This report is based on food and beverage organization called Sugar N Spice. The company is based in Brisbane where it solely operates from. Sugar N Spice cafe specializes in food products such as coffee, tea, chocolate, fruit juices, assorted breakfast, main meals, exciting food for children, food for different occasions such as parties or weddings, alcohol and so much more (Jeffery n.d.).
Food and beverages can be ordered directly by placing a call to their customer care representative. The organization uses QuickBooks cloud accounting package software for their bookkeeping requirements. The cafe is operated by the general manager who also doubles as the owner. He is assisted by key personnel to run smoothly.
Sugar N Spice cafe is a family business. The family hereto is the bonafide owner of the cafe. The general manager is drawn from the family. The cafe applies the functional organizational structure. This inherently implies that the hierarchical arrangement is such that different functions operate independently but report to the general manager (Campbell 2011).
The cafe breakdown of operations consists of the owners at the top of the chain, then there is the general manager, three managers who consist of the floor manager, the bar manager and lastly the kitchen manager. There is a bookkeeper who operates independently and reports directly to the owners and the general manager. Each of the managers reports directly to the general manager who then reports to the owners.
Each manager has a lead person who reports to him. Subsequently, each lead person has a host of staff working under him. The personnel working under the lead person report to the lead person and to the manager. The floor manager has a lead server and servers and hosts under his control. Similarly, the kitchen manager has a lead cook who also acts as the assistant manager and cooks, servers, and dishwashers under his span of control. Finally, the bar manager has the lead bartender and a host of bartenders under him.
As already indicated above, Sugar N Spice cafe employs the functional organizational structures to run its affairs. The four functional areas are accounting, bar management, floor management and the kitchen management (Freeman 2010).
The first inefficiency that could result from this structure is a breakdown of communication. The bookkeeper has no touch with the line managers. This implies that the managers could make a financial decision without his knowledge or by not involving him (Hicks 2003).
In addition, the structure presents an acute danger of conflict of interest. The general manager is also partly the owner. This means that he may make decisions without necessarily involving the rest of the owners (Leon 2014).
The organizational structure also lacks customer care representative, as a delicate business whose survival depends on the patronage of the customers, the structure presents a glaring oversight that could cost the cafe business as customer complaints and feedbacks may not be addressed (Porter 2008).
The structure also presents an opportunity for a power struggle. This is on two occasions. Firstly, the bookkeeper reports to the owners and general manager directly. He may choose to bypass the general manager and be reporting solely to the owners. The same case applies to the staff under the lead managers. They may choose to report directly to the line managers, therefore, bypassing the lead personnel. Lastly, the structure does not incorporate information officer hence critical business decisions may be overlooked because information is not abused to given the way forward (Hicks 2003).
Looking at the operations of Sugar N Spice Cafe, the following facts are resplendent, to begin with, the organization runs only one branch, it also runs a relatively common business in the food industry, which is well known. Lastly, it has very few employees (Leon 2014).
For these reasons, the most likely system acquisition method would be commercial software. This is because a commercial software has been developed for businesses with many common features. It also does not need to be customized to the needs of the organization are not unique. The number of employees is few hence no need for elaborate payroll system associated with either custom software or the ERP. Lastly, it is the most cost effective method for a small business (Jones 2014).
The sales procedure for Sugar N’ Spice cafe involves simple elements that are complacent within the food and beverage industry. The sale procedure for the cafe revolves around the customer and the servers.
When the customer first arrives at the cafe, they have the option of taking seats either inside or outside the establishment. A server from the floor management function approaches the customer and takes their name details and checks if they exist in the system. He then takes their order. The server then checks the availability of the order. If the order is ready, the server generates an order identification number. The order is then taken to the function concerned, be it the kitchen or the bar.
From the order identity number generated, a payment slip for the order is then produced at the functional level by the representative. The customer is then presented with their ordered food items. If the customer is satisfied with the order requested, a payment slip for the order is presented. When the customer has finished taking his order, they approach the cashier with the payment slip or alternatively beckon the server for to make a payment. When a payment is made, the customer is issued with a payment receipt and the transaction is concluded.
One of the control problems in the system is that of the duplicity of roles. This means that multiple users can be able to run orders and generated payment slips for the customers. This may lead to unaccountability in the case of a problem with the orders. The absence of ways to always track customer transactions is also a huge control problem. At the cafe, one of the biggest control problems is the multiplicity of duties done by the employees which make it hard to track individual transactions (Leon 2014).
