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RBS AIS Failure
Name
Institution
Accounting Information Systems (AIS)
Accounting information systems provide business with the ability of collecting, storing, managing, processing, retrieving and reporting their financial data so that they can be used by their consultants and accountants, the managers, business analysts, chief financial officers, tax authorities, auditors and financial regulators (Medina-Quintero, Mora & Abrego, 2015). When working with the AIS systems, there is need to ensure a high level of accuracy. AIS systems are made up of software, information and communication technologies, people, internal controls, procedure and instructions and data. All these components need to work together to ensure that the accounts of the organization run smoothly.
When working with AIS, there is need to place focus on the facts. There is also need to ensure that information is captured in a timely and accurate manner. Most importantly, any data captured should be thoroughly checked for validity. Otherwise, they systems would be characterized by several failures.
Royal Bank of Scotland AIS Failure
Accounting information systems (AIS) have changed the way business is done especially in the banking sector. AIS have played an important role in capturing financial information and generating reports that can be used to analyze the financial performance of businesses. However, over the years, several institutions have faced massive AIS failures that have resulted in losses and dissatisfaction among customers. Royal Bank of Scotland has had its fair share of system failures. In June 2015, an AIS failure caused close to 600,000 payments to go missing. The main cause of the failure was using new systems on top of the old ones. The bank failed to entirely replace their old systems while times had changed and new regulatory requirements had come in play. Even as this happened, the bank failed to acknowledge that their old systems were not effective enough to meet the increasing demands from the customers. The systems were designed to support a limited number of customers. But currently, the bank services a large number of customers and yet they have failed to make changes to cater for that.
The second reason for the failure of the systems is lack of adequate testing when installing system updates. Just as other banking institutions, RBS has been forced to cut short the number of their IT staff. Consequently, they have ended up with a limited number of IT technicians. Some of them appear gifted and yet they are not field ready to handle technical issues. As a result, when they updated the systems of the company, they never performed adequate testing to ensure that everything was running smoothly and without any hitches. Instead, issues were uncovered after deploying the updates and this was coupled with their lack of technical knowhow on how to handle these issues and make adequate corrections.
Finally, there was a failure to track all the changes that were made in the systems to ensure that they were correctly taken care of. AIS software used in banks can be very complicated and making a small change in one part of the system may require making multiple changes within the system. However, when changes were made, there was no attempt to exhaust the system to ensure that all areas that were affected were taken into consideration. Instead, there was an assumption that resulted in several payments not going through. This was a major undoing on the part of the IT department but it was hard to portion blame on them owing to the complexity of the systems and the difficulty of tracking all changes.
Senior Management Responsibility for the Failure
Banks have a difficult task of having to make changes to their AIS whenever there is a new regulatory change or when a product is changed or withdrawn. It is the duty of the bank management to ensure that they have a competent IT team in place to be able to deal with these issues. Instead of increasing the power of their IT department despite glaring need to do so, the bank management cut on the number of the IT staff they had. In the end, their IT department has been lacking in their ability to ensure the AIS runs smoothly and without glitches.
Additionally, despite knowing well the importance of having efficient IT infrastructure and AIS, the bank management has continued to under-spend on their IT needs. As a result, they have never been able to have in place IT systems and infrastructure that customers can have confidence in. in fact, the bank has downplayed the importance of performing quality checks. This compromising on quality is the main reason the AIS underwent that failure. It is apparent that the bank needs to overhaul their AIS. However, doing this while still continuing to be operational will almost be impossible. Even at that, it is unimaginable that they system they have now will continue to be in operation forever. The bank needs to ensure that is done to replace the parts of the system that have been the main reason for failure. Besides, they need to invest in competent IT staff that would ensure that they never compromise on quality. Increasing spending on IT is necessary to ensure that they have the best technology in place and the ability to respond to system failures in time so that the customers are not overly affected.
When focus is shifted to quality checks, there would be an attempt to have the best and most qualified people in place. These people will not leave anything to chance and cases such as the failure that occurred would be very minimal if any. With quality checks, information entering the AIS would be efficient and correct.
Point of Failure
The main system failure occurred during the operational pace. The AIS system experienced a processing problem and resulted in a backlog. As a result, some of the customers were not able to get their payments in time. Among the payments that were delayed included those of tax credits, wages, and disability allowances. The bank has spent a lot of money to rectify problems in their IT systems and yet the problems have persisted. The AIS system that the company uses was not adequate enough to handle all the payment demands at once. In fact, the entire IT infrastructure needed to be upgraded to be able to support the demands of the AIS. It is important for the company to figure out where they need to be and have in place concrete performance objectives. There must also be a plan for achieving these performance objectives including having the right technologies in place (Williams & Smith, 2002). Parts of the reasons that can cause backlogs is not having a strong and powerful server. The bank needs to review the performance of their database servers and their payments systems to determine if the response time is what they desire. They need to understand the capacities of payment systems and ensure that they have a load balancer in place to give them the ability to handle multiple requests at a go. While upgrading the hardware might also help in improving performance, having a reverse proxy server might have come in handy in helping the company to free the application so that new requests are not queued for long. This way, cases of backlogs can be reduced.
How Best Practices could have helped
According to Cato (2001), best practices are methodologies or techniques that have been proven through research and experience to be reliable and can lead to the results that are desired. Best practices could have helped the bank in coming up with systems that had the abilities to ensure effectiveness and helped then to achieve their results. Best practices can also enhance efficiency and le...