ERP Implementation Business Accounting

Question: Discuss about the ERP Implementation for Business Accounting. Answer: Introduction The accounting software is designed for automating the processing, recording, handling as well as storage and also accessing different kinds of financial transactions of a business along with other associated information. It helps in the improvement of accuracy, efficiency and cost-effectiveness in accounting and financial operations. It also provides the companies with powerful mechanisms to streamline their essential financial processes and implementation of formal procedures for collecting, maintaining and presenting financial data (Business-Software.com, 2009). The organisations may either develop the accounting software in-house or purchase it from a third party. It may also use the application software package of the third party after making local modifications. The accounting packages differ vastly in cost as well as complexity (Pulakanam Suraweera, 2010). The accounting packages that exist today record the financial transactions and along with that they also produce accounting reports. However, for managerial decision making, functionality is also included so as to gain a competitive advantage (Collins, 2006). In the recent years, accounting software have made great leaps technologically in terms of flexibility, sophistication, speed and power. There has also been an increase in the number of innovative features like web interfaces and they have become better integrated with supply chain and also other applications (Mohamed, 2007). Several of the accounting software packages consist of add-ons which can be utilised for integrating the software with the web / internet or with other software (Caruso, 2007). History, Development and Adaptation of Accounting Software Till the year 1974, accounting was mainly done in the manner similar to the one which was started by the ancient Egyptians around 3000 years ago. However, the growth in trade and expansion of businesses required a system for documentation of the transactions. In the mid-1980s, the PC was launched by IBM and this led to the rapid evolution of the trial balances that were paper based to the spreadsheets on Lotus 123. Even though, the balancing of books was still being done manually, the first accounting packages started to make their appearance. In the late 1980s, TurboCash, an automated system emerged which made the process of consolidating ledgers easier. However, it could not perform many functions and was not web based. The earlier accounting systems that were DOS-based had high stability but were updated very rarely. However, the advent of Microsoft along with its upgrades in a regular manner, constant system adaptations became the norm. A major role was played by technology in ac counting softwares evolution. Firstly, the shift that occurred from DOS to Windows ad from then on it became a significant deal breaker while selecting the accounting package. Accounting technology has evolved in a twofold manner. It includes the Business Intelligence (BI) being built in which indicates a use of technology that is more predictive and intuitive and the cloud computing mobility. The development that has taken place in accounting software over the years has made modern accounting totally different from its roots. Today, there is presence of double-entry bookkeeping, political measures such as the GST, sophisticated investments and joint stock companies which makes it vital for an accountant to have expertise in a large number of areas. Computers have emerged as tools that are not only indispensible but also partners in this. The BI is already entrenched firmly and the software as a service or cloud computing is the next wave. In this phase, the accounting software is not just the replication on the screen of what is written on paper but it is more interconnected, intuitive and mobile (Ryan, 2012). The cloud computing has a huge impact on the bigger audit firms. Cloud helps them in better resource utilisation and every data is accessible on the internet, irrespective of where the company is based. Cloud computing in convenient and it also allows the experts to perform the crucial functions such as security as well as backups in a way that is cost effective (Scott, 2015). Today the accounting packages have evolved into complete tools for business management and the cloud has heralded a new era in accounting packages in the world as well as in Australia. The Market Leaders, Market Size and the Competitive Advantages of the Accounting Softwares in Australia QuickBooks, MYOB, Xero, Reckon and Saasu are the leading accounting software that are available in Australia currently and are widely used by most of the small businesses. They form the major players in cloud accounting market of Australia and are fighting a battle for supremacy. They have simplified the process of keeping accounts and allowed the businesses to make decisions related to cashflow and invoicing through mobile and desktop apps. With Xero and Intuit throwing the industry wide open, incumbents such as MYOB are building their own offerings for maintaining the market share (Heber, 2015). The competitive advantage of Intuit QuickBooks software is due to its economical price and comprehensive features that are provided by it. MYOB is among Australias best accounting softwares which has the aim of functioning as more than an accounting package. In addition to the regular functions of accounting, it gains its competitive advantage from being structured in a way that helps the business owners to increase their profitability and making better quality of decisions by having a real time view of the financial operations related to the business. It is more than just being a store register. The MYOB Kounta interface helps on integrating the complete business operations with the transactions at the point of sale. It can work both online as well as online. It is ATO compliant which helps the businesses to stay updated with the compliance obligations and option of working online with the personnel of bookkeeping. The MYOB software can also be extended easily and built with add-on solutions that are available with the wide range of tools of the firm (Advisory HQ, 2016). It has approved a program of $40 million for developing cloud technology (Heber, 2015). Xero is also very popular and has real time data monitoring capabilities (Advisory HQ, 2016). The advanced reconciliation process of Xero helps in the importing and categorisation of bank transactions. It invested $250 million for building up of its cloud platform right from the start (Heber, 2015). The revenue that MYOB secures is more per unit in comparison to Xero but the churn rate is also higher. While MYOB is Australias provider of accounting software, Xero is the largest company of cloud accounting. The number of cloud subscribers of MYOB in Australia and New Zealand are 116,000 whereas Xero has 320,000 subscribers. The net customer additions of Xero in the recent years has been twice that of the cloud subscriber growth of MYOB which shows that it is ahead in the race for the market share throughout the cloud offering. A important part of cloud space is the reduction in customer churn as users possess a higher lifetime value in comparison to the desktop market. The annual churn rate of MYOB is approximately 17% throughout its customer base of cloud whereas for Xero it is nearly11-13% for Australia and New Zealand. As the three companies fight for the title of leadership, they will be focusing on reducing the churn rates and improving customer acquisition as well as retent ion rates (Heber, 2015). Figure 1 LTV Calculation for MYOB and Xero (Heber, 2015) Figure 2 MYOB Vs. Xero : Net Cloud Additions (Heber, 2015) Current Gaps and Challenges Encountered by Users and Customers of Accounting Packages / Software in Australia The computerisation of accounts has increased the number of people who are a part of managing the accounts. They include the owner, the IT consultants, the accountant and some employees. The purpose built softwares are updated only on the owners request. Costs are high initially and benefits like high functionality and affordability are accompanied with dependency, uncertainties, risks and potential complexities (Feiler, 2000). System integration is another challenge that they face. Continuous technological changes and software updates that are associated with it add to the issues. The owners are required to adopt IT and also keep pace with the IT industry changes that are fast paced. For businesses with poor resources, this is a big ask (Bland, 2007). The lack of IT competency of the managers and poor understanding related to computer along with expertise in internal computer that is lacking is another challenge. Additionally, the managers may also lack the skills of computing and good knowledge of accounting (Sleeter, 2005). Support of top management and the leadership and management of skills of the project manager are necessary but in small businesses this may be lacking as the top management as well as the project manager may be the same(Nah Delgado, 2006). Work pressure may prove to be an additional challenge in such cases (Lee Runge, 2001). Recommendations Low cost software that is user friendly and provides input efficiencies like auto-fill will be useful for overcoming such challenges. The users can also take the help of external consultants for overcoming the challenges related to IT and accounting knowledge. Conclusion The high competition among the enterprises has led to a demand for information that is more updated for allowing management to adapt rapidly to the opportunities and responding to the problems. Realtime reporting helps in understanding the corporate performance in a better way and also provides more confidence in case of corporate governance (Trigo et al., 2014). In Australia, this demand is being catered to by the leading players like QuickBooks, MYOB and Xero who are fighting for market supremacy. Bibliography Advisory HQ, 2016. Overview: Best Small Business Accounting Software Australia. 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