Sungate Foods is based in Victoria .It buys from350 farms and packages and sells wild rice both in domestic as well as international market. It is already using Information systems but that information systems is not integrated. In spite of using information systems, there is lot of requirement for re-entering of same data again and again due to limitation of the system (Weygandt, 2007). Entering data again and again not only waste the precious time of the people but also cause human errors making task of reconciliation very difficult. Sungate has defined its budget of 150,000 US dollars and looking for replacing its Information systems with the new accounting software or ERP software that will be a good fit for its requirements and also helps to eliminate the existing problem. The objective of this report is to identify the business processes and business requirements for the Sungate and then study the accounting systems and to recommend a good fit software.
Existing business problems
Sungate Foods based in Victoria that produces rice and wild use already have existent information systems but facing a lot of issues due to that system. According to a study done by MIT, SAP and PRTM, there is an association between IT strategy of the enterprise, efficient business processes and the performance of the supply chain. Currently, the Sungate is working with very low degree of integration between the business processes. There is lack of clear and consistent supply chain performance measures. Each functional unit is performing their task without anyone worrying about the systems as a whole (Townsend, & Wilkinson, 2014). There are independent IT systems having redundant data. The focus is on manual entry of data and since each functional unit is working in Silos, same data needs to be entered manually multiple times by different departments. Purchasing department is entering data to keep record of receiving. Stores and Inventory are entering received items so as to update the quantity of each items in the store, financial department is entering data so as to match invoices and conciliation during month end. Each functional unit is working in Silos and same data is entered manually by different departments leading to the wastage of time and human errors.
Not only this, People work for weeks in order to compile financial and business reports and come up with the insights. In this world of digitalization, Cloud technology and agility, Sungate is still relying on people to compile data for weeks (Parkes, 2012). If Sungate wants to grow, it has to invest in technology if not the advances ones at least it should improve the basic technology at work.
Organization is keeping the high inventory so as to ensure complete orders. This has also increased the holding costs of the inventory and led to decrease in cash to cash cycle time, which is thus affecting the financial indicators of the company (Dameri, 2013).
Before making a software selection, it is imperative that Sungate should brainstorm to come up with the detailed list of requirements and should also prioritize them so that if there is conflict in selecting various requirements and respective software, decisions could be made easily (Vanhoof, 2014).
Below are the critical business processes for the Sungate and under each business process; any number of transactions takes place:
Procure to pay cycle/Expenditure cycle
This cycle starts from whenever there is requirement to buy the new items or existing items. Requisition for quotation is requested from multiple suppliers. Once quotes are received, they are analyzed and purchase order is created. After that goods are received into the inventory and invoice is created which is then transferred to journal and post to GL (General Ledger). Sungate buys regularly from 350 farms which mean it has already identified the suppliers and transaction begins from creating the purchase orders and ends with posting to general ledger (Miranda, 2013).
Order to cash cycle/Revenue cycle
This starts upon receiving the customer orders. If is present in inventory, fulfill from inventory else create production job to produce the desired quantity. After that, order is packed and shipped to the customer. Customers are then invoiced and after receiving the payments, account receivables needs to be updated (Dumas, Rosa, Mendling, & Reijeers, 2013).
Sungate sells both domestically and to international markets and thus there will be lot of customers’ orders. If all orders follows the order to cash cycle, this business process is also stream lined. Requirement here is that account receivables should share the data with the quantity sold to customers and hence there is no multiple entry of data.
Payroll cycle/Time and Labor cycle
This cycle refers to the collecting of the efforts spent by employees by means of time sheet and thus paying to the employees. Sungate employees 100 people during times of normal demand and this number goes to 200 during times of peak times. Instead of using excel sheets and entering data in registers, there should be some mechanism or software module that could handle payroll module (Holt, 2008).
Production cycle/make to order
This starts when the Production planning department releases job in the system, raw material is issued and thus converted into finished goods by means of labor and processing over different machines. If there are many orders and business has to make decision between which jobs to manufacture first due to delivery promises, scheduling algorithm are used (Weygandt, 2007). These algorithms also schedule the jobs such that maximum utilization of the resources will be there.
