Strategic Information System Report: Commonwealth Bank - IS Strategy

This report provides a comprehensive analysis of the Strategic Information System (SIS) of Commonwealth Bank. It begins with an overview of the bank's organizational structure, services, and products, including credit cards, loans, and investment options. The report then delves into the bank's operations and functionality, identifying gaps in current processes, such as those that led to money laundering issues and system errors. It highlights specific problems the new system aims to solve, such as technical defects and falling share prices, and outlines criteria for proving the system's effectiveness. Furthermore, the report explores the concept of Information Systems (IS) Strategy, emphasizing its importance for aligning organizational objectives with IS. It discusses the benefits of IS strategy, including improved decision-making and customer relations, while also addressing potential difficulties in developing and implementing such a strategy, such as human resource, technical, and management challenges. Finally, the report examines potential information system failures within IS projects, including system failures and lack of management support, and offers solutions to mitigate these issues. The report concludes with a discussion of how to overcome these challenges to ensure successful implementation of the IS strategy.

Running head: STRATEGIC INFORMATION SYSTEM
Strategic Information System
Name of the Student
Name of the University
Author’s note

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Table of Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................3
1. Commonwealth Bank- Structure, Services and Products........................................................3
2. Operations and Functionality...................................................................................................5
3. Information Systems Strategy..................................................................................................7
4. Difficulties in developing IS Strategy.....................................................................................8
5. Information System Failures..................................................................................................10
Conclusion.....................................................................................................................................11
References......................................................................................................................................12
Bibliography..................................................................................................................................15

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Introduction
Strategic information systems help organizations to support as well as shape the
competitive strategy of its business units. SIS helps an organization to effectively utilize valuable
information for gaining competitive and strategic advantage in the market (Altaf and Khalil
2016). Strategic information systems enable organizations to improve its performance,
productivity, operational efficiency and develop new and advanced businesses (Amrollahi,
Ghapanchi and Talaei-Khoei 2014). SIS is gaining importance as it is required by organizations
for organizing and managing business procedures and activities in a new manner. SIS will help
businesses to use and apply valuable information for attaining the strategic objectives
(Arvidsson, Holmström and Lyytinen 2014). Strategic information systems can help the various
organizations to achieve its objectives by aligning the strategies of its business with the IS.
The following literature review describes the various processes and the organizational
structure of Commonwealth Bank. It also gives a brief overview of the different products offered
by the bank. It points out the gaps present in the current processes of the bank and identifies the
specific issues that can be solved by the new system. This literature review also describes the
concept of Information System Strategy and highlights the challenges that might be faced by
Commonwealth Bank while implementing the strategy. It gives recommendations for
overcoming the mentioned challenges. This literature review mentions the issues that can occur
within an IS project and gives suggestions for solving the problems.

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Discussion
Commonwealth Bank is a renowned multinational Australian bank that runs its business
in several countries. It is a leading integrated financial service provider in Australia. This leading
bank of Australia is known for offering various services such as banking services and other
financial institutional services. Commonwealth Bank also provides investment services,
insurance services and fund management services. Commonwealth Bank utilizes extensive
policies and takes various initiatives for meeting the customer commitments and increasing the
level of customer satisfaction (Commbank.com.au. 2018). It is one of the most recognised brands
of the financial sector in Australia.
1. Commonwealth Bank- Structure, Services and Products
a) Structure of the organization: The structure of Commonwealth Bank has various levels
based on different job roles. The employees belonging to each level has to report to the higher
level employees. The topmost level of the structure has the Board of directors and the top
management team (Commbank.co.id 2018). The middle or next level managers are under the
supervision of the topmost level of the tall structure, and they make decisions based on short-
term goals. The topmost and middle level in the hierarchy use strategic and tactical information
respectively (Pearlson, Saunders and Galletta 2016). The lower levels of the hierarchical
structure need operational information for carrying out daily activities and meeting daily
objectives as well as targets.

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Figure 1: Organizational or Hierarchical Structure of Commonwealth Bank
(Source: Commbank.co.id 2018)
b) Products and Services: Various financial services and products are offered by the
Commonwealth Bank such as:
i) Credit cards: This bank offers business as well as personal credit cards at a low or
reasonable rate (Commbank.com.au. 2018). It facilitates business operations by providing
business credit cards to various organizations.
ii) Business, personal and home loans: Commonwealth Bank gives loan facilities to the
businesses for helping in expansion. It also provides home and personal loans to the customers.
iii) Bank accounts: Commonwealth Bank gives the customers the opportunity to open
business accounts for facilitating business activities. It also gives the facility to open personal
bank accounts as well as student accounts.

