Discuss the factors you have identified and expalin why they are more reliable then the cliches in the original article.
B Bakery is a bakery company that sells products to supermarkets and different pub chains. They have mixed customer base with some prominent businesses as their customer. They produces bakery products and supplies those to another businesses, shops etc.
A bakery business needs has some production unit, supply chain management, sales, marketing, accounts, finance and HR management process. The supply chain management will take care of buying raw material from other businesses, like poultry farm, fruit shop, flour supplier etc. Then the production using will produce bakery product. Then the inventory and logistics management will need to store those products and delivery the orders to different shops, pubs etc. Accounts will manage the accounting activities, payment to suppliers, payment from customers, payroll management of the staffs etc. The HR management will take care of the hiring, payroll etc. of the staffs. Finally sales will take order and sells the products by exploring prospective markets. Marketing will takes care of promotion of the business. Each of the business processes are dependent on each other. If one process is affected it will hamper the whole business process. For example, if there is problem with supply production will be affected, and that will affect sales, finally accounts. In the same way, if the business losses some accounts, then the business will have less sales, HR management will suffer. Thus for running a bakery, it needs to take care of each business processes, the resources like baking equipment, bakers, chefs etc. B. Bakery will follow something similar to what a typical baker does.
Each process of a bakery business, as discussed in the previous section, are important and indispensable. However the core business processes are, SCM, production, HRM and accounts. But, accounts is the most important for any business as it works like fuel to the whole business process. The business of B bakery has got significant growth in last few years. However, currently it is facing some difficulties with accounts. They have dedicated accountant team with accounting experts who takes care of the bookkeeping etc. for the business. But the accounts cannot help in competitive decision making activities. As a result the company has lost some of its important accounts by failing to offer products at competitive price. Now, it has realized that the business needs more information for running it smoothly in coming years. These information are likely to come from their business processes and market research. Based on these information the company will be able to make strategic decisions and that will help them to bring their business to next level of success. (John Wiley & Sons, 2012)
The business wants to have an accounting information system for its business. They want to invest in some available accounting software for that purpose. Thus the business requirements for B Bakery are,
The bakery business needs several key outputs from its core business processes to achieve better performance of their business in market. The first thing needs from the business processes are information. All transactional and operational information are required for processing and decision making. Accounting is a process in a business that is connected to all other business process. So, for getting more information from the accounts process, it will need information from all business processes that are present in the business. It will take information like payable to suppliers, stock in inventory, amount of sales, possible margins, cost of raw materials, costing, labor charge etc. All these are important to setting competitive price of some product. Other information are needed from the business processes are the payrolls of the staffs of the company etc.
For acquiring these information from the business processes, it will need an integration of the business processes and the systems used for the business processes. Better integration will provide better compatibility and faster business process. Ultimately that will help in earning more revenue. The AIS implemented over the ERP or integrated to the ERP implementation will provide a structure to the business that will help the business to collect, process, manage, store and retrieve financial and accounts information by business analysts, managers, accountants, tax consultants, auditors etc.
On the other hand ERP will integrate the functions and processes of the business. The integration of ERP and AIS will bring more valuable information from the business information. AIS will provide business forecasting information by analyzing historical information. (Romney & Steinbart, 2014)
The firm will need ERP and AIS implementation for their business. Both of the implementation are necessary for achieving the business objectives of the company. The ERP software will integrate all business processes and there will be a shared and central database for all business processes. The central database will be also available to the AIS process. Thus the AIS software will have access to information from the entire business process and the processing will be better and more accurate. (Gelinas & Dull, 2008)
Any AIS provides three fundamental functions to the business process. Those are,
1. An effective and efficient data processing using the data acquired from different transactions by the company. For that function it will need to capture all those transaction sources, documentation etc. All these transactions should be recorded to journals. A journal chronologically records each transactional event related to the company. Then it will need to transfer data from journal to ledgers. In ledger, it will sort data based on different accounts.
2. The AIS software will help the management in decision making by providing information from the databases and analysis. There are mainly two categories of information to be shared with management, managerial reports and financial statements.
3. The AIS software will provide all required internal control for ensuring the reliability of the information being produced by the software, for ensuring the efficiency of the business activities and accordance to the objectives of management.
There are various sub systems of any AIS software. Those are, financial cycle, expenditure cycle, HR, revenue cycle, production cycles and general ledger and reporting cycle.
B Bakery is a family owned firm based business. It has near about 70 employees. The business has generated revenue more than $13.5 million in the last year. Thus the company can be categorized as medium to large scale company. So, it will need some suitable solution for their business. (Simkin, et al., 2014)
Based on the industry research, there are three classes of accounting information system software for businesses based on the size of the business. Those are,
4.1 Entry level solutions
The entry level accounting software are suitable for small businesses and home based businesses with one to five members. The software from this class is capable of delivering basic financial accounting functionalities, review, reporting etc. AIS like QuickBooks, SAGE 50 US Edition, XERO, FreshBooks, and Wave etc. are the examples of AIS software belonging from this class.
