Cloud / SaaS Service Level Agreement Redux

One of the most popular posts on this blog continues to be my SaaS Service Level Agreement post from last year. I've also published several additional pieces since covering additional SLA best practices - whether you are looking for a cloud computing SLA, cloud SLA, a SaaS SLA or an on-demand SLA.

I thought it would be useful to re-summarize and bring up to date my recommendations both for what people shopping for SaaS or Cloud Computing solutions should be asking for in Service Level Agreements, and what vendors should consider offering in their SaaS and Cloud Computing SLAs.

In my experience, there are four key areas to consider in your SLA:

First is addressing control: The service level agreement must guarantee the quality and performance of operational functions like availability, reliability, performance, maintenance, backup, disaster recovery, etc that used to be under the control of the in-house IT function when the applications were running on-premises and managed by internal IT, but are now under the vendor's control since the applications are running in the cloud and managed by the vendor.

Second is addressing operational risk: The service level agreement should also address perceived risks around security, privacy and data ownership - I say perceived because most SaaS vendors are actually far better at these things than nearly all of their clients are. Guaranteed commitments to undergoing regular SAS70 Type II audits and external security evaluations are also important parts of mitigating operational risk.

Third is addressing business risk: As cloud computing companies become more comfortable with their ability to deliver value and success, more of them will start to include business success guarantees in the SLA - such as guarantees around successful and timely implementations, the quality of technical support, business value received and even to money back guarantees - if a client isn't satisfied, they get their money back. Cloud/SaaS vendor can rationally consider offering business risk guarantees because their track record of successful implementations is typically vastly higher than their enterprise software counterparts.

Last is penalties, rewards and transparency: The service level agreement must have real financial penalties / teeth when an SLA violation occurs. If there isn't any pain for the vendor when they fail to meet their SLA, the SLA doesn't mean anything. Similarly, the buyer should also be willing to pay a reward for extraordinary service level achievements that deliver real benefits - if 100% availability is an important goal for you, consider paying the vendor a bonus when they achieve it. Transparency is also important - the vendor should also maintain a public website with continuous updates as to how the vendor is performing against their SLA, and should publish their SLA and their privacy policies. The best cloud vendors realize that their excellence in operations and their SLAs are real selling points, so they aren't afraid to open their kimonos in public.

These ideas leads to specific SLA terms that I recommend cloud / SaaS buyers discuss with their vendors, and that SaaS / Cloud vendors should consider including in their service level agreements:

Control oriented Service Level Agreement Terms

• Establish a system availability SLA, based on average monthly availability, with bonuses for overachieving and increasingly steep penalties for downtime beyond the agreed level.
• Establish a system response time SLA, based on average monthly response time, with penalties for slow system performance.
• Establish a fail over window for disaster recovery SLA in the case of a catastrophic failure of the vendor's infrastructure.

Operational Risk oriented Service Level Agreement Terms

• Ensure that you can get your data back if you ever decide to leave and that it is unambiguous that you own your data.
  
• Ensure that the vendor will assist you in migrating away, for an appropriate professional services fee.
• Ensure that you can retain your data on the vendor's system for an appropriate fee if you ever need to stop using the service but don't want to lose access to your data.
• Review the vendor's privacy policy and make sure that you understand what happens according to the SLA if there is ever a privacy breach.
  
• Ensure that the vendor undertakes annual SAS70 Type II audits, and that the vendor further undergoes annual third party security and penetration testing.
  

Business Risk oriented Service Level Agreement Terms

• Establish an error resolution time SLA, with different windows for different severity levels (system down vs. workaround) and again with penalties for not being responsive.
  
• Establish criteria for the quality and timeliness of professional services engagements with bonuses for implementations that go better than planned and penalties for those that do not.
• Look for guarantees around proactive communications - look for monthly product feature updates and quarterly roadmap updates and understand how your requests for new features and product changes will be prioritized.
• Ask for money-back guarantees - cloud vendors may be willing to offer you a money-back guarantee, particularly if you are willing to commit to a pre-agreed upon scope of work and criteria for success. If you are comparing multiple vendors this can be a great way to reduce your risk or at least to understand how confident the vendors are that they will meet your needs.

Penalties / Rewards and Transparency oriented Service Level Agreement Terms

• In each of the above sections, ensure that the vendor documents the methodology for measuring performance and calculating penalties and rewards.
  
