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Chapter 11
Information Systems Management
True/False Questions
1) One of the major functions of the information systems department is to develop, operate,
and maintain enterprise applications.
Answer: True
Rationale:
The information systems (IS) department is responsible for developing, operating, and
maintaining enterprise applications, which are software systems designed to support
organizational processes and functions on a large scale. This includes tasks such as designing,
building, testing, deploying, and maintaining applications that meet the needs of the
organization.
2) One of the common titles of the principal manager of the IS department is chief operating
officer.
Answer: False
Rationale:
The principal manager of the IS department typically holds the title of Chief Information
Officer (CIO), not Chief Operating Officer (COO). The CIO is responsible for overseeing the
information systems and technology functions within an organization, including strategic
planning, budgeting, and ensuring that IT initiatives align with business goals.
3) In all companies, the chief information officer reports directly to the chief financial officer.
Answer: False
Rationale:
While it's not uncommon for the Chief Information Officer (CIO) to report to the Chief
Financial Officer (CFO) in some organizations, reporting structures can vary. In many cases,
especially in larger organizations, the CIO may report directly to the Chief Executive Officer
(CEO) or another executive such as the Chief Operations Officer (COO).

4) In IS departments, the technology office investigates new information systems
technologies and determines how the organization can benefit from them.
Answer: True
Rationale:
The technology office or technology department within the IS department is responsible for
researching, evaluating, and implementing new information systems technologies that can
benefit the organization. This includes identifying emerging technologies, assessing their
potential impact on the organization, and making recommendations for adoption or
integration into existing systems.
5) The chief technology officer evaluates new technologies, new ideas, and new capabilities
and identifies those that are most relevant to the organization.
Answer: True
Rationale:
The Chief Technology Officer (CTO) is typically responsible for evaluating new
technologies, innovations, and capabilities and determining their relevance and potential
value to the organization. The CTO plays a key role in driving technology strategy,
innovation, and decision-making to support the organization's goals and objectives.
6) In the IS department, the development group manages the computing infrastructure,
including individual computers, networks, and communications media.
Answer: False
Rationale:
The development group within the IS department is primarily responsible for designing,
building, and maintaining software applications and systems, not managing the computing
infrastructure. The infrastructure management function is typically handled by the
infrastructure or operations team, which focuses on managing hardware, networks, and other
IT assets.
7) If an organization does not develop programs in-house, then the development group of the
IS department will include programmers, test engineers, and technical writers.
Answer: False

Rationale:
If an organization does not develop programs in-house, it may not have a development group
within the IS department. Instead, it may rely on external vendors or contractors to develop
software applications. In such cases, the IS department may still include roles such as project
managers, business analysts, and systems analysts to oversee external development projects
and ensure they meet the organization's requirements.
8) The purpose of the data administration group is to protect data and information assets by
establishing data standards and data management practices and policies.
Answer: True
Rationale:
The data administration group within the IS department is responsible for managing and
safeguarding the organization's data and information assets. This includes establishing data
standards, policies, and procedures, as well as implementing data management practices to
ensure data integrity, security, and privacy.
9) IS is also known as IT.
Answer: False
Rationale:
While Information Systems (IS) and Information Technology (IT) are related terms, they
refer to different aspects of the technology domain within organizations. Information Systems
typically encompass the broader scope of technology systems, processes, and functions used
to support business operations and decision-making. Information Technology, on the other
hand, refers specifically to the hardware, software, networks, and infrastructure used to
manage and process information within an organization.
10) IT must be placed into the structure of an IS before an organization can use it.
Answer: True
Rationale:
Information Technology (IT) encompasses the hardware, software, networks, and
infrastructure used to manage and process information within an organization. Before an
organization can effectively utilize IT, it must be integrated into the structure of its

Information Systems (IS), which includes the processes, procedures, and people involved in
leveraging technology to support business operations and achieve strategic objectives.
11) With the exception of system analyst, all the major job positions in the IS industry require
business knowledge.
Answer: False
Rationale:
While many job positions in the Information Systems (IS) industry require a combination of
technical and business knowledge, not all roles necessarily require deep business expertise.
For example, roles such as network administrators, database administrators, and
cybersecurity analysts may focus more on technical skills and expertise rather than extensive
business knowledge.
12) A business analyst works with business leaders and planners to develop processes and
systems that implement business strategy and goals.
Answer: True
Rationale:
A business analyst plays a crucial role in bridging the gap between business needs and
technology solutions within an organization. They work closely with business stakeholders to
understand their requirements, analyze processes, identify opportunities for improvement,
and develop systems and solutions that align with the organization's business strategy and
goals.
13) In the context of responsibilities involved in job positions in the IS industry, a technical
writer should develop test plans, and design and write automated test scripts.
Answer: False
Rationale:
While technical writers may be involved in documenting test plans and procedures, designing
and writing automated test scripts is typically the responsibility of test engineers or quality
assurance professionals within the IS department. Technical writers primarily focus on
creating clear, accurate, and user-friendly documentation for software systems, processes, and
procedures.

