Deck 9: The Business of Information Technology

Question 1

Which dimension of the balanced scorecard answers the question "How do customers see us?"

A) Customer perspective
B) Innovating and learning perspective
C) Internal business perspective
D) Financial perspective
E) Supplier perspective

Answer 1

A

Question 2

To justify an IT investment and receive necessary support and approval, a manager must often create a(n) ________________.

A) IT portfolio
B) community plan
C) business case
D) workflow diagram
E) business technology plan

Answer 2

C

Question 3

Mary is recommending IT investments in the neighborhood of $250 million for her company. However, the board is hesitant since it's such as capital-intensive project. If the project fails the company could go out of business. What financial calculation should they use?

A) ROI
B) NPV
C) EVA
D) IRR
E) FV

Answer 3

C

Question 4

Critical to the business case is the identification of both _________ and ________.

A) costs, risks
B) costs, benefits
C) advantages, disadvantages
D) assumptions, risks
E) benefits, detriments

Question 5

Sam has just purchased 10 new high speed color laser printers for his company. He is very excited because he got a 40% discount and paid only $2,990 for each unit. His boss, Joe, wants to know things such as operating costs, support, overhead, etc. for the printers. Joe wants to know this value:

A) RCO
B) TCO
C) ROI
D) NPV
E) EVM

Question 6

A company that seeks an IT portfolio that lowers costs as the primary business objective will be more likely to increase spending on ___________ because these applications can help automate processes.

A) strategic systems
B) infrastructure
C) informational systems
D) transactional systems
E) social media

Question 7

This method of IT funding is the most equitable, as the costs associated with IT are based on use. However, it can be difficult and tedious to calculate the usage costs.

A) Allocation
B) Corporate budgeting
C) Usage
D) Distributed
E) Chargeback

Question 8

Joe works for a company where the IT department charges him for the number of CRM login accounts that are in his department. What type of IT funding model is his company deploying?

A) Allocation
B) Corporate budgeting
C) Usage
D) TCO
E) Chargeback

Question 9

Scorecards provide a summary of information gathered over a period of time. Another common IT monitoring tool is the _____________.

A) baseline
B) metrics
C) portfolio
D) dashboard
E) monitor

Question 10

Denise works for a company where the IT department charges her department for actual usage of a SharePoint server, determining how often users log in and how much storage space her department consumes. What type of IT funding model is the company deploying?

A) Allocation method
B) Corporate budget method
C) Usage method
D) Distributed method
E) Chargeback method

Question 11

A local marketing firm is considering launching a new and extensive social media marketing campaign. This investment of resources is being looked at through the length of the project since it is anticipated to last at least 5 years. What financial calculation should be used to compute the investment's value, taking into account the time value of money?

A) ROI
B) NPV
C) EVA
D) IRR
E) TCO

Question 12

Which of the following should a manager expect from the IS organization?

A) Promoting enterprise security.
B) Participating in setting and implementing strategic direction.
C) Innovating current processes.
D) Managing data, information and knowledge
E) All of the above

Question 13

In the early days of IT, the CIO would report to the ____ as IT was seen as a way to control costs. As technology has become more strategic and able to deliver a competitive advantage, CIOs now report directly to the ____.

A) CFO; CEO
B) CEO; CFO
C) CFO; COO
D) COO; CEO
E) CEO; CTO

Question 14

According to the research by Peter Weill, a firm that boosts investments in infrastructure is typical of those firms with a focus on (1) _______ and a firm that boosts investments in transaction systems is typical of those firms with a focus on (2) ______

A) (1) transactions (2) connections
B) (1) savings (2) expansion
C) (1) cost (2) ability
D) (1) agility (2) cost
E) (1) ability (2) agility

Question 15

This financial calculation provides a percentage rate that measures the relationship between the amount the business gets back from an investment and the amount invested.

A) IRR
B) ROI
C) Payback
D) NPV
E) EVA

Question 16

This is a plan designed to counter a manmade or natural disaster that could cripple an enterprise.