4.2 Small to Medium scale Business Solutions
This class of AIS software are suitable for small and medium scale businesses with five to 100 active users. The software are able to support more functionalities than the previous class. There will be high demanding transactional information support for reporting etc. The software are highly scalable and the associated database will be robust. Some examples are SAGE 100 ERP, EXACT Max, QuickBook enterprise, CYMA, Microsoft Dynamics (GP, NAV, SP), SAP By Design etc.
4.3 Enterprise Accounting Software
This class of AIS software are suitable for organizations having more than 100 active users. These systems has robust feature sets and extended functionalities. The Examples of such software are, SAP, Oracle, SAGE ERP X3 etc.
Based on the business requirements and organizational details of B Bakery, the recommendation is for selecting a good SMB solutions.
Among the SMB accounting system solution providers, the prominent vendors are SAGE 100 ERP, Microsoft Dynamics (GP, NAV, SP), SAP By Design etc. Here is a discussion of these three systems along with available variations.
5.1 SAGE 100 ERP
SAGE 100 ERP has different variation of AIS software for SMBs. Those are SAGE 100 Advanced ERP, SAGE 100 Standard ERP etc. It can support almost 50 active users at a time for diverse range of accounting and financial activities, business intelligence, HR, web services, manufacturing and distribution, CRM services. The solutions are highly customizable based on different business processes. The software are highly modularized, stable and flexible.
It supports for recording unlimited historical budgets, creation of various financial reports from available templates, creation of BOM or Bill of Materials. (SAGE, 2014)
It needs Microsoft Windows environment and Microsoft SQL based backend database. It can be implemented based on client server or online platform. There are wizard based support for setting up and using the software. There is a seamless integration among the modules of the software. It is easy to use and easily understandable. There are robust features that will help to maximize the ROI of the business. The software provides easy to build reports and presentation also. The Business intelligence module will help in better decision making. Users can add user defined fields, business rules etc. for performing specific tasks. However, customization like these are expensive and sometimes need up gradation. Personalization of workflows based on different users is also possible.
5.2 Microsoft Dynamics
Microsoft Dynamics also has variations of AIS software available for SMBs like B. Bakery. The variations are Microsoft Dynamics NAV, GP, SL etc. Among these Variations Microsoft Dynamics GP is a general accounting software that offers functionalities for controlling resources, finance, decision making, HR etc. The ERP based AIS software is easy to deploy and use. The interface is similar to Microsoft Office. There are special support for tax and regulatory, online training etc.
Microsoft Dynamics SL is another variation of Microsoft Dynamics and this is an AIS software suitable for medium scale businesses. The specialty of this software is, it is suitable for project focused accounting. Construction businesses, Government contracting etc. are suitable for this.
Microsoft Dynamics NAV is a general purpose AIS software for any kind of medium sized business. It provides total control over the core business process like supply chain management, HRM, financial management, business intelligence, reporting etc. (Microsoft , 2015)
SAP Business ByDesign is a general accounting solutions for small to medium scale businesses. This is mostly suitable for SMBs that are looking for SaaS based cloud accounting solution. It gives a robust set of professional services along with integrated process for finance, CRM etc. The companies belonging to light manufacturing industry is also suitable for implementation of this system. (SAP, 2015)The advantages of this software are,
B Bakery wants an AIS software to invest on. They want the software to work on an integrated platform connecting all of their business processes, capable of analysis more business operational and transactional data to the decision making process.
The recommendation is to use SAGE 100 ERP accounting software for their business. There are numerous advantages of using the same in their business process. The reasoning behind the recommendation are,
Overall the business process will be integrated, simplified, robust, efficient and scalable.
7 References
Gelinas, U. J. & Dull, R. B., 2008. Accounting Information Systems. s.l.:Thomson/South-Western.
John Wiley & Sons, 2012. Accounting Information Systems: Understanding Business Processes. 4th ed. s.l.:John Wiley & Sons.
Microsoft , 2015. Microsoft Dynamics. [Online]
Romney, M. B. & Steinbart, P. J., 2014. Accounting Information Systems. s.l.:Pearson .
SAGE, 2014. Sage 100 ERP, s.l.: SAGE.SAP, 2015. SAP Business ByDesign. [Online]
Simkin, M. G., Norman, C. S. & Rose, J. M., 2014. Core Concepts of Accounting Information Systems. s.l.:John Wiley & Sons.
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