The Dynamics of QuickBooks and Great Plains

Microsoft kicks off Convergence on March 11, and the company is boasting 8,000 planned attendees. Heck, who wouldn't want to go to San Diego in March? Convergence is Microsoft's premiere event for Dynamics products and the midmarket.

This week, as a Convergence-competitive first strike, Intuit set up a Web site offering customers resources for switching to QuickBooks from another product. The site's final objective is to connect prospective switchers to local solutions providers with expertise in QuickBooks Enterprise.

Inuit is trying to capitalize on what it claims is growing momentum for QuickBook Enterprise customers, particularly among midmarket businesses using other products. Intuit claims 6,000 new customers from businesses using another accounting system.

Gary Wiessinger, Intuit's Mid Market Group director for product management and product development, said a significant percentage of these switchers are coming from Great Plains.

Intuit launched QuickBooks Enterprise four years ago, after finding many midmarket businesses used the standard versions of the accounting software. QuickBooks is a product for small businesses.

"It was a bit of a pleasant surprise for us," Wiessinger said.

Microsoft moved into midmarket accounting software sooner than Intuit, after completing its Great Plains acquisition in April 2001. The software would become an anchor product for Microsoft's Business Solutions division. Microsoft added other products to the stable, including Navision and Sales Management Systems, mostly through acquisitions.

With the acquisitions, Microsoft also inherited disparate partner channels that the company has been slow to combine with its existing channel programs. In September 2005, Microsoft rebranded Business Solutions products as "Dynamics," as part of a broader integration of application features, branding and channel programs. In 2006, Microsoft combined Business Solutions with its Office—or Information Worker—group to form the Business division.

Intuit claims to have successfully exploited some of Microsoft's integration problems by offering clear pricing, easily accessible product information and a cleaner partner model. Even today, potential Dynamics customers typically need to place a phone call just to get pricing information. The process reflects some of Microsoft's channel acquisition legacy. Pricing information for other products, such as Office, Windows Server 2003 or Windows Vista, is readily available on Microsoft's Web site.

"Our pricing is all right there on the Web site," Wiessinger said.

Both companies heavily rely on their sales channels. Intuit has 30,000 of what it calls Pro Advisors. Under a pilot program, Inuit also has trained 70 Solution Providers, which is a fraction of Microsoft's 9,000 Dynamics partners.

Across the Battle Lines
Competition is fiercer than ever between Intuit and Quicken. Microsoft is pushing hard against Intuit in the market for small-business accounting software. Microsoft even offers a free Office Accounting Express product. But Intuit appears unshaken.

Retail sales of Office Accounting 2007 are insignificant compared to entrenched competitor Intuit QuickBooks. Intuit's product commands more than 90 percent retail market share, as measured in dollars, compared with about 2 percent for Microsoft's software, according to NPD.

Maybe Microsoft needs to better understand how—ah, pardon the pun—market dynamics have changed. In the 1990s, Microsoft easily vanquished market leaders like Lotus, Netscape, Novell and WordPerfect. Granted, Microsoft took on competitors with huge market share, but also in growth markets. There was plenty of headroom for a rival to come in and snatch away control.

Maybe Microsoft should learn lessons from its own dominance. In mature software markets, where one product is hugely dominant, Microsoft faces the same adoption barriers as its competitors that are trying to oust Office or Windows.

Microsoft couldn't provide someone to speak about Intuit's market claims or Great Plains progress. It's understandable. Timing is difficult, as Microsoft executives prepare for the start of Convergence. We'll make sure that Microsoft gets its say in posts related to Convergence.