ESTABLISHING yourself in an already-heated market is a tall order for any business, and in one as fast-moving as accounting technology, the level of competition can be relentless. As all markets do, it eventually matures, with two or three larger companies dominating and acquiring any upstart companies that could threaten their position at the top.
That was the situation facing Intuit when it embarked on its attempt to break the UK market. Already the most-used accounting software in the US, the company has set its sights on British customers and Europe. It’s all happening rather quickly, as one might expect from a confident, US-backed tech firm.
That backing is key. Intuit UK is a wholly owned subsidiary of the US parent company Intuit, with about $2bn (£1.3bn) liquid assets on the balance sheet. In terms of gearing, much of that lies at the US end, freeing up the UK operation to pursue its growth plans.
And grow it has – having moved from rather low-key Maidenhead in 2013 to the thick of it in Westminster – so things have already, through a combination of organic growth and acquisition of companies such as the payroll business Developed Payroll Solutions, become rather “cosy” and another, larger, office is being sought.
In the fourth quarter of 2014, Intuit posted total company revenue of $714m – a 13% rise – accompanied by a 40% rise in online subscribers to its QuickBooks product, with 60,000 new customers signing up. For the full year, company revenue hit $4.5bn, up 8%.
The company’s financial year runs from August, and so when European director of finance Mike Williams took the role in that month last year, he combined his general management role and his finance role and set the company’s sights on pursuing the cloud market and expansion in earnest.
A classical model
Understandably, given Intuit’s growth rate, Williams has built up his finance and compliance teams across the UK and Europe and, as with most technology-based companies, IT and R&D are the most capital-intensive areas, particularly given the regular updates provided for the cloud products to take account of regulations and improved functionality.
“It’s the classic model of an American company going global,” he tells Financial Director. “Our big regions are the US and Canada, and more recently we’ve started to open up Australia and Asia. So we have region managers and finance teams to back them up. They’re there to look at a growth scenario rather than debits and credits.”
But while Intuit holds court in the US as is the de facto choice for SMEs and sole traders there, it finds itself up against seasoned and well-known brands in Sage, Xero, Iris and Oracle – all vying for their part of the five million small businesses currently operating in the UK. One method to achieve that, according to Williams, is occasional discounting in order to “inject” sales.
“If you look at our website, you’ll see three products,” he says. “There’s an entry-level product, a mid-range product and a high-end one, with a list-price of £9.99, £19.99 and £29.99, and that’s a monthly charge. We discount those things, so when you talk about market share, we inject those sales every now and again, and that gives you a big boost. The other thing we then look at is retention, which we look at on a daily, weekly and monthly basis, and that gives you a sound footing.”
That’s all very well, but it’s important for any business to reach its intended customers. For Intuit, that’s not only accountancy firms, but also SMEs. In a mix of serendipity and weirdness, one of football’s more bizarre controversies in 2014 presented Intuit with just the opportunity to introduce itself to new people on a level it had never been afforded before.
One of the Premier League’s best-known talents, former France star Nicolas Anelka in the twilight of his career at West Bromwich Albion, celebrated a goal against West Ham with a so-called quenelle gesture. It seemed innocuous enough at the time to most British onlookers, but given the international nature of England’s elite league, it soon became apparent that it was interpreted by some as an “inverse Nazi salute” with heavy anti-Semitic connotations.
Jewish-owned sponsors and property website Zoopla promptly withdrew and Anelka was banned and then let go by the club. The whole, rather unedifying, episode settled, Intuit took the vacant space on the Baggies’ shirts – on the proviso that nothing similar to the Anelka affair would happen again. And thus its name is now visible on a level it never could have imagined, beamed weekly – sometimes more often – to millions across the globe.
“It’s opened a lot of doors for us,” admits Williams. “Our brand is low in the UK. Accountants know Intuit, and they know Xero, but it’s small business outside of that. You want people to recognise your name, and they’ll start looking at you if they see you on the shirt of a Premier League team.”
In terms of hard numbers, it’s very difficult to put a figure on the return on investment of sponsoring a top-flight football club, although it’s safe to say it’s not cheap.
“What we do know is that it’s allowed us to talk to people we wouldn’t have been able to talk to before,” he says. “When we invite them to come and see their favourite team, it’s very easy to strike up conversation about what they’re doing. We’ve been able to do some events there [at The Hawthorns stadium] as part of the sponsorship, and there’s a definite attraction to going to a Premier League ground, so people decide to come.”
The amount of spin-off publicity has been ample, too, Williams notes, with the company represented on the team’s kits in the FIFA 15 game, Match of the Day, live broadcasts in the UK and abroad, on Fantasy Football sites and photographs regularly appearing in the country’s newspapers.
Despite the Anelka controversy, Williams notes that the sponsorship with West Brom helped Zoopla challenge Rightmove in the housing market, something he hopes Intuit can replicate. “I don’t see any reason why we can’t,” he says.
Relaxed and affable, it’s no surprise to learn that Williams has not always been an FD, and as such takes on a more strategic role than is traditional. Indeed, at Intuit alone, he has been head of finance in Europe and interim UK managing director before taking his current role in August last year. In a previous life, he was EMEA managing director at card reader company Verifone before a stint as EMEA operations director at communications business Polycom.
“I’ve stepped in [to FD roles] and stepped out. I like building strategy. In other companies, I’ve been director of various things, so being a director at Intuit is nothing new. Between me, managing director Richard Preece and marketing director David Walsh, we drive the business and put the strategy together,” he explains.
“It’s a very heated market, and the people we see are Xero and Sage, and then you’ve got Clearbooks and FreeAgent. The way we’ve made cut-through is by focusing on the online product. All our promotion and all our activity are geared towards that. That was the big kick-off.”
But whether Intuit can replicate its US position here in the UK is still not certain. It’s certainly a notable force in the industry, but Williams acknowledges Xero and Sage have long been established, while Iris will have its say, too.
Generally, there is first a proliferation in markets, then a consolidation, and some will fail as things settle down. As its market is now mature, Intuit’s attempt to move from a simple presence – as the company was two years ago – to a significant force is a hefty task.
“I think people are less suspicious of the technology than they were a few years ago,” Williams says. “Where they would have been concerned about security before, they’re not worried about it because they use it every day. Thanks to that, the new level of awareness of QuickBooks has really served us well.” ?
Mike Williams CV
2012 – present various, including director of finance – Europe, Intuit
2010 – 2011 chief financial officer, CPI Books UK
2003 – 2010 Operations director EMEA, Polycom
1999 – 2002 Financial controller & managing director EMEA, Verifone
1983 – 1999 various, including UK financial controller, HP