Intuit

Intuit Case
Case
Individual
Individual Assignment
Assignment
Q.1 Why and how exactly might Xero (and similar competitors) be a threat to QuickBooks? How
concerned should Intuit be about competitors such as Xero?

Xero, a New Zealand headquartered but globally focused company, was founded back in 2006. Xero Ltd.
provides online accounting and business services to small and medium sized enterprises. Xero made
serious inroads in the New Zealand and Australian markets in a relatively short time.in these markets they took
up on incumbents like MYNO who had not yet awaken to the importance of cloud based or platform based
solutions but depended on product based solutions. Xero launched in North America in 2013-14 looking to
replicate similar sweeping gain in this market as well.

Zero and QuickBooks have similar value propositions and cater to the same customer base of SMBs. This makes
Zero is substantial threat to QuickBooks.
1. They fulfil the same need of comprehensive financial/business accounting tools
– Xero and Intuit provide integrated financial and business solutions like invoicing, payroll
management, cash flow management
– While QuickBooks was traditionally a desktop based software solution, they are also developing
cloud based solutions looking to adapt the desktop based experience on any mobile device. Xero
however, was launched as SaaS based accounting software, and was a more leaner and cloud based
model.
– They both provide third part application integration with their modules/software
2. They both cater specifically to the same customer group : Small and medium sized business.
3. They are both competing for market share in the North America region and expanding to US.
4. QuickBooks and Xero had subscription based pricing model. Zero provided unlimited user access due to
SaaS. Zero could also provide cloud based model, QuickBooks still limited the access and charges as per
user differential view based on the user and privileges, QuickBooks was relatively slower to integrate this
into their software.
While Intuit holds majority share ~80% in this market with their QuickBooks based solution, this means for the
current users it will be significant switching cost to transition to Xero based accounting system. But the desktop
based system is also a substantial challenge to QuickBooks to migrate them to cloud. It is estimated the market
will transition towards online/cloud based model. The new users/business would now proactively look for
lighter and smarter cloud based model and Xero has significant advantage in this segment with technology and
more robust system. Also, Xero would back their entry and look to gain share through massive marketing
budgets and compelling pricing offers to their customers and partners. 2
Q.2 What should be the business model for QuickBooks Financing? Substantiate your response by
listing pros and cons for the chosen business model.
1. Open marketplace similar to Google AdWords
2. Pre-negotiated offers from a limited set of pre-selected providers
3. Products or services offered directly by Intuit, similar to Financial Supplies

Business Model 1 : is not a feasible model as the customers will be averse advertising on the QuickBooks platform
and also, it offers not significant value as the process of credit ratings, applications and re-applications is the
biggest pain point in order to secure loans for SMBs
Business model 3 is also not a practical as it would been significant investment. Also for the SMBs it would be
limiting their options for financing service. IF it is similar to the financial supplies model, QuickBooks would tie
up with 1 supplier or financial service provider and provide only those options.
Business model 2 (pre-negotiated offers from a limited set of pre-selected providers) is the most viable model for
QuickBooks Financing.
This model truly exploits the value of network effects. More lender means more options, QuickBooks had
historical health data of the customers, which could be valuable for the lenders to evaluate the credit worthiness
and provide credit ( current system was inefficient as it was cost and time consuming for smaller loan values).
However, QuickBooks data could provide insights and expand number of credit customers.
It will be a platform that covers full spectrum of credit offerings. Since the platform works with limited and pre-
negotiated providers it is more effective and provides only those options which the SMB is eligible for.
QuickBooks behavioral data to provide lenders with valuable insights and hence significantly reducing processing
time and risk factors for the lenders. This opens up a new avenue of growth in creditors. This bring additional
busines growth of the lenders esp. previous loan applications which would have been declined due to time and
cost to process them.
Advantages to the customers are
• Streamlined Application Process
• Capital Marketplace
The cons of this model are
• If the services are extended to large set of providers, the quality of service and credit ratings may significantly
drop. So limited options will also limit options if you are looking for a particular type of financing.

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Q.3 Between QuickBooks Financing and Concierge, which is the more important opportunity to
pursue? Why?

