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But it’ll need that dough: ZenPayroll is taking on a big challenge — providing payroll software-as-a-service to small and medium companies and thus taking on payroll behemoth ADP (although obliquely since ADP focuses on large companies.)

Joshua Reeves, CEO and co-founder of ZenPayroll

ZenPayroll CEO and co-founder Joshua Reeves cites IDC numbers to back up his contention that there’s a ton of opportunity here.  ADP along with Paychex, Ceridian and Intuit handled about $7 billion of a total $13.9 billion in US payroll in 2010. The other $7 billion is split up between lots of small local providers and companies that use error-prone manual processes.  ”Small businesses have been slow to automate payroll — many of them still do it on paper and calculate taxes using spreadsheets,” Reeves told me.

The Internal Revenue Service’s own stats show that a third of US small businesses are fined for payroll tax mistakes annually to the tune of $5.3 billion. Clearly, there is a payroll problem to be solved.

ZenPayroll says its SaaS will ease that headache at a fraction of the price ADP and others charge. It will charge companies $25 per month and an additional couple of dollars per employee.  For a ten-person company, that ends up being $780 per year compared to $3822.80 for ADP Compliance with Pay Convenience or $1,428 for Paychex Small Business Paperless service. Other competitors include outsourced human resources services, but they focus on a full suite of services, not just payroll, Reeves said. And payroll is ZenPayroll’s sole focus.

Payroll is serious business

Ease of use is critical. “You go to the web site and request an invite. We respond in a few hours, you set up the account, enter employee ID numbers and send invites to your employees who add their own information,” Reeves said. The service supports direct deposit or payment by check, according to whatever pay schedule the employer prefers. It supports bonuses, reimbursements, garnishments — all options a business needs.  And it integrates with existing e-sign and e-fax technologies, Reeves said.

The service, the beta of which has already handled several millions of dollars in payroll, runs on private, dedicated servers that are backed up many times a day in multiple locations, Reeves said.

Payroll is a big, big job and no one — not company CEOs, CFOs, employees, state or federal tax authorities — has a sense of humor about mistakes. Reeves said the company has hired payroll tax experts with decades of experience from ADP and Paychex. This is important — because tech smarts is one thing — but doing payroll right also requires deep expertise in tax codes and regulations.

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Intuit, for example, has been linking its GoPayment mobile payment service to its QuickBooks Online accounting software, making it easier for its 8 million existing software customers to go mobile. Now, it’s taking another key step by integrating its QuickBooks Point of Sale product with GoPayment. That means that the 200,000 customers who use QuickBooks POS hardware and software will have an easy way to combine a traditional POS experience with a mobile payment service.

For business customers who take advantage of this combo, that means they can have workers taking payments in the aisles of stores or out at trade shows or events, with all the transaction data, inventory and analytics handled by one system on the back end. The mobile app can be populated with inventory items pulled automatically from QuickBooks Point of Sale. By offering both options, Intuit gives companies more flexibility to grow from a simple mobile-only retailer to a bigger storefront merchant. Between QuickBooks POS and GoPayment, Intuit is currently processing $6 billion annually and reaching 23 million consumers, the company said.

Trevor Dryer, Intuit’s Head of Product Management, Mobile Payments & Point of Sale, told me Square and its Square iPad register are appealing products for very small businesses and merchants getting started. But he said as businesses start to grow with more inventory, employees and more locations, they’re looking for a bigger system to handle not just payments but the entire suite of services including demand generation, engagement, loyalty, inventory, analytics, accounting and other needs.

Dryer said QuickBooks Point of Sale and GoPayment offers a more robust set of features including traditional hardware such as a barcode scanner, barcode tag printer, receipt printer, credit card reader and cash drawer. Intuit’s system can handle thousands of inventory items and has better options for grouping products and customer tracking, he added. When combined with QuickBooks’ deeper inventory and accounting software, he insists it makes more sense for many businesses.

“Square and Square Register, they’re very light solutions,” said Dryer. “It might be great for a small business starting out, but as the business grows they need more functionality.”