14) In the context of knowledge, skill, and characteristics requirements for job positions in
the IS industry, a consultant must have an entrepreneurial attitude and people skills.
Answer: True
Rationale:
Consultants in the IS industry often work with various clients and projects, requiring them to
possess an entrepreneurial attitude to identify opportunities and solve problems creatively.
Additionally, strong people skills are essential for consultants to effectively communicate
with clients, understand their needs, and collaborate with different teams.
15) In the context of knowledge, skill, and characteristics requirements for job positions in
the IS industry, a network administrator must have in-depth knowledge of one or more
programming languages.
Answer: False
Rationale:
While programming knowledge can be beneficial for a network administrator, it is not
typically a primary requirement for the role. Network administrators primarily focus on the
configuration, maintenance, and troubleshooting of network infrastructure and systems rather
than developing software applications.
16) Aligning information systems with organizational strategy is a one-time process.
Answer: False
Rationale:
Aligning information systems with organizational strategy is an ongoing process that requires
regular assessment and adjustments. Organizational strategies evolve over time in response to
changes in the business environment, market conditions, and technological advancements,
necessitating continuous alignment of IS to support the evolving strategic goals.
17) As strategies change, as the organization merges with other organizations, as divisions are
sold, IS must evolve along with the organization.
Answer: True
Rationale:

Changes in organizational strategies, mergers, acquisitions, or divestitures often require
corresponding adjustments and adaptations in information systems to support the evolving
needs and goals of the organization. Failure to evolve IS along with organizational changes
can result in inefficiencies, redundancies, and mismatches between technology and business
objectives.
18) Adapting IS to new versions of business processes is a quick process.
Answer: False
Rationale:
Adapting information systems to new versions of business processes typically requires
thorough analysis, planning, development, testing, and implementation phases, which can be
time-consuming depending on the complexity of the changes. Rushing the adaptation process
can lead to errors, disruptions, and negative impacts on business operations.
19) The chief information officer is the representative for IS and IT issues within the
executive staff.
Answer: True
Rationale:
The chief information officer (CIO) holds a senior executive position responsible for
overseeing the management, implementation, and alignment of information systems and
technology with the organization's strategic goals. As such, the CIO serves as the primary
representative for IS and IT matters within the executive leadership team.
20) When considering a merger, it is important that the company consider integration of
information systems in the merged entities.
Answer: True
Rationale:
Mergers involve combining the operations, processes, and systems of two or more
organizations, making the integration of information systems crucial for ensuring seamless
business operations, data consistency, and synergy realization. Neglecting the integration of
information systems can lead to inefficiencies, data silos, and operational disruptions.

21) It is the chief information officer's responsibility to establish and communicate IS
priorities to the IS department, while the responsibility for enforcement rests with the chief
executive officer.
Answer: False
Rationale:
While the chief information officer (CIO) is responsible for establishing and communicating
IS priorities to the IS department, the responsibility for enforcement typically lies with the
CIO as well. The CIO oversees the execution of IS strategies, projects, and initiatives,
ensuring alignment with organizational goals and objectives.
22) A steering committee is a group of senior managers from the major business functions
that works with the chief information officer to set the IS priorities and decide among major
IS projects and alternatives.
Answer: True
Rationale:
A steering committee composed of senior managers from various business functions
collaborates with the chief information officer (CIO) to prioritize IS initiatives, allocate
resources, and make decisions regarding major IS projects and alternatives. This collaborative
approach ensures that IS investments align with business needs and objectives.
23) The steering committee serves an important communication function between department
managers and users of IS.
Answer: False
Rationale:
While the steering committee plays a crucial role in setting IS priorities and making
decisions, its primary function is not communication between department managers and IS
users. Instead, the steering committee focuses on strategic planning, resource allocation, and
governance of IS initiatives.
24) The steering committee provides a forum for users to express their needs, frustrations,
and other issues they have with the IS department.
Answer: True

Rationale:
The steering committee often serves as a forum where users can voice their concerns, provide
feedback, and express their needs related to information systems. This direct engagement
with stakeholders helps the committee gain insights into user requirements and challenges,
facilitating better decision-making and prioritization of IS projects.
25) The CEO and other members of the executive staff usually set up the steering committee's
schedule and agenda.
Answer: False
Rationale:
While the CEO and executive staff may have input into the overall direction and objectives of
the steering committee, the scheduling and agenda-setting are typically managed by the
committee itself or by the chief information officer (CIO) in collaboration with committee
members. This ensures that the agenda reflects the strategic priorities and concerns of the
organization regarding information systems.
26) The IS department determines the membership of a steering committee.
Answer: False
Rationale:
Typically, the membership of a steering committee is determined by senior management or
executive leadership, with input from various stakeholders including the IS department. The
composition of the steering committee often includes senior managers from different business
functions to ensure diverse perspectives and alignment with organizational goals.
27) Outsourcing is the process of hiring another organization to perform a service.
Answer: True
Rationale:
Outsourcing involves contracting with external organizations or service providers to perform
specific business functions or services that were traditionally handled internally. This can
include IT services, customer support, manufacturing, and more.
28) Outsourcing saves direct management time but not indirect management time.

