The objective of this report is to discuss the information system and accounting software of Target Australia. The company, ‘Target’ is a mid-price department store chain and Australia's largest store in terms of number. The company is a subsidiary of Wesfarmers. This report is divided into two parts. The first part discusses the current organizational structure of Target, existing operational problems, current use of Information Systems, and existing control problems in the systems. The second part discusses the journey of accounting software packages, analysis of current market in Australia and identify the current gaps in the market with respect to accounting software packages (Granlund, 2011). The purpose of this part is to provide detailed analysis that will help the management to select the relevant software for their business out of the numerous businesses available in the Australian market. The paper also has a conclusion sections that sums down the analysis of the paper.
The large retailers like Target have the options to choose from number of system integration methods. The suggested choice in most of the cases is ERP system as ERP system works as one stop solution for all the organizational IT and business problems. The various part of first part can be discussed as:
Target Australia has a very flat organizational structure. The company has close to 16,000 employees in Australia. There are three key levels of organizational structure at Target Inc. The top level of the level of senior management. This level includes the CXOs of the company. The next level or the level 2 of the organization is the level of mid-managers. These are the management people who are ultimately responsible for the operational work and operational decisions. The third level of level 3 is the employees who are executors. These are the people, who are responsible to implement the strategies and policies. The basic theme of the roles of three level can be discussed as:
Target has to match the sales data and revenue recognized which is sort of conciliation and there are often issues in doing that. Some other issues are picking of material from the warehouse. As there are large number of product SKUs and products are stored without using barcoding and dedicated location of each SKU, it takes long time to locate the product and sometimes product is stored but inability to locate it lead to stock-outs. Another challenge is required that too much data entry is required which sometimes cause inaccuracy due to human errors. Not only this, paper work required extra space to store and make it difficult to retrieve information and handle it.
There are various methods to manage the Information Technology within the organization. The company can either get the custom software created based on its business needs. However, it is important that the business needs should be translated effectively and mapped to Information Technology needs. The second solution for the company is the use of commercial software and the third option for the company is the used of Employee Resource Planning system. Commercial software that can be customized and configured based on business requirements would be the best choice for Target-Australia. It is suggested that Target should get the ERP system customized based on its business needs.
The sales at Target-Australia happen through a combination of offline and online methods. Most of the stores of Target Australia are owned stores. The company has a centralized inventory management system that is integrated with the various sales systems of different stores (Oster, 2012). The support function, to the sales function, for Target-Australia are marketing, human resource function and operations functions. The system flowchart for the company for the existing sales procedures can be shown as:
One of the control problems for Target-Australia is that not all the raw materials is purchased on the daily basis. Only the material, which is required to support production on the next day, will be purchased on a given day. Thus, one of the control needed is that use of items in the food which are no longer fresh i.e. has passed their shelf life should not be permitted to be issued for the particular job. Another control problem is that no dedicated space in the warehouse for the particular SKU (Stock Keeping units), which results in the long time during picking and locating the material.
The possible frauds at Target can happen through inefficient inventory management system. One of the leakages for fraud is that various stores of Target can shown false inventory levels. The store manager can indulge himself or herself in fraud by showing inadequate inventory level. For example, suppose for Product A, the actual inventory in store is 120 units and the store manager quotes it as 95 units. If this information is recorded in the system, the store manager can actually sell 25 units in the black market and the profitability would not be recorded in the books of Target Australia.
There are various types of accounting software packages that Target or any other retailer can use. The various parts of second part can be discussed as:
There are various commercial accounting software packages that Target can use. Going back to the history of accounting software development, MYOB was the first product developed by the Teleware in 1983 in New Jersey. Its first product was “Managing your money” and become famous as MYM. This product was half-baked and there were many issues. “Mind your own business” was the next version of MYM, which become famous as MYOB. As business was increasing, Teleware give license to Australian software distribution firm and then MYOB become a market leader in Australia. More similar products were hitting the market but they are still in infancy and first mover advantage helps MYOB to penetrate deeply in the market and command good customer base. By late 1990s, company changed it’s headquarter from US to Australia. Intuit also launched program quicken which become famous as quick books online.
