Vendors Get SaaSy

Software as a Service (or SaaS) is not a new term, but some of the older vendors who traditionally offered their applications on the desktop started swimming in the SaaS pool this summer.

September 21, 2009
by Alexandra DeFelice

When servers need replacing or licenses expire, customers will start to evaluate whether they need to continuing paying for that software to live in their offices or whether they should turn to Web-based applications.

There are two separate benefits of Software as a Service (SaaS) these vendors are concentrating on — around the clock online access to these products and cheaper upfront costs.

Intuit announced in August that it planned to offer a free beta version of a SaaS professional tax software product, ProLine Tax Online, for 1040 Federal returns along with California and Arizona.

Jorge Olavarrieta, group product manager at Intuit, said he hopes to have all states available for tax year 2009 with yet-to-be-determined pay-per-return pricing and that the product’s future roadmap may also include additional federal modules.

Intuit — which also produces ProSeries and Lacerte on the accountants’ side and TurboTax on the consumer side — has no plans to develop Web-based (or SaaS) versions of ProSeries or Lacerte, but ProLine Tax Online is powered by the Lacerte engine and brings that “anytime, anywhere” access that the vendor is trying to promote, Olavarrieta said.

Thomson Reuters, meanwhile, is focusing primarily on the SaaS subscription pricing model. Interestingly, that vendor, which most people likely associate with its suite of desktop products, has offered “Web-based” versions of its products since 1999, but it marketed it under the term “virtual office” and charged owners of the software an additional fee for Web-access to that software. It just didn’t call it SaaS.

Was it ahead of its time? Likely, according to Scott Fleszar, senior director of strategic marketing for Thomson Reuters.

In June, the vendor announced the Thomson Reuters SaaS option, in which users pay monthly software leasing fees rather than upfront purchase fees and can access their software, including the CS Professional Suite of products, as well as Microsoft Office and Exchange, over the Web.

Bruce A. Tharel, who has been a Thomson customer for years and opted against purchasing virtual office, signed up for Thomson SaaS right away, primarily because of the pricing model which gave him access to roughly a dozen products for $425 a month, including product support.

Will more accountants opt for SaaS as more of these traditional vendors outline the benefits? Only time will tell. But a decade after Thomson introduced “virtual office” Fleszar says that option made sense for roughly 20,000 of the firms using its software, but only 1,200 subscribed to it. (Author Note: Fleszar clarified these numbers, saying a more accurate reflection is that of the roughly 23,000 firms using Thomson Reuters’ tax software, about 3,500 subscribe to a SaaS or hosted delivery model.)

With the SaaS option, close to 300 firms had already subscribed by August and Fleszar says Thomson’s goal is for that to reach 700 by year’s end and 2,000 by the end of 2011.

Intuit and Thomson aren’t the only traditionally on-premise vendors opting for SaaS. Microsoft started marketing its products as “software plus services,” acknowledging the need for both desktop and Web-based applications and CCH is starting to do the same.

Last October, CCH announced its plans to build Web-based versions of some of its products. The vendor is on track to release SaaS versions of ProSystem fx Tax, Practice, Document and a new workflow product called Workstream in late October, according to CCH President Mike Sabbatis.

Is this the end of desktop software? Not necessarily, but Sabbatis says his company noticed increasing adoption of Global fx, which provides Web access to CCH’s tax software, enticing the company to delve deeper into software plus services.

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Alexandra DeFelice is a senior editor for the Journal of Accountancy. She can be reached at 212-596-6122.