Impact of IT on Business - Term Paper Example

Impact of IT on Business Student’s Name Professor’s Name Course + Code University Date Abstract The objective of this paper is to analyze the impact of IT on business. The report has addressed the impact of IT on Commonwealth Bank of Australia. According to the report, it is clear that information technology has not only revolutionized the banking industry, but also other businesses through its numerous benefits. There is a need for change in strategies and business resources, in order to enhance effectiveness in IT systems. On the other hand, there are risks that are associated with advancement in information technology, in terms of security of information, unauthorized access and possible manipulation of data. Proper monitoring and maintenance of information technology systems needs to be put in place to in order to harness full benefits and put a check on the inherent risks. Table of Contents Introduction 4 The Need of IT in Commonwealth Bank of Australia…………………………………………….4 Importance of IT in Business Survival 4 Information Technology Application Requirements……………………………...........................5 Use of IT in Banking Industry 6 Benefits of Using Information Technology 7 Risks Associated with use of Information Technology 7 IT Monitoring and Maintenance ……………………………………..………………………….. 8 Conclusions and Recommendations……………………………………………………………....9 Bibliography………………………………………………………..……………………………11 Introduction In the present day world, technology has become an effectual tool in business development. Both small and big businesses have undergone a revolution by embracing the continuous information technology advancements (Reifer, 2012). Entrepreneurs have also utilized technological networks and modernized communication channels to take their business ventures to higher levels. Commonwealth Bank of Australia is one of the beneficiaries of the growth in information technology. The purpose of this paper is to show the impact of information technology on Commonwealth Bank of Australia. The Need of IT in Commonwealth Bank of Australia Commonwealth Bank of Australia, just like other banks in today’s business arena, requires continued use of technology in its operations. Adoption and constant improvement of information technology systems has enabled banks to increase their business, minimize operating costs, and improve efficiency (Shroff, 2008). Investment in information technology has enabled Commonwealth Bank of Australia to remain competitive in the market, and enhance its profitability. Additionally, the day to day’s activities of the bank cannot be effectively carried out without the use of technology. Obviously, continued use of information technology will see Commonwealth Bank of Australia move to a higher level in its operations (Shroff, 2008). Importance of IT in Business Survival Information technology offers an effective way of communicating with customers. Interaction between staff and customers is crucial for survival of any business. Modern information technology provides a platform, through which organizations communicate with their clients with ease, speed and clarity (Kamat, 2010). Use of websites has enabled clients to access immediate answers to most of their questions (Kamat, 2010). Moreover, technology allows businesses to market their products far and wide beyond geographical boundaries. Effective ways of communication between clients and businesses help to build and uphold a good public image (Abubakar, Mokhtar & Abdullattef, 2013). Undoubtedly, information technology enhances effectual communication in any business, which in turn promotes a favorable business reputation. In order to boost efficiency in day to day operations, any business ought to embrace use of information technology. Owing to the advancements in IT, critical resources such as space and time are preserved to a great extent (Reifer, 2012). Additionally, technology makes it possible for a business to understand its cash flow, manage its inventory, as well as check on all costs. Business executives can make use of advanced information technology to hold meetings online, thus saving on time and money. This is a clear indication that IT enhances efficiency in business operations. Information Technology Application Requirements Commonwealth Bank of Australia is under obligation to comply with regulatory requirements in the application of information technology. The existing regulatory procedures may be a barrier to the implementation of IT systems (Reifer, 2012). Therefore, the amendment of existing policies and procedures or adoption of new ones becomes important, in order to accommodate the new technology. Some of these procedures would call for staff training and implementation of new security measures to protect the interests of all stakeholders. It has been observed that IT application calls for compliance with regulatory requirements and adoption of appropriate policies (Reifer, 2012). Application of information technology in the banking industry calls for an advancement in the intelligence systems. In order to enhance effectiveness, safeguard bank’s resources and address customers’ interests, proper controls must be put in place (Reifer, 2012). These controls include segregation of duties, information access management, performance evaluation and foul-proof data analysis procedures. Development of the intelligence systems helps in assessment of the new trends, which determines the effectiveness, and calls for a change of course where necessary (Reifer, 2012). Application of information technology calls for change in intelligence systems. Use of IT in the banking industry Banks have embraced the use of IT in risk management, marketing and customer relations. Commonwealth Bank of Australia has enhanced its customer interaction by taking advantage of superior technological advancements. According to Abubakar, Mokhtar and Abdullattef (2013), customer profile and delinquency analysis is carried out through modern technology, an issue that has made it easy for banks to handle customer complaints effectively. Risk management has also been taken care of through the use of information technology. Banks are now able to scrutinize data in all banking aspects from a centralized location, making it possible to identify any risks, and take care of them accordingly (Abubakar, Mokhtar and Abdullattef, 2013). Clearly, IT has had a great contribution in customer relations and risk management. Benefits of Using Information Technology Use of IT in any business is an effective way of reducing operational cost. Costs incurred in renting or buying of equipment and space to store data is significantly reduced in the businesses that have embraced the use of IT (Kamat, 2010). Commonwealth Bank of Australia in particular has a lot of information that need to be stored securely. Without the use of IT, it