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Accounting Information Systems, 13e (Romney/Steinbart)

Chapter 21 AIS Development Strategies