A) Business Continuity Plan
B) Disaster Recovery Plan
C) Business Disaster Plan
D) Disaster Business Case
E) Business-IT Maturity Model

Question 17

A CIO must spend part of the day performing _____ tasks and the some part of the day working on operational tasks. Rarely can a CIO focus on just one task in any given day.

A) Administrative
B) Strategic
C) Database
D) Financial
E) Technology

Question 18

Building a business case for an IT investment:

A) Allows management to establish priorities for investing in different projects.
B) Helps gain commitment for the IT investment from business managers.
C) Creates a basis for monitoring the investment.
D) Identifies the benefits of the investment.
E) All of the above.

Question 19

The responsibility of the IT organization is to:

A) Manage core business functions like selling, accounting and manufacturing.
B) Partner with business managers to ensure the right IS exists to support the business strategy.
C) Set the business strategy.
D) Have sole responsibility for building information systems for the organization.
E) Design business processes.

Question 20

Activity based costing _____________

A) groups costs into meaningful buckets that are then distributed based on the activity or product they support.
B) is useful for allocating small project work.
C) charges all costs to "cost centers".
D) considers only initial capital investments.
E) calculates ongoing maintenance costs.

Question 21

Often the customer of an IT organization is not an external customer but rather an internal customer.

Question 22

While a relatively simple method for funding, corporate budgeting ______________ A) helps control the costs of IT. B) may result in an IT organization that is less end-user oriented. C) encourages sharing of funding resources between IT and business units. D) levies charges on specific users or business units. E) gives business managers sole control over IT decisions.

Question 23

Which dimension of the balanced scorecard answers the question "How do we look to shareholders?"

A) Customer perspective
B) Innovating and learning perspective
C) Internal business perspective
D) Financial perspective
E) Supplier perspective

Question 24

A CIO must have a strong understanding of technology and a limited understanding of the business.
Ans; False

Question 25

All of the following are methods used to value an IT investment EXCEPT:

A) Payback analysis
B) ROI
C) NPV
D) CTO
E) IRR

Question 26

The business side of IT is very different from the business itself.

Question 27

Labor costs associated with an IT infrastructure far outweigh the actual capital investment cost.

Question 28

Four asset classes of IT investments include:

A) Financial Systems
B) Marketing systems
C) Control systems
D) all the above
E) none of the above

Question 29

TCO, discussed by Gartner, stands for Technology Chief Officer

Question 30

An IT dashboard provides:

A) Summary information gathered over a period of time.
B) Statistics on system usage.
C) A distraction from where more IT attention should be focused.
D) Current and critical measurements for the organization in an easy to read manner.
E) A snapshot of a firm's financial data at any given point in time.

Question 31

WalMart, the world's largest retailer, uses RFID tags to track movement of goods across its intense supply chain. One identifiable benefit is that pallets of goods no longer need to be manually logged by a worker when received. Instead, an information system automatically logs the goods as they arrive. This benefit is identified as which type of business change:

A) Innovation
B) Efficiency
C) Cessation
D) Work force reduction
E) Doing new things

Question 32

Financial measures are the sole means for making management decisions.

Question 33

The allocation method is the most equitable funding method used by many IT organizations.

Question 34

There are three main ways to handle funding for IT, including chargeback to users, allocation of costs to users, and providing IT services from a corporate budget.

Question 35

The balanced scorecard:

A) Is a tool used to communicate the organizational metrics using a traffic light approach (red/yellow/green).
B) Is a method used to evaluate the health of an organization by looking at all value drivers such as the customers, the workforce, the financials and business processes.
C) Focuses its attention on an organization's financials.
D) Is used to communicate the TCO for an IT investment.
E) Is one of many metrics used to evaluate the value of an IT investment.

Question 36

Valuing an IT investment is difficult because of many reasons. One of the reasons is:

A) Many IT investments are necessities and payback is hard to calculate.
B) Increased customer satisfaction is not valued enough to justify costs.
C) IT investments often add no real business value.
D) IT managers do not see the need to value an investment whose payback period is relatively short.
E) IT is seen as "a necessary evil".

Question 37

The scope of responsibilities for an IT organization seems to expand with increased IT maturity.

Question 38

Corporate budgeting is a wise choice for funding newer technologies and innovation.

