Operational Issues And Accounting Solutions For Jet Cleaning Services Essay.

Operational Issues Faced by Jet Cleaning Services

Jet cleaning services is the New Zealand based company that offers superior commercial cleaning service. It was founded in 1986 and provides services like upholstery cleaning, building cleaning, pest management, floor care cleaning, water blasting, carpet cleaning and many other services. This industry is very competitive but still Jet cleaning has scaled up very well in New Zealand due to its motivated employees and the excellent service (https://jetcleaning.co.nz/About). However it is struggling to keep its books lean and clean because there are multiple systems and each has its own way of processing information. Its IT systems are not supporting its tremendous growth and needs upgradation. Adopting a franchise model for expansion helps the Jet cleaning to double its revenue in just few years however as each franchise has its own business operations, this lead to lot of complexity and headaches for the management. The goal of this paper is to discuss the various operation issues and control problems in the Jet cleaning services and how it can obviate such issues by using effective accounting software. Second part of this paper talks about the evolution of accounting packages in Australian market along with the discussion on leader in this area and the most rising company in this area. Finally, based on the requirement identified, the suitable accounting package will be recommended to the Jet cleaning services.

Kristian de Pont is the CEO of the company who oversee the various departments like Accounts, operations manager, Franchise business manager, business development manager and Training and HR manager.

Figure 1: Org Structure at Jet Cleaning

There are many operational problems faced by the Jet cleaning services: Few of them are as follows:

• Each franchise is having its own systems and shares the data with the parent company in its own format. Jet cleaning receives data from multiple franchises in multiple formats and thus finds it difficult to compile it during conciliation (Gillis, Combs, & Ketchen, 2014). There is not real time sharing of data between head office and franchise offices.
• Jet cleaning is having basic accounting system that manages everything from resources and employees to inventory and customer information and the system is not integrated which means multiple information is entered multiple times in the system. Purchasing department is entering items that it purchases and account payables department also entering items that are purchased and matches with supplier invoice.
• It needs a system where it can record the information about the leads and probability of converting them into real customers but current system does not help them to quote, track and close the new deals
• There is no standardization in the service of Jet cleaning. Same customer may face different processes in different stores because Franchise are not controlled in terms of systems they will choose, standard business processes. This could also lead to loss in reputation of Jet cleaning and it has to be very careful while leveraging franchise model for expansion. One thing it can do is to prepare standard processes and makes it mandatory for all the Franchise to follow same standards.
• There is no provision of data backup and if the hard disk crashed or something happen to systems, it will become very difficult for the Jet cleaning. Though Jet cleaning ask Franchise to maintain back up but it again has to get the data which will be a tough task in case of any emergency

There are multiple franchises of Jet cleaning in New Zealand and going by its growth, it is very much possible that it starts expansion overseas in coming years especially in Australia. Thus, it needs a system that can scale up and respond to the increasing demand. Let us see the suitability of each of system acquisition method:

• Commercial software: There are numerous such software like MYOB, XERO, Saasu Quick Books online, and ReckonOne. All of these software offers different version of on cloud implementation and on –premise implementation and also have licensing and subscription charges based on number of users and thus can be scale up and down without much trouble.
• Custom Software: This refers to that company should take the services of consulting companies like Deloitte and Accenture to develop a software or small ERP of its own. This method is not at all recommended because there is no need to reinvent the wheel and pay for developing sometime which already exists in the market (Games, Wriedt, & Zhao, 2016).
• ERP: There are many large tier ERP systems like Oracle, SAP, Microsoft dynamics and mid-tier ERPs systems like MYOB GreenTree, Incor etc. These ERP systems are integrated suite consisting of various modules like Sales, Inventory, Procurement, Finance, Transport, Warehouse and any organization can purchases modules based on its business requirement (Deka, & Roychoudhury, 2016).
• Recommendation: As the Jet cleaning is expanding and currently have many Franchise across the country that have different systems and wants to standardize processes across offices, mid-tier ERPs like Sage ERP, MYOB GreenTree will be more suitable.

The sales procedure is quite different at Jet cleaning services. There are various Franchises that serves directly retail customers or customers with a small order. They take orders from customers, perform services and get the money from the customer for their service. Once the franchise gets the money, it will transfer the fix percentage to parent company as royalty as mentioned in the agreement and keep the rest.

Sales Procedures at Jet Cleaning Services

In case of large orders from Hospitality sectors, apartments, hospitals, shopping malls, such orders are directly negotiated at the headquarters with business development managers. Once big orders are converted into deals, they will be awarded to appropriate franchise or franchises who can handle the operations of the client.

