What Is The Concepts In Enterprise Resource Planning?
In this assignment, a literature review has been proposed that discusses the implementation of accounting software in the business procedures of the company. The organization that has been chosen for this report is Woolworths Australia. In this assignment, the organizational structure of the company has been explained. The operational problems that the company is facing due to the organisational structure has been evaluated and explained in detail. Several system acquisition methods have been discussed such as ERP, custom accounting software and commercial accounting software. A sales procedure flowchart of the proposed organisation has been provided in the report. Moreover, the report also discusses the control problems in the system and the possible frauds that the company might face when implementing the new system.
Moreover, the report also discusses the adoption and development of accounting software packages. The current market size of each software has been evaluated. The leaders of the market has been analysed and the reason for their competitive advantages has been proposed. The current challenges that users face due to accounting softwares have been evaluated and recommendations have been provided to counter the challenges.
The main objective of the Board of Directors is to increase and maintain shareholder value while checking that the Business activities in the organization are maintained properly. Their role is to appraise the performance, policies and strategy of the Group by serving and representing the interests of the prospective stakeholders (A brief history of Woolworths 2018). Every director has to comply with the rules that are outlined in the Board Charter. The Board Charter contains all their responsibilities, power and how they can represent the shareholder’s interests properly. Gordon Cains has been the chairman of the organization since 2013.
Brad Banducci is the Chief executive officer and the managing director. Other important members of the group includes Jillian Broadbent, Holly Karmer, Siobhan Mckenna, Richard Dammery, Kathee Tesija, Scott Perkins and Michael Ulmer.
Just below the Board of Directors comes the Group Executive Committee. They play an important role in the running of the business organizational goals. The members of the executive committee are responsible for carrying out administrative tasks and making decisions to ensure that the best quality services are provided to the customers as well as the employees working in the organization. They are responsible for reporting the progress to the Board of Directors by checking the management operations and decisions (Woolworths Group: Quality Brands and Trusted Retailing 2018).
Four permanent committees are set up by the Board of Directors to help them with certain responsibilities such as Nomination Committee, Sustainability committee, People performance committee and Audit, risk management and compliance committee (Woolworths.co.za 2018).
Due to this structure, the organisation is facing some operational problems. As the board of directors control four committees with different responsibilities, it becomes difficult for the employees to report back to several bosses. The Board of Directors has several members who have several quarries and resolving messages (Woolworths checkout shutdown 2018). The employees can become easily distracted with the message varieties and can get confused with conflicting instructions. Moreover, the committees are not linked with the other departments which is common for big organizations like Woolworths. But this organizational structure has its own share of flaws such as poor customer service. For providing optimum service to the customers, a good collaboration between the departments is necessary (Hyvönen 2013). A customer who is looking for a solution to a problem may be handed over to different departments because no one is sure whose responsibility it is to manage. This inefficiency can lead to the loss of business. The separate departments can also lead to lack of cooperation between the workers. The concept of teamwork loses its value as the team members of a particular department may be unwilling to cooperate with members of another department unless they are told to do so by a supervisor (??????? and Kharakoz 2015).
Another operational problem that can rise due to the separate departments is the lack of proper communication. While the basic hierarchy of Board of Directors and Executive committee can be understood, the problem arises between managers and supervisors of every departmental teams (Woolworths: the rise and fall of the department store 2018). In several instances, some supervisors and managers take up authoritative role which becomes confusing for the employees working in the team. This leads to ineffective decisions and results in a loss of time and money.
Commercial accounting software- These software can handle the accounting needs of small to medium sized businesses. The commercial accounting software can be used for any businesses and is used for creating customized functions for particular operations. The software has the capability to display graphs and reports to summarize the data and show the health of the business as well as tax reforms. Every commercial software that is available in the market has its own share of advantages as well as disadvantages. For example, Freshooks, Turbocash and Quickbooks are some examples of commercial accounting software. The software can be configured moderately and has a number of error detection layers that is used to prevent and detect incorrect information (ENTERPRISE RESOURCE PLANNING 2016). The software requires a lot of time ti install and requires an on-site taskforce to maintain the software.
Custom accounting software- In some instances, an accounting software is custom made for the business in particular. This may be implemented by accident when the company asks its employees to create a software for handling certain accounting tasks that are specific to the company. In time, the accounting software grows in capability and the business implements the software as a custom accounting software. In other cases, a custom accounting software is created when no other software can provide the specific accounting problem needs that are specific to the company. The custom made software is taken up by the organization when its accounting needs are not fulfilled by any other ERP packages or COTS (Kohler 2013). Although the custom made software are company specific, they tend to be buggy and requires periodic maintenance which is more than what commercial accounting software needs.
Enterprise Resource Planning or ERP software- The software helps to integrate information from various areas of the business to a particular database. This software helps to eliminate the issues that are associated with independent departments (just like Woolworths) which have to run their own department specific software (which does not share information with the other departments). The software takes some time to install and is quite expensive. This software can be managed by large organizations such as Woolworths. The software usually consists of a number of modules that has to be purchased separately. These modules focus on specific departmental operations one at a time such as HR, finance, accounting, distribution and inventory control (ENTERPRISE RESOURCE PLANNING 2016). ERPs have several advantages such as reduction of redundant tasks, applications in accounting, better customer services, improvement of financial data, distribution and supply chain management and standardizing critical business operations. ERP system is the most likely system acquisition method for the mentioned scenario as the system is perfect for managing independent departments in an organization like Woolworths where the Board of Directors directly control four independent departments running different operations (Arli et al. 2013). Moreover, Woolworths is large enough to afford such a costly system but in the end, the adoption of the ERP software will prove beneficial for the company in the long run.
