Discuss about the Strategic Information System for Xero Accounting Software.
The literature review depicts the usefulness of accounting software in medium and large scale business enterprises (Pazowski and Pastuszak 2013). The development and implementation of accounting software or packages offers the easiest dashboard facilities to the users. Christauskas and Miseviciene (2012) stated that the rapid use of accounting software in small and medium enterprises helps to increase the competitive advantages in the marketplace. Therefore, it has been contradicted that, constant distraction of these software leads to commercial gaps and the business users faced major challenges.
This particular literature review is based on an accounting software namely as Xero (Xero.com 2016). The New Zealand based software package basically develops cloud based accounting software to small and medium enterprises (Smith 2015). The products serve by Xero are based on SaaS (Software as a service) model.
Ranjan, et al. (2014) stated that, in the year of 1953, the first computerized accounting system was introduced when, an organization required to generate an automatic payroll management system. The first commercial computer was generated for Arthur Anderson consultancy (Accenture) to develop computerized accounting system. In the year of 1961, the computerized spreadsheet was introduced. Initially, the system was found to be very expensive than any other used by small and medium enterprise. Again Masanet (2014) opined that the micro computers used for commercial utilization in terms of word processing. Since, 1990 the usage of accounting software packages such as ACT and SAGE were started. It can be contradicted that nowadays, the modern cloud accounting software are widely using.
The software was founded by Rod Drury when he realized that the traditional computerized accounting system has become obsolete (Schroeter et al. 2012). Xero was formally established in 2006. The Xero market entered in United Kingdom and United States in 2008 to 2009.
Though, the reality is something different however still accounting software is suspended to eliminate the accountants. According to (Ranjan, et al. 2014) the system started to be utilized by the public on June, 2007 with a total investment of $15 Million. On the first day of trading the total amount of gain was 15% of the total investment. However, (Smith 2015) mentioned that the revenue is one of the biggest factors that come under consideration for the longevity measurement of accounting software. Cloud based software accounting is widely used by different firms to develop the overall financial ability. The Australian market I gaining advantages by adopting the cloud based software. Over 14% of the totals Australian SME’s are adopting this software to manage the financial sections. From a survey it is reported that within coming 12 month more than 39%of the total accounting companies are going to adopt the software (King 2015). The main reason of conversion from traditional system to cloud based accounting is due to its top security services which is a biggest concern in the SMEs.
Certain problems were encountered in the traditional accounting system of Australian SMEs. Firstly, neither the data nor the software was up to dated (Jain and Paul 2013). The implementation was only possible in the computer systems and the data can be transacted from one place to other; thus, not reliable. The key people were not capable to access the details and data backup or storage was too costly. The up gradation process was also time consuming and complicated. Whereas, cloud based software helped the organizations to overcome these issues. The development of cloud based system helped the owners to get connected to their data as well as to the accountants (Ryan 2013). It is cost effective, easy to handle and free of complexity. On the other hand, the software can integrate the complete ecosystem and make helps it to be scalable in the competitive market. The software is not needed to be installed and run the desktop like all the other systems (Pazowski and Pastuszak 2013). Instead of installation the SMEs can make the utilization on monthly subscription basis.
From current revenue analysis it has been found that, Xero has over 270,000 users all over Australia. The number of users helps the organization to keep their market share at the top. The competitors give global opportunity to Xero as, MYOB focuses on locally and Xero focuses worldwide (Smith 2015). The company had about 15% market share and they had a great momentum of work also. It has more than 11,000 partners worldwide and over 250,500 consumers all over the world (Xero.com 2016). Moreover, massive growth is expecting by Xero due to rapid growth of consumers throughout the world. In the initial stage of the financial year, the subscription was only followed in Australia and New Zealand but not outside (Trivedi and Gangwar 2013). Apart from this, the operating revenue of Xero was increased by 72% to $NZ43.4 Million.
From the report of IDC it has been determined that, the demand of cloud computing based accounting system is increased from $18.0 billion in 201 but it enhanced to $19.0 in 2014 (Schroeter et al. 2012). The SMEs perform as a catalyst to the software. Rather it can be said that, the enterprise level tools are now available everywhere (King 2015). The revenue growth has developed in a spectacular rate with the gain of above 500%. Not only this but also about past six years the rate has become 84.09% and yearly result is NZD$30.30.
