Software vs Service Provider – why you aren’t running your apps in the cloud (yet)

article originally published in 2007 on Joanie’s Accounting and Business Technology Blog

When a user logs in to a virtual desktop, and all their valuable and beloved applications are available to them, fully functional and integrated as they are on the PC, with all their data available to them as well, the reaction is almost always one of excitement, empowerment, and – ultimately – bewilderment. “Why”, they ask, “doesn’t everyone do this?”

Good question.

At least part of the answer is due to the way software companies license and sell their applications. Now, if you can continue to produce your product in the same way you always have, distribute it using your known distribution channels (which deliver predictable performance), and realize revenue in the manner to which you have become accustomed, why would you actively seek to create disruption in the “normal” flow of things? Especially when status quo seems to be working pretty well.

Another good question.

The adoption of virtual computing (in this case, hosted desktops and the applications associated with them) is pretty much in the hands of the application software companies. It’s certainly not the platform that we are waiting for. The base technology is already proven on the hardware side, with blade servers and other high-density configurations available. And the software has been proven in a variety of deployments, as demonstrated by Microsoft Terminal Services, Quest Software, VMWare, Citrix,and others.

So – the software companies are part of the barrier.

And so it comes down to the application software manufacturers. These guys seem to fall into two main camps when it comes to cloud-ifying (my new term) their applications: (1) redevelop the app with a web framework and deliver a browser-based solution, or (2) pick a single delivery model from the above list of platform software providers, and eliminate any true integration capability. In short – webify or segregate. Either way, it creates severe limitations in the way the software can take advantage of integrations with other applications. And, for most desktop software vendors, integration with other desktop applications is frequently one of the key benefits of the product.

The web-based applications have already come to grips with this reality. Where a download of a document to your favorite word processor was once just fine, the market now demands data re-use and expanded business process integration, forcing the web applications to open themselves to outside integration and 3rd party developments. Just look at the developer network Salesforce.com has built. If that doesn’t prove that no app is an island, I don’t know what does.

But the desktop apps who have chosen to “webify” using application publishing and delivery tools have evidently forgotten that one thing: integration is part of what makes their apps popular. No business process is an island, and the data rarely stands alone. Would ACT! be so popular if it couldn’t integrate with your Outlook email client, or with your MS Word word processor? Would MS Excel be so popular if you couldn’t push almost anything to a spreadsheet file? The answer is no. This is why the integrations were developed in the first place – greater functionality and an improved value proposition, resulting in increased use and user productivity.

Too many options?

To complicate the problem, there is not just one delivery method that works for every application, business model, or user. With the variety of technologies available, independent software companies have hard choices to make in determining how their cloud’d products might be offered, and additionally by whom they might be sold. As of today, though, many software companies have approached the problem alone, where opting to use their “hosted” editions frequently eliminates the option of integrating on the desktop with other locally-run applications.

Not only does the software maker have to find the best technology/platform fit for the delivery and for their market, but they must also then consider their distribution channel – the “food chain”of delivery of the product or solution. Often this “who” that can offer the product is just as big a problem as “how”.

The maker of a given software package is in the business of selling their software, not other peoples’ software. While integration with other products is exceptionally important to the product’s value in the market, the software maker is fundamentally concerned with only the sales of their own solution. They tend to promote sales through resellers and consultants who can not only provide the software but offer install, training, and ongoing support as well. Designating sales organizations which are “authorized” to represent a product is a typical software company approach.

Many of these authorized resellers are focused exclusively on selling the software solution, not the ongoing support of the platform. These resellers are often highly skilled at working the specific software application, but may lack in-depth understanding of the platform upon which it runs.

Some authorized resellers are actually integrators – companies who sell products from a variety of sources and combine them into “solutions”. Historically, integrators have been key players in creating successful markets for certain products, providing the support and other services necessary to keep the products entrenched in the user community.

In many cases, the integrator makes their money on the support element on the arrangement, not necessarily on the product. In these situations, the platform and ongoing maintenance and support are the key revenue drivers, and the integrator may be loathe to recommend a solution to the client that cuts into their involvement and revenue stream. And hosted, managed, cloud-based application services can certainly do that.

What is the answer? Well, there isn’t just one that jumps out.

One element in the solution is recognition by software companies that their products need to be available in a hosted model. Consumers require choice in terms of their involvement with the business IT infrastructure. Some folks want to control it, others simply need access. The business of hosting applications is growing, but many of the software makers in the market aren’t behind the movement.. they are unwilling participants who leave it up to the service providers (the integrators in the datacenter) to make things work. In some cases (I will refrain from naming names herein) end-user licenses are even written to make hosting the software an illegal event.