Answer: False
Rationale:
Outsourcing can save both direct and indirect management time. By delegating certain tasks
or functions to external service providers, organizations can free up internal resources,
streamline processes, and focus on core business activities, thereby saving both direct and
indirect management time.
29) Outsourcing does not cap financial risk.
Answer: False
Rationale:
Outsourcing can help mitigate financial risk by providing cost predictability through fixed
contracts or service-level agreements (SLAs). Additionally, outsourcing allows organizations
to avoid large upfront investments in infrastructure, technology, or personnel, thereby
reducing financial risk associated with capital expenditures.
30) By outsourcing IS, organizations reduce risks of implementation.
Answer: True
Rationale:
Outsourcing information systems (IS) can reduce implementation risks by leveraging the
expertise and experience of external service providers. These providers often have specialized
knowledge, tools, and resources to efficiently implement IS projects, thereby mitigating risks
such as delays, cost overruns, and quality issues.
31) Once a company has chosen a vendor, further risk management is up to that vendor.
Answer: True
Rationale:
After selecting a vendor, the responsibility for managing risks associated with the outsourced
services primarily falls on the vendor. However, the client organization still retains oversight
and may participate in risk management activities through monitoring, performance
evaluations, and contract management.
32) The acquisition and operation of hardware infrastructure cannot be outsourced.

Answer: False
Rationale:
The acquisition and operation of hardware infrastructure can be outsourced through
arrangements such as infrastructure as a service (IaaS) or cloud computing. In these models,
the hardware infrastructure is provided and managed by external service providers, allowing
organizations to focus on using the infrastructure rather than managing it.
33) Acquiring licensed software is a form of outsourcing.
Answer: True
Rationale:
Acquiring licensed software involves purchasing the right to use software developed by
another organization, which can be considered a form of outsourcing. The organization relies
on the software vendor to maintain and support the software, thereby outsourcing certain
aspects of software development and maintenance.
34) In case of software as a service, hardware and both operating system and application
software are leased.
Answer: True
Rationale:
In software as a service (SaaS) models, organizations lease access to both the application
software and the underlying hardware infrastructure from the service provider. This allows
organizations to use software applications over the internet without having to manage the
hardware or software infrastructure locally.
35) When the vendor becomes the de facto sole source, with high competitive pressure, it
might decrease its prices.
Answer: False
Rationale:
When a vendor becomes the sole source with high competitive pressure, it may actually
increase prices due to reduced competition. In such situations, the vendor may have more

leverage to negotiate higher prices or impose unfavorable terms, leading to increased costs
for the client organization.
36) Outsourcing risk does not concern ending the agreement.
Answer: False
Rationale:
Ending the outsourcing agreement is a significant concern related to outsourcing risk.
Organizations must consider the potential impacts, costs, and challenges associated with
terminating the agreement, including transitioning services back in-house or transferring
them to a new provider.
37) One of the major outsourcing risk concerns ending the agreement, if outsource vendor's
employees have gained significant knowledge of the company.
Answer: True
Rationale:
If employees of the outsourcing vendor have gained significant knowledge of the client
organization's processes, systems, or proprietary information, ending the outsourcing
agreement may pose a risk of data breaches, intellectual property theft, or disruption to
business operations.
38) Parting from an outsource vendor does not present any risks to the organization.
Answer: False
Rationale:
Parting ways with an outsourcing vendor can present various risks to the organization,
including operational disruptions, loss of institutional knowledge, transition challenges, and
potential legal or contractual disputes. Organizations must carefully manage the transition
process to mitigate these risks effectively.
39) It may become infeasible in terms of time and money to consider moving to another,
better, lower-cost vendor.
Answer: True
Rationale:

Transitioning from one outsourcing vendor to another can be complex, time-consuming, and
costly, especially if the new vendor requires significant customization, integration, or
training. In some cases, the switching costs may outweigh the potential benefits of moving to
a better or lower-cost vendor.
40) Not just financial concerns but even time and events could force a company to decide to
outsource.
Answer: True
Rationale:
Organizations may decide to outsource not only due to financial considerations but also in
response to time constraints, resource limitations, technological advancements, market
changes, or strategic priorities. Outsourcing can provide access to specialized skills,
scalability, flexibility, and faster time-to-market, among other benefits, which may drive the
decision to outsource.
41) Users should report all IS problems, no matter how trivial, to the IS department.
Answer: False
Rationale:
While it's important for users to report significant IS problems to the IS department promptly,
minor issues that do not significantly impact productivity or security may not require
immediate attention. Users should exercise judgment in determining which problems warrant
reporting, balancing the need for support with the IS department's capacity to address issues
efficiently.
42) IS users have the right to participate in requirements meetings for new applications that
they will use and for major changes to applications that they currently use, but this right
cannot be delegated to others.
Answer: False
Rationale:
IS users typically have the right to participate in requirements meetings for applications they
will use or for major changes to existing applications. However, this right can often be

delegated to designated representatives or subject matter experts who can effectively
communicate user needs and requirements to the IS department.
43) It is reasonable for IS users to expect to receive repetitive training and support for the
same issue.
Answer: False
Rationale:
It is not reasonable for IS users to expect repetitive training and support for the same issue if
the issue has been adequately addressed and resolved previously. Users should make an effort
to learn from previous training and support interactions to minimize the recurrence of similar
issues in the future.
44) IS users have a responsibility to follow security and backup procedures.
Answer: True
Rationale:
IS users play a crucial role in maintaining the security and integrity of information systems
by adhering to established security protocols, following best practices, and complying with
backup procedures. Failure to follow security and backup procedures can compromise data
confidentiality, integrity, and availability, leading to security incidents or data loss.
45) Unauthorized hardware and programs interfere with automated maintenance programs for
upgrading your computer.
Answer: True
Rationale:
Unauthorized hardware and programs can interfere with automated maintenance programs by
introducing compatibility issues, conflicts, or security vulnerabilities. Automated
maintenance programs rely on a stable and controlled computing environment to perform
updates and upgrades efficiently, which can be disrupted by unauthorized changes to
hardware or software configurations.
46) Most organizations would have moved their internal hardware infrastructure to the cloud
by the next decade.

