Strategic Information System and Accounting Software Market Report

This report delves into the strategic use of information systems within the business context, examining how these systems support business activities and create competitive advantages. The report is divided into two main parts. The first part focuses on the role of strategic concepts in the selection of information systems, using Toorallie Australia, a fashion retailer, as a case study. The analysis covers organizational structure, operational problems, system acquisition methods (specifically ERP), system flowcharts of sales procedures, and control problems within the system. The second part discusses the development and adoption of accounting software packages, the current market size of the Australian accounting software market, and the market leaders (Xero, MYOB, and Intuit) along with their sources of competitive advantage. Furthermore, it addresses the challenges faced by end-users of accounting software, such as security concerns and the need for skilled staff, and suggests potential solutions, like data access control and training programs. The report concludes with a summary of the key findings and the importance of aligning accounting systems with organizational structures to mitigate control problems and related frauds.

Strategic Information System 1
Strategic Information System

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Introduction
In the business world, the role of information system in supporting the business activities
strategically and creating competitive advantage has identified, which causes the emergence of
the concept of strategic information system. This assignment has two parts in which, first focuses
in discussing the role of strategic concept in the selection of information system. For this,
Toorallie Australia, a fashion retailer is selected (Toorallie Australia, 2017). In second part,
available software packages and competition in Australian accounting software market is also
discussed. Along with this, the challenges of end users of accounting software are also discussed
to make relevant suggestions.
PART 1:
1. Organizational Structure
Functional structure exists in Toorallie Australia in which functions of business are performed by
a specialized team. Employees with shared skills and knowledge work together, which ensure
operational efficiency (Schermerhorn, 2010). The structure of this organization is stated below:

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Through above structure, Toorallie performs its functions from procurement of wool to the
production, sales and marketing of woolen garments. This structure is less complex that
simplifies the operations of a business (Hitt et al., 2012).
2. Operational Problem
In the functional structure, the personnel of different department may not communicate with each
other that could cause operational inefficiency and errors. Staff works within the boundary of
their respective departments and thus it causes lack of proper communication and co-ordination
in the operations, which are the main cause of inefficiency and errors (Parnell, 2013). For
example: absence of communication between marketing and production departments may
impede ability of this firm to understand the demand of the customers effectively and to make
relevant offerings. This could bring inefficiency in terms of producing innovative offerings for
the customers and to satisfy customers (Hill and Jones, 2011). The chance of errors in the
StaffProductionStaffStaffStaffFinanceStaffStaff

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operations is also increased due to the lack of communication and co-ordination among the
departments.
3. System Acquisition Method
The method of acquiring system is most likely an Enterprise Resource Planning (ERP). This
firm operates in a fashion industry thus it has wide product line in multiple colors and size. It is
likely to create difficulties in maintaining appropriate stock levels. Due to this, it needs a
platform to integrate sales, marketing and other functions of the business to get real time
information. Stock visibility and its reporting are also critical for Toorallie to become more
responsive towards the queries of the customers regarding the available size and colors of cloths
(Enprise, 2017). For managing the operations in a way to enhance and improve customer
experience, ERP is the most likely system acquisition method.
4. System Flowchart of the Sales Procedures
The system of sales procedure at Toorallie is depicted below:
At Toorallie, the above system of sales procedure is used in which the sales process starts when
customer places an order for a garment either from online and retail store. The system checks the
availability of ordered goods and processes the sales accordingly. In case of stock availability,
billing information is proceeded and payment is accepted that leads to the end of sales process.

Customer order either
from online or retail store
Determine availability in inventory
NO
Process of billing
information
Payment Acceptance
Order Processing
End Process
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5. Control Problems in the System
The system has control problems in terms of making update in the inventory and informing the
manufacturing department. The conversion of customer order into sales is recorded by the
system but inventory is not removed, which is the key problem of this system. It is likely to
cause problem in the quantification of the inventory. Similarly, the system does not inform to the
production department regarding the reduction of inventory level, which may also cause problem
in controlling the stocks and to maintain sales (Petrucelli, 2013). Due to the current problems,
some sorts of frauds are possible such as false purchase. False purchase may occur due to the
theft of inventory at the point of sales as no records are developed regarding the stock level. This