Another element, equally if not more important, is the service provider community. With the wide variety of technical standards out there – the different technologies, different approaches, different levels of consideration, and different market sensitivities – it is no wonder that fear and doubt are prevalent in the market.

And then there is the distribution channel and method of selling licensing. Many software companies work exclusively through their authorized reseller channels. While this may benefit the user from a product knowledge standpoint, it creates difficulties with the new delivery model and frequently puts the software sales channel in direct competition with the platform providers.

The tweener gets you from here to there.

While the concept of cloud-ifying desktop and network applications may seem to be “fraught with peril”, it can be done well and deliver significant benefits to the company. By simply changing the way employees access and interact with their applications rather than changing the apps themselves, businesses can introduce an entirely new range of business benefit and capability. Outsourcing the business IT can also represent cost savings and, more importantly, allow you to focus personnel and financial resources on your core business. And, for those who see online application services as the future, this “tweener” step gets you divested from localized technology and helps to embrace the flexibility and freedom that virtual and mobile computing can deliver without forcing radical change.

Now, if we can only get the software makers on board.

Learn more about hosted applications and why Outsourced IT services, Cloud computing, and working at any time and from anywhere makes a lot of business sense.

Challenges to the QuickBooks Accountant “self-hosting”model: There’s more to hosting than just having a server.

Sure, any good IT guy can build you a network.  And any quality IT services company can offer to manage your network and systems for you.  But, can just any IT company help make your business a QuickBooks hosting company for other businesses?  Maybe, maybe not.   I’ve always said that there is a fine art to delivering quality application services (especially involving QuickBooks) to a largely non-technical audience, and if the details aren’t covered up front, they will end up causing you a great deal of pain later.

Almost every IT consultant I’ve worked with believes that they have what it takes to help accountants create an in-house capability to host QuickBooks and provide remote access for client businesses.  While there is likely no argument that the consultant understands how to set up a network for a single organization, the rules change a bit when you begin talking about having many different businesses – most of them not related in any way – sharing systems, software, and data storage facilities.  This is often referred to as “multitenant” architecture, and QuickBooks, like many other desktop applications, was never designed for this type of implementation.  For these and other reasons, it takes quite a bit of technical understanding as well as recognition of the necessary controlling elements in the business model to create a hosted delivery that can actually work well, and deliver the security and confidentiality of data required and an online “experience” your clients will enjoy.

While many of the issues to be addressed are technical in nature, a lot of them also speak to the details of the business model and exactly what services are being offered.  Decisions must be made in terms of what applications to support, how users will access the applications, how users and data will be organized, and how the entire system will be supported, managed and maintained over time.  Experience has taught us that the business that expects their costs to be largely experienced with  initial equipment purchases and implementations will be unhappily surprised by the investments in time and materials required to create the client hosting environment, and then to support users and maintain systems post-launch.

The key is to not minimize the needs of the client, and to fully recognize and address the issues that the client will face when working from your environment.  Without the relevant experience to know what these challenges are and how to overcome them, the firm may find themselves at a significant operational disadvantage.  The result is that they are unable to fully meet the client demands, and could possibly lose the entire IT investment because of an inability to reasonably compete with commercial hosting offerings.

If your company is looking to offer QuickBooks hosting services to your clients, contact our consulting team today to get the information you need to make the best, most informed decisions possible.  After all, an unsatisfactory online experience could damage the trust and working relationship with the client, and that just isn’t worth the risk.

QBC

Why consider the cloud? follow the link to learn more

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.

QBC

Running QuickBooks in the Cloud: Get Information from those who know

Read the article “So You Think You Want to Host QuickBooks.  Really? Seriously?“  subtitle: Biting off more than you can chew

Read more about reselling accounting versus reselling technology, because we know you’re wondering about this stuff, too.

Running QuickBooks in the Cloud: Information from those who know

QBCloud consultants have been involved in virtually every aspect of the popular QuickBooks hosting service from the very beginning – all the way back to 1997, before the Internet was a hugely big deal, and prior to DSL broadband even being invented.

