Unlocking Xero's Competitive Advantage: A Cloud-Based Accounting Solution

Xero Accounting is a cloud-based software that has gained popularity globally, particularly in Australia and New Zealand. It was developed specifically for medium and small businesses, offering user-friendly features such as real-time updates, accessibility, and unlimited collaboration. Xero's competitive advantages include its simple and intuitive interface, great integration system, and reasonably priced services. However, users have faced challenges such as inadequate security, weak reporting services, lack of efficiency, outdated systems, and inaccuracy. To overcome these challenges, the company should prioritize installing regular updates, ensuring report customization, and maintaining usability. Overall, Xero Accounting has its benefits and drawbacks, but it remains a leading player in the market.

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SIS Assignment
Name
Institution affiliation

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ABSTRACT
There are several accounting packages in Australia. This study is about the organizational
structure, development and adoption of the accounting systems used in Australia. The literature
review investigates some most commonly used accounting soft wares. It also tries to explore
challenges faced by users while interacting with such systems.
Introduction
Accounting software packages systems are used to collate data about a business and report on its
financial viability. It allows you to structure expense accounts and income, for instance,
advertising expenses, rental or sales income, material costs and salaries. They also can be used to
wield pay bills, bank accounts and prepare budgets. Some accounting software also permit you to
handle payroll, prepare tax documents and manage project costing depending upon the system.
Current Organizational Structure
The hierarchy in the accounting department helps to make sure that finances are managed
responsibly and effectively. The following shows the organizational structure of companies that
uses accounting software.
Chief Financial Officer- Also called the vice president of finance is the top most senior executive
of an accounting organizational hierarchy. This office directly reports to the business owner or
CEO. His/her role is to ensure that all areas of accounting are carried out in accordance with
policies of the company.
Financial Controller- Many firms have a financial controller that reports to the Chief Financial
Officer but has more detailed accounting responsibilities. The controller manages daily expenses
and ledgers, assigns duties to other accounting employees and communicates with the Chief
Financial Officer to ensure companywide financial decisions are made. His/her input is
considered advisory since s/he is not a member of the executive team.
Division Managers- The financial controller will generally have three major reports in bigger
companies, that is, the payroll manager, accounts receivable manager and the accounts payable
manager. According to Aquinas, (2010), in smaller firms, one division manager can perform all
these duties, or they may be carried out by the controller or Chief Financial Officer. Under any
circumstances, these divisions represent the main elements of the accounting structure. Their
roles are to manage salaries, expenses and incomes.
Accountants and Clerks- Accountants and clerks work for the division managers. These are
specialized professionals with knowledge in, managing expenses, tracking income, Human
Resource policy and administering payroll.
Interns- organizations of all sizes employ intern, students or young professionals to assist them in
doing the daily activities of the accounting division. These young professionals can be paid or
unpaid, but typically their roles will be at the lowest rank of the hierarchy. They may help in
filing, research, data entry, and among other administrative duties allocated to them by their
managers, who are usually either the controller or the division managers.

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Organizational Structure Diagram
Operational Problems
A firm with a good organizational structure enjoys the advantages of enhanced communication
with the ability to develop a common company message and a well-designed hierarchy. As much
as the organizational structure can be efficient, it can also bring about problems that can cause
internal conflict and loss of productivity. Johnson, (2012).
Some of the problems encountered are;
Departmental Loyalty- There can be mentality of us versus them among different groups. For
instance, sales may feel frustrated with accounting because credit terms for new clients are not
getting approved.
New Management- The company tend to settle into a way of carrying their roles that they feel is
comfortable and efficient for the existing management team, if there have been no changes for a
long time. Changes in management, can put pressure on the organizational structure of a
company. The new management, may lack knowledge with the way things were done and may
come up with new ways on how things should be run in an organizational structure.
Board of Directors
operational problems
Chief Executive Officer
Chief Financial Officer
Financial Controller
Payroll ManagerAccounts Receivable managerAccounts Payable
manager
Payroll ClerkAR clerkAP clerk
InternsInternsInterns

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Confusion- Without effective communication, new processes and ideas can get confused.
Managers may start to put more efforts trying to claim some parts of a process as their own.
Confusion can slow down production if departments fail to get their responsibilities clearly.
Company Goals- If there is inadequate consultation between the upper management and other
departmental managers during creation of departmental goals, the company runs the risk of not
achieving its objectives. Effectiveness of an organizational structure, requires upper management
to seek the input of the rest of the company employees to develop company goals and objective.
System Acquisition Method
The most likely system acquisition method would be commercial software. This is because it is
the dominating accounting software used across the world. It is relatively configurable to the
requirements of a business. It has several layers of error detection to avoid the entry of wrong
information. It generates standard reports that can be customized to meet users’ needs. Enterprise
resource planning and custom software, may not be the preferred methods because they are
expensive, takes time to install, buggy and requires regular maintenance. Wahlen, Bradshaw &
Baginski, (2014)
System Flowchart of the Sales Procedures
Sales system flowchart defines a series of activities taken to achieve a particular result. It also
refers to the series of actions that sales manager in an organization follows to close a deal with a
customer.

