Evolution of Accounting Software in Australia

Evolution of Accounting Software in Australia

This is a Research paper, submitted by University Student, on “Evolution of Accounting Software in Australia”. This Research paper can be used as a guide to complete University Assignment related to Evolution of Accounting Software in Australia or any other similar topics.

Abstract

This literature review portrays the history of accounting software which focus on the evolution of accounting software and the adoption of these software by the small or big business to align with the change in technology.

On other hand, this research also shows the status of current market of these accounting software in Australia. It explain some of the leading Accounting software producing company and explain what made them top leading company in Australia.

Later part of this research explains the challenges faced by the user of accounting software in Australia. At last it is concluded with the recommendation which the software company must focus on to attract the customer and to overcome their challenges.

Introduction

Accounting Software is a system which helps the organization for the documentation of their financial transaction within a computer over a complete scope of bookkeeping choices definitely subordinate upon how huge is the organization in terms of size and operation (Scott, 2015). The accounting packages software vary from a various million pound alternative for public organizations to uncomplicated oversaw records connected with salary and charges. It is due to the need of financial report, accountant capability, organization size and its budget (Jack, 2015). The rapid introduction of Enterprise Resource Planning system produced the new strategy toward the management control potential through the use of new information technology (Little, 2006).

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History: Development and Adoption of Accounting Software

The need of recording of different transaction, inventory of assets and smooth flow of organization with minimal error different companies take the help of computer by using different accounting software packages. If we see back to history, the first computer purchased by the business for accounting purpose was dated to 1955 (Scott, 2015). Due to the innovation of numeric system and different devices for the calculation the first computer to use accounting software is UNIVAC 1 (Scott, 2015).

In ancient the accounting software was bespoke but as time pass the ability of the computer also boost up as a result it began to accept computer languages and different programming. In 1960s many companies invest in tailored accounting system for their business purpose (Scott, 2015).  In the beginning of 1981 Peachtree introduced the office suite which can work in different computers. It only includes spreadsheet and word processor. The Quicken product was launched by Intuit in 1983 which triggered the challenges of making accounting software more user interface (Scott, 2015). In the beginnings of 1980s Teleware Inc. innovate the eye catching accounting software. This company and the product was bought after few years by Australian Publisher and they renamed it as MYOB in 1999 (Scott, 2015).

Today the computer system and the accounting software handles every corner of the business virtually in a real time basis. MYOB, Reckon Accounts, Quickbooks, Xero, Cashbook Complete etc. are the different accounting software used by large and small business in Australia. They are user friendly and provide the every aspects of business needs. Among all of them MYOB is widely used in Australia by both small and large business (Little, 2006).

 

The current Market Size of Accounting Software in Australia

According to the data of 2010, by 2011 the accounting software market takes 17% of total Australian IT market and it is assumed that the sales of accounting software in Australia will achieve a higher increment in sales by 2015  (BMI, 2011). In April 2015, MYOB (ASX: MYO) sales it IPO successfully and it joined hand with Reckon (ASX:RKN) & Xero (ASX:XRO) which are Australia based software company. This provide the opportunities to local based accounting software company to take the benefit of rapid growth of accounting software business (Macken, 2015).

According to the data, from the 2 million small business company who use accounting software only 375,000 people use the cloud based solution provided by MYOB (Macken, 2015). Intuit, for instance, has a bookkeeping item called Quickbooks (both cloud and desktop based) that rivals MYOB, Xero and Reckon in Australia. In 2015, Intuit has over 8000 subscriber in its cloud-based Quickbooks all over the world which is an online based accounting software (Macken, 2015). In Australia Intuit has 2 million subscriber in 2015 (Macken, 2015).

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Accounting Software Leaders in the Market of Australia

MYOB, Intuit and Xero are the three giant players in Australia in the context of accounting software market (Heber, 2015). They provide the best software so that the customer remove the bookkeepers and allow the different business to produce cash flow management and invoicing through their computer desktop or mobile (Heber, 2015).

The accounting – industry has been exposed by cloud administrations like Xero and Intuit. Officeholders – in Australia, that is MYOB – have been dashing to manufacture their own offerings, keep up piece of the overall industry and raise in the middle of $AU831.7 and $AU833.8 million in view of a demonstrative value scope of $3–$4 an offer in its IPO (Heber, 2015).

Xero Company has come from New Zealand and started its business by investing $250 million on accounting software. If we see the result of last year it has about 400,000 customer from 180 countries. Xero processed 95,000,000 invoices and $240 billion transactions (Heber, 2015).

In the previous 12 months Intuit, a US based company has developed its Australian group to 60 staff. They process two acquisitions which include PDF information extraction organization Invitco. This robotizes removing data from bills and input the information in bookkeeping programming as well as additionally rehearse administration programming supplier Fifo (Heber, 2015).

