In this report the execution of effective strategic information system has been discussed by selecting a retail company operating in Australia named Aldi. In this report the organisational structure of Aldi is explained and the likely problems that might arise due to their structural framework which could interfere in their operational process have been discussed. Also most suitable system acquisition methods and their different characteristics have been explained in this study with further illustration of a flowchart of the sales process with detailed explanation has been provided. In the second part of report development of accounting software packages have been explained as they are essential for supporting strategic information system of an organisation and market size of some of best providers in Australia has been detailed along with their competitive characteristics. Finally likely challenges of using these packages have been explained with recommendations to avoid serious problems.
Organizational structure is a conceptual framework that determines distribution of roles, responsibilities and authorities related to work among the different levels of organization to ensure better communication process, flow of information across different levels and departments and to ensure systematic and structured coordination of activities. It acts as guideline which makes functioning of activities and clarity of roles more precise and clear among employees at different levels thus making implementation of objectives smooth and well coordinated. It also helps in better supervision of activities across organization (Maduenyi, Oke, Fadeyi and Ajagbe, 2015).
The current organizational structure of Aldi is categorized into different level of groups like board of directors, vice president and business function managers like finance, operations and HR and further into different sub groups under each functional department. Each group operates their own function and collectively works in sync with other departments to meet common organizational objectives. The significance of organizational structure at Aldi is very imperative as it supports better communication network amongst all levels and functions of Aldi and also simplifies role of different employees at different level within the organization (Voigt, Buliga and Michl, 2017). Moreover it even helps Aldi work according to different job specialization and forms a chain of command and span of control formally at each level bringing clarity among employees and their reporting structure. This helps to well manage all activities at Aldi.
Organisational structure at ALDI:
Due to the current organizational structure of Aldi it might face certain operational issues like:
Disproportionateness in production process: at Aldi each function is divided into several departments and sub-departments that operate separately their own work due to which disparity might occur in tasks that requires different departments to work together which could result to operational problems in production. This could occur largely due to dissimilarity of opinion or disorientation in collective task which could impact production process due to different set of procedures and policies for different functions (Hofmann, Busse, Bode and Henke, 2014).
Inaccuracy in economies of scale: as there are different departments and several functions at Aldi so maintaining record of their production and sales department wise is a tough task. Any kind of error in recording these inputs will result into operational problems and miscalculation in economies of scale.
Inadequacy of communication process: the organizational structure of Aldi is such that it becomes challenging for employees to maintain good communication process with co-workers. The communication process hinders as their organizational structure misses flexibility which could create operational problems due to lack of communication and could impact outputs (Hofmann, Busse, Bode and Henke, 2014).
The different types of system acquisition methods are:
Commercial software: these software programs are constructed mainly for the prospect of sales and several of open sources commercial software’s are not well advanced. Many firms use commercial accounting software of different categories but they do not perfectly satisfy the definite needs and requirements rather they function as generalized software.
Custom Software: custom accounting software’s have been constructed by many companies to make procedure of financial accounting easier and more conducive to needs of firms which would support development of productiveness. The suitable benefit of custom software is that they could be comfortably upgraded quickly within a limited expense. It even supports firms to target their HRM practices for better operations (Thomas, Ellis, Easterbrook, Reichardt and Knee, Rovi Guides, 2016).
Enterprise resource planning (ERP): ERP software is an integrated application that supports multifunctional management of business needs which are linked to human resources, technology and services and the software has numerous processes which help to modify the managing activities in a firm. It helps companies to carry out numerous functions at same time thus improving their operational performance. Also ERP transforms a firm into real time information driven organization.
As analyzed all three types of system acquisition methods have their own set of benefits and relevance. But the most likely of all methods is ERP as it helps to perform multiple functions within an organization such as recording accounting data, maintaining records of different services and customers which are quite useful for retail business such as Aldi. ERP combines all functions into single function for streamlining different functional activities and data across the firm which can help Aldi manage their wide set of activities and business transactions.
The sales procedure at Aldi is very simple in characteristic where the business dealings and sales affairs are recorded in ERP system software. These software archive details of transaction pre and post sales as well as general entries. As Aldi is into retail business its main function is to provide customer access to regular essential products and also customer services. In addition to these Aldi also has to maintain procurement and distribution of supplies service with medium to small vendors which are all recorded in ERP system. The ERP system combines all functions to make sales process easier at Aldi. This ERP system is then sub-categorised into sales distribution, service application, financial application, production application and inventory management which are all centrally assembled with database and ERP system (Kovac and Palic, 2016).
After every sale is done the transaction and customer information is recorded and if any issue arises then customer request is put into the system so as to address the complaint. Technical analysis is then made and after solving customer problem a feedback is received into the system. In case customer remains dis-satisfied with first request attempt the issue is re-analysed and fixed. All sales transactions and affairs are recorded as shown in flow chart with the help of accounting software’s.
There can be numerous control problems related to software systems which could be associated with price, nature, category description and brand of the software system etc. the considerable control problem associated with ERP software is its cost where many medium to small sized firms are not able to implement ERP system due to its high investment cost. Another control problem is related to category description of ERP system so before investing into ERP system the nature and effectiveness of the software needs to be analyzed before starting its use as the execution process of ERP is exhaustive and may hinder other operations of business. And in case, if ERP is used to share information with diverse other firms then implementation process could unwillingly affect operations (Chang, Yen, Chang and Jan, 2014).