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iv) Investment: Investment opportunities and options are provided to the users for
expanding their wealth as well as businesses.
v) Insurance: Life insurance and vehicle insurance are offered by Commonwealth Bank.
It also provides income protection packages as well as plans to the customers.
vi) Asset finance: A range of financial solutions are offered by this bank for customer
equipment and cars.
vii) Merchant services: EFTPOS machines, E-commerce solutions are provided by this
bank for facilitating the merchants.
viii) Superannuation: Services such as employer superannuation scheme is one of the
superannuation options offered by the Commonwealth Bank. It is also known for providing
customized solutions for achieving the business objectives.
2. Operations and Functionality
a) Current Processes: The current processes of Commonwealth Bank focus on satisfying
its customers and ensuring competitive advantage in the market. Variable rate and fixed rate loan
service consists of the main components of the loan service process. Innovative approaches are
undertaken by the loan service process for satisfying the customer needs. The main focus of the
IT process is to grow its technical competencies and provide computerised programs for
facilitating customer service. Its investment process ensures the growth and preservation of
customer wealth (Commbank.com.au. 2018). The customer service process aims at delivering
valuable services to the customers. The human resource process is focused on hiring competent
staffs for ensuring effective business operations.

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b) Gap Identification: The business processes of Commonwealth Bank have loopholes
and gaps. These loopholes and coding errors were responsible for the money laundering problem
where money were illegally transferred from the customer accounts. This incident led to the
downfall of its share price. There have been major system errors that have affected the market
growth of Commonwealth Bank and led to fluctuation in its share price. The customers could not
access ATM services and other facilities because of errors or technical faults in the system. Gap
in the technical process of the bank is its major concern. Financial technology companies are
gaining competitive advantage over Commonwealth Bank. Technical faults in the processes are
preventing the bank from satisfying its customers.
Figure 2: Graph showing the falling share price of Commonwealth Bank
(Source: Commbank.com.au. 2018)
c) Specific problems that will be solved or fixed by the new system: The technological
defects and system error will be resolved by the new system. The new system will be able to

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increase the share price and prevent the falling of share price of the bank. Commonwealth Bank
will be able to gain competitive advantages over the FinTech companies by developing the new
system. Streamlining of business processes will eliminate the current gaps in the processes and
help to satisfy the customers (Nambisan 2013). Effective implementation of the new system by
incorporating strong security standards will facilitate in preventing money laundering in the
future.
d) Criteria that will prove that the new or proposed system meets the requirements:
System verification can be used for proving whether the new system satisfies its requirements.
System validation is another criterion. Performance of the new system is a major criterion for
proving that the proposed system has met its requirements or not. Functioning of the hardware
and software components of the new system are part of the criteria. One of the criteria is meeting
operational requirements of the users and customers (Bajdor and Grabara 2014). System testing
along with proper evaluation can be done for checking the performance of the new system.
Reliability and throughput are important criteria for the new system.
3. Information Systems Strategy
Businesses develop as well as implement IS strategy for aligning organizational strategies
with its IS (Whittington 2014). IS strategy is needed by Commonwealth Bank for ensuring
effective use of valuable information and achieving strategic business objectives.
Synchronization of the IT and technical platform of Commonwealth Bank with its information
systems can be done by implementing IS strategy (Argenziano, Severinov and Squintani 2016).
Organizational objectives can be easily achieved by implementing IS strategy as this strategy
will support the IS structure of the bank (Peppard, Galliers and Thorogood 2014). Strategic
information can be delivered and competitive advantages can be gained by Commonwealth Bank

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by implementing IS strategy (Sakas, Vlachos and Nasiopoulos 2014). IS strategy will provide
new opportunities to the bank for growing its business and direct the bank to strategically utilize
valuable information (Cassidy 2016). IS strategy is considered to be demand-oriented and it
helps in developing new strategies as well as support the current strategies of the business.
The above mentioned benefits show the need of integrating IS strategy with the whole
organizational strategy. Integration of the IS and organizational strategy is mandatory for
increasing the business productivity and improving the business performance. The IS strategy
will help in establishing and maintaining strong relations with the customers and the suppliers. IS
will enable the bank to give quick responses to the customers and meet customer requirements
(Altameem, Aldrees and Alsaeed 2014). Better decision making can be facilitated by
implementing IS strategy as this strategy will enable the top management team to easily access
strategic information and carry out effective strategic planning (Peppard and Ward 2016).
Commonwealth Bank will be able to improve its financial services and products by
implementing IS strategy that will enable the bank to effectively utilize strategic information and
achieve organizational objectives.
4. Difficulties in developing IS Strategy
a) Human resource challenges: The employees of Commonwealth Bank might not
support the idea of migrating to a new system. They might not be technically competent, and this
can act as a barrier to the development of IS strategy. If the employees lack sufficient technical
knowledge then this can act as a reason for the IS strategy failure. Lack of flexibility can also
harm the implementation process of IS strategy (Galliers and Leidner 2014). Poor coordination
and organizational culture can act as a problem while implementing the IS strategy.