Figure 2: Sales Procedure

• Due to the franchise business model of the Jet cleaning, there are multiple challenges and lack of controls in the system which allow the current system to be misused. Also, current systems lacks the security and does not have the intelligence that can prevent data manipulation and frauds.
• Each franchise is processing customer orders and pass the royalty percentage of total sales to the Jet cleaning. In the past, there were several incidences where some of the Franchise are not entering the orders in the systems and telling the customers that their IT system is down just to show less sales and pass less royalty to the company. Each franchise office can show the reduced sales by various ways and currently (Zhanf, Lawrence, & Anderson, 2105) Jet cleaning has no way of identifying that. This is the very big issue and devoid Jet cleaning of the revenue.
• Jet cleaning has no standard processes in terms of which raw materials that will be used in providing the various services to the customers. As a result, each franchise is using its own materials (King, & King, 2016). Now, it is possible that any franchise can use cheap material to increase its profits. This may result in the loss of reputation of Jet cleaning.
• Issues in reconciling the data received from various franchises. There are no standards and each franchise is sharing the data in any format whatever it like.

Software accounting packages were launched in mid 1980s. Intuit and Teleware were the first company to develop the software for handling accounting however these systems provide the very limited functionality during that time. As the demand was increasing, Teleware has sold license to one of the Australia Company to sell licenses of MYOB in 1999. During the same time, Reckon accounting software was also founded in 1987 in UK and released in Australia in 1993. SAASU product was founded in 2000 and launched in the market in 2007. Xero was little late in joining the league and was founded in 2006 in New Zealand. Although there were software that are more or as old as MYOB but still MYOB has the largest market share in Australian market for accounting software. Xero is the largest growing player due to its more focus on cloud while MYOB has been perceived as confused in its cloud based products. Other products like SAASU, Reckon have less market share although they have very good functionality in some of the areas. SAGE ERP was also launched in early 1990s and it was quite expensive but very good product. However, due to limited branding and lack of Australian localization, this product is not very popular in Australia and New Zealand.

The current market size of accounting software industry is estimated at around 20 billion US dollars and expected to increase by 3-4% for every year for next 5 years which means there is tremendous growth. More and more companies are understanding the importance of usage of information systems in their businesses. While earlier companies sees IT as an overhead but with gradual change in mindset of people and evolution of analytics, dashboards, companies have started seeing IT as strategic differentiator.

MYOB has the largest market penetration in Australia and New Zealand followed by XERO. XERO did excellent job considering the fact that it is quite late entrant in this market i.e. 2006. However, XERO has the biggest infrastructure for cloud and is the largest growing player in the market. If we look at the growth, Xero has been growing at the rate of 46% from 2015 to 2016 while MYOB grew only 37% in terms of number of subscriptions (https://www.xero.com/au/ ). This simple statistics re showing the current trend and flavor of the market which is cloud computing. Cloud hosted projects are comparatively less expensive and their timeline is also very small and thus they have become very popular (Beaulieu, Martin, Sarker, & Andersen, 2015). Xero, being the largest cloud provider, is the direct beneficiary of the popularity of the cloud application.

Figure 3:

https://www.afr.com/business/accounting/quickbook-users-jump-by-60pc-but-xero-myob-remains-leaders-20160929-grrwm0

Let us analyze various software packages and check them as per the requirement of Jet cleaning:

Based on the above alignment with requirements, MYOB GreenTree suite is recommended for Jet cleaning services.

Conclusion

This case study starts with analyzing the business processes and organization structure of Jet services. It also aim to discover the pain areas for the organization. After that various accounting software packages were also discussed and MYOB GreenTree is recommended to be implemented at Jet services for streamlining of their business operations. This software is recommended as it is very closely align to the requirements of the Jet cleaning business.

References

Beaulieu, T., Martin, T. C., Sarker, S., & Bjørn-Andersen, N. (2015). Confronting, Confirming, and Dispelling Myths Surrounding ERP-in-the-Cloud. Ais Transactions on Enterprise Systems.

Deka, M., & Roychoudhury, A. (2016, October). Seamless Integration of Technology with People and Process Through In-House IT-A Case Study. In SPE Asia Pacific Oil & Gas Conference and Exhibition. Society of Petroleum Engineers

Gillis, W. E., Combs, J. G., & Ketchen, D. J. (2014). Using resource?based theory to help explain plural form franchising. Entrepreneurship Theory and Practice, 38(3), 449-472.

Gomez, O., Wriedt, P., & Zhao, F. (2016, July). Build or Buy: A Case Study for ERP System Selection in SMEs. In International Conference on Human-Computer Interaction (pp. 23-33). Springer International Publishing.

King, B. L., & King, B. L. (2016). Caught in the middle: franchise businesses and the social media wave. Journal of Business Strategy, 37(2), 20-26.

Zhang, J. J., Lawrence, B., & Anderson, C. K. (2015). An agency perspective on service triads: Linking operational and financial performance. Journal of Operations Management, 35, 56-66.