Intuit's IPP will cause a stir but will it shake up the saas world?

by admin on June 3, 2009

in Cloud Computing/SaaS

It’s all happening with Intuit today. No sooner do we get a saas payroll deal out the way and the company formally launches Internet Partner Platform (IPP.) The first report I saw in this was from Ben Kepes who declares:

…it looks to me like IPP is finally offering to fulfil the promise of the end-to-end integrated small business software platform that I’ve been evangelising for a few years now – my catch cry of late has been that application integration should only be seen as the very first step in building a SaaS ecosystem.

At first sight I was confused and even now I am not quite sure what to make of this announcement. It seems to me like a lock-in play to create a marketplace for saas applications on the promise that Intuit can address a huge market of some 25 million businesses. Given what Intuit itself has said about addressable markets, that seems a tad over the top. BS antenna at the ready!

Anyhoo, I commented on Ben’s post, suggesting that the only way this makes logical sense for Intuit is if those coming onto its platform are able to leverage against potential integrations to Quickbooks.

My ZDNet colleague Phil Wainewright provides a much greater depth of discussion noting that:

What Intuit brings to the party when developers federate such applications to its platform is all the ‘middleware’ of cloud service delivery — single sign-on, consolidated billing, a consistent API for exchanging data between applications — along with the reach and trust of its established brand name. In that sense it is a mirror-image of Force.com and other cloud platforms out there, which have focused on what may turn out to be an outmoded notion of lock-in to a technology platform. Instead, Intuit’s lock-in is to the service delivery infrastructure, irrespective of the underlying technology platform on which the applications themselves execute.

As I thought – sort of. Phil adds:

Of course it is still lock-in, but it’s a different kind of lock-in from what we’ve seen before, leaving developers free to host elsewhere and connect into rival PaaS ecosystems. Customers are more locked-in, but if they carefully choose add-ons that are also available elsewhere then it’s probably easier to move off Intuit than another more closed platform. And when I asked whether it might be possible for another small business accounting application to offer itself on the Intuit platform, the team didn’t demur. So you could in theory envisage someone offering a ‘graduate from QuickBooks’ offering within the Intuit ecosystem, even though I can’t imagine it would be welcomed with open arms.

Ben on the other hand is taking at Intuit’s word that there may be no Intuit software to which customers might connect. I just don’t see IPP making any sense except in the context of a much broader Quickbooks play as part of its broadening saas/on-demand/cloud (SOC) play.

All of which leaves me with several questions. Later on today there will be a podcast but in true blogger fashion, I prefer to raise my questions here and hope they get answered. If they don’t then I will be meeting Phil next week at which we can dive into this further.

  1. Past attempts at providing marketplaces have met with failure, one of the most recent of which was the demise of Coghead. How does Intuit believe it can prevent a similar fate happening to IPP?
  2. I’m less than convinced about Phil’s benign stance regarding vendor side lock-in. Developers that choose to come into the IPP orbit will still have development effort to undertake. How many times will they do that, especially if other platforms emerge?
  3. Is this a direct play against Salesforce.com’s Force.com and AppExchange?
  4. What about interface consistency between applications? That’s something you do get with Force.com but isn’t immediately obvious in the IPP play?
  5. We seem to be looking at a play which is somewhere between product and service. Why not simply open source the whole thing and put the argument to bed? This would give Intuit a much better chance of attracting many saas players. The fact they only have 5 for this V2 launch seems a bit lame.
  6. It seems to me that with a smorgasbord of apps to choose from, end user cost could ramp very quickly. What is intuit doing to counsel developers about pricing?
  7. Intuit doesn’t have a great track record outside the US. Does it see IPP2 as a platform that can travel?

These are questions that any professional should be contemplating. Best advice would suggest that clients be advised to use integrated suites wherever possible. By putting IPP firmly into play, Intuit is signaling that small businesses can have it all albeit lock-in is ever present. If it works then oit could be a game changer subject to getting solid answers to the above. One to watch.

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Jeff Collins June 3, 2009 at 9:22 pm

There are some good points made here. The idea is to create a way for developers to stay independent with high quality SaaS apps, built on any platform, and integrated into any other PaaS-play out there. Intuit provides a mechanism that creates integrated value for the small business, making it easier for them to outfit themselves with saas products, and is one way (of many) of reaching a customer-base for the partners. The intent isn't to lock the developer in, it's to work toward integrated value for a channel of apps that work together in the Intuit context without locking in.

