Strategic Information Systems and Accounting Software Package Review

This literature review examines the strategic use of accounting software packages, with a particular focus on the National Australia Bank's (NAB) adoption of Xero. It explores the evolution of accounting software from early systems to cloud-based solutions, discussing the advantages of software packages such as increased speed, reduced errors, and improved data organization. The review categorizes software into commercial, custom, and ERP systems, highlighting the importance of choosing the right software for business needs. It analyzes the organizational structure of NAB, the bank teller process, and potential control problems within accounting systems, including input, processing, storage, and output stages. The review also covers the competitive landscape of the Australian market, the current trends in the accounting industry, and the gaps and problems faced by users, such as security concerns and lack of user-friendliness, and recommends that firms should focus on introducing new features and alterations in the existing products features to cater the needs of users.

Running head: Strategic Information Systems
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Strategic Information Systems
Accounting Software Packages

Strategic Information Systems 1
Literature review
In general sense, accounting means giving an explanation or reporting about something. In
the context of business financial accounting can be defines as process of identifying,
classifying, measuring, recording and communicating the economic transactions (Collis, Holt
and Hussey, 2017). Accounting is not only important for businesses it is required in every
sphere of life. Accounting provides the critical numbers that helps in decision making and
proceeding in right direction to achieve financial objectives (Barrow and Tracy, 2010).
In recent times, accounting software packages have begun to be used in various business
organisations. These computerised systems not only ease the accounting task, it links various
other information with the accounting information which provides better insights for decision
making. The most likely system acquisition method depends on the size and needs of the
enterprises. In Australia small and medium size companies generally use software packages
like MYOP, whereas large companies usually invest on ERPs (Horngren and Harrison,
2015). Using accounting software packages can have various advantages. It simplifies the
data entry procedure. The major advantage of using software package is speed. Using
accounting software increases the speed of accounting processes. It is so because machine
has the capacity to perform faster than humans. Another major advantage of the using
accounting software it minimises risk of error. If the entered data in the software is correct
there are negligible chances that results will include errors. Machines have more accuracy
then humans and therefore accounting software promises the error free results. Better
organisation of data. There is a possibility that data prepared manually can be misplaced but
when data is stored in electronic form there are very less chances of misplacing the data.
Accounting software can easily store the data and also it provides easy access to it when
required. Other benefit of using accounting software is reporting. The software also generates
various reports automatically based on the results. These reports help in decision making and
communicating the financial results to different interesting parties. Along with these basic
accounting functions the software also provides various additional functions such as online
banking and e- filling. It reduces overall cost as it reduces the need to employ accountants.
Although it is required to pay certain price for the software but its benefits reduce the overall
cost.
These softwares can be basically classified into three different categories. These categories
are commercial software, custom software and ERP. Commercial softwares are those
softwares which are available for general use. This software performs some general functions
and can be used by any firm. Customised softwares are special software that is designed to
cater the needs of a specific organisation. This type of software is not available for general
use they are designed only on demand of specific firms. An ERP is much more than
accounting software. It contains features of accounting software as well as some other
features. Enterprise resource planning is software that is designed for integration and
optimisation of various transactions of business. It allows business to automate various
functions related to back office (Moon, 2007).To gain maximum from the accounting