Back in those days, hosting of QuickBooks software seemed more like a license enforcement issue to Intuit than anything, because it was demonstrated that hosting business software might also a really great way to steal it.  Well, to provide lots of people with unauthorized use, anyway.  This is one of the main reasons why we worked for so long to try to get Intuit to recognize not only the business benefits of hosted applications, but to also recognize how the provider community could help protect the Intuit QuickBooks licensing.  After all, QuickBooks desktop editions are the bread and butter of the product line, and the after-market of developers, consultants, trainers, writers, and everyone else within the QuickBooks “sphere of influence”, will keep the QuickBooks solutions earning market share for some time.  Why not extend the lifespan of the solution by bringing it to the clouds?

After many years of exploration, testing, and proving the value of the business model, the Intuit Authorized QuickBooks Hosting program was finally launched, with only a few core providers initially participating.  The Authorized QuickBooks Hosting program represents a way for Intuit to provide at least a basic review and authorization for providers who wish to validate their hosted deliveries of QuickBooks applications, and provides a number of guidelines relating to treatment of the customer, the software, and the associated data.

Two of the most important elements of the Authorized QuickBooks Hosting program center around software licensing options and support availability.  The Authorized Commercial Hosts for QuickBooks are the only entities allowed to lawfully offer rental (subscription) licensing for QuickBooks Pro and Premier desktop editions.  Being able to provide QuickBooks licenses as a subscription service provides businesses with a simple and affordable means to keep their QuickBooks software up to date at all times, without the annual expense of upgrades and software installations.  Further, rental licensing programs allow providers to offer “turnkey” subscription services which include both the platform, the service delivery, and the application software license.  With this model, hosted QuickBooks acts more like a true SaaS (software as a service) offering.

The second element is support availability – support for end-users of the software as well as the service providers delivering the hosted apps.  Because Intuit does not support the Pro and Premier editions of QuickBooks in any sort of multi-tenant hosting environment, businesses electing to use these QuickBooks products in hosted infrastructure are on their own as far as support goes.  The commercial providers, at least those that were there from the beginning, paved the way for running QuickBooks in the clouds, developing the methodology and knowledge to implement and support the solution for many different and unrelated businesses from a central infrastructure. While the authorized commercial providers get a bit higher level of software support from Intuit than the average solution provider, the essentials of the architecture and implementation are completely up to the host. The hope is that the commercial providers will step in and assist the self-host and other businesses attempting to develop their own hosting to support client accounting and related processes, but there are very few providers with the knowledge, resources, or willingness to assist others in these areas.

**As a side note, it’s worth mentioning here that the consulting team at InsynQ is a resource which Intuit uses to refer self-hosts and other businesses who wish to develop their own hosted QuickBooks capability, so self-hosts and new hosting providers are not totally without resources for assistance.**

The other issue relating to support is end-user support for the customer-owned QuickBooks license.  When a QuickBooks license is utilized in a manner which does not conform with Intuit’s EULA (end-user license agreement), Intuit may be under no obligation to support that license – by offering technical assistance or by supporting service and product integrations.  This means that users running their businesses from hosting infrastructure that is not “authorized” by Intuit risk losing the support and serviceability of their software licenses.  We are seeing more instances where QuickBooks users are not able to obtain software support for their licenses, because those licenses are either hosted by an authorized delivery or provider, or the licenses were obtained via a method not allowed under the Intuit hosting program rules.

The Intuit Authorized Hosting program for QuickBooks is a good thing, even if there are a few “gotchas” in it (like the $5 per user per month surcharge on hosted QuickBooks users).  It provides the necessary guidance and framework for those who wish to offer hosted QuickBooks in the right way, and creates enough of a barrier (financially and otherwise) to keep out those who either aren’t serious about providing a quality service, or who don’t have the necessary resources to do things the proper way.  Even within the provider community today, there are varying opinions on how to handle certain aspects of the delivery.  There are different classes of providers, as well, with each offering a different solution set and support options, as well as varying in expertise and capability.  Certainly, different technologies will deliver different “customer experiences” but at a gut level, QuickBooks is still just QuickBooks.  It’s all about how much you know, and what experience you have in dealing with the application, the platform, and the user market.

As with so many things in life, experience does matter.  In this case, aligning with a company that has experience running QuickBooks for thousands of users – experience running the software on industry standard technologies and platforms – is the best experience you can draw from.  There is truly a fine art to delivering what isn’t exactly the most robust and well-designed software, and delivering it to a largely non-technical audience complicates things just that much more.  Without the direct support of Intuit and/or an experienced provider, those who embark on a do-it-yourself path will likely have a hard time making it to the clouds.

QBCloud hopes to make things a little easier by providing information and guidance on how QuickBooks in the Cloud works, providers offering the service, proper licensing, and other topics relating to QuickBooks application hosting.   We hope you find it useful.