The system flowchart of the sales procedure of Woolworths has been mentioned in the following diagram:-
The control problems of the ERP system are written as follows:-
Due to the high adoption costs as well as exposure to business risks, the adoption and development of accounting software packages are highly restrained. The conversion process also takes significant time and resources of the company. With the rise in technological innovation, companies face immense dilemma about whether to stick to their traditional way of accounting or move towards a better accounting option. As several softwares offer innovative advantages, the businesses are tempted to try the new software packages. But this adoption process is very cumbersome. Most of the software packages involve tedious processes and time consuming activities. The conversion activities need to be done with the regular works that is performed in the company on a daily basis (ENTERPRISE RESOURCE PLANNING 2016). The adoption process usually takes place while running both the new as well as the old system side by side to asure the business of improved results. The risk factor needs to be taken in context during the adoption procedure. While the new business modules takes time to develop, the company faces immense pressure from stakeholders to assure accuracy of the new system. Human errors can creep in while putting the information into the database during the adoption procedure and inconsistency of data due to lack of knowledge about the data structures are very common errors during this phase (??????? and Kharakoz 2015).
The market size of the accounting softwares normally varies from time to time and country to country. First of all, in Australia, 64% of the market share is taken up by Xero. 50% market share is taken up by Sage and Intuit has taken up around 20% of the market share. In the USA, Inuit has around 56% of the market share. About 33% market share is taken up by Sage and the rest of the market share is taken up by other vendors (Knox 2015). A recent study by SOHO showed that about 25% of the market share is taken up by Sage and 33% is taken up by Inuit. In mid-range institutions, Sage had a collective market share of 42% while Inuit had a meagre 22% (Monk and Wagner 2013).
Freshbooks is the most popular accounting software in the market at present. The software has several features for giving it the competitive edge in the present market scenario. The software supports subscriptions and recurring invoices. Online payment is supported by the software with several vendors such as PayPal and credit cards (Hyvönen 2013). The integration process of the software with other business applications is very smooth. As the software is a complete package, the need for other softwares is eliminated providing the user with the total control over the accounting operations from a single dashboard. Moreover, the pricing of the software is flexible. Also, the software makes secure backups of every data ensuring proper data security and gives the user versatility by letting it access the software through mobile apps.
Some challenges faced by users of accounting softwares are written as follows:-
Some recommendations for the proposed challenges are written as follows:-
Conclusion
To conclude the report, it can be stated that the Woolworths need to include ERP software in its business processes to counteract the operational problems that it I facing due to the organisational structure. The report has briefly discussed the organisational structure that the company is using currently. The errors and inefficiencies due to the organisational structure has been mentioned in the report. The advantages of ERP for Woolworths over the other two system acquisition methods have been briefly discussed. The operational problems that the company is facing due to the organisational structure has been evaluated and explained in detail. A sales procedure flowchart of the proposed organisation has been provided in the report. The report also discusses the adoption and development of accounting software packages in general. The current marketing size of several accounting softwares with respect to Australia has been discussed. The current market leader in accounting softwares have been mentioned. The report concludes by mentioning the current challenges that users face while using the accounting softwares. Relevant recommendations have been provided in the report.
References
A brief history of Woolworths, 2018. [online] Available at: https://www.woolworthsmuseum.co.uk/aboutwoolies.html [Accessed 2018].
Woolworths checkout shutdown, 2018: Supermarket apologises for …. [online] Available at: https://www.news.com.au/finance/business/retail/woolworths-explains-technical-glitch-and-apologises/news-story/f5476d22eea131858908768c181d5230 [Accessed 2018].
Woolworths Group: Quality Brands and Trusted Retailing, 2018. [online] Available at: https://www.woolworthsgroup.com.au/ [Accessed 2018].
Woolworths hit by nationwide technical outage | SBS News, 2018. [online] Available at: https://www.sbs.com.au/news/woolworths-hit-by-nationwide-technical-outage [Accessed 2018].
Woolworths Supermarket, 2018 – Buy Groceries Online. [online] Available at: https://www.woolworths.com.au/ [Accessed 2018].
Woolworths.co.za, 2018 | Food, Home, Clothing & General …. [online] Available at: https://www.woolworths.co.za/ [Accessed 2018].
Woolworths: the rise and fall of the department store, 2018.[online] Available at: https://www.theguardian.com/business/2008/nov/19/woolworths-retail-department-stores [Accessed 2018].
Arli, V., Dylke, S., Burgess, R., Campus, R. and Soldo, E., 2013. Woolworths Australia and Walmart US: Best practices in supply chain collaboration. Journal of Economics, Business & Accountancy Ventura, 16(1).
ENTERPRISE RESOURCE PLANNING. (2016). [Place of publication not identified]: SPRINGER.
Hyvönen, T. (2013). MANAGEMENT ACCOUNTING AND INFORMATION SYSTEMS: ERP VERSUS BOB. European Accounting Review, 12(1), pp.155-173.
King, L. and Thobela, S., 2014. Woolworths farming for the future. International Food and Agribusiness Management Review, 17(B).
Knox, M., 2015. Supermarket monsters: The price of Coles and Woolworths’ dominance (Vol. 6). Black Inc..
Kohler, A., 2013. Woolworths invests $20 m in data analytics. Retrieved 17/7/2013, from https://www. businessspectator. com. au/news/2013/5/2/information-technology/woolworthsinvests-20m-data-analytics.
Monk, E. and Wagner, B. (2013). Concepts in enterprise resource planning. Australia: Course Technology Cengage Learning.
Patel, K. and Vij, S. (2013). Enterprise resource planning models for the education sector. Hershey, Pa.: Information Science Reference.
??????? and Kharakoz, Y. (2015). Features of application of erp-systems in management accounting. Auditor, 1(3), pp.71-76.
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