Answer: True
Rationale:
The trend towards cloud adoption has been steadily increasing as organizations seek to
leverage the scalability, flexibility, and cost-efficiency of cloud computing services. By the
next decade, it is reasonable to expect that a significant portion of organizations will have
migrated their internal hardware infrastructure to the cloud or adopted hybrid cloud solutions.
47) By 2023, companies will no more be concerned about security to keep data on their own,
privately controlled servers.
Answer: False
Rationale:
Security concerns related to data privacy, regulatory compliance, and cybersecurity threats
are likely to persist even as organizations increasingly leverage cloud services. While cloud
providers invest heavily in security measures, organizations still bear responsibility for
protecting sensitive data and ensuring compliance with relevant regulations, regardless of
where the data is stored.
48) Running a computer center for anyone other than a cloud vendor is not a promising
career.
Answer: True
Rationale:
The growing adoption of cloud computing has led to a shift in IT infrastructure management
away from traditional on-premises data centers towards cloud-based solutions. As a result,
career opportunities in managing on-premises data centers may become more limited
compared to roles focused on cloud services, virtualization, and software-defined
infrastructure.
49) We will most certainly see a fall in the use of mobile devices at work in the next 10 years.
Answer: False
Rationale:

Mobile devices have become essential tools for work productivity, communication, and
collaboration, and their usage is expected to continue growing in the next decade.
Advancements in mobile technology, increased mobility of the workforce, and the adoption
of remote work practices are likely to contribute to the continued prevalence of mobile
devices in the workplace.
50) Mobile devices will become more expensive with dynamic user experiences in the future.
Answer: False
Rationale:
Advances in technology often lead to increased efficiency and cost reduction rather than
higher expenses. While mobile devices may offer more dynamic user experiences in the
future, advancements in manufacturing processes, economies of scale, and competition in the
mobile device market are likely to drive down costs rather than increase prices.
Multiple Choice Questions
1) Developing, operating, and maintaining an organization's computing infrastructure is a
major function of the ________ department.
A) human resources
B) information systems
C) marketing
D) manufacturing
Answer: B
Rationale:
The information systems (IS) department is responsible for managing an organization's
computing infrastructure, which includes developing, operating, and maintaining various
information systems and technology solutions to support the organization's operations and
goals.
2) Which of the following is NOT a function of the information systems department?
A) conducting external audits

B) developing applications
C) protecting information assets
D) managing outsourcing relationships
Answer: A
Rationale:
Conducting external audits is typically not a function of the information systems department.
Instead, it falls under the purview of internal or external audit functions that assess
compliance with regulatory requirements, internal policies, and industry standards.
3) In organizations that operate significant nonaccounting information systems, the chief
information officer is most likely to report to the ________.
A) chief financial officer
B) chief executive officer
C) director of information services
D) chief technology officer
Answer: B
Rationale:
In organizations with significant nonaccounting information systems, the chief information
officer (CIO) typically reports directly to the chief executive officer (CEO) to ensure
alignment of information systems with strategic business objectives and effective
communication at the executive level.
4) If the primary information systems in an organization support only accounting and finance
activities, the CIO should most likely report to the ________.
A) CFO
B) CTO
C) COO
D) CEO

Answer: A
Rationale:
If the primary information systems in an organization support accounting and finance
activities, the CIO should report to the chief financial officer (CFO) to ensure that
information systems align with financial goals, regulatory compliance, and accounting
principles.
5) Which of the following is a function of the technology office in an organization's IS
department?
A) managing computing infrastructure
B) creating new information technologies
C) investigating new IS technologies
D) maintaining existing information systems
Answer: C
Rationale:
The technology office in an organization's IS department is responsible for investigating new
information systems technologies, evaluating their potential impact and relevance to the
organization, and making recommendations for adoption or integration into existing systems.
6) In the IS department, the ________ group manages computing infrastructure, including
individual computers, in-house server farms, networks, and communications media.
A) operations
B) technology
C) development
D) manufacturing
Answer: A
Rationale:
The operations group in the IS department is responsible for managing computing
infrastructure, which includes individual computers, in-house server farms, networks, and

communications media. This group ensures the reliability, availability, and performance of
the organization's IT infrastructure.
7) Which of the following statements is true of the operations group in an organization's IS
department?
A) It does not include system and network administrators.
B) It monitors the user experience and responds to user problems.
C) It manages all computing infrastructure except in-house server farms and communications
media.
D) Its size and structure depend on whether programs are developed in-house.
Answer: B
Rationale:
The operations group in an organization's IS department is responsible for monitoring the
user experience, responding to user problems, and ensuring the smooth operation of
information systems and technology infrastructure.
8) Which of the following is true about the "maintenance" of information systems?
A) It is undertaken by the IS department only if programs are developed in-house.
B) It includes monitoring the user experience and responding to user problems.
C) It involves fixing problems or adapting existing systems to support new features.
D) It is performed by operations, as it involves fixing problems with existing software.
Answer: C
Rationale:
Maintenance of information systems involves fixing problems, addressing software bugs,
implementing updates, and adapting existing systems to support new features or changing
business requirements. This responsibility typically falls within the realm of the development
group in the IS department.
9) In the IS department, the ________ group manages the process of creating new
information systems as well as maintaining existing information systems.

