Information Systems Today, 7e (Valacich)
Chapter 9 Developing and Acquiring Information Systems
1) ________ refers to the process of identifying, quantifying, and presenting the value provided
by a system.
A) Making a business case
B) Testing a process
C) Making a prototype
D) Deploying software product
E) Refining a prototype
Difficulty: Moderate
Learning Obj.: 9.1: Describe how to formulate and present the business case for technology
investments.
Classification: Concept
2) Which of the following statements best describes the productivity paradox of technology
investment?
A) The productivity of any technology is directly proportional to the investment in that
technology.
B) While it is easy to quantify the costs associated with developing an information system, it is
often difficult to quantify tangible productivity gains from its use.
C) As investment in technology increases, productivity decreases steadily.
D) While it is easy to identify and quantify the intangible benefits of an information system, it is
not easy to quantify the tangible benefits.
E) The productivity of an information system is in no way related to the investment in the
technology.
Difficulty: Moderate
Learning Obj.: 9.1: Describe how to formulate and present the business case for technology
investments.
Classification: Concept
3) System efficiency is the extent to which a system ________.
A) allows firms to reach their operational targets
B) allows people to plan tasks that are achievable
C) enables people to accomplish goals or tasks well
D) enables people to do things faster or at lower cost
E) allows employees to reduce the risks associated with tasks
Difficulty: Moderate
Learning Obj.: 9.1: Describe how to formulate and present the business case for technology
investments.
Classification: Concept
1
4) Which of the following is true of system effectiveness?
A) It is the extent to which a system enables the firm to accomplish goals well.
B) It is the extent to which a system allows a firm to plan its tasks.
C) It is the extent to which a system enables the firm to do things faster, at lower cost.
D) It is the extent to which a system allows a firm to cut operational costs.
E) It is the extent to which a system enables people to accomplish tasks with relatively little time
and effort.
Difficulty: Moderate
Learning Obj.: 9.1: Describe how to formulate and present the business case for technology
investments.
Classification: Concept
5) Which of the following scenarios demonstrates system efficiency?
A) A company’s new information system allowed the company to reach its monthly targets.
B) A company was able to easily reach its sales goals through the use of its information system.
C) A company’s new information system allowed the company to set achievable targets.
D) A company’s new information system helped employees achieve their individual goals
alongside the company’s goals.
E) A company’s new information system helped employees work faster, with less effort.
Difficulty: Difficult
Learning Obj.: 9.1: Describe how to formulate and present the business case for technology
investments.
Classification: Application
2
6) A company implemented a new information system two months ago, but it has not resulted in
concrete increases in productivity. A similar system has been in place at the company
headquarters for the past two years, and this system has resulted in significant, quantifiable
benefits. Which of the following reasons is the most likely explanation for the lack of results?
A) The benefits of the new information system are difficult to pinpoint because the firm is
considering the wrong indicators.
B) The new system is being used to redistribute market share rather than make the whole market
bigger.
C) It can take years from the first implementation of this new system before the magnitude of
benefits is felt by the organization.
D) The benefits of the new information system are difficult to pinpoint because the firm is not
familiar with the working of the system.
E) The new system may be beneficial for individual firms, but not for a particular industry or the
economy as a whole.
Difficulty: Moderate
Learning Obj.: 9.1: Describe how to formulate and present the business case for technology
investments.
Classification: Application
7) Business case arguments based on ________ focus on beliefs about organizational strategy,
competitive advantage, industry forces, customer perceptions, market share, and so on.
A) faith
B) fear
C) facts
D) fiction
E) fallacy
Difficulty: Easy
Learning Obj.: 9.1: Describe how to formulate and present the business case for technology
investments.
Classification: Concept
3
8) Business case arguments based on fear are dependent on ________.
A) the belief that implementing the new information system can have significant positive
consequences for the firm
B) beliefs about organizational strategy, competitive advantage, industry forces, customer
perceptions, market share, and so on
C) data, quantitative analysis, and/or indisputable factors
D) the notion that if the system is not implemented, the firm will lose out to the competition or
go out of business
E) the results of a qualitative analysis of employee responses to the new information system
Difficulty: Easy
Learning Obj.: 9.1: Describe how to formulate and present the business case for technology
investments.
Classification: Concept
9) Business case arguments based on data, quantitative analysis, and/or indisputable factors are
known as arguments based on ________.
A) fads
B) faith
C) facts
D) fear
E) fiction
Difficulty: Easy
Learning Obj.: 9.1: Describe how to formulate and present the business case for technology
investments.
Classification: Concept
10) Which of the following statements is an example of a business case argument based on fear?
A) If we do not implement this system, our competitors could gain a significant advantage over
us.
B) This system has the potential to reduce required effort by 40 percent.
C) Using this system will help our employees serve customers more efficiently.
D) The system can help us meet both individual as well as organizational goals.
E) The new system is user-friendly and can be implemented almost immediately.
Difficulty: Moderate
Learning Obj.: 9.1: Describe how to formulate and present the business case for technology
investments.
Classification: Application
4
11) ________ costs are ongoing costs that occur throughout the life of the system.
A) Smart
B) Sector
C) Fixed
D) Recurring
E) Non-recurring
Difficulty: Easy
Learning Obj.: 9.1: Describe how to formulate and present the business case for technology
investments.
Classification: Concept
12) Which of the following is an example of recurring costs associated with an information
system?
A) installation charges
B) cost of hosting Web servers
C) employee salaries
D) technology purchases
E) cost of system acquisition
Difficulty: Moderate
Learning Obj.: 9.1: Describe how to formulate and present the business case for technology
investments.
