Usage of Accounting Software in Australia


Accounting software has been around for quite some time now and has become an integral part of modern-day accounting processes. All graduates that wish to find employment in accounting are expected to know and be able to use a variety of such programs in order to work quickly and efficiently. The situation is the same in Australia – all large and moderate businesses are using automated accounting packages in order to control and record their money flows (Wynn 2009). The accounting reports are like a rearview mirror in a car. They will not tell you the future of your company, but they can tell you where it has been. However, if the company is experiencing a crisis, the first signs of trouble could be found in the accounting reports. Which is why most business owners, big or small, realize the importance of accounting (Ramsey, Martin, Ibbotson & Parker 2009). The purpose of this paper is to research the usage of accounting software in Australia, its history, development, and current market leaders. The paper is concluded with predictions for the accounting software in the future, as well as challenges, which it would have to face.

History and Development of Accounting Software

Accounting software is a relatively recent invention. Until the invention of the first accounting programs, the process of accounting was similar to how it was done in medieval Italy or in Ancient Egypt. The only difference was that papers and ballpoint pens have replaced the quill and the clay tablets. It was becoming a tedious task, as the businesses had grown larger and larger. However, it was an important task nonetheless, which is why large companies used to have armies of accountants in order to deal with all the paperwork (Brown 2014).

With the development and creation of Lotus 123 in the 1980s by the Lotus Software, which later merged with the IBM, accounting was made easier. Although the machine was only able to process spreadsheets and did not possess any dedicated accounting software, it was still a massive improvement over the numerous data cards, which the accountants had to use prior to the rise of computer systems. The book balancing was not an incorporated feature, so it still had to be done manually. Soon, the first dedicated accounting software programs started to appear. The most famous one being Turbocash, developed in South Africa in 1987 (Eamonn 2012). Among its features, it had the capability to perform trial balance automatically, create income statements and balance sheets, which are essential for accounting. The software had quickly spread throughout Africa. It also became popular in Europe, in such countries like the Netherlands, Croatia, Great Britain, Greece and Spain. It has reached the other continents too, and found use in Canada and Australia.

In Australia, among the first developers of its own accounting software was a company named Teleware Inc. Since the 1980s it has been in the business of developing accounting software, and it had attracted the eye of bigger companies. In 1993 the company was purchased and merged with the Best Software, and in 1999 the company name was changed to MYOB Limited, which is now one of the leaders in the field of accounting software in Australia.

Another company that emerged on the Australian market and expanded during that period is Intuit, which was founded in 1983. It started with the accounting software aimed at small and medium-sized businesses, as well as families and individuals. As the name of the company suggested, their products were aimed to be easily understood by the potential user. As it turned out, making the software understandable was as much of a challenge as making it do the calculations properly. (Ivens 2009)

The early accounting programs were written in all sorts of languages, from 9PAC to DOS, until the majority have moved on to Windows, as the company took the lead in the computer market. Accounting software made great progress since – now it supports information clouds, which allow storing data on virtual servers, and the programs receive systematic updates every now and then, which include bug fixes and updates to the databases. Virtually all necessary accounting operations, such as invoicing, formulating BAS reports, bank feeds, and receiving payments, are digitalized (Curtis 2012).

Accounting Software Market Size

With the total number of Australian businesses exceeding 2 million, and continuously growing, the market for accounting software is rather large. It is a very competitive environment too. Several software providers constantly compete with each other, in order to sway the clientele their way. Another factor that contributes towards the market growth is the fact that the Australian government supplies a 100 dollar voucher towards the starting businesses, which is often enough to cover the expenses (Robb, Rohde & Green 2016). It makes the programs accessible to small businesses, which would have never opted for using such otherwise.

Surprisingly, there still is room for expansion. Studies made by the PT Partners Accountants and Business Advisors and the Australian Bookkeepers Network report that per 1000 business enterprises around 130-150 still use paper-based accounting systems. Usually, these are preferred by very small and simple businesses, which do not need complicated programs in order to fill out their paperwork. Some of the business owners are uncomfortable with the thought of their reports vanishing due to hardware failure and feel a lot safer storing them at home. The paper does offer some advantages, when compared to software, such as easiness of understanding, and security. Unless there is a fire or a flood, the paper records will stay safe for an unlimited amount of time, while the working life of computer hardware is limited to 5-7 years. However, as technology progresses, the companies will be able to encompass even conservative businesses such as these, as the services become cheaper and more accessible. Eventually, paper as an information carrier will become a thing of the past.

