Accounting Software Globalization And Industrialization: Challenges And Opportunities In Australia

Analysis

Describe about the Accounting Software Globalization and Industrialization.

In today’s world of globalization and industrialization, the organizations have adopted the Information Technology for almost every sphere of business. One of the organizational areas is Finance and Accounting in which software technology is currently making its mark. In Australia, there are a variety of organizations that use different software to support the accounting function. It also depends upon the scale and size of the company as to which accounting software would suit it the best (Jadhav & Sonar, 2009). Accounting software helps in automatic process, storing and analysis of all the Accounting and financial statements of the company such as cost sheet, balance sheet, receivables, payables etc. It uses and Information System that is based on a code and it analysis the data automatically that is fed into it. This literature review will cover various Accounting Software being used in Australia and what challenges they pose.

Analysis

Just like any other industry, Accounting software industry also has a similar history. With small companies starting to provide different solutions different organizations. Gradually the consolidation of companies leads to the rise of a few big giants that control the whole accounting industry industry (Gujarathi, 2005). The history of accounting software industry is dated back to 1990s when computer systems were the new things. In initial few years the large players like Microsoft dominated the market. In the current environment also, Microsoft is the market leader with its Microsoft Dynamics product. The companies like SAP and XERO also have a good market presence. The sheer size and the scale of the company could explain the competitive advantage of Microsoft.

At this point, it is very difficult for any small company to compete with a big giant on the technology front. Since big organization would like their data to be secure and in safe hands, they would always go for big payers since they have the deep pockets to pay them. Thus, all the big companies use Accounting software provided by Microsoft (Microsoft Dynamic’s ERP is one example), Working Point Accounting Software etc. On the other hand, there are Accounting software companies like Myob, Saasu etc. that cater to relatively small organizations. Big organizations instead of buying one or two solutions buy the entire software support for their company that is known as the Enterprise Resource Planning software (ERP).

As all the industries are moving ahead with cutting edge inventions and technologies everyday, one of the latest and most widely used technologies is “Cloud”. Cloud technology lets the companies keep their data at a secured cloud service provider’s database. From that database, services can be accessed on the fly and must faster. This has been a revolution as earlier the same services were given in house through personal databases and installations. In a similar manner, Australia also evolved by accepting the cloud based software solutions. All the big organizations such as Microsoft, working Point etc. have a bundle of services that include cloud services (their cloud management is cutting edge), personal installations etc. in the Accounting software space.  Cloud has really added to their piggy bank since the investment in cloud development is only one time and then the services can be provided to huge number of customers at the same cloud and thus not incurring any additional cost (Creed, Daly, Dowdle & Stevens, 2008). Also the investment is mostly in research and development and not on hardware or operational and overhead expenses. This also proves to be helpful for a longer period of time as is not in the case of hardware. All the organizations are getting more and more interesting since if they have the initial investment to do, it helps in reducing overall operations costs in the long run.

Cloud Technology and Accounting Software

The most interesting thing about the cloud services is that an organization can choose easy customizations based on their budget and scale. Thus, the services are not just limited to big organizations and this was a clear case in Australia. Earlier small organizations were not using accounting software since they could not afford conventional Accounting software services offered by big players (Mouritsen, Hansen, & Hansen, 2009). Cloud services has led them to use these services at optimum costs and also reducing their future expense and gradually shifting to a process based operations

But the use of accounting software in organizations in Australia can be compared with the organizations across of parts of the globe through the mentions in various theories. Frederick Winslow Taylor was an engineer and an inventor that combined his scientific knowledge into management principles to understand the affect of changes in the organizational operations that are brought by technology (Budhwar, Crane, Davies, Delbridge, Edwards, Ezzamel, Harris, Ogbonna & Thomas, 2002). His Scientific Management Theory can be applied to Cost accounting in the following four aspects –

Collecting and gathering all information from the changes and converting them into principles and formulas to complete everyday tasks

Always following a scientific approach towards achieving any goal and for that training of employees is required

Closing the distance between technology and employees so that they can gradually use technology for the daily work

To better adopt the technology and service, the work should be well divided between managers and workers so that everyone is on the same page regarding the technology.

Some of the challenges and gaps that currently exists in the use of accounting software in organizations are –

Lack of depth to Small organizations – In Australia, the use of accounting software is not increasing in small organizations at a good rate.

