Chapter 1



Chapter 14

Understanding the Business Value of Systems and Managing Change

True-False Questions

| |One reason for the high failure rate among IS projects is that organizations have failed to manage the organizational change |

| |process surrounding the introduction of new technology. |

| | |

| |Answer: True Difficulty: Easy Reference: p. 486 |

| |A large IS project can be precisely planned with accurate cost figures. |

| | |

| |Answer: False Difficulty: Easy Reference: p. 486 |

| |Most system projects can be justified using traditional accounting methods. |

| | |

| |Answer: True Difficulty: Medium Reference: p. 486 |

| |Capital projects generate cash flows into and out of the organization. |

| | |

| |Answer: True Difficulty: Easy Reference: p. 487 |

| |Financial models express the risks and uncertainty of costs and benefits estimates. |

| | |

| |Answer: False Difficulty: Medium Reference: p. 488 |

| |Most technology systems are outdated within five to eight years. |

| | |

| |Answer: True Difficulty: Easy Reference: p. 489 |

| |Budgeting for information systems requires that the payback period must be shorter and the rates of return higher than |

| |typical capital projects. |

| | |

| |Answer: True Difficulty: Medium Reference: p. 489 |

| |One weakness of the payback method is that it ignores the time value of money. |

| | |

| |Answer: True Difficulty: Medium Reference: p. 491 |

| |The payback period is especially good for high-risk projects in which the useful life of a project is difficult to determine.|

| | |

| |Answer: True Difficulty: Medium Reference: p. 491 |

| |The desired rate of return must equal or exceed the cost of capital in the marketplace. |

| | |

| |Answer: True Difficulty: Medium Reference: p. 491 |

| |The total initial investment is divided by the net benefit to arrive at ROI. |

| | |

| |Answer: False Difficulty: Medium Reference: p. 491 |

| |Future savings are not worth as much in today’s dollars as are current savings. |

| | |

| |Answer: True Difficulty: Easy Reference: p. 492 |

| |To compare the investment made in today’s dollars with future savings or earnings, you must add the earnings to their present|

| |value and calculate the net present value of the investment. |

| | |

| |Answer: False Difficulty: Hard Reference: p. 492 |

| |To calculate the profitability index, divide the present value of the total cash inflow from an investment by the initial |

| |cost of the investment. |

| | |

| |Answer: True Difficulty: Medium Reference: p. 492 |

| |Information-intensive industries should focus on high-benefit, low-risk projects. |

| | |

| |Answer: False Difficulty: Medium Reference: p. 493 |

| |The scoring model is a quick method for arriving at a decision on alternative systems. |

| | |

| |Answer: True Difficulty: Medium Reference: p. 493 |

| |Low-benefit, high-risk systems should always be avoided. |

| | |

| |Answer: True Difficulty: Medium Reference: p. 493 |

| |Scoring models are best used as the final arbiters of system selection. |

| | |

| |Answer: False Difficulty: Medium Reference: p. 494 |

| |The ROPM places a value on management learning. |

| | |

| |Answer: True Difficulty: Medium Reference: p. 495 |

| |The extent to which computers have enhanced the productivity of the service sector is unclear. |

| | |

| |Answer: True Difficulty: Easy Reference: p. 496 |

| |Failure to address properly the organizational changes surrounding the introduction of a new system can cause the demise of |

| |an otherwise good system. |

| | |

| |Answer: True Difficulty: Medium Reference: p. 497 |

| |An information system will be judged a failure if its design is not compatible with the culture of the organization it is to |

| |serve. |

| | |

| |Answer: True Difficulty: Easy Reference: p. 498 |

| |User involvement in the design and operation of information systems leads to better solutions. |

| | |

| |Answer: True Difficulty: Easy Reference: p. 500 |

| |User concerns and designer concerns are usually the same at the beginning of the project. |

| | |

| |Answer: False Difficulty: Easy Reference: p. 500 |

| |Relying on purely technical considerations can result in a system that fails to serve organizational needs. |

| | |

| |Answer: True Difficulty: Easy Reference: p. 501 |

| |The technical characteristics of the project are 75 percent more likely to cause project failure in large projects than the |

| |behavioral characteristics of the system. |

| | |

| |Answer: False Difficulty: Hard Reference: p. 501 |

| |On average, private sector projects are underestimated by one-half in terms of budget and time required to implement the |

