I’ve written many times in the past about the relative dearth of vendors providing cloud accounting solutions to the mid-market – as NetSuite continues to move up the food chain and focuses on larger enterprises it only leaves players like FinancialForce and Intacct to focus on the mid-market One differentiating point that NetSuite has long been articulating, and one of its core strategies seems to be in the provision of multi-entity consolidation, that spaghetti-like situation where one corporate owns a number of different entities and needs to roll up all of those individual entities’ financial reporting into the holding company.
Intacct, until now at least, hasn’t talked much about this problem space, apparently happy to leave these larger and more complex situations to vendors like NetSuite. A conversation I had with an Intacct customer recently suggests that this strategy is changing somewhat and becoming more nuance. Intacct does provide a consolidation functionality as detailed in the video below:
Anyway – in this case the consolidation was more nuanced than is usually the case. The customer, Kith Media, was formed in 2011 to take over financial management for several operating subsidiaries that were divested from a large media conglomerate, including print phone directories and internet-based local search services. Kith Media’s particular situation meant that they needed to maintain separate books for each of its distinct business entities, while eliminating reporting work done outside of the financial system, such as using Excel for reports.
The original entity used QuickBooks, while the acquired entities had all used an Oracle system as part of their former owner. CFO of Kith Media, Jim Henderson explained to me that this situation means that the company had a real greenfields opportunity – they weren’t going to use Oracle and QuickBooks wasn’t going to scale to handle the new complexity of the combined organization. Henderson only had a few weeks to both decide on and implement a solution, so one of the key drivers was simplicity and ease of deployment. He performed a kind of quick-fire due diligence on both Intacct and NetSuite, with Intacct articulating a novel approach towards the consolidation problems the company was facing. Instead of a complex consolidation approach, Intacct suggested using the dimension functionality of their general ledger – essentially a way to tag transaction data in the system across multiple tracking categories. In this case, Kith was able to separate items by operating entity for reporting and analysis. Henderson got to 20% of due diligence with both NetSuite and Intacct and became convinced that this novel approach to consolidation would actually work. The cost savings that Intacct brought (compared to NetSuite) along with the simplicity the solution delivered convinced him to go all-in with Intacct. The video below has more information about Intacct’s dimension approach:
It’s not consolidation in the traditional sense of the word – but it brings some distinct advantages in terms of reducing the TCO of the software (since multi-entities can be run from within one instance) and also removes the need for complex cross-instance consolidation setup. Kith got up and running on Intacct in four weeks – something of an achievement given the usual timescale that these sort of projects require – the company uses Intacct for its revenue recognition and expense management processes, a boon compared to their previous approach of using manually prepared Excel spreadsheets.
As I said before – the mid market opportunity is an attractive one – customers with, in general, more of an appetite for moving to the cloud; a generally fairly complex functional requirement and not a huge number of competitors means that Intacct and the handful of other companies targeting this space have a large prospect base, and one which, as the example of Kith Media shows, don’t take a huge amount of work to get over the line.