Alex Barnett June 3, 2009 at 9:21 pm

Hi Dennis,

thanks for taking at look at what we are doing with the Intuit Partner Platform and the great questions you posed.

I think Jeff Collins summarized pretty nicely the overall gist of how we think about it.., but here’s a shot at answering some of these in a bit more detail:

>>1. Past attempts at providing marketplaces have met with failure, one of the most recent of which was the demise of Coghead. How does Intuit believe it can prevent a similar fate happening to IPP?

I think there is a material difference between Intuit’s opportunity and other attempts, and probably the biggest is the size of Intuit’s customer base. We have 4 million small business QuickBooks customers with a potential user base of 25 million employees. From the customer point of view, the mega-trend of SaaS adoption presents new challenges for them, specifically around how all these SaaS apps they subscribe to work together (or don’t). What if all the SaaS apps that they use (back-office and front-office) “just worked” together? That’s a problem we are directly solving. We’re not selling a bunch of disconnected services, but connect services – Intuit’s and 3rd party SaaS apps. We think that’s pretty huge. Another great asset we bring to the table is trust in the Intuit brand.

>>2. I’m less than convinced about Phil’s benign stance regarding vendor side lock-in. Developers that choose to come into the IPP orbit will still have development effort to undertake. How many times will they do that, especially if other platforms emerge?

There are two components to your question: technical lock-in for ISVs and the cost of integration.

On technical lock-in: The five SaaS apps we announced today are developed on a variety of stacks and hosted *outside* of the IPP platform. One of the apps is built on Java. Another is built entirely on .NET. Another is a mix of RoR and LAMP. Another built of Flex (on their own hosting environment – not IPP). If an app was running on EC2, that would work too, as would an app built on Google AppEngine. With Federated Applications it simply doesn’t matter, they can all connect to our platform. From the customer standpoint, they just want great apps – the stack each is built on isn’t important to them.

On the cost the integration points for Federated Apps – these are pretty lightweight (one of the partners was able to turn around the work in less than two weeks, including time for the technical review of the app). We made a deliberate decision to make IPP agnostic to the technology that developers want to use. Yes, we have a “native” stack also, but the options we are providing developers now means there is no technology lock-in to speak of. At the end of the day the cost of integration for our developers is a matter of ROI. If it’s not worth doing, they won’t.

>>3. Is this a direct play against Salesforce.com’s Force.com and AppExchange?

There are similarities, but there are two big differences worth pointing out: 1. You don’t need to be an Intuit paying customer (QuickBooks or anything else) in order to be a customer of any of out 3rd party SaaS apps – this isn’t the case with Force.com and AppExchange. 2. Salesforce.com is focused on the large / enterprise market. We are focusing on the strength of the majority of our existing customer base – the small business market.

>>4. What about interface consistency between applications? That’s something you do get with Force.com but isn’t immediately obvious in the IPP play?

From a UI standpoint, we want to provide a level of consistency across the apps, but at the same time allow the application developers to differentiate via the quality of their UI. We provide toolbar across all apps that provides a common way of sign-in/sign-out, manage the application’s subscription levels, invite users to their instance of the app, access support and help content, and submit app ratings and reviews. We think by working with the developer community there are additional UI elements we can add, but we’re taking a fairly liberal approach to start.

>>5. We seem to be looking at a play which is somewhere between product and service. Why not simply open source the whole thing and put the argument to bed? This would give Intuit a much better chance of attracting many saas players. The fact they only have 5 for this V2 launch seems a bit lame.

We think the #1 reason we will attract SaaS providers to the Intuit Partner Platform is the amount of money they can make by doing so. That said, we definitely see the potential for developers and Intuit around Open Source.

On the number of apps we announced today – many are brand new apps leveraging a brand new capability. They been working closely with us as we productized Federated Apps and wanted a small and manageable number of developers to work with to iron out the kinks. These 5 Federated Apps are in addition to the 23 we already had live on our “native” platform.

>>6. It seems to me that with a smorgasbord of apps to choose from, end user cost could ramp very quickly. What is intuit doing to counsel developers about pricing?

Great question. Most of the developers we speak to have a fairly strong sense of their price points. The interesting this is that our pricing and packaging model provides lots of flexibility – so they can experiment and fine tune – in real time – to find the optimal pricing and features.

Hope this helps!

Alex.

Alex Barnett
Group Manager, Developer Relations, Intuit

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