| |system. |

| | |

| |Answer: True Difficulty: Medium Reference: p. 502 |

| |In organizations, bad news travels slowly upward. |

| | |

| |Answer: True Difficulty: Easy Reference: p. 503 |

| |There is a very high failure rate among enterprise system and BPR projects. |

| | |

| |Answer: True Difficulty: Medium Reference: p. 503 |

| |Many enterprise application and reengineering projects have been undermined by poor implementation and change management |

| |practices that failed to address employees’ concerns about change. |

| | |

| |Answer: True Difficulty: Medium Reference: p. 503 |

| |Under merger conditions, it is usually easy to integrate the information systems of companies engaged in the same businesses.|

| | |

| |Answer: False Difficulty: Medium Reference: p. 504 |

| |Because English is the modern business language, it is easy to initiate transborder data flow. |

| | |

| |Answer: False Difficulty: Medium Reference: p. 504 |

| |The major hardware challenge in implementing global systems is making data flow seamlessly across networks shaped by |

| |different national standards. |

| | |

| |Answer: False Difficulty: Hard Reference: p. 504 |

| |There is often local resistance to the decision to use global standards. |

| | |

| |Answer: True Difficulty: Easy Reference: p. 506 |

| |Participation in implementation activities is usually enough to counter user resistance. |

| | |

| |Answer: False Difficulty: Medium Reference: p. 509 |

| |Systems development can create problems just because it is an entirely rational process. |

| | |

| |Answer: False Difficulty: Hard Reference: p. 509 |

| |If using the new system is mandatory, a way users may resist is by developing increased error rates. |

| | |

| |Answer: True Difficulty: Easy Reference: p. 509 |

| |Users are more likely to be cooperative if counterimplementation is not allowed. |

| | |

| |Answer: False Difficulty: Medium Reference: p. 509 |

| |It is better to evaluate information systems in terms of user criteria than in the criteria of the IS staff. |

| | |

| |Answer: True Difficulty: Easy Reference: p. 509 |

| |Management can use cooptation to create a global technology infrastructure. |

| | |

| |Answer: False Difficulty: Medium Reference: p. 512 |

Multiple Choice Questions

| |There is a very high failure rate among information systems projects because: |

| | |

| |a. organizations have incorrectly assessed their business value. |

| |b. organizations fail to allow enough funds to succeed. |

| |c. firms have failed to manage the organizational change process surrounding the introduction of new technology. |

| |d. Both a and c |

| |e. All of the above |

| | |

| |Answer: d Difficulty: Medium Reference: p. 486 |

| |There are few reliable techniques for estimating: |

| | |

| |a. the level of non-compliance in an organization. |

| |b. the time and cost to develop large-scale information systems. |

| |c. the time it will take to employ the necessary personnel. |

| |d. the actual support given by senior management. |

| |e. the effect of the system. |

| | |

| |Answer: b Difficulty: Medium Reference: p. 486 |

| |Many companies do not necessarily realize that some or all of the benefits of system projects accrue: |

| | |

| |a. directly to the consumer. |

| |b. to middle managers. |

| |c. to production personnel. |

| |d. to society at large. |

| |e. debts that cannot be paid under the budget. |

| | |

| |Answer: a Difficulty: Easy Reference: p. 487 |

| |Financial models assume: |

| | |

| |a. all relevant alternatives have been examined. |

| |b. all costs and benefits are known. |

| |c. the intangible benefits are known. |

| |d. Both a and b |

| |e. All of the above |

| | |

| |Answer: d Difficulty: Medium Reference: p. 488 |

| |Costs and benefits: |

| | |

| |a. have expected lives of more than one year. |

| |b. rely on cash flows. |

| |c. do not occur in the same time frame. |

| |d. are not valid for information systems. |

| |e. All of the above |

| | |

| |Answer: c Difficulty: Medium Reference: p. 488 |

| |The life expectancy of information systems is _______ than for manufacturing systems. |

| | |

| |a. longer |

| |b. more difficult to predict |

| |c. about the same as |

| |d. less costly |

| |e. shorter |

| | |

| |Answer: e Difficulty: Easy Reference: p. 489 |

| |The formula: (Original Investment/Annual net cash flow) = number of years is the one used for the: |