• Understand whether you will be issued an automatic credit if a failure occurs that impacts you, or must you ask your vendor for a credit to receive one
  
• Understand whether you can you get out of your contract if the vendor continuously and materially fails to meet their SLA
  
• Ensure the vendor guarantees transparency and proactive notification of system availability, production issues, scheduled downtime and pending updates.
  
• Review the vendor's public real-time status website that shows their operational performance. If they don't have one, think about looking for another vendor.
  
• Review the vendor's published service level agreement and understand how it applies to you (and how it compares to this list. If the SLA isn't published on the company website, decide whether that is a red flag to you.
  

The secret sauce behind all of this is that cloud vendors can do all of these things much more cheaply and a lot better than nearly all of their clients can, because can spread the cost if doing all of this well across thousands of clients. The best cloud vendors have figured out that this is both a huge competitive advantage and that it drives significantly value to their clients.

I realize this is a very long post - but I wanted to try to make it comprehensive and I hope that both prospective SaaS / Cloud buyers and vendors find it helpful. At Intacct, we publish our SLA, which we call "Buy with Confidence" as well as our privacy policy and our real-time system status.

Cloud Financials - 500%+ ROI, Two Month Payback

This week Nucleus Research issued a press release on an ROI study they recently completed on the financial impact of deploying cloud financials. The punchline: 589% ROI, a two-month payback and $715,000 cost savings over three years. They studied the deployment of Intacct at nGenera, an innovative services company in Austin, Texas.

The key benefits of cloud financials identified by Nucleus were:

1. Reduced IT costs. Consolidating systems and going on demand has enabled nGenera to reduce ongoing software, hardware, disaster recovery, and support staff associated with those systems.
2. Avoided additional finance hires. By enabling employees who know their business to work remotely and driving other efficiencies through Intacct, nGenera has been able to continue to grow without the need for additional financial management staff.
3. Increased end user productivity. End users of the application can now enter their time and expenses electronically in the system, saving end users about an hour per month and improving project accounting.

According to Rebecca Wettemann, the VP of Research at Nucleus:

We are seeing more companies move to on-demand solutions for both cost savings advantages and increasingly for the business agility it provides. nGenera, for example, was able to reduce overhead and ongoing IT costs, and also retain its best talent wherever they reside”

When I first saw the 589% ROI number, I was concerned it was so high that it looked less than credible. But Nucleus are professionals at studying and calculating ROI - it's what they do for a living and they've done it at thousands of companies.

At end of the day, whether you want to call this SaaS ROI, or cloud ROI on on-demand ROI, I think it's great to document specifically how the new model delivers value for the customer.

The complete Nucleus ROI study on nGenera is available here (short registration required)

More Sage Insight

I'm way behind on postings lately - lots of good stuff stored up I'll try to get out out in the next few weeks.

I've been spending a lot of time with folks from the Sage VAR community over the last several months - doing many of demonstrations of Intacct and lots of education about cloud computing in general. And I've learned a ton from them - how their businesses work, what their aspirations are, what their lives are like today, and both their excitement and concern about cloud computing.

I've written quite a bit here before about the financial model of cloud computing for the channel - the value of the subscription revenue model that comes with cloud computing to the traditional software VAR community in terms of its predicable cash flows and revenue stream and positive impacts on the valuation of the VARs business itself.

Having met with perhaps 30 Sage VARs in the last couple of months, I'm learning how they react to cloud computing and in particular to Intacct given their context - some of these folks have been in the trenches for 20 or more years reselling financial applications and their wealth of knowledge is just tremendous.

The consistent reaction has been largely amazement about how far cloud financials have come. It turns out that Intacct has lots of features built in that are either not available, hard to use or are third party add-ons in the Sage MAS product lines - some of the top Intacct features the VARs positively react to over and over again are dashboards, financial reporting, business intelligence and operational analytics, workflow and approvals, multi-entity and multi-currency support with financial consolidation and built-in contract management with revenue recognition. There was also consistent surprise at how easy it is to customize Intacct and how much customization can be done.

Where it gets interesting is when we start to talk about the operational aspects of deploying Intacct - the idea that they can build re-usable templates for a particular industry or client focus that they can deploy over and over again in cookie cutter fashion seems to really hit home. The idea of making the product their own, and building out and selling vertical versions of the applications without having to do a lot of coding seemed to be universally attractive.