means that the bank would have to invest considerable resources in terms of space and equipment in order to keep the data safe. However, IT has seen the Commonwealth Bank of Australia save enormous amount of money, which would have been used to purchase storage equipment. Conclusively, use of IT is an effective way of reducing costs in the Commonwealth Bank of Australia. Advancement in information technology has greatly improved customer service in retail and corporate banking. Consequently, resolutions to customer complaints have been reached with ease, improving customer royalty (Abubakar, Mokhtar & Abdullattef, 2013). Moreover, online and mobile based banking services have to a large extent replaced the generic banking services (Abubakar, Mokhtar & Abdullattef, 2013). Therefore, customers have alternative channels through which they conduct their banking activities. The ability to save on time spent while queuing in banking halls has enabled numerous clients to stick to the banks that have embraced the use of technology. Clearly, information technology has positively influenced customer service, thereby enhancing customer royalty (Abubakar, Mokhtar and Abdullattef, 2013). Risks Associated with Use of Information Technology Consolidation of information and centralized data storage expose banks to the risks of unauthorized access. In the unfortunate event of access to banks confidential information by unauthorized parties, reputational damage, and loss of customer’s savings may occur (Greuning & Brajovic, 2009). On other occasions, such banks may face legal suits as a result of negligence, or lack of appropriate security measures. Such incidences can lead to diminishing customer confidence, reduced profitability, or in the worst case scenario lead to ultimate closure of banks due to lack of business (Greuning & Brajovic, 2009). Evidently, the use of information technology has exposed Commonwealth Bank of Australia various information risks. Electronic storage of information makes it prone to manipulation by fraudsters and hackers. Remote accessibility of electronic data poses a great threat since it can be accessed by numerous people from different locations as opposed to manually stored records (Greuning & Brajovic, 2009). For these reasons, fraudsters are likely to take advantage and manipulate the data by colluding with untrustworthy banks’ members of staff. The risk is aggravated by high volumes of information that can be accessed at the click of a button. Apparently, though information technology has its benefits, it also poses unprecedented information risk challenges (Abubakar, Mokhtar and Abdullattef, 2013). Another risk in information technology is introduction of malware and computer virus. Professional IT experts spend a considerable amount of time developing helpful programs, similarly people with sinister motives develop destructive programs, which corrupt the functionality of computer systems, and render them unreliable (Greuning & Brajovic, 2009). Such malware and computer virus have the potential of derailing banks’ operations, facilitating unauthorized exchange of information, or completely destroying exiting computer systems. From this information, it is evident that the use of information technology exposes the bank to the risk of corrupted programs that can negatively affect the use of computer systems. IT Monitoring and Maintenance In order to maintain proper functioning IT systems, Commonwealth Bank of Australia has invested in modern equipment and up-to-date software. For effective utilization of information technology, banks must introduce the right resources such as computer software and hardware, networks, data and data centers, as well as trained personnel (Reifer 2012). Additionally, these resources must be well designed, in order to address the specific need at hand (Reifer 2012). Commonwealth Bank of Australia has invested a considerable amount of money in its tangible resources, as well as in hiring professionals to monitor the systems. Without a doubt, information technology requires the introduction of new resources in order to run effectively, and serve the intended purpose (Abubakar, Mokhtar and Abdullattef, 2013). Commonwealth Bank of Australia has aligned all its business strategies, in an effort to monitor and maintain its information technology systems. Proper coordination between external and internal environments, as well as business policies and technology are a sure way of monitoring and maintaining information technology in any business (Reifer 2012). Systems that are well aligned work effectively, and enhance growth of the business. Moreover, faults are easily detected and dealt with promptly. It is obvious that alignment of business strategies will lead to proper maintenance of IT systems, as well as effectively monitor their functionality . Conclusion and Recommendations In summary, information technology has revolutionized businesses in the present day world. Commonwealth Bank of Australia has embraced the use of information technology, and has realized tremendous changes in its operations. Information technology has enabled the Commonwealth Bank of Australia to greatly enhance its customer relation, effectively manage its risks, and significantly reduce its operational costs. However, this bank has faced a number of risks including unauthorized access of data by fraudsters and hackers, and introduction of malware and computer viruses. In an effort to maintain and monitor the usage of information technology, Commonwealth Bank of Australia has employed trained personnel, and has introduced modern computer software and hardware, network and data. Additionally, the bank has introduced data management centers to monitor the usage of IT systems as well as align all the banking strategies. The benefits of adopting information technology far much outweigh the risks the associated risks. For this reason, it is paramount for banks to embrace the use of information technology in order to remain competitive in the market and enhance performance. Bibliography Abubakar, M., Mokhtar, S & Abdullattef, A 2013,‘Modelling the Mediation Effect of Service Recovery on the relationship between Customer complaints and Customer loyalty in Retail banking Industry’. Australian Journal of Business and Management Research, Vol. 3, No.4, pp.32-38 . Greuning, H & Brajovic Bratanovic, S 2009, Analyzing banking risk: A Framework for Assessing Corporate Governance and Risk Management. 3rd edn. Washington DC: World Bank. Kamat, A, 2010, ‘The Impact of Information Technology on Business’. PresentSoft Technologies Pvt Ltd, Retrieved from: http://www.presentsoft.co.in/2010/08/03/the- impact-of information-technology-on-business. Reifer, D 2012, Software maintenance success recipes, Boca Raton, CRC Press Shroff, F 2008, Modern banking technology, 1st ed. New Delhi, Northern Book Centre. Read More