In addition, the online ordering is not linked to what is currently available at the cafe which means a customer may book an item only to be informed that it’s not available when they come for the order. Lastly, the bookkeeper is not linked to the orders from the functional units which may lead to a lapse in cash flow accounting (Abbotsford 2017).
The possible frauds in the system include inflation of orders by the servers as they are not regulated. Another fraud would be a possibility of theft because all accounting is done by one bookkeeper. Lastly, there is a risk of asset misuse as the line managers are not linked to the bookkeeper (Leon 2014).
Development and adoption of the accounting software packages
The first roots of accounting as a discipline can be traced in history back to the 13th century when Europe began trading end masse with the Middle East. Businesses grew beyond the point of being run by a single person. Therefore business records were in demand to show business progress. The creation of double entry commenced in Genoa Italy (Jones 2014)
Up until the 1950s accounting was done using pen and paper. That is until IBM came up with ‘9PAC’ program in the late 1950s. As computers were expensive and stored limited data, the few businesses that adopted the command driven language inspired technological progress in the computing arena (Wienman 2015).
In 1973, the creation of the first true accounting system SAP RF with the capability of incorporating different business processes and accounting needs took precedence. The businesses that used the software registered significant efficiency that became the driving force for advancement in the accounting system (Leon 2014).
Jones (2014) observes that it wasn’t until the 1980s that adoption of computers became relatively cheap. This is when IBM developed the first personal computers that were available to small business enterprises. However, they used the lotus 123 spreadsheets which made accounting a manual entry affair.
In 1981, Peachtree introduced an elaborate word processor as well as a spreadsheet in a wholesome office suite. Closely following by, Intuit developed the first true graphical user interfaced accounting package in the year 1983(Leon 2014).
In the year 1989, TurboCash was launched in South Africa with the capability of automating ledge entries and reconciling account payables receivables and bank reconciliations in a record timeframe. TurboCash was shortly acquired by Pastel and was distributed under that name (Pendred 2016).
In the Australian market, the first remarkable accounting software package was introduced in 1993 by Teleware. Shortly, the accounting package interested Best Software who acquired it. In the year 1999, Teleware software took the proprietary name MYOB (Abbotsford 2017).
According to Pendred (2016), many other accounting packages have since made inroads into the Australian market including Xero, Sage, QuickBooks, Cash flow Manager, Reckon One, Saasu and Nominal among other accounting software. These are predominantly used by small and medium businesses.
For bigger businesses and multinationals, Enterprise Resource Planning (ERP) is the most preferred accounts management software owing to its many modules that apply to different sections of the companies and serve a large workforce (Leon 2014).
In the year 2014, a research done by Xero showed that Australia the leading the world over in adoption of accounting packages and generally cloud-based accounting system. Competition in the market has become rife with each company targeting different interest of the SME market. The competing packages have been adopted largely because of subsidies from the government and also owing to the relatively cheap price of acquisition (Porter 2014).
The current market for accounting software packages mainly consists of the Small and Medium Enterprises. That said, it is important to note that there are different segments within the larger market. Every software company has their own niche of customers. Xero and Intuit for instance only target the online cloud computing businesses. Other companies like MYOB have variations for both cloud accounting and traditional desktop customers (Redrup 2016).
In all likelihood, other accounting packages are mostly desktop versions. The selling features that endear the packages to the market are their reasonable stability and data security. This is because unlike the cloud-based accounting software that has to be updated regularly, the desktop versions do not need this. They are also easily scalable to export data to other packages (Smith 2013).
On the market size front, the government statistics show that the number of SMEs in Australia in 2016 were 2,171,544. Out of these businesses, only 10% use online cloud accounting software such as Xero or QuickBooks, the rest use desktop versions or office suite (Tadros 2016).
The market leaders in the Australian accounting packages are Xero which in the year ending 2016 had a total of 312,000 customers and having a customer subscription growth of 54 percent. However, it is important to note that Xero only operates cloud-based accounting in Australia and New Zealand. The figure given is only for Australia market (Abbotsford 2017).
The next market contender is MYOB which has a total of 195,000 customers. The business grew its customers by 37 percent in the year 2016. In contrast to Xero, MYOB runs both the desktop accounting package and the online cloud-based version. The company indicates that it has 70,000 customers in their cloud accounting system alone while the rest use the desktop applications (Redrup 2016).
The fastest growing accounting package is QuickBooks by Intuit. Intuit grew its customer base by 61 percent in the year 2016 to a total of 53,000 in the Australian market. The company offers only the cloud based version of their accounting system just like Xero (Tadros 2016).
