Intuit's payroll strategy: Build on our base

Some 300,000 business owners across

the nation do their books themselves with

Intuit's Quickbooks software but then outsource

their payroll to one of Intuit's big

competitors, ADP or Paychex.

Intuit's ability to woo those Quickbooks

users to its payroll system will be one of the

keys to the growth of the company's

Employer Services Group, which employs

515 at a south-Reno facility.

The Reno offices, located in two

50,000-square-foot buildings in the Sierra

Corporate Center as well as a third facility

near Mill and McCarran Boulevard, reflect

revenue growth that has been close to 40

percent in recent years.

Intuit's employment in Reno has grown

quickly as well. It's more than doubled

from the 221 who worked for the company

when it arrived in northern Nevada in mid-

1999 after paying about $200 million to

acquire homegrown Computing Resources

Inc.

The recent employment growth has

been fast enough that Intuit is beginning to

think about additional office facilities, said

Mike Sykes, general manager of Intuit's

outsourced payroll team.

When it broke ground in 2001 for its

Reno campus, Intuit said it planned three

buildings one more than currently on

the campus that ultimately would house

about 850 employees.

The company isn't concerned about its

continued ability to find good employees in

northern Nevada.

"It's been a very good market for us,"

Sykes said. "We haven't struggled to attract

people."

Those employees serve three primary

groups of Intuit payroll customers:

* Quickbook users who continue to do

their own payroll, but receive updated tax

tables periodically.

* Quickbook users who rely on Intuit to

handle their tax filings and direct deposit of

payrolls.

* Customers who outsource their entire

payroll function to Intuit.

As the largest of Intuit's 25 Employer

Service Group locations nationwide, the

Reno office handles customer service, tax

support, tax processing, marketing, training

and other responsibilities.

Those responsibilities will grow, Sykes

said, as Intuit aggressively seeks to widen

its beachhead in the outsourced-payroll

business.

In most markets, he said, the company

holds the No. 3 position in market share

ADP and Paychex are dominant but

Intuit looks to leverage its strong name

recognition and built-in base of

Quickbooks customers into a bigger piece

of the business.

Intuit's strategy doesn't rely on undercutting

its rivals' pricing even though some

customers may see payroll outsourcing as a

commodity service that's virtually indistinguishable

from one provider to the next.

"We're holding the line," said Sykes.

"We charge a fair price, one that's reasonable."

While Intuit's payroll service serves customers

with as many as 3,000 or 5,000

employees, much of its focus centers on

smaller companies.

"Our sweet spot is the small employer

the one with 100 and fewer employees,"

said Sykes.

Once it's in the door with its payroll

service, Intuit seeks to widen its outsourcing

presence. It offers human resources and

benefits management. Other employers

turn to Intuit for management and administration

of 401(k) plans.

"It's an expanding wheel," said Sykes.

While payroll and human resources

functions are serious business, Intuit's

employees in Reno work in an atmosphere

whose playfulness is intended to spur creativity.

Artwork featuring Elvis Presley hangs

from one wall. The central hallway curves

through each of the elongated buildings,

which were designed to provide as many

offices-with-a-window as possible. Quiet

rooms provide space for employees to take

a short escape from the stresses of the day.

White boards are placed throughout the

building to facilitate meetings, and "huddle

rooms" are strategically placed for

impromptu small meetings and brainstorming

sessions.

The playful spaces, however, sit atop a

mechanical design that's intended to be

highly functional.

Power systems are backed up with a

diesel generator, and the room that houses

computer servers is equipped with redundant

mechanical systems.

Power and communication lines run

through trenches in a 2-inch raised flooring

that eliminates power poles from the ceiling

and provides greater flexibility for the

location of future workstations.

Intuit is based in Mountain View, Calif.