Support was another interesting area. The idea that they can (with permission) securely log into their clients' application from anywhere and anytime with a web browser to help provide support and diagnose problems - since they can see exactly what their clients see, and both the client and the VAR can even be logged in at the same time looking at the same thing - seemed to really cause some aha's.

What I didn't understand going into these meetings was how much time the VARs currently have to spend on-site diagnosing problems, re-installing software and generally providing PC support, which is often unbillable and certainly low value added work. The idea of being able to do all of this remotely and collaboratively with clients just seemed to be like a breath of fresh air.

I've written here before many times and it's starting to become widely accepted that the cloud computing model is both better for the client and better for the vendor. At the same time it's becoming crystal clear that cloud financials are far better for the VAR community too - they can deliver a better product to their client, their people can be far more productive, they can monetize their intellectual property, and they can build a business based on predicable, recurring revenue streams.

Intacct Wins the 2009 SIIA Codie Award for Best Financial Software !

Last night Intacct was awarded the 2009 SIIA CODiE award for Best Financial Software.

More than 850 products were nominated for the CODiEs this year.

What's especially gratifying about winning the CODiE is that they are only given out after extensive evaluation and peer review - the SIIA is the Software & Information Industry Association and the CODiE Awards hold the distinction of being the software industry’s only peer-reviewed awards program.

According to the SIIA, "Now in its twenty-fourth year, the CODiE Awards program has raised the standard for excellence and serves as prestigious representation of outstanding achievement and vision in the software and information industry."

The complete list of 2009 winners is here

Intacct Joins Forces with the AICPA and CPA2Biz

Today is an exciting day for the Intacct community.  

The AICPA, the largest professional association in North America, today announced that they have endorsed Intacct as their preferred provider of financial applications.  CPA2Biz, a subsidiary of the AICPA, will begin distributing Intacct to more than 45,000 AICPA member firms and to their millions of small business clients.  The AICPA, CPA2Biz and Intacct will spearhead a major program to drive the adoption of cloud computing and Intacct across more than 350,000 AICPA members, the companies they work for and their clients.

We started working on this new alliance with the AICPA and CPA2Biz teams more than a year ago.  Their motivation is in improving the financial performance of millions of small and midsized businesses and increasing the productivity of the accounting profession by moving financial processes onto the Internet.  They have done extensive research on the benefits of the adoption of cloud computing by the profession and tremendous diligence on Intacct.  You can imagine the AICPA does not make a move like this lightly.

We have also established a joint development relationship.  We’re working hard with the AICPA and CPA2Biz to make their intellectual property available within Intacct applications.  For one example, imagine 100 different micro-vertical financial templates in Intacct, blessed by the AICPA as the best way to run law firms, restaurants, construction businesses and more.  And built-in business guidance from the AICPA – like best practices for handling new transparency requirements, or benchmarks for key financial measures and how you compare to your peers.

The AICPA and CPA2Biz have a great track record of executing partnerships like this.  Five years ago, they endorsed PayChex as their preferred payroll system; today, PayChex has more than 500,000 customers with more than 25,000 AICPA member firms are recommending Paychex to their clients.  They don’t do things in a small way – it’s all about scale.

So what does it all mean?

First, the endorsement of cloud computing for core financial applications by the largest professional organization in North America is milestone in itself - the AICPA clearly sees tremendous benefits for their membership in moving financial processes into the cloud.

Second, over time, literally millions of small and midsized businesses across America will be touched by this new alliance.  It has a shot at improving transparency and productivity, particularly for small business, on a macroeconomic scale. 

It’s also a clear indication of the AICPA’s and CPA2Biz’s vision to transform accounting services – touching nearly every sector of the US economy.  As the economy recovers, I also expect our new alliance to create jobs – by making it easy for firms to hire in lower cost areas of the country and bringing stay at home and part time workers back into the profession.

More close to home, it’s a tremendous endorsement for Intacct.  We expect the new partnership to drive significant growth for Intacct across 350,000 AICPA members, 45,000 member firms and millions of their clients.  This means lots of new opportunities for Intacct and our channel and alliance partners.

Please join me in welcoming the AICPA, CPA2Biz and more than 350,000 AICPA members into the Intacct family.

