Deck 10: Funding Information Systems

Question 1

Total Cost of Ownership is a financial estimate designed to explicitly recognize the:

A) Implementation costs of IT assets
B) Maintenance costs of IT assets
C) Depreciation costs of IT assets
D) Full life cycle costs of IT assets
E) End of life costs of IT assets

Answer 1

Full life cycle costs of IT assets

Question 2

Which of the following can be one of the results of poor budgeting?

A) Lack of direction
B) Only the more important of competing projects getting any money
C) IT managers knowing which projects are given priority over others
D) Improved morale due to increased spending
E) Improved services due to increased spending

Answer 2

Lack of direction

Question 3

Who should prioritize IS projects?

A) Business Managers
B) Customers
C) IS Professionals
D) All of the above
E) Both A and C

Answer 3

Both A and C

Question 4

Who gets to decide, along with who is accountable, is generally referred to as what?

A) Leading
B) Planning
C) Governing
D) Organizing
E) Controlling

Question 5

Which of the following is not one of the categories of risk associated with board of director decisions?

A) IT Project Risk
B) Business Continuity Risk
C) Infrastructure Risk
D) Information Risk
E) Staffing Risk

Question 6

There are three main methods used by modern organizations to fund IS. These include:

A) Chargeback, Allocation, and Investment
B) Allocation, Overhead, and Investment
C) Chargeback, Overhead, and Investment
D) Chargeback, Allocation, and Overhead
E) Allocation, Chargeback, and Investment

Question 7

Which of the funding methods treats the IS function as a cost center?

A) Chargeback
B) Allocation
C) Overhead
D) Investment
E) All of the above

Question 8

Which of the following balances pay-per-use against charging the department that uses the IS functions directly?

A) Chargeback
B) Allocation
C) Overhead
D) Investment
E) All of the above

Question 9

Which of the following generally results in IS having more freedom to experiment and evaluate new technologies?

A) Chargeback
B) Allocation
C) Overhead
D) Investment
E) None of the above

Question 10

Most organizations have two primary types of decisions to make regarding IT during the budgeting process. These are:

A) Operational Expenses and Capital Expenditures
B) Vision and architectural guidelines
C) Rationalizing infrastructure and consolidating resources
D) Maintenance and Operational expenses
E) Difficulty vs. Risk and Expense vs. Profit

Question 11

Which of the following is NOT one of the three primary types of risk associated with an individual project?

A) Experience with the technology
B) The complexity of the project
C) The amount of organizational change associated with the project
D) The cost of the project
E) The relative novelty of the technology to the customer

Question 12

The three risk profiles described in the text include all but which of the following?

A) Cost-Focused
B) Balanced
C) Agility-Focused
D) Transaction Focused
E) None of the above

Question 13

Which of the drivers of outsourcing has to do with eliminating IS due to the ignorance of the firm's strategic management?

A) Financial Appeal
B) Reducing Cost
C) Focusing on Strategy
D) Accessing Superior Talent
E) Improved Control

Question 14

Which of the risks of outsourcing are associated with contract lengths?

A) The Outsourcing Paradox
B) Changing requirements
C) Partnership risks
D) Hidden Coordination Costs
E) The Deceptive role of IS

Question 15

If a company was based in Montgomery, Alabama, which of the following would be considered an offshoring activity?

A) Dealing with a customer in China
B) Sending the help desk function to Mexico
C) Purchasing parts from a supplier in Los Angeles, who gets them from India
D) Moving the IS Department completely to Hawaii
E) Shifting sales and marketing functions to the a web page so that it is accessible everywhere.

Question 16

The allocation approach to funding information systems uses pay-per-use direct billing of information systems resources and services to the organizational function of department that uses them.

Question 17

Outsourcing is the process of engaging a foreign provider to supply the products or services the firm no longer intends to produce internally

Question 18

Full outsourcing of all IT and information systems functions to one provider ensures the success of those function because all aspects are handled externally.

Question 19

Most executives are actively involved in setting IT strategy

Question 20

IT Steering committees are comprised of people from throughout an organization, in addition to IT personnel, to decide issues relating to IT.

Question 21

What type of committees formalize management involvement in information system decision making in larger organizations?

Question 22

Which approach treats information systems as a shared expense to drawn from the organization's overall budget rather than to be paid for by each unit?

Question 23

Name three aspects of the budgeting process that can affect an individual project's risk:

Question 24

Companies choose to outsource information systems and IT to specialists for many reasons. List and describe three drivers of outsourcing.

Question 25

Describe the relationship between the steering committee and the total cost of ownership of an IS project.

Question 26

Describe the main IS systems funding methods and provide at least 2 examples of each. Make sure to list both the advantages and the disadvantages of each.