The aim of this research report is to present an account of strategic significance of information systems in context of critical organisational factors that may determine the success or failure of the organization’s investment in the system. The report used a wide variety of secondary resources including relevant books, journals and professional magazines to present an analysis of usefulness and drawbacks of accounting software systems keeping in view the organisational objective, operations and structure. It discusses operational issues faced by Australia based Café, Coffee Supreme along with its organisational structure, sales procedure and system drawbacks of its procedures. Further, the report seeks to identify the development and adoption of accounting information systems, its current market size and market leader in Australia and gaps software adoption along with recommendations to fill those gaps.
Organisational structure can be looked upon as a skeleton of an organisation around which all the operations, communication and knowledge flow with an organisation revolves. Many scholars believe that organisational structure is closely related to a firm’s objectives and strategy is closely related to its structure and influence its operational and knowledge management processes.
Coffee Supreme, being a small Australian organization looking for expansion currently operates as a mixture of functional structure with product based and geographical divisional structure. The café operates at different locations in Australia and New Zealand (Coffee Supreme, 2017). As such the organization has geographical division with functional structure where divisional managers are in-charge of overseeing the financial, hospitality, marketing, operations and procurement functions at the shop site. Along with this, the organisation also provides coffee to other cafes thereby acting as a wholesaler. This division works separately and includes all the functions right from procuring the beans to roasting and selling it to its customers. This not only allows the organisation to focus on two separate businesses, but grow them independently by quick decision-making. Thus, this structure is appropriate because while divisional structure allows Coffee Supreme to focus on its market offerings and provides it with the required agility to adjust its strategies to suit market conditions, functional structure facilitates overall monitoring and control of activities being carried out at the organisation.
While divisional structure combine with functional structure is best fit for an expanding organization with different product line, such structures lead to repetition of similar activities and often require duplication of tasks and resources thereby leading to wastage of financial resources. This can further lead to operational inefficiencies due to repetition of expenses and reduction in profitability. Moreover, organizations operating in divisional structures tend to develop separate units that confine to particular markets. This often leads to difficulties in resource allocation, communication and knowledge sharing and lack of expertise in functional areas thereby leading to ineffective decision-making at the time of crisis. On the contrary, divisional structure allows managers to concentrate on different product lines and facilitate quick decision-making by de-centralizing the process.
Information systems can be built in-house or can be acquired from vendors. There are many different system acquisition methods including commercial software, Enterprise resource planning and customized software. Just as an organization needs to identify appropriate vendor for its AIS implementation, it also needs to identify appropriate acquisition method keeping in view its requirements, costs and finances available. Thus, it can decide to either make or buy software accordingly.
Coffee Supreme is a small business organisation that is looking to expand. However, being a small business, it opted for acquisition of commercial software in the form of turnkey systems. Turnkey system can be described as a software acquisition method that is sold as a package of both hardware and software that is installed by the specialized vendor and the user “turns on the key”. Such systems are beneficial for small business as customized software to suit the needs of specific industry thereby allowing user to customize their data as per industry specifications. Moreover, these off-the-shelf softwares are easy to acquire and require less time and money. However, they provide only standardized services that are relevant within the concerned industry.
Sale forms a critical part of organisational activities. It not only determines the profitability, but also the continuance of the organization’s business and demand for its products. Thus, it is necessary that every organisation is aware of all the activities and customer touch points included in a single sales procedure.
Sales procedure flowcharts are useful tools that equip mangers with ability to identify and analyze every step in sales process and all customer touch points during the same. This is further useful to identify any gaps in service delivery to improve the process and reduce changes of risk and fraud in operations.
Figure 2: Sales Procedure at Coffee Supreme
It can be seen that when a customer places order, the information is not only sent to kitchen but is also used different steps. It is sent to inventory database to check the required inventory and order is sent to order database. Then the manager uses this information to generate reports and procure inventory at the coffee shop.
The system flowcharts are not only useful to identify activities involved in any procedure, but they also help to identify any type of control issues inherent in the system or risk areas where data can be misstated to conduct fraud. Moreover, analysis of system flowcharts can help in identifying areas where controls are required so as to enhance the process efficiencies and effectiveness.
It has been identified that accounting systems and procedures are prone to many control problems and frauds. He posits that accounting system users can conduct fraud by misrepresentation of information or manipulation of information while feeding data into the system like misrepresenting inventory costs, over estimating expenses or revenues and vice versa. Moreover, such systems are dependent of new technology updates, data accessibility, and data availability which may pose challenges for the organization. Additionally, unauthorized access and system malware pose risks to confidential data thereby establishing a requirement of system controls to reduce risks.
