Commonwealth Bank: Strategic Information System and Software Report

This report provides a comprehensive analysis of the strategic information system employed by the Commonwealth Bank (CBA). It begins by examining the bank's hierarchical organizational structure, highlighting both its efficiency in managing a large workforce and the operational problems that arise from its complexity, such as regulatory issues and data abstraction challenges. The report then delves into the system acquisition methods, specifically the use of ERP software, and its benefits in streamlining banking processes, resource planning, and data integration. A system flowchart illustrating the bank's processes is included, emphasizing its role in defining activities and identifying system flaws. The report also addresses control problems, including preventive, detective, and corrective controls, and the risks associated with data security, employee training, and cloud-based software. Part 2 focuses on the development and adaptation of accounting software packages, particularly Xero, and its role in improving financial information security and employee productivity. It also covers the current market size, key competitors, and the basis of their competitive advantages, concluding with recommendations for improvement.

Running head: COMMONWEALTH BANK 0
Strategic Information System for Business and Enterprises

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Table of Contents
Introduction................................................................................................................................2
Part 1..........................................................................................................................................3
Organisational structure.........................................................................................................3
Operational problems linked with such structure...................................................................3
System acquisition method....................................................................................................4
System Flowchart...................................................................................................................4
Control problems....................................................................................................................5
Part 2..........................................................................................................................................7
Development and Adaptation of the Accounting Software Packages...................................7
Current Market Size...............................................................................................................7
Current Gaps and Challenges.................................................................................................9
Recommendations..................................................................................................................9
Conclusion................................................................................................................................10
References................................................................................................................................11

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Introduction
In the era of digital business, it has become essential for the firms to make sure that
they have adopted the best of technologies so as to smoothen their work process (Xero Blog,
2018). It is also essential that a company has an efficient organisational structure that is
capable of managing all the operations. This is due to the reason that there are many
operational problems that has arisen because of their organisational structure. A firm must
always have a system acquisition method as per their requirement. Commonwealth Bank is
one of the biggest banks in Australia and is making use of the software package named
XERO. In this report, various aspects related to the software accounting software have been
provided. It also highlights the Control problems that are present in the systems as well as
frauds that can be possible. It also showcases the leaders that are present in the market as well
as current gaps and challenges that are present in the accounting software and packages.

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Part 1
Organisational structure
According to Schlagwein, Thorogood & Willcocks (2014) every organisation needs to
have an organisational structure that is suitable for its business. In the firm like
commonwealth bank where there are several units within the firm, it becomes essential for
them to have an organisational structure that simplifies their working process. Presently the
company has adopted an organisational structure that is hierarchical in shape. Since there are
around 52,000 employees associated with different units hence hierarchical structure is highly
efficient for such a huge workforce. Apart this it is also to be considered that firm has a large
number of places through information gets generated. Keeping this in mind they have
adopted information system that is pyramidal in shape. In many ways it has been installed as
per the information that is generated at various levels. Since the information requirement of
different levels of the organisation is different hence pyramidal shape also supports the
information management. The four levelled pyramidal shape supports in various kinds of
decision making. For example, the top level supports the strategic planning and policy
making. The second level supports tactical planning for decision making or tactical planning.
Third level helps in the control and operation of the firm. The last stage gathers information
that is related to the transactional processing.
Operational problems linked with such structure
On the contrary Belfo and Trigo (2013) Suggest that several operational problems
arise due to the organisational structure Commonwealth bank has adopted. It somehow
reduces the operational efficiency of the firm which is not good for facing the competition
that is present in the industry. The first and foremost operational problem is the complexity of
the organisational structure. This makes the management of the organisational structure
difficult. With such organisational structure regulatory problems also arise. Many a time it is
seen that there is difficulty in the flow of payments. Another major issue is that the
information requirements are changing from time to time and hence providing training to all
the employees needs to be done on regular basis so that they can effectively make use of all
the systems. Apart from this data abstraction is very essential such a big firm like
Commonwealth bank and it must be implemented at various levels. Ensuring this in such a
complex organisational structure is a major problem.