Transforming Client Accounting Services

Over the last few months, we have spent quite a bit of time speaking with many CPA firms using Intacct and and other web-based applications in their client accounting services practices.

The goal was to understand what they have learned and begin to come up with a model to quantify in dollars and cents terms the financial impact to the practice for firms that have switched to the "cloud accounting" model to collaborate with their clients over the Internet.

I've written here before about the motivation for firms to move to the on-line model. It helps with core concerns that just about all firms have - spending less time on mundane tasks, monetizing intellectual capital, becoming better trusted advisors to clients, delivering better service and more easily aligning labor supply with client demand. Just about everyone I've talked with over the last couple of years finds all of this to be kind of like motherhood and apple pie - the words "no brainer" come up a lot. So taking things to the next step seemed important - starting to quantify the value to firms that have actually made the move.

While we need to do much more work and many more interviews, dig in to more details, build out a deeper model and most importantly document lots of case studies, some of the initial findings regarding the business impact of moving client accounting services on-line are compelling.

For the average, small, client accounting services practice we spoke with - defined as two partners and three bookkeepers, with 100 clients - the value of moving on-line was reported as being close to a 50% upside in financial results. The bulk of the benefits seem to come in four main areas:

• Doubling hours in proactive consultation per client from 8 to 16 per year, because the CPA always has on-line access to the client's current financials and can more easily offer timely and immediately relevant advice
  
• Being able to serve 10 more (10% more) clients with the same staff, by reducing travel time, reducing data management issues and leveraging automation and standardization
• Freeing up 50 hours per bookkeeper per quarter, by reducing the time to fix data errors, reconcile books and travel to the client
• Increasing overall billings by 3% to 5% by offering higher-value, trusted trusted advisor services - which is made possible by reducing the amount of lower value added work

Note that this is clearly not a scientific survey - the findings above are based on self-reported results, the sample set is by definition biased - all the firms we have been speaking with are advocates of the on-line model and were excited about the benefits they have seen. But at least it provides some numbers and axes to look at to compare with what you are seeing in your own practice so you can see if this all feels reasonable to you. Going forward I expect to drive more formal and less biased research to thoroughly document all of this in a much more rigorous way.

If you are reading this and you are from a firm that has made the move to "cloud accounting" for your client accounting services practice, do post a comment to let use know if your experiences match what the above firms have told us they have seen.

Moving Accounting into the Clouds

My personal cloud computing "buzz-o-meter" hit an all time high this week.

The Wall Street Journal had a front page story on cloud computing - which started with Larry Ellison calling it "Gibberish" last year and ended with him announcing his new "cloud-computing ready" products on Oracle's earnings call last week.

Then I picked up Business Week which ran not one but two separate cloud computing stories - one encouraging IBM to acquire Sun to get more into cloud computing, and the other trying to educate consumers about being smart in using the cloud. NPR got into the act too, with another consumer focused story.

I've been having lots of meetings with thought leaders from the accounting profession lately - in one last week I heard that Intacct should start talking about "cloud computing" instead of SaaS or on-demand or Internet and in the other that the best way to describe Intacct was to call it "Cloud Accounting."

Then yesterday I heard through my network that our new president wants to learn a lot more more about cloud computing too.

So what does it all mean?

Just about everyone in the technology profession (and apparently now even Larry Ellison) agrees that Cloud Computing is a disruptive new shift - even a bigger deal than the last major architectural transition from mainframe to client server computing. But our industry is full of buzzwords that come and go, so it's sometimes hard to sort out real vs hype.

My week above says that cloud computing has moved from a Silicon Valley buzzword to becoming something that has capturing the attention of mainstream consumers, government and business. I think the major factor driving this wide level of interest is that Cloud Computing is pervasive across our experience as consumers as well as in the business world.

And when multiple thought leaders from the CPA world, one of the most conservative professions of all, start talking about moving CPA firms to cloud computing and Intacct as "Cloud Accounting" - that says to me that we are really on to something.

New Microsoft Study - SaaS Adoption by SMB Grows to 86%

A new Microsoft Study, released today, called the 2009 SMB Insight Report, says, among other things, that SaaS adoption by small and mid-sized businesses will grow to 86% in 2009.

