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1/28/2009
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Intacct Announces SaaS Upgrade, Plans To Take On Oracle

The small SaaS vendor wants to play in the big leagues. But first it must prove it can be profitable.

Most of the software-as-a-service market has focused around areas such as customer service, payroll, and sales-force automation -- all things that are important to a business, but don't run it. The conventional wisdom is that SaaS is untested for "core" business processes.

Intacct is poking holes in that wisdom. Close to 3,000 companies use Intacct's SaaS financial management and accounting applications. Intacct has raised $80 million in venture funding since it was founded in 2000 -- $30 million of which it acquired within the past two years, said senior VP Dan Druker. This week, the company announced upgraded products and lower pricing, and Druker also discussed how Intacct is using the reseller channel to expand its business.

New features in Intacct Winter 2009 include an application designed to simplify the financial consolidation reporting and analysis process, an application it developed with software company QuickArrow to manage finances specific to a professional services organization, and an improved user interface developed with Adobe Flex.

Intacct also lowered its entry-level pricing for managing a company's financials to $400 a month, about a 50% reduction. The goal is to grab smaller companies that are outgrowing QuickBooks. It's also offering migration services from QuickBooks for less than $2,000.

Most of Intacct's customers are in the 50-to-1000-employee range, but now it has its sights on companies that are a little larger and are also evaluating Oracle's financials software -- and are sometimes winning, claimed Druker.

"[Valued-added resellers] are starting to drive our first-ever Oracle financial replacements," he said. More typically, Intacct competes with Microsoft Dynamics, Sage, and NetSuite.

Intacct sees a lot of opportunity with the reseller market. Many SaaS vendors use a direct sales model, but 50% of Intacct's business is done through resellers, and it hopes to hit the 80% mark this year.

"They are the local-expert feet on the street... there are 5,000 accounting VARs in North America," Druker said.

Resellers earn about a 30% cut on an Intacct deal, but can earn as high as 40%, he said. Intacct, meanwhile, doesn’t need to spend as much on marketing and sales as the direct-sale SaaS vendors do because of the help from resellers.

Yet like all SaaS companies, Intacct, which employees about 120 people, needs to prove it'll be profitable in the long term. Druker wouldn't reveal revenue but said the company has regularly doubled its revenues each quarter over a previous year's quarter (although last quarter it dropped to a "high double-digit" percentage growth range, he said). Intacct is "profitable from operations," he said, which means it's still in the red when it comes to net income.

And, like other SaaS companies, Intacct's management is convinced that long-term and steady growth eventually will result in net profitability.

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