Strategic Information System: Commonwealth Bank

 1. Introduction

Information system can be defined as a defined as a system which is used for collection, storage, organization and communication of information. It is used by the organization to organize and analyze data which makes it easy for them to answer questions as well as solve problems that are relevant to the mission statement of the company. An information system is comprises of five main components such as hardware, software, network, database and people which integrate to perform input, output, process, control and feedback.

This report going to research on information system for an organization for which firstly the critical success factors and primary objectives are described. Furthermore, types of information used along with the mission statement and development of organizational chart is also given. The report also analyzes the current system in which it identifies the weakness and further develop a document flowchart and data flow diagram for better understanding.

2. Background of the organization

The Commonwealth Bank is a multinational bank that currently functioning in different parts of the globe and serves the customers with its financial services that includes business and institution banking, retail and other financial services. As stated by Arvidsson, Holmström & Lyytinen (2014), there are also various services which are provided by the Commonwealth Bank and it includes the insurance, broking and investment services and management of funds. The organization is operating by the help of 51,800 employees working for the company.

The critical success factors of the Commonwealth Bank is to basically serve its customers to the fullest and allow them to achieve every possible financial help from the organization. Additionally, the organization uses all the relevant data that is related to its customers. As studied by Dwivedi et al. (2015), the primary objective of the Commonwealth Bank is also based on its success factor. The primary objective of the organization is to determine and identify the data that is capable of helping the customers with the best possible financial service.

The business of the Commonwealth Bank could be depending on the mission statement which is followed and the most probable mission statement of the organization would be to serve the customers with the financial services that can meet the basic complicated needs and achieve the peak position in the banking sector.

3. Organization’s success factor and primary objectives

Commonwealth Bank of Australia is the largest Australian company and there are several factor which contribute to their success in the market. As noted by Dhillon, Torkzadeh & Chang (2018), one of the factor is that its business is tied up with the economy of Australia and the country economy is doing great which is the reason why it eclipsed BHP Billiton to become the most valuable company. The banking sector of Australia became the third largest with a market capitalization of around $295 billion but by this January it jumped to $329 billion. However, other factors include that the commonwealth are more secure and have stronger balance sheet and they operate in an economy which is consistently growing.

The interest rates have deeply fallen which is why a lot of investor are trying to earn higher incomes in Australia. The commonwealth bank of Australia is offering attractive net profit output that increased the growth of customer base as investors are seeking for lower risk. The company also has low level of sub prime debt and were not that highly leveraged when compared with overseas. The primary objective of the bank is to have regard to the interest of their stakeholders, employees, performance and the community in which it functions. Along with these the other objectives includes to observe high standards of ethical behaviour, function in a manner that is consistent to the values of banks.

3.1 Types of information

There are different sorts of information which can be helpful in evaluating the objectives of Commonwealth Banks of Australia. As mentioned by Galliers & Leidner (2014), the first thing which the organization should do in order to have regard for their stakeholders, performance, employees and the community in which it operates is to build a strategy that will take each of these into consideration. Their strategy should be build on such a way that it incorporates with the information system as it has the ability to handle the work place and maintain the information properly. It provides a great support to the entire working operation of the business and includes some main components such as people, procedures, data and equipment.

As noted by Hussin, Hashim & Yu (2018), Commonwealth can inherit this information system in their working process as it has various functions for example, data base management system, transaction processing system, office information system, knowledge management system and devise support system. The company is the leader in providing integrated financial services, along with premium, retail business and fund management, superannuation, institutional banking, investment, share broking products and services. Acquiring these types of information in a systematic manner is going to significantly help the entire organization in carrying out work effectively and fulfilling their objectives.

3.2 Creating Mission statement

The main mission statement that will be suitable from the company’s perspective is that they should be able to try and enhance the wealth and fulfillment of the life of their customers. The organization must create a mission statement in such a way that they align their values and vision along with information system as this is one of the strategy which is effectively going to increase their profit margin and hence higher productivity. Furthermore, it is important for them to excel at enhancing and securing the financial wellbeing of people, communities and their business.

In order to achieve the mission statement, they must earn the trust of their customer, regulators, stakeholders, colleagues, suppliers and keep by providing high quality service. As stated by Arvidsson, Holmström & Lyytinen (2014), Commonwealth bank of Australia’s work ethics and values must be confident and elegant in their approach, along with being having prestige and comfortable. It is essentially for them to keep improving their information system and follow strategies such as innovative thinking, reliable strategy, strong capitalization, follow the principles of good banking, customer experience orientation, risk diversified and investment in service delivery channels. They should also focus in simplifying their procedures and policies in such a manner that it becomes easy for investors to carryout business with them.