In my recent interview with Square COO Keith Rabois, he said the start-up already has a set of tools for customers that is lifting sales by double digits. But he also said there’s still a lot more work being done to build out Square’s features.

This is one area that competitors feel they can exploit. PayPal and Intuit are bringing a set of existing tools to bear on small businesses while VeriFone is relying on a more open approach for its SAIL mobile payment product, allowing merchants to plug in their preferred tools. The race will be on for Square to build up its offering as it goes up market before its rivals can cut it off with their own products.

QuickBooks POS will start at $1,099 for a basic version of the software and $1,499 for the pro version. With hardware, the pro version costs $1,899. The pro multi-store software sells for $1,799 and $2,299 with hardware. That’s much more expensive than Square Register, which is free but requires an iPad.

But Intuit is highlighting where the battle is going. Mobile payment is still just getting underway for many merchants and there’s a lot of room for growth for companies like Square and others on the low end. But the competition will really intensify as everyone converges on bigger merchants with more transactions.

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That, Intuit Senior VP of Big Data, Social Design and Marketing Nora Denzel told me, was the reaction of one of her co-workers after getting a view of her personal finances using Mint.com. Company bias aside, the story is telling of how individuals might expect to directly benefit from analytics today. Large companies use big data techniques as methods to simultaneously increase revenue and save operating costs, but the most-direct benefit to consumers is usually a targeted advertisement or a list of possible social networking connections. That’s pretty lame. A consumer service that actually cares about your bottom line…? Well, that’s something.

“Data for delight”

That’s what Denzel says Mint is, and it’s able to be that because Intuit collects a lot of data on more than 5 million Mint users. Intuit calls it “data for delight.” The service becomes about more than just tracking your spending, but becomes a tool for comparison. Users can compare their financial situations to others who are similarly situated by demographic, geography or other factors. The service can tell users how much money they’d save by switching to a new credit card or refinancing their mortgages.

Nora Denzel

“The [alerts users] really dig is when we give them personalized information,” Denzel said, comparing Mint to her ink-ordering printer that saves her trips to the office supply store. “At least someone in this house is helping me.”

And let’s say you’re more than one person — let’s say five people running a small business — Intuit has you covered there, as well. Small business owners often have little insight  into the broader market, because they lack the tools, knowledge, and time to collect and analyze the relevant data. “You’re running a race and you have no idea where are,” is how Denzel explains the situation.

However, while many small business owners might never have heard of Hadoop, Voldemort or other big data technologies, Intuit has. And it uses them, Denzel said. Its data store is growing exponentially as it collects more data on users from a growing number of sources. “We call it big data for the little guy,” Denzel said.

For example, a flower shop that uses QuickBooks or any of Intuit’s small-business services can compare its finances to other flower shops in the same city or elsewhere based data gathered from Intuit’s more than 4 million small-business customers. Or the flower shop could be alerted in real-time that it’s about to pay too much for new packing supplies because Intuit’s system has spotted other businesses buying the same thing for less elsewhere.

“Data for decision-making”

But before you can delight anyone with data, you first have to attract and maintain customers. That’s why, Denzel said, about half of Intuit’s big data effort goes toward marketing and social media engagement, and why she has such a unique job title. Marketing especially is a blend of art and science, she explained: “No offense to Mad Men, but it’s all tested now.”

Although “the last mile is always humans,” Denzel said Intuit continuously tests everything from ads to product design to find out what’s working best for customers. After decades in the industry, one of the biggest — and most-humbling — changes she’s seen thanks to big data is that “we’ve outsourced product management to consumers.” If your experience tells you something should work but customers don’t respond, you’re wrong.

Notice the fourth tweet down.

On the social media front, Denzel said Intuit is adamant about monitoring and analyzing social data, as well as about engaging with customers. Sentiment analysis and data mining can tell a company a lot what consumers are saying or feeling about the brand, but they can also help the company meet customer expectations. Denzel said if a customer complains on Twitter, that person expects a response from the company (it’s “their Batphone to your company”). And if they complain on Twitter and then are forced to call, they expect the customer service agent to know how the situation has escalated.

