The Intacct Advantage in Professional Services and Software Firms

Professional Services and Software companies have different problems than the rest of us. Without even getting into VSOE (Vendor Specific Objective Evidence), firms that have a lot of their sales work such as client, price list and contract maintenance done in a CRM system such as Salesforce, often have the issue of having to rekey those client addresses, contract details, and sales order specifics into two separate products. They also have to maintain price lists in both areas-which is difficult and introduces data integrity issues. People sometimes don't key the same piece of data into two systems identically-especially if the people are two different people.

Many accounting products offer web services now. It's not just SaaS products. What Intacct does that is unique is that they ensured that the integration was done and worked well between their solution and one of the leading CRM providers-Saleforce. This means that not only can you check off your list that these products can integrate (where you or your consultant has to create the integration), this means that they already do integrate in the most common areas where a professional services or software organization would want them to.

The first slide shows how most professional service and software firms manage their businesses. They have a CRM system and an accounting system. You could think of this as the "Before Intacct" model. Please note that price lists, contacts, and customer master information is maintained in two different places.

This second slide, or "After Intacct" slide shows that key items such as Price List and Customer Master (includes contacts) are sharing this data in real time through real time integration between the two products.

If you work for a Professional Services organization and you are not even to the point in the first screen capture-meaning you may still be doing your quotes in Excel-this solution is even better. And if you work for a software firm that sells software, maintenance and services bundled together where you have revenue recognition challenges, Intacct is a product you should seriously consider. This product has both the horizontal capabilities of a solid mainstream product that has been endorsed by the AICPA but also the vertical features you probably need if you are in the software business. This is true even if you only sell software and have the revenue issues. If you have a staff of consultants rather than a challenge-Intacct becomes even more valuable to you with its cloud access from most computers and most devices.

So consider the value of a software product that does the following things for you:

• Process automation to increase your profitability
• Real time, consistent information in the cloud
• Don’t need IT to manage finance infrastructure
• Superior multi-entity, multi-currency, and financial consolidation for improved visibility
• Business visibility & control

As a professional services firm that uses a product we like very much, we have made the move to Intacct. Why? 225 maintenance plans to track, a remote workforce that does not enjoy slow terminal service or VPN connections for their timecards and expense reports are the main reasons. We also don’t want to have to keep upgrading our own hardware, our database versions, our server operating systems, our client operating systems, or our own customizations each time we upgrade a version of what we use. Why disrupt your business when you can keep working productively? Why keep buying hardware when the rest of the world is ridding itself of that IT burden?

Silverlight debacle coming to the cloud applications world?

Just read an interesting article on the Microsoft Dynamics Community website - Microsoft Dynamics GP 12's Silverlight Plans Unchanged Despite Windows 8 Plug-In Limitations - which connects the dots in a way that had not been on my radar yet.

I knew that SAP had chosen Microsoft Silverlight as the technology for building out the user interface for Business by Design. 

I also knew Microsoft was using Silverlight as the way to start to "cloudify" it's Dynamics product lines. As recently as April of this year, the Dynamics team Microsoft was telling people Silverlight is our Key for Cloud Credibility. 

But here's the problem - in the consumer world of 2011, Apple, Google, Facebook and now even Microsoft have decided that Adobe Flash and Microsoft Silverlight aren't cool anymore - and a newer technology called HTML 5 is the answer for rich web applications.  

Late last year we started seeing the Microsoft operating system and web browser teams start to move away from Silverlight and to embrace HTML 5 - see stories  here, here, and here.

As Microsoft have begun to further disclose their plans for Windows 8, the volume got even louder.The thread discussing this on the Windows 8 web forum got close to 200 posts from Silverlight developers freaking out before it was locked - and it now has more than 7 million views.

The most current Microsoft position appears to be that Silverlight will not work in Internet Explorer 10 or the new user interface of Windows 8 - and forget tablet/mobile usage, since neither Apple or Google have Silverlight plug-ins on their tablets or smart phones.

