SaaS vs Shrinkwrap or Never trust a company not on Twitter

While eating lunch today, I started to think about the growing complexity of my company‘s expenses and decided it might be a good time to start looking at accounting solutions. The fact that my research began with a tweet is indication enough that I probably don’t fit anyone’s average consumer mold. But, I think some of the insights that came out of my experience are pretty fundamental and potentially extend beyond the ‘early adopter’ echo chamber.

First, I started down the conventional route by checking out market (and marketing) leader QuickBooks. Through some quick web searching, I found a few authoritative sounding comparisons that pegged QuickBooks as the best value for basic users (we’re just at the lower bound of even needing this stuff) — with the notable exception of the Mac version, which apparently gets less product development love than the Windows one. At $180, QuickBooks wasn’t really that daunting on the financial cost front. But, I was already starting to cringe on the usability/time cost side.

What I found myself really wanting was a web app (like Mint or Wesabe) for business accounting — something with a lightweight interface for connecting and organizing data from my financial services providers all in one place. And while I was researching products that might fit this bill, I started to think about why I had this innate preference for a web app (SaaS) over shrinkwrapped software. The business model of packaged software invites feature bloat, because it’s upgrade driven and you need to continually find ways to justify why Thingamajig 2009 Pro Edition™ is so much better than Thingamajig 2008 Pro Edition™. Software as a Service businesses have a much different (and arguably greater) challenge, they need to continue to create value for their customers month after month. Sometimes that value comes in the form of new features, but it doesn’t *have* to. So, you end up with a much more customer-centric product (what customers *know* they want after using it, not what they *think* they want before buying it — as humans are notoriously bad predictors of our own happiness) and a vendor who is truly interested in addressing your customer needs. So, unless there is an element of the problem a given software product is trying to solve that inherently benefits from the advantages of the desktop (i.e. local storage, access to the file system/peripherals, superior performance), I’d rather have the SaaS version.

The other thing that was on my mind when doing this evaluation was my incredibly positive recent experience on Twitter with the CEO’s of iPlotz and Balsamiq, both of which happen to be SaaS products. I realized that it really spoiled me and there’s no way I’m ever going back to the old regime of captive audiences and passive customers. So, my new rule is “never trust a company not on Twitter.” Now, that’s a bit reductionist — and, in Intuit’s defense, they are actually on Twitter (hi Alison 🙂 ). The real point is that today’s customer service equation needs to include how responsive the company is to your new product requirements and feature requests, not just how quickly they fix something when it’s broken or answer a question when you’re too lazy to read the instructions. As much as I appreciate Intuit’s presence on Twitter, I highly doubt Alison is able to change Intuit’s release schedule to get that new feature I want out to me sooner. By virtue of the packaged software business model, she is not adequately empowered to address my customer needs.

Through my research and a very handy post on my friend Leonard’s blog (thanks for the tip Carrie), I found two SaaS solutions for small business accounting: LessAccounting and Xero. They’re both about the same price ($~25/month), and Xero seems to have a slightly superior feature set (automatic syncing with your online accounts is a biggie). But, LessAccounting clearly had the edge in customer interaction. LessAccounting has a very active corporate Twitter account and both founders have personal accounts, they use Get Satisfaction and there are 4 topics on their Get Satisfaction page that have been updated in the last 24 hrs (I also checked out the activity on the Get Satisfaction accounts of both founders), and, last but not least, they have a sense of humor (be it a slightly mean one 🙂 ). Xero has a very active corporate blog and they seem to be quite responsive to their customers’ comments. But as a prospective customer, I would really like to have some better ways to interact with Xero than sending them an email or leaving a comment on their blog. (Update: Phillip from Xero responded in the comments that they do in fact have a Twitter account and an in-product feedback mechanism.) Get Satisfaction and User Voice are both great names, because when you use their products as a company that’s exactly what you do: give your customers a voice and the satisfaction that it’s being heard.