| | |

| |a. internal rate of return. |

| |b. profitability index. |

| |c. net present value. |

| |d. cost-benefit ratio. |

| |e. payback method. |

| | |

| |Answer: e Difficulty: Medium Reference: p. 490 |

| |If you need to take into account the cost, earnings, and time value of money, you will use the _____ budgeting model. |

| | |

| |a. internal rate of return |

| |b. profitability index |

| |c. net present value |

| |d. cost-benefit ratio |

| |e. payback method |

| | |

| |Answer: c Difficulty: Medium Reference: p. 492 |

| |To calculate the _______________, you will divide the present value of the cash inflow of the investment by the initial |

| |cost of the investment. |

| | |

| |a. internal rate of return |

| |b. profitability index |

| |c. net present value |

| |d. cost-benefit ratio |

| |e. payback method |

| | |

| |Answer: b Difficulty: Medium Reference: p. 492 |

| |______________ can be used to rank several projects for comparison. |

| | |

| |a. The internal rate of return |

| |b. The profitability index |

| |c. The net present value |

| |d. The cost-benefit ratio |

| |e. The payback method |

| | |

| |Answer: d Difficulty: Medium Reference: p. 492 |

| |_________ is the discount rate that will equate the present value of the project’s future cash flows to the initial cost|

| |of the project. |

| | |

| |a. The internal rate of return |

| |b. The profitability index |

| |c. The net present value |

| |d. The cost-benefit ratio |

| |e. The payback method |

| | |

| |Answer: a Difficulty: Hard Reference: p. 492 |

| |When the firm has several alternative investments from which to select, it can employ: |

| | |

| |a. portfolio analysis. |

| |b. scoring models. |

| |c. capital budgeting analysis. |

| |d. Both a and b |

| |e. All of the above |

| | |

| |Answer: d Difficulty: Medium Reference: p. 493 |

| |Often the most important outcome of a scoring model is: |

| | |

| |a. the single score it can give. |

| |b. its simplicity. |

| |c. agreement on the criteria used to judge the system. |

| |d. the judgment of the participants. |

| |e. the sensitivity of the outcome. |

| | |

| |Answer: c Difficulty: Hard Reference: p. 494 |

| |The real options pricing model is based on options in the financial system, but: |

| | |

| |a. they are based on very limited cash flow. |

| |b. they cannot be traded on the market. |

| |c. they are not expressed in dollar values. |

| |d. they are not used in enterprise systems. |

| |e. None of the above. |

| | |

| |Answer: b Difficulty: Easy Reference: p. 495 |

| |ROPM places a value on: |

| | |

| |a. IS systems planning. |

| |b. budgetary reserves. |

| |c. ROI. |

| |d. management learning. |

| |e. capital projects. |

| | |

| |Answer: d Difficulty: Medium Reference: p. 495 |

| |One of the disadvantages of ROPM is: |

| | |

| |a. estimating all the key variables. |

| |b. optimal timing of the investment. |

| |c. volatility in the market. |

| |d. the value of delayed investment. |

| |e. PCBs are not calculated. |

| | |

| |Answer: a Difficulty: Hard Reference: p. 495 |

| |Cell phones, home fax machines, laptop computers, and information appliances: |

| | |

| |a. have been proven to allow knowledge workers to get more done in less time. |

| |b. increase productivity for management. |

| |c. have not been proven to allow knowledge workers to get more done in less time. |

| |d. are a major frustration for most managers. |

| |e. increase the quality of productivity. |

| | |

| |Answer: c Difficulty: Medium Reference: p. 496 |

| |System failures fall into the problem areas of: |

| | |

| |a. documentation, employee resistance, management misunderstanding, and design. |

| |b. operations, cost, cooptation, and management misunderstanding. |

| |c. cost, design, documentation, and employee resistance. |

| |d. design, data, cost, and operations. |

| |e. cooptation, design, operations, and documentation. |

| | |

| |Answer: d Difficulty: Medium Reference: p. 497 |

| |Historically, information systems design puts technical issues over: |

| | |

| |a. organizational concerns. |

| |b. cost. |

| |c. operations. |

| |d. goals. |

| |e. software platforms. |

| | |

| |Answer: a Difficulty: Hard Reference: p. 498 |

| |When systems designers work with users, they find that users often: |

| | |

| |a. do not care about better productivity. |

| |b. do not know what will be needed. |

| |c. are eager to help choose hardware. |

| |d. are more knowledgeable than senior management. |

| |e. take a narrow view of the problem. |

| | |

| |Answer: e Difficulty: Medium Reference: p. 500 |

| |Users prefer systems that: |

| | |

| |a. are oriented to facilitating organizational tasks and solving business problems. |

