Intuit's Pay Cycle acquisition starts the SMB saas roll-up game

by admin on June 2, 2009

in Cloud Computing/SaaS

Intuit’s swoop on Pay Cycle, an on-demand payroll provider for $170 million provides an indication of how hot the (saas/on-demand/cloud) SOC market is becoming. According to the official announcement:

The acquisition will give small businesses access to one of the most innovative, easy-to-use and cost-effective online payroll solutions from one of the strongest and most trusted brands in financial management software. In addition, it will provide hundreds of thousands of accountants with the ability to easily and profitably offer services as stand-alone payroll providers for their small business customers.

Pay Cycle declares 85,000 customers so on simple math, that equates to $2,000 per customer – ‘subject to adjustment’ (ie how many customers they really have on the paying roster.)

While many people are saying this is a good move it should not be surprising. Pay Cycle was founded by two former Quicken execs and over its 10 year history, the company has developed a clutch of export facilities for popular SMB products like Quicken, Peachtree and QuickBooks.

As far as I am aware, there is no direct UK equivalent (other than ADP, although there are plenty of potential players) yet this is something the UK SOC market badly needs. It represents a big hole in the market that someone needs to fill. I say this as an alternative to each vendor attempting to build their own payroll which is a huge endeavour that can suck way too much development time for the perceived rewards. Also, payroll represents an easy entry for professionals looking to leverage the SOC metaphor as it is something clients are willing to pass over.

From Intuit’s perspective, other than being a good fit, it lays yet another foundation block down in that company’s objective to become the de facto SMB SOC leader in the US market.

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Free Games September 29, 2009 at 12:50 pm

"…other than being a good fit, it lays yet another foundation block down in that company’s objective to become the de facto SMB SOC leader in the US market." – I agree with this.

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