A) operations
B) technology
C) development
D) outsourcing relations
Answer: C
Rationale:
The development group in the IS department is responsible for managing the process of
creating new information systems (application development) as well as maintaining existing
information systems (software maintenance and enhancements).
10) If an organization does not develop programs in-house, then the development group of
the IS department will be staffed primarily by ________.
A) programmers and development personnel
B) PQA test engineers
C) business and systems analysts
D) technical writers
Answer: C
Rationale:
If an organization does not develop programs in-house, the development group of the IS
department will primarily consist of business and systems analysts who are responsible for
gathering requirements, analyzing business processes, and overseeing the development and
implementation of third-party or outsourced software solutions.
11) The purpose of the ________ group is to protect data and information assets by
establishing data standards and data management practices and policies.
A) data administration
B) data warehousing
C) data mining

D) data communication
Answer: A
Rationale:
Data administration focuses on managing the organization's data assets, including
establishing standards and policies for data management to ensure data integrity, security, and
accessibility.
12) A ________ works with users to determine system requirements, designs and develops
job descriptions and procedures, and helps determine test plans.
A) system analyst
B) business analyst
C) user support representative
D) network administrator
Answer: A
Rationale:
System analysts are responsible for analyzing user requirements, designing system solutions,
and assisting in the development and implementation of systems, including defining job roles
and procedures and contributing to test planning.
13) A ________ prepares program documentation, help-text, procedures, job descriptions,
and training materials.
A) system analyst
B) consultant
C) programmer
D) technical writer
Answer: D
Rationale:

Technical writers specialize in creating various types of documentation, including program
documentation, help-text, procedures, and training materials, to support users and system
implementation.
14) The responsibilities of a computer technician include ________.
A) installing software and repairing networks
B) managing and protecting databases
C) writing program documentation
D) advising the CIO on emerging technologies
Answer: A
Rationale:
Computer technicians are primarily responsible for installing software, troubleshooting
hardware and software issues, and maintaining computer systems, including repairing
networks.
15) The responsibilities of a ________ include advising the chief information officer,
executive group, and project managers on emerging technologies.
A) project manager
B) consultant
C) system analyst
D) chief technology officer
Answer: D
Rationale:
Chief Technology Officers (CTOs) are senior executives responsible for advising top
management and project managers on technological strategies and innovations to support the
organization's goals.
16) Which of the following is true about IS infrastructure?
A) Once developed, it is not possible to change IS infrastructure.

B) IS applications can be easily changed to meet organizational requirements.
C) Changing IS infrastructure is expensive and time-consuming.
D) Information systems need to change only when organizations merge.
Answer: C
Rationale:
Changing IS infrastructure typically involves significant costs and time due to the complexity
of technology integration and potential disruptions to existing systems and processes.
17) The ________ is the representative for IS and IT issues within the executive staff,
providing the IS perspective during discussions of problem solutions, proposals, and new
initiatives.
A) chief operating officer
B) chief technology officer
C) chief information officer
D) chief executive officer
Answer: C
Rationale:
The Chief Information Officer (CIO) serves as the top executive responsible for overseeing
the organization's information technology strategy and ensuring alignment between IT
initiatives and business objectives.
18) A(n) ________ is a group of senior managers from the major business functions that
works with the CIO to set IS priorities and decide among major IS projects and alternatives.
A) steering committee
B) discussion forum
C) IS department
D) network board
Answer: A

Rationale:
A steering committee is typically composed of senior managers from various business
functions who collaborate with the CIO to establish priorities, evaluate major IS projects, and
make decisions regarding IT investments and initiatives.
19) Which of the following is a function of the steering committee for an IS department?
A) writing program code
B) imparting training
C) adapting software
D) setting IS priorities
Answer: D
Rationale:
The primary function of the steering committee is to set IS priorities, allocate resources, and
make decisions regarding major IS projects and initiatives in alignment with the
organization's strategic goals.
20) Which of the following statements is true about the steering committee of an IS
department?
A) It serves an important communication function between the company and its clients.
B) Its membership is determined by the IS department.
C) Its schedule and agenda are set up by the CEO and other members of the executive staff.
D) Its meetings are conducted by the IS department.
Answer: D
Rationale:
The steering committee meetings are typically organized and conducted by the IS department,
which coordinates the agenda, invites members, and facilitates discussions related to IS
priorities and projects.
21) ________ is the process of hiring another organization to perform a service.

A) Merging
B) Outsourcing
C) Headhunting
D) Diversifying
Answer: B
Rationale:
Outsourcing involves contracting with a third-party organization to perform specific tasks or
services on behalf of the hiring organization, which can include functions such as IT services,
customer support, or manufacturing.
22) One of the reasons outsourcing is undertaken is to ________.
A) reduce an organization's control over functions
B) increase costs for the outsourcing vendor
C) cap an organization's financial exposure
D) enhance management's focus on nonessential functions
Answer: C
Rationale:
Outsourcing can help organizations limit their financial exposure by establishing fixed costs
for services, allowing for better budgetary predictability and risk mitigation.
23) Which of the following is true about outsourcing?
A) It increases budgetary instability due to the level of risk involved.
B) It saves both direct and indirect management time.
C) It creates diseconomies of scale.
D) It guarantees a higher level of quality than that provided in-house.
Answer: B
Rationale:

