Intuit, the Mountain View, California-based maker of business and financial management software, has made the move from packaged product to a purely online digital strategy. The company started in 1983 with its Quicken personal finance software--one of the early success stories in boxed software. But the company has recently decided to shed its PC roots and become a cloud software company, selling Quicken to a private equity firm in order to focus the business on their Software-as-a-Service (SaaS), or cloud, offerings--its TurboTax software and QuickBooks Online.
"[Intuit] is a classic case of a onetime disrupter being challenged by an upstart with a new approach and a simpler product," reported The New York Times, referring to Xero, a New Zealand company that offers a flexible, online accounting system for as little as $9 a month.
Intuit has made a bold move to embrace its digital strategy, which Jeanne Ross, Principle Research Scientist at MIT Sloan's Center for Information Research, defines as “an integrated business strategy inspired by the capabilities of powerful, readily accessible technologies and responsive to constantly changing market conditions.”
According to the The New York Times, Intuit’s digital reinvention strategy is bearing fruit. Subscriptions to its QuickBooks Online software grew 49% last year, and overall revenue grew 23%. QuickBooks Online now connects with about 2,000 apps, and the open structure has increased customer retention and helped feed customers into the TurboTax side of the business, especially its online version.
In one sense, this strategy shift makes sense--more and more people are turning to cloud computing. However, according to the McKinsey & Company article, "From box to cloud: An approach for software development executives," only 8% of the revenues generated by the top 100 software vendors originate from SaaS models (as of early 2015). And seven of the ten biggest companies draw less than 5% of their software revenues from SaaS. Nonetheless, the global SaaS market is projected to grow from $49B in 2015 to $67B in 2018.
Perhaps the most important business lesson here is that Intuit paid attention to the disruption it was seeing in its market and realized the company must change. And to do so it must embrace its digital strategy. So ask yourself: is my organization being threatened by a disruptive business model? If so, how and when do we react?
Learn more about digital strategies in the MIT Sloan Executive Education program, Revitalizing Your Digital Business Model. You can also view Jeanne Ross's complimentary webinar, Digital Disruption: Transforming your Company for the Digital Economy.