“The chief communications officer is now the chief listening officer,” Denzel said. (I assume Intuit is doing plenty of listening thanks to Friday morning’s outage for QuickBooks Online.)

And Intuit is listening. Last week, I explained how LivePerson uses predictive models to help decide when website visitors might need to engage in live chat with a customer service representative. It turns out Intuit is a LivePerson customer and actually uses text from chats to make Intuit customer service even better.

Denzel said Intuit feeds that data into Hadoop, which lets it determine certain words and phrases that suggest a customer is going to stop using an Intuit product. When those phrases pop up in future chats, a customer might get transferred to the best-available agent; if they’re used on some public forum, that customer might get a call. As with most things big data, an unexpected phone call might be a little bit creepy at first, but it’s probably less so if the problem actually gets resolved and both parties get what they want.

Feature image courtesy of Shutterstock user val lawless.

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Demandforce is a software-as-a-service web application that works within a company’s existing business system and provides tools for communicating with customers. It also helps small businesses market over the Internet and through mobile devices and improve their reputation. The San Francisco company has 35,000 small business users in North American and has helped its clients generate $1 billion in incremental revenue.

Intuit will run Demandforce as a new division in Intuit’s Small Business Group led by Rick Berry, Demandforce’s president and founder. It should help Intuit continue to grow its SaaS business and appeal even more to SMBs. There’s a big opportunity in helping small businesses grow up and take advantage of online tools. And it puts Intuit into a better position as it goes after some of the local marketing spend that businesses previously diverted to newspapers and mailers.

The all-cash deal is another win for Benchmark Capital, the largest institutional investor, which is coming off its big payoff in the $1 billion Instagram deal.

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Employees appear to be taking the trend one step further, however, according to a new survey out today from online database software company Intuit QuickBase, which found employees are increasingly bypassing IT for a DIY approach to tech. Inspired by Forrester’s “HERO Index: Finding Empowered Employees” report from last year, Intuit QuickBase and Global Strategy Group asked 903 information workers across America about how they come up with the tech solutions they need at work. They found:

• 50 percent of information workers now turn to online databases and Web-based productivity apps, instant messaging platforms, video chat services and social networks to solve their own business problems without consulting IT.
• 19 percent of respondents had customized a web app or software for work.
• However, 35 percent of businesses still do not enable or encourage employees to create solutions independently.

The reason employees are taking matters into their own hands is fairly clear from the survey results – speed. Sixty-eight percent of workers who built or customized an app on their own completed the work in less than a week. Seventy-two percent of respondents said their internal development teams took more than a month to complete requests.

“The speed of business is increasing, and that’s driving a greater user demand for solutions,” Allison Mnookin, VP and GM of Intuit QuickBase, explained in an interview. “Information workers are seeking ways to compete. How do I be more nimble? How can I be more efficient?”

Other recent surveys have found IT is simply overwhelmed with keeping up with consumerization and the seemingly endless parade of devices and platforms it brings, so perhaps their slow response is understandable, but so is the desire of a tech-savvy workforce to get things done quickly. Employees increasingly import the expectation of painless, speedy IT from home to work. “Business users believe their pain should be solvable. In their personal lives, they’re starting to use technologies that suggest to them there must be a way,” said Mnookin.

Should IT resign as sheriff?

So is this move toward increasing tech independence a good thing, particularly as teams are spread more broadly in terms of location, creating added coordination challenges with distant IT departments? According to Intuit, employee-built solutions are working. Eighty-two percent reported their solution is still being used within their organization or team. And even if IT tries to stop the spread of this DIY ethos, it appears they have a hard time doing so: 17 percent of workers said they select tools and software to meet their needs even without IT approval.

There are also other reasons for IT to empower rather than try to control workers’ DIY impulses: Stifling them is irritating to the most proactive and presumably productive employees. Twenty-eight percent of all workers told Intuit they would consider moving jobs for a more technologically free work environment. For those crafty employees willing to go rogue and solve problems despite IT discouragement, that number increases to 50 percent.

