Report on Accounting Software Packages Used in Australia
In the last few decades, the organisations and educational institutes both have experienced rapid change in the role of accounting professionals. Starting from the hard copy manual accounting, adoption of the international financial reporting has generated rapid restructuring in the overall financial and accounting system. This restructuring of the accounting system reflects growing interrelations between the nations and the emergence of the new forms of the international accounting governance. The present study analyses the history of the accounting software and the emergence of the new software packages. In addition to that the development, adoption scenario of those packages have been analysed in the given literature review. The current market size of the frequently used accounting software packages has been evaluated, followed by identifying the market leaders and the competitive challenge associated with those services. Finally, the gaps and challenges on those accounting software have been identified in the present study ending with strategic recommendations for improving the drawbacks of the present Australian Accounting Software Packages.
After a prolonged journey through the hard copy based accounting system, the Australian professional accounting divisions entered into the realm of the international accounting standard setting in the year 1973. Since that time the accounting packages has been evolved as per the international standards. The Australian Government has allowed the use of DOS-based accounting software of the organisation Greentree, under the brand name CBA In the words of Tang and Byrne (2007), CBA was named as the Australian Microcomputer Accounting Business Software, in the year 1986. However, despite of the outstanding performance, the accessibility issues have got the observation critics of IFRS, due to the lack of financial statement accessibility by the investors and analysts (McDowall and Jackling, 2006). The report of PWC, 2007 also intimates the similar issues. In order to improve the financial decision making, international standard setting accounting packages have arrived in the Australian accounting package and the complete suite of international standards have been introduced in the year 2002, by the Australian FRC.
The development of the accounting software packages has been arrived due to the increasing demand of the updated software packages from the SMEs and MNEs. Initially, the accounting packages of Greentree ERP have enabled the MNEs to manage the accounting systems in a large scale. However, due to the ERP, collaboration, several SMEs has failed due to the affordability issue (Tang and Byrne, 2007). During that time, with respect to the norms placed in the section 227 of the Australian Securities and Investment Act 2001, the Australian Accounting Standards Board (AASB) made an active participation in the development of accounting standards for the global usage. MYOB was founded in the early 1980 and founded in Australia in the year 1991, for providing accounting support to the SMEs. However, due to its failure to support large enterprises, Xero Accounting Software came into the account for serving both SMEs and MNEs although it was mainly dedicated to the SME business model.
Furthermore, the emergence of Reckon in the year 1987 was successful in serving the SMEs related to the bookkeeping and accounting solutions. In this context, Tang and Byrne (2007) stated that the increased complexity on the accounting system of the MNEs, quick changes in the traditional accounting software has been emerged. In the year 2013, Intuit QuickBooks Accounting Software has come to the account and gathered mass response within the SME business accounting. Additionally, the new updated accounting version of Reckon has been focused on both the large and small scale business enterprises. According to the Australian Business insider view, MYOB, Intuit and Xero have been ranked three major players in the Australian Accounting software market, due to its diversified account solutions offerings to the world-class organisations.
1.3 Current market size:
Among the top cloud accounting marketers, Xero has attained the biggest market share within the cloud computing accounting services. On the other hand, the revenue loss of MYOB is pushing the marketers to invest between 13% to 16% revenue on its research and development activity. In the words of Watson et al. (2007), MYOB is racing to build the market share and rise between $AU831.7 and $AU833.8 million. In addition to that, the US marketer Intuit has also rolled into the Australian accounting market and competing heavily with the rivals like MYOB, Xero, etc. The remarkable success of Xero such as processing about $240 billion in transactions along with the invoice number of 95 million is raising potential threats to its market rivals MYOB, Intuit QuickBooks, etc. Therefore, strong diversification in the accounting packages would be required to manage the sustainability in the global market.
