HI5019 Strategic Information Systems- Nippys Analysis

Nippy’s is quite flat organization. There are 3 companies under Nippy’s brand name and all of them act as an independent entity though owned by Nippy’s family members only. One is specialized in citrus fruits juice, another looks after packaging of all the juices and third one is related to maintenance of orchards and sourcing of the fruit. It is horizontal in the sense that mostly mangers are responsible for taking their decisions and handling their tasks independently rather than top people making decisions.  

Operational problems (e.g., inefficiency, errors) Nippy’s is experiencing 

Presently, Nippy’s is using 2 accounting systems i.e. MYOB premier for maintaining its general ledger and in-house built DOS program to record debtors. Although both the systems were good but as the company business is increasing and load is increasing. Its traditional systems are not able to handle the load. Also, with increasing load, it is difficult to analyze the data manually and thus Nippy’s needs better mechanism to see dashboard, data and handle reporting requirements. Also, as more staff is getting added so functional security is also required that person could able to see and manage only what he is supposed to do and not able to access any other part. Thus, functional security was missing in their current system. It has to keep track of much more data and 2 systems often cause inefficiencies and human error. Product line was increasing at Nippy’s. Earlier it sells only juices but now it is into multiple types of sports drinks and dairy drinks. It also has to maintain their Bills of material (BOM). With increasing export, there is different requirement of data in each nation which also needs to be honored by Nippy’s. Some of the issues at Nippy’s are as below:

• Difficulty in reconciliation during period end
• Increased inventory
• Huge manual transactions often results in errors and data do not match

Most suitable system acquisition method— commercial software, custom software, or ERP? 

Considering the business of Nippy’s, it is already using MYOB premium version along with custom in-house built software so the best advice would be to upgrade the MYOB to MYOB exo version which is designed for large businesses and has much more functionalities than MYOB premium. ERPs are quite large software and implementation time is also large and will be experience also. Company can advise MYOB team and check if MYOB exo is fulfilling its requirements or not. If not, then it could consider option of going to ERP systems. Custom software is not recommended because it will take much time and also there is no point in reinventing the wheel. The better option is to buy the software and focus on your core competencies.

Flowchart of the sales procedures at Nippy’s

Nippy’s sells its products to distributors who then sell to various retailers like Woolworths, Coles and other supermarkets. People then buy its products from super markets. Generally, the demand of juices are quite predictable and stable, thus Nippy’s manufactures make to stock. It forecasts and continues to manufacture as per the forecasts. It will continuously replenish products to its distributors (Silvestro, & Lustrato, 2014). Supermarkets give money to distributors and then who gives money to Nippy’s. This is how the sales procedure is for a company like Nippy’s who manufactures to stock.

Also, if anyone wants to do bulk order or belong to some other country and want to import the Nippy’s product, it can go to their website. For export orders, Nippy’s generally takes the request at their web site and then provided the appropriate quotes depending upon the requirements. It has slight bigger portfolio in terms of exports. For instance, it also exports citrus fruits from its large farmhouses where fruits are grown. Once the deal is finalized between Nippy’s and importing country, it sends them the sales order acknowledging their purchase order. It then ships them the product and updates the entry in its account receivables. Based on the payment cycle and other conditions, it will then receive the money and post the entire transactions to general ledger (Korotina, Muller, & Debortoli, 2015). This is the typical order to cash cycle at Nippy’s.

Control problems and frauds possible in current system

• There is lot of material required and not just the citrus fruits to manufacture juices. For instance, it also buys flavors, sugar and other raw material (Watson, Brunner, Wellard, & Hughes, 2016). Here there are 2 potential problems first is the identification of appropriate inventory and thus order size and another one is that current information systems are not built that can supports e-procurement and often there is large lead time in procuring the materials (Zunk, Marchner, Uitz, Lerch, & Schiele, 2014).
• Another fraud possible is due to the lack of functional security in the current IT systems i.e. people can access data that they are not supposed to and can manipulate it also. Nippy’s has to control it before it can land itself to a bigger problem (Figl, Recker, Hidalga, Hardisty, & Jones, 2016)
• As it is using 2 systems, there may be issues in reconciling the 2 systems and sometimes the data in 1 system do not match with another and lot of time is wasted in troubleshooting. People also make human errors which can lead to rework and decrease the productivity of the people
• There is no reporting systems and management dashboard that can help the management with the key statistics like inventory turnover ratio, load ratio, wastage, quality problems (Andres, DeAngelis, & McCone, 2015)