Leading Companies

Right now, there are three defined leaders on the Australian market, which provide accounting software. These are MYOB, Intuit, and Xero. As it stands, MYOB holds the majority of the market with the user base of more than 1.200.000 members. Most of these members are located in Australia. It is not a big surprise – the company was one of the first to enter the developing software market, and managed to consolidate its leading position (Cooke, Seargle & O’Connor 2013).

Intuit Inc. is an American company, which also has a long-time presence on the Australian Software market. It is very popular outside of Australia, in the USA and Europe. It has the necessary work force and resources to expand and develop its software to the highest quality standards, as it is a big international company. However, throughout all these years it was unable to push MYOB off the Olympus of market dominance.

Xero is a relative newcomer to the Australian market (Pulankanam 2010). A company that has originated in New Zealand, it has entered the Australian competition in 2011 and ever since has been rapidly gaining popularity both within the country and around the world. The company is known for its innovative strategies and business practices (Keall 2013) and had received many awards in the past 10 years. Xero’s rate of dynamism and growth has made it a part of the ‘triumvirate’ of the Australian accounting software market.

Right now, MYOB is the leader of the marker, holding sway of around 75% of the entire share. However, with the emergence of cloud servers, all three companies are viewing to grasp the dominance in this field. The superiority of information clouds is obvious – people want to be able to access their account information from their smartphones and computers, from anywhere in the world (Lim & Parren 2014). It is something that hardware-based storage systems could not provide. This means that the first company to fully adjust itself to the new reality will have the best chances of grasping dominance over the market.

The Future and the Challenges of Accounting Software

As time passes and accounting software becomes more and more complex and elaborate, it will be able to undertake some of the functions of the accountants, such as statutory compliance with the tax laws and annual reporting (Walther, Sedera, Sarker & Eymann 2013). Cloud services will expand to the point where over 90% of small businesses and 100% of medium and big businesses would switch to cloud-based accounting (Yigitbasioglu 2015). It is likely that the accountants will become outsourced since there would be no need for large offices to keep them in. The program and package interfaces are going to become more intuitive and simplified, in order to allow new customers to grasp the basics of its use. However, with the promotion of information clouds, the matter of security is going to become more important – antivirus programs and backups will become essential in order to ensure safety and security of the customers (Kurtz &Vines 2010).

References

Brown, R 2014, History of Accounting and Accountants, Routledge, London.

Cooke, P, Searle, G & O’Connor, K 2013, The Economic Geography of the IT Industry in the Asia Pacific Region, Routledge, London.

Curtis, V 2012, Making the Most of your MYOB AccountRight, Woodslane Press, Sydney.

Eamonn, R 2012, ‘The Evolution of Accounting Software: Past, Present and Future’, The Journal of the Global Accounting Alliance, Web.

Ivens, K 2009, Quickbooks 2009 The Official Guide, Mc-Grawhill, Inc., New York.

Christauskas, C & Miseviciene, R 2012, ‘Cloud–Computing Based Accounting for Small to Medium Sized Business’, Engineering Economics, vol. 23, no. 1, pp. 14-21.

Keall, C 2013, ‘Xero and Vend big winners at NZ Hi-Tech Awards 2013’, NBR, Web.

Kurtz, R & Vines, R 2010, Cloud Security: A Comprehensive Guide to Secure Cloud Computing, Wiley Publishing, New Jersey.

Lim, N & Parren, B 2014, ‘Standard Business Reporting in Australia: Past, Present, and Future’, Australasian Journal of Information Systems, vol. 18, no. 3, pp. 29-51.

Pulankanam, V 2010, ‘Implementing Accounting Software in Small Businesses in New Zealand: An Exploratory Investigation’, Accountancy Business and the Public Interest, vol. 9, no. 1, pp. 98-124.

Ramsey, E, Martin, M, Ibbotson, P & Parker, M 2009, ‘Small Business and Information Systems’, Australasian Journal of Information Systems, vol. 16, no. 1, pp. 3-5.

Robb, D, Rohde, F & Green, P 2016, ‘Standard Business Reporting in Australia: efficiency, effectiveness, or both?’, Accounting & Finance, vol. 56, no. 2, pp. 509-544.

Walther, S, Sedera, D, Sarker, S, & Eymann, T 2013, ‘Evaluating Operational Cloud Enterprise System Success: An Organizational Perspective’ ECIS 2013 Completed Research, Paper 16.

Wynn, M 2009, ‘Information Systems Strategy Development and Implementation in SMEs’, Management Research News, vol. 32, no. 1, pp.78-90.

Yigitbasioglu, O 2015, ‘External auditors’ perceptions of cloud computing adoption in Australia’, International Journal of Accounting Information Systems, vol. 16, no. 1, pp. 46-62.