Intuit Introduces Changes to Authorized Commercial Host for QuickBooks Program, Introduces QuickBooks Enterprise Rental Licensing

Intuit Introduces Changes to Authorized Commercial Host for QuickBooks program, introduces QuickBooks Enterprise Rental Licensing

A few years ago, Intuit introduced a program which allowed application service providers and hosting companies to provide application hosting and management of the QuickBooks® desktop edition products, along with subscription rental licensing.  As the market moves to online application service and cloud computing models, the importance and value of having QuickBooks desktop editions available in the cloud is proven through the consistent growth and growing popularity of the QuickBooks hosting model.  Intuit has recently introduced a number of changes to the Authorized Commercial Host for QuickBooks (ACHQB) program – changes geared towards increasing opportunity for both hosting providers and hosted customers alike.

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The ACHQB program grants participating service providers the rights to install QuickBooks software on their servers and offer it has a managed hosted application service to customers.  Further, the Authorized Commercial Host for QuickBooks designation provides member hosts with the ability to license QuickBooks Pro and Premier products as monthly subscription license rentals to accompany the hosting of the application.  Among the changes introduced to the program is the ability for member providers to now offer QuickBooks Enterprise Edition and Advanced Inventory functionality via a subscription rental licensing model.

Previous to this change, customers had to first obtain their QuickBooks Enterprise software products through an Intuit Solution Provider or directly from Intuit.  While the licenses were often sold with annual maintenance, customers were forced to purchase a total number of user licenses for their business regardless of how long those licenses would be in use.  With the ability for authorized QuickBooks hosts to now offer QuickBooks Enterprise as a rental license subscription, businesses are able to obtain QBES licenses for their users on a monthly rental basis, eliminating the need to purchase a bulk of licenses up front.  Further, businesses can add users and remove users as the business requires, allowing them to save money by removing unneeded licenses or to affordably add temporary access licenses (like when the auditor shows up each year!).

Another change, which could be a pretty big one for some providers, is the minimum volume commitment required for program participation.  In previous years, service providers would pay their program participation fee, and then would begin reporting to Intuit their hosted QuickBooks usage.  Providers pay Intuit a “hosting fee” of $5 per user per month for each hosted QuickBooks user on their system, a fee which was separate from any licensing and which applied to any user accessing QuickBooks on the host.  There was no “floor” or volume commitment the service provider had to commit to; the cost of entering the program was barrier enough.  With the evident popularity and success of the Intuit QuickBooks hosting model, it makes sense that Intuit is now holding those service providers to a committed level of usage in order to obtain the benefits provided by the program.  Where the only consideration was the cost of entering the program and providing the service, providers must now justify their commitment to delivering a revenue minimum of $7500 per quarter. (1) Note that this commitment is based on the cumulative total of invoiced revenue for the quarter, whether it is for rental licenses, hosting fees, or licenses purchased and resold to customer; this is a quarterly revenue report which includes revenues related to ongoing business, not simply new sales (phew!).

Intuit offers ACHQB members two separate licensing and reporting models, either or both of which may be provided to customers:  bring-your-own-license and rental-license.

The bring-your-own-license model allows customers who have already purchased their QuickBooks software to use that license to qualify them for hosting services.  Once the customer has deployed with the host and reported their license as being hosted, future licenses for the customer must come from Intuit National Accounts sales team, or via license rental from the hosting provider.  It is for these users with customer-owned licenses that hosting providers must pay the $5 monthly hosting fee to Intuit, and hosts must ensure that future customer licenses are obtained only through the two acceptable methods.

The rental-license model allows the customer to obtain QuickBooks licenses for their users from the hosting service provider, the price of which is generally added to the hosting service fee.  The license grants the customer usage of the product on the host only, delivering no authority to use the product on any other system (including the local PC).  For customers renting licensing via their QuickBooks host, it is important to recognize that leaving the host will require that the customer purchase QuickBooks software licenses in order to run the software and access their data from their local PC.  The change in the program as it relates to rental licensing and reporting is that now, with the current agreement, Intuit does not charge the hosts a separate $5 monthly hosting fee when the customer is renting the license.  Rather, the licensing fees are now set to include this fee.  This change was made to not only increase accuracy in host usage reporting, but mostly to make it easier for customers to understand what their hosts were billing them for.

As accounting professionals, bookkeepers and the small business clients they serve move toward the cloud and real-time, collaborative and virtual working environments, the importance of the Intuit QuickBooks desktop product hosting model continues to grow in relevance and capability.  As technology for hosting applications continues to evolve and as hosting providers become more innovative in their approaches, the popularity of this model will simply increase.  Certainly, Intuit sees the value in the program and continues to take meaningful steps towards structuring the offering to best meet the needs of the QuickBooks customers and the service providers alike.

Joanie Mann Bunny FeetMake Sense?

J

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(1) Please note that this article has been updated to reflect clarifications in QBACH revenue commitments.  For a complete explanation, see this article: Intuit Authorized Commercial Host for QuickBooks Offers Flexibility in Business Model | Clarifications on Revenue and Usage Commitments

About Joanie Mann

Joanie Mann is a recognized authority in the areas of ISV cloud enablement and ASP service delivery, and consults with application and platform hosting companies worldwide. Her extensive work with accounting professionals worldwide has also positioned her as an expert consultant and adviser to professional practitioners seeking to leverage cloud accounting solutions, web-based applications and Internet technologies in their firms and with their clients. Author of Cloud Hosting Explained for Normal People (available on Amazon Kindle) Principal consultant at Cooper Mann Consulting CooperMann.com @JoanieMann on twitter
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