At the Midwest Accounting Show in Chicago, I was asked a sincere question that deserved a thoughtful answer. “My needs can be met by QuickBooks Online. However, I have used QuickBooks desktop for years. It is clear Intuit wants us to convert to QuickBooks Online. How do I decide?” With this emotional question, there is no right or wrong answer. I did my best at the time, and recognized the many of you have to be asking the same question for your practice and your clients.
Others have tried to answer this question, but did not address all of the key issues, nor do I think I can cover all of your key issues. I thought I’d summarize the issues after consistently being asked a similar question for the last few years, hearing Intuit’s statement of direction from their August 2014 earnings call, seeing the QuickBooks 2015 product and reflecting on the changes and progress in QuickBooks Online.
Let’s start with some key strengths for QuickBooks Online:
- Simple multi-user access in a browser and therefore runs from any computer with good internet access
- Low cost per user, approximately $7-13 per user per month without payroll
- Automatic bank and credit card downloads
- Expanding third party add-ins with improving support in IPP
- Backup provided and automatic
- QuickBooks Online Accountant (QBOA) provides a simple mechanism for inviting and billing clients and managing clients from a single console
Key shortfalls for QuickBooks Online:
- Additional cost for running multiple companies – each company is currently considered a separate subscription
- Retention of older company files has a cost. A few conditions under which this can occur include:
- Closing down a company and retaining the company file for access
- Deciding to restructure a company’s chart of accounts, and wanting to retain the old company structure
- Corrupt file that can’t be resolved with Intuit support
- Depth of inventory and costing
- Frequent updates make the product harder to document and teach procedures
- Lack of breadth of product features when compared to QuickBooks Desktop
Commonly cited issues for QuickBooks Online consultants:
- Learning another product and the additional certifications
- Features needed not in the product
- Internet speed at client sites or at your own firm
- Different sales cycle
- Different client base/needs
- Repeatable customized reporting
It is clear that Intuit has made notable progress on improving QuickBooks Online with the revisions in September 2013 and the developments in the product since that time. With Intuit’s QuickBooks Online installed base of 683,000, they have the largest installed base of any entry level SaaS product. With Intuit’s publicly stated goal of having 3 millionusers by 2017 and selling the product directly into multiple different countries, it is clear this is where the company sees their future. Future public revenues of the company are being adjusted to illustrate and capitalize on the recurring revenue model of QuickBooks Online.
Let’s continue with some key strengths for QuickBooks Desktop:
- Ability to run more than one company file at no additional cost
- Broad ecosystem of third party add-ons to extend the product
- Longevity in the market
- Good reference and learning materials in books, classes and consultants
- Ease of use improvements, including items to make users and consultants more efficient
Key shortfalls for QuickBooks Desktop:
- Expensive to host for online access, with costs varying from $30-60 per month per user
- Escalations in pricing, although still a good value for the capabilities
- Payroll subscriptions
- Sunsetting of older products after three years, in effect a 33% annual maintenance
- ProAdvisor costs, including certifications
- Inconsistencies between the Mac and Windows versions.
- Periodic updates, some of which create issues
Commonly cited issues for QuickBooks Desktop consultants:
- Competition makes it harder to get acceptable rates for the expertise
- Reluctance to add third party products because of updates not coordinated with product releases
- Clients try to do too much on the system leading to slow downs and dissatisfaction
- Native reporting not customizable or professional enough
- Maintaining licensing and invoice complexity from Intuit
QuickBooks Desktop user counts are approaching 5.2 million. Even with the move to QuickBooks Online, current Intuit forecasts expect no more than a 25% decline in QuickBooks Desktop licensing through 2017, which would be around 3.9 million users. The higher end QuickBooks Enterprise version can reduce licensing costs in larger installations, adds slightly greater functionality, but does not notably increase end-user speeds.
So With This Background, How Do I Decide?
Clearly there are many more factors than the simple lists above. What is your business model today, and what do you want it to be? For some of you, the answer may be more like a buffet line than a menu. Why choose cake or ice cream? You’ll take both. For others, you have so much expertise in QuickBooks Desktop that you don’t want to change. Still others have a relatively short time until they can slow down or retire, and frankly have little interest in learning another new product. For a few more, the clients want the local control of their files, are running multiple entities and are very happy with the results QuickBooks desktop is producing. It is perfectly fine to not change!
On the other hand, some of you see your entire future in the cloud. You might solve this problem in the short term by hosting QuickBooks with one of the 27 authorized hosting companies or by creating your own private cloud with Citrix or Microsoft RDS. You may believe that people want to work from cell phones, tablets and are on the go, and truly need what a browser based product can deliver. You see the value of a permanent lease on software that is continuously updated, and believe that the ecosystem will expand to support more and more capabilities with QuickBooks Online.
The only thing I’m sure of is that both products can solve small business accounting problems. Besides, which is better a Ford or a Chevrolet (or if you prefer a Mercedes or a BMW)? For me, cars are simply transportation. Intuit’s QuickBooks offerings are two key offerings in the accounting software business, and both can get you to many different destinations. What is your destination and what type of ride do you want to take to get there?
About the Author
Randolph P. (Randy) Johnston, MCS has been a top rated speaker in the technology industry for over 30 years. He was inducted into the Accounting Hall of Fame in 2011. He was selected as a Top 25 Thought Leader in Accounting from 2011-2013. His influence throughout the accounting industry is highlighted once again this year by being a recipient of the 2013 Accounting Today Top 100 Most Influential People in Accounting award for the tenth consecutive year. Among his many other awards he holds the honor of being one of nine technology stars in the U.S. by Accounting Technology Magazine. Randy writes a monthly column for The CPA Practice Advisor, articles for the Journal of Accountancy, and creates articles for both accounting and technology publications, as well as being the author of numerous books. He has started and owns multiple businesses including K2 Enterprises in Hammond, Louisiana and Network Management Group, Inc. (NMGI) in Hutchinson, Kansas. In 2010, NMGI announced their national support of CPA firms. His wife and four children enjoy many experiences together including theatre, music, travel, golf, skiing, snorkeling and model trains.