For Intuit, a company best known for its intuitive applications from TurboTax and QuickBooks, innovation has always been one of its key differentiators. Lately the attribute has achieved a greater sense of urgency as Intuit’s core markets are maturing and the reliability of new recurring revenues is not assured.

Intuit, which helps popularize such strategies as following its customers to their work environment to learn how they use technology products, is seeking to adapt to the new world where ease of use is considered a given because of the pervasive nature of mobile computing and Web services.

Its challenge is to come to terms with the raised bar of intuitive technologies that have been set by others through assimilation and increasingly acquisitions. Its recent purchases of Mint and MedFusion underscore Intuit’s desire to strengthen its consumer finance management and vertical capabilities, respectively.

This is not to suggest that Intuit’s innovation engine is idling. At an event held in San Francisco in early September, Intuit showcased a number of new and upcoming technologies that reinforce its competitive edge.

For example, a mobile payment technology, which has not been productized, allows users to make a financial transaction simply by bumping two iPhones to establish a simple contact without the need of transponders or add-ons.

Over the next few weeks, millions of Intuit Online Banking customers will start using an advanced user interface that incorporates ad links such as embedded discount offerings and other services from local merchants, creating additional recurring revenue streams for Intuit, financial institutions and other stakeholders.

Another new innovation still under development allows retailers to capture and display receipt information online and on the iPhone, replacing paper receipts with an automation process that could drastically improve the user experience both for merchants and consumers during product returns or refunds.

For a vendor that spends 17% of its revenues on R&D, totaling $573 million in FY 2010, the race to enhance the innovation quotient of Intuit is just the beginning.

Intuit, which derives less than 5% of its revenues from non US customers, reckons that its future may lie in the international market. In one of its biggest moves to expand overseas, Intuit last year decided to go after the India market as part of its global business unit dedicated to addressing the needs of consumers and small businesses around the world with localized products.

In an alliance with India’s Moneycontrol.com, the vendor now offers Intuit Money Manager, a personal finance tool similar to Mint for millions of middle class Indians. Since its debut earlier this year, more than 50,000 active users have been accessing the site every day.

Intuit is also developing Jasmine, a customer contact management app for small businesses connecting them to mobile phone users in India.

Such diversification moves come at a time when its core markets – primarily Intuit TurboTax and QuickBooks – are shifting to the online world where customer loyalty is more fickle than ever and competition from free Web services proves is threatening the basic tenets that have helped build Intuit. The changes are so profound that Mint, a free service that makes money by providing leads to financial services providers and merchants, is trumping the hard-earned reputation of Intuit Quicken, which sustains itself by selling shrink-wrapped packages. Mint is expected to replace the online version of Intuit Quicken this year.

In the online world where Intuit is developing and delivering an array of such connected services to compete with paid or free Web services, the vendor’s ability to drive recurring revenues will largely depend on its ability to safeguard one of its best-kept secrets – keeping its customers happy through easy to use and highly accessible applications.

Recent incidents of data center outages that have disrupted Intuit’s connected services point to the inherent challenges for some of the most established software vendors to migrate their customers to the online world. Microsoft found itself tackling the same issue in recent weeks, while Intuit has vowed to fix the problem by shoring up its data center operations.

To be sure, Intuit remains a technology powerhouse that is highly profitable. After hitting a high of 29% in fiscal 2007, its operating margin tumbled to 22% in fiscal 2009 with the onset of the recession, which dealt a blow to many small to midsized businesses that Intuit has counted on for years. With the help of a number of acquisitions including ECHO for payment processing, Homestead Technologies for eCommerce applications, PayCycle for online payroll and Mint for consumer finance management, Intuit’s operating margin has rebounded to 25% in its latest fiscal 2010, which ended July 31.

As Intuit develops new recurring revenue streams by expanding overseas and going after new verticals such as healthcare, its future will rest on whether it can regain its Mojo through continuous innovation that underscores its intrinsic value – keeping its products as simple to use as possible. The only difference this time is that Intuit needs to assume the burden of delivering ready-to-use products and services to a large group of users and market segments with perhaps extremely diverse innovation requirements.

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