Evolution of Accounting Software in Australia

Question: Describe about the Evolution of Accounting Software in Australia. Answer: History Accounting is an important business activity in any business house and this activity was holding lot of important information about the organization (Deshmukh, 2006). The programmers concentrated to develop lot of applications that can serve the accounting field. In the initial stage the in house programmers present in an organization developed the solutions to solve the problems faced in the organization. So the first accounting program was programmed for the mainframe computers which was initiated by IBM and played a vital role in developing the software and ruled the world. The mainframes were in use from 1960 to 1975 and these systems provided high security and were very much reliable but they were large in size, which used the centralized processing intelligence (A System of Health Accounts, 2011). There was a new invention of the minicomputers which were basically smaller than the mainframe computers and were also less powerful when compared the mainframes. The use of minicomputers lasted from 1975 to 1985. The data was stored as the flat files and was managed by the indexed file organization structures same like the mainframe computers. In general the Assembler, FORTRAN, COBOL and RPG languages was used by both the mainframe and minicomputers. It was improvised to the database as a hierarchical type. These computers provided the high capacity for processing the transactions and it supported large number of users. Then next, from 1980 to 1990, the microcomputers were in use. It showed a greater advancement as it provided the Local Area Networking to share files, for indexing the files, but it contained certain limitations like, it offered a limited capacity for processing the transactions and supported limited users. Then the world of accounting saw important changes from 1988 to 1995 with the client server architecture that used the LAN and WAN (Wide Area Network). These computers were a mixture of mainframe computers, minicomputers and the Personal computers. The databases were able to centralize as well as decentralize and it supported many users. The transaction processing capacity was really high. From 1995 the world completely saw a new era of internet, which contained the relational databases, object-oriented database, multidimensional databases and Object-oriented databases. It offered the users the flexible capacity for processing the transactions and was used by a huge number of users world-wide. As stated in (Deshmukh, 2006), it is determined that though the world has stepped in to an evolutionary phase, there are few governments and the businesses that still continue the old hardware and software. But to a maximum extent the new generation software languages are used. And as per (Shoeboxed.com.au, 2016), it is stated that the Australian businesses, among which approximately 80% still run based on excel spreadsheets and invoices which are generally written manually or by using the MS Word. In general it is determined by (BIT, 2016), that before the year 2000, most of the small businesses in Australia were happy using the manual accounting work but since the advent of GST, a huge number of business shifted to the accounting software. This was supported by the Commonwealth Government. It is not wrong to continue the business with book keeping process and according to the survey of (BIT, 2016), almost 13 percent of the organizations continued book keeping for their business and found it to be reliable for their business. The Current Market Size In 2011, the Deloitte Access Economics has estimated in (The Outsourced Accountant, 2015), that the market size will increase to a greater extent. And thus, according to (The Outsourced Accountant, 2015), the Australian economy is seeing a digital growth in an accelerated speed and has been contributed in the GDP (Gross Domestic Product) in the year 2015 and thus the market is increasing in its size rapidly. The outsourced accountants are helpful for the Australian accounting organizations to know and apply the solutions provided by the outsourced accountants to become a proactive participant and attract clients. The outsourced accountants help Australia to save time and money and carrier out the work which consumes more time. (The Outsourced Accountant, 2015). Therefore, according to (Ibisworld.com.au, 2016), in the last five years, there is steady growth in Australian market size. The Leaders in the Market In Australia, there exist three big competitors for the accounting software market called as MYOB, Intuit and Xero. According to (Businessinsider.com.au, 2016), MYOB is the strongest competitor. These accounting software helps in inviting the accounting professionals for viewing the customer's accounts and helps them in taking appropriate decisions by giving their time for their customers (Xero Accounting Software, 2016). The software provides a real time view of the cash flow of the customer, provides a collaboration which helps in accessing and controlling