Date posted: 27/05/2024 10 min read

Cloud control

Desktop practice management software is no more. The future is in the cloud, and SME firms have more choices than ever.

Quick take

  • Practice management software vendors have moved away from desktop software, to invest in their cloud-based products.
  • Some companies have purchased competitors in order to add new functionality, while others are licensing powerful solutions like Salesforce to give them an edge.
  • New entrants are embracing generative AI, and are using compliance tools and document management to differentiate themselves in the market.

After two decades of relative quiet, activity in practice management software has exploded. Ongoing feature development has ceased for all desktop practice management software. It’s now cloud or nothing. Accordingly, several big brands have bowed out of practice management altogether to make way for a raft of new challengers.

These days, Reckon no longer sells any practice management software. UK software consolidator The Access Group bought APS, put it in maintenance mode, and is encouraging firms to move to its cloud replacement, Access accounting practice software.

Sage is another big name to call it quits. The Access Group also bought Sage HandiSoft and is shepherding those firms onto its cloud software as well.

The twin themes of 2024 are integrations and AI. Major software vendors pursued an aggressive, walled-garden approach when they sold expansive desktop suites. Now they have switched to relatively lightweight cloud products, they are pursuing integration strategies with app stacks of various colours and combinations.

And most vendors are at least talking about the potential for using generative AI, the technology behind ChatGPT. While we have seen the first glimpses of this AI in practice management, it’s a little early to know how much impact it will have.

New careers in the cloud

MYOB has unofficially retired its desktop software and switched its focus onto two cloud products, MYOB Practice Management and MYOB Advanced Professional Services. (Accountant Enterprise and Office still appear on MYOB’s website but they are omitted as options on the sales inquiry form.) 

MYOB Practice Management is a rebadged GreatSoft, the cloud-based practice management software was built in South Africa by former APS founder, Brian Armstrong (it’s a small scene). MYOB acquired the Australian rights to GreatSoft in 2021 and has been rapidly building out the number of integrations with other back-office software popular with accounting firms.

These applications appear as tabs on a client record with either a deep link directly to the equivalent client record or, in some cases, pulling data from the application and displaying it in MYOB’s practice management client view.

This represents quite a radical change for MYOB, which pursued an all-in-the-family approach during its desktop suite days. MYOB Practice Management even integrates with competitors such as Xero, FYI and HowNow.

MYOB is filling gaps in its product line through acquisitions and licensing, rather than building a new product from scratch, which would take years. The latest acquisition in practice management is Nimbus, a cloud-based client portal and document management platform.

MYOB is trying to make it as easy as possible for its existing customers to move to its cloud platform. Firms can link MYOB Practice Management so that updating client entity information and contact details will also update the same records in Accountants Enterprise or Accountants Office.

MYOB sold two desktop suites targeting large and small firms respectively. MYOB has maintained this approach by creating a custom version of its enterprise resource planning (ERP), MYOB Advanced, for larger accounting firms.

ERPs are complex platforms that can run many departments within a company. Accordingly, practice management is just one element of MYOB Advanced Professional Services. It also contains modules for running other parts of a firm such as finance management, payroll, and customer relationship management (CRM) and marketing.

Cloud-based productsImage credit: MF Guddyx

New tricks

Access Group is the inheritor of the code and customer bases of Reckon APS and HandiSoft. It has taken on the challenge of building a cloud practice management suite by turning to one of the best-known enterprise software brands. Its Access Practice Management is built on Salesforce, a very powerful CRM that can be heavily customised and connects to many business applications.

By licensing the Salesforce platform, the Access Group has been able to fast-track the development of standard functions such as creating and managing records for tasks, jobs and clients. Access Practice Management has a very similar look and feel to its donor platform Salesforce, right down to the activity feed and internal messaging platform, Chatter. The client record contains tabs for details, relationships, jobs, invoices, client portal documents and more.

The company is in the process of adding integrations to key software, with deeper connections to other software in its portfolio. Access Group has also snapped up reporting tool Fathom, compliance productivity toolkit ChangeGPS, and expense management and compliance software Dext (Receipt Bank), adding to a stable of over 20 applications in various niches.

The new old guard

While MYOB and Access Group are early in their journey as cloud players, there are three software companies that have already operated in this space for more than a decade.

Wolters Kluwer’s CCH iFirm, one of the very first cloud practice management suites, is now also one of the most complete suites on the market. It has its own cloudbased tax platform that competes with Xero Tax, and already boasts a decent number of integrations with back-office applications such as BGL, Class, digital signature apps, workpapers and more.

Wolters Kluwer is looking at how it can add a generative AI assistant to its online tax database, iKnowConnect, which includes the electronic contents of the Australian Master Tax Guide 74th Edition 2024. This is a huge differentiator for iFirm – displaying information and relevant advice for each client, pulled directly from Wolters Kluwer’s tax publications.