4. Development of organizational chart

The organizational chart of the Commonwealth Bank is based on the vertical integration of the businesses and it was done by the managing director, David Murray in the year 2001. As opined by López & La Paz (2017), the change has been in effect since the year 2001 and allowed the organizational structure to function in an integrated manner. The organizational structure of the Commonwealth Bank would allow the organization to develop the products and the services to the different segment of the customers that will also affect the responsibilities of the leaders. The divisions in which the organization will function for a specific customer base is explained as follows:

  • Retail Banking Services: The banking services will basically meet the requirements and demands of the small business and personal financial needs. The service will also function for the customers seeking accessible and affordable banking. As mentioned by Galliers & Leidner (2014), these services are provided by the help of the Australian Services which was a former part of the Commonwealth Bank and also includes the Customer Service Division.
  • Premium Financial Services: The premium financial service is basically responsible for the collection of the current proprietary of the bank that is also related to the funds management system. As studied by Dwivedi et al. (2015), the collection will help the customers with customized services as well as it will provide the customers with the service and help regarding the complex financial requirements.
  • Investment and Insurance Services: The investment and insurance services are capable of bringing the funds of the management group along with the superannuation business and insurance with the master funds. As noted by Dhillon, Torkzadeh & Chang (2018), the funds are composed of the different Colonial Insurance and Commonwealth Investment Management, agents and financial advisors which are currently functioning under the existing brand, Colonial First State, Brokers of Insurance working with the Commonwealth Bank and the support service that can be generated by the help of a third-party.
  • Institutional and Business Services: The institutional and business services basically function to meet the financial needs and requirements of the investment for the corporate customers running a business and the middle market. The bank under this scheme will be capable of providing the regular traditional services for the business along with the management of the risks that will help in the utilization of the business and the approach to a better relationship management.

As explained in the reports, the managing director by the help of the better organizational structure will help in the representation of the strategic position of the Commonwealth Bank and the mixture of its businesses. The integrated structure which was provided earlier will help in meeting the needs and demands of the customers with various complex management of wealth and simple services that are related to banking. The major focus of the bank is done on the management of the wealth by the help of the customers running an institution and also the businesses. As noted by Dhillon, Torkzadeh & Chang (2018), the integrated organizational system helps in ensuring that the decisions provided by the organization, Commonwealth Bank is speedy and responsive in nature. Currently, the organizational chart of the Commonwealth Bank is represented and headed by the following members:

  • Ralph Norris as CEO
  • Garry Mackrell working for International Financial Services
  • Wealth Management Operations handled by Grahame Peterson
  • Premium Business Services offered by Stuart Grimshaw
  • Retail Banking Services provided by Michael Cameron
  • Financial Risk Management carried out by Gary Thursby
  • People Services done by Les Cupper
  • Group Strategic Development done by Hugh Harley
  • Technology Services carried out by Michael Harte
  • Legal Services provided by John O’Sullivan

Figure 1: Organizational Chart of Commonwealth Bank

(Source: Dhillon, Torkzadeh & Chang, 2018)

Strategic Information System: Commonwealth Bank

Strategic Information System: Commonwealth Bank

5. Analyzing the current system

The Commonwealth Bank of Australia has a total number of 800,000 shareholders in the market with 52,000 employees working under them. The organization structure can be understood as the company’s activities like coordination, supervision, and other shares are directed towards reaching the organization goal achievement. Moreover, these depends on company’s objective and how it determines the structure in which their entire organization functions and operates. As mentioned by Galliers & Leidner (2014), the current organization system of Commonwealth bank of Australia is vertically integrated and performs in such a type of network where CEO Ian Narev is the leader. The structure also comprises of board members, COO, and CFO and also other international teams which are directly connected to the organizations. However, thought the leader is the CEO, apposition suggests that it follows divisional structure which means matrix project organizational structure.

5.1 Identifying the addressing the weakness

Though the organization Commonwealth Bank of Australia is using this matrix structure and it currently suitable for them but it has some major disadvantage associated with it due to the fact that it is one of the most expensive structure when compared with other organizational structure. As opined by López & La Paz (2017), the cost of CBA consistently increases due to the double management requirements. Furthermore, this type of structure is influenced by their size along with the dynamics of corporation of the organization. One of the weakness of the structure which the Commonwealth bank of Australia faced was money laundering scandals. Due to the fact that in this organizational structure, the employees need to report to more than one manager which causes huge conflict as a result confuses the employees.

Furthermore, as studied by Dwivedi et al. (2015), because of vertical integration in the organizational structure, it creates power endeavor as there is no specific explanation if lines of authority. Conflicts and confusion are mostly common among employees as the executives and authority have equal power in this structure. Commonwealth bank of Australia has faced conflicts among different functional manager and project manager related to authority and power. At the same time, it becomes impossible for an employee to listen to both functional manager and project manager which results in ignoring any one of them and therefore delay in work and more time in reaching the goals. Along with these, due to the lack of organizational chain of command, there arises situation where communication as well as coordination becomes ineffective.