Which leaves the users of these applications in an interesting bind, as noted in the original article - don't upgrade to Windows 8 or IE 10 and you'll be just fine. No wonder the development community is freaking out. According to ZDNet - It definitely seems Microsoft’s ultimate goal is to wean developers off Silverlight and to convince them to use HTML5 and JavaScript to write new apps for Windows, going forward.

This really highlights the risks of using proprietary technologies when building cloud applications. While it may not be a big deal for some consumer website to shift their on-line video player from Silverlight to HTML 5 - from an enterprise application developer point of view it means a complete re-write of a large part of your applications.

The lesson - when building cloud apps take great care to use only open web standards - and when evaluating cloud apps make sure the vendor isn't using any proprietary technologies like Silverlight that will lock you into or out of any particular platform - the whole point of cloud computing is to free you to work from anywhere, anytime and on any device you choose.

I bet we will all be hearing more about this soon - its certainly sounds like a budding debacle to me. There is also considerable irony that the Microsoft Dynamics GP team bet on a technology that appears to be being abandoned by the Microsoft Windows and Browser teams - but that's just piling on...

Intacct Revenue Management and Vertical Offerings

One of the many challenges in offering non-industry specific accounting software products is running into competitors that sell only into that vertical.

5 years ago while selling Dynamics SL, which has unbelievable project accounting features, to an engineering firm-this happened to us. We had committed a lot of our billable resources to the presentation and the firm, which was quite large, but they were not forthcoming in telling us what was important to them. They wanted to both add drama and see how well we could think on our feet.

Almost half way through the day, the client shared that they would like us to show "whatever we have" in the way of a soil testing module. Horizontal packages don't have soil testing modules but the industry specific product had one.

So you can imagine my enthusiasm for a horizontal package such as Intacct that has vertical features in the professional services market and the software development markets we market into.

Intacct offers a zero client software, no terminal services, no infrasture needed, fast ability for firms to enter timecards and approve them from anywhere-that will run from multiple browsers.
So what does this have to do with your revenue recognition problems?

It also offers the ability to unbundle software sales into recognizable revenue streams using the rules that VSOE (Vendor Specific Objective Evidence) makes necessary to conform with U.S. GAAP.

For those of you that are not familiar with VSOE and revenue recognition rules, here is what is up.
Twelve years ago, a growing clamor started because software companies, trying to beautify themselves by recognizing revenue ahead of delivery, led the AICPA to clamp down.

These VSOE rules say that when software and other items are bundled together in a contract, a company cannot recognize any of the revenue from the contract until the last item has been delivered — unless it can prove the separate value of each item.

In other words, if a company sells a software license with installation services and 12 months of maintenance, it must either defer all that revenue for 12 months or recognize it proportionately over the 12 months, depending on the particular circumstances, unless it can establish the independent values of the undelivered items.

In practice, without an accounting software product such as Intacct, these rules constrain the ways companies sell their products, chew up a lot of management time, and put off investors.

Intacct Revenue Management helps organizations adapt and comply with evolving revenue recognition guidelines. The software increases productivity by automating the revenue recognition, billing and renewal processes. It also helps CFO's, gain real time visibility into future, deferred and renewal revenue streams.

So we are excited to get behind Intacct, our newest product offering, as we would like to someday give a presentation and the prospective client say "ok consultants, show us your VSOE modules."

The IRS wants your data file - That's so 1980's....

Here's another unexpected benefit of cloud computing - preventing the IRS from snooping through your financial data.

The IRS has just issued guidelines for it's examiners to request copies of your accounting software data files.  They are thinking about QuickBooks, Peachtree, and other accounting software data files  - and they've installed software in their offices to access your financial information.

While having a 1980's era file-based system for sharing data files has long been a work-around for businesses to send their financial information to a trusted business partner like a CPA firm, the IRS has now clearly taken notice and wants in. 

