Topics: Net present value, Rate of return, Cost-benefit analysis Pages: 9 (2223 words) Published: April 21, 2014
Answers to End of Chapter Questions

1. Give three examples of business reasons for a system to be built.

(1). To maintain or improve the competitive position.
(2). To perform a business function more efficiently.
(3). To take advantage of a new business opportunity.

2. What is the purpose of an approval committee?

The approval committee generally serves as the decision making body regarding investments in information systems projects. This committee generally has a broad organizational representation, and therefore can avoid allocating resources that will serve only narrow organizational interests. The approval committee commonly has project oversight responsibilities as well as monitoring project performance after the project has been accepted.

3. Why should the system request be created by a businessperson as opposed to an IS professional?

Usually, the system request originates with a businessperson because the need for the system or system improvement is recognized in the business unit. It is unlikely the IS professionals in the organization will be able to recognize all the business needs and opportunities for systems and improvements in the business units since they are not involved directly in those areas. Also, the businessperson will have a much better idea of the value of the proposed system or improvement, and therefore is in a better position to create a meaningful system request.

4. What is the difference between intangible value and tangible value? Give three examples of each.

Tangible value represents the benefits from the system that are quantifiable and measurable. Intangible value represents benefits that are real, but are difficult to quantify and measure. Examples of tangible benefits might be increased sales, reduced operating costs, reduced interest costs. Examples of intangible value might include increased customer satisfaction, improved decision making, improved problem recognition. Note that these intangible values are not necessarily impossible, but tend to be difficult to measure or even observe directly. Some firms will go to great lengths to measure intangible values like customer satisfaction in order to make them "more tangible" and, therefore, more accurately forecast.

5. What are the purposes of the system request and the feasibility analysis? How are they used in the project approval process?

The purpose of the system request is to initiate a systems project. The system request pulls together preliminary ideas on the reason for the system and its expected value to the organization. The feasibility analysis represents a more detailed investigation into the proposed system outlined in the system request. The system analyst and the project sponsor work together to more fully develop the objectives of the system and to understand its potential costs and benefits to the organization. The system request and the feasibility analysis are the key inputs used by the approval committee in determining if the proposed system has enough merit to move into the Analysis Phase.

6. Describe two special issues that may be important to list on a system request.

Environmental factors should be considered (e.g., new governmental reporting requirements); competitive factors (e.g., IS-enabled systems introduced or anticipated by competitors); externally imposed deadlines that cannot be altered (e.g., completion by the start of the next fiscal year); and mandated technologies (e.g., including wireless access).

7. Describe the three techniques for feasibility analysis.

Technical feasibility looks at the capability of the organization to successfully develop the proposed system. Included in this assessment is the project size, the types of technologies to be used in the project, and the amount of prior experience with that technology and the business application. Economic feasibility addresses the economic justification of the project. Here, we...
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