Describe about the Management Accounting for The Current Market Size.
The following assignment presents the literature review on accounting software and packages used in Australia based on several articles and journals. The study covers the brief discussion on the history i.e. background of the researches, development and adoption of software and packages by the small and medium companies. Apart from that, the assignment highlights the information on current market size with respect to supplies and use of accounting software and packages along with the identification of such market leaders. Along with the these discussions, the study also covers the discussion on certain gaps and challenges that are faced by the users of accounting software.
Accounting software refers to the application of certain programs used to record and process the financial and accounting transactions of the organizations with the application of functional modules. Accordingly, the organizations are required to acquire specific accounting software or packages as per the nature and size of the business that helps in generating reliable, accurate and faster financial records. Article on “Implementing packaged Software” provides process of dedicated package implementation with the co-operation of major software vendor. It stated that previously, collection of data made from around 78 individuals in 18 firms along with the model support for the customer and package vendor (Lucas Jr, Walton and Ginzberg 1987). Article on “Differences in Critical Success Factors in ERP systems Implementation in Australia and China” provides ERP model implementation and success factors even when the implementation of such model was expensive. The study provided the high disruptive level in configuration and implementation of ERP software yet in most of the firms, it provided improved processes in recording and representing accounting transactions (Shanks et al. 2000).
During the earlier years, accounting records were prepared manually and using the formats similar to that were used during ancient times in order to monitor the availability, inflow and outflow of cash funds. As the time passed by, regulations of accounting became complex and accordingly updated methods of recording and representing financial information were adopted which involves journals, ledgers and other day books. Further, accounting records turned more complex due to economic revolution, increase in regulatory framework principles and other statutory and legal frameworks (Aleqab, Nurunnabi and Adel 2015). Additionally, advancement in information technology started evolving in the regions which included the transformation in maintain accounting records in the form of softcopy to provide easy, faster and accurate results. Accordingly, organizations started to implement different and various types of technical processes to record the financial transactions using spreadsheets. As the use of spreadsheets and computer programs became user friendly for the organizations, technological development introduced several software and packages of accounting to record the accounting transactions that provided more reliable and easy access (De Lange, Jackling and Suwardy 2015).
In the recent years, market for accounting software packages in Australia reflects comparative growth over the five years in accordance with the increase in online connectivity and advanced technology. Distribution of software packages for accounting has been changed by considering market share for more than 50%. For instance, Xero in Australia indicated around 65% of the market share for accounting software provided to the small business (Perera and Hewege 2016). On the contrary, other software providers have market share of around 20% to 35% in Australia along with the total revenue $3.00 billion while the annual growth in the revenue for software providers has been 9.7% approximately during 2012- 2017 in terms of around 1500 businesses (Perera and Hewege 2016). Increase in the organization’s nature of business, size includes large number of account balances therefore, manual recording of the accounting transactions is difficult, time consuming and prone to errors and mistakes. Therefore, adoption of accounting software package became essential and considered by many small and medium business organizations to record the financial transactions more effectively (Perera and Hewege 2016). Accordingly, firms like AACA, SOHO, Sage Enterprise hold maximum market share to provide the accounting software at 25%, 35% and 42% in the recent years. Though market share reflects the subjective measure in distribution of software packages with respect to the entire industry, market share for each organization with respect to each business activities reflects different market size (Perera and Hewege 2016).
In view of the current market information of Australia, the market leaders in providing accounting software package are Xero, Reckon, Saasu, MYOB and Intuit QuickBooks following the highest rank. It has been noted that Xero has the highest market share of around 65% along with 500,000 subscribers in Australia (Aleqab, Nurunnabi and Adel 2015). The competitive advantage of Xero in providing software package is the availability of wide range of accounting features in its software application as well as it provides online invoicing in a faster way. Further, the software package of Xero provides update notice as and when the subscribers are viewing the invoice. Similarly, Reckon holds around 50% of the market share that focuses in providing best accounting software including affordable “cloud accounting software” which makes the service provider competitive. Similarly, MYOB has been the best accounting software provider for small business organizations that charges around $50 per month as well as $99 per month in accordance with the software version subscribed by the organizations (Aleqab, Nurunnabi and Adel 2015). Accordingly, it can be said that the functions of the accounting software including its advancement and reliability makes the service providers competitive in Australia. It has been observed that MYOB provides 30- day free trial to the subscribers with each of the package, which is another competitive advantage that increased its market share (Aleqab, Nurunnabi and Adel 2015).
Along with the increased market share for the accounting software package, there are certain challenges that create significant gaps in the current market. On the major challenges that the users of the software package encounters is lack of security with respect to the accessibility of organizational data by the international parties. Sometimes, users of the package experience weak reporting service while retrieving the results and outcomes of record of financial information and monetary transactions. Another essential challenge on the use of accounting software is lack of user- friendly and customization and it requires competitive knowledge and skill to use the applications correctly. Absence of feature on bank reconciliation in the software application creates a market gap in the recent economy since it is important to reconcile the bank balance and balance in the books of accounts (Sinha et al. 2015).
In view of the previous and current study on the accounting software/ package along with the recent market gaps, it can be recommended that the service providers should upgrade the software to provide secured service. For any business organization, financial and other important details are confidential and it is significant to maintain the security while recording such information. Accordingly, service providers are suggested to incorporate more secured application so that the financial data of the users or subscribers cannot be used or viewed by other parties. Further, it is recommended to incorporate the feature on preparation of bank reconciliation, which is used to determine any errors or mistakes in the books of accounts.
Conclusion
Considering the study on accounting software/ packages used in Australia, it can be concluded that the evolution of methods on recording the accounting information in electronic mode established due to advanced technology. Along with that, increase in the nature and size of business, number of financial transactions and increase in complexities on accounting regulations enabled the adoption of accounting software. In the recent years, the market share of the service providers in Australia reflected huge growth with 50%- 65% due to advanced features and service applications. However, the Australian users experienced challenges on the use of software package, which created certain gaps in the current market. Accordingly, the software providers consider the necessary improvements and developments to eliminate the significant problems and provide advanced and reliable service to the subscribers.
References
Lucas Jr, H.C., Walton, E.J. and Ginzberg, M.J., 1987. Implementing packaged software. Information Systems Working Papers Series, Vol.
Shanks, G., Parr, A., Hu, B., Corbitt, B., Thanasankit, T. and Seddon, P., 2000. Differences in critical success factors in ERP systems implementation in Australia and China: a cultural analysis. ECIS 2000 Proceedings, p.53.
Aleqab, M.M.A., Nurunnabi, M. and Adel, D., 2015. Mind the Gap: Accounting Information Systems Curricula Development in Compliance With IFAC Standards in a Developing Country. Journal of Education for Business, 90(7), pp.349-358.
De Lange, P., Jackling, B. and Suwardy, T., 2015. Continuing professional development in the accounting profession: Practices and perceptions from the Asia Pacific region. Accounting Education, 24(1), pp.41-56.
Perera, C.R. and Hewege, C.R., 2016. Integrating sustainability education into international marketing curricula. International Journal of Sustainability in Higher Education, 17(1), pp.123-148.
Aleqab, M.M.A., Nurunnabi, M. and Adel, D., 2015. Mind the Gap: Accounting Information Systems Curricula Development in Compliance With IFAC Standards in a Developing Country. Journal of Education for Business, 90(7), pp.349-358.
Sinha, P., Wang, M., Scott-Kennel, J. and Gibb, J., 2015. Paradoxes of psychic distance and market entry by software INVs. European Business Review, 27(1), pp.34-59.
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