When shopping for SaaS, you’re choosing a partner in innovation. So, the future direction of a product is maybe an even more important consideration than the current feature set. And while LessAccounting can surely replicate Xero’s features, can Xero replicate LessAccounting’s customer-centricity? They both offer 30 day free trials, so I’m going to try both and make a decision in a month. And who knows, at $180 for QuickBooks Pro I may decide shrinkwrapped software is the more sensible way to go this time around (but, that doesn’t mean I have to like it 😉 ).

Update: Wow! This is starting to freak me out. I write these things to capture the distillation of the things I see out on the interwebs that I like and dislike, mostly for my personal benefit in thinking about my own business. I don’t do so really anticipating to hear back from the companies about whom I’m writing, but I guess I’ll just have to get used to this whole blogging thing 😉 .

Thanks to Phillip from Xero and Allan from LessAccounting for your responses in the comments and for engaging in the conversation. Phillip corrected me that Xero does have a Twitter account, which I updated in situ above.

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15 thoughts on “SaaS vs Shrinkwrap or Never trust a company not on Twitter”

  1. Great post, so great I wanted to suggest to Techmeme but your title is too effen long. Can your hack0r skillz rise to the challenge and add bit.ly to your suggest feature? I know that will be easier than asking you to be brief.

  2. Hey Jonathan, great article. We try really hard to be in touch with our users and potential users. To me, NOTHING is worse than having an issue with an app or desktop software and you can’t get the problem fixed or you waste time tracking down someone to talk to.

    About our feature set –
    Give us a couple days, we’re about to WOW your pants off. Well maybe just your socks. But still, some article of clothing will be wowed, I promise.

  3. Hi Jonathan. We have a feedback feature directly in the software so we can help people right when they need it most and so we can understand what they were doing when they asked for help.

    We use Uservoice for our API developers and we’re considering expanding that out. We need to make sure we choose a tool that works well for us, that scales well and that enables us to keep track of all the conversations we have with customers.

    So please definitely let us know what you think of Xero. And ping us on twitter @TeamXero anytime.

    Cheers.
    Philip

  4. @Mark: Next rev of the ‘Suggest to Techmeme’ button will definitely have a URL shortener involved (just might not be bit.ly 😉 ). In the meantime, I hard-coded the one on this post with a shortened URL. Thanks for the attempted tip and the heads-up.

    @allan: I saw you hinting at imminent new features on your Get Satisfaction page. Looking forward to having articles of my clothing removed by awe sometime soon 🙂 .

    @Phillip: Happy to be proven wrong. I will say that I put in some time looking for a Twitter link on your site, both on the blog and the contact page, before I wrote the post. Even if it is up there (at which I would be surprised), it’s definitely too hard to find currently.

    And, it’s good to know that you have a feedback feature in your product (I look forward to discovering it when I begin my free trial shortly). I also understand the value of having the metadata around the feedback. However, the big advantage of a solution like User Voice is that it cultivates a community of impassioned users. Not only is it nice to know other people are out there, but that community can also provide P2P support and get a feeling of ownership by seeing how their contributions are incorporated. As I said in my previous post:

    Bringing your customers into the product development process has the dual benefits of helping you build better and more customer-centric products and making your customers your most passionate sales people (because after all, it’s their product too).

    I look forward to trying out your product, and will update my original post now.

  5. Hi Jonathan!
    Thanks so much for the shout-out! I love Twitter – it allows me to engage directly with folks I would never meet otherwise. And I’m not the only one – there are LOTS of Intuit folks on Twitter – let me know if you want a list… I think the last time I looked there were over 25 of us.

    My role at Intuit is actually to create large training programs for accountants… so most of the folks I know are in fact accountants. But I LOVE speaking with and helping small business owners, because their needs are so much more varied and they don’t always have someone helping them with their books.

    So I guess I am saying I do this because it is FUN and I learn alot, and laugh alot, every day. And I do get to help people which for me is very fullfilling.

    Now, as to your comment about release dates? Hmmm… you are a little bit right, and a little bit wrong there…… Intuit takes customer feedback VERY seriously, and we use that as a basis for what we put into the next release. I get to give feedback as well, and I relay suggestions back to the Product Management team as I hear of them. So that’s all good. The bottom line is that the PM’s hear what they need to hear, and they factor that in for the next release.