5.2 Preparation of document flowchart

The document flowchart of Commonwealth Bank of Australia is given below:

5.3 Data flow diagram

Customer details                                                                               New account details

Account Details

Login credentials

Account balance update

Account balance update                                                                                                                              Money Amount

Money amount                                                                                                                                          Money amount

Amount destination and money amount

Money amount

6. Primary features of the new system

The best approach to resolve the issue related to matrix structure is to replace it with information system as it will remove all the complexities that exhibit in organizational operation. As stated by Arvidsson, Holmström & Lyytinen (2014), the most suitable software which Commonwealth Bank of Australia needs to implement in order to maintain the account information is commercial software. As the organization offers various types of financial services along with institutional banking, investment, retail, broking, insurance and investment. Focusing on this, it can be said that CBA needs such a software which sole purpose is to examine the financial operation of a financial institution like a bank.

As the bank, purchases its software from supplier as well as vendors it result in not development of its financial application. Moreover, it is important for the organization to implement accounting software from MYOB and Xero as both of these are cloud based accounting software. These software will help Commonwealth Bank of Australia to control several accounting procedures. The main function of Xero includes purchase order management, cost tracking and inventory overview. Whereas on the other hand, MYOB includes bank reconciliation, tax management, expense tracking, accounts receivable, invoicing, payroll, accounts payable, revenue recognition and billing.

6.1 Justification for choosing the system

The main reason for choosing web based and cloud based software like Xero and MYOB is that it will help in reducing the conflicts and confusion that used to arise among employees due to matrix organizational structure. Furthermore, use of these software in the organizational process will help in reducing the scandals and fraud associated with money laundering. Also the accuracy and efficiency level increases with the use of these sort of software and also minimizes the chances of human errors. Furthermore, using these software will help the clearly understand their individual roles and responsibilities which is essentially necessary in order to achieve their goals and mission statement.

6.2 Discussion of other advanced technologies

MRP stands for material requirement planning which is a production planning, inventory control and scheduling system helpful in managing manufacturing processes. Though, this systems is mostly software based but MRP can also be conducted manually.

MRP ll stands for manufacturing resource planning is a method for effectively planning the resources the resources of an organization. As explained by Pearlson, Saunders & Galletta (2016), the main function of it is that MRP ll is used to address the operational planning units along with financial planning with the ability to answer questions such as what if.

EDI stands for electronic data interchange is a type of software which is used to exchange data between two or more computers. It is mainly used for easy and fast transfer of business documents within the organization and also among business shareholders such as customers or suppliers.

7. Description of technology platform

The suggested software that could meet with the accounting needs and demands of the Commonwealth Bank is the MYOB and XERO. The software that is suggested to the Commonwealth Bank, MYOB is completely based on the advanced technology which helps it to deliver the long-term benefits in the business by the help of the key platforms which is supported and it includes the software delivery and the operational security. On the other hand, the XERO is supported by the platform under which a solid engine is provided to handle the accounting and is also supported by a cloud that is capable of connecting the small business to the advisors of the own business.

The MYOB also functions with a significantly high technology for the backup of the system that is built on an idea of recovery strategy and also provides a fundamental security. The function is termed as Greentree Secure by MYOB and basically ensures the users with a retrievable facility of the data within a few minutes of time. It is very much useful for the Commonwealth Bank as the data is essential and having a retrievable backup is essential for the organization. Additionally, by the help of the software implementation the organization is capable of maintaining a customized framework that can meet the demands and requirements of the system.

As pined by Wu, Straub & Liang (2015), the implementation of the software will also provide the users in the Commonwealth Bank to develop and extend its facilities to the by adding new functions by the help of the software. XERO and MYOB also ensure that the usability of the software is easy and can be handled by the technicians by the help of simple training. The platform for the technology to be implemented is also available in the Commonwealth Bank as these two software runs on a computer which supports the Windows Operating System and the minimum system requirements that are necessary are also available with the Commonwealth Bank.

7.1 Financial and non-financial data attributes

The ER diagram presented in the figure below provides a detail of the relationship of the Commonwealth Bank with the customers and other entities. The financial data attributes that is explained as the factor that explains the financial health of the organization and Commonwealth Bank being a financial institution is strong in the financial aspects as the common equity, capital requirements and the capitalization ratio along with the earnings per share is significantly high and allows the organization to build a strong relationship as it has been explained by the help of the figure.

