Current organizational structure of Common Wealth Bank
Discuss about the Literature Review of Accounting Software Packages for Commonwealth Bank.
The modern corporate world has embraced the use of strategic information systems to improve their efficiencies and meet their business objectives. Vital information systems are business systems which have been developed to fit specific business functions and are used by most businesses to merge technology with the organizations or strategic business planning (Pearlson et al. 2016, p. 28). They are therefore developed by most firms to help them in developing generic business strategies and increase the business competitiveness in the market by giving the company a competitive advantage. Among the many information systems designed to improve the competitiveness of most organizations are the accounting software systems.
Competition has rapidly increased among the Australian accounting software companies in the provision of accounting softwares for small, middle-sized as well as large corporations (Galliers & Leidner, 2014, p. 117). This literature review will, therefore, focus on understanding the importance of strategic information systems in business strategies. It will also focus on the understanding of the development of accounting software’s and their effectiveness in enhancing business efficiency and competitiveness in the market. The literature review will be focused on the Commonwealth Bank in Australia and the impact of accounting software in their business model.
It is essential for any business to have an understanding of its business models and accounting systems in order before adopting the accounting systems. The development of these accounting systems is based on the nature of business as well as the size of the organizations. The small-scale industry has increasingly adopted the use of accounting software’s globally and therefore increasing their competitiveness with the medium-sized companies as well as the significant forms or corporations (Altameem et al. 2014, p. 103). Over 70 percent of businesses in Australia have adopted the use of accounting software in their business models with the commercial banks or the banking industry forming the largest consumers of the software while the small-scale business is increasingly incorporating the systems into their business models.
Companies have started investing their resources in the development of accounting systems which meet their business needs or requirements. The primary critical players in the Australian accounting software market include; MYOB, Intuit and Xero accounting software providers with the most significant player in the market being Xero Accounting Software providers. These three major players have increased competition in the Australian Accounting Software Market having taken the into cloud accounting with the development of cloud accounting software (Yigitbasioglu, 2015, p. 54). The cloud computing software’s have increasing being adopted in both small and middle-sized businesses. However, identifying the best system to incorporate in your business is very critical in determining the success of the entire organization. We focus on the analysis of how Xero accounting systems have impacted the growth and development of the Commonwealth Bank in Australian.
Operational Problems that Commonwealth may be Facing
CommonWealth bank is a leading Australian Multinational bank with their operations and businesses running across New Zealand and other parts such as the United States. The bank was founded in the year 1911 and started its operations in 1912 as a government bank offering saving and general banking services to her customers (Ferguson et al. 2013, p. 27). The bank forms one of the Australians driving commercial organizations which has enabled the bank to boost their customer’s confidence with the bank. The bank is a leading provider of integrated financial services and has contributed significantly to offering retail banking services, insurance, and investment services as well as superannuation services.
Every organization has developed its organizational structure which enables it to achieve its objectives and deliver their services. The success of an organization and especially in management decision making is determined by the organization structure. An organizational structure can either be hierarchical or flat organizational structure (Ma, 2015, p. 14). The collective wealth bank of Australia has developed within itself hierarchical organizational structure characterized by different departments, headed by a different line of managers who manage a specific group of people within the organization. The bank, therefore, has different layers of management which have become a significant challenge to the organizations regarding management decision making. The communication with the bank is slow due to the communication structure, and this has dramatically impacted the implementation and adoption of new technologies in the bank for an extended period (Dimitriu & Matei, 2014, p. 842). Consultations processes within the organization have increased the time taken before making any investment decision for the bank. The structure is subject to increased inefficiencies and financial errors within the company through loss of information and delay in responding to customers concerns or complaints.