| |b. support the easy input of data. |

| |c. are able to provide optimum hardware and software efficiency. |

| |d. are capable of storing much more data than they need. |

| |e. are conducive to better training. |

| | |

| |Answer: a Difficulty: Medium Reference: p. 500 |

| |Systems analysis and design involves tasks that: |

| | |

| |a. are sequentially linked. |

| |b. require extensive communications and training. |

| |c. cannot be performed in isolation. |

| |d. Both a and b |

| |e. All of the above |

| | |

| |Answer: e Difficulty: Easy Reference: p. 500 |

| |The project risk will rise if the project team and the IS staff lack: |

| | |

| |a. implementation training. |

| |b. good equipment. |

| |c. the required technical expertise. |

| |d. financial studies and plans. |

| |e. optimism and understanding. |

| | |

| |Answer: c Difficulty: Medium Reference: p. 501 |

| |A systems development project without proper management will most likely: |

| | |

| |a. fail to train personnel adequately. |

| |b. suffer cost overrun, unexpected time slippage, technical shortfall, and unobtained anticipated benefits. |

| |c. have little influence on the business. |

| |d. require more workers. |

| |e. crash the database more often. |

| | |

| |Answer: b Difficulty: Medium Reference: p. 502 |

| |For many organizations, it is easier to deal with visualizing and designing breakthrough changes to business processes |

| |than with: |

| | |

| |a. combining two information systems. |

| |b. research requirements. |

| |c. systems designers. |

| |d. senior management. |

| |e. dealing with fear and anxiety in the organization. |

| | |

| |Answer: e Difficulty: Medium Reference: p. 503 |

| |The major hardware challenge in an international setting is: |

| | |

| |a. cost. |

| |b. standardizing the firm’s computer hardware platform. |

| |c. training and education. |

| |d. finding user-friendly applications. |

| |e. accessing the Internet 24/7. |

| | |

| |Answer: b Difficulty: Medium Reference: p. 504 |

| |The first step in managing project risk is to: |

| | |

| |a. identify the financial cost. |

| |b. make sure the project is approved by senior management. |

| |c. identify the nature and level of risk confronting the project. |

| |d. adopt a contingency approach. |

| |e. define the scope of the project. |

| | |

| |Answer: c Difficulty: Easy Reference: p. 506 |

| |A project leader: |

| | |

| |a. needs heavy technical and administrative experience. |

| |b. needs an understanding of organizational psychology. |

| |c. holds a senior level position within the firm and is well respected. |

| |d. has great patience to deal with conflicting business units. |

| |e. comes from outside the organization. |

| | |

| |Answer: a Difficulty: Medium Reference: p. 507 |

| |Large projects will benefit from appropriate use of: |

| | |

| |a. formal planning tools. |

| |b. DISB tools. |

| |c. formal control tools. |

| |d. Both a and c |

| |e. Both a and b |

| | |

| |Answer: d Difficulty: Easy Reference: p. 507 |

| |Projects with challenging and complex technology to master benefit from: |

| | |

| |a. internal integration tools. |

| |b. outside help. |

| |c. controlling risk factors. |

| |d. using enterprise systems. |

| |e. integrated global networks. |

| | |

| |Answer: a Difficulty: Hard Reference: p. 507 |

| |The implementation process always involves: |

| | |

| |a. organizational change. |

| |b. internal integration manipulation. |

| |c. downsizing. |

| |d. another project team. |

| |e. senior management. |

| | |

| |Answer: a Difficulty: Medium Reference: p. 509 |

| |A new system can be made more user friendly by: |

| | |

| |a. using formal planning tools. |

| |b. improving the end-user interface. |

| |c. an organizational impact analysis. |

| |d. allowing flexible changeover. |

| |e. Both a and b |

| | |

| |Answer: b Difficulty: Easy Reference: p. 509 |

| |Areas where users interface with the system should be carefully designed, with sensitivity to: |