On the other hand, the non-financial attribute of the organization which can be studied is the sustainability. The organization is functioning under the laws of the government that are related to the sustainability of releasing or gathering appropriate information. As noted by Hussin, Hashim & Yu (2018), the Commonwealth Bank also has a sustainable strategy that ensures that the customers are provided with adequate details and the information related to the customers are not disclosed. In order to implement the adequate software, the Commonwealth Bank also needs to ensure that there is no breaching of the data and the risk of losing data is minimum.

Figure 2: ER Diagram of Commonwealth Bank

(Source: Hussin, Hashim & Yu, 2018)

7.2 User Views

The views of the users in the case of implementing a new software is mainly regarding the loss of essential information. According to Szabó & Öri (2017), the risks of fraud and hacking in such cases are significantly high. The implementation or the installation of the ERP software costs significantly high and the lack of training and skills to manage the software could lead to an unwanted circumstance. Therefore, in order to avoid such issues in the organization the business, Commonwealth Bank should invest a huge amount of money to achieve the best results instead of loosing essential information regarding the company.

7.3 Examination of security risk and data breaches

As stated by Whittington (2014), the major risks in the security and the data breaching can be explained as a cyber crime which is currently affecting various organizations around the globe. The illegal entrance of an individual to steal the essential data is known as hacking and the most probable solution to avoid this act is mainly by investing more money in the anti-hacking or anti-malware software. Additionally, the passwords that is provided to the user should be regularly changed and therefore, the number of members knowing the password should be limited.

7.4 Appropriate accounting control

The most appropriate accounting control is to develop the skills of the users or the technicians by the help of the proper training facilities and also use a strategy that reduces the number of users to observe the data. Additionally, the connection should be secure by the help of the trained executives and moreover, the loopholes and glitches should be avoided in every circumstance. As stated by Arvidsson, Holmström & Lyytinen (2014), the hacking activities should be tackled by the creation of strong anti-malware programs and the activities should be checked regularly. These activities could provide the most appropriate solution for the control over the software. The choice of the software is also essential in such cases and MYOB and XERO are one of the most popular software providing companies regarding the accounting in an organization. The trusted vendor is capable of verifying the issues in the system and the chances of the details being leaked.

8. Conclusion

It can be concluded from the above study that the accounting software is the most essential and the helpful ERP system for the business of the Commonwealth Bank. The suggested ERP system for the Commonwealth Bank is the MYOB and XERO. The discussion on the various aspects of the organization is explained in the sections above. The various sections of the study also briefly explain about the functioning of the organization. The Commonwealth Bank could also expand its business by implementing the most appropriate software. However, there are also various issues regarding the implementation of the software and the discussion also allows to evaluate the strategies that can prevent the illegal activities. Moreover, the potential risks and the breaching of the data has also been analyzed in the study.

Citations

References

Arvidsson, V., Holmström, J., & Lyytinen, K. (2014). Information systems use as strategy practice: A multi-dimensional view of strategic information system implementation and use. The Journal of Strategic Information Systems, 23(1), 45-61.

Dhillon, G., Torkzadeh, G., & Chang, J. (2018, June). Strategic Planning for IS Security: Designing Objectives. In International Conference on Design Science Research in Information Systems and Technology (pp. 285-299). Springer, Cham.

Dwivedi, Y. K., Wastell, D., Laumer, S., Henriksen, H. Z., Myers, M. D., Bunker, D., … & Srivastava, S. C. (2015). Research on information systems failures and successes: Status update and future directions. Information Systems Frontiers, 17(1), 143-157.

Galliers, R. D., & Leidner, D. E. (2014). Strategic information management: challenges and strategies in managing information systems. Routledge.

Hussin, N., Hashim, H., & Yu, H. (2018). Strategic Information Management (SIM) In Malaysian Organizations: An Investigation of its Antecedent. DEVELOPMENT, 7(3).

López, E., & La Paz, A. (2017). Ontology of Strategic Information Systems Planning. In International Conference on Information Resources Management, CONF-IRM 2017 Proceedings, Santiago de Chile. http://aisel. aisnet. org/confirm2017/22.

Pearlson, K. E., Saunders, C. S., & Galletta, D. F. (2016). Managing and Using Information Systems, Binder Ready Version: A Strategic Approach. John Wiley & Sons.

Szabó, Z., & Öri, D. (2017, December). Information strategy challenges in the digital era how enterprise architecture management can support strategic IS planning. In Software, Knowledge, Information Management and Applications (SKIMA), 2017 11th International Conference on (pp. 1-8). IEEE.

Whittington, R. (2014). Information systems strategy and strategy-as-practice: a joint agenda. The Journal of Strategic Information Systems, 23(1), 87-91.

Wu, S. P. J., Straub, D. W., & Liang, T. P. (2015). How information technology governance mechanisms and strategic alignment influence organizational performance: Insights from a matched survey of business and IT managers. Mis Quarterly, 39(2), 497-518.

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