Are these engaged and solution-orientated workers really the ones organizations want to lose? “Here are employees that see problems and want to fix them, and for most companies, those are the employees that you love,” said Mnookin. “And those are the employees that, with the wrong policies, you put most at risk.”

Which isn’t to say IT should suddenly take a completely Wild West approach. “Certainly, there are important rules in terms of data, governance and security that IT has always been the champion of and will continue to be important,” Mnookin said, but overall she is a fan of IT letting its hair down a bit when it comes to releasing employees’ tech creativity.

IT increasingly realizes the world is changing. They can’t do it all and they’re better off provisioning and checking on the things they care about from a governance perspective than just locking down employees, knowing that a certain proportion will just do this regardless.

If you view your role as enabling business to compete and serve customers successfully than that demand for the speed of change will be impossible [for IT] to meet alone. I think the old model of everything is build and solved by IT is going to die.

Do you agree with Mnookin that IT needs to loosen up and let motivated employees solve more of their own problems without interference?

Image courtesy of Flickr user toolstop.

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The software company is announcing Monday that it has struck a deal with AT&T that will enable automatic sign-up and pre-approval for AT&T customers signing up for GoPayment based on their existing AT&T data. Users just provide a few pieces of new information, including their bank account data, and they’re set up. That shortens the on-boarding period and builds off the existing relationship Intuit has with AT&T, which already sells GoPayment to its small business customers.

Tapping 8 million existing customers

The AT&T deal shows how Intuit is looking to push harder into the mobile payments market by building off existing business ties. Intuit already has relationships with 8 million businesses that generate $2.6 trillion in revenue and use its business software like QuickBooks to handle their finances. But it hasn’t done a great job capitalizing on those accounts and leveraging its reputation among small businesses, something it’s trying to turn around now.

“We don’t need to add a new customer to dramatically build a payments franchise,” Chris Hylen, VP and general manager of Intuit’s Payment Solutions division told me. “If we focus on our 8 million existing customers, we’ll be in a pretty good position.”

In September, Intuit enabled GoPayment to sync data with QuickBooks Online and recently began an email marketing test in which it cross-marketed GoPayment with QuickBooks Online. The company saw a 25-percent increase in unit sales of GoPayment readers with 70 percent of those customers getting a QuickBooks account. That suggests that Intuit has an opportunity to provide not just a mobile payment tool but accounting software as well. And it shows that many businesses need more than just a payment acceptance tool; they need a larger solution to help them manage their finances.

Speeding up the sign-up process

In the next four months, Intuit will integrate GoPayment payments into QuickBooks Online so users can accept credit card payments online. Existing QuickBooks users won’t have to enter any data to get GoPayments started, because Intuit will pull it automatically from their QuickBooks accounts.

In December, users will be able to get started with GoPayments without having to enter their bank account information. Intuit will automatically create an account for new customers that’s linked to a GoPayment prepaid debit card they will get a few days later in the mail. Their money can go onto this card which they can use as a debit card. Users can still link GoPayment to an existing bank account, but this new option is another way to on-board users faster.

This is all part of a larger push to make payments more frictionless and build off Intuit’s existing customer base. Earlier this year, Intuit also reduced the number of fields new users need to fill out to get aboard GoPayment from 38 to 14.

Mobile payments opportunity beckons

The mobile payments market is still quite new, and there’s plenty of room to grow for Square, Intuit and others. Hylen said there are some 28 million small businesses in the United States, but only about 7 to 8 million of them accept electronic payments. Intuit, he said, already has an edge with millions of businesses that use its financial software and trust the company for its experience and security. It’s just a matter of leveraging that more effectively.

It’s a solid move for Intuit, which seems to trail Square’s mindshare in mobile payments. With others like Google Wallet, Isis and PayPal all moving into this space, it has to get its act together. It’s a good realization that payments by themselves aren’t enough to sway customers. The better play is to create a fuller solution that can pick off more pain points for business customers. Intuit has different assets than Square and other rivals. But if it’s going to really compete, it needs to bring all of its resources to bear on this opportunity, something it’s figuring out now.

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