February 2001

CPA2biz Receives Funding from Microsoft, Thomson Corporation

NEW YORK—After nearly a year of delays, the American Institute of CPAs’ controversial CPA2biz.com Internet portal finalized commitments for $50 million from software giant Microsoft and information and technology provider Thomson Corporation.

“Microsoft and Thomson are world-class industry partners,” said AICPA President Barry Melancon. “This level of capital is an outstanding kickoff for CPA2biz. Combined with CPA2biz’s existing strategic partnerships and expected future partnerships, we believe CPA2biz is well positioned to be an asset to CPAs.”

CPA2biz is supported by the 52 state, district, and territory CPA societies. (The New York State Society of CPAs’ executive committee initially voted in May 2000 to decline participation, citing a need for more financial, legal, and marketplace information. Having received that additional information, the

NYSSCPA board of directors voted a month later to join the 51 other participating jurisdictions.)

The states are participating in the portal venture through the State Societies Network, Inc. (SSNI), originally launched in 1999 by the CPA Societies Executives Association as a vehicle through which state societies could share costs in areas such as printing, accounting, technology, and dues collection. SSNI is also the legal entity that formed a joint venture with the AICPA called Shared Services LLC to help launch the portal. Each state society paid $3 per member to join SSNI.

As a result of the funding received from Microsoft and Thomson, the state societies will be paid $5 per member as a return on the initial investment.

Project Creeps Forward

Intended to enhance the relationship between CPAs and their clients, the portal’s latest launch date is set for this spring. The site is designed to provide CPAs and small businesses with an affordable, Web-based infrastructure for doing business.

“Market studies demonstrate that CPAs are the most trusted advisers to small businesses,” said CPA2biz CEO Brett Prager. “Most importantly, this trust translates into meaningful influence with the small-business owner. The average small-business owner is highly influenced by his or her accountant in virtually all business decisions.”

Through a system of integrated business applications, CPA2biz hopes to equip accountants with tools that can add significant value to their small-business clients. With the portal, CPAs can connect with their clients electronically and provide services, including general ledger systems, payroll, 401(k) administration, customer relationship management, human resources management, procurement, and online banking. In addition, the portal expects to create the potential for new online services.

“So far no one has cracked the code to the small-business market, which represents roughly 50 percent of the U.S. gross domestic product,” Prager said. “But with more than 400,000 CPAs working within or on behalf of small businesses, we believe the CPA—with the support of the CPA2biz portal—has the ability to crack that code. Microsoft and Thomson recognize the potential for growth in this area.”

Under the agreement, Microsoft and Thomson—the owner of accounting magazines including Accounting Today, Accounting Technology, Practical Accountant, and Electronic Accountant—will work closely to provide a wide range of Internet services and content to small business users and CPAs.

“Our longstanding relationship with the AICPA and its senior leadership made a partnership between us and CPA2biz natural,” said Richard J. Harrington, president and CEO of the Thomson Corporation. “The value for Thomson is an increased opportunity to provide custom solutions and content to CPAs in an even more substantive way.”

Kathleen Hebert, vice president of Microsoft’s small business division, said, “The AICPA and the CPA community are very important to Microsoft because CPAs are right there on the front lines, working with small businesses to overcome the hurdles of taking their business online and helping them to leverage the Web to drive their business forward.”

Recent Microsoft actions indicate the company is focusing on the small and mid-size business market. The software giant acquired accounting vendor and e-solutions provider Great Plains Software last December for the price of $1.1 billion in Microsoft stock. The acquisition agreement merged Microsoft’s large technical resources, global reach, and .NET technology platform with Great Plains’ expertise in business process applications for the middle market, said Jeff Raikes, vice president of Microsoft’s productivity and business services group, during a Dec. 21 conference call.