run, Google could end up an even bigger monopoly than Microsoft, I don’t think it would run into antitrust problems if it tried to buy Intuit today. (If it waits, though, all bets are off.)
Bottom line: By acquiring Intuit, Google leaps to the forefront of the small-business software market and establishes a foundation for moving up-market with its software-as-a-service business suite, while at the same time gaining a big share of the personal finance sector just as it’s beginning a shift to the SaaS model. The acquisition is certainly do-able. Google’s current market cap is about $137 billion. Intuit, a nicely profitable company, has a market cap of just under $10 billion, with a little over $1 billion of cash on hand. And just a few months ago, Google and Intuit announced a major strategic alliance, so the lines of communication are certainly open. What’s not to like?
UPDATE: In the comments, Isaac Garcia notes that Intuit also has QuickBase, another popular software-as-a-service application for small businesses and corporate teams (which even includes a CRM module). Does anyone know how many companies currently use QuickBase?