This report is prepared to develop the understanding about the accounting information system. In addition to this, this report will also consist information about the components of accounting information system. B. Bakery is selected for this report. The purpose of this report is to evaluate different accounting software packages and after this evaluation recommending the appropriate accounting software package to the business.
What is a Baker?
A specialized type of pastry chef is called a Baker. A baker is someone who mix the ingredients and bake according to recipes to make different types of breads, pastries, and other baked goods (Hamelman, 2012). The goods which a baker made sold by grocers, restaurants, wholesalers and institutional food services. Bakers mainly do the following works:
Business activities/processes of a bakery:
Almost every bakery business follows the same steps from start to finish to bake something. These steps ensure that the bakery is producing the best quality bread without compromising taste, texture and nutrition. Following are the step that an organization follows to bake:
Step one: Ingredient selection and scaling:
To make good bread it is very important for a baker to use good ingredients. When a baker choosing flour for bread making, he should look for one labeled as “plain flour” or as “bread flour”. Most of the breads are made with the four basic ingredients; water, flour, salt and yeast or sourdough starter (Gamelas, et al., 2016). It is very important choose the best ingredients and measure those ingredients fairly, they can measure the ingredients in grams in scale because scaling is much faster and more accurate than measuring in volume.
Step two: Mixing:
Mixing process involve two stages; the first one is to incorporate ingredients and the second is to develop the structure dough. A baker can mix the ingredients with hands or he can use machines for this work. Dough can be mixed in a tabletop mixer or can be kneaded by hands.
Step three: Primary Fermentation:
This is the step where the yeast starts to do its work, it covert sugar into carbon dioxide, alcohol and organic acids. A primary fermentation can be sourdough starter or a yeasted starter (Coda, et al., 2014). The primary fermentation time of every dough depending on its formulation.
Step four: Divide and pre-shape:
This step starts after the dough is properly fermented. In this step baker divide the fermented dough into the desired size and give the divided piece a pre-shape.
Step five: Bench rest:
After the dough has been pre-shaped, the baker should provide rest to the dough for a short time before final shaping. This bench rest normally takes 15-20 minutes.
Step six: Final Shaping:
After the bench rest the next step is to making final shape of the dough. There are mainly four basic shapes in bread making; the boule (round), the baguette (stick), the pan loaf (a blunt-ended batard) and the batard (an oval shape). After the shaping of the dough, the dough should be place somewhere to rest during its final fermentation (Keller and Rouxel, 2016).
Step seven: Scoring:
Scoring is a decorative function, in this step most loaves will be scored or cut just before they are baked.
Step eight: Baking:
After the scoring, the next step of this process is to bake the lean doughs. The lean doughs typically baked at a very high temperature, around 230-245°C.
Step Nine: Store and delivery:
After the baking is completed, the logistic and inventory management will need to store those products safely because bakery products don’t have a long life so the inventory management should store the products at a cool place and they should make delivery of those products as soon as possible to different shops, pubs etc.
Following are the procedures that are indispensable to be performed by a bakery firm:
Supply Chain Management process:
Supply chain management process plays a very important role in running key operations for almost every organization. If a firm don’t have a successful supply chain, than all the processes will halt at the floor level and it bring down the overall results. Supply chain management involve material, information and finance because these factors move in a process and SCM involve coordination and integration of these factors because these factors move in a process from supplier to manufacturer to wholesaler to retailer to consumer (Tummala and Schoenherr, 2011). Supply chain managers have a responsibility to ensure the supply chain to make this process cost efficient. It involve five basic stages to make the SCM process effective, such as; plan, source, execute, deliver and return.
Production Process:
Transformation of range of inputs into those outputs that required by the market is called production process. This process includes two main sets of resources; first is the transforming resources and the second is transformed resources. The transforming resources includes those things that carry out the transforming processes like; machinery, people, computers and building (Soesanti and Syahputra, 2016). On the other hand transformed resources are the components and raw material that are transformed into an end product. Any production process include many steps and at each step value is added in the course of production and this make the product more reliable and it improve the quality of product.