The key trends that Microsoft identifies for Small and Midsized Businesses for 2009 all bode well for SaaS:

1. Lower Budgets Mean Less Has to Be More.
2. Strategic IT Investments Bolster the Bottom Line
3. Service and Responsiveness Are Key to Customer Retention.
4. Smaller Companies Will Increasingly Adopt Cloud Computing.
5. Better Together: SMBs Rely on Trusted Partners.

Somewhat strangely, the highest interest reported by the study for a Microsoft SaaS offering was for Microsoft Silverlight - their competitor to Adobe flash - which I have a hard time thinking of as a SaaS or Cloud Computing kind of thing at all.

So while there is nothing earthshattering here, just more good validation that SaaS is become more and more widely adopted and why, one interesting thing that may not be obvious is that Microsoft is now starting to use the terms "cloud computing" and SaaS - for those of you that don't follow this closely, Microsoft have been pushing the term "Software + Services" as their alternative to SaaS, the idea being you combine traditional desktop software with Internet services. Perhaps now that they are seeing 86% of businesses wanting to adopt SaaS, they've decided to get a little bit SaaSy too.

Cloud computing is the next generation of SaaS ?

Earlier this week I found an interest article on a blog written by Bruce Richardson of AMR research. Bruce is musing about whether the combination of Compiere, an open source ERP application running on Amazon EC2 could be the next disruptive thing in ERP. The catalyst was a discussion with and an e-mail exchange he had with the Don Klaiss, ex SVP of Oracle Applications and now the CEO of Compiere, who told Bruce:

Cloud computing is the next-generation of software as a service, in which a complete software environment is licensed as a subscription from a software vendor and low-cost, secure, and dependable IT hardware infrastructure is ‘rented’ from a utility-computing provider on demand.

This new definition of cloud computing made me raise at least one eyebrow. Running your applications on the Amazon elastic compute cloud is a bit like virtualization - and I agree with Don that renting hardware in the cloud can be cheaper than installing hardware on premises. I also think it's particularly attractive for prototyping and for bursty applications, but that's for another post. But running applications on virtual hardware in the cloud is just a fraction of what SaaS is all about - and to claim it's the next generation of SaaS just doesn't pass the sniff test.

With SaaS, the vendor takes on the costs and risks of purchasing, maintaining and operating all of the infrastructure required to run the applications. This includes things like Oracle licenses, SOA platforms, security software, and a lot more. The SaaS vendor also operates the system, handling security, tuning, backup, upgrades, maintenance, disaster recovery, etc. SaaS vendors also spend lots of money and resources on operating procedures, SLAs and SAS 70 audits to guarantee things like like uptime, performance, security and quality of service.

There is also a lot of magic in multi-tenancy at the application level - with major associated benefits and economies in scaling and operations. Old single-tenant applications running in a virtual machine in EC2 by definition don't get this - above the hardware level it's still the old single instance, single tenancy, single maintenance model.

If you are running your applications on Amazon EC2, by definition you are doing all of this stuff yourself. Sure you get virtualized hardware and that's good, but buying and maintaining infrastructure is up to you, as is installing, maintaining and operating your applications. There are no SLAs, that's also up to you, and you're also on the hook for backup, disaster recovery, performance tuning, etc.

The way the SaaS business model works is that the vendors are taking all the money they save on sharing multi-tenant infrastructure and operations across thousands of clients and operations and returning it to their customers. SaaS vendors dis-intermediate both hardware and software infrastructure vendors, and are far more efficient at operations than nearly any individual customer could be. All of this savings goes right back into the pockets of SaaS customers. In the model that Don describes, you only achieve these efficiencies at the virtualized hardware level - which is only around 5% of the overall TCO for running a business application.

Even in the old ASP model, the attraction was that your vendor remotely operated your single instance, single tenant applications for you so you could get both hardware and operational scalability.

A TCO analysis would show that for business applications, all of the multi-tenancy and sharing you get with SaaS ends up being far less expensive than the costs of individual companies each running their own applications themselves on EC2. SaaS vendors get scale across everything - sharing infrastucture and operations costs, not just hardware costs, across large numbers of customers. In other words, you've got to consider the other 95% of costs that are not just related to running virtualized hardware.

So don't get me wrong - I think Amazon EC2 is great stuff - But to call putting a single tenant application on EC2 the next generation of SaaS - well I don't think so.