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System acquisition method
As per Bodnar and Hopwood, (2012) it is essential for every organisation to make
sure that they have adopted the best system acquisition method. Due to specific problems,
there are facing in the firm they need to have a system acquisition method that is dynamic as
well as unique to their business. Customised software packages are taken use by the firms for
having software that is made as per their requirements. It helps in reduction of intrusion by
external sources. On the other hand, commercial software is something that is available in the
market and is used by the manager as per the general requirements. These are also called
proprietary software which helps in effective management of the records within the firm
(Schorr et al., 2013).
Galliers and Leidner, (2014) believe that ERP systems are something that is an
effective method because it is having specific nature and supports the organisation in the
manner they do their work. It helps in effective utilisation of resources. It permits the firm to
utilise integrated application software for managing the operations and activities in a better
manner. It helps in resource planning that helps in forecasting the demand related to
sustainable resource utilisation. Along with this ERP system supports features like data
Integration to Commonwealth Bank.
In all the system acquisition method the best method that is most likely to be used by
the firm is ERP software. It is able to give information regarding the utilisation of resources.
It is also capable of making the banking process easier. For example, it aligns all the
resources in such a manner that large number of consumers of the bank can be entertained. At
the same time, ERP system streamlines the work process and make forecast for the future that
helps in storing the data into the centralised system (Soudani, 2012). It reduces the
operational cost at the same time it enhances mobility.
System Flowchart
Kallunki, Laitinen & Silvola, (2011) argues that System flowchart is essential for any
organisation as it defines the activities that may be carried out in an information system. It is
also understood as physical design technique. The process that is followed by the
Commonwealth bank is being highlighted in the flowchart and hence is capable of services to
wide range of consumers at the same time. In the process of measuring the business
operations as well as in the sales management this system flowchart is very beneficial. It is
also able to define the sales procedures along with the advanced accounting services. It is a

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crucial part of the modern-day sales procedure and is adopted by the company so as to
enhance the sales and revenue of the firm. The biggest benefit of using system flowchart is
that it gives the idea about the flaws that are present in the system and hence helps in finding
ways to eliminate it.
Figure 1: System Flow Chart for Commonwealth Bank
Control problems
According to Lim (2013), there are several control problems that exist in systems or
software that is used by the firm. These issues reduce the operational efficiency of the entire
system. There are several types of control problems that exist in any firm such as Preventive
control, Detective control and Corrective control (Toth, 2012). These are generally caused
because of the internal and external errors or faults present in the system. Commonwealth
Bank is facing several kinds of risks like access, hacking of data, frauds, errors and mischiefs.
With the increasing use of malicious contents by various individuals, it has been seen that
Commonwealth Bank is at higher risk to get affected by the external attacks. Retaining and
hiring new employee has been a challenge for the Commonwealth Bank. Company also faced
technical errors many a time due to excessive load on their systems.
Cassidy, (2016) believes that training is required for the employees so as to safeguard
them from any external attacks. Apart from this they also had to deal with the control
problems such as laggings in the data collection method as well as cybersecurity. Since they
are largely dependent on the cloud software for their data management, hence they are at
higher risk of getting attacked by hackers. Commonwealth bank has large amount of
confidential information linked to their customers hence it becomes crucial to protect these
data from getting leaked. If it goes into the hands of unauthenticated persons, then there is a

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chance that they could misuse that data. Along with all these another significant problem is
that ERP software entails application complexities that may be the reason for improper
collection of data associated with application and software. Company needs to do regular
check-up of the internal control they have so as to find the loop holes that is present in the
system and hence can take steps to eliminate them.