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industry it is very essential for the business organisation to choose its accounting software
very carefully.
Accounting software packages are required in almost the business settings but they are most
important for banks and other organisation which deal in providing financial products or
services. This literature review is in context of business organisation National Australia Bank
that uses Xero accounting software package. The firm has 200,000 customers in Australia
and 400,000 around the globe. It has opted to use this package to provide better and efficient
services to the organisations. The company entered in partnership with Xero in 2015 (nab,
2015). Organisation structure can be defined as an organisation setting that determines how
people and their jobs are classified and coordinated. It is concerned with assigning
responsibilities, allocating the task and defining authority relationships in an organisation
(Maduenyi, Oke, Fadeyi and Ajagbe, 2015). The organisation structure adopted by bank is
formal in nature. Although in the recent years it has done some changes to the executive team
ad organisation structure to make the organisation more customers oriented (corporate
governance at NAB , 2016) .Formal organisational structure is characterised by hierarchal
relationships among various jobs and organisational units. The structure relies on formal rules
and policies. This structure establishes effective reporting relationships that controls,
coordinates and motivates employees to achieve organisational goals (Tran, and Tian, 2013).
A poor organisational structure may give rise to various operational problems. Some of the
operational problems that may arise in formal structure are slow decision making, lack of
innovation, lack of team work and low productivity. Slow decision making can sometimes
lead to loss of an attractive opportunity or delay in some operation. It is because the process
of decision making has to pass through various layers before arriving at a solution. Lack of
innovation can be a result of less freedom to employees. The employees are not encouraged
and paid attention when they come up with a new idea. In formal organisation setting politics
increases, this can hamper the coordination and cooperation among the employees. This leads
to creating a culture where workers do not like to assist each other they are just focus on their
own work. This hampers the team work in the organisation. The next major operational
problem that may result because of formal structure is low productivity. Low productivity can
result because of the inefficiency in operations. Employee empowerment constraints and rigid
rules can lead to creation of an environment where employees are not able to accomplish
their task effectively (Elsaid, Okasha and Abdelghaly, 2013).
The type of organisation chosen for study is a Bank. Banks do not have any fixed sales
procedure. Actually they are not involved in selling any physical product they are engaged in
providing financial services. The most important process at bank is the process of bank teller.
That is the main point of customer contact. The flowchart of bank teller process is given
below:

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Source: Rohitha Perera, 2017.
The software package used by the company is very popular in Australian markets. It is bit
costlier than some of its competitors but provides the user with various advantages. Xero’s
products are influenced by design and user experience and therefore have a tagline “beautiful
accounting software” (Macpherson, 2015).
The few control related problems cat occur at 4 stages in the system. These four stages are
input stage, processing stage, storage stage and output stage. The problems at input stage
include data not visible, unauthorised access, input of wrong data by unfamiliar use. The
problems at processing stage involve lack of judgement ability in computer systems,
centralisation of data and separation of duties. The problems that can occur at storage phase
are data stealing is easy, information can be altered without physical traces and invisibility of
audit trail. The problems at output stage is different reality can be created (Ramadhan, Joshi
and Hameed, 2017).
The Xero accounting software system protects against all kinds of potential frauds. It is not
easy to commit any kind of fraud in these accounting systems. The Xero also provides
guidelines to small and medium enterprise to protect against any kinds of frauds. The
software package also provides extra features that can quickly catch up any kind of crooked
behaviour (Hooper, 2017).

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The accounting software came into use in early 1950s and 1960s. The various changes in the
accounting software are given in the diagram.
Source: Ashutosh Deshmukh , 2006
In the 2000 era two more concepts named ‘SaaS’ and integration came to existence this
resulted bringing out more powerful systems that could handle more complex accounting
operations. These systems also provided concurrent access to files and programmes. In the
year 2010 mobile accounting came into existence. This was the beginning of period of real
time accounting. This resulted in mobile applications for the financial operations. Based on
these developments presently accounting services can be classified into three different
categories that are on premises accounting, hosted solutions and cloud completion. Premises
accounting stands for a software programme that is purchased by a company and it is
installed in its own system. In the hosted solution software can be accessed by company’s
system but the centre of data is at a physically different place. It is located with the service
provider. Hardware is managed through service provider’s end. In cloud computing the data
is managed through the virtual platforms. The continuous evolutions in the accounting
software have made this task easy and efficient (Bendovschi, 2015). In Australia the current
market is for very wide and attractive. The two major players in the Australian market of
accounting software are MYOP and Xero. Previously MYOP was a dominant market player

