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Microsoft Wants You

By Larry Armstrong Some 80% of small companies that use accounting software use some version of Intuit's () QuickBooks. That may make it sound like Intuit's got a stranglehold on the market, but consider this: Most small businesses don't use any accounting software at all. Microsoft () reckons that 45% of small companies accomplish most of their financial tasks with Microsoft Office products -- keeping their books in Excel, creating invoices and estimates in Word, managing customer and vendor contact lists with Outlook, and filling in the gaps with pencil, paper, and Post-it notes.

Yes, Microsoft talks insistently about unseating QuickBooks: In a dozen years, it has tried to take on QuickBooks three or four times, depending on who's counting. All its attempts have failed in the marketplace. But with so many small companies already using Office for finance-related tasks, Microsoft figures some of them can be persuaded to pony up for an accounting package as well. That's where Microsoft Small Business Accounting 2006 comes in. It's a financial management program designed to seamlessly integrate with Microsoft Office. As a stand-alone product, it will sell for $179 when launched in September. You can also get it as part of Microsoft's new Office Small Business Management Edition ($499).

I got a sneak peak at the final version of Microsoft SBA recently. (A trial version has been available from Microsoft since late last year.) Since the trial release, Microsoft has added a number of features, including the ability to handle payroll by yourself using Excel.

What impressed me the most is the tight fit between Microsoft SBA and the rest of the Office suite. Sure, you'd expect to be able to export quotes and invoices to Word to print or e-mail them, and to ship data to Excel for charts or projections. You can do that, though not as handily, with the current versions of QuickBooks Pro or with Sage Software's Peachtree Complete Accounting (and those will work with older versions of Word and Excel better than Microsoft's new entry will).

But you can also open up the books -- selectively, of course -- to the rest of the staff if you're running the contact manager version of Outlook 2003 with SBA. That's something you can't do with QuickBooks. Salespeople, for example, can see and update sales and payment information for their customers, and they can create new quotes and invoices through Outlook. For professional and consulting firms, appointments on the Outlook calendar can be used to track billable time.

Intuit isn't sitting idly by. The new version of QuickBooks won't be out until late this year, so I asked Intuit for an early demo. It's cleaner looking and even easier to use than earlier versions, and there's a lot less in-your-face promotion for premium (read: extra-cost) add-ons. QuickBooks also is finally dropping its proprietary database and adopting the same standard Microsoft uses. That will speed up operations such as generating reports and will allow for an unobtrusive always-on audit trail, which your accountant will appreciate.

Another change: QuickBooks Basic ($200) is history. While Intuit won't talk about new prices for the Pro and Premier versions, which now list for $300 and $500, you can bet that it's not going to cede the $200 price point to Microsoft. So, whether you decide to give Microsoft's Small Business Accounting -- or any other financial management software -- a whirl, one thing's for sure: Thanks to Microsoft, you're bound to get more bang for your buck.

Larry Armstrong writes about personal technology for BusinessWeek magazine

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