Recommendation for Cloud-Based Accounting Software for AGL Energy Limited

This report provides recommendations to a client company for adopting the use of cloud-accounting software from the perspective of a management consultant. The company selected for providing recommendation to AGL Energy Limited, an ASX listed Energy Company of Australia. The report has recommended the company to integrate the sue of SAP accounting software to match its diverse needs and requirement as SAP has varying range of products that can be suited to carry out different business processes of the company.

Accounting Information System

Executive Summary
This report is prepared for providing recommendations to a client company for adopting
the use of cloud-accounting software from the perspective of a management consultant. The
company selected for providing recommendation to AGL Energy Limited, an ASX listed Energy
Company of Australia. The report has recommended the company to integrate the sue of SAP
accounting software to match its diverse needs and requirement as SAP has varying range of
products that can be suited to carry out different business processes of the company.

Contents
Introduction.................................................................................................................................................4
Background..................................................................................................................................................4
Description of Client Company and the Business Activities.....................................................................4
Key Business Processes............................................................................................................................4
System Requirements..................................................................................................................................5
Software Selection.......................................................................................................................................6
Description of Accounting Vendor Package of SAP and Xero..................................................................6
SAP.......................................................................................................................................................6
XERO....................................................................................................................................................7
Comparison of SAP and XERO Features...................................................................................................8
Recommendation for the Most Suitable Vendor and Accounting Software Package for AGL Energy
Limited.........................................................................................................................................................9
Conclusion...................................................................................................................................................9
References.................................................................................................................................................11

Introduction
The businesses are increasingly adopting the use of accounting information system
software for collection, storage, processing and interpreting of their financial data and thus
assisting in better decision-making. The adoption of such information system enables the
business managers in gaining accurate data for taking decisions regarding the business growth.
The cloud-based accounting software is being largely used by business within Australia for
managing and processing of their complex accounting and financial transactions. In this context,
this report has been prepared from the perspective of a management consultant to provide
recommendations to the CFO of an ASX listed Australian company regarding investment within
the cloud-based accounting software. The company selected for the purpose is AGL Energy
Limited, a leading provider of energy product and services within Australia.
Background
Description of Client Company and the Business Activities
AGL Energy Limited is recognized as a leading provider of energy product and services
within Australia. It is a public company that is involved in retailing as well as generation of
electricity and gas for residential as well as commercial purpose. The company is listed on ASX
and is headquartered within Australia and has attained a leading position within utility sector of
the country since its establishment. The company has placed strong commitment in developing a
sustainable energy future of Australia by depicting continuous investment in generation of wide
range of electricity products and services. It is also regarded as a leading energy company
involved in inversing within renewable energy and providing its products and services to about
3.6 million customers (AGL Energy Limited, 2018).
Key Business Processes
The introduction of deregulation in the energy market is causing the need for utility
companies such as AGL Energy Limited for reducing their costs. The increase in the operational
efficiency and reduction in the production cost is the key driver for improving the business
processes and achieving competitive advantage. As such, the key business processes of the

company are emphasizing on integration of IT for achieving cost reduction and higher efficiency.
The key business processes of the company along with IT integration can be depicted as below:
(Source: http://www.cired.net/publications/cired1999/papers/3/3_p9.pdf)
System Requirements
AGL Energy has acquired a dominant position within energy sector of Australia and is
one of the biggest retailers of energy on the National Energy Market. The company is regarded
as one of the lowest cost producer of energy and provides its diverse energy products and
services to large number of customers. However, the increasing competition within the energy
sector is driving the need for the company to adopt a customer-oriented approach for adequately
meeting their needs and demands. The approach required the company to enhance its competitive
position through better cost management and improving the efficiency of its core business
process so that it can continue to deliver higher quality energy products at lower prices. This
requires the company to implement the use of an Enterprise Resource Planning (ERP) system
that enables the companies such as AGL Energy to implement the use of application software
such as SAP or Oracle (Madjid, 2017).
These are cloud-based accounting software applications that would enable in centralizing
all the complex accounting and financial transactions of the company. For example, it facilitate
in maintaining the vendor information for paying the vendor on the due date of each month.
Also, it would enable in maintaining customers invoice by entering their details into the system.
The recording of all the accounting data on a centralized database enables individual departments
to access the required information easily and thus streamlining the work flow. It also improves

