Over the next few months Mclowd’s free SMSF accounting Platform will begin to approach what we call ‘fit-for-purpose’.

This description is used to define the point at which the functionality provides an effective alternative to the software offered by incumbents such as BGL and Class (albeit without some of the bells and whistles).

This applies to both individual Trustees as well as accounting and financial planning firms.

Our target date for effective replication – including automated data feeds – is September 30 2014.

Channel Migration

Based on the steady progress that is being made each month, we now have a number of early adopters within these channels looking to migrate for FY15.

Even at this early stage it is clear that there are two phases to the process of replacing proprietary software packages with an online, crowd-based Community:

• Perception
• Action


The first phase is arguably the easiest: triggering declines in perceived value by delivering transparency as to the new marginal cost of cloud-based SMSF accounting software: $0.00

BGL in particular has made this task much easier by:

• Splitting out the cost of the various data feeds and other add-ons to its core software offering
• Placing their new cloud-based offering Simple Fund 360 on exactly the same hosting infrastructure as Mclowd: AWS

Accounting and financial planning firms can now calculate BGL’s gross margin on the licence fees being charged for the core software – which is approximately 100%.

(There is a very good reason why Mclowd chose a governance / business model that supports near zero marginal cost pricing: the above transparency is now an existential threat to incumbents, but in contrast is a global opportunity for the Mclowd Community).


However declines in perceived value will not automatically show up in migration behaviour.

Instead migration is likely to be a function of:

• Seasonality
• Firm size
• Risk aversion

(No doubt as we acquire validated learning about the migration process this list will be expanded).

In turn these criteria provide Mclowd with guidance as to where we should focus our efforts in coming months.


This is a harsh reality in relation to accounting software, however the ‘migration’ season for channel partners can be extended through improved migration tools, including the ability to import historical data.

Where automated processes are not available, providing access to low cost data entry resources through the Marketplace will be important.

Firm Size

While the scalability of the migration process will improve over time, in the short term firms with hundreds of SMSF clients will present a challenge.

Mclowd must ensure there are sufficient resources (in both volume and quality) to support firms of all shapes and sizes. (It is important to note that Mclowd itself does not have the organisational capability to deliver large-scale migration, and will in almost all instances rely on the Crowd).

Fortunately size is also correlated with the net present value of the savings that are on offer.

Risk Aversion

Some firms will simply be uncomfortable with moving their clients data into the ‘public cloud’, or to a relatively new market entrant.

Again, BGL’s decision to move its 360 offering to AWS has levelled the playing field in terms of the risk profile of Mclowd vis-à-vis incumbents.

For Mclowd risk aversion needs to be met with even more transparency, so we will draft Case Studies which detail the $$ savings being delivered to specific channel partners, and in turn their SMSF clients.


Channel migration is an important phase in the evolution of the Mclowd Community.

While individual Trustees have been adopting the accounting Platform for more than 18 months, the vast majority of SMSF assets are tied up in relationships with accounting and financial planning firms.

(As such Mclowd cannot hope to fulfil its vision of improving net returns for investors without engagement from these channel partners).

While it is still early days, declines in perceived value and access to high quality, low-cost resources is likely to trigger a tipping point.

Getting to this tipping point as quickly as possible and with the least amount of ‘internal’ resources is important, because it will allow Mclowd to limit the deployment of capital and our operational footprint.