| | |

| |a. costs and benefits. |

| |b. employee training. |

| |c. organizational impact. |

| |d. counterimplementation. |

| |e. ergonomic issues. |

| | |

| |Answer: e Difficulty: Easy Reference: p. 509 |

| |When technology-induced changes produce unforeseen consequences, the organization can benefit by: |

| | |

| |a. alerting senior management to the problem(s) in timely fashion. |

| |b. seeing those consequences as a chance to take advantage of new opportunities. |

| |c. changing the integration procedures. |

| |d. documenting the problem(s) for future systems design. |

| |e. providing better incentives to learn the new system. |

| | |

| |Answer: b Difficulty: Hard Reference: p. 509 |

| |The concept of participatory design is closely linked to the concept of: |

| | |

| |a. core systems. |

| |b. management implementation. |

| |c. systems design. |

| |d. sociotechnical design. |

| |e. technical efficiency. |

| | |

| |Answer: d Difficulty: Hard Reference: p. 511 |

| |Agency and other coordination costs ______________ as the firm moves from local option systems toward regional and |

| |global systems. |

| | |

| |a. increase |

| |b. decrease |

| |c. usually stay the same |

| |d. are more easily tracked |

| |e. are more difficult to track |

| | |

| |Answer: a Difficulty: Hard Reference: p. 511 |

| |In planning global systems, companies should realize that: |

| | |

| |a. core systems should be kept at home. |

| |b. not all systems need be coordinated on a transnational basis. |

| |c. all systems should be coordinated on a transnational basis. |

| |d. the system must be planned to divide opposition to a transnational strategy. |

| |e. each country should develop its own transnational system. |

| | |

| |Answer: b Difficulty: Medium Reference: p. 511 |

| |A good sociotechnical design is expected to produce an information system that blends technical efficiency with a |

| |sensitivity to organizational standards, leading to: |

| | |

| |a. greater productivity. |

| |b. high job satisfaction. |

| |c. lower transaction costs. |

| |d. cooptation. |

| |e. better procedures and more effective reporting. |

| | |

| |Answer: b Difficulty: Medium Reference: p. 511 |

| |To provide international connectivity for global systems, firms can: |

| | |

| |a. build their own international private network. |

| |b. rely on a value-added network service. |

| |c. use Internet technology. |

| |d. use VPNs. |

| |e. All of the above |

| | |

| |Answer: e Difficulty: Easy Reference: p. 512 |

| |The intangible benefits of computers are difficult to measure and therefore are: |

| | |

| |a. not addressed in financial models except for new systems. |

| |b. not addressed by conventional productivity measures. |

| |c. not understood by management. |

| |d. Both a and c |

| |e. All of the above |

| | |

| |Answer: b Difficulty: Medium Reference: p. 513 |

Fill In the Blanks

| |A firm makes two kinds of information system investments: system projects and infrastructure. |

| | |

| |Difficulty: Hard Reference: p. 486 |

| |Capital budgeting is the process of analyzing and selecting various proposals for capital expenditures. |

| | |

| |Difficulty: Medium Reference: p. 487 |

| |All capital budgeting methods rely on measures of cash flows in and out of the firm. |

| | |

| |Difficulty: Easy Reference: p. 487 |

| |By definition, there is no solid method for pricing intangible benefits. |

| | |

| |Difficulty: Hard Reference: p. 488 |

| |Tangible benefits are those than can be quantified and assigned a monetary value. |

| | |

| |Difficulty: Easy Reference: p. 488 |

| |Intangible benefits are those than are not easily quantified. |

| | |

| |Difficulty: Easy Reference: p. 488 |

| |Payback method is a measure of the time required to recoup the initial investment on a project. |

| | |

| |Difficulty: Medium Reference: p. 490 |

| |The Accounting Rate of Return on Investment (ROI) calculates the rate of return on an investment by adjusting cash inflows |

| |produced by the investment for depreciation. It approximates the accounting income earned by the investment. |

| | |

| |Difficulty: Medium Reference: p. 491 |

| |The value, in current dollars, of a payment or stream of payments to be received in the future is called the present value. |