The bank has however encountered operational issues which most of them can be attributed to the organizational structure. As a result, the bank has experienced systematic failures in delivering services to their customers and also in meeting their business objectives. Some of the reported concerns or problems with the bank system were on the selling line of insurance which was not supposed to be paid out. There were problems of over-insurance reported for the home loan customers; there were also problems related to the underpayment of superannuation payments to employees (Hossack, 2015, p. 256). In addition to these failures, there were also increasing concerns over the decreasing bank assets and lack of reconciliation of charges for certain card transactions among other issues under investigations which have been leveled against the bank.
Most likely system of acquisition method for the Commonwealth bank
These problems can be attributed to the hierarchical structure of the financial institution which makes it easier to lose crucial financial information. The increased bureaucracies in the organization regarding decision making and in responding to concerns from customers have affected the image of the institution (Mageto, 2017, p. 87). The traditional structures of organization management regarding control are largely affecting the operations of the bank. The development of organization strategic information systems would play an important role in integrating or merging the banking technology with the strategic planning of the bank and lead to improved organizational efficiency in service provision. Such problems have led the management of the bank to make technological investments regarding improving their accounting operation by adopting the Xero accounting software systems to enable the bank to improve its services (Singh & Kumar, 2014, p. 36). The continued problems of reconciliation of accounts, time-consuming and increased errors, as well as inconsistency, would be improved by the adoption of this new technology. The bank was dominated by the use of traditional banking technology which involved the use of desktop accounting systems and data redundancy which were the most significant contributors to the increased challenges.
The most critical decision for the management to make is about identifying the best system to be incorporated into the business model. The primary factors influencing the acquisition of accounting software’s include the effectiveness and efficacy of the software. Many businesses, therefore, make their acquisition decision based on these two factors as it is possible to acquire accounting software which may not fit the business model or even help in achieving the desired objectives (Mcleod et al. 2015, p. 198). With the increased competition in the Australia accounting software market, three is a great need for the management to be careful on the method of acquisition as this will determine the effectiveness of the software in meeting their customers’ demands and business objectives.
The management of the Commonwealth bank can, therefore, acquire commercial software, a custom accounting software or even use the ERP method. The custom software is created by the company as the company goes on with its operations. The decision to have custom software is based on the inability of the commercial software to meet the needs of the business. The acquisition of commercial accounting software involves acquiring already designed accounting software existing in the market and has been the most widely used method for many companies (Flaherty, 2018, p. 71). This software works for almost all businesses and allows for the customization of the system or software to specific business needs. The commercial accounting software is composed of graphs which summarize all the financial activities of the company, provides reports for the operations showing the financial health of the business as well as provision of the taxes forms for the industry. An example of this accounting system is the Xero Accounting software (Oates & Dias, 2016, p. 106). On the other hand, the Enterprise Resource Planning acquisition method or software supports all business in all sectors including manufacturing, marketing, financial as well as human resource businesses Includes software such as the Sage ER X3, Microsoft Dynamic AX 2012 among others.
According to the above information on the different acquisition methods for accounting software’s, the management of Commonwealth Bank will be more likely to use the Commercial software acquisition method. The reason for their decision will be based on the nature of their business and organization structure which is comprised of different management levels (Cohan, 2017, p. 156). The commercial accounting software will provide the bank with an opportunity to customize the software to meet the various business needs. It will also offer the opportunity to the management of the bank to analyze the performance of the bank through the reports and address any errors or any challenges resulting from their operations.
The system flow chart for the sales of the shows how sales transactions are processed and how the information is stored in the accounting software. The bank adoption of the Xero Accounting software has enabled it through the use of information technology develop a systematic sales procedure for bank transactions or activities. The company sales transactions are recorded in the company sales ledger before being posted into the general ledger. Below is the standard system flow chart used by Commonwealth bank for its sale transactions.
Figure 1: System flow chart for common wealth bank sales procedure (Schlagwein et al. 2014)
The system flowchart above therefore shows the different stages through which the sales of the company follow. The first step involves the reporting of the sales transaction through recording; the trade then undergoes various periodic processing before the information is analyzed and reconciled in the different sales ledgers. The information is then stored in the master data system where it can be retrieved or posted into the company general ledger. The master data contained all the reports and analyzed information about the sales.
