CMIS 526 EXAM PREP QUESTIONS AND
ANSWERS EXPERT VERIFIED MATERIAL
●● What are some unintended consequences that can limit the
productivity gains from IS investments
Answer: game playing
personal surfing and shopping
Junk and personal e-mailing
●● What are factors that lead to the IS productivity paradox
Answer: redistribution, mismanagement, measurement, time lags
●● If it is so difficult to quantify the benefits of information systems for
individual firms and for entire industries, why do managers continue to
invest in information systems? Why waste time making the business
case for a system?
Answer: Competitive pressures force managers to invest in information
systems whether they like it or not.
For many organizations, IS are an important source of competitive
advantage.
Given limited resources on the one hand and the vast number of
potential systems and technologies that could be selected on the other
hand, a strong business case aids the decision-making process and helps
direct resources in more strategic ways.
,●● What are the three types of arguments commonly made in the
business case for an IS
Answer: faith, fear, facts
●● Describe the three types of arguments commonly made in the
business case for an IS
Answer: Faith- arguments based on beliefs about an organizational
strategy, competitive advantage, industry forces, customer perceptions,
market share, etc
Fear- arguments based on the notion that if the system is not
implemented, the firm will lose out to the competition or, worse, go out
of business
Facts-arguments based on data, quantitative analysis, and/or indisputable
factors
●● A successful business case will be based on:
Answer: faith, fear, and facts
●● One goal of a cost benefit analysis is to accurately determine the
total cost of ownership. What is this
Answer: TCO focuses on understanding not only the total cost of
acquisition but also all costs associated with ongoing use and
maintenance of a system.
,●● When considering the total costs of ownership, costs can usually be
divided into what two categories
Answer: non-recurring costs and recurring costs.
●● Compare non-recurring costs and recurring costs
Answer: Non-recurring costs are one time costs not expected to continue
after the system is implemented. These include costs for things such as
site preparation and technology purchases. These may include the costs
of attracting and training a webmaster or renovating some office space
for new personnel or for hosting the web servers. Recurring costs are the
ongoing costs that occur throughout the life of the system. These include
the salary and benefits of the webmaster and any other personnel
assigned to maintain the system, electricity, upgrades, and maintenance
of the system components, monthly fees paid to a local internet service
provider, and the continuing costs for the space in which the webmaster
works or the data center where the servers reside.
●● What is the difference between a capital expenditure and a non-
capital expenditure
Answer: A capital expenditure is a non-recurring cost, such as the
acquisition or upgrade of long-term physical assets such as equipment
and buildings.
Non-capital expenditures/operational expenditures are recurring costs
are money spent on repairs, supplies, payroll, and other operating
expenses.
, ●● What are tangible costs and types of tangible costs
Answer: Tangible costs are costs that are relatively easy to quantify.
These include non-recurring capital expenditures and recurring non-
capital expenditures.
●● What are intangible costs
Answer: These may include the costs of reduced traditional sales, losing
some customers that are not "web ready" or losing customers if an IS is
poorly designed or not on par with competing sites. These cn be
quantified or reserved as costs to consider outside of the quantitative
cost-benefit analysis.
●● What is the difference between tangible and intangible benefits
Answer: Tangible benefits are easy to determine because they are
quantifiable. Intangible benefits are difficult to quantify.
●● What are some examples of tangible benefits
Answer: estimating that the increased customer reach of a new web-
based system will result in at least a modest increase in sales. Evidence
from similar projects may indicate a 5% increase for the first year, a
10% increase in the second year, and a 15% increase in the third year.
Other tangible benefits are the reduction of order entry errors because
orders will now be tracked electronically and shipped automatically. You
could calculate the money previously lsot on faulty and lost orders, and
the wages of personnel assigned to find and fix these orders. The
reduction of these costs is a quantifiable benefit of the new system.
ANSWERS EXPERT VERIFIED MATERIAL
●● What are some unintended consequences that can limit the
productivity gains from IS investments
Answer: game playing
personal surfing and shopping
Junk and personal e-mailing
●● What are factors that lead to the IS productivity paradox
Answer: redistribution, mismanagement, measurement, time lags
●● If it is so difficult to quantify the benefits of information systems for
individual firms and for entire industries, why do managers continue to
invest in information systems? Why waste time making the business
case for a system?
Answer: Competitive pressures force managers to invest in information
systems whether they like it or not.
For many organizations, IS are an important source of competitive
advantage.
Given limited resources on the one hand and the vast number of
potential systems and technologies that could be selected on the other
hand, a strong business case aids the decision-making process and helps
direct resources in more strategic ways.
,●● What are the three types of arguments commonly made in the
business case for an IS
Answer: faith, fear, facts
●● Describe the three types of arguments commonly made in the
business case for an IS
Answer: Faith- arguments based on beliefs about an organizational
strategy, competitive advantage, industry forces, customer perceptions,
market share, etc
Fear- arguments based on the notion that if the system is not
implemented, the firm will lose out to the competition or, worse, go out
of business
Facts-arguments based on data, quantitative analysis, and/or indisputable
factors
●● A successful business case will be based on:
Answer: faith, fear, and facts
●● One goal of a cost benefit analysis is to accurately determine the
total cost of ownership. What is this
Answer: TCO focuses on understanding not only the total cost of
acquisition but also all costs associated with ongoing use and
maintenance of a system.
,●● When considering the total costs of ownership, costs can usually be
divided into what two categories
Answer: non-recurring costs and recurring costs.
●● Compare non-recurring costs and recurring costs
Answer: Non-recurring costs are one time costs not expected to continue
after the system is implemented. These include costs for things such as
site preparation and technology purchases. These may include the costs
of attracting and training a webmaster or renovating some office space
for new personnel or for hosting the web servers. Recurring costs are the
ongoing costs that occur throughout the life of the system. These include
the salary and benefits of the webmaster and any other personnel
assigned to maintain the system, electricity, upgrades, and maintenance
of the system components, monthly fees paid to a local internet service
provider, and the continuing costs for the space in which the webmaster
works or the data center where the servers reside.
●● What is the difference between a capital expenditure and a non-
capital expenditure
Answer: A capital expenditure is a non-recurring cost, such as the
acquisition or upgrade of long-term physical assets such as equipment
and buildings.
Non-capital expenditures/operational expenditures are recurring costs
are money spent on repairs, supplies, payroll, and other operating
expenses.
, ●● What are tangible costs and types of tangible costs
Answer: Tangible costs are costs that are relatively easy to quantify.
These include non-recurring capital expenditures and recurring non-
capital expenditures.
●● What are intangible costs
Answer: These may include the costs of reduced traditional sales, losing
some customers that are not "web ready" or losing customers if an IS is
poorly designed or not on par with competing sites. These cn be
quantified or reserved as costs to consider outside of the quantitative
cost-benefit analysis.
●● What is the difference between tangible and intangible benefits
Answer: Tangible benefits are easy to determine because they are
quantifiable. Intangible benefits are difficult to quantify.
●● What are some examples of tangible benefits
Answer: estimating that the increased customer reach of a new web-
based system will result in at least a modest increase in sales. Evidence
from similar projects may indicate a 5% increase for the first year, a
10% increase in the second year, and a 15% increase in the third year.
Other tangible benefits are the reduction of order entry errors because
orders will now be tracked electronically and shipped automatically. You
could calculate the money previously lsot on faulty and lost orders, and
the wages of personnel assigned to find and fix these orders. The
reduction of these costs is a quantifiable benefit of the new system.
