BADM 7050 EXAM 2 QUESTIONS AND
ANSWERS
Know the definition of a business continuity plan - Correct Answers -Business continuity
Plan - preparations to counter physical or electronic attacks, hacking attempts, weather
disasters, and other events that could cripple the enterprise
If you want to boost investments in your infrastructure, the focus of your firm is what? -
Correct Answers -Business Effectiveness (Level 2 in Business Maturity Model)
If you want to boost investments in your transaction systems, the focus of your firm is
what? - Correct Answers -Business Efficiency (Level 1 in Business Maturity Model)
streamline or cut costs on the way business is done
If you are trying to lower your costs, what type of technology are you going to invest in?
- Correct Answers -Transactional systems - they automate/streamline processes and
lower operational costs
What method of IT funding is the most equitable? - Correct Answers -Chargeback
systems: IT costs recovered by charging individuals, departments, or business units
based on actual usage and cost
- Seen as more equitable bc costs are distributed based on usage or consumption of
resources, ensuring that the largest portion of the costs are paid for by the group or
individuals who consume it the most.
What is the difference between ROI, IRR, NPV, EVA< and payback - Correct Answers -
ROI (return on investment)- Tells you if you will gain from the investment of interest
IRR (internal rate of return) - represents the rate that is earned on an investment. The
rate is compared to a target that is determined by corporate policy
NPV (net present value) - accounts for the time value of money. NPV discounts the
cash flows from future periods as being worth less than immediate cash flows.
EVA (economic value added) - determines the amount of benefit of an investment that
exceeds the costs of the capital used for the initial investment.
Payback period - computes how long a firm estimates it must wait until all costs are
finally recouped.
,What are the common types of IT monitoring tools? - Correct Answers -The balanced
scorecard and IT dashboards
Balanced scorecard: focuses attention on the organization's value drivers. Companies
use scorecard to assess the full impact of their corporate strategies on their customers
and workforce as well as their financial performance. Provide summary information
gathered over a period of time
IT dashboards: summarizes key metrics for senior managers in a manner that provides
quick identification of the status of the organization
provides a snapshot of metrics at any given point in time
What should a manager create to justify an IT investment? And what should be included
in this? - Correct Answers -Business Case
Executive summary
Overview and intro
Assumptions and rationale
Project summary
Financial discussion and analysis
Benefits and business impact
Schedule and milestones
Risk and contingency analysis
Conclusion and recommendations
Appendices
In the early days of IT, who would the CIO report to? And why? And who does the CIO
report to now? And why? - Correct Answers -In the early days, the CIO reported to the
CFO- The role was predominantly responsible for controlling IT costs.
Now, CIO reports to the CEO or the Board of Directors due to the role being an official
"C-Suite" level position- Involved with operational and strategic tasks related to IT.
Responsible for all IT responsibilities throughout the organization
Why is valuing an IT investment difficult? - Correct Answers -The systems are complex,
and calculating the costs is an art, not a science.
Because many IT investments are for infrastructure, calculating a payback period may
be more complex than other types of capital investments.
Many times the payback cannot be calculated because the investment is a necessity
rather than a choice without any tangible payback
What are the four asset classes of IT investments? (4) - Correct Answers -1.
Transactional systems: Streamline or cut costs on the way business is done (equivalent
to Level 1 in the Business Maturity Model)
, 2. Infrastructure systems: Provide the base foundation of shared IT services used for
multiple applications such as servers, networks, tablets, or smartphones (equivalent to
Level 2 in the Business Maturity Model)
3. Informational systems: Provide information used to control, manage, communicate,
analyze, or collaborate (equivalent to Level 2 in the Business Maturity Model)
4. Strategic systems: Gain competitive advantage in the marketplace (equivalent to
Level 3 in the Business Maturity Model)
What mechanisms are used to create and ensure good IT governance? (3) - Correct
Answers -1. Policies: useful for defining the process of making a decision under certain
situations, but when environment is complex, policies may be too rigid
2. Review Board: committee that is formally designated to approve, monitor, and review
specific topics
3. IT steering committee: also called an IT governance council. Such a committee is
composed of key stakeholders or experts who provide guidance on important IT issues.
What is a balanced approach to managing a company's IT organization? - Correct
Answers -Federalism - Structure between Centralized and Decentralized (p208)
What activities will IT organizations outsource? - Correct Answers -- Strategic networks
- Platforms
- Business ecosystems
Why are outsourcing decisions difficult and expensive to reverse? - Correct Answers -
b/c have to reacquire the necessary infrastructure and staff
Why does a project manager break up a project? And how? - Correct Answers -To
organize the work of a project team, the project manager may break a project into
subprojects. He or she then organizes these subprojects around distinct activities, such
as quality control testing. This organization method allows the project manager to
contract certain kinds of work externally to limit costs or other drains on crucial project
resources.
What type of organization management does IT use to control most of its infrastructure
in one location? - Correct Answers -Centralized IS organization - does not refer to IT
architectures but to decision‐making frameworks
What type of organizational management should a company use if it is attempting to
obtain the advantages derived from both centralized and decentralized organizational
paradigms? - Correct Answers -Federalism- a structuring approach that distributes
power, hardware, software, data, and personnel between a central IS group and IS in
business units.