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Part 2
Development and Adaptation of the Accounting Software Packages
Organisations use accounting software for recording and processing their financial
transactions; the software is a key part of the accounting information system of companies.
Simunek, Van Genuchten & Sejna (2015) provided that corporations use the accounting
software for collecting necessary information and developing business strategies which assist
them in making business decisions regarding its financial affairs. These activities prove that
the accounting software is not only used for reporting and processing of financial
transactions, the management also uses it for handling financial activities and take related
business decisions. Commonwealth Bank uses their accounting software to improve the
security of their financial information and positively affecting the productivity of its
employees. Effective utilisation and growth of ERP System can assist the enterprise in
increasing its effectiveness and profitability.
Commonwealth Bank uses Xero accounting software to perform day-to-day business
activities relating to saving, and processing of bank feeds automatically. The software enables
the enterprise to provide an overview of its financial records. As per McWilliams (2017), the
software is a cloud-based platform due to which Commonwealth Bank did not have to install
any application or software into its system. Employees use the software through an internet
connection, and the company has provided separate username and password to identify users
and their work. Furthermore, customers are also able to use the software by using Xero
account or NetBank account which enables them to perform their banking tractions from the
comfort of their home. The key competitors of the software include Financial Force
Accounting, NetSuite ERP, Jira, and Wave.
Current Market Size
As per Kwek (2013), Commonwealth Bank has a market capitalisation of over $100
billion and it investors are receiving high profits on their investments. The corporation has
established a regulatory environment which ensures that it is able to generate consistent
profits. On the other hand, Xero Limited has a market capitalisation of over $5 billion, and it
is one of the most popular accounting software between small and medium enterprises
(Investmart, 2018). Other organisations which use Xero and deal with Commonwealth Bank
are able to get quick access and accurate information due to the effective infrastructure of the

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software. Furthermore, customers are able to get instant information about their banking
activities and other data by using Xero. Effective implementation of Xero system opens the
opportunities for business innovations that can lead to new developments and easier
processes which improve the efficiency of the overall procedure.
Current market Leaders and basis of their Competitive Advantage
There are a number of competitors in the industry which investments significant
amount of capital in research and development to generating a competitive advantage. Major
competitors of Commonwealth Bank include Westpac, ANZ Bank, National Australia Bank,
ASB Bank and others. Burdon, Mooney & Kang (2017) stated that these organisations rely
on their accounting software to improve the accuracy and efficiency of their operations which
resulted in generating a competitive advantage. On the other hand, there are many major
competitors of Xero as well which focuses on capturing new clients by improving their
services such as Wave, FreshBooks, QuickBooks, NetSuite ERP, Intacct, Financial Force
Accounting and others.
In Australia, the financial services industry is an integral of the nation’s economy, and
it contributes over $140 billion; the industry employs more than 450,000 people (The
Treasury, 2018). Banking organisations use a number of accounting software based on their
requirements in order to improve efficiency and accuracy which resulted in generating a
competitive advantage. One of the key factors that provide a competitive advantage to the
company is a reduction in operating expenses. As per Schiefelbein (2012), effective use of
technology has enabled Commonwealth Bank to reduce its IT expenditure by 3 percent.
Furthermore, it has reduced its Cost to Income Ration by 46 percent and retail costs by 31.8
percent. The corporation has also launched its mobile application to target its customers and
making their banking transactions more efficient.
Moreover, the bank has launched a mobile application called ‘Kaching’ which enable
its customers to perform more banking functions through their smartphones (Commbank,
2012). Customers use this application for performing banking activities such as fund transfer,
bills payments, online shopping, keeping track of their expenses and others. Effective use of
accounting system ensures that each of these transactions is effectively recorded in the
system. The enterprise has generated a competitive advantage by assessing their customers’
demands and fulfilling them by using innovative technologies. Effective use of accounting
software along with other technologies assists Commonwealth Bank in avoiding errors in