    Can I tell you what we are working on though or when we will release your particular feature? No – and this is not because I don’t know… I do know what we are working on because I am very tied in to Engineering, but being a publicly-traded company puts a serious hammer down on anything we can announce. Rev rec rules… All of the companies you mention will face the same issues when they go public BTW – this is not unique to Intuit.

    The very BEST WAY to give Intuit product feedback is via the “Give Product Feedback” mechanism in QuickBooks… it is under the Help Menu. If you give feedback that way, your voice is added to others who may be asking for the same feature or enhancement, and the Product Managers will then use that to prioritize what goes into the next release.

    Hope this helps, and keep the dialogue coming! And if you do decide to go with QuickBooks you will be in great company. AND, you know who to ping if you have questions!

    ……and you do know we have an Online version of QuickBooks right? and that it will very shortly work with Firefox and Safari?

    Alison Ball, Intuit
    twitter: alisonatintuit
    email: alison_ball@intuit.com

  6. @Alison: First of all, thanks so much for leaving such a substantial comment — Intuit is lucky to have someone like you who understands how to engage with customers online and is eager to do so. Also, sorry for spelling your name wrong in the post, I’ve fixed it now 🙂

    I was a actually a product manager of a desktop software product back in the day, so I understand all to well that product iteration is just not possible for native desktop applications (i.e. not running on a framework like Adobe AIR) at the speed of web apps. So, it is a bit unfair to compare release cycles between products like QuickBooks (apples) and Xero or LessAccounting (oranges).

    And while this line of thinking (and thus the blog post) started by comparing small business accounting products, it really became a much more theoretical commentary on two very different business models that now happen to be colliding in this space. The above-mentioned hurdles of deploying native desktop software (e.g. regression and compatibility testing) essentially preclude it from being a viable product category for the SaaS business model.

    As I said in the original post: “Software as a Service businesses have a much different (and arguably greater) challenge, they need to continue to create value for their customers month after month.” While I’m sure repeat (i.e. upgrade) business is essential to Intuit’s business plan and it is clear through your actions that customer satisfaction is of great importance, the packaged software business model means that pursuit of customer satisfaction is focused on a single channel (i.e. more/better features) — if all you have a hammer, everything looks like a nail. On the other hand, SaaS businesses think about and act on customer satisfaction much more broadly. Take this (possibly a bit extreme, but very illustrative) example from FreshBooks – http://blog.mrtweet.net/how-freshbooks-built-an-army-of-evangelists-starting-from-one-special-tweet.

    Like I said, it may turn out that packaged software (i.e. QuickBooks) makes more sense for me in this particular circumstance (mostly because of price – $180 vs ~$25/month). But, my point was more that, all other things being equal, I’d rather be a customer of a SaaS business than a packaged goods business.

  7. Awesome reply, Jonathan!
    Nice to know of your background – you clearly “get it”.

    But you know, as I think this through, its not all about selling boxed renewals….I think the magic really happens (and this is just my personal opinion, mind you..) when desktop apps and cloud apps can work together… each can then do what they do best. Intuit already has a lot of these kind of apps out there, BTW…. Merchant Services, Intuit Online Payroll, Time Tracker, Field Services, etc etc are just some examples of our web-based applications that work seamlessly with desktop QuickBooks. They allow the people who are mobile to do their job, but keep the central accounting back in the office where alot of business owners and accountants want it.

    As you move forward with this very interesting discussion, I’d love to get your take on the box-cloud approach!

    And you know, whatever software you choose -SaaS or box – if it is an Intuit product, you now have a friend at Intuit. 🙂

    Alison

  8. Good article!

    I think Intuit has done a pretty good job in balancing the Shrink Wrap version of “Quickbooks Pro” and “QuickBooks Online” (SaaS).

    Also, I think that the shrink-wrap version costs much less than the online version if you factor in how often people upgrade a stable software. Even with Intuit tries to force you to upgrade by sending repeated emails and making payroll data obsolete etc.).

    I am not sure what it is feature wise but the QBonline pro version costs about $35/month. I am not sure how this is justified as long as you do not need to access it from a different computer at starbucks!

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