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Control Problems and Possible Frauds in the Accounting System
Computer time theft- Information generated by an individual can be claimed by another person
that the data is his own and he is the actual generator. In computer systems original copy and
duplicate copy terms does not exist. Macintosh & Quattrone, (2009).
Program manipulation- A competitor, rival or an intruder can modify, delete or manipulate one
or more program parts of an organization rendering the full software unusable.
Theft of information- Information stored in a computer can be transferred into external storage
and could be sold to competitors. With enhancement of communication technology, employees
of the company may transfer confidential data of a company to another. Hackers can tap to a
network and extract data.
Theft of software- This is the most experienced crime in computers systems. Company
employees or staff may copy the software bought by a company and transfer it to his personal
computer. Extra rules, policies and controls can be implemented to protect hardware and
software from unauthorized use.
Access control- The first system security should be hardware and software control. The system
should be kept under lock and key to avoid theft of the hardware. Electronic and physical access
control techniques including limited after-hour, keyboard locks, restricted access to systems and
automatic logs should be implemented.
Passwords- Provision of passwords should be made at all system security levels. Changes
should be made frequently or when required to prevent unauthorized users from accessing the
system resources.
Backup Copies- It is recommended to perform frequent backups of all software and store them
differently from the usual storage media. Backups are normally taken on external media such as
disks and cloud which are later used to restore data when raw data from the system fails. It is
also necessary to take backups of software programs.
Development and Adoption of the Accounting Software Packages
Some years ago, the demand and utilization of cloud based accounting software was minimal in
Australia. Traditional forms of accounting were dominant among business firms. For instance,
they used manual accounting entries such as use of pen and paper in the early 1980s. However,
evolvement of a number of spreadsheets and accounting software had modified accounting
system function in the country. Emergence of accounting cloud based software in Australia like
Quick books, Xero and among others has led to an evolution in the functions of the accounting
system in the business firms. The cloud based software are integrated in nature, internet based
and easy to use. These have stimulated the popularity growth of accounting software packages in
the country. Accounting cloud based software packages has become a simple accounting
package to a company management tool. Mageto, (2017).

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The Current Market Size
Business accounting software market is predicted to grow at a compound annual growth rate of
6.3% over the forecast period that is 2017 to 2024 globally. The world market for business
accounting software was estimated at revenue of USD 3.2 Billion in 2016 and is envisioned to
meet a valuation of USD 4.4 Billion by the end of prediction period. Sudden emergence of
mobile application of business accounting and the need for efficient way to manage accounts of
small organizations are expected to be the changing factors behind the flourishing of world
business accounting software market. Deep analysis of the global business accounting software
market involves the following areas: manufacturing, service and retail. Smith, (2015).
Leaders in the Market and their Competitive Advantage
Xero Accounting is one of the cloud-based accounting software that leads in the market. It was
developed specifically for medium and small businesses. According to GRÖNFELDT &
STROTHER, (2006), it was first introduced in New Zealand in 2006 and became a popular buzz
globally. The company further thrived mainly in Australia. Since Xero Accounting is structured
to meet the basic needs of small and medium business, its user-centric interface is made easier
for performing daily transactions by its developers. Some of their competitive advantages are;
Its cloud based- Xero Accounting was developed up for the cloud unlike its competitor
QuickBooks. Cloud computing implementation on the platform fastens the process of updating
entries in real time. This henceforth yields to timely assessments and regular analysis of the
present financial standing of a firm, thus accelerating its growth. Another benefit the cloud is
giving is its accessibility. Accessibility of accounts anytime and anywhere by users is made
possible whenever there’s an internet connection. Smith, (2015).
It is Simple and Intuitive UI - Xero Accounting software was built for individuals who aren’t
much into accounting, but also good enough for accounting expertise. Its well-arranged structure
makes it a fun to use.
Other competitive benefits of Xero are, its great integration system, unlimited collaboration of
users, it has rich features, processes are fast and easy to set up and it is reasonably priced.
Challenges Encountered by Users of Accounting Software
Some of the problems faced by the users include;
Inadequate security- Software customers feel that the security of their data is at stake as they can
be accessed by third parties.
Weak reporting service- Users finds it disappointing that a system easily accepts their data but
almost impossible to retrieve them yet some of accounting software solutions are powerless in
assisting them. Clarke, (2008).
Lack of efficiency- Some accounting software products lack capabilities, compatibility, expend
abilities and some features that are not user-friendly therefore consuming a lot of time.

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Outdated & lack of accuracy- Due to outdated of some accounting software systems, system
errors happen, details tend to be inaccurate and system slows down.
Recommendations
To counter these challenges, the company should ensure that the following are adhered to:
Install and regularly update system firewall so as to detect and prevent any third party access.
Report is a very important part of any system. Therefore, an accounting system should facilitate
generation of standard reports by users that ca be customized depending on the need and use of
the report.
Ensure that when sourcing out for accounting software should consider usability and
customizability of the program. This will ensure user friendliness of the system and thus
customers can interact with it easily.
Accounting software should be updated gradually to deal with bugs and security threats arising
due to rapidly evolving technology.
Conclusion
In conclusion we find that accounting software have their several advantages which include:
simplicity of data entry, automated reports and analysis, speeds up processes, automated
functions and reduced errors. However, it also has some disadvantages that comprises of price-
it’s expensive, implementation-its complex and requires expertise.

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