| | |

| |Difficulty: Easy Reference: p. 492 |

| |Net present value is the amount of money an investment is worth, taking into account its cost, earnings, and the time value |

| |of money. |

| | |

| |Difficulty: Medium Reference: p. 492 |

| |The method for calculating the returns from a capital expenditure by dividing total benefits by total costs is the |

| |cost-benefit ratio. |

| | |

| |Difficulty: Medium Reference: p. 492 |

| |The profitability index is calculated by dividing the present value of the total cash inflow from an investment by the |

| |initial cost of the investment. |

| | |

| |Difficulty: Medium Reference: p. 492 |

| |The internal rate of return (IRR) is the profit that an investment is expected to earn. |

| | |

| |Difficulty: Medium Reference: p. 492 |

| |A(n) portfolio analysis is an analysis of the portfolio of potential applications within a firm to determine the risks and |

| |benefits, and to select among alternatives for information systems. |

| | |

| |Difficulty: Hard Reference: p. 493 |

| |A(n) scoring model is a quick method for deciding among alternative systems based on a system of ratings for selected |

| |objectives. |

| | |

| |Difficulty: Medium Reference: p. 493 |

| |A(n) real options pricing model (ROPM) evaluates information technology investments with uncertain returns by using |

| |techniques for valuing financial options. |

| | |

| |Difficulty: Hard Reference: p. 495 |

| |A(n) option is the right, though not the obligation, to act at a future date. |

| | |

| |Difficulty: Easy Reference: p. 495 |

| |A(n) real options pricing model (ROPM) places a value on management learning, and the use of an unfolding investment |

| |technique based on learning over time. |

| | |

| |Difficulty: Hard Reference: p. 495 |

| |A(n) knowledge value-added approach focuses on the knowledge input into a business process as a way of determining the costs |

| |and benefits of changes in business processes from new information systems. |

| | |

| |Difficulty: Hard Reference: p. 495 |

| |A(n) unit of output is a measure of productivity. |

| | |

| |Difficulty: Hard Reference: p. 496 |

| |The uneven result of the studies to quantify the benefits from information technology has been termed the productivity |

| |paradox. |

| | |

| |Difficulty: Hard Reference: p. 496 |

| |Because new information systems can be highly disruptive to the organization, successful system building requires careful |

| |change management. |

| | |

| |Difficulty: Medium Reference: p. 497 |

| |A(n) system failure occurs when a system either does not perform as expected, is not operational at a specific time, or |

| |cannot be used in the way it was intended. |

| | |

| |Difficulty: Easy Reference: p. 497 |

| |A(n) user interface is the type of hardware and the series of on-screen commands and responses required for a user to work |

| |with the system. |

| | |

| |Difficulty: Easy Reference: p. 497 |

| |When all organizational activities work toward the adoption, management, and routinization of an innovation, the process is |

| |called implementation. |

| | |

| |Difficulty: Medium Reference: p. 498 |

| |A(n) change agent is the individual who acts as the catalyst to ensure successful adaptation to a new system or innovation. |

| | |

| |Difficulty: Medium Reference: p. 498 |

| |A(n) user-designer communications gap occurs when there is a difference in background, interests and priorities that impede |

| |communication and problem solving among users and IS specialists. |

| | |

| |Difficulty: Medium Reference: p. 500 |

| |A(n) man-month is the traditional unit of measurement used by systems designers to estimate the length of time to complete a |

| |project. |

| | |

| |Difficulty: Hard Reference: p. 502 |

| |The movement of information across international boundaries is called transborder data flow. |

| | |

| |Difficulty: Medium Reference: p. 504 |

| |The use of internal integration tools is a project management technique that ensures that the implementation team operates as|

| |a cohesive unit. |

| | |

| |Difficulty: Easy Reference: p. 507 |

| |The use of formal planning tools is a project management technique that structures and sequences tasks, budgeting time, |

| |money, and technical resources required to complete the tasks. |

| | |

| |Difficulty: Medium Reference: p. 507 |

| |The use of formal control tools is a project management technique that helps monitor the progress toward completion of a task|

| |and the fulfillment of goals. |

| | |

| |Difficulty: Medium Reference: p. 507 |

| |The use of external integration tools is a project management technique that links the work of the implementation team to |