The contemporary business environment is highly competitive and required quick decision-making, data mining and data analysis to gain insights into different aspects of business. As such, organisations are increasingly adopting and implementing different accounting software to ensure data availability to take forward looking decision for the benefit of their organisations. Alamin et al. (2015) believe that the foremost reason behind organisations adopting accounting software is that such software facilitates data organisation and management in a manner that it is easy to identify the financial position as well as problem areas related to the business. Moreover, it is found that accounting softwares are beneficial for organizations to improve their operation efficiency by providing the much needed agility and flexibility. This is achieve by the timely decision making due to availability of reliable data and better quality of reports, greater knowledge flow due to increased communication, wider system integration and information sharing.
All these factors were also the reason behind Coffee Supreme’s adoption of Xero accounting software. According to company’s CEO, Al Keating, Xero’s high integration with cloud and other softwares allows him to work easy on the software and provides him with require financial information and figures related to costs, cash flow, payment, inventory and others in user friendly manner (Xero, 2017).
The current Australian market is full of many options and types of accounting softwares for small businesses. The computerization of accounting function even in small businesses has increased the popularity of electronic reporting and as such the market is full of strong players like Freshbooks, Xero, Zoho Books, Intuit Quickooks, Sage, Accounting Pro, MYOB and many others that provide different features and applications at varied prices (Yakal, 2016). Looking at the rapid increase in AIS adoption, Ismail and King (2014) found that the growth rate of revenues of AIS providers is around 9.7%. Moreover, according to Garter report (2014), the accounting software industry in Australia is growing at the pace of 7.7% per year as a result of increased adoption and technology integration of business with AIS.
A study conducted by Tijani and Mohammed (2013) found that Intuit QuickBooks are leading the Australian AIS market. However, a recent report released by Canstar Blue found that Xero leads the competition as the best accounting software for small businesses leaving behind Intuit QuickBooks and MYOB. Xero’s ease of use, high integration with cloud and other softwares, customer services and value for money provide it with competitive edge to excel in the industry (Xero, 2016). Moreover, Yakal (2016) identified that Xero provides the maximum number of features to support small businesses. Moreover, Ngai et al. (2011) found that Xero currently accounts for 70% market share of the Australian accounting software market due to its features like highest integration with cloud, easy access with mobiles and tablets, user-friendly interface and ease of use. Thus all these features make Xero the market leader and most loved AIS as compared to its competitors.
Additionally, in context of Coffee Supreme, Xero was adopted because it provides industry specific features. As such, it also offers certain customized features that are useful for cafes operators. It also proved industry specific customization for organisations operating as NPOs, hospitality, retail, construction and many more (Xero, 2017). This is useful for organisation and also helps in saving costs and time.
Even though, accounting softwares are beneficial in numerous ways, they also pose challenges for the organizations that choose to adopt them. The foremost challenge faced by organisations planning to adopt accounting systems is that of organisation wide implementation of software and integrating its current processes with the same. Though accounting software is adopted by businesses that are small in scale and scope, it still needs to look at its requirements and needs before selecting accounting software. Moreover, investment in accounting systems is strategic in nature. Hence, organisations also face immense pressure from financial front in making correct decision so as to enhance the return from investment. Technological changes, system updates, new requirements and configurations and high leadership and resource commitment on the part of organisations are also certain aspects that challenge organizations while AIS adoption.
In addition to this, organisations may find gaps in their actual capabilities and the requirements of the software implementation. Managers need to identify that skills gap is the major issue faced by organizations during software adoption. Additionally, there may be gaps while implementation in terms of duration, resources and benefits incurred.
Conclusion
It can be concluded that accounting software systems are becoming important part of business organisations. They are looked upon as a tool to bring in operation efficiencies and knowledge and data management. Moreover, the growth rate experienced by the industry points towards the rate with which Australian organisations are embracing the new technology for their benefit. The analysis revealed that Xero is currently the market leader in Australia in AIS for small businesses. Its ease of use, wide integration and usability on different platforms provide it with the competitive advantage over its rivals. However, adoption of AIS is challenging in terms of skills requirement, financial investment required, duration delays, leadership and resource commitment and efforts required for enterprise-wide implementation.
Nonetheless, to overcome the gaps faced by organisations during software implementation, it is recommended organisations proactively manage the change process by continuous communications with employees and training them to gain new skills required for operating the new software. Moreover, they should ensure that the new system meets the requirements so that investments provided the maximum possible benefits.
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