Cloud-Based Accounting Software for Woolworths Group Limited

This report examines the use of cloud-based accounting software for Woolworths Group Limited and recommends the integration of XERO accounting software to meet its financial management needs.

Accounting Information System
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Executive Summary
This report has been developed for examining the use of cloud-based accounting software
for an ASX listed entity. The business entity selected for analysis purpose is Woolworths Group
Limited that is undertaking the adopting of a cloud-based software application to meet its
strategic needs and objectives. The company has been recommended to integrate the use of
XERO accounting software after analysis of its business requirements and the functionalities
offered by the software. The software can adequately meet the financial management needs of
Woolworths by better tracking of its inventory, sales, expenses, purchases and other financial
management issues in an effective manner.
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Contents
Introduction.................................................................................................................................................4
Background..................................................................................................................................................4
Brief Description of the Client and its Business Activities........................................................................4
Key Business Processes of the Client.......................................................................................................4
System Requirements..................................................................................................................................5
Software Features and Functionalities....................................................................................................5
Software Selection.......................................................................................................................................6
XERO & MYOB Accounting Software Package and their Products...........................................................6
XERO....................................................................................................................................................6
MYOB...................................................................................................................................................7
Comparison of the Software Features of MYOB & XERO.............................................................................7
Accounting Software Package Vendor Suitable for the Client Company.....................................................8
Conclusion...................................................................................................................................................9
References.................................................................................................................................................11
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Introduction
This report has been developed to provide recommendations regarding the adoption of
cloud-based accounting software within a selected Australian ASX-listed company. The overall
analysis has been undertaken from the perspective of a management consultant intending to
provide suggestion to its client regarding the adoption of cloud-based accounting software, that
is, SAP, MYOB or Xero. The report is developed for the use of CFO of the client company for
providing knowledge regarding the best accounting software package that should be considered
for supporting the business needs and activities. The case company selected for analysis purpose
is Woolworths Limited, a supermarket giant of Australia involved in providing grocery items
within its retail chains across Australia and New Zealand.
Background
Brief Description of the Client and its Business Activities
Woolworths Limited is known to be a leading supermarket giant within Australia that has
been established within the year 1924. It mainly specializes in providing grocery items such as
vegetables, fruit, meat and packaged foods and also additional products such as health and
beauty items. It conducts about 1000 stores across Australia involved in providing fresh fruit
and vegetables. The company mission is to provide innovative and distinctive products and
services to its customers across Australia and New Zealand. The core business segments of the
company include Australian Food, New Zealand Food, Endeavour Drinks group and other
portfolio business. The food segments of the company across Australia and New Zealand is
involved in providing food and liquor products while drinks group is involved in procurement of
liquor products for reselling to the customers in Australia. The other portfolio business of the
company includes providing hotel, entertainment and gaming services (Woolworths Group,
2019).
Key Business Processes of the Client
Woolworth places high emphasis on adopting a business process management approach
for achieving its strategic goals and objectives. The key business processes of the company
includes procurement of raw materials, handling inventory, manufacturing of products,
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transportation of products to retail stores, sales, customer service and accounting. Procurement of
raw materials is the key business activity within the company that involves sourcing fresh food
and vegetables from its in-house farms which is followed by manufacturing of products and then
it involves logistics operations involving transportation of products to the final customer. The
customer service operations are followed by after sales which ensure that service delivered to the
customers is up to the mark. The accounting business process is the major function within the
company that involves development of financial reports and presenting it to the end-users for
meeting their interest and seeking continuous funds from the investors to conduct its business
functions services (Woolworths Group, 2019).
System Requirements
Software Features and Functionalities
Woolworths Ltd has achieved enormous growth within the retail sector of Australia since
its establishment in the year 1924. It has diversified its business operations in various segments
and as such ahs to employ large number of employee base for serving its about 2 million
customers base. The main challenge that Woolworth is facing in this regard is maintaining
competent and skilled base of employees for sustaining its growth. In this context, the company
has introduced an HR transformation program having the primary goal of delivering high
performance through development of highly talented workforce diversity. The company under
this program intends to eliminate the complex paper based process for ensuring that HR is able to
emphasize on the core areas of the business such as talent, leadership, organizational
effectiveness and employee recognition (Coyne, 2017).
The company in order to attain a distinctive competitive advantage needs to develop and
implement a human capital management system that can be enabled by adopting the cloud-based
accounting software. This accounting software possesses the features and functionalities of
recording financial transactions and reporting the financial data at the end of every month. The
major advantage of using this type of accounting software is that it enables the business to
maintain its accounting and financial transactions on an online platform that can be accessed in a
convenient manner. It eliminates the need for business to install and maintain the software on
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individual desktop as all functions can be operated with the use of internet or other network
(Prasad and Green, 2015).
