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The Bottom Line Moves Online

A growing list of companies supply accounting software online, charging users by the month and sparing them the expense and delays of in-house installation.

1Aug

Bill Meyer finds himself facing good and bad news. The bad news: his company, InSilicon Corp., needs new accounting software, and soon. The good news: He may be able to choose from a growing list of companies that supply such software online, charging users by the month and sparing them the expense and delays of in-house installation.

InSilicon's CFO has a little breathing room. His firm, which develops software that enables microchips to "talk to the outside world," as he puts it, was spun off from Phoenix Technologies Ltd. last year. InSilicon will rely on its parent company's internal systems for several more months, but in the meantime, Meyer is shopping around for an application service provider (ASP). One company that has caught his eye is Intacct Corp. (www.intacct.com), of Los Gatos, Calif., which recently launched a Web-based accounting service aimed at small and midsize businesses. Priced at $50 per month for two users, with each additional user paying an extra $5 per month, Intacct provides double-entry accounting, custom reporting, and other core financial applications, plus the ability to automate data-entry tasks.

"The Web model is perfect for accounting," Meyer says. A system that provides ubiquitous access to data via the Internet, he explains, and the user-friendliness of a Web browser, at a low monthly price point, is very appealing. But he hesitates to make the switch now, because Intacct lacks some features, such as the ability to handle multiple currencies. "If we can get by until a future release offers those features," Meyer says, "that would be ideal."

David C. Thomas, Intacct's CEO, says the product's abilities will be continually enhanced, either by Intacct or through partnerships with other software companies. And he's betting that the company's low monthly fee will find a huge audience. "On the low end, you have companies that rely on a PC-based product such as QuickBooks," he says, "and then there's this huge leap to expensive client/server systems that cost hundreds of thousands of dollars. There's almost nothing in between. Until now."

And yet competition is already fierce. Companies including Virtual Growth, NetLedger, and eLedger are also offering online accounting, in some cases for as little as $5 a month. And on the very day that Intacct announced its service, Accpac International Inc., a division of software giant Computer Associates (CA) International Inc., also unveiled an online accounting and E-commerce suite aimed at small and midsize businesses. Priced from a few hundred to a thousand dollars per user per month, Accpac says its access to CA technology and expertise will enable it to offer what CEO David Hood calls "a complete, well-rounded solution" that can include everything from Microsoft Office applications to Web storefronts.

Accpac also announced in June that it would acquire SBT Accounting Systems, which since February has been making its low-end and midrange accounting software available via the Web. Meanwhile, other vendors are rapidly adopting the ASP model. As Gartner Group analyst Rita Terdiman points out, "There are almost 150 accounting software providers in the traditional client/server world, and over time most of them will move into the ASP space."

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