Intuit Cutting Staff Amid SaaS Transition

Intuit, a member of our SaaS 20 Stock Index, is cutting 7 percent of its staff (or about 575 positions). The move reflects Intuit’s accelerating shift to software as a service (SaaS). Indeed, the company plans to move even faster from packaged software to online services, social networking and mobile technologies, according to the Associated Press.

Ironically, another SaaS 20 Stock Index member — NetSuite — positions itself as a logical replacement for Intuit’s traditional desktop accounting and small business software.

Although immensely hyped, the SaaS industry isn’t without its challenges.

As traditional software companies (Intuit, Microsoft, Oracle, etc.) increasingly shift to on-demand models, they are colliding with SaaS pure-plays like Salesforce.com. The fierce competition, coupled with slower-than-expected profit growth for some SaaS players, has driven our SaaS 20 Stock Index down more than 15 percent this year.

For managed service providers, SaaS represents both a blessing and a burden. While distributors like Ingram Micro can now host applications (Exchange Server, Dynamics, SharePoint, etc.) for MSPs, there’s no doubt that MSPs will wind up competing with some software companies’ hosting initiatives.