Cloud financials vendor Intacct is today making a pitch to grab a larger share of the fast-growing B2B cloud vendor market. It has launched a new subscription billing capability, along with a dashboard and reporting tool that automatically calculates the key operational metrics favored by SaaS businesses. Both are tightly integrated with Salesforce to enhance their appeal to companies that already use the cloud CRM platform.
The products are designed to plug the shortcomings of traditional accounting systems, which do not measure several of the most important business metrics tracked by organizations that sell their services on subscription. These metrics, highly prized by knowledgeable investors as well as management teams, include monthly recurring revenue (MRR), customer acquisition cost (CAC), churn, and customer lifetime value (CLTV). Complex revenue recognition calculations that apply to subscriptions can lead to discrepancies when these metrics are tracked outside of the accounting system.
The difficulty of compiling accurate numbers using conventional solutions makes it hard for SaaS businesses to track performance or evaluate the potential impact of pricing or product changes, said Mark Gervase, senior product marketing manager, in a pre-launch briefing:
They are all living the pain of the manual calculations, the delays and the trouble getting all the information and then having to go back and reverse-engineer everything to get all the answers. There isn't a solution out there like this that works so closely with Salesforce and can do the records automatically and all the statutory reporting.
Tight integration to Salesforce
The two products are:
- Intacct Digital Board Book, a set of real-time reports, charts and performance cards that present SaaS business metrics calculated automatically within the Intacct financial system of record, including transactional data collected from Salesforce. The product takes advantage of Intacct's built-in ability to slice and dice the live data by dimensions such as new revenue, add-ons, upgrades, product, industry, segment or channel.
- Intacct Subscription Billing automates subscription management functions including recurring billing, payment, and order processes. Built on the Salesforce1 platform, it operates order management and billing alongside other CRM functions running in the customer's own Salesforce instance. It automatically passes accounting transactions to the Intacct financials system, such as booking payments and handling the often complex revenue recognition calculations that subscription businesses require.
The tight integration between Salesforce and Intacct in the two new products is in line with the vendor's philosophy of working with other best-of-breed vendors, Gervase explained:
We're handling the customer-facing transactions on that Salesforce platform, while the transactional nature of the financial and acccounting piece is done where that's most suited. It is truly taking advantage of the best-in-class solutions.
Intacct is emphasizing the distinctiveness of this approach in contrast to other subscription billing vendors that it will now compete with. Leading the pack of subscription billing specialists, high-flying startup Zuora provides a sophisticated range of subscription management capabilities but does not include financials. The top cloud ERP rival is NetSuite, which launched its own subscription billing capabilities three years ago, and whose annual conference kicks off later today in San Jose. Here Intacct's trump card is its close integration with the Salesforce platform.
Eighty percent of software companies use Salesforce, according to Vijay Ramakrishnan, director of product marketing, who told me last week:
For those companies that are using Salesforce we're delivering something they cannot get from any other solution: built-in connectivity to Salesforce. It's not third party middleware, it's native connectivity, built into our product.
'Numbers the CFO can trust'
Bringing all of the data together in the financials system will enable CFOs to report SaaS metrics more quickly and with the same confidence that they have in the GAAP metrics that traditional accounting systems provide, said Ramakrishnan.
The CFO has to deliver these numbers with the same accuracy and perhaps more timeliness than he or she has to deliver the GAAP numbers.
Many currently have to resort to time-consuming spreadsheet calculations or third-party analytics packages to compile these numbers, he said. As well as the risk of errors creeping in, these workarounds provide static snapshots that make it difficult to drill down and examine the factors producing the top-line numbers.
We are the first and only cloud midmarket solution to automate the preparation of those metrics for SaaS companies.
We're delivering these metrics in the system of record. They're numbers the CFO can trust.
There are growing numbers of B2B SaaS companies as the cloud delivery model takes hold in the business market. The Montclare SaaS 250 ranks the most established but this is just the tip of a very large and fast-growing iceberg. Intacct, which already has a significant customer base among SaaS vendors, believes there is a gap in the market to offer a product that meets the needs of mid-tier companies. Gervase said:
I feel that this will take off based on the way that we solve it, using Salesforce, [which is] the bellwether for cloud solutions.
When it comes to our target mid-sized businesses, they are poorly served. The simple tools won't do and the complex expensive tools are out of reach. We're definitely filling a gap for our target segment of the market.
It's interesting to see a subscription billing product that essentially runs simultaneously on two platforms at once. It's a native Salesforce application, but it integrates very tightly with Intacct for the accounting calculations. Unlike a best-of-breed solution that the customer has to stitch together for themselves, Intacct has pre-emptively done the stitching in advance.
My sense is that the vendor's hunch is correct that this fills an underserved gap. Zuora targets a higher-volume market where subscriber numbers are often in the millions. NetSuite is a more direct competitor but Intacct is smart to play the Salesforce integration card here. While it's quite possible to integrate NetSuite to Salesforce, Intacct has a far closer relationship with the CRM vendor that dates back almost a decade, and makes a virtue of its ability to connect to a wide ecosystem of best-of-breed solutions.
The main competitor though is neither of these. The market opportunity here is to displace the many spreadsheets and workarounds that mid-sized businesses typically use to patch across the gaps in their existing applications. Because of the nature of the SaaS business model, these companies have an especially pressing need to find a better solution. Intacct's new offering speaks to that need.
[Updated: An earlier version had said that 80 percent of Intacct customers were Salesforce users. Changed to 80 percent of software companies.]
Disclosure: NetSuite and Salesforce are diginomica premier partners. Intacct and NetSuite are recent consulting clients of the author and NetSuite has funded my travel and accommodation to attend SuiteWorld this week.
Image credits By Intacct.