Financial cycle/cash to cash cycle time
This cycle refers to the maintenance of working capital necessary to run the firm. It involves revenue recognitions from the customers, obtaining the payments and deploys it to pay to the people and buying the raw material (Baskerville, 2016). The smaller it is, better it is for the organization. Sungate is maintaining high levels of inventory which has reduced the cash to cash cycle time. It has to maintain optimized this cycle time by maintaining appropriate levels of inventory (Davenport, 2013).
The key business requirements are categorized into high, medium and low priority and are as follows:
Requirement and its Priority
High priority: Integration of Data across Functional units
The most important requirement is that all the above cycles should be integrated which means data should be shared among all the functional units. When purchasing department is receiving item, it should be stored in the system, automatically update the quantity of inventory and notify finance guys also for the invoicing. This would save tremendous amount of time for the organization as there is no need to manually enter the data multiple times. This sharing of data also breaks the silos between the functional units. This cycles spans through multiple functional units. Earlier, each functional unit is recording and managing their data for their department. The requirement should be the business processes that will integrate the different functions and share the data. That will result in huge efficiency as there are no mistakes (Johansson, & Carlsson, 2013).
High priority: Reporting
One of the most important business requirements is to get the managerial and financial reports. Currently, it is taking weeks for the staff to prepare financial and managerial reports. Also, some decisions couldn’t wait for so long and thus has been taken without availability of appropriate information at hand. There is requirement of systems that could take inputs from the data in the system and process it to provide the output. Also, such requirements can be configured by the manager or users. It means that manager just needs to enter chart of accounts and what information is required, system would do the calculations and provide reports (Spear, & Parrish, 2013). There is also the requirement of making the reports more presentable like if they are for the external parties, they should contain the name of the Sungate and other important terms and conditions and should be presentable.
Medium Priority: Inventory Optimization
Inventory level should be optimized. Thus, there is requirement of having some kind of reorder strategy or calculating economic order quantity. Also, cycle’s inventory should be supported. All these lead to increase the visibility of the inventory levels. There should also be safety stock but safety stock quantity should be defined after brainstorming. Carrying too less inventory also increases the risk of stock outs and thus there should be the balance (Horenbeel, Bure, Cattrysee, Pontelon, & Vansteenwegen, 2013).
Apart from basic purchasing features like receiving and invoicing, additional features like spend management, ability to convert quotes into purchase orders, freight terms and appropriate approval hierarchy for approving of purchase orders are also desirable
Order Management features
Besides basic features like entering sales order, the features like credit terms, hold for customers, pricing support are also desirable.
Analytics and Dashboard
Analytics and Dashboard are good to have but they can wait. Analytics will be required once the organization becomes comfortable with the basic and optimum level of Information systems and are comfortable working in an integrated environment.
Various Systems comparison and Alignment
There are numerous Accounting software and ERPs systems designs for different types of requirements and hence there is no one size fits all software. Let us have a look on the various software and if it serves the requirements and budget of the Sungate.
Oracle systems, SAP and Microsoft Dynamics Systems: These huge ERP packages are very exhaustive and besides covering the requirements of Sungate, they provide the numerous additional features. There are many successful case studies about the organizations that have implemented these packages. All these fully answers the requirements of the Sungate but given the scale of the business of the Sungate and intricacies in the business, It would not make much sense to implement any of these ERPs because these are required for the businesses which are speeded worldwide and scale of the business is much larger. Also, the cost structure of this package is also quite high as compared to the budget of the Sungate. So, the cost aspect of these gigantic packages and their unsuitability for the business size (Jindal, Dhindsa, 2013) put these ERPs out of the game.