Classification: Concept
13) Which of the following is an example of an intangible cost for a system?
A) cost of losing customers
B) employee salaries
C) cost of installation and maintenance
D) cost of employee recruitment and retention
E) customer support costs
Difficulty: Easy
Learning Obj.: 9.1: Describe how to formulate and present the business case for technology
investments.
Classification: Concept
5
14) A company is conducting a cost-benefit analysis for its information system (IS) department.
In this, the salary of an employee is an example of a(n) ________ cost.
A) intangible and tangible
B) tangible and recurring
C) intangible and recurring
D) tangible and non-recurring
E) recurring and non-recurring
Difficulty: Moderate
Learning Obj.: 9.1: Describe how to formulate and present the business case for technology
investments.
Classification: Concept
15) Which of the following is true for tangible costs?
A) They are recurring costs.
B) They are always non-recurring costs.
C) They are relatively easy to quantify.
D) They are the same as intangible benefits.
E) They are always fixed costs.
Difficulty: Easy
Learning Obj.: 9.1: Describe how to formulate and present the business case for technology
investments.
Classification: Concept
16) A company implements a new information system and observes a 5 percent increase in its
monthly sales. This is a(n) ________ of the system.
A) intangible benefit
B) tangible cost
C) tangible benefit
D) recurring cost
E) non-recurring cost
Difficulty: Moderate
Learning Obj.: 9.1: Describe how to formulate and present the business case for technology
investments.
Classification: Application
6
17) “Increased customer reach of the new Web-based system will result in at least a modest
increase in sales.” This statement represents a(n) ________ for the company.
A) recurring cost
B) intangible cost
C) tangible benefit
D) non-recurring cost
E) intangible benefit
Difficulty: Easy
Learning Obj.: 9.1: Describe how to formulate and present the business case for technology
investments.
Classification: Application
18) Which of the following is an example of an intangible benefit for a firm?
A) lower transport and operational costs
B) a significant increase in sales
C) a reduction in operational errors
D) cost reductions as compared to previous data
E) improved customer perceptions of the firm
Difficulty: Easy
Learning Obj.: 9.1: Describe how to formulate and present the business case for technology
investments.
Classification: Application
19) A break-even analysis ________.
A) identifies the point where tangible benefits equal tangible costs
B) analyzes the relevant cash flow streams associated with the system at the organization’s
discount rate
C) refers to the discounted sum, or present value, of a stream of costs associated with a project or
proposal
D) attempts to summarize the overall value of money for a project or proposal
E) is the rate of return used by an organization to compute the present value of future cash flows
Difficulty: Easy
Learning Obj.: 9.1: Describe how to formulate and present the business case for technology
investments.
Classification: Concept
7
20) A method for deciding among different information system (IS) investments or when
considering alternative designs for a given system is ________ analysis.
A) transactional
B) weighted multicriteria
C) finite element
D) independent component
E) link quality
Difficulty: Easy
Learning Obj.: 9.1: Describe how to formulate and present the business case for technology
investments.
Classification: Concept
21) ________ are alternative measures of outcomes that help clarify the impact a change will
have on the firm.
A) Proxy variables
B) Pseudocodes
C) Constants
D) Prototypes
E) Protocols
Difficulty: Easy
Learning Obj.: 9.1: Describe how to formulate and present the business case for technology
investments.
Classification: Concept
22) The biggest increases in productivity results from increased system efficiency rather than
system effectiveness.
Difficulty: Easy
Learning Obj.: 9.1: Describe how to formulate and present the business case for technology
investments.
Classification: Concept
23) Business case arguments based on faith require hard data based on system costs.
Difficulty: Easy
Learning Obj.: 9.1: Describe how to formulate and present the business case for technology
investments.
Classification: Concept
8
24) The total cost of ownership is focused on understanding not only the total cost of acquisition,
but also all costs associated with ongoing use and maintenance of a system.
Difficulty: Moderate
Learning Obj.: 9.1: Describe how to formulate and present the business case for technology
investments.
Classification: Concept
25) Salaries paid to employees are non-recurring costs.
Difficulty: Easy
Learning Obj.: 9.1: Describe how to formulate and present the business case for technology
investments.
Classification: Concept
26) A break-even analysis is a type of cost-benefit analysis to identify at what point tangible
benefits equal tangible costs.
Difficulty: Easy
Learning Obj.: 9.1: Describe how to formulate and present the business case for technology
investments.
Classification: Concept
27) A net-present-value analysis is an analysis of the relevant cash flow streams associated with
the system at the organization’s discount rate.
Difficulty: Moderate
Learning Obj.: 9.1: Describe how to formulate and present the business case for technology
investments.
Classification: Concept
28) When making the case for an information systems (IS) investment, it is undesirable to
translate all potential benefits into monetary terms.
Difficulty: Easy
Learning Obj.: 9.1: Describe how to formulate and present the business case for technology
investments.
Classification: Concept
9
29) A steering committee identifies and assesses all possible systems development projects that
the organization could undertake.
Difficulty: Easy
Learning Obj.: 9.1: Describe how to formulate and present the business case for technology
investments.
Classification: Concept
30) Proxy variables cannot be used to measure changes in terms of their perceived value to the
organization.
Difficulty: Easy
Learning Obj.: 9.1: Describe how to formulate and present the business case for technology
investments.
Classification: Concept
31) What is the productivity paradox for technology investments? Explain the possible reasons
for the productivity paradox.