Human Resource Management Process:
Human resource department is that department which hires the employees and provides them training, provide compensation and benefits to employees and define work for the employees in the organization. Human resource management involves the following processes:
Accounts Process:
Accounts process is a sequence of activities that involve the recording of cash inflow and cash outflow. Accounts process is very important for any business because it works like fuel to the whole business process. The accounting process is starts with a transaction and end with the closing of books (Thiessen, et al., 2013). Accounts process helps a business to know the revenues and expenditures of business and how much profit the business is earning.
The success of a business surely linked with the performance of supply chain of a business. Those companies which have high performance supply chains achieve revenue growth more than the average within the industries. Effective supply chain management ensures the availability of raw material at production stage at proper time. Effective supply chain management help the manufacture to reduce the overhead costs and direct sales cost (M. Hult, et al., 2013). Cost efficient supply chain can reduce the unnecessary costs and can increase the revenue. If the supply chain of a business is good than the distribution process of the company will run smoothly and the customers will satisfy with the services.
Through the good production process, management can increase their productivity and can utilize their resources. For a good production process, Company should make well planned strategies that make the best use of resources. For a best production process, production management department decide that how many workers are required for a particular production, which equipment should be used, and what process will provide best product quality to meet the need of customer. Effective production process increase the profitability of a company and it indirectly increase the investment.
Strategic human resource management is a process of linking the human resource functions with the strategic objectives of the organization to improve the performance. Human resource management helps an organization to evaluate the current HR policies and it help to replace the outdated policies. HRM is very important for building team in organization and increasing the team spirit (Boxall and Purcell, 2011). HRM is also very important for monitoring the progress of organization towards achieving its pre define goals. HRM also evaluate the performance of employees and provide them remunerations and profit for their performance.
Accounting is known as “the language of business” because it is a basic tool for recording, reporting and evaluating the transactions of a business. Accounting process is very important for a business because from this accounting process business can know the total income and expenditure of business. Accounting processes documents of all the activities related to finance in a business (Zimmerman and Yahya-Zadeh, 2011). Accounting process helps an owner to evaluate the past performance and the present performance with the help of the accounting documents.
There are some software features that should be considered by a company to achieve the investment objectives. Following are the features:
Reporting and analysis:
In today’s challenging business environment information is power. That’s why any accounting software package that a company wants to buy should have robust reporting and analysis capabilities. Reporting and analysis function of accounting software helps an organization to confirm the regulations of government and industry (Lewis, 2014).
Graphics:
Accounting is mostly based on the number system, so the accounting software should have a good graphic quality so the charts and other illustrative formats can be represent with high quality graphics.
Automation:
Support for simple accounting transactions and basic financial task is not enough for many businesses. There are some special requirements of companies for the accounting software. Some companies wants full automation of employee expenses, payrolls and time sheets, company and departmental budgets, purchase requisition and other financial activities (Pleuss, et al., 2012).
Automatic Update:
This is a very important feature of accounting software because using outdated software is like eating food that has passed its expiry date. If a company using outdated accounting software then it may feel some problems in its accounting records. Tax laws, regulations and financial practices change over time, so it is important for businesses to use that accounting software which have automatic update feature.
Internet connectivity:
In today’s world every person is using the internet and every business is connected with the internet so it is very important for accounting software to follow the crowd (G. Simkin, et al., 2014). So it should be consider by the company to choose that accounting software which have the ability to send or receive digital documents and handle electronic fund transfer.
Security:
Security is very important and essential feature of accounting software that should all accounting software have. Every business depends on its accounting software. In case any data lost than it can be a dangerous thing for business because it can reveal the secrets of the business and it can damage the business. So the security feature of accounting software is very important for business and while choosing accounting software the owner should check the security level of that software.
Data sharing:
Good accounting software should have the data sharing feature so user can easily share the data with other departments (Pearce, 2012). This feature make the access of data easy for all related departments of organization such as; HR department, Accounts department, Sales department and management.
