Selection of Accounting Software Using Analytical Hierarchy Process

Topics: Decision making, Decision making software, Decision theory Pages: 13 (3324 words) Published: April 3, 2011

Understanding the business’s financial information capabilities and weaknesses is critical to selecting the appropriate accounting software solution. Accounting software system seem very important that because not only to have information at fingertips, but also to have more accurate information. The right accounting software can help organizational grows and also provide the efficiency of control and manage the organization’s financial information. When the companies choose one accounting software system, the company should know the challenges that company would expect from using that accounting software system.

Here, this research will focus on the stages of choosing the accounting software for one SME company which is here IT Services Sdn Bhd. At the end of this research, you will find out why this respective company chooses MYOB as accounting software solution.

In selecting the best accounting software system, organization will faced various alternatives software in the market, because of that it can be the one critical business decision organization face. The objective this paper is to examine what are the criteria of choosing accounting software system for SME. SME here is one services provider known IT Services Sdn Bhd. This stage involved with decision making by Finance Department which is Chief Finance Officer, Accountant and Senior Account Executive. This paper will use Analytical Hierarchy Process to determine the important criteria and sub-criteria collected from interview session with respective respondent in choosing accounting software. The main research question here is to study what are the criteria of choosing the accounting software for one SME company; and the second research question is to study how this accounting software selected meet organization’s objective.


Accounting systems are responsible for analyzing and monitoring the financial condition of companies, preparation of documents necessary for tax purposes, providing information support to many other organizational functions, and so on.(Tavakolian, H.,1995, pp19). The accounting software selection process is complex because of the large number of choices available, the strengths and weaknesses of the various packages, and the cost of those packages. (Rushinek,A. and Rushinek, S.F,1995). Properly implemented accounting software may benefit to the organization, including better decision making capabilities, improved cash flow, more accurate information, more control and as a foundation for growth. (ACCPAC 2005). Almost all firms also gree that the software have had positive impact on their businesses but, several firms think that accounting software is expensive to use and not stable. ( Ismail, N,.A and Zin,M,. 2009, pp 4)

This paper also reviews from journal pertaining supplier selection practices and decision tools or methods used particular for supplier selection process. The selection process depends on the sourcing strategy that a firm follows whether favor of single supplier or multiple suppliers selected. (Sonmez, 2006). According to Wilson (1994), purchasing decision is depends on the type of products and this including decisions in terms of choice criteria and also weights of each criteria. He also defined product types and the criteria of each product types which are: 1) Routine order products; regarding the functionality to use the product. 2) Procedural problem products; It is regards the capability of the product. 3) Performance problem products; determination of satisfaction in the application of the product. 4) Political problem products; Involvement the influence of multiple decision makers.

It is generally agreed by several literature that the followings elements makes the supplier selection decision making process difficult and complicated ( Sonmez (1996), Haleem (2009): • Multiple criteria – both qualitative and quantitative •...

References: 1. Cheng, E.W.L. And Li, H.,(2001)“Information Priority-Setting for Better Resource Allocation Using Analytic Hierarchy Process (AHP)”. Information Management and Computer Security, (2), PP 61-70.
2. Sonmez, M., (2006) “A Review and Critique of Supplier Selection Processes and Practices” Business Scholl Occasional Papers Series, Paper 2006:1.
3. T.L. Saaty.(1990) “How to Make a Decision: The Analytic Hierarchy Process”, European Journal of Operational Research, vol. 48(1): pp. 9–26.
4. Varma,S., Wadhwa,S,. and S.G. Deshmukh,S.,G. (2008) “Evaluating petroleum supply chain performance: Application of analytical hierarchy process to balanced scorecard” Asia Pacific Journal of Marketing and Logistics. Vol. 20( 3): pp. 343-356.
5. Chan F.T.S (2002). “Design of Material Handling Equipment Selection System: an Integration of Expert System with Analytic Hierarchy Process Approach”. Integration Manufacturing System, Vol 13(1):58-68.
6. Vargas, L.G. and Forman, E.H (1995). “The Analytical Hierarchy Process: A New Paradigm”, New Orleans, LA.
7. ACCPAC International, Inc.(2005). How to Choose an Accounting System. Pleasanton, CA.
8. Wilson, E. J. (1994) The relative importance of supplier selection criteria: A review and update. International Journal of Purchasing and Materials Management, Vol 30(3): p. 35.
9. Pearson, J. M. and Ellram, L. M. (1995) “Supplier selection and evaluation in small versus large electronics firms”. Journal of Small Business Management, Vol 33(4): p. 53-65.
10. Ariff,H , Salit,M.S, Ismail,N. and Nukman,Y.(2008) “Use of Analytical Hierarchy Process (AHP) for Selecting the Best Design Concept”. Jurnal Teknologi : p. 1 -18
12. Ismail, N,.A. and Mat Zin,.R. (2009) “Usage of Accounting Information among Malaysian Bumiputra Small and Medium Non-Manufacturing Firms”. Journal of Enterprise Resource Planning Studies, pp.1-7
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