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b) Technical issues or challenges: Technical faults can lead to hardware as well as
software failure and create a negative impact on the implementation of IS strategy. System errors
can harm the IS strategy. Commonwealth Bank can face difficulty in shifting to the new system
from the legacy system. The entire implementation process can get stopped by extending and
modifying the intermediate processes.
c) Management issues or challenges: Lack of technical understanding of the senior
management team can cause difficulty in the process of IS strategy implementation.
Communication gap in the internal processes can prevent the top management executives from
understanding the need of IS strategy. Lack of support from the senior executives will cause
problem in effectively implementing IS strategy.
Solutions for the above mentioned difficulties are discussed below.
a) Solution for human resource challenges: Conducting technical trainings for enhancing
technical knowledge and skills of the employees will be highly effective in overcoming the
human challenges. The HR manager must focus on hiring employees belonging from technical
backgrounds and having experience in technical domains.
b) Solution for technical challenges: The information systems must undergo regular
maintenance for preventing hardware as well as software failure. Proper technical planning and
scheduling can be done for executing the intermediate processes without any delay or
modification. Correct identification of technical specifications will facilitate proper
implementation of IS strategy.
c) Solution for management challenges: The top management team must be made
technically efficient and competent (Boonstra 2013). Meetings can be conducted and

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presentations can be given for demonstrating the importance of IS strategy to the top level
managers. Top management support will help to overcome various difficulties and achieve
success in implementing IS strategy.
5. Information System Failures
a) Issues or problems that might take place within IS projects: The main issue that can
arise within an IS project are the system failures (Cecez-Kecmanovic, Kautz and Abrahall 2014).
When the project aims as well as objectives are not correctly defined or when there is no clarity
regarding the project objectives then there is high possibility of system failure. When the top
management does not support the IS projects then it leads to major issues (Petter, DeLone and
McLean 2013). Presence of communication gaps and unclear responsibilities can cause IS
project failure. If the technical specifications are not properly determined then there is high
possibility of the failure of an IS project (Rainer et al. 2013). When the top management is
unaware of the need of IS projects, and when they do not support this idea of IS projects then it
can harm the implementation of IS projects. Lack of regular maintenance of IS can cause
software crisis and lower the productivity. When there is lack of proper project budget as well as
charter then it can cause problem within the IS projects (Mir and Pinnington 2014). When the
business strategies are not properly aligned with its IS then it can harm the IS projects.
b) Recommendations for solving the above mentioned problems
i) The information systems must be regular maintained for avoiding failure of the system.
Regular meetings can be conducted for getting a clear idea of the project objects, responsibilities,
eliminating communication gaps and gaining support of the top management and IS staffs.

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ii) IT specialists and other technical staffs must be hired for carrying out regular
maintenance of the IS. This will prevent software crisis and support the success of IS projects.
iii) Training must be provided to the employees for enhancing their technical
competencies. This will facilitate the staffs to identify technical specifications, prepare accurate
project budget and charter for aligning the business IS with the business strategies.
Conclusion
This literature review concludes that strategic information systems can enable
Commonwealth Bank to overcome its current loopholes and gaps, and attain competitive
advantages over other FinTech companies. It showed that Commonwealth Bank has a
hierarchical structure and sells various financial products such as credit cards and loans to its
customers. Technical gaps and system errors present in the current processes of Commonwealth
Bank had led to the money laundering issue. According to this literature review, the new system
will be able to overcome the technical problems within the current processes. This literature
review said that integration of IS and organizational strategy is mandatory for improving
business performance. It also explained the top management issues along with the human
resource problems and technical difficulties that can occur during the implementation process of
IS strategy in Commonwealth Bank. The solutions to overcome these issues were gaining top
management support, training the employees and regular maintenance of the IS. This literature
review has discussed certain problems that arise within IS projects such as system failure, lack of
proper project plan and lack of top management support. The recommended solutions for these
issues were conducting regular meetings, hiring IT specialists and conducting technical training
programs.

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References
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Argenziano, R., Severinov, S. and Squintani, F., 2016. Strategic information acquisition and
transmission. American Economic Journal: Microeconomics, 8(3), pp.119-155.
Arvidsson, V., Holmström, J. and Lyytinen, K., 2014. Information systems use as strategy
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Bajdor, P. and Grabara, I., 2014. The Role of Information System Flows in Fulfilling Customers’
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