The FAQ about this program on the IRS website is quite instructive - they want your data file, and the expect you to send it to them.  

"The IRS has instituted a program to request accounting software files when examining certain small business taxpayers, and SB/SE examiners can now accept and read data files from accounting software packages used by most small businesses"

The problem is that if you send the IRS your entire data file, this allows them to snoop far beyond the issue they are investigating - because these products store all of your data in a single file - your financial data, your customer data, your supplier data, your product data - and a single file includes data that spans many years - making it very easy and attractive for the IRS to go on a fishing expedition. The net: the very same single data file that made it easy to send your information to your CPA now exposes you to needless risk with the IRS.

We at Intacct were pleased to be invited to a meeting with the AICPA and the IRS in Washington DC last week to discuss this issue and how to protect taxpayers. And here's the cool thing about cloud computing - at least for modern multi-tenant cloud applications like Intacct - there simply is no file for IRS to request - we don't even have the concept of a file underlying the system. 

Instead the whole system is based on real-time collaboration over the web, with access control and security built in. With Intacct you've got two good options if the IRS wants your data - you can easily export a subset of your information that precisely matches their request and submit it to the IRS in whatever format you wish.  Or you can give the IRS examiner a login to your Intacct system, since you have complete control over what they can and cannot see and you can limit them precisely to the information they have requested.  In both cases, you can cost-effectively remain compliant while ensuring that you don't accidentally over-disclose information.

It's so interesting to see an unexpected downside of a 1980's vintage technology - the data file - cropping up in 2011. We've grown beyond our Betamaxes and our Bon Jovi cassettes - maybe with cloud computing we can also move on from data files.

A brand-new data center for 5,000 companies - and no one noticed...

The benefits of cloud computing from an IT operations perspective are relatively well documented - the idea being that everything to do with running the software becomes the vendor's problem - but this weekend we had an extreme example of the beauty of cloud computing at Intacct that is I think informative.

At Intacct, we've been growing so fast that we were about to run out of power and space at our primary data center, which runs at an IBM facility. Our operations team has also not been entirely thrilled with some of the service and support we've been receiving from IBM, so we've known for a while it was time to upgrade.

After a thorough evaluation, we selected Savvis, and their tier one facility in San Jose, California. Savvis is also running applications for cloud computing leaders including salesforce.com, Adobe, SAP, amazon.com, and Workday, as well as for corporate giants like GE, Coca Cola, Thomson Reuters, Microsoft, P&G and eBay - so Intacct and our clients are in good company.  After the transition, our major data centers are with Savvis in California and with Sungard in Pennsylvania - and we have plenty of headroom matching our greater than 100% annual growth.

This weekend, we upgraded 5,000 customers to our brand new facility at Savvis. Our operations team have been preparing and practicing for the upgrade for nearly a year, we purchased and installed all new and upgraded hardware and we notified all of our users and partners of the pending upgrade well in advance.

The actual switchover took place over a three hour window last Friday night, plus a one hour window on Saturday night. That's it - just a few hours of scheduled downtime and everyone was back up and running, just better and faster than before.

And here's the best part - We had one support call this morning related to the transition - that's it, across more than 5,000 companies, more than 30,000 business entities and tens of thousands of users that were upgraded. When people came into work this Monday morning, all that our clients noticed is faster performance than they saw last Friday - everything else is entirely transparent to them. 

I can't think of a better statement about the IT value of cloud computing - 5,000 customers automatically upgraded to a new and better facility, with all new and much faster servers, state of the art hardware and upgraded network connectivity - and all totally transparent and at no incremental cost or effort to any customer. 

Can you imagine in the old world of on-premises software what would have happened if 5,000 companies all swapped out their data centers (or even just replaced their hardware) for their ERP system themselves - the time and expense, the number of upgrades that would have failed, the amount of downtime that would have been incurred?

I hope you agree this is a great example of why cloud computing is just that much better.