the members level for access. It offers a security of the customer's data. It helps in decreasing the data entry manually. Moreover, in order to ease the customers it provides completely free and automatic updates for its customers (Xero Accounting Software, 2016). The MYOB has increased its market from $AU831.7 to $AU833.8 million (Businessinsider.com.au, 2016). The software packages are tailor fitted and customised as per the r equirement of the business (Yau and K. Auyeung, 1995). What gives them the Competitive Advantage? According to (Businessinsider.com.au, 2016), the competitors for the accounting software market are competing to take over the market and their plus point is that any business today, whether a big one or a small one requires to handle and manage the accounting department of their firms and thus these firms help our competing accounting software companies to gain their objective in an easy way (Duska, Duska and Ragatz, 2011). The companies in Australia are evacuating the space of the book keepers and allowing the accounting software to do the same accounting process effectively. The processes such as the invoicing, cash flow decision management are all carried out on the desktops and by using the mobile applications. Moreover, even the online accounting facilities are made available in Australia for the small businesses (Xero Accounting Software, 2016). Identify the Current Challenges Encountered By Users or Customers of Accounting Software or Packages Security is major issue faced by the accounting software or the packages in Australia. As per (QnE Accounting Software, 2013), the other problems are ineffective reporting, Inefficiency, poor accessing speed, Inaccuracy, they are not user-friendly, the Bank Reconciliation feature is absent, it lacks effective (CRM) Customer Relationship Management, inconvenient technical supports via phone, it lacks compatibility and most importantly the technical support service is not available 24/7 for the customers. Maintenance of accounting software's essential tools for using the software effectively requires updated equipment and thus it is a challenge for the small firms. (Smallbusiness.chron.com, 2016). The simple form of mathematics were expanded by using the accounting methods which were quite complex in nature. But, there are accounting experts for whom this is just a matter of time to solve the problem by using simple and easy methods. On the other hand the accounting software helps to solve the problem in no time with the simplest method, the very fact is that the cost acts as a gap for the small organizations to adopt to the accounting software (Ibisworld.com.au, 2016). Recommendations The small business houses in Australia are recommended to choose the appropriate and suitable online accounting software that completely fits their business requirements. The other important aspect for which the accounting packages are suggested is that they offer various features which helps the firm. Moreover, make selection based on the budget of the firm. It is suggested that any queries related to the accounting software must be directly talked and sorted out to avoid future management problems. References A System of Health Accounts. (2011). Paris: OECD Publishing. BIT. (2016).7 accounting packages for Australian small businesses compared: including MYOB, QuickBooks Online, Reckon, Xero. [online] Available at: https://www.bit.com.au/Review/344651,7-accounting-packages-for-australian-small-businesses-compared-including-myob-quickbooks-online-reckon-xero.aspx [Accessed 13 Sep. 2016]. Businessinsider.com.au. (2016). [online] Available at: https://www.businessinsider.com.au/charts-the-battle-for-supremacy-in-australias-cloud-accounting-market-2015-4 [Accessed 13 Sep. 2016]. Duska, R., Duska, B. and Ragatz, J. (2011).Accounting ethics. Chichester, West Sussex, U.K.: Wiley-Blackwell. Ibisworld.com.au. (2016).Software Publishing in Australia Market Research | IBISWorld. [online] Available at: https://www.ibisworld.com.au/industry/default.aspx?indid=5275 [Accessed 13 Sep. 2016]. QnE Accounting Software. (2013).Problems faced by companies that are using accounting software for their businesses. [online] Available at: https://qneaccountingsoftware.wordpress.com/2013/09/13/problems-faced-by-companies-that-are-using-accounting-software-for-their-businesses [Accessed 13 Sep. 2016]. Shoeboxed.com.au. (2016).The evolution of accounting bookkeeping. [online] Available at: https://www.shoeboxed.com.au/blog/the-evolution-of-accounting-bookkeeping/ [Accessed 13 Sep. 2016]. Smallbusiness.chron.com. (2016). [online] Available at: https://smallbusiness.chron.com/disadvantages-using-accounting-software-3823.html [Accessed 13 Sep. 2016]. The Outsourced Accountant. (2015).Australian Accounting Trends in 2015 Financial Year. [online] Available at: https://theoutsourcedaccountant.com/australian-accounting-trends-in-2015-financial-year/ [Accessed 13 Sep. 2016]. Xero Accounting Software. (2016).Online Accounting | Xero. [online] Available at: https://www.xero.com/au/accounting-software/online-accounting/ [Accessed 13 Sep. 2016].