The adoption of cloud-based software accounting process will enable the company to
easily maintain and develop the employee payroll and also creating a centralized system of
recording all its accounting transactions. The payroll system maintained through could based
accounting will help the HR managers for easy process of the payroll related transactions of the
employees and thus effectively managing the complex salary transactions of its huge number of
employees (Hossack, 2015). The reduction of paper based work in maintaining payroll and other
accounting transactions will enable the company to reduce the workforce needs and employ the
use of its competent employees in other business processes. The company is aiming to become a
lean retailer and thus the implementation of a cloud-based merchandising system that enables to
keep a track of its inventory and point of sale. The replacement of traditionally excel based
system of maintaining the accounting records with the software system enables the company in
easy development and maintenance of its financial accounting and reporting system. The
supermarket could enable in achieving improvements in its overall operational process by
reducing time involved in maintaining accounting records and disclosing them to the end-users.
Te streamlining of business process by enabling greater access to financial and accounting
information by individual departments would enable in driving operational efficiency (Mageto,
2017).
Software Selection
XERO & MYOB Accounting Software Package and their Products
XERO
XERO Limited along with its different subsidiaries is involved in providing cloud-based
online accounting software applications to business entities operating across Australia and New
Zealand. It has been established in the year 2006 and since then has attained a leading position
within the information technology sector of Australia for providing online software applications
to manage the complex financial issues of businesses. The XERO accounting software has been
founded by Rod Drury after recognition of the lack of essential requirements and functionalities
within the traditional desktop accounting software systems. The systems have become outdated
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and are not able to match the current business needs and requirements. Therefore, the
development of cloud-based accounting software is required to meet the contemporary business
challenges so that they are able to easily manage their financial data. The main accounting
software products provided by XERO includes XERO Cashbook, XERO Ledger, XERO Practice
Manager to manage the complex financial issues such as maintaining of invoices, vendor
management, tracking expenses and inventory and accounts receivables and payables and
developing financial reports on time (XERO, 2019).
MYOB
MYOB is a recognized Australian accounting vendor that intends to provide tax,
accounting and business services software to the business entities within Australia. It has
provided the most effective and easy way for businesses to manage their cash flow and ATO
compliance requirements. It provides time-saving features to businesses for taking care of their
regular business activities and enables the business to minimize the cost of their operations
(Curtis, 2015). The online accounting solutions provided by the vendor is apt for meeting the
diverse accounting needs of businesses starring form managing invoices, payroll, expenses,
financial reporting and tax management solutions. There are various online accounting software
products that are provided by the vendor which includes MYOB Essentials, MYOB
Accountedge, MYOB Accountright, MYOB Advanced, MYOB Greentree, MYOB Payglobal for
providing diverse accounting needs and requirements of the business companies (About MYOB,
2019).
Comparison of the Software Features of MYOB & XERO
Comparison Basis XERO MYOB
Ease of use
XERO provides dashboard
that can be used to depict the
financial information such as
outstanding invoices, bills
pending, bank balance and
expenses incurred. It is also a
browser based system that
enables the users to access the
MYOB requires a desktop be
installed before it can be used
by a user form distant
locations. Also, it does not
provide dashboard features as
provided by XERO
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software application at any
point of time.
Efficiency XERO is able to perform page
loading at a faster rate and
also can conduct various
accounting functions at a time
MYOB is relatively slow in
page loading and also does not
support carrying out of
multiple tasks at a time
Reporting The financial reports provided
by XERO can be accessed at
any point of time and also
helpful in showing the gaps in
performance as compared to
previous years
The financial reports
developed by MYOB can be
accessed only after the
complete data for the month
has been provided.
Costs XERO provides additional
features and therefore its basic
subscription plan is costly
MYOB is less costly as
compared to XERO
Sales
XERO does not have the
features of developing sales
quotes or creating sales orders
MYOB possess the features of
developing sales quotes and
orders
(Lane, 2018) and (Smith, 2013)
Accounting Software Package Vendor Suitable for the Client Company
Woolworth’s operational problems can be adequately resolved with the use of a cloud-
based accounting software application. The company is having a complex and rigid functional
processes and systems that are having a negative impact on its operational efficiency. Also, it
does not have the presence of a centralized database for recording of its accounting and financial
data that is also a point of concern or the company. This is because it might lead to negatively
impacting the operating efficiency by restricting the integration of the various business functions.
The lack of integration of various business functions can lead to restricting quick decision-
making within the company and this can have an impact on the future chances of business
growth and expansion (Crozier, 2011). The use of accounting software of XERO by Woolworths
will enable in providing customized software to be used by the company to match its financial
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needs and requirements. The use of Xero online accounting software would enable Woolworths
to develop a centralized database and organized its complex financial data in an effective manner
(Smith, 2017). It would enable in easy managing and sharing of financial documents that can be
accessed anywhere by the business managers for the purpose of decision-making. It would
enable in sending quick invoices and thus managing accounting receivable and payables of the
company. This would help in strengthening the client relationships and improving the bottom
line by better managing of its financial performance (Galer, 2016).