Question 39

All of the following are qualities of a dashboard EXCEPT:

A) Highly summarized
B) Key metric driven
C) Raw data
D) Effective Visualization
E) Alerts

Question 40

All of the following are new roles found in an IT organization today EXCEPT:

A) Community manager
B) Chief Social Media Officer
C) Chief Knowledge Officer
D) Chief Privacy Officer
E) Chief administrative assistant

Question 41

Why is TCO so difficult to define? What are some of the challenges of determining TCO?

Question 42

Avon uses this to monitor the status of its IT projects, knowing that a red-coded item indicates a serious problem.

Question 43

IT leaders must be part of the business strategy discussion.

Question 44

This is a term used to describe a person who aligns business and IT strategies and uses technology to create a competitive advantage.

Question 45

Why is it particularly difficult to determine the value of an IT investment?

Question 46

What does TCO stand for?

Question 47

List some soft costs one would anticipate when implementing an IT solution.

Question 48

Traditional valuation methods such as ROI, NPV, and IRR cannot be applied to information technology because it is technical, not business-oriented.

Question 49

The process called "true up" is used to balance true expenses against payments made for this particular funding method.

Question 50

Besides financial metrics, what metrics help an IT organization manage its IT investments?

Question 51

This model is helpful in teasing out the differing needs for managing IT at different levels of sophistication of the IT function.

Question 52

Why would an organization use the balanced scorecard and focus its metrics on more than just financials?

Question 53

Describe at least one new role emerging in organizations today as a result of social business.

Question 54

This costing technique looks beyond the initial capital investment of an IT solution and includes costs associated with technical support, administration, training and system retirement.

Question 55

Managing a global IT organization has challenges that extend beyond managing a global team. What are the specific issues a global IT organization has to consider?

Question 56

An airport is in the process of implementing a new baggage claim system that tags each passenger's baggage with RFID. Readers are installed around the airport to track bags and see that the baggage is delivered to the right plane or the right carrousel. The airport is considering different funding models to see if the airlines, the airport or the passengers will be charged. Use the three funding models to explain how this new IT could be funded.

Question 57

What does CIO stand for?

Question 58

This is the senior-most executive in the enterprise responsible for IT vision and leadership for IT initiatives.

Question 59

Two methods for communicating metrics are dashboards and _______.

Question 60

It is determined that a mobile application needed to support the Sales, Marketing and Finance departments will cost $60,000. The Sales department has 20 employees and all employees will need the application. Likewise, all 10 of the Marketing department employees will need the application. Only 1/3 of the Finance department is interested in the mobile application. The Finance department has 30 employees. The CIO has decided to fund the mobile application using either the allocation method or chargeback method.
Which funding method does each department wish the CIO will choose to use and why?

Question 61

Match the dashboard with its appropriate description.

Question 62

A balanced scorecard is a method used by IT departments to measure overall health and success of an IT investment. Match a type of measurement an IT organization may report with the appropriate balanced scorecard category it supports.

Question 63

Peter Weill's produced a study that identified the 4 main categories that make up a company's IT portfolio: the IT infrastructure, transactional systems, informational systems, and strategic systems. Weill's research shows that most companies spend a majority of their IT portfolio on the 1.______ and the least amount of money is spent on the 2. __________. A company that is seeking to be highly agile should spend more money on the 3. __________ to provide a nimble platform and less money on the 4. _________ which tends to lock in current business processes.

Question 64

Match the activity an IT organization provides with its description.

Question 65

Match the three levels of Business-IT maturity to the business organization's approach to IT. Remember that Level 3 is more mature than Level 1.

Question 66

Match the funding model to its method by which costs are recovered.

Question 67

Match the title with its responsibility.

Question 68

What can a manager expect from the IT organization?
Matching

Question 69

Match the component of the business plan with its objective.

Question 70

Match the three levels of Business-IT maturity to the term that best describes the level of maturity. Remember that Level 3 is more mature than Level 1.

Question 71

Match each IT organizational activity with its related level of maturity (based on the Business-IT maturity model). Remember that Level 3 is more mature than Level 1.