Customization:
A good accounting software should have the customization feature so the user can customize it according to the need and requirement of business. With this feature it is easy to customize the data and report according to the need of clients.
Scale ability:
Today organization is small but in future if the business grows and increases than the accounting software should have the capability to increase the scale ability. With the growth of business it is not possible to change the accounting software because changing accounting software is very expensive (Guo, et al., 2011). Therefore accounting software should have the scale ability feature.
In order to make effective use of accounting information in business, several vendors of accounting software package including SAP, MYOB (Mind Your Own Business), Xero, and NetSuit can be considered by this firm. For conducting comparative analysis over the functions and features, the website of three vendors including MYOB, Xero and SAP are gone through.
The key categories of accounting software include low, medium and high. In accordance to the requirements of B Bakers, low and high end categories of software are not selected. High/end accounting software is more useful in large size firm, which has operations in the diverse countries and huge number of employees. In such organization, accounting information is quite diverse and complex and thus high end software is more suitable to fulfil this need (Whittington, 2012). Similarly, accounting software of low category allows firm to perform basic functions such as accounts’ development and their storage, formulation of financial statements and calculation of basic accounting data in regard to a market (Hall, 2012). Thus, it serves the accounting information needs of a small organization.
The accounting software of medium category is suitable for this business as it employs more and less than employees from a small and large organization respectively. It has 70 employees that operate in single market but likely to experience expansion in business due to increase in demand of its offerings. Medium software may allow this firm to manage the accounting data with more efficiency and less complexity. The high end software is more difficult to implement and use and thus it will create huge cost (Andrea Renwanz Boyle and Flores, 2010). Through medium category software, B Bakers may fulfil accounting needs of its growing business in relatively less cost and time.
By comparing the features and functionalities of two accounting software, it would be more easy to make informed decision regarding the selection of IT system for B Bakers. The comparison of two accounting software is depicted in below table:
|
Functionalities |
MYOB |
Xero |
|
Size of Business |
Small to large |
Small to medium |
|
Limit of transactions |
Unlimited |
Limited |
|
User friendly |
Less user-friendly |
More user-friendly |
|
Update |
Partial Automatic |
Fully Automated |
|
Ease of Access |
Low |
High |
|
Add-ons |
Less |
More |
|
Deployment and tailoring on cloud |
Less experienced |
More experienced |
|
Installation |
Required |
Not required |
|
Supporting operating system |
Windows and OSX |
Windows, Linux and OS X |
|
Reporting |
Standard |
Different formats |
|
Back-up |
Less time consuming |
More time consuming |
|
Security |
Low measures |
High measures |
|
Customer Support |
Available (12 hours) |
Available (24*7) |
|
Formation of budgets |
Yes |
Yes |
|
Management of accounts in terms of currency |
Multi-currency |
Multi-currency |
|
User accounts |
Multiple |
Single |
|
Integration with third party |
No |
Yes |
|
Control over user access |
No |
Yes |
|
Accounting App |
Yes |
Yes |
|
Multi-browsing |
No |
Yes |
|
E-commerce |
Requires Ad-on |
Yes |
|
Managing Inventory |
Yes |
Requires Ad-on |
|
Business Analytics |
Basic |
Basic |
The above table depicts the similarities and differences between accounting software such as Xero and MYOB. It is determined from the above table that these software packages have some similarities and differences, which has potential to influence the IT investment decision of B Bakers. Both accounting software provide facility to perform business analytics and data reporting, budgeting and forecasting and accounts management in multi-currency (Graphiq Inc., 2017). Although the features of both software packages are quite similar but the main difference exists between the capacities of features. MYOB is suitable to small to large organization but has capacity to handle unlimited transactions. In contrast to this, Xero is suitable for small to mid size organizations but facilitates fully automatic update, more add-ones, high ease of access and multi-browsing (GetApp, 2017).
