Yesterday, it was announced that Intuit is buying Paycycle for $170 million. Let me just state for the record that I think this is a smart buy for Intuit. Why? Well, my partner Ben and I actually worked in the payroll group within Intuit, and yet when it came time to run payroll for our two most-recent businesses, we chose Paycycle both times. Simply put, it's a great service - easy to use and understand, priced well and of course, fully web-based, which allows us to run payroll from any computer. So congrats to the Paycycle team - this was well deserved.
Ok, back to the announcement and what this means to small businesses.
On the one hand, you could look at this as a reduction in competition amongst payroll services, which might be scary. What if Intuit raises prices on us and our fellow Paycycle customers, knowing that there are now fewer alternatives to turn to?
On the other hand, you could say it's a good omen for makers of small business web applications and services, which could inspire more innovation and competition. Several folks have smartly pointed out that this could be an indicator of more acquisitions to come in the small business SAAS (software as a service) space. In fact, there was another tidbit of information in a Wall Street Journal article about the acquisition that we found particularly interesting: more than half of Intuit's revenue now comes from "connected service offerings." Given that Intuit does more than $3 Billion a year in revenue, that's a lot of money.
To us here at Outright, that's strong evidence that tons of small businesses are making use of the web to better run their businesses. And as customers adopt more online business services, more entrepreneurs will step forward to create even better solutions for them. So keep an eye on web-based small business applications, because there's still lots to do to make running a business even simpler.