Intacct Chosen by Indiana-based Software Developer

As a representative of a few accounting software programs and "student of the game", I always get excited to speak to someone I hardly know about how and why they bought their new accounting software program.

Usually this type of situation lends itself to complete honesty and often enjoyment on both sides regarding understanding what made a person pick one product over another. When I am the person offering the product and get "turned down"-I'm always concerned that the person didn't want to give me all the reasons someone else won the deal.

Intacct Software sells directly and through a channel. A CFO who lives and whose business (roughly 10 million in sales) is in Indiana follows my blog and called me when he got into the market for software.

He started to speak to me about Intacct at a time that was before we represented the product and he was already working with someone directly at Intacct.

I shared with him that I wanted to implement the software in Minneapolis first and really just wanted to understand his process and reasons for whatever he selected. It was not my goal to have our first client in a different time zone and a plane ride away.

The two products he looked at mainly were Netsuite and Intacct. I told him that he should look at Acumatica as well.

Incidentally, I asked him if I could use his name in my blog and he said "no" because he gets enough calls from solicitors and likes to keep his anonymity as much as possible. More importantly, he also shared that I can call him in November of this year (2011) to see how everything went.

He found Intacct to have the best Financial Statement generator with eliminating entries of the three he reviewed. His firm is a SaaS-based software developer and they offer subscriptions all over the world, so the Multi-National reporting was important to him.

Netsuite could not provide the type of Multi-National reporting needed. He liked Acumatica's financial reporting but thought the product looked and felt too much like a distribution product and he wanted something more tailored to a software developer. He said that Netsuite's One World was good with the Multi-National reporting-but not as good and certainly weaker in many other areas.

He also shared that he had heard some bad things about Netsuite's customer retention and decided to Google "Netsuite Sucks". He found the number of responses alone made him eliminate Netsuite despite the fact that their salesperson was very good. He referenced this site that said 38% of people using Netsuite really don't like it.

I looked at the sites http://amplicate.com/hate/netsuite, and also http://www.clientsfirst-us.com/blog/partners-perspective/industry-insights/customers-are-running-away-from-netsuite/ and some of the comments, to be fair, were not negative about the software but negative about the overall experience.

He also shared that Netsuite could not handle the VSOE (Vendor Specific Objective Evidence) requirement as well as Intacct. VSOE is an accounting requirement that the AICPA requires of software developers to ensure they are not recognizing revenue too early in order to look good to investors.

We'll call my anonymous buyer "Russ". One of the most impressive and likable qualities to Russ about Intacct is their 3rd party ecosystem. This guy did a lot of research and found that all the important other SaaS products that he wanted to work with already had Intacct on their list of products. Salesforce (CRM) and Clarizen (project scheduling) were two that he listed first but said that Avalara (salestax) was a key one for them as well.

He said that Intacct is in the "wheelhouse of integration" and defined that term as meaning that integration already exists-he doesn't have to create it or test it or hope that it works. He said that he preferred the "best of breed" approach to the "suite approach" because in a suite you often get weaker modules. With best of breed you can pick the software and its features rather than getting stuck with a module because it's part of your suite.

In addition to VSOE requirements, Russ has lots of maintenance plans that he needs to remember to bill and then recognize over a whole year. He has deferred revenue that comes in all shapes and sizes due to the contracts they offer to customers.

He is in the process of moving away from both his revenue recognition worksheet and his billing (when to and how much) worksheet. He expects this savings in time and increased accuracy (if someone adds a subscription or user that increases the maintenance amount-something a spreadsheet can't do for you) in invoicing to be large. He will save in revenue leaks as well since once a customer pays their maintenance bill, it's hard to go back and ask for more.

He shared that he only has 120 clients currently on those two spreadsheets but that 2 less "islands of information" are very welcome to him.

For those of you that have read this blog, you may remember this person being very excited about finding a product that could work on-premise first and then be moved to the cloud without any disruption. Well this is the same person that, when he saw, the "rev rec" features in Intacct said-this is what I need to buy.