Lastly, Reckon has a total customer base of 48,000 in Australia. Their customers include some of the top 70 % of Australia’s SMEs. Reckon was a bit late in moving their systems online and also their servers from the USA to Australia which contributed to losing their competitive edge (Niven 2010).
The market leaders have all moved to the cloud system which is unique and what customers want. They also have dedicated huge resources towards research and development to make innovative additions to their modules. Moreover, they have trusted partners who offer customized approach to the system modules. This is especially true for MYOB. Operating in different countries gives the market leaders economies of scale. Export marketing is also a source of competitive advantage as it shows that the market leaders can operate elsewhere and thrive (Parmenter 2015).
Some of the challenges experienced by the users include problems when migrating information from one package to another. In addition, the learning curve to seamlessly use the packages is steep. Next, the current monthly payment plans by the software companies are not exactly friendly to startups trying to break even. Security challenges are a concern for cloud accounting system. Rapid system upgrades are a challenge to many users. Finally, data ownership issues arise when hosting cloud accounting to different hosting companies (Niven 2010).
Conclusions and recommendations
In conclusion, it would be helpful if the accounting software data plans cost are friendly to SMEs. The software companies would ease the learning processing they held training symposiums or webinars to SME owners. Security challenges can be addressed if the software companies become the hosting companies instead of leaving the job to third parties. Software upgrades should be controlled and less frequently. Modules can be developed to ease data migration from one software package to another. Lastly, issues of data ownership can be addressed by the government imposing stiff penalties on hosting companies sharing the users’ information.
References
Abbotsford, J. (2017). Review of Cloud Accounting: Xero, Saasu, MYOB, QuickBooks | Business IT. [online] Growthpath.com.au. Available at: https://www.growthpath.com.au/Business-IT/review-of-myob-liveaccounts-and-xero-accounting-in-the-cloud.html [Accessed 29 Apr. 2017].
Campbell, D. (2011). Business strategy. 1st ed. Houndsmills, Basingstoke, Hampshire: Palgrave Macmillan.
Freeman, R. (2010). Strategic management. 1st ed. Cambridge: Cambridge University Press.
Hicks, J. (2003). Australian bankers form a fraud task force. Computer Fraud & Security, 2003(1), p.2.
Jeffery, R. (n.d.). Business review weekly. 1st ed. [Sydney]: BRW Group, p.34.
Jones, C. (2014). The technical and social history of software engineering. 1st ed. Upper Saddle River, NJ: Addison-Wesley, p.184.
Leon, A. (2014). Enterprise resource planning. 1st ed. New Delhi: McGraw-Hill Education (India) Pte Ltd., pp.40-65.
Niven, P. (2010). Balanced Scorecard Step-by-Step. 1st ed. Hoboken: John Wiley & Sons, Inc., pp.67-80.
Parmenter, D. (2015). Key performance indicators. 1st ed. Hoboken, N.J.: Wiley.
Pendred, M. (2016). Most Popular Australian Accounting Software Packages Compared Side by Side. [online] Horizon Business Systems. Available at: https://www.horizonbiz.com.au/popular-australian-accounting-software-packages-compared-side-side/ [Accessed 30 Apr. 2017].
Porter, M. (2008). Competitive advantage. 1st ed. New York: Free Press, pp.60-75.
Porter, M. (2014). The competitive advantage of nations. 1st ed. New York: Free Press, pp.20-25.
Redrup, Y. (2016). Xero to keep gaining market share in Australia, new MD Trent Innes says. [online] The Sydney Morning Herald. Available at: https://www.smh.com.au/business/xero-primed-to-keep-gaining-market-share-in-australia-new-managing-director-trent-innes-says-20160106-gm0b08.html [Accessed 28 Apr. 2017].
Smith, H. (2013). Converting to Xero from MYOB In A Day For Dummies. 1st ed. Sydney: For Dummies.
Tadros, E. (2016). QuickBooks users jump by 60pc but Xero, MYOB remains leaders. [online] Financial Review. Available at: https://www.afr.com/business/accounting/quickbook-users-jump-by-60pc-but-xero-myob-remains-leaders-20160929-grrwm0 [Accessed 29 Apr. 2017].
Weinman, J. (2015). Digital Disciplines: Attaining Market Leadership via the Cloud, Big Data, S. 1st ed. New Jersey: John Wiley & Sons, pp.92-95.
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