QBF has strong value proposition. As mentioned in the case almost 85% of the customers on
QuickBooks were looking for load . IF we take into consideration the amount of loan needed by QBF
SMB customers per year: $24 billion. ( 85%*4.5*60%(applied in the last 2 yrs.)*70%
(declined)/2(yrs.))* 30000 (avg loan required). Assuming 10% commission it would be $2.4bn
revenue to intuit. Also, getting credit is one of the top most pain points for almost the entire
customer base for QuickBooks or SMBs

Concierge is not an attractive investment because of the low switching costs for discount offer
platforms, and because the market is already highly contested. Furthermore, functioning as an
advertisement platform would irritate its core accounting software users would not add real value.
It is mentioned that while the customers of QuickBooks don’t indulge in significant cost comparisons
on essentials, this could be a positive for QuickBooks concierge to provide large volume based
discount with few vendors and not indulge In lowest possible prices. Also, integration of printing
services like tax documents, checks could integrated through QuickBooks. However, other concierge
esp in travel and rentals may not viable solution

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 Q.4 To what extent should Intuit pursue platform opportunities for QuickBooks (QB)? Why?
1. Peer-to-peer platform for QB customers (e.g. Intuit Customer Network). No Intuit Partner
Platform, no QuickBooks Financing (QBF), and no Concierge.
2. Peer-to-peer platform plus platform for third-party developers. No concierge and no QBF, but
possibly rely on third-party developers to develop similar initiatives
3. Peer-to-peer platform plus platform for third party developers plus Concierge and/or QBF
4. None of the above – stay focused on QB as a pure product
Peer-to-peer platform for QB customers (e.g. Intuit Customer Network). No Intuit Partner Platform, no QuickBooks
Financing (QBF), and no Concierge :A peer-to-peer payment platform would enable QuickBooks to capture a large market
large number of SMBs are on QuickBooks. By taking just a small transaction fee QuickBooks would be able to capitalize on
the large market. Positive network effects: When customers of SMBs get exposure to QuickBooks while using the payment
platform, QuickBooks get free marketing and branding. This will result in increased customer acquisitions. However, larger
part of the business outlook is through QuickBooks financing as it has significant business value proposition. Also,
significant business or opportunity to make different software applications run on the QuickBooks data base and systems
would be lost, which would restrict functionalities available to the customers.

Peer-to-peer platform plus platform for third-party developers. No concierge and no QBF, but possibly rely on third-party
developers to develop similar initiatives
There is a clear value proposition and high customizability for the Customers of QuickBooks benefit from the added
functionalities from third party developers Third-party developers gain access to the large customer base of QuickBooks and
and invaluable data through QuickBooks. This could be commission based revenue generation model.
To compete with competitors like Xero who had an advantage on clod and app based system in the accounting software
market, the third-party developer platform is almost essential as many of QuickBooks customers are adding these additional
features through third-party developers
Customers can compare and choose from a bevy of SMB tools and software that integrate with their QuickBooks system
This move would change the platform from a two sided platform in peer-peer platform to a multisided platform. It opens up
API , app stores and developer programs to allow third-party developers to build and sell software products to QuickBooks’
customer base. Those products leverage data about small-business finances provided by QuickBooks. Customers now have
much strongly integrated systems like payroll, taxation, invoicing, sales dashboard etc. all built on the QuickBooks's
database. This makes the system more robust and user friendly for the customers. The core values of intuit was to design
with the customer need at the core of it is truly opened up through developers Opening up to third party APIs would
definitely enhance the value to customers would now would have more higher switching cost to any other competitor. The
con of this strategy would be significant impact on its own systems or product lines. However, the complete value and
business size should be more on basis of commission on the APIs. Also, this needs to be integrated with QBF/Conceirge to
provide integrated solutions to the customers of Quickbooks
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 Q.4 To what extent should Intuit pursue platform opportunities for QuickBooks (QB)? Why?
1. Peer-to-peer platform for QB customers (e.g. Intuit Customer Network). No Intuit Partner
Platform, no QuickBooks Financing (QBF), and no Concierge.
2. Peer-to-peer platform plus platform for third-party developers. No concierge and no QBF, but
possibly rely on third-party developers to develop similar initiatives
3. Peer-to-peer platform plus platform for third party developers plus Concierge and/or QBF
4. None of the above – stay focused on QB as a pure product
Peer-to-peer platform plus platform for third party developers plus Concierge and/or QBF
on the top of the peer-to peer and third party developers, intuit should considered the QBF as it has a distinct value
proposition to the customers and lenders. The total credit opportunity that this generated would be ~24bn and 10%
commission would be ~$1.2bn of incremental revenue by opening up this opportunity of QBF.
Concierge though not an attractive investment because of the low switching costs for discount offer platforms,
And contested competitive space (Groupon etc.), has an advantage as the customers opt for integrated solutions and
also the comparison of various services by the customers is low. So while it could add linear business opportunity

Product only offering has limited viability esp. with strict competition rising in Xero and other cloud based accounting
systems. This would completely erode the market share in the future, where customers are expecting lighter and on-
the-go accounting systems. Customer would also look for more integrated solutions where different applications can
be loaded or operated on the same system and not multi systems each with its own schema and DBMS.

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