Strategic Information System Report: Wesfarmers Business Analysis

This report provides a comprehensive analysis of the strategic information system employed by Wesfarmers, a leading Australian business group. It begins by examining the company's organizational structure, highlighting its centralized, hierarchical nature and its implications for operational efficiency and decision-making. The report then delves into the operational problems arising from this structure, such as delays in decision-making and potential for internal competition. The system acquisition methods, including custom and commercial software, are discussed, with a focus on Wesfarmers' adoption of custom software. A system flowchart of the sales procedures is presented to visualize the company's sales process. The role and evolution of accounting software packages, including market leaders like MYOB and Xero, are explored, along with the current market size and competitive landscape. The report identifies gaps and challenges faced by users of accounting software and offers recommendations. The analysis emphasizes the importance of strategic information in analyzing the market and improving the success of the company.

STRATEGIC INFORMATION SYSTEM
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TABLE OF CONTENTS
Introduction......................................................................................................................................4
Part 1................................................................................................................................................4
Organizational structure...............................................................................................................4
Operational problems due to structure.........................................................................................6
System Acquisition Method........................................................................................................7
System flowchart of the sales procedures....................................................................................8
Control problems in the accounting system.................................................................................8
Part 2..............................................................................................................................................10
Development and adoption of the accounting software packages.............................................10
The current market size.............................................................................................................10
Leader in the market and what gives them the competitive advantage.....................................11
Identify the current gaps or challenges encountered by users or customers of accounting
software/packages and make relevant suggestions or recommendations..................................11
Conclusion.....................................................................................................................................12
References......................................................................................................................................13
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TABLE OF FIGURES
Figure 1: Wesfarmers Divisions......................................................................................................4
Figure 2: Organizational Chart Wesfarmers....................................................................................5
Figure 3: System flowchart of the sales procedures........................................................................7
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EXECUTIVE SUMMARY
With the changing business scenario, many businesses jumped into the accounting software field
and started identifying the different and unique requirements of both small as well as medium
sized enterprises. The report herewith explains about the current organisational structure of a
leading business group of Australia named as Wesfarmers Limited. The company is dealing with
accounting software packages. The business and operational problem of the company have been
discussed in the below section along with identifying how the problems are related to
organisational structure. The main issue associated with the structure is found as the reducing
scope of cross cultural activities that negatively affects the creativity of the employees. It has
been witnessed that added that these accounting software’s are used by more than 1 million
businesses owners in Australia In the report, it has been explained that MYOB is a leader in the
accounting software market from the very long time.
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INTRODUCTION
Strategic information plays a very important role in the success of company as it helps to
analyse the market. Wesfarmers is one the biggest companies in Australia which is doing its
operations in effective manner. In this report, the manner in which company operates and the
problems it faces in terms of its operations and control are discussed. Further, system acquisition
methods and sales procedures adopted by Wesfarmers are also explained. Other than that, role of
accounting software packages and their advantages to companies in Australia are also presented
with proper competitive analysis.
PART 1
Organizational structure
Wesfarmers Limited is one of the biggest business groups not only in Australia but also
in the world which has its head quarters in Perth, Australia. The company operates in the market
with different businesses in the fields of retail, chemicals, fertilizer, coal and many more
(Wesfarmers, 2017). Because of lots of divisions, the company follows the centralized,
hierarchal structure where the information flows from the top to bottom. However, each of the
division has its own head and is expected to take the division to new heights with proper
strategies and techniques. This particular structure is followed by the company because of the
different head of different units, understand the market in different ways as per their customers
need and demands. Also, if one business fails, it does not have any impact on the function of
others. However, there are some functions which are organized centrally by the head office like
human resources as each division has to follow same HR policies. Also, financial decisions for
each business is taken by the board of directors where the head of division present their past
records and future visions. With this centralized functions specification, the company is able to
take control of its divisions in an appropriate manner and also by giving freedom to the different
division; it allows them to explore the market opportunities and work independently to gain more
market share.
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Figure 1: Wesfarmers Divisions
(Source: Wesfarmers, 2017)
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Figure 2: Organizational Chart Wesfarmers
(Source: Wesfarmers, 2017)
Operational problems due to structure
There are many issues that are faced by Wesfarmers because of centralized, hierarchal
structure which starts with the delay in decision as if the manager of the particular division wants
to launch a particular product or service in the market, he or she has to take permissions from the
centralized board and pass on the budget (Wesfarmers, 2017). Centralized board takes its time to
review the proposal made by the head, and during this time, it might happen that opportunity is
lost and some other companies come up with the solution.
Other than that, there is also an increase in the competition among the different divisions
of the company as they fight with each other to provide the worth of their divisions and do not
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think of the common goal which is to fulfil the goals and objectives of Wesfarmers. It increases
the quarrels and makes the working environment negative which affects the working of other
departments also which are not involved.
This particular type of structure also reduces the scope of cross cultural activities and
reduction in the creativity of the employees. As the divisions are not related to each other, no
employees get the opportunity to work with another team which reduces the scope of employee
learning and their ability to perform much better.
Other than that, if any changes have to occur in the company, it takes a long time to be
executed because a long hierarchal structure have to be followed which takes time and that might
affect the working of a particular division.
System Acquisition Method
The most common methods for the system acquisitions have been identified as
commercial software, ERP or the custom software based on the needs of clients. Custom
software’s have various distinctive business processes as the company are able to modify the
software as per their need and demands (Pellinen, 2006). Commercial software is the ones
which are standard and cannot be modified. They are equipped with lots of functions like Excel,
accounting, word, etc. Companies have to use the functions which are built within. The last is
ERP in which, minor customization can be made in some of the functions without developing the
systems from scratch.
The system software that is used in the Wesfarmers is customer software because there
are different divisions of the company and they all work independently. Company purchases the
open ended software from the market and then the engineers in the company make changes in
them as per the requirement of divisions (Scapens, 2010). Different processes and systems are
added to provide the additional functionalities which help the company to perform effectively.
As the employees of the company make modifications, they are able to remove all the bugs that
appear while operations and they do not have to wait for the software company person to visit
and check as it might waste lots of time.
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System flowchart of the sales procedures
Figure 3: System flowchart of the sales procedures
(Source: Wesfarmers, 2017)
From the diagram, it can be understood that the working of the company starts by the
research in the market then account assessments are done to identify the different opportunities
and needs of the customers (Wesfarmers, 2017). After this, different types of sources are
identified, and then the products are sending for the development. Proper selling of goods is done
with customer relationships.
Control problems in the accounting system
Gujarathi, (2005) identifies that there are many problems which have to be faced by the
companies in terms of the accounting software which operates online and some of them are-
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HACKING
Most of the data of the companies now days are available online on the
cloud platforms and there are many hackers who can hack into the
system and release the sensitive data into public which can cost
millions to companies.
BUGS AND
INTERNET
HANDLING
It might be possible that server of company is down and because of that
SME’s that use those software’s are not able to upload the real time
data. Also, some bugs and other software issues can also hamper the
working (Zwick, 2004).
CONFIDENT
IALITY
As employees are also given the access of the cloud accounting, it
might be possible that they leak some information so the controlling is
another issue that affects the companies on regular basis.