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creates an opportunity for employees for theft of stock as no record is maintained in the system
(Gee, 2014). The lack of adequate inventory information the problems of unrecorded sales may
become more apparent and it affects the business at the considerable level.
PART 2
1. Development and Adoption of the Accounting Software Packages
At the early age, general ledger was the most common accounting system. It was a book, which
included different pages for each accounts such as cash balance, inventory, receivables and
others. This book was filled manually to develop the accounts of a business. At the end of the
month, the calculation of accounts was made and matched manually. It was quite complex for
firms operating at the large scale. The process of handling accounts was quite complex and
expensive. The evolution of computer has influenced significantly the development and adoption
of the accounting system (Scott, 2015). In1950-60, the nature of complex accounting data
created the need of automation. Initially, accounting programs were developed for mainframe
computers. These computer were large in size but had capability to proceed large data. The
characteristics of accounting software package changed with the development of computer.
Minicomputers and local area networks caused the introduction of more powerful accounting
programs (White, 2010). After 1995, the automation of accounting activities took place due to
the availability of more powerful and portable computers, client-server, wide-area network and
internet.
With this evaluation, the accounting software packages were evolved from spreadsheet to
commercial, ERP and custom software. Spreadsheet software was initially adopted accounting
package, which serves the need of small business only. Commercial accounting software is more
powerful and servers better accounting experience but implementation process is quite complex.

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ERP is suitable for large organization as integrates information of all business functions on real-
time basis (Jacobs et al., 2011). Custom software is developed and used for fulfilling specific
business needs.
2. Current Market Size
The market size of the provider of accounting software is quite large in Australia. Over the past
few years, the industry of accounting software has grown in the significant manner. In Australia,
there were around 2 million small and medium organization used accounting software in 2015.
The key companies in this market including QuickBooks, Intuit, Xero and MYOB realizes
increase in the number of subscribers, which indicates increase in the size of the market. It is
expected that number of accounting software users in Australia will not grow 1 percent per year
(Roger Montgomery, 2015). Thus, the industry becomes highly competitive, which causes fall in
the prices.
The emergence of cloud-based accounting software contributes in increasing the current market
size and competition respectively. The operators of this industry strive to attain market share by
expanding business outside the home country and to provide cloud-based solutions to the
business (Herber, 2015).
3. Market Leaders and Sources of Competitive Advantage
In Australia, Xero, MYOB (Mind Your Own Business) and Intuit are three market leaders of the
accounting software industry. These providers have intense competition in terms of making
innovative offerings and increasing the consumer base. But, the intense rivalry exists between
MYOB and Xero as both are the only key providers of cloud-based accounting solutions to the
businesses in this country. Both companies such as MYOB and Xero have 446,000 and 585,000

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paying subscribers in Australia respectively (Redrup, 2017). MYOB chased the Xero as the
number of online users of it has increase by 46% in 2016 from the last year (Ramli, 2016).
MYOB is easy to operate and simple to use due to limited feature and functionalities, which
provides it a source of competitive advantage. It is also less expensive than Xero that makes it
more favorable for small and medium sized organization. On the other hand, simple user
interface, more functionality, pioneering in cloud-based solutions and access over high tech
personnel is the key competitive sources of these firms (Scott Partners, 2017).
4. Challenges and Suggestions
Security is the main challenge encougred by the users of cloud-based accounting software. In
cloud system, data is stored over the internet, which can be accessed from anywhere and anytime
with the internet connection. It increases the possibilities of data theft, which places customer
trust at risk for business and affects their reputation (Armbrust et al., 2010). The other challenges
include lack of skilled and experienced staff, which is quite critical to use the accounting
software effectively. The providers of accounting software regularly provide software updates,
which adds more features and due to this the requirement of skilled staff become critical
(Seethamraju, 2015). It creates challenges for firms to use software effectively.
According to Jain (2012), users can ensure security on clouds by ensuring set-up of data access
control with rights. It may help to use cloud based accounting solutions effectively. Seethamraju,
(2015) states that training and development programs may help firms to educate staff and to
make effective use of new IT system.
Conclusion
It can be concluded that implementation of an accounting system requires fit with the
organizational structures and procedures as it helps to reduce the control problems and related

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frauds. The current market size of Australian accounting software is quite large in which MYOB
and Xero are the leaders of the market. Security and lack of skilled staff are key challenges for
users of Australian accounting software.

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