Intacct Walks the 2009 CODiE Red Carpet - Best Financial Software

I'm happy to report that Intacct has just been named a finalist in the "Best Financial Software" category for the 2009 CODiE awards. I looked through the list of finalists, and it looks like Intacct is the only financial applications that made it through the extensive evaluation process (more than 850 products were nominated) to the finals.

The CODiE Awards, originally called the Excellence in Software Awards, were established in 1986 by the Software Publishers Association (SPA), now the Software & Information Industry Association (SIIA), so that pioneers of the then-nascent software industry could evaluate and honor each other’s work. Since then, the CODiE Awards program has carried out the same purpose – to showcase the software and information industry’s finest products and services.

The CODiE Awards hold the distinction of being the industry’s only peer-reviewed awards program, which provides member companies with a unique opportunity to earn praise from their competitors.

We're delighted to receive this recognition from our peers in the industry.

Saugatuck: SaaS in Finance: Mainstream, Growing, and Poised for Growth

More evidence from Bill McNee's excellent SaaS research firm, Saugatuck, that SaaS momentum is continuing to build in the finance department.

In a major new report coupled with extensive research on SaaS in finance, just released, the analysts at Saugatuck found:

Finance executives are much less happy with their current on-premise systems’ abilities to meet important business goals. There is a gap between existing systems’ abilities to meet important business goals; and just as clearly, SaaS solutions are seen as a much more attractive and viable alternative.

So while finance executives are unhappy with their current financial applications and expect that SaaS will be a lot better. This isn't just a hope, it's based on experiences they are already having with SaaS, as Saugatuck notes:

Finance executives see broad-based value in the use of SaaS across both tactical point solutions and core finance systems, functions and roles. Nearly sixty percent of Finance executives indicated that their firms are using SaaS for mature business applications categories such as Payroll.

And it's driving more and more finance departments to adopt SaaS, which is exactly what we are seeing at Intacct:

While starting from a much lower account penetration base, SaaS adoption into key financial functions and processes will experience explosive growth of 40 percent to more than 100 percent by the end of 2010.

Saugatuck's bottom line couldn't be more clear:

As a result of Finance executives’ dissatisfaction with current systems, and market conditions that favor the acquisition and use of SaaS over many traditional, on-premise solutions, Saugatuck believes that arguments being made by many leading, legacy on-premise providers (and industry pundits) that customers will “never” swap out and upgrade their core financial systems – whether SAP, Microsoft, Oracle, PeopleSoft, JD Edwards, Sage and the like – is, at best, optimistic. If alternative solutions such as SaaS are seen by existing customers as providing more value at lower cost, then these legacy systems (and their vendors) face significant market share losses at best.

You can read the overview of the report here: “Great Expectations: SaaS Strategies in the Finance Organization”

IDC Says the Downturn is Good for SaaS

And I agree with them - it sure matches what we are seeing here at Intacct.

IDC Says:

The harsh economic climate will actually accelerate the growth prospects for the software as a service (SaaS) model as vendors position offerings as right-sized, zero-CAPEX alternatives to on-premise applications. Buyers will opt for easy-to-use subscription services which meter current use, not future capacity, and vendors and partners will look for new products and recurring revenue streams.

One of the main value drives for SaaS has always been that you don't need to make a large up front investment in software, and you don't have to make any infrastructure capital investment at all. In the downturn we're seeing the need to preserve cash accelerate the adoption of Intacct by companies who need to move to new versions of products like the Sage and Microsoft Dynamics and Deltek lines - all of these moves require capital expenditures for new software, new servers, new databases, sharepoint, etc.

The same downturn-driven need for cost savings and cash preservation is also driving companies to switch over from Oracle Financials to Intacct - the entire subscription cost of Intacct is about 50% of just the software maintenance charges alone for Oracle Financials - not even counting the capital and operating costs that go along Oracle.

Additional findings from the IDC study include:

• By the end of 2009, 76% of U.S. organizations will use at least one SaaS-delivered application for business use.

• The percentage of U.S. firms which plan to spend at least 25% of their IT budgets on SaaS applications will increase from 23% in 2008 to nearly 45% in 2010.

• This market's growth prospects will accelerate the shift to SaaS for the whole value chain as the promise of a recurring revenue stream, and the opportunity to tap OPEX and project-related dollars, will benefit the whole SaaS ecosystem.

At our user conference I polled our the audience and our average client is already closer to five SaaS applications - they are seeing extraordinary savings in their overall IT expenditures and great improvements in productivity as they shift more and more of their business to the cloud.