The major challenge facing the effectiveness of accounting systems is the internal control. The control of information and operations in the company is determined by the organizational structure, and therefore the system needs to provide information that will be satisfactory to the company board of directors, to the management as well as those under them (Pearson, 2016, p. 185). Risk assessment in this system is very minimal, and therefore it will be difficult for the management to control the risks associated with the system. Because of lack of legitimate authority and controlled access, the system is likely to be a victim of unauthorized access.
The system is also subject to financial frauds however these are minimal as compared to the use of manual methods. Unauthorized access can interfere with the financial information in the system as an individual may enter data with his manipulative agenda. Unfamiliarity with the system may lead to financial fraud by introducing incorrect information.
It is therefore essential for the Commonwealth bank to develop a strategic information system that will help the organization merge technology with strategic business planning and improve its efficiency. In its efforts to improve the operations of the bank and its effectiveness and efficacy of their financial services, the bank has adopted the Xero cloud computing systems which have developed in serving the small business customers for the bank (Wickramasinghe et al. 2017, p. 367). Before the adoption of the Xero accounting software, the small business customers were required to manually apply for data feed which took almost more than a week to receive. However, with the adoption and development of the Xero accounting software which uses the cloud computing technology, the small business customers can secure data feed between the organization Netbank and the Xero cloud computing accounting software. This has enabled them to save time and money as they can be able to reconcile their transactions automatically on a daily basis.
The current market for accounting software’s in Australia has increased with the increased adoption of accounting software in the modern small and medium-sized businesses. The leading players in the industry include; MYOB accounting software providers, Intuit Quick Books accounting software as well as the Xero accounting software providers. Over 70 percent of small and medium-sized business has adopted the use of accounting systems with competition increasing in the industry (Warren et al. 2015, p. 402). The industry in the year 2016 recorded annual revenue of over 3 billion US dollars. The companies are competing for supremacy battle for cloud accounting and increased dominance in the vast market.
There is increased supremacy battle for the companies in Australia software accounting market with some providers having a competitive edge over the others. MYOB accounting software providers had existed as the leaders in the market due to their supremacy in desktop legacy. They had more customers who adopted their desktop accounting software. However, with the introduction of cloud computing accounting technologies, the industry has experienced a dramatic shift with Xero accounting software providers leading the market due to their ability to offer cloud accounting which has enhanced their effectiveness and improved their service provision (Tayeh et al. 2015, p. 96). Their ability to use cloud computing technology which is faster regarding speed and reliability has given them a competitive advantage in the market, and now every other company is seeking to adopt the cloud computing technology.
Despite the increased adoption and installation of accounting software systems, the user of the systems has met several difficulties. One of the challenges has to be an incompatibility with the existing organization structure which has made it difficult for the networks to deliver the expected results. Secondly, the systems have not been user-friendly with the development of complicated accounting software without training the organization staff or the users on their usage (Brewer et al. 2014, p.33). The users have expressed their concerns over the efficiency of some accounting software’s as well as lack of enough speed and lack of security for the financial data or information.
The leading accounting software producers such as MYOB, Xero, and Intuit should focus on the development of accounting software which is easier to use and is more user-friendly. It is also essential for the companies to develop software’s which offer more speed to the users and can be more effective and reliable regarding producing relevant financial reports (Schlagwein et al. 2014, p. 4). Lastly, the accounting software’s developed should be more compatible or should be customized to fit into the existing business or organizational structures.
Conclusion
Strategic information systems play a vital role in helping the businesses merger the current technology with the organizational strategic plans to achieve their goals and improve their efficiency in service provision. The development and adoption of accounting software’s have impacted most business globally. However, it is crucial for the management of the different company to ensure that they adopt systems which are compatible to their business models and will help them improve their effectiveness and gain a competitive advantage in the market.
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