interaction among the individual departments and eliminating the gaps in performance that could
occur due to non-availability of financial resources. It enables the production manager to keep a
continuous track of inventory so that it could be replenished before its consumption to maintain
continuous work flow. Also, it enables the business manager to continuously track the sales and
expenses and thus enable them to gain an insight into real-time data that helps in taking accurate
decisions. The cloud-based software applications can be accessed through internet and therefore
business managers can easily access the accounting information at any location or at any point of
time (Schaeffer, 2017).
The adoption of cloud-based accounting software applications would enable the company
in processing the payroll of employees in an easy manner. AGL Energy employs huge workforce
diversity for carrying out its numerous business processes and systems. Therefore, the HR
manager faces quite difficulty in manually recording and processing of their payroll by entering
the various details of the employees and maintaining their records. The process of payroll can be
easily done through the use of cloud-based accounting software applications where employee’s
records can be easily maintained and payroll can be processed through its use at fixed date of
every month. The financial reports can be easily developed by the accountants by easily
processing of complex accounting transactions and thus it involves less time for development
and presentation of financial reports by the company with the use of such software applications.
Thus, it can be said that the use of cloud-based accounting software would enable AGL Energy
to maximize operational efficiency and achieving cost reduction. It also helps in simplifying the
complex accounting and financial transactions and thus helps in saving time and it could be
utilized in carrying out its core business process.
Software Selection
Description of Accounting Vendor Package of SAP and Xero
SAP
SAP is accounting software that enables the business entities to record financial
transactions and operating data at the end of each month or quarter. The accounting software
enables in easy analyzing of financial data and thus facilitating the entities to improve the
handling of their complex financial transactions. The major functions of SAP accounting

software enables in improving the efficiency of the accounting operations and thus business
managers can take better and accurate decisions. SAP is recognized to be market leader in
providing ERP software for the companies irrespective of their size. The internet facility
provided by the accounting software enables the business managers to access the accounting data
at any point of time. The innovation of the accounting software offerings is the key to the
business strategy of the SAP Company. It is actively involved in developing and providing
innovative ERP solutions to its customers such as SAP HANA for supporting the business
processes and helping the companies to drive their operational efficiency. The purpose of the
company is to provide right type of technology to its customers for supporting them to realize
their strategic goals and objectives.
The product portfolio of the SAP accounting vendor varies from offering comprehensive
solutions for all its business processes across all the industries. The different product categories
provided by the vendor can be described as follows:
 SAP S/HANA Cloud: This type of cloud-computing accounting software package
enables business in improving the decision-making and productivity across all the
business levels.
 SAP Cloud Platform: It enables in integrating and optimizing of the IT landscape and
enhancing the agility and digital transformation of the business processes
 SAP HANA: It aims to improve the efficiency of the business processes by providing a
in-memory data platform to centralize all the accounting data
 Concur Expense: It is an innovative ERP offering that helps in managing the expenses
incurred by a company with the use of cloud-based mobile system
 SAP Business Intelligence Suite: It enables in improving the decision-making within
businesses by providing easy access to data so that it could be used conveniently for
taking strategic decisions.
 SAP Commerce Cloud: This type of ERP offered by SAP emphasizes on delivering
exceptional and seamless customer experiences by integration of digital systems such as
online, mobile and other IT tools and technologies (SAP, 2018)