ANSWERS
Know the definition of a business continuity plan - Correct Answers -Business continuity
Plan - preparations to counter physical or electronic attacks, hacking attempts, weather
disasters, and other events that could cripple the enterprise
If you want to boost investments in your infrastructure, the focus of your firm is what? -
Correct Answers -Business Effectiveness (Level 2 in Business Maturity Model)
If you want to boost investments in your transaction systems, the focus of your firm is
what? - Correct Answers -Business Efficiency (Level 1 in Business Maturity Model)
streamline or cut costs on the way business is done
If you are trying to lower your costs, what type of technology are you going to invest in?
- Correct Answers -Transactional systems - they automate/streamline processes and
lower operational costs
What method of IT funding is the most equitable? - Correct Answers -Chargeback
systems: IT costs recovered by charging individuals, departments, or business units
based on actual usage and cost
- Seen as more equitable bc costs are distributed based on usage or consumption of
resources, ensuring that the largest portion of the costs are paid for by the group or
individuals who consume it the most.
What is the difference between ROI, IRR, NPV, EVA< and payback - Correct Answers -
ROI (return on investment)- Tells you if you will gain from the investment of interest
IRR (internal rate of return) - represents the rate that is earned on an investment. The
rate is compared to a target that is determined by corporate policy
NPV (net present value) - accounts for the time value of money. NPV discounts the
cash flows from future periods as being worth less than immediate cash flows.
EVA (economic value added) - determines the amount of benefit of an investment that
exceeds the costs of the capital used for the initial investment.
Payback period - computes how long a firm estimates it must wait until all costs are
finally recouped.
,What are the common types of IT monitoring tools? - Correct Answers -The balanced
scorecard and IT dashboards
Balanced scorecard: focuses attention on the organization's value drivers. Companies
use scorecard to assess the full impact of their corporate strategies on their customers
and workforce as well as their financial performance. Provide summary information
gathered over a period of time
IT dashboards: summarizes key metrics for senior managers in a manner that provides
quick identification of the status of the organization
provides a snapshot of metrics at any given point in time
What should a manager create to justify an IT investment? And what should be included
in this? - Correct Answers -Business Case
Executive summary
Overview and intro
Assumptions and rationale
Project summary
Financial discussion and analysis
Benefits and business impact
Schedule and milestones
Risk and contingency analysis
Conclusion and recommendations
Appendices
In the early days of IT, who would the CIO report to? And why? And who does the CIO
report to now? And why? - Correct Answers -In the early days, the CIO reported to the
CFO- The role was predominantly responsible for controlling IT costs.
Now, CIO reports to the CEO or the Board of Directors due to the role being an official
"C-Suite" level position- Involved with operational and strategic tasks related to IT.
Responsible for all IT responsibilities throughout the organization
Why is valuing an IT investment difficult? - Correct Answers -The systems are complex,
and calculating the costs is an art, not a science.
Because many IT investments are for infrastructure, calculating a payback period may
be more complex than other types of capital investments.
Many times the payback cannot be calculated because the investment is a necessity
rather than a choice without any tangible payback
What are the four asset classes of IT investments? (4) - Correct Answers -1.
Transactional systems: Streamline or cut costs on the way business is done (equivalent
to Level 1 in the Business Maturity Model)
, 2. Infrastructure systems: Provide the base foundation of shared IT services used for
multiple applications such as servers, networks, tablets, or smartphones (equivalent to
Level 2 in the Business Maturity Model)
3. Informational systems: Provide information used to control, manage, communicate,
analyze, or collaborate (equivalent to Level 2 in the Business Maturity Model)
4. Strategic systems: Gain competitive advantage in the marketplace (equivalent to
Level 3 in the Business Maturity Model)
What mechanisms are used to create and ensure good IT governance? (3) - Correct
Answers -1. Policies: useful for defining the process of making a decision under certain
situations, but when environment is complex, policies may be too rigid
2. Review Board: committee that is formally designated to approve, monitor, and review
specific topics
3. IT steering committee: also called an IT governance council. Such a committee is
composed of key stakeholders or experts who provide guidance on important IT issues.
What is a balanced approach to managing a company's IT organization? - Correct
Answers -Federalism - Structure between Centralized and Decentralized (p208)
What activities will IT organizations outsource? - Correct Answers -- Strategic networks
- Platforms
- Business ecosystems
Why are outsourcing decisions difficult and expensive to reverse? - Correct Answers -
b/c have to reacquire the necessary infrastructure and staff
Why does a project manager break up a project? And how? - Correct Answers -To
organize the work of a project team, the project manager may break a project into
subprojects. He or she then organizes these subprojects around distinct activities, such
as quality control testing. This organization method allows the project manager to
contract certain kinds of work externally to limit costs or other drains on crucial project
resources.
What type of organization management does IT use to control most of its infrastructure
in one location? - Correct Answers -Centralized IS organization - does not refer to IT
architectures but to decision‐making frameworks
What type of organizational management should a company use if it is attempting to
obtain the advantages derived from both centralized and decentralized organizational
paradigms? - Correct Answers -Federalism- a structuring approach that distributes
power, hardware, software, data, and personnel between a central IS group and IS in
business units.