Xero: It is the most widely used software package in Australia and NewZealand and becomes leader after replacing MYOB who was earlier the leader in Australian markets. There are numerous successful case studies of organizations using this software. It continues to launch additional features frequently and thus product development is strong. Recently, In march 2015, Xero added basic inventory features and thus overcome its major shortcoming. Also, it goes very well with numerous Bolts on systems. In terms of requirements, it has good level of purchasing and sales support sufficient for Sungate. By using this software, organization will have connected unified view of the processes ( and they no longer need to enter data multiple times. Also, this software is very cheap and even if the organization can have Bolton Systems, which provides advanced purchasing, and inventory features, it will be under budget (Hossack, 2015). Xero has excellent 3rs party connectivity and that is the unique proposition of this product making it a leader in Australia. Some of the Bolton systems like DIY, Unleashed Inventory integrates very well with Xero.It also supports payroll. With Xero, organization can have best of many worlds because 3rd party integration is good and it can have best 3rd party softwares. In future also, when the business expands and organizations wanted to buy advanced modules, it can buy best in the market and integrate it with Xero (Yuthas, 2013). Apart from all these features, the most important and powerful convincing factor is that it has excellent reporting tool whereby users can configure and customize their accounting reports and saves a lot of time. Users no longer need to spend weeks in preparing the reports. This will boost decision-making in the organization leading to better results. It also has multiple currency support feature, which is missing in MYOB, and since Sungate sells internationally, this feature is desirable. Its license will come under budget and even any bolt on is purchased and integrated for advanced purchase and inventory capabilities, cost will still be under budget.
MYOB: MYOB offers solutions both on cloud as well as classic. MYOB will provide the integrated flow of the processes but not all functional areas ware well supported by it. It is one of the oldest products in Australia market and 2nd largest market leader in Australia. MYOB highly focus on accounting. It has features like tax accounting, GST. Earlier, MYOB has minimal support for Purchasing and order management but latest advanced versions have full support for these modules (Hall, 2012). If the organization decides to go for cloud solution, this solution will be very cheaper as compared to the budget of the Sungate. Not only this, classic version will also be cheaper. Also, since organizations employees 200 people during peak times and 100 during normal times, the cloud solution will help organization to increase or decrease the user restriction accordingly and thus paying for the exact no. of users. All the medium priority requirements and cost restrictions are perfectly fulfilled by this software solution however, this MYOB solution does not have low priority requirement i.e. Dashboard and analytics. But due to lack of 1 important high priority requirement i.e. business reporting makes to rule this software also out of the options. MYOB has basic level of reporting but not advanced reporting where chart of accounts can be configured and inputted by the business users to see the data for a particular business segment or department (Hossack, 2015). MYOB also don’t support multiple currencies and Sungate sells in international markets also and thus there will be issue. Also, MYOB does not have cash flow forecasting features (
SYSPRO: SYSPRO is also very powerful package for the medium scale companies with large number of successful case studies. The most important thing is that organizations that have implemented this package re generally of same scale as of SYSPRO. In terms of the features, it has all the features covered in the requirement list. It has excellent support for purchasing, inventory. It has automatically creation of purchase order using reorder inventory technique and min max inventory technique, which help the Sungate to reduce the inventory (Scholtz, Calitz, & Cilliers, 2013). It has excellent reporting tool where users can define their own reports and can save them for future purposes also. This software is also very flexible and can be customized based on business needs. 3rd party integration is also good and the goodwill of the vendor is also established in the market. It also has basic analytics and dashboard features. It cost will come under the budget of Sungate. It is not Accounting package but ERP package like SAP and Oracle suitable for medium scale organizations. Thus, it has lot of features and user training is also minimal ( Support of the vendor is also very good. Thus, this software is also recommended.
After carefully studying the existing structure and business problems of the Sungate, appropriate requirements are identified and they are matched with the offerings of software packages. 1st recommendation is SYSPRO and if it is expensive, then next accounting software can be considered as Xero with any 3rd party bolt on. Bolton can be added later also thus helping organization to splits its cost and manage it better.
It was difficult to find the exact cost of software license as no vendor has disclosed total cost of ownership except oracle. However, referring to various sources, approximate price is guessed and based on that recommendations are made.
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