PART 2
Development and adoption of the accounting software packages
According to Obrien, (2007) accounting software packages had seen a great deal of
development as it all started in the year 1991 when MYOB started providing services like
accounting, tax and may more to the SME’s. Slowly this software’s started developing more, and
since 1993 many businesses since in Asia have relied on this business management as well as
accounting software. The software’s which were developed earlier were also not able to fit with
the other software’s of that time like CRM, inventory methods, etc. With the passing of time,
companies in Australia realized the dire need of the accounting software’s so that they can also
concentrate on different functions like ERP, CRM, etc (XERO, 2017). With the time, different
companies like Xero, Inuits continued the development of software with new and effective
technological changes and at present, these firms carry the solutions of businesses to over 1
million accounting firms and businesses in who whole Asia Pacific Region.
The current market size
Tracy, (2013) identified that there are many Australian companies which are working in
the same field and they all have different market sizes. Gupta, (2011) added that these
accounting software’s are used by more than 1 million businesses owners in Australia. The
accounting software’s provided by companies are reliable and supports more than 10,000
accounting practices and over 500,000 businesses worldwide. All the organizations from the very
beginning are using their knowledge, scale and expertise to help the SME’s in order to build
them a better business. The growth of the industry has been forecasted annually at 4.8% by the
year 2022-23 which can be said that this industry has lots of scope in future (IBIS World, 2017).
The revenue of the industry is $3 billion and annual growth between the years 2013-2018 is
8.3%.
However, (2007) argued that, despite the advantages of accounting software and the
presence of many companies, almost half of the SME’s in Australia are still not using these
products and only rely on their paper accounting methods or use normal desktop software. This
is because, most of the companies feel, using the accounting software will increase their costs
and also people will need to be trained which is not possible for them.
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Leader in the market and what gives them the competitive advantage
According to Bagad, (2008) MYOB has been a leader in the market from the very long
time, and it can be seen from it dual digit revenue development for the half year ending June. In
Australia, the company is a leader in the cloud accounting for different SME’s. In the first half of
the financial year, companies are exploiting its powerful base with the adoption of new clients
and are also making efforts to retain the existing clients by offering them valuable solutions and
packages. The company acquired almost 63% of the new users in the first half of accounting
period in selecting cloud products and over 86,000 paying subscribers utilizing these resources.
Tracy, (2013) added that products of MYOB are used by more than 1 million businesses owners
in both Australia and New Zealand. $833.1 Million listing of the company in May 2015 was the
largest technology organization listing ever on ASX which allowed the company to make huge
earning and gain great market share. The company also accounts for the 67% of the back office
software that is used in Australia (MYOB, 2017).
In the current scenario, MYOB is fighting one the biggest companies in this field which
is XERO. It is a company which is again showing a great rise in its sale and recorded a great
growth of 54% last year. This company is also providing many seminars and other free offers to
the users so that they can increase its presence. There are some other companies like Intuit also,
which is new in the market but with its advanced accounting software’s and great marketing, it
has also shown a great success.
Lucey, (2004) said that system of the cloud based accounting is increasing the
efficiencies in the organizations. Rather than purchasing the complete IT infrastructure,
organization are now accessing their accounting software via the internet for some minimal
monthly charges. It is allowing organizations to devolve and make concentration fully on their
operations as well as financial resources. More than 12% of the small businesses in Australia are
using cloud accounting software provided by MYOB.
Identify the current gaps or challenges encountered by users or customers of accounting
software/packages and make relevant suggestions or recommendations.
Shaikh, (2013) identified that one of the biggest challenges that these accounting firms
have to face with its cloud accounting system is the security of data as there are many hackers in
the world who can hack into the system of the company can bring out the sensitive information
of different companies that are using this software. In order to avoid this, these companies like
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