Part 2

Accounting software Analysis

Development of the accounting software packages

Specific to Nippy’s which is already using general ledger module of MYOB premium version and users are comfortable with MYOB, the best option would be to upgrade to MYOB exo version which is designed for large businesses and has many functionalities like sub ledgers, functional security, management dashboard, reporting (Pan, Pan & Lim, 2014) .

The current market size

As per the data from the IBIS research, accounting software market size is growing at continuous rate of 2.6% from 2013 and is around $ 20 billion currently and expected to grow at a better rate with the advent of cloud which is a way cheaper than desktop version (https://www.ibisworld.com.au ).

Leaders in the market and their competitive advantage

MYOB is the leader in accounting software while Xero is the biggest Cloud computing accounting company. MYOB has been the leader in this industry since last 15 years but currently as the Cloud has become a buzzword today and Xero is the biggest cloud accounting company, it has got the huge competitive advantage over the MYOB and had increased quite aggressively in past (Hossack, 2015). However, MYOB has also started realizing the huge potential of cloud offering and has invested heavily in developing its cloud applications.

Current gaps or challenges encountered customers of accounting software/packages and recommendations 

Specific to Nippy’s MYOB exo would be an excellent choice which would obviate the need of maintaining 2 systems one for general ledger and other for debtors what Nippy’s is doing currently and provides lot of additional functionalities.  MYOB exo version also provides distribution module and can provide the link to your distributors to see the status of their orders and place the orders. Thus, to summarize, there is no 1 size accounting software that fits all the organizations. Different software exists due to the different organization’s requirements.

Conclusion 

This case study analyzes the various accounting software in Australia along with the pros and cons of each software along with their market size. There is no 1 size fits all software, there is always one of kind of software for different businesses. MYOB which is a market leader once has also framed its strategy around cloud offering to reclaim its market leadership status. Also, this case study also discusses about the Nippy’s organization that was using 2 accounting software that were not integrated and plethora of problems organization is facing. MYOB exo business version is recommended to Nippy’s to fulfill its requirements.

References

Andres, M., DeAngelis, K., & McCone, D. (2015). Reintegration, reconciliation, and relationship quality. Military families and war in the 21st century: Comparative perspectives, 145-160.

Figl, K., Recker, J., Hidalga, A. N., Hardisty, A., & Jones, A. (2016). Security is nowadays an indispensable requirement in software systems. Traditional software engineering processes focus primarily on business requirements, leaving security as an afterthought to be addressed via generic “patched-on” defensive mechanisms. This approach is insufficient, and software systems need to have security functionality engineered within in a similar fashion as ordinary business... Requirements Engineering, 21(1), 107-129.

Hossack, S. (2015). Cloud-based accounting and productivity tools for practitioners and taxpayers. Taxation in Australia, 50(5), 265.

Korotina, A., Müller, O., & Debortoli, S. (2015). Real-time Business Process Intelligence. Comparison of different architectural approaches using the example of the order-to-cash process. In Wirtschaftsinformatik (pp. 1710-1724).

Pan, G., Pan, S. L., & Lim, C. Y. (2014). Managing Fit between Organizational Functionality, Package Features and Stakeholder Needs During Enterprise Accounting Systems Implementation: A Process Analysis.

Silvestro, R., & Lustrato, P. (2014). Integrating financial and physical supply chains: the role of banks in enabling supply chain integration. International journal of operations & production management, 34(3), 298-324.

Watson, W. L., Brunner, R., Wellard, L., & Hughes, C. (2016). Sponsorship of junior sport development programs in Australia. Australian and New Zealand journal of public health, 40(4), 326-328.

Zunk, B., Marchner, M., Uitz, I., Lerch, C., & Schiele, H. (2014). The role of E-procurement in the Austrian construction industry: Adoption rate, benefits and barriers. International journal of industrial engineering and management, 5(1), 13-21.