Karbon continues to set the pace for innovation in practice management. The company brought out features based on generative AI phenomenon ChatGPT less than six months after it rose to fame in 2023.

These improvements, under the banner Karbon AI, included AI-generated responses to client emails within Karbon’s inbox interface. Accountants can compose an email from a task such as ‘email client contact asking for anything relevant to this year’s return that may have been missed’. They can also summarise lengthy email conversations and internal chats to catch-up on the main priorities and promised activities.

Karbon’s central feature is email triage. It is designed to help accountants manage the firehose of messages that pour through their inbox every day. Accountants can schedule emails into tasks, assign them to colleagues, and link them with clients and jobs, all with the goal of getting to inbox zero (at least until tomorrow).

Karbon has been focusing on expanding from the communications and job management into time and billing, with a new billing module added in 2023.

Last year FYI dropped ‘Docs’ from its name as it moved from document management to a full-blown practice manager. The company already has a very sizable customer base on document management – over 1000 Australian and New Zealand firms – that it will persuade to complete the leap.

FYI’s founder, Rob Cameron, has a long history with MYOB, and the FYI interface will be comfortably familiar to firms that use its products. In fact, FYI has set up an automated process called FYI Practice Sync that moves firms from the retiring MYOB Accountant Enterprise to its platform. A firm can simultaneously run FYI and Accountant Enterprise, then gradually cut over to FYI as staff are ready to make the move.

FYI’s edge is that documents should be at the heart of practice management. It defines documents very broadly – logs of phone conversations and emails, as well as spreadsheets, PDFs and Word documents. It has a very powerful categorisation engine that automatically files a lot of the documents under entity groups, which makes it much easier to centralise your conversations and information about each client.

The platform also has a broad number of integrations with key back-office applications. FYI produces client records that centralise all types of documents and even information from some of its integrated apps, turning the platform into a very effective CRM as much as a job management program.

FYI’s other strength is its automation engine. It has a large number of triggers that can create actions in FYI and some that can work with integrated applications.

While MYOB and Access Group are early in their journey as cloud players, there are three software companies that have already operated in this space for more than a decade.

The latest challengers

One of the most interesting contenders is Xbert, which bills itself as an ‘AI-powered’ practice management platform. Xbert consists of dozens of automations (little AI robots called Xberts) that look for anomalies in accounting software and flag them for remediation.

Like FYI, Xbert saw the opportunity to move into practice management as the major brands prepared to retire their desktop software. It has job management, templates, automated reminders and processes, although it lacks some core modules such as billing.

Xbert has also added features powered by generative AI such as the ability to ask questions on the status of jobs. Asking, ‘What tasks are outstanding for my clients last month?,’ brings up a multi paragraph, conversational response discussing the types of overdue tasks and who they were for. It reads much like a chat a partner would have with their office manager.

Adelaide-based AccountKit is a relatively young product that is popular with small accounting and bookkeeping firms with up to 20 users. The company built up a library of 18 compliance-related tools such as loan calculators and entity ownership diagram mappers, before releasing a practice management platform.

AccountKit takes a customer-centric approach that captures phone messages, emails, meetings and documents. Combined with its compliance toolbox, it’s delivering good quality for small firms.

Kloud Connect was created by business process outsourcing player Solutions Centric, which wasn’t happy with the current crop of practice software. Founder Krish Sritharan brought on a new CEO Dan Beck, a veteran IT consultant to the accounting industry who developed businessintelligence reporting for Reckon APS.

Kloud Connect has a database-style interface that will be familiar to firms raised on desktop practice software. But its main claim is one of timeliness; when generative AI is rewriting how humans work with computers and Microsoft is building its AI assistant Copilot into Windows itself, Kloud Connect hopes to ride these coattails better than existing products built on older codebases.

Finally, what’s up with Xero Practice Manager?

Market share for practice management software is closely guarded. However, Xero Practice Manager (XPM) is probably the most popular practice management platform in Australia and New Zealand. Free software (if you join Xero’s partner program) is hard to resist.

XPM has received few updates over the past couple of years. The main announcement at Xerocon 2023 was that XPM, Xero Tax and Xero HQ would move to a single client list and staff list. While a very welcome initiative that will save a lot of double handling, it shows Xero is spending R&D on replacing legacy code, rather than adding new features.

Xero Practice Manager has a lot of competition for funding. Xero recently released a marketing video promising an ambitious AI assistant called Just Ask Xero, which it claimed would enter beta later this year. Apart from investing in AI, Xero is also building out features for overseas markets with the greatest potential for growth. It is also promising investors that it will cut back on spending to improve profitability.

Luckily for Xero, the cost of switching practice management software is very high and XPM remains a very attractive package for small firms, given its deep integration with Xero’s accounting software, which dominates the Australian and New Zealand markets. While Xero continues to offer XPM for free to partners, it will remain a tough product to beat.

Article updated on 30 May 2024. We stated that MYOB Practice Management was free. However, the only 'free' element is access to the MYOB Practice dashboard.