Strategic Information Systems 5
but in May 2017 Xero was ahead of MYOB. The revenue growth of MYOB was 13 per cent
and revenue growth of Xero was above 40 per cent. It is expected that revenues of zero will
pass MYOP in the next 12 months (growthpath, 2017). The other market players are
Quickbook, Intuit and Reckon. Xero is becoming the dominant market player because of the
competitive advantage. The company has advantage because of various reasons. Xero is a
cloud based accounting; it is built from the cloud based accounting from the ground level.
Cloud based accounting is the recent trend in the market. It has a structure that is suited to
both accounting professionals and users who are not into accounting. This provides a
platform which provides both beauty and fun. This software package has an ability to accept
the unlimited users in one account. Xero tops up the accounting software market with its rich
features. Setting up this software package does not have bulky requirements. Setting up this
software package is quick and easy it just requires a good internet connection. The firm has
adopted differential pricing strategy to remain ahead in the competition. The prices of
software vary according to the regions. Company also offers 180 days free access to new
users but with the limited access (BPO connect, 2014). The current trends that prevail in the
Australian accounting industry are continuous growth in the digital economy. Digital
economy has contributed 5.1 per cent in the GDP. Association of accounting technicians is
now encouraging the firms to use small and medium enterprises to adopt clouding
technologies in its accounting processes. Increase in outsourcing and offshoring. The firms
have now started to outsource their business activities. Accounting is one of them.
Accounting software also eases the outsourcing task (theoutsourcedaccountant, 2016). Recent
market trends, demonstrates that market conditions for accounting firms are favourable. It is
expected that demand for advanced accounting software package will rise in coming time.
There are various gaps or problems that are faced by users in current software packages. One
of the basic issues is lack of security. The users are worried about the data security. Using the
accounting software opens them to potential risk of confidential data used by foreign parties.
Some companies have come up with better security options but still not able to create trust in
the minds of user. Some of the software packages do not provide user friendly platform, users
are not able to perform any kind of customisation. The other areas in which gap have been
experienced by users in terms of expectations and reality include compatibility, flexibility,
internal control, training and reporting capability. The users expect software that provides
almost all the general features such as easy to use, after sale assistance, beta versions, time to
time up gradations, guaranties and warranties (Ramazani, Zanjani, and Vali, 2012). It is
recommended for the firms to introduce new features and make alterations in the existing
products features to cater the needs of users. A software package should cater needs such as
increased speed, efficiency, accuracy in results, compatible with the firm’s requirements,
flexible enough to accommodate changes and up gradation, reliability and trustworthiness. To
overcome the gaps it is also important for the accounting software companies to always
explore new technologies and test it with the selected segment after implementing it in their
product.

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References
Barrow, C. and Tracy, J.A., 2010. Understanding Business Accounting for Dummies. John
Wiley & Sons.
Bendovschi, A.C., 2015. THE EVOLUTION OF ACCOUNTING INFORMATION
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BPO connect, 2014. Top 7 Reasons Xero Accounting Wins Over Competitors, viewed on 27
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competitors/
Collis, J., Holt, A. and Hussey, R., 2017. Business accounting. Springer.
Deshmukh, A., 2006. The Evolution of Accounting Software. In Digital Accounting: The
Effects of the Internet and ERP on Accounting (pp. 15-41). IGI Global.
Elsaid, N.M., Okasha, A.E. and Abdelghaly, A.A., 2013. Defining and Solving the
Organizational Structure Problems to Improve the Performanceof Ministry of State for
Environmental Affairs-Egypt. International Journal of Scientific and Research Publications,
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liveaccounts-and-xero-accounting-in-the-cloud.html
Hooper, C., 2017. How to Bust Fraudulent Activity in Xero. Digital Firtst, viewed on 27
August 2017 from https://digitalfirst.com/bust-fraudulent-activity-xero/
Horngren, C. and Harrison, W., 2015. Accounting: bsb110, 3rd edition. Pearson Higher
Education AU.
Macpherson, S., 2017. Which accounting software is right for your business?. In the Black,
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Maduenyi, S., Oke, A.O., Fadeyi, O. and Ajagbe, A.M., 2015. Impact of Organisational
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Moon, Y.B., 2007. Enterprise Resource Planning (ERP): a review of the literature.
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Nab, 2015. NAB and Xero deliver a smarter way to do business, viewed on 27 August 2017
from http://news.nab.com.au/nab-and-xero-deliver-a-smarter-way-to-do-business/

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Nab, 2016. 2016 Corporate Governance Statement, viewed on 27 August 2017 from
https://www.nab.com.au/content/dam/nabrwd/About-Us/corporategovernance/2016-
corporate-governance-statement.pdf
Perera, R., 2017. Banking Teller Process ( Flowchart), viewed on 27 August 2017 from
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Ramadhan,S., Joshi, P.L. and Hameed, S.A., 2017. Accontants’ perception of internal
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firm. American Journal of Industrial and Business Management, 3(2), p.229.

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