Figure 1: Market revenue of Xero
(Source: Xero.com 2016)
Xero accounting is cloud based software used especially for small and medium business. Xero software is generally used by SME’s of Australia and New Zealand for accounting and there is some other software which is stands up as a biggest competitor to Xero (Ranjan, et al. 2014). MYOB is one of the toughest competitors of Xero. On the other hand QuickBooks is another competitor to Xero. The cloud computing concept threatens the competitors. The dashboard used by the software show the entire storage at a time and at a glance (Christauskas and Miseviciene 2012). Not only has this but also for the usage of this oe employee needed not to be an expert of finance or accounting. The software possesses great integrated system and therefore, the export and import of data on an API (Application Programming Interface) platform is also feasible than other software. The financial budget, vendors, consumers, fixed assets are the items for import and export with the help of the accounting software (Ryan 2013). The other reasons are collaboration with other users, the rich features, fastest and easiest processors and reasonable price rate.
From other survey sources it has been found that the major competitors of Xero are as follows:
|
Software name |
Impact |
|
Blinksale |
A user friendly platform that provides the users to send their feedback |
|
Clear Books |
Online accounting software used by SMEs |
|
FreeAgent |
Online accounting including transaction management |
|
Intuit |
Online accounting including transaction management |
|
ClientBiller.com |
Billing Tool |
|
Magnifinance |
Cash flow management software |
Table 1: competitors to Xero
(Source: Xero.com 2016)
During the survey it has been found that the system is facing different issues regarding cloud based accounting software. The major issues identified are as follows:
Competitive market: Much other soft accounting software is evolving in the Australian market thus, the rate of future debt is found to face difficulties in coming future (Jain and Paul 2013).
Costly: The rate of investment for adaptation and development is high and the maintenance cost is also higher than the other systems.
Future scope: Due to implementation of much other software in coming future the profitability is in doubt. Not only is this but rate of high loan also possible (Ma 2015).
Security issue: Xero software is not enough secured thus, stealing of data and possibility of hacking is present. Due to the rapid changes in tax the security will be interrupted by the users.
The software can become more efficient by adopting some of features to it. The recommendations to the system are as follows:
Security: The dashboard system utilizes by Xero should be updated and customized so that the secured data cannot get hacked by the unauthorized an unauthenticated users.
Allowance of quotes: Quotes are needed to be implemented so that small business will be capable to share their views with all the users and according to it changes can be made.
Inventory management: Inventory management capabilities should be updated in order to track the quantities and values of the items.
Integrated system: The payroll system is now completely needed to be integrated. In the integrated system the employees will be able to look for the payment history and time of transaction as well.
Conclusion
From the overall discussion it can be concluded that, Xero is one of the most widely used accounting software in Australia and New Zealand. It has covered the history of traditional accounting software and the ways in which the advanced accounting software Xero is develop and adopted by different SMEs are mentioned in this review. Apart from this, current market revenue and leading challenges are identified. Along with this, some recommendations and challenges are also mentioned in this literature.
References
Christauskas, C. and Miseviciene, R., 2012. Cloud–computing based accounting for small to medium sized business. Engineering Economics,23(1), pp.14-21
Jain, R. and Paul, S., 2013. Network virtualization and software defined networking for cloud computing: a survey. IEEE Communications Magazine, 51(11), pp.24-31.
King, A., 2015. Xero soothes auditors on automation.
Ma, X., 2015. The adoption of cloud computing for small and medium accounting firms.
Masanet, E., 2014. The energy efficiency potential of cloud-based software: A us case study.
Pazowski, P. and Pastuszak, Z., 2013. Cloud computing–a case study for the new ideal of the IS/IT implementation. In International Conference on Management, Knowledge and Learning (pp. 855-862).
Ranjan, R., Buyya, R., Leitner, P., Haller, A. and Tai, S., 2014. A note on software tools and techniques for monitoring and prediction of cloud services. Software: Practice and Experience, 44(7), pp.771-775.
Ryan, M.D., 2013. Cloud computing security: The scientific challenge, and a survey of solutions. Journal of Systems and Software, 86(9), pp.2263-2268.
Schroeter, J., Mucha, P., Muth, M., Jugel, K. and Lochau, M., 2012, September. Dynamic configuration management of cloud-based applications. In Proceedings of the 16th International Software Product Line Conference-Volume 2 (pp. 171-178). ACM.
Singh, S. and Chana, I., 2013. Introducing agility in cloud based software development through ASD. International Journal of u-and e-Service, Science and Technology, 6(5), pp.191-202.
Smith, H., 2015. Xero for dummies. John Wiley & Sons.
Trivedi, S.K. and Gangwar, R., 2013. Cloud Computing: A Tool For Enhancing The Computing Power. International Journal of Information Technology & Computer Sciences Perspectives, 2(2), p.555
Xero.com., 2016. https://www.xero.com/.
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