| |that of users at all organizational levels. |

| | |

| |Difficulty: Medium Reference: p. 507 |

| |A Gantt chart visually represents the sequence and timing of different tasks in a development project as well as their |

| |resource requirements. |

| | |

| |Difficulty: Medium Reference: p. 507 |

| |Counterimplementation is a deliberate strategy to thwart the implementation of an information system or an innovation in an |

| |organization. |

| | |

| |Difficulty: Medium Reference: p. 509 |

| |A(n) organizational impact analysis is the study of the way a proposed system will affect the organizational structure, |

| |attitudes, decision making, and operations. |

| | |

| |Difficulty: Easy Reference: p. 509 |

| |Ergonomics is the interaction of people and machines in the work environment, including the design of jobs, health issues, |

| |and the end-user interface of information systems. |

| | |

| |Difficulty: Easy Reference: p. 509 |

| |A(n) sociotechnical design is one designed to produce information systems that blend technical efficiency with sensitivity to|

| |organizational and human needs. |

| | |

| |Difficulty: Easy Reference: p. 511 |

| |A(n) core system supports functions that are absolutely critical to the organization. |

| | |

| |Difficulty: Easy Reference: p. 511 |

| |Cooptation is the art of bringing the opposition into the process of designing and implementing a solution without giving up |

| |control of the direction and nature of the change. |

| | |

| |Difficulty: Medium Reference: p. 512 |

Essay Questions

| |What are the challenges involved in dealing with the complexity of large-scale systems projects? |

| | |

| |Large-scale systems, including enterprise systems, that affect large numbers of organizational units and staff members and |

| |that have extensive information requirements and business process changes are difficult to oversee, coordinate, and plan for.|

| |Implementing such systems, which have multiyear development periods, is especially problematic because the systems are so |

| |complex. In addition, there are few reliable techniques for estimating the time and cost to develop large-scale information |

| |systems. |

| |List and give a short definition of at least four traditional capital budgeting models. |

| | |

| |1. The payback method—a measure of the time required to pay back the initial investment of a project. |

| |2. The accounting rate of return on investment—calculation of the rate of return by adjusting cash inflows produced by the |

| |investment for depreciation. |

| |3. The cost-benefit ratio—calculating the returns by dividing total benefits by total costs. |

| |4. The net present value—the amount of money the investment is worth, taking into account its cost, earnings, and the time |

| |value of money. |

| |5. The profitability index—used to compare the profitability of alternative investments. |

| |6. The internal rate of return—the rate of return or profit that an investment is expected to earn. |

|. |What are at least four limitations of financial models when applied to information systems? |

| | |

| |Financial models do not express the risks and uncertainty of their own cost and benefits estimates. |

| |Costs and benefits do not occur in the same time frame. |

| |Inflation may affect costs and benefits differently. |

| |Technology—especially information technology—can change during the course of the project, causing estimates to vary greatly. |

| |Intangible benefits are difficult to quantify. |

| |List at least six tangible benefits of information systems, and at least ten intangible benefits. All else being equal, to |

| |which three benefits—tangible or intangible—do you attribute the most important? |

| | |

| |Tangible: increased productivity, lower operational costs, reduced workforce, lower computer expenses, lower outside vendor |

| |costs, lower clerical and professional costs, reduced rate of growth in expenses, reduced facility costs. |

| | |

| |Intangible: improved user utilization, improved resource control, improved organizational planning, increased organizational|

| |flexibility, more timely information, more information, increased organizational learning, legal requirements attained, |

| |enhanced employee goodwill, increased job satisfaction, improved decision making, improved operations, higher client |

| |satisfaction, better corporate image. |

| |List and describe at least three alternative methods of selecting and evaluating information system investments that can |

| |involve strategic considerations not addressed by capital budgeting methods. |

| | |

| |1. Portfolio analysis—Once strategic analyses have determined the overall direction of systems development, the various |

| |alternatives may be viewed as applications, carrying risks and benefits, which may be evaluated in light of those risks and |

| |benefits, just as one would examine a portfolio of financial investments. |

| |2. Scoring models—a quick method for deciding among alternative systems based on a system of ratings for selected |

| |objectives. |

| |3. Real options pricing models—evaluate information technology investments with uncertain returns by using techniques for |