The various frauds which are possible in ERP system is risk of hacking confidential information, ransomware attacks and potential threat of internal frauds committed by insiders of organization. As ERP system makes information available so biggest fraud occurs from user access to parts of the system that should not be enabled to all users which leads to committing fraud (Chang, Yen, Chang and Jan, 2014). The most general is dummy company fraud in which a user establishes false supplier, operates fictitious orders and bills for products that are never received or paid. Other sorts of frauds are inventory manipulation, use of supplier bank account and unauthorized manipulation to payroll information.
Accounting software packages are essential provision for every commercial organization and hence there is a requisite to develop and upgrade these accounting packages further in advanced manner as per emerging needs of business so that they could meet the exact requirements of business. As such accounting software packages are selected and upgraded according to specific demands of business sectors and its utilization in the business offers numerous leverages and efficiency for a firm which generally includes retaining time, labor, finding out and managing financial information and inputs of the firm, maintaining information on cash and transactions and requisites for the firm. Development and upgradation of accounting software packages minimizes uncertainty and susceptibility by offering data on real time which helps in giving real time solutions to business problems. Moreover accounting software packages are used in firms for producing computerized invoices, managing account entries and records which could be additionally used during auditing process of the firm (Kanellou and Spathis, 2013). Also accounting software packages are utilized for administering account information and inputs of client companies and suppliers which therefore makes tax computation and payment process easier and simplified for them and also administers customer data which makes payment process convenient for customers too. Moreover accounting software packages should be upgraded and utilized by firms as it helps to compare financial inputs with own previous data as well as with inputs and performances of competitors which helps firms to utilize this intelligence in developing strategies that would leverage competitive advantage. Even use of accounting software packages minimizes concern of misplacing manual bills and records and hence keeps data secured.
The market size of accounting software packages is expanding day by day as the world is progressing faster towards digitalization and emphasis for paperless work as well as advancement in technology has together supported the rise in utilization of accounting packages and expansion of its markets. MYOB is one kind of accounting software package which utilizes different process depending upon financial needs and other requisites of client and is popular in different parts of Australia and New Zealand. Other majorly popular accounting software packages include Sage, Intuit and Xero. The market size occupied by Xero in Australian accounting market is 65%, while Sage holds 10% and Intuit seizes around 20% of this market share of accounting software packages (Drew, 2015). Further with demand of accounting packages increasing day by day the market capture of all these major companies are expanding as they offer immense benefits and needs of commercial organizations. Moreover the type of software should be selected depending upon size and requisite of a business which helps in minimizing cost, lowering risks and providing requisite inputs or information in real time by saving time and efforts. Also the data remains secured in these software’s where past inputs can be retrieved easily for analysis for long term.
In Australian accounting software packages market the most popularly used software’s are Xero, Sage and Intuit where Xero’s business market size is nearly around 65% of the market share followed by Intuit which captures about 20% of market size and Sage captures near 10% share of market in Australia’s accounting business software’s. Each of these packages has their own utilization and advantages which have made them leaders in market and some of their competitive advantages are:
Xero: the competitive advantage of Xero software package is that it does not requires installation on computer systems as they can be accessed through cloud computing which makes them leader in the accounting business software market. As this software needs no installation so maintenance cost is very less and are majorly used in banking sectors. As Xero software is conveniently accessed so it is very popular with organizations that run their business on cloud technology and is mainly utilized for currency conversions (Drew, 2015)
Intuit: the competitive advantage of Intuit software package is that it is very effective in managing taxation process and is a highly customer friendly software which makes it easily manageable by customers. But it is in the process of upgradation to make the software more advanced.
Sage: the competitive advantage of Sage software is that it is very effective for organizations in obtaining higher controls, offering more customer satisfaction, enhancing the productiveness and adjustability in business operations. As Sage software minimizes cost of operations for business functions so it is largely demandable in the market. Sage software also offers archives for all business functions of a firm which helps in better control and management of everyday functioning (Drew, 2015).
There are numerous challenges or gaps in the current accounting software packages that are encountered by their users but the major challenge among all concerns being encountered by companies of all sizes and natures is the price of these accounting software packages which is comparatively higher. If cost of these accounting software packages will be expensive then using these would become strenuous for start up companies and small or medium sized businesses. Also maintenance expenditure of these accounting software packages is comparatively larger which becomes unaffordable for most of the business firms. Other challenges that users could encounter while using accounting software packages are fraud, manipulation of information or cyber attacks (Belfo and Trigo, 2013).
Some recommendations for users of accounting software packages are:
· Users should recognise well the usability and description of software before investing in accounting software packages
· Users should utilise softwares that are adjustable to their budget
· Users should also ensure adequate security and surveillance of data so that misuse of information or fraud could be averted
From the above study it can be inferred that accounting software systems are very essential element for any business firm as it makes their operations more efficient and controllable, compiles there useful data as well as secures their confidential information which makes functioning of business activities easier and simplified. Moreover, other than software process the organizational structure of a firm is crucial for its competent development and improvement as well designed and structured organizational structure averts numerous organizational concerns and complexities related to distribution of power, roles and command which could affect functioning of business activities and attainment of desirable objectives. Further to make business functions more efficient ERP software’s are used by organizations to make process more advanced to meet need and demands of market which when adopted even in sales process helps in better management of transactions, inventory management, customer service management and post sales management which makes the entire process more systematic and real time as revenue generation of companies relies majorly on sales process. So use of effective and adequate software systems and accounting packages makes activities easier and beneficial for companies and also saves lot of time and efforts.
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