Outsourcing can save management time by delegating tasks to specialized service providers,
allowing the organization to focus on core competencies and strategic initiatives.
24) Outsourcing gathers all of the possible risks into the risk of choosing the right ________.
A) steering committee
B) sales team
C) technology
D) vendor
Answer: D
Rationale:
The success of outsourcing largely depends on selecting the right vendor, as they will be
responsible for delivering the outsourced services. Choosing the wrong vendor can lead to
various risks and challenges for the organization.
25) International outsourcing companies like Amazon.com are particularly advantageous as
they provide ________.
A) software licenses
B) enterprise applications
C) customer support
D) hardware infrastructure
Answer: C
Rationale:
International outsourcing companies often offer customer support services, which can be
advantageous for organizations outsourcing tasks such as IT support or helpdesk services to
handle customer inquiries and technical issues.
26) ________ is a form of outsourcing.
A) Buying off-the-shelf software
B) Customizing information systems

C) Acquiring licensed software
D) Updating data standards
Answer: C
Rationale:
Acquiring licensed software from third-party vendors is a form of outsourcing, as it involves
relying on external providers for software solutions rather than developing or maintaining
them in-house.
27) Which of the following is a form of hardware outsourcing?
A) acquiring licensed products
B) IaaS cloud hosting
C) SaaS
D) Web storefronts
Answer: B
Rationale:
Infrastructure as a Service (IaaS) cloud hosting involves outsourcing hardware infrastructure,
such as servers and storage, to third-party providers who manage and maintain the physical
hardware and associated resources.
28) Which of the following is an outsourcing alternative, in which hardware and both
operating system and application software are leased?
A) licensed software
B) IaaS cloud hosting
C) software as a service (SaaS)
D) Web storefronts
Answer: C
Rationale:

Software as a Service (SaaS) is an outsourcing model where both the application software
and the underlying hardware and operating system are leased from a third-party provider,
offering a complete software solution hosted and managed externally.
29) Which of the following is an example of a company that offers SaaS?
A) Salesforce.com
B) PeopleSoft
C) Electronic Data Systems
D) Epicor
Answer: A
Rationale:
Salesforce.com is a well-known example of a company that provides Software as a Service
(SaaS), offering cloud-based customer relationship management (CRM) software to
businesses.
30) In 2005, Marriott International chose Hewitt Associates to handle its human resources
needs for the next 7 years. This is an example of ________ outsourcing.
A) network
B) software
C) business function
D) application
Answer: C
Rationale:
This scenario exemplifies business function outsourcing, where Marriott International
outsourced its human resources needs to Hewitt Associates, relying on them to manage HR
functions such as payroll, benefits administration, and employee services.
31) When a company outsources a system, control over prioritizing fixes for software failures
and problems belongs to the ________.
A) CTO

B) vendor
C) hiring organization
D) CIO
Answer: B
Rationale:
When a system is outsourced, the responsibility for fixing software failures and problems
typically lies with the vendor who provided the outsourced service. They are contractually
obligated to address and prioritize fixes based on the terms of the outsourcing agreement.
32) Which of the following is a risk of outsourcing IS/IT functions?
A) It gives undue authority to the CIO in the executive team.
B) It provides the hiring organization with too many choices.
C) It involves the potential loss of intellectual capital.
D) It enables the vendor to gain economies of scale.
Answer: C
Rationale:
Outsourcing IS/IT functions may involve sharing sensitive intellectual property or knowledge
with external vendors, which could pose a risk of loss or leakage of intellectual capital,
especially if not adequately protected through contracts and security measures.
33) As an IS user, you have a right to a secure computing environment. This means that
________.
A) the organization should protect your computer and its files
B) you should protect the organization's computers and files
C) you should inform the IS about any software upgrades
D) you will never face a network problem
Answer: A
Rationale:

Users have the right to expect that the organization will take measures to protect their
computers and files from security threats, ensuring a secure computing environment to
safeguard sensitive information and prevent unauthorized access or data breaches.
34) Which of the following is a right of users of information systems?
A) installing programs and applications of their choice
B) making hardware modifications when desired
C) receiving effective training according to their requirements
D) obtaining the configuration of their choice
Answer: C
Rationale:
Users have the right to receive effective training according to their requirements to ensure
they can effectively utilize information systems and perform their job duties efficiently.
35) Which of the following is generally a responsibility of users of information systems?
A) reporting even trivial problems
B) replacing legacy systems with improved ones
C) upgrading data standards
D) following security and backup procedures
Answer: D
Rationale:
It is the responsibility of users of information systems to follow security and backup
procedures to protect data integrity, confidentiality, and availability, as well as to comply with
organizational policies and regulations.
36) Which of the following is true about users of information systems?
A) They have a responsibility to protect their computers from viruses by installing protection
software.
B) They must ensure the availability of reliable and secure Internet connections.

