INTUIT (www.intuit.com).

Intuit senior vice president Jim Heeger is also focused on the small business segment, but Heeger faces a different challenge than most ASP startups: His goal is to find subscription services that will extend rather than replace Intuit's shrink-wrapped software presence. "We start with a huge leg up in small business," Heeger says. "We don't have to run Super Bowl ads to tell people who we are."

One of Intuit's most successful add-on solutions has been a subscription-based payroll service that integrates tightly with QuickBooks. Launched a year ago, the QuickBooks Online Payroll Service has so far signed up 12,000 customers who pay $40-$70 a month for payroll processing, direct deposit, and tax reporting. "It took PayChex years to reach numbers like these," Heeger notes. (Intuit also has "hundreds of thousands" of subscribers to a $6/month service that provides updated payroll tax tables, he adds.)

In addition to payroll processing, Intuit has several new QuickBooks- related services in the pipeline, including online postage purchasing, credit card processing, automated e-mail, and online leasing and loans. "We see a whole host of services--from ourselves and from partners-- that become more effective when they're connected to a customer's accounting software."

Marketing tactics: Intuit's shrink-wrapped software is "an incredibly powerful tool" for service marketing, Heeger points out. At appropriate moments, QuickBooks displays "in-product messages" that remind users about how to order online services, forms, and other add-on products. "And when people call in to buy upgrades, we often end up in a consultative sale, recommending online solutions."

Development issues: "Accounting and tax software deal with people's money," says Heeger. "They don't want to hear excuses about bugs if something goes wrong." Rather than try to build a back-end payroll processing center from the ground up, Intuit originally outsourced its processing work to Computing Resources Inc., then bought CRI in May of this year. "It was a good way to bring expertise in-house," Heeger notes.

Forecast: Intuit as a whole now generates 15% of total revenues from Internet-related services, but Heeger says the small business and tax division is doing even better. "Last fiscal year, 54% of our sales came from services and ancillary products like supplies. In three to five years, the percentage could be as high as 80%."

Jim Heeger, senior vice president/small business division, Intuit Corp., Box 7850, MS:1840, Mountain View, Calif. 74039; 415/944-6996. E- mail: jim_heeger@intuit.com.