Intuit Taps Hewlett-Packard and Google for Advice

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Intuit's Internet playbook goes deeper than developing online versions of its familiar accounting and tax software, though. In October the company plans to launch Personal FinanceWorks, a line of online banking software for small banks. QuickBooks 2009 will include software that lets small businesses create their own Web sites to acquire customers, and Intuit is spending on data center capacity to host those sites, which it eventually plans to charge for. "They're planting all these seeds," says Laurie McCabe, an analyst at consulting firm AMI Partners, which has advised Intuit on the small business software market, of the company's efforts. "They're not just burying their heads."

Still, it's likely to be a while before Smith's online software push takes hold. At a Sept. 24 meeting with analysts, Intuit reiterated its forecast of 9% to 12% revenue growth in fiscal 2009, a slowdown from 15% in 2008 and 16.5% in 2007. Management has become "more aggressive" about pushing online products that can lead to future growth, wrote Citigroup (C) software research director Brent Thill in a Sept. 24 research note. But many of the prototypes in Intuit Labs won't contribute revenue anytime soon, said Thill, who rates Intuit a hold.

Like their counterparts across the software industry, Smith and his team are catering to a generation of consumers and businesses that have been conditioned by so-called Web 2.0 technologies that emphasize design and online user interaction and content generation. "These are people who don't even know what a [compact disc] is anymore," says Intuit Senior Vice-President Rick Jensen, who manages the company's QuickBooks line, of the company's Generation Y customers. Dozens of other software companies—most notably Microsoft (MSFT)—that made their bones in the PC's '80s and '90s heyday, are grappling with similar transitions. In August, Microsoft decided to pull the plug on desktop versions of its Money personal finance software, a Quicken competitor, and release future versions only on the Web.

Picking the Brains of the Best

As he pursues Intuit's transformation, Smith has sought counsel from some of Silicon Valley's leading lights. Last December, he and company founder Scott Cook sat down to a dinner in Hurd's office at HP, where the pair sought tutelage from the renowned efficiency maven about how to measure Intuit's spending on procurement, marketing, legal services, information technology, and HR against its peers. The result: a sweeping benchmarking study of Intuit vs. 1,000 other companies, including Apple (AAPL), Google, and Adobe Systems (ADBE). "In many cases we were overinvesting," Smith says.

In June, Intuit announced it would lay off 7% of its workforce, or 575 staffers, at an eventual cost of $23 million in the fourth fiscal quarter. Now, Smith says, he'll take whatever savings accrue from the cuts and plow them into online software initiatives. "We invest where the puck is going to be," he says.

Smith also borrowed Google's long-standing policy of letting its programmers devote a chunk of their time to working on out-there projects that don't contribute to the company's immediate business goals but may yield serendipitous discoveries. Now, Intuit engineers can put in four or five hours a week working on software aimed at new areas, like cell phones and social networks. One result: the launch in August of Quicken Beam, free software that lets users bring up their banking activity on their cell phones. Intuit has also built several Facebook widgets, including one that proffers tax tips, after Smith talked to Facebook COO Sandberg.

A Risk-Taker for Risky Times

Also on Smith's mealtime circuit: a May lunch with Sun Microsystems (JAVA) CEO Jonathan Schwartz, where the two discussed how to become more technically transparent while protecting intellectual property. Smith also had dinner in June with former Adobe Systems CEO Bruce Chizen to talk about enacting rapid change without driving employees crazy.

Smith is making a break with the style of Intuit's ex-CEO, Steve Bennett, a former GE (GE) executive who had a mixed record of success. Says Jeffries analyst MacMillan: "Brad Smith is more of a risk-taker than Steve Bennett, and sometimes you need someone who's a bigger risk-taker to change the trajectory of a business's growth."

Ricadela is a writer for BusinessWeek in Silicon Valley.