MYOB requires installations to update the system, whereas in Xero, it happens automatically and due to this, the later one is less time consuming and more ease of access as well as user friendliness. The number of add-ons is quite high in Xero in compare to MYOB. MYOB provide facility to develop performance reporting in both horizontal and vertical formats and to perform back-up data in less time than Xero (Xero, 2012). From the security measures, Xero is more competent as it has more measures than MYOB.
Xero has more experience of developing cloud based accounting software and due to this, it has more potential to design, deploy and tailor the software than MYOB, which makes this less time-consuming and more user-friendly. Similarly, customer support service exists in the both software packages but only Xero provides 24*7 services to the customers and allows third party integration (Xero, 2017). Xero also controls the user access that confirms more security than MYOB.
For performing e-commerce activities and inventory management, add-ons are required in MYOB and Xero respectively. Multiple user accounts are possible in MYOB whereas single user account is facilitated by Xero (Graphiq Inc., 2017). Thus, it can be stated from the above table both accounting software provides facility to perform basic accounting functions but capacity of their features is quite vary to each other.
In above section, a comparison between the accounting software packages namely Xero and MYOB is performed to ensure informed selection of software for bakery business. In bakery business, firm offers wide range of goods to the number of different types of customers including pub-chains and supermarkets and thus costing and pricing become a key management issue. In growth phase of a business, the accounting function is likely to become more complex to handle (Horngren et al., 2012). Xero can be more relevant to the business needs of bakery business. In bakery business, several activities such as production, procurement, storage and delivery are performed and the cost associated with each activity is required to calculate to make pricing decisions. Xero is less complex to implement and upgrade and thus bakery business would be able to fulfil the needs of accounting information without increasing complexity (GetApp, 2017).
Apart from this, cost is also major concern for growing business, which can also be addressed through the implementation of Xero as it consumers less time and resources than MYOB. It makes it a cost-effective option for bakery business. Similarly, bakery business has inventory with the perishable nature thus it is also a key areas of concern. In absence of inventory management, bakery business may incur high stock turnover and it would affect profitability and growth (Scot, 2010). The customization of inventory management tools is possible and easy in Xero than MYOB and due to this former one is more relevant to the needs of a bakery business. In MYOB, bakery business will need to install or update number of add-ons and this inflexibility may affect its ability to meet the changing needs of business more quickly and to remain competitive in the market (Thomas, 2015).
The difference in customer support services of both vendors also crucial aspect to consider the bakery business as it has no skilled staff and prior experience to implement, install and update the accounting software. Xero offers customer support services for 24 hours, whereas MYOB services are limited for 12 hours (MYOB, 2017). Due to this, MYOB is less suitable for a growing bakery business which would need support anytime to handle the installation and use of the new accounting software and get benefit from this.
The increasing diversity in the offerings of a bakery business due to the changes in the needs and preferences of customers is likely to create need of a flexible accounting information system. Xero is more flexible in terms of third party integration, multi-borrowing and user access control than MYOB and due to this; accounting information needs of bakery business could be more satisfied with this (Xero, 2017). Due to the facilities of automatic update, multi-browsing and online access over data, it would be possible for this firm to record, update, access and evaluate the data regarding each operation on the real time basis and to take informed business decisions accordingly. It could help bakery business to improve efficiencies of operations and to offer goods at the competitive prices. Bakery business may choose to expand the market through online platform and for this e-commerce facility is quite critical (Kempf et al., 2011). Xero has e-commerce functionality but in case of MYOB, add-one requires. It also makes sense to select Xero for bakery business over MYOB.
Conclusion
From above discussion, it is determined that meticulous planning is required to make selection of AIS for a business. The planning includes definition of business requirements, development of business needs and the determination of system requirements. On this basis, relevant accounting software packages are compared and justification for selection of software is provided. Xero is recommended over MYOB for bakery business due to its more compatibility with the business processes, needs and system requirements. This software has more potential to meet with the needs of a bakery business without increasing complexities and much cost. Due to this, it is recommended over other accounting software package.
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