We similarly are seeing a major shift in the the channel - with the VAR community actively moving to embrace SaaS. Since the channel follows demand - it rarely creates it - the projection that demand for SaaS will continue to rise implies we will see great synergy, since SaaS is better for both the client and the channel.

Lots of the SaaS bloggers are covering the new IDC report - Vinnie, Phil and Dennis among them.

Intacct Winter 2009 - Convergence for QuickBooks Graduates

As those of you who've been following this blog know, one of our key strategies here at Intacct is to make it a "no-brainer" for companies that have outgrown QuickBooks to graduate to Intacct.

We've been working hard with our Business Solution Providor Partners (aka our VARs) to take reduce the cost, time and risk of graduating from QuickBooks to Intacct - and to offer really compelling business value for making the move.

The first part of this project was to work with our VARS to develop migration tools, work out a rapid implementation methodology, and create best practices industry templates for QuickBooks graduates. It turns out that the methodology and industry templates are the most important part of the graduation process- the reason companies graduate from QuickBooks in the first place is to upgrade / professionalize their financial processes, introduce automation, streamline operations, go international, become auditable, etc.

So we've put a lot of focus with the partners on creating a process that makes it fast for QuickBooks graduates to upgrade their financial processes, and I'm even more excited about the growing library of micro-vertical versions of Intacct that our partners are creating. An really cool feature we have for VARs now is that they can package up their industry expertise to create custom vertical industry versions of Intacct that they can re-use over and over again for new clients.

We've also made some significant changes to Intacct Winter 2009 focused on user experience, user productivity and effectiveness. The goal was to make all of our users delighted and more productive with our user interface, but in particular to help QuickBooks graduates through the process of moving up to a system that inherently has much more depth and complexity.

We spent a lot of time on a new configurable menuing system that adapts to the users role and preferences. We added a really cool new favorites bar (written in Adobe Flex for you techies out there) that slides in and out and provides one-click access to a users favorite screens, business processes, customers, etc. We also added "Google-like" search - simple one click search to everything across the system. Another cool innovation are graphical process maps that show the user what their company's processes look like to help them navigate through the system. All in all it works together very well to make the system much faster to navigate around in, much easier to understand and much faster to find exactly what you need to get your job done.

So together there are four new things that have come together in Intacct Winter 2009 to make it much faster, less expensive, more productive and higher value to graduate from QuickBooks to Intacct. Faster migration via automated tools, a fast and value added implementation methodology, micro-vertical industry templates with built-in best practices and new features for higher user productivity and superior user experience.

The result of the convergence of our fast growing VAR community and these new product features is that we can offer an even better solution for QuickBooks graduates, and we can offer it faster cheaper than ever before. A year ago the cost of a basic Intacct implementation was around $10,000. Today our VARs are offering graduation from QuickBooks for less than $2,000 - an 80% improvement. Plus with all the new best practices industry content what you get for $2,000 today is increasingly higher value than what $10,000 would have brought you a year ago. So it's cheaper and better.

Where I see this going, and where I think the most value is, is in an ever increasing library of micro-vertical versions of Intacct from our partners. I'd like to see a marketplace of hundreds of certified industry versions of the product that are tailored across a wide array of micro-verticals and company sizes. For the partners, this provides a way to monetize their intellectual property by getting paid for their domain expertise. For customers, this means a very inexpensive way to get a massive head start of a best practices financial system implementation for their vertical.

I see this in a way as a convergence of SaaS and Web 2.0 community ideas. SaaS is mostly focused on industrial strength business applications and technologies delivered over the Web. But the community idea - in this case bringing together a community of VARs and other experts to develop a pool of intellectual property that can be deployed on top of the SaaS applications in the form of microvertical templates and best practices - well that's more of a Web 2.0 community or marketplace thought that I think has lots of possibilities.

Intacct Winter 2009 - The World is Getting Flatter

It's been a whirlwind last few weeks here at Intacct as we've been heads down finishing up Intacct Winter 2009, a major new release that we are announcing this morning.

The highlights are big time improvements for global business management, a brand new financial consolidation, reporting and analysis application, new pre-packaged integration with QuickArrow, lots of improvements to our user interface designed to make Intacct even easier to use and more productive and new tools for ease of adoption that have let Intacct and our partners offer a 50% reduction in entry-level pricing and an 80% reduction in entry-level implementation costs.