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their financial reporting and improving overall efficiency which satisfies customers’ demand
and generates a competitive advantage.
Current Gaps and Challenges
The accounting software focuses on improving the accuracy and efficiency of banking
transactions making it easier for customers to perform their banking transactions; however,
there are few gaps which resulted in reducing the productivity of the corporation. According
to McWilliams (2017), the risk of cyber-attacks is one of the biggest challenges faces by the
enterprise because Xero is a cloud-based platform which can be hacked by cybercriminals.
Commonwealth Bank is required to invest in appropriate security measures for improving the
security of their accounting data. According to the company, it uses world-class security
measures to protect its customers and their data from breaching through the mobile
application. It provides 100 percent security guarantee to its customers regarding use its
NetBank and CommBank Application. As per Uribe (2017), the company is years ahead in
terms of cybersecurity than compared to its competitors.
Recommendations
It is recommended that Commonwealth Bank should improve the control over its
accounting operations in order to improve their efficiency. The corporation is using ERP
software, and it should use firewalls to protect its data. Although the security system of
Commonwealth Bank is solid, however, it is required to improve its authentication process.
Effective authentication will result in reducing the risk of unauthorised access; the company
should use two-step verification system to protect its customers’ data in the mobile
application. Furthermore, it should ensure that the ERP system is linked with external and
internal security configuration both of which are focused towards avoiding a data breach. It
should also continuously monitor the process of accounting system for avoiding the risk of
cyber-attack.

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Conclusion
In conclusion, the role and significance of accounting software have increased
substantially in the banking industry, and organisations use it to perform various financial
activities. The organisational structure of Commonwealth Bank is hierarchical, and it focuses
toward controlling its accounting system since it resulted in increasing its profitability and
assist the company during adverse business conditions. It uses Xero for performing its
accounting related transactions which reduces accounting errors and increase efficiency by
automatically recording transactions. The corporation has a large market share, and many
customers rely on the effectiveness of its services. It focuses towards fulfilling its customers’
banking requirements while at the same time improving the security of their system. Various
recommendations are given in the report that can be used by Commonwealth Bank for
improving the security of its ERP systems such as two-step verification, firewalls, and
authorisation program. These factors assist the enterprise in increasing its profitability and
maintaining its competitive advantage which sustains its future growth.

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References
Belfo, F. and Trigo, A., (2013) Accounting information systems: Tradition and future
directions. Procedia Technology, 9, pp.536-546.
Bodnar, G.H. and Hopwood, W.S., (2012) Accounting information systems. England: Pearson
Higher Ed.
Burdon, S., Mooney, G., & Kang, K. (2017). Lessons in Innovation from the Digital
Marketplace. Journal of Service Theory and Practice.
Cassidy, A., (2016) A practical guide to information systems strategic planning. CRC press.
Commbank. (2012). Aussie-first innovations make banking simpler. Retrieved from
https://www.commbank.com.au/about-us/news/media-releases/2012/120705-
commbank-kaching-gives-australians-more-ways-to-bank-on-more-smartphones.html
Galliers, R.D. and Leidner, D.E. eds., (2014) Strategic information management: challenges
and strategies in managing information systems. Abingdon-on-Thames: Routledge.
Investmart. (2018). Xero Limited (XRO). Retrieved from
https://www.investsmart.com.au/shares/asx-xro/xero-limited
Kallunki, J.P., Laitinen, E.K. & Silvola, H., (2011) Impact of enterprise resource planning
systems on management control systems and firm performance. International Journal
of Accounting Information Systems, 12(1), pp.20-39.
Kwek, G. (2013). Commonwealth Bank's market capitalisation rises above $100b. Retrieved
from https://www.smh.com.au/business/markets/commonwealth-banks-market-
capitalisation-rises-above-100b-20130103-2c6yi.html
Lim, F.P.C., (2013) Impact of information technology on accounting systems. Asia-Pasific
Jornal of Multimedia Services Convergent with Art, Humanities and Socialgy, 3(2),
pp.93-106.
McWilliams, K. (2017). Productivity in accounting services. Improving service sector
productivity: the economic imperative, 118.