Intuit Quick booking is highly ranked software in Australia. The reason behind is they provide it in cheap price compare to other and its ease of use  (AdvisoryHQ, 2015).

In 2014, MYOB invested $40 million for innovation of cloud technology. It’s a piece of an arrangement to burn through $100 million more than three years on improvements in mechanizing information section, including bills and receipts, enhancing versatile encounters, joint effort, installments and keeping money (AdvisoryHQ, 2015).

As per Business Insider Australia Intuit, Xero and MYOB will concentrate on decreasing their churn rates and intend to enhance client securing and standards for dependability as they bump for the general authority title (Heber, 2015).

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Issues and Challenges faced by Customers

Gradual changes in the technology, diverse in the Australian law and shortage of skilled manpower has bring many issues and challenges in the field of Accounting software market (CPA Australia, 2015). Some of the issues and challenges are mentioned below:

  • Accounting firms nowadays have to deal with a new competitors like Investment banks, technology firms and consulting firms along with their rivals which are affecting in the financial benefits of the company. This makes the customers difficult to adopt the software because it cost more expensive (Arthur, 2015).
  • Increased in the commoditization of accounting services where no any customers want to pay more for the products and when the firms want to provide what is necessary for the customers it becomes them difficult to earn more profit (Arthur, 2015). This degrades in the specification of the software and unable to meet the expectation of customer and fail to fulfill the criteria of their business demand.
  • The change in the technology is affecting the accounting software market. For example: the endeavors by the Tax Office to connection its automated standard business reporting frameworks with business web accounting software creates the challenges to the market which increased the cost and creates shortage in manpower (Arthur, 2015). This change in technology makes the software more complex and every customer cannot afford costly manpower to handle it.
  • According to report 30% of accounting customers are facing the challenges in the technology which supports software successfully without any errors. Moreover dealing with customer’s expectation with minimal expenses make the accounting company more challenging in this competitive market (Frederiksen, 2015). This kind of hazard make the customer business flow more slow with errors.
Recommendations

To overcome the challenges and issues, the firm must address these challenges by using different strategies. Also the company should focus on the marketing efforts to attract and hire the best talent manpower in the company. As Accounting firms endeavor to address these difficulties, the requirement for very key, composed advertising is more noteworthy than any time in recent time, and numerous organizations may require master direction. The organizations that can fabricate an agile and multi-reason advertising machine will be the ones that contend effectively and develop (Jack, 2015). Company must focus on the software compatibility in different technology of minimal cost and the ease of use.

Conclusion

The main key strategy of the accounting firms is to attract and develop the clients. The needs of the buyers, their expectations, buying behavior, strategy of Australian government and changes in their law and the marketing effort of the company should be align to each other to survive in the field of this competitive market. Although there are still lot of challenges in the accounting firm market, there will be a lot more challenges will come in future as a result of changing in the trend of technology, customer expectation, competitive market and demand of the government.

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References

AdvisoryHQ, 2015. AdvisoryHQ. [Online]
Available at: http://www.advisoryhq.com/articles/5-best-small-business-accounting-software-in-australia/
[Accessed 12 December 2015].

Arthur, D., 2015. Harmoniq. [Online]
Available at: http://www.harmoniq.com.au/predictions-vs-reality-challenges-for-the-accounting-industry/
[Accessed 12 December 2015].

BMI, 2011. Part of BMI’s Industry Report & Forecasts Series, s.l.: Business Monitor International Ltd..

CPA Australia, 2015. Firm of the Future: Opportunities and challenges for Public Practices , s.l.: CPA Australia Ltd.

Frederiksen, L., 2015. Professional Services Marketing Today. [Online]
Available at: http://www.hingemarketing.com/blog/story/the-top-5-business-challenges-for-accounting-financial-services-firms
[Accessed 12 December 2015].

Heber, A., 2015. Business Insider Australia. [Online]
Available at: http://www.businessinsider.com.au/charts-the-battle-for-supremacy-in-australias-cloud-accounting-market-2015-4
[Accessed 12 December 2015].

Jack, L., 2015. Future making in farm management accounting: The Australian “Blue Book”. Accounting History, 20(2), pp. 152-182.

Little, I., 2006. Evaluating, Selecting and Implementing Accounting Software. Credit Control, 27(3), pp. 36-39.

M GRANLUND, k. L., 1998. It’s a Small world of management Accounting Practices. Journal of Management Accountants, Volume 10, pp. 153-79.

Macken, A., 2015. Roger Montogomery. [Online]
Available at: http://rogermontgomery.com/accounting-software-wars-who-will-win/
[Accessed 12 December 2015].

Scott, B., 2015. MYOB. [Online]
Available at: http://myob.com.au/blog/60-years-of-accounting-software-introduction/
[Accessed 05 December 2015].

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