During the past three years, vendors such as Intuit, Microsoft, NetLedger and Peachtree Software have launched Web-based accounting solutions, primarily aimed at the small-business market. To date, however, they have had a tough time weaning small businesses from desktop accounting solutions. In fact, NetLedger, the "leader" in the Web-based space, has about 5,000 customers just a tiny fraction of the millions of QuickBooks users that Intuit boasts.

Some vendors —: including Microsoft, which recently shut down its Web-based accounting service, Finance Manager — attribute this poor showing to a lack of demand for Web-based accounting solutions. They contend that customers have no interest in online accounting services. But Intacct, a recent entrant into the Web-based accounting fray, believes these vendors haven't hit the mark with customers because they didn't put the right ingredients into their offerings. Intacct, led by David Thomas, a 25-year veteran of the accounting software world, intends to get the formula right.

On the product side, the vendor's strategy is to combine the best of mainframe, desktop and accounting solutions in its software-as-services offering. Built for the Web from the ground up, Intacct's suite runs on a Linux operating system and Oracle database, and is designed to take full advantage of XML to integrate easily with other Web-based services.

No Holding Back
The service is comprehensive, including core general-ledger, accounts-payable and accounts-receivable functions, as well as payroll, employee expenses, 401(k), order entry, inventory control, purchasing, online document delivery, and online bill and invoice payment features. Intacct also offers professional accountant tools, including online audit and review (which it co-developed with Deloitte & Touche), and professional tax preparation integration, financial analysis, time and billing, and business development. In contrast, Intuit and Peachtree introduced Web-based solutions that lack the full functionality of their desktop counterparts. Similarly, Microsoft's Finance Manager failed to deliver enough functionality to be competitive.

The second key tenet of Intacct's strategy is to serve as a private-label supplier to a 100 percent indirect-sales channel. By letting its partners' brands take center stage, Intacct believes it can better its odds of reaching and selling its services to its target customers: companies with five to 1,000 employees. As measured by signed partners, Intacct is already well under way in executing on this strategy. The vendor is working with three types of alliance partners to integrate and market its services:

1. Application partners range from payroll-services providers such as Automatic Data Processing (ADP) and CBS Employer Services, to companies such as salesforce.com, which markets customer relationship management (CRM) software, and OpenAir.com, which sells Web-based professional-services solutions. In the Intacct/ADP partnership for example, Intacct will integrate its online general-ledger application with ADP's major-accounts payroll solutions, including PC Payroll for Windows (PCPW) and Pay eXpert for small-to-midsize companies (up to 999 employees).

2. Business partners include companies such as American Express, Deloitte & Touche and the Principal Financial Group. Intacct and Deloitte & Touche, for instance, teamed up to offer the industry's first Web-based auditing tool, and its alliance with the Principal Financial Group integrates the Principal's 401(k) and retirement services with Intacct's online professional-accounting system.

3. Vertical partners that offer industry-specific services. Partners include Intralight for hospitality and retail, PRMsoft for health care and Sintech Software for insurance.

XML Marks the Spot
Intacct's XML Developer Kit provides the fuel for its partner integration program. Launched in July 2001, the kit helps partners integrate their Web-based business services with Intacct's online accounting and auditing solutions. Available for a fee of $495, the developer kit includes five hours of consulting time with Intacct's XML development team, which helps to assess partners' integration needs, develop a plan to address them and support documentation. Intacct also provides its partners with an XML Gateway account on Intacct servers and a fictional demo company to test integration performance.

To help partners sell Intacct to their customers, Intacct has introduced an "atomic" billing solution, through which it can bill by service usage instead of charging a fixed price per user, per month. In the two months since it adopted this pricing scheme, Intacct's revenues have jumped 25 percent because existing customers are now putting more users on the system -- confirming the company's belief that more flexible, granular pricing encourages customers to increase use of its services.

Although Intacct's solution is still new in the small-business accounting space, it's the first vendor that has bottled a small-to-midsize-business accounting formula with all of the key ingredients: Web-native services, private-label distribution through high-profile partners and proactive integration with partners' existing services. We expect that Intacct, with its strong formula, will give competitive online and off-line alternatives a good run for their money.