1.4 Leaders in the market and the competitive advantage:
Intuit QuickBooks Enterprise
In the mid of 2008, Intuit has proclaimed QuickBooks to have 3.7 million users, which indicates that the brand has managed to capture 94.2% of the accounting business market. The present Intuit webpage signifies that QuickBooks is holding 85% of the retail market shares in the Australian market. Erwin (2010) determined that the no cost upgradation to the next edition of QuickBooks software has influenced the majority of the enterprises to subscribe the accountant software. Thus, the majority of the business especially the SMEs are investing on the QuickBooks Enterprise. Since, Intuit has provided the FSP devices in the 2013 edition where the user can get the copy of QuickBooks Enterprise 2014 with no operational cost. Thus, the added benefits helped the brand to widespread the utility of its accounting software and convince the entrepreneurs with its services. Thus, the current approach has facilitated the brand to attain a competitive advantage in the Australian market.
It has been inferred that MYOB provides tax and accounting services to the small and the medium business and accountants. According to Tan and Ferreir (2012), $2.5 billion had been the largest float of MYOB in the current year. It provides the accounting right strength devices which include everything which the traditional accounting traditional desktop accounting program demands. Tan and Ferreir (2012) stated that NYOB has been racing to build its individual offerings, enhanced market share between $AU 831.7 – $AU 8333.8 million. The current figure has been demonstrated on the basis of the indicative price range of $3 – $4 share in the IPO. Majority of the enterprise are prioritizing MYOB, as it removes the need for the book keepers and facilitates the business to make invoice and run its cash flow management decisions on the desktop and mobile apps. Thus, the calculation process becomes easier for the ent4rprise, which intricate the business owner to opt for the software.
Xero basically targets the small medium enterprises in the Australian market. Previous year the brand has made the record of 400,00 paying customers in Australia, processing the transactions with $240 billion and a total of 95 million invoices. Erwin (2010) explained that the brand has basically i9nvesvted $250 million in developing its cloud performances and invoices to appeal the small and the medium enterprises. The invoice facility had been the major advantage for Xero with which the brand has enabled to convert 35% of the MYOB’s prospects. As a result of the former reason, the annual churn of MYOB across it cloud customers base has been 17%, however, Xero has attained the churn of 11-13%. Inference can be drawn that Xero has basically focused on reducing its churn rates to improve its customer acquisition and retention rates, to attain the competency in the market.
1.5 Gaps challenges and suggestion:
The gaps and challenges have been evaluated underneath:
Product code issues in the QuickBooks software
The majority of the subscribers are facing the product code issues while installing the QuickBooks software. Tan and Ferreir (2012) inferred that despite of receiving the product code in the email, the users fail to use the same while the registration and profile recovery process. On the other hand, the user receives the mail from the company that within 30 days the registration process needs to be completed with the correct product code, thus, the user requires finishing the process by calling the registration number. However, the majority of the users are switching to the other software, as the validation code that has been provided by the customer care representatives is invalid. Thus, despite of having the access to the software, the enterprises are failing to utilize accounting software. Thus, QuickBooks necessitates updating its product code services in order to maintain the prior brand trust amongst users.
The cloud registration has grown by 80% in 2015 and expected to hit by 90% in the next year. Thus, the preference of the users towards the desktop accounting services has been gradually declining. Thus, Erwin (2010) suggested that MYOB can successfully convert half, of its existing customers to the cloud based services. But the biggest challenging task of the brand would be to convince its customers with the new services, as several other giants have captured 95% of the market, thus, it would be merely impossible for the brand to influence the segments. However, MYOB was relatively slow in its product shift to the cloud, thus, has lost 60,000 paying customers to Xero.
The current study emphasizes on the history and the development of the accounting software in the Australian market. It has been inferred that QuickBooks, MYOB and Xero had been the market leader, amongst which QuickBooks has managed to capture the major section of the market, followed by Xero and MYOB.
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Tang, M., and Byrne, R. (2007) “Regular Versus Online Versus Blended: A Qualitative Description of the Advantages of the Electronic Modes and a Quantitative Evaluation”, International Journal on ELearning, 6 (2), pp. 257–266
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