The current accounting software industry in Australia is a huge industry. This industry started with the on-premise solution for accounting problems. The last decade has seen the evolution of cloud based accounting software. The benefit with cloud-based accounting software is that the small and mid size organizations can also use the accounting packages without any much hiccups. It is estimated that the current size of accounting software industry in Australia is $20 billion. The annual growth rate in the industry is 2.6%. At an industry level, the anticipated employees in the industry are 115,557. The Accounting Services industry has grown over the past five years on the back of steady economic growth and increasing demand for industry-specific advisory services (Mangala & Kumari, 2015).
There are various players in the industry and each of the players has its own pros and cons. The large companies like SAP also have ready-made solutions to address the accounting problems of large organizations. MYOB, on the other hand, has highest penetration in the market and thus has the market share however its growth is less which means that XERO will beat the MYOB in coming times. Sage ERP subscriptions are on the decline as this products lacks Australian localization. QuickBooks online and Reckon are other products that are growing but still they are small players. The current accounting software industry in Australia is highly fragmented industry with number of players in organized and un-organized sector. The players in organized sector are the large players like SAP, XERO, etc. The players in the unorganized sector are mainly the small players that would usually cater to the needs of small players in the industry. It is expected that going forward both organized players and unorganized players would grow in the country (Mouritsen & Hansen, 2009).
One of the current gaps or the drawbacks in the current accounting packages is the dependency on skilled resources to manage the system. Various organizations have felt that it is not easy to manage the accounting software implementation. In fact, the implementation of accounting software package can be a mess in itself if it is not handled effectively. In fact, this is one of the reasons that there was a huge demand in the use of cloud based accounting software. It is relatively easy to manage the implementation of cloud based accounting system as compared to on-premise implementation.
Another gap in the current accounting software landscape in Australia is the high cost of accounting software packages. In the current environment, also, there are number of organizations that are not able to utilize the benefits of accounting software packages due to high cost. In the coming times, the cost of accounting software should come down (Jadhav & Sonar, 2009). Few recommendations at the industry level an be discussed as:
This paper begins with analysis of organizational structure at Target Australia and suggests them what will be the best approach for them to make software in-house or to buy software. After that, there was discussion on flow chart of sales procedure (Clark & Shoaib, 2012). The second part of this paper talked about the evolution of accounting software in Australia in general and what are the pros and cons of various software and which one will be most aligned to the business of Target Australia. With the above discussion it can be said that ERP system is the best solution for Target Australia. At the same time, it is recommended that accounting software package should be integrated tightly with the ERP systems. The ERP system for Target Australia would have number of modules and the accounting software should be the key module for organizations.
Clark, R.A., Shoaib, M., Hewitt, K.N., Stanford, S.C. and Bate, S.T., 2012. A comparison of InVivoStat with other statistical software packages for analysis of data generated from animal experiments. Journal of Psychopharmacology,26(8), pp.1136-1142.
Creed, D., Daly, D., Dowdle, P., & Stevens, J. (2008). A roadmap to help your organization become process-based. Journal Of Corporate Accounting & Finance (Wiley, 19(5), 77-83.
Granlund, M., 2011. Extending AIS research to management accounting and control issues: A research note. International Journal of Accounting Information Systems, 12(1), pp.3-19.
Jadhav, A.S. and Sonar, R.M., 2009. Evaluating and selecting software packages: A review. Information and software technology, 51(3), pp.555-563.
Mangala, D. and Kumari, P., 2015. Corporate Fraud prevention and deteCtion: revisiting the Literature. Journal of Commerce and Accounting Research, 4(1).
Mouritsen, J., Hansen, A. and Hansen, C.Ø., 2009. Short and long translations: Management accounting calculations and innovation management. Accounting, Organizations and Society, 34(6), pp.738-754.
Oster, R.A., 2012. An examination of statistical software packages for categorical data analysis using exact methods. The American Statistician.
Yigitbasioglu, O., 2015. Enablers of sense-making and responding and their impact on the effectiveness of management accounting practices.
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