XERO
Xero is a public listed Australian software company that is involved in proving cloud-
based accounting software solutions for businesses. The products offered by the company are
based on software as a service (SaaS) model and is sold to the companies on the basis of
subscription. The accounting software products of XERO enable the companies to realize time-
saving in managing of their complex accounting and financial transactions. The major features
offered by XERO includes easy invoicing, controlling inventory, reconciliation of foreign
currency, tracking of sales and expenses on regular basis, creates purchase orders and also
enables in managing the cash flow by scheduling payments (Xero, 2018). The different products
provided by XERO include:
 XERO HQ: It enables in accreting a single database of all the clients of a company and
developing useful lists that can be accessed as per the needs
 XERO Tax: It is an interactive cloud-based accounting platform that enables in easily
carrying the accounting and bookkeeping functions. It enables in saving time at the time
of accounting for tax returns.
 XERO Cashbook & Ledger: It enables in automatic reconciliation of accounts and thus
providing accurate figues for taking important business decisions (Xero, 2018).
Comparison of SAP and XERO Features
Basis for Comparison SAP XERO
Pricing This accounting software is
more costly as compared to
XERO as it provides more
features such as tracking of
expenses, invoicing and
reporting
It is cost efficient and provides
features as per the customer
requirements
Ease of Use
It is not much user friendly
and provides many features
that might be complex to be
understood by the users
Xero is very user-friendly and
has rather simple features to
be understood
Security It has less security of data as It possess more data security

compared to Xero
Functionalities It provides large number of
functions to be used by the
end-users
It has less functions as
compared to SAP
(Biafore, 2012 & Smith, 2019)
Recommendation for the Most Suitable Vendor and Accounting Software
Package for AGL Energy Limited
AGL Energy Limited places high emphasis on achieving customer satisfaction and thus
integrates the use of a customer-oriented approach in order to provide its various products and
services as per the customer needs and expectations. As such, the use of SAP accounting
software is recommended to be implemented by the company. This is because SAP provides
various features to manage the customer relations as compared to XERO. SAP provides a special
product known as SAP Commerce Cloud that enables in developing an attractive Customer
Relationship Management (CRM) database to improve the customers service management. The
installation of this type of accounting software will enable the company in easily recording and
managing the sales incurred over each month. The comparison of the sales figure will help in
developing an insight into the gap in performance and thus taking effective measures for
overcoming the gap identified (Coyne, 2017).
It is also implementing the use of SAP/HANA platform in its ERP system for improving
its business processes right from recruitment, on-boarding, performance management, learning,
operational management , financial reporting and other functions. The use of SAP accounting
software is done for integrating the various business processes for developing standardized data
structures and simplifying the work processes (Guan, 2009). Thus, the adoption of SAP
accounting software will help the company to drive improvements in its asset management,
increasing the operational efficiency and effectively managing its financial resources. This
accounting software will match appropriately the IT needs and requirements of the company
regarding the use of an ERRP system. It will help in saving time required for managing complex
financial transactions, helps in managing payroll and vendor information and easy development
of financial reports (Mudie, 2014).

Conclusion
It can be said from the discussion held that cloud-based accounting software such as
XERO or SAP are helping the business entities to easily manage and record their complex
financial and accounting information. The big companies such as AGL Energy Limited need to
integrate the use of SAP accounting softer as it has diverse products to meet the different needs
of large number of the business process of the company. Therefore, AGL is recommended to
integrate the use of SAP and select the most appropriate product provided by the vendor as per
its needs and requirements.

References
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https://www.itnews.com.au/news/agl-picks-sap-s4-hana-for-erp-overhaul-479727 [Accessed on: 22
May 2019].
Guan, L. 2009. AGL Energy uses SAP, Avaya and AMC to keep customers happy. ?[Online]. Available
at: https://www.itnews.com.au/news/agl-energy-uses-sap-avaya-and-amc-to-keep-customers-happy-
115273 [Accessed on: 22 May 2019].
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Functions.USA: IGI Global.
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combination?[Online]. Available at: https://www.fool.com.au/2014/10/09/are-xero-fpo-nz-agl-
energy-ltd-and-resmed-inc-the-perfect-portfolio-combination/ [Accessed on: 22 May 2019].
SAP. 2018. All Products. [Online]. Available at: https://www.sap.com/products.html [Accessed on:
22 May 2019].
Schaeffer, E. 2017. Industry X.0: Realizing Digital Value in Industrial Sectors. Germany: Kogan
Page Publishers.
Smith, H. 2019. Xero For Dummies. USA: John Wiley & Sons.
Xero. 2018. About Us. [Online]. Available at:
https://www.xero.com/uk/features-and-tools/practice-tools/ [Accessed on: 22 May 2019].