QuickBooks Disconnect

How Intuit Could Crush the Nascent Cloud Accounting Ecosystem

Photo (adapted) courtesy of George Thomas

Last week at QuickBooks Connect, its annual user conference, Intuit announced that it’s partnering with payments processor Bill.com and time tracking app TSheets to develop “deep” integrations inside of QuickBooks Online (QBO).

The big news is that sometime next year, users will be able to pay bills inside the QBO interface via Bill.com’s payment network. And eventually QBO users will be able to take advantage of Bill.com’s approvals and document management tools without ever leaving the QBO app.

Similarly, users will be able to view and approve time sheets created using TSheets from inside QBO. Never again will you have to leave QBO when running payroll to approve hours recorded in TSheets.

As a longtime Xero partner and evangelist, and a current Xero Ambassador, my initial reaction was a mix of “Hey, that’s really cool! 😮  (delight) and, “Man, I wish we had that in Xero” 😔 (jealousy).

I was surprised, too. I didn’t think Intuit had it in them to innovate.

After all, pretty much every feature they’ve released for QBO over the last 5 years has been copied from Xero. Even diehard QuickBooks fans will admit that QBO sucked before Xero showed up in the United States. Now it’s not half bad!

You all have Xero to thank for that.

Now, finally, Intuit has come out with something new. Something different. Something Xero hasn’t done before.

And it’s great that Intuit is trying to do something new. We need competition that drives true innovation. Users win when developers compete.

The problem is, these deep integrations Intuit is building with select developers is a step backward, not forward.

“What!”, you say? “How could that be?”

“He’s just a Xero fanboy!” I can hear the QuickBooks diehards yelling at their monitors.

Fair point.

As Xero Ambassador, I don’t pretend to be objective when it comes to the whole QuickBooks vs. Xero debate. I’m unabashedly pro Xero.

But I also don’t go after Intuit just for the sake of it. I was a ProAdvisor for years, and Intuit makes great products.

But I feel that in this case, it’s important to say something. The reason is that given their dominant market share in the U.S., what Intuit is doing with QuickBooks could have a chilling effect on on the developer community.

By choosing to work exclusively with particular developers for deep integrations in QBO, Intuit could easily stifle competition in the cloud accounting ecosystem.

That’s bad for everyone, regardless of what accounting system you use.

Once you can pay your bills inside of QBO using Bill.com, why would you use any other payables app? And if TSheets is the only app with a deep integration into QBO for time sheets, what are the odds you’ll consider another time tracking app in the app marketplace?

Competitors to these chosen apps are now at a significant disadvantage. And those apps represent two major categories. Who says Intuit won't do the same for other types of add-ons?

Xero pioneered the concept of an open accounting platform with an ecosystem of applications it calls the Xero App Marketplace. Intuit copied that concept with the QuickBooks App Store. This has been a wonderful thing for business owners, accountants, bookkeepers, and developers.

Just look at what this free market concept has done for us. Now there are hundreds of applications that sync with both Xero and QuickBooks Online. The possibilities for creating customized accounting solutions are endless.

My fear is that Intuit might very well crush that openness by creating more exclusive deals with particular developers in the ecosystem.

When Intuit announced these new deep integrations, there was no mention that this option would be available to other developers. If that's true, then these deals with TSheets and Bill.com represent the beginning of a closed platform, not an open one.

Xero, on the other hand, is committed to building an open platform and supporting a thriving ecosystem of apps.

Xero isn't aren’t looking to build exclusive integrations because they know that approach reduces competition. Instead, integration opportunities are made available to all via the open API.

Along those lines, Xero partners will be excited to know that Xero is planning to offer deeper integrations with all app marketplace partners by giving them access to the upcoming Xero HQ Activity Feed.

Xero HQ and the new Activity Feed will be available in November.

Xero HQ and the new Activity Feed will be available in November.

Using the Activity Feed, integrated apps will be able to push actionable notifications to Xero accounting and bookkeeping partners right inside of Xero. When a user clicks on a notification, he or she will be taken right to the screen in either Xero or the integrated app where they can perform the related task.

The end result should be an experience that’s just as seamless as what Intuit is building into QuickBooks with deep integrations. After all, you don’t need deep integrations if by clicking a link you’re taken directly wherever you need to go.

This approach is both fair and sustainable. It shows how Xero really takes the time to think about these challenges and build solutions that aren’t just stopgaps.

My bet is that Xero’s commitment to openness will win in the long run.