C) They must learn standard techniques and procedures for the applications they use.
D) They must learn to install hardware and software.
Answer: C
Rationale:
Users of information systems are generally expected to learn standard techniques and
procedures for the applications they use to effectively utilize software tools and maximize
productivity within the organization.
37) Users should not bother IS personnel for trivial issues, so they have a responsibility to
________.
A) learn basic computer skills
B) protect their data
C) install security programs by themselves
D) make necessary hardware modifications
Answer: A
Rationale:
Users have a responsibility to learn basic computer skills to troubleshoot minor issues
independently and minimize unnecessary disruptions to IS personnel, enabling them to focus
on more critical tasks and support needs.
38) Which of the following is true about the changes and developments foreseen for 2023?
A) Licensed, off-the-shelf software will become less configurable, less adaptable, and less
flexible.
B) Most organizations will move their internal hardware infrastructure into the cloud.
C) Better-skilled employees will be needed to adapt software to increasingly unique
organizational needs.
D) Small computing devices will lose their popularity and become more expensive.
Answer: B

Rationale:
The trend toward moving internal hardware infrastructure into the cloud is anticipated to
continue, driven by factors such as scalability, cost efficiency, and accessibility, making cloud
hosting a preferred option for many organizations in 2023 and beyond.
Essay Questions
1) List the major functions of the IS department.
Answer: The major functions of the IS department are as follows:
• Plan the use of IS to accomplish organizational goals and strategy.
• Develop, operate, and maintain the organization's computing infrastructure.
• Develop, operate, and maintain enterprise applications.
• Protect information assets.
• Manage outsourcing relationships.
2) Define CIO. Describe the CIO's typical reporting relationships.
Answer: The title of the principal manager of the IS department varies from organization to
organization. A common title is chief information officer, or CIO. The CIO, like other senior
executives, reports to the chief executive officer (CEO), though sometimes these executives
report to the chief operating officer (COO), who, in turn, reports to the CEO. This is typically
the case in organizations such as manufacturers that operate significant nonaccounting
information systems. In some companies, the CIO reports to the chief financial officer (CFO).
This reporting arrangement might make sense if the primary information systems support
only accounting and finance activities.
3) Define CTO and describe the typical responsibilities of a CTO.
Answer: An individual called the chief technology officer, or CTO, often heads the
technology group in an IS department. The CTO evaluates new technologies, new ideas, and
new capabilities and identifies those that are most relevant to the organization. The CTO's job
requires deep knowledge of information technology and the ability to envision and innovate
applications in the organization.

4) Name the four groups found in a typical IS department and explain the major
responsibilities of each.
Answer: Most IS departments include a technology office that investigates new information
systems technologies and determines how the organization can benefit from them. Operations
manages the computing infrastructure, including individual computers, in-house server farms,
networks, and communications media. This group includes system and network
administrators. An important function for this group is to monitor the user experience and
respond to user problems. The development group manages the process of creating new
information systems as well as maintaining existing information systems. The outsourcing
relations group exists in organizations that have negotiated outsourcing agreements with
other companies to provide equipment, applications, or other services.
5) Explain the major IS planning functions.
Answer: The major IS planning functions are:
• Align information systems with organizational strategy—The purpose of an information
system is to help the organization accomplish its goals and objectives. In order to do so, all
information systems must be aligned with the organization's competitive strategy.
Maintaining alignment between IS direction and organizational strategy is a continuing
process. As strategies change, as the organization merges with other organizations, as
divisions are sold, IS must evolve along with the organization.
• Communicate IS issues to executive group—The CIO is the representative for IS and IT
issues within the executive staff. The CIO provides the IS perspective during discussions of
problem solutions, proposals, and new initiatives.
• Develop priorities and enforce them within the IS department—The CIO must ensure that
priorities consistent with the overall organizational strategy are developed and then
communicated to the IS department. At the same time, the CIO must also ensure that the
department evaluates proposals and projects for using new technology in light of those
communicated priorities.
• Sponsor the steering committee—A steering committee is a group of senior managers from
the major business functions that works with the CIO to set the IS priorities and decide
among major IS projects and alternatives.

6) Describe a steering committee and explain the CIO's role with regard to it.
Answer: A steering committee is a group of senior managers from the major business
functions that works with the CIO to set the IS priorities and decide among major IS projects
and alternatives. The steering committee serves an important communication function
between IS and the users. In the steering committee, information systems personnel can
discuss potential IS initiatives and directions with the user community. At the same time, the
steering committee provides a forum for users to express their needs, frustrations, and other
issues they have with the IS department.
Typically, the IS department sets up the steering committee's schedule and agenda and
conducts the meetings. The CEO and other members of the executive staff determine the
membership of the steering committee.
7) What is outsourcing? Explain the management advantages of outsourcing.
Answer: Outsourcing is the process of hiring another organization to perform a service. Its
management advantages are:
• Obtain expertise—Outsourcing can be an easy way to gain expertise. Developing expertise
is often expensive, and may not be in the company's strategic direction. The organization
might choose to hire a specialist company to perform this service.
• Avoid management problems—outsourcing helps in avoiding the management problems
that rise due to hiring and allotting tasks that require specific skills.
• Free management time—Some companies choose to outsource to save management time
and attention. Outsourcing saves both direct and indirect management time.
8) How does outsourcing help reduce costs?
Answer: With outsourcing, organizations can obtain part-time services. Another benefit of
outsourcing is to gain economies of scale. If a number of organizations outsource to the same
vendor, then that vendor can make all of the adjustments once, and the cost of the change can
be amortized over all of them (thus lowering the cost that the vendor must charge).
9) How does outsourcing facilitate risk reduction?
Answer: Outsourcing caps financial risk and leads to greater budgetary stability. It can reduce
risk by ensuring a certain level of quality, or avoiding the risk of having substandard quality.