Given my background coming from Hyperion and having worked on both Hyperion Enterprise and Hyperion Financial Management, which are both financial consolidation applications, I had a great time working on Intacct Global Consolidations over the last year - because the financial consolidation, reporting and analysis process is a one that nearly every company has to go through every month and is a natural to make better using the Internet and Software as a Service.

In my experience, most finance departments find the monthly close and financial consolidation and reporting process to be odious. It's manual, tedious, repetitive and off-line. And once you are done, you get to do it all over again the next month. Most companies handle it outside of the core financial system, because their old on-premises software financial systems were never designed to be connected together as part of a global network. This is the whole reason Hyperion (now part of Oracle), Cartesis (Now part of SAP) and Frango (Now part of IBM) came into existence - to bandaid over the disconnected financial systems in a typical enterprise.

The mid-market has it worse - most mid-sized companies use Excel or reporting tools like FRx and a huge amount of manual elbow grease for every consolidation. The result is that they go through this process as infrequently as they can get away with - it's not uncommon to see midsized companies consolidating quarterly or annually. That's an awful long time to go between being able to analyze how the business is doing, particularly in an economic climate like we are in today.

So last year we set out thinking about how can we make this process better using SaaS. And that's just what we did. Unlike in my days at Hyperion, at Intacct, because we are SaaS, we can assume that all financial data for every business entity, in every location and in any accounting regime or currency is always available on-line and real-time. So we set out to build a system where everything is always live and instantly available - from consolidated corporate data through regional rollups to local transaction details.

We embedded real time processing and automation for multi-entity and multi-currency accounting into the core of the Intacct Suite. We put in place infrastructure so different entities across the business can act both independently and be coordinated. Then we added an enterprise class consolidation application with high-end consolidation, compliance and reporting features on top of our Internet-aware real-time multi-entity and multi-currency infrastructure.

All together, this changes the velocity at which you can manage the business, particular for small and mid-sized enterprises. In Intacct Winter 2009, you can run financial consolidations on either a formal periodic basis or ad-hoc on-demand. You can start out analyzing consolidated financials and can drill live into any level of detail in any business entity. The system will make the appropriate financial adjustments and convert currencies behind the scenes in real-time as you go. You can view reports and analyses in any currency and change between currencies and locations automatically and instantly. And you can even run reports that look at details across many different business units - such as consolidated customer and vendor aging reports - and the system will do all required adjustments and conversions behind the scenes to make sure you are comparing apples to apples. All of this works on both financial and non-financial data, so you can understand operational metrics like employee productivity and how they relate to financial results anywhere in the world.

Financial consolidation, reporting and analysis is a business problem that was just made for SaaS because it is inherently a data collection and analysis process- in a flat world connected by the Internet, the days and weeks it used to take to run a consolidation and reporting cycle collapses into seconds and minutes.

It's hard to even contemplate thinking this way in my old Hyperion days, because the old on-premises financial systems never understood they could be operating in a live, interconnected way. Everything was based on periodic offline extracts once a month or once a quarter. Don't get me wrong- Hyperion was a great product - it's just the model is so radically different when you compare the old way of summary level monthly extracts to SaaS-enabled real-time consolidations and instant insight across the entire enterprise.

There is lots of other good stuff in Intacct Winter 2009 - with more than 100 client and partner driven features and enhancements, our new Intacct MAX for QuickArrow and with our partners new abilities to make it easier, faster and cheaper than ever before to graduate from QuickBooks to Intacct. I'll post more on these later, but for now I want to congratulate the Intacct development team on really great work in showing on the on-demand world can transform the processes of enterprise class global business management and financial consolidation.

Intacct Makes the Top 100 Products of 2008

I'm pleased to report that we will announce tomorrow that Intacct has been selected by Accounting Today as one of the Top 100 Products of 2008. Intacct was recognized in the “High-End and Mid-Market Accounting” category

The annual list, started 16 years ago, was created to recognize what Accounting Today considers to be the elite products available on the market.

Along with the perfect 5-Star Review that Intacct earned from CPA Technology Advisors in September this new recognition provides continued evidence that SaaS products like Intacct have matured to the point where they are functionally directly competitive with very mature software applications, even in most sophisticated application categories like financial applications and ERP.