The futuristic planning by small companies is lacking. A company would not invest if they were not futuristic and confident about the technology use (Mistry, Sharma & Low, 2014). The decision on whether or not the investment should be made takes far too long because of which the companies looses on an opportunity to catch up with the industry growth

The overall technology implementation must be done within an organization in a consolidated manner. All the functions of the organization must be connected using an ERP system and thus Accounting software must not be used as a separate service. This is required in order to use the accounting service along with other services in order to fully utilize and improve the functions end-to-end

Application of Scientific Management Theory to Cost Accounting

It is highly important to install and use accounting services in order to reduce the changes of human errors that are made intentionally or by mistake. It will mainly protect the company from fraudsters who are trying to game the system for their unsolicited use. A software service will be hard to break into and can be regulated much more easily

Adopting accounting software along with other technology services will ensure a holistic organizational approach and understanding and thus the company would be able to move forward and compete other companies in a better way (Baldvinsdottir, Burns, Nørreklit & Scapens, 2010). As the technology is surely going to improve and thus big companies in Australia will be adopting those, small companies have to start integrating accounting services with there core business as the competition in future would be immense. But since the technology costs are becoming lower and lower, small Australian companies have a good sign going forward and thus it is further more imperative to adopt new technology in account services

Conclusions & Recommendations

The conclusion lies in the fact that the actual important of accounting software is un-ignorable. If a company wants to compete, cut on losses, stay in the business for a long run and grow at a higher growth rate than ever, technology and accounting service adoption is imperative. Also it is required internally for the growth of all the stakeholders as if the industry is moving forward, the company has to move forward also for its employees as the work satisfaction would exists if the employees are feeling themselves in the race or ahead of competitors (Cahill, 1998). If the company lacks in adopting technology services, the internal stakeholders satisfaction will also be lower. For deciding the accounting services a company want to adopt, a fair amount of industry research would be required, also taking reference from the bigger companies in terms of their adoption and implementation strategy will be of great help. At this point in time, Microsoft offers the best cloud solutions in the area of accounting. Also Working Point Accounting software would be a close competitor with good solutions. The major worry for Australian companies should consider is the growth and adoption of accounting services by smaller companies and thus players like Saasu and Myob will come into picture. Also it is important to understand where exactly the company needs improvement and decide the set of services to proceed with. Post vendor selection, the integration and adoption of the technology within the culture of the organization is important. A company should not only adopt the technology but also urge and educate every for its use. Thus, for a long-term vision and business, technology adoption must not just be a stepping-stone but should be imbibe within the values and culture of the company and an organization should strive to adopt new technology all the time in all the business spheres possible. 

References

Baldvinsdottir, G., Burns, J., Nørreklit, H., Scapens, R. (2010). Professional accounting media: accountants handing over control to the system. Qualitative Research in Accounting & Management, 7(3), pp. 395 – 414

Budhwar, P., Crane, A., Davies, A., Delbridge, R., Edwards, T., Ezzamel, M., Harris, L., Ogbonna, E., Thomas, R. (2002). Organizing/theorizing: developments in organization theory and practice. Management Research News, 25 (8/9/10), pp.1 – 193

Cahill, D. (1998). Key Account Management: Using key accounts as partners to get to the learning organization. International Marketing Review, 15(3), pp.205 – 214

Creed, D., Daly, D., Dowdle, P., & Stevens, J. (2008). A roadmap to help your organization become process-based. Journal Of Corporate Accounting & Finance (Wiley, 19(5), 77-83. doi: 10.1002/jcaf.20420

Gujarathi, M. (2005). Use Of ERP Software In Accounting, in Bill N. Schwartz, J. Edward Ketz(ed.). Advances in Accounting Education: Teaching and Curriculum Innovations 7(1), pp.207 – 220

Jadhav, A.S. and Sonar, R.M., (2009). Evaluating and selecting software packages: A review. Information and software technology, 51(3), pp.555-563.

Mistry, V., Sharma, U., Low, M. (2014). Management accountants’ perception of their role in accounting for sustainable development: An exploratory study. Pacific Accounting Review, 26 (1/2), pp.112 – 133

Mouritsen, J., Hansen, A. and Hansen, C.Ø., (2009). Short and long translations: Management accounting calculations and innovation management. Accounting, Organizations and Society, 34(6), pp.738-754.