QuickBooks Hosting Program and Large Accounting Firms – is there a fit?

The Intuit QuickBooks Hosting program was designed to create a consistent operating and reporting framework for providers offering application hosting services for QuickBooks desktop applications. This framework addresses a number of elements of the service model, including but not limited to essential security, system architecture, information privacy, and software licensing. While the hosting program includes options for commercial providers and “self-hosts”, this article will focus on the market segment not effectively addressed by the program: large firms where several hundred client users may be involved.

According to the Intuit website, the Intuit self-hosting program is for businesses with an existing professional relationship with Intuit, either as a Certified QuickBooks ProAdvisor or as a Certified Intuit Solution Provider. These providers may, under this program, be eligible to offer application hosting of QuickBooks software and associated data management services to customers to whom the professional is also providing bookkeeping or accounting services.

The key element in the QuickBooks self-hosting program, the element which makes the program not work for certain larger firms, is the limitation on the number of clients the provider is allowed to provide hosting services to. The program cites the limit of two hundred (200) clients, or client businesses, with a limitation on the total number of client users at four hundred (400). For most firms, this limitation is not a barrier to participation in the program, as they have fewer than two hundred businesses in their client base which would utilize hosted QuickBooks services. For other firms, however, this limitation puts them at a disadvantage, forcing them to either accredit as a commercial host under the program (an expensive and time-consuming effort, and an effort not entirely appropriate for many accounting firms), or purchase services through an existing commercial host.

Partnering with and purchasing through a commercial host is probably the right answer, but at face value, the cost seems pretty high. Once a firm racks up a bill of $10K per month to service 250 client businesses, it feels like a lot of money. In the scheme of things, that per-client cost is likely negligible in terms of the efficiency savings and access to additional work, but the first glance is the one that sticks with people.

The unfortunate reality is that, with the limitations on the number of clients a firm can provide hosting for balanced against the costs of working with a commercial provider, many larger firms simply elect not to participate in any of the programs. At the moment, there is not a visible enforcement effort on the part of Intuit to make any providers of QuickBooks hosting “come clean” and join the programs, so a number of firms are simply continuing to do what they’ve always done – which sometimes includes walking a fine line in terms of license compliance. But I believe there is risk in that approach, and professional firms should investigate all of their options. While visible enforcement may not be there today, those working in this service area know that a storm is brewing. Particularly with Intuit now offering their label on hosted QuickBooks Enterprise (delivered by a 3rd party provider and offered as a direct competitor to the ISP channel and to the hosting programs, but that’s another story), we can all bet that enforcement will come eventually. With no enforcement, Intuit reduces the value of their own offerings. Rather, I see the eventual enforcement of the program participation and rules as being a key to Intuit’s success with the program long term. And, there’s too much money at stake and far too many folks still – uh – leveraging licensing (leveraging is a much nicer way to say “stealing”, don’t you think?).

So, with the costs and complexities of the commercial program being a barrier to professional service firms (either with participating in the program, or purchasing through a program participant), and with the limitations on the self-host program not meeting the needs of the larger firms… how is the large firm going to address the needs of those QuickBooks-using clients?

Unfortunately, I don’t have the perfect answer here. I wish I did, but I’m not making the rules, Intuit is. I think it’s important to play by the rules, even if you have to find a way to make them work for your business. Sometimes that’s where the real innovation comes in.

So – rather than trying to find a way to make the current business model fit into the box that Intuit has built, maybe it’s time to take a slightly different approach – one that’s out of the box. After all, with the popularity of the cloud and all the good reasons why businesses should “focus on their core competencies and outsource those that are non-core”, it may be time to rethink your strategy when positioning those QuickBooks-using clients. Maybe being the IT and accounting service provider is not the right answer. Maybe, just maybe, it’s time to separate the two, and simply let the client make the choice. Electing to not use the suggested platform of the firm could result in higher accounting fees or rates..why not? You lose efficiency when you work with clients who demand offline, paper, manual interaction. Maybe the fees should reflect that reality. You’re giving the client the choice, right? It seems that they will end up paying one way or the other… either paying for the hosting service which enables an efficient working relationship with the accountant, or paying higher fees because of the extra time and effort it takes to get, manage, and do the work.

Consider, for example, why the client uses your services. Accounting is not their core competency, and it’s not what their business is about – but it’s necessary. So, they outsource that part of their work to a professional. This allows the business owner to focus on their business, and not on bookkeeping and/or accounting. The same philosophy is true with respect to technology. Most businesses aren’t in the IT business, so the consideration to outsource IT management and services isn’t really a stretch. In fact, most businesses outsource their IT management now by using outside computer technicians. It’s just that they only outsource the management, and not the entire IT problem (e.g., desktops, servers, etc.).

What does outsourced IT have to do with a large firm hosting QuickBooks? Well, when it comes to figuring out how to approach the problem, we should consider all the parts and IT management is certainly a big part of what hosting offers to a business, and what the hosting solution would be providing to your clients. In so many cases, I see the professional firm approach the hosting service only in terms of direct costs – cost to subscribe the user, cost of software, etc. The firm is trying to justify in their own minds paying the cost of the hosting service so that the client will come on board… and then the firm would earn their profits by billing for the work. The unfortunate result in this model is that the client doesn’t really see the direct cost of, or value of, the hosting solution, and views it as simply a means of working with the accounting professional and making his life easier.

The alternative approach, which is the approach that allows the accounting professional to keep an arms length relationship with the hosting service and, therefore, the cost of the service, is for the client to be the subscriber and pay their own bill for hosting. When the client gets their service directly from the provider, then they may be better positioned to explore and benefit from the other services the provider can offer – including hosting for other critical business applications. This is often where a QuickBooks-only or self-host service begins to fail the subscriber, by not being able to support other applications or processes critical to the business. And, if the service doesn’t work for the client business, they won’t use it. If you try to make a client use a service that doesn’t work for them, then you’ll likely lose the client.

I believe it’s important for the client to know that the technology model supports doing business in a more efficient and effective manner, and that the technology and their accounting are not the same thing. The accounting firm does important work for the business, and the hosting solution helps them do it better. Certainly, firms see a lot of improvements in their internal efficiency, as well as improvements in client service, when they apply the correct technology to solve certain business problems. The client will see that, as well, if you let them.