Hiring an outside vendor reduces the risk of picking the wrong hardware or the wrong
software, using the wrong network protocol, or implementing tax law changes incorrectly.
Outsourcing gathers all of these risks into the risk of choosing the right vendor. Once the
company has chosen the vendor, further risk management is up to that vendor.
10) Describe the different outsourcing alternatives for hardware, software, data, and
procedures.
Answer: Organizations have found hundreds of different ways to outsource information
systems and portions of information systems.
Some organizations outsource the acquisition and operation of computer hardware. Electronic
Data Systems (EDS) has been successful for more than 30 years as an outsource vendor of
hardware infrastructure.
Acquiring licensed software is another form of outsourcing. Rather than develop the software
in-house, an organization licenses it from another vendor. Such licensing allows the software
vendor to amortize the cost of software maintenance over all of the users, thus reducing that
cost for all users.
Software as a service (SaaS) is another outsourcing alternative, in which hardware and both
operating system and application software are leased. Salesforce.com is a typical example of
a company that offers SaaS.
Another outsourcing alternative is to outsource an entire system. PeopleSoft (now owned by
Oracle) attained prominence by providing the entire payroll function as an outsourced
service. In such a solution, the vendor provides hardware, software, data, and some
procedures. The company need provide only employee and work information; the payroll
outsource vendor does the rest.
11) Describe the loss of control associated with outsourcing.
Answer:
• Vendor in driver's seat—Each outsource vendor has methods and procedures for its service.
The hiring organization and its employees will have to conform to those procedures.
• Technology direction—The outsource vendor chooses the technology that it wants to
implement. If the vendor, for some reason, is slow to pick up on a significant new technology,
then the hiring organization will be slow to attain benefits from that technology. An

organization can find itself at a competitive disadvantage because it cannot offer the same IS
services as its competitors.
• Potential loss of intellectual capital—Another concern is a potential loss of intellectual
capital. The company may need to reveal proprietary trade secrets, methods, or procedures to
the outsource vendor's employees.
• Product fixes, enhancements in wrong priority—Quality vendors track software failures and
problems and fix them according to a set of priorities. When a company outsources a system,
it no longer has control over prioritizing those fixes. Such control belongs to the vendor. A fix
that might be critical to the organization might be of low priority to the outsource vendor.
• Vendor management, direction, or identity changes—The outsource vendor may change
management, adopt a different strategic direction, or be acquired. When any of those changes
occur, priorities may change, and an outsource vendor that was a good choice at one time
might be a bad fit after it changes direction. It can be difficult and expensive to change an
outsource vendor when this occurs.
• CIO may become superfluous—When users need a critical service that is outsourced, the
CIO must turn to the vendor for a response. In time, users learn that it is quicker to deal
directly with the outsource vendor, and soon the CIO is out of the communication loop. At
that point, the vendor has essentially replaced the CIO, who has become a figurehead.
12) Explain how the benefits of outsourcing are outweighed by its long-term costs.
Answer: Outsourcing can appear too good to be true. In fact, it can be too good to be true.
• High unit cost, forever—Although a fixed cost does indeed cap exposure, it also removes
the benefits of economies of scale.
• Paying for someone else's mismanagement—An organization can find itself paying for
another organization's mismanagement or may suffer the consequences of poor management,
such as lost data.
• In time, outsource vendor is de facto sole source—The outsource vendor may change its
pricing strategy over time. Initially, an organization obtains a competitive bid from several
outsource vendors. However, as the winning vendor learns more about the business and as
relationships develop between the organization's employees and those of the vendor, it

becomes difficult for other firms to compete for subsequent contracts. The vendor becomes
the de facto sole source and, with little competitive pressure, might increase its prices.
13) Explain the risks associated with ending an outsourcing agreement.
Answer:
• Critical knowledge in minds of vendors, not employees—The outsource vendor's employees
have gained significant knowledge of the company. They know the server requirements in
customer support, they know the patterns of usage, and they know the best procedures for
downloading operational data into the data warehouse. Consequently, lack of knowledge will
make it difficult to bring the outsourced service back in-house.
• Expensive and risky to change vendors—Because the vendor has become so tightly
integrated into the business, parting company can be exceedingly risky. Because of such risk,
the company must invest considerable work, duplication of effort, management time, and
expense to change to another vendor.
14) List any four rights of users of information systems.
Answer: (Students may list any four rights.)
Users of information systems have a right to:
• Computer hardware and programs that allow them to perform their jobs proficiently
• Reliable network and Internet connections
• A secure computing environment
• Protection from viruses, worms, and other threats
• Contribute to requirements for new system features and functions
• Reliable systems development and maintenance
• Prompt attention to problems, concerns, and complaints
• Properly prioritized problem fixes and resolutions
• Effective training
15) List any four responsibilities of users of information systems.
Answer: (Students may list any four responsibilities.)

Users of information systems have a responsibility to:
• Learn basic computer skills
• Learn standard techniques and procedures for the applications they use
• Follow security and backup procedures
• Protect their password(s)
• Use computer resources according to the employer's computer use policy
• Make no unauthorized hardware modifications
• Install only authorized programs
• Apply software patches and fixes when directed to do so
• When asked, devote the time required to respond carefully and completely to requests for
requirements for new system features and functions
• Avoid reporting trivial problems

Test Bank for Using MIS
David M. Kroenke, Randall J. Boyle
9780133029673, 9780135191767, 9780134106786, 9780138132484, 9780136100751, 9780134606996

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