XERO is better to be used by the company in comparison to MYOB as per its business
needs and requirements. XERO would enable the company to manage the different business
processes as it allows conducting multiple accounting activities at a time. It provides more fast
and innovative solutions to the accounting problems. The invoices can be easily created in
XERO as compared to MYOB which is essentially required by Woolworths as it has numerous
suppliers and customers. Also, its better payroll system would help in achieving employee
satisfaction and this would further enable in improving the productivity and profitability of the
company (Preez, 2016). Also, Woolworths can easily manage its tax compliance and foreign
currency requirements with the use of XERO accounting software and this facility is not readily
available on MYOB. Also, Woolworths possess huge inventory and therefore XERO provides
better inventory tracking system as compared to MYOB with the use of its advanced inventory
tracking features (Johnston, 2018). Therefore, it can be said that implementation of XERO
accounting software is adequate for meeting the strategic goals of the company of becoming a
lean retailer through simplifying its business operations and improving its decision-making
capabilities. The reduced cost of operations and better decision-making would enable
Woolworths to provide higher quality products at lower prices and thus improving it sales and
profitability position (Marsden, 2013).
Conclusion
The report has examined the need for business entities to use the cloud based online
accounting software applications such as XERO, MYOB or SAP for increasing the efficiency of
their business operations by better managing of the financial resources. Woolworths can
improve the efficiency of its business processes through the use of an ERP system which is
cloud-based for better monitoring and controlling of the financial resources. The use of XERO
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accounting software is regarded as appropriate for Woolworths to better meet its strategic
priorities of improving the operational efficiency by better inventory management and tracking
of operational expenses on a regular manner.
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References
About MYOB. 2019. [Online]. Available at: https://www.myob.com/au/about [Accessed on: 22
May 2019].
Coyne, A. 2017. Woolworths' next IT overhaul. [Online]. Available at:
https://www.itnews.com.au/news/woolworths-next-it-overhaul-472701 [Accessed on: 22 May 2019].
Crozier, R. 2011. Woolworths to pilot SAP promotions software. [Online]. Available at:
https://www.crn.com.au/news/woolworths-to-pilot-sap-promotions-software-280492 [Accessed on:
22 May 2019].
Curtis, V. 2015. MYOB Software for Dummies – Australia. USA: John Wiley & Sons.
Galer, S. 2016. Woolworths Transforms HR, Delivers High-Performance People Strategy with
SAP SuccessFactors. [Online]. Available at: https://news.sap.com/2016/07/woolworths-
transforms-hr-delivers-high-performance-people-strategy-with-sap-successfactors/ [Accessed on: 22
May 2019].
Hossack, S. 2015. Cloud-based accounting and productivity tools for practitioners and taxpayers.
Taxation in Australia, 50(5).
Johnston, M. 2018. Best Small Business Accounting Tools: Xero vs Quickbooks vs Freshbooks
vs MYOB. [Online]. Available at: https://beanninjas.com/blog/best-small-business-accounting-
tools-xero-vs-quickbooks-vs-freshbooks-vs-myob/[Accessed on: 22 May 2019].
Lane, S. 2018. Which one is the best cloud accounting provider? [Online]. Available at:
https://www.listonnewton.com.au/information-centre/xero-vs-myob-which-will-work-better-for-
your-business [Accessed on: 22 May 2019].
Mageto, J. 2017. Accounting Softwares in Australia. An Overview. Australia: GRIN Verlag.
Marsden, S. 2013. New Zealand Master Bookkeepers Guide. Australia: CCH New Zealand
Limited.
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Prasad, A., and Green, P. 2015. Organizational competencies and dynamic accounting
information system capability: impact on AIS processes and firm performance. Journal of
Information Systems, 29(3), pp.123-149.
Preez, D. 2016. Australia’s Woolworths stabilises IT systems after “worrisome time. [Online].
Available at: https://diginomica.com/australias-woolworths-stabilises-it-systems-after-worrisome-
time [Accessed on: 22 May 2019].
Smith, H. 2013. Converting to Xero from MYOB In A Day For Dummies. USA: John Wiley &
Sons.
Smith, H. 2017. Xero For Dummies. USA: John Wiley & Sons.
Woolworths Group. 2019. How do we do business. [Online]. Available at:
https://www.woolworthsgroup.com.au/page/about-us/our-approach/how-we-do-business [Accessed
on: 22 May 2019].
XERO. 2019. Why XERO. [Online]. Available at:
https://www.xero.com/why-xero/benefits/online-accounting/ [Accessed on: 22 May 2019].
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