| |valuing financial options. They differ in value based on the firm in which they are constructed, and take into account the |

| |value of management learning over time and the value of delaying investment. |

| |4. Knowledge value-added approach—focuses on the knowledge input into a business process as a way of determining the costs |

| |and benefits of changes in business processes from new information systems. Knowledge inputs are measured in terms of |

| |learning difficulty to learning time to master a new process, and a return on knowledge can be estimated. This method makes |

| |certain assumptions that may not be valid in all situations, especially product design and research and development, where |

| |processes do not have predetermined outputs. |

| |In what ways has the use of computers and information systems contributed to productivity gains, and who has benefited from |

| |these uses? |

| | |

| |It is assumed, apparently, that the new technologies have increased productivity because information technology now accounts |

| |for more than 40 percent of total business expenditures on capital equipment in the United States. While productivity gains |

| |in manufacturing may be measured, it is not at all clear that there are concomitant gains in the service sector. Corporate |

| |downsizings and cost-reduction measures have increased worker efficiency but have not yet lead to any appreciable growth in |

| |productivity among office workers. New technologies have made it possible to get more work done and bring their work home, |

| |but they are not necessarily getting that work done in less time. |

| | |

| |It must be remembered that the earlier studies used older data, when computers were not as intensively used as they are |

| |today. When newer studies focused on revenues, profits, ROI, and stock market capitalization as the measures of firm |

| |efficiency, they found that information technology investment started to generate productivity paybacks, and growth in |

| |efficiency accelerated by increases in organizational learning and changes in business processes, in the 1990s. |

| | |

| |It seems also to be true that computers may increase the quality of products and services for consumers or may create |

| |entirely new products and revenue streams. In fact, it may be that the real benefit of the new technologies is to the |

| |consumer, rather than the organization. |

| |Discuss the four categories into which information systems failures may fall. |

| | |

| |1. Design—may fail to capture essential business requirements or improve organizational performance. Information may not |

| |be provided quickly enough to be helpful, it may be in a format that is impossible to digest and use, or it may represent the|

| |wrong pieces of data. A poor user interface falls into this category. |

| |2. Data—may have a high level of inaccuracy or inconsistency. May be erroneous or ambiguous; or may not be organized |

| |properly for business purposes, or it may be incomplete. |

| |3. Cost—may run far over budget or be too costly to complete. |

| |4. Operations—the system simply does not work. Information is not timely because of system breakdowns, aborted jobs, |

| |excessive response time. |

| |Why is user involvement in the design of new information systems such a problem? What can be done to alleviate it? |

| | |

| |The main problem is the user-designer communications gap. The user and the designer have different concerns and motivations, |

| |backgrounds, interests, and priorities. They have little or no common ground upon which to devise the new system. The users|

| |tend to feel that their input is not “technical” enough, and they bow out before they can contribute their experience and |

| |expertise. |

| | |

| |One way to alleviate the problem is to allow time to develop a common area of understanding and methods of communications |

| |between the users and the designers. Joint meetings, discussions, and mutual respect go a long way toward eventual success. |

| |Systems designers and implementation teams often do not take into sufficient account employees’ concerns about organizational|

| |change. What are some of these concerns and how can this undermine the success of the project? |

| | |

| |Dealing with fear and anxiety throughout the organization; overcoming resistance by key managers; changing job functions, |

| |career paths, and recruitment practices; and the need for training require attention and sympathetic handling by the |

| |implementation team. To work around this, the team may increase user involvement in the implementation (allow users to |

| |become active members of the project team, take on leadership roles, take charge of installation and training) of the |

| |project. If users resist organizational change, or institute counterimplementation strategies, the problem is exacerbated. |

| |Further strategies to overcome user resistance can include user education and training, the provision of better incentives |

| |for users who cooperate, and improvement of the user interface. If all else fails, management edicts and new policies may be|

| |handed down from above. |

| |Discuss the special strategies and concerns of an implementation strategy for global systems. |

| | |

| |The first requirement is the definition of core business processes and the development of systems to support them. |

| |Cooptation tactics may be necessary to help ensure that widely dispersed foreign units participate in the operation of new |

| |global systems, but global headquarters maintains overall control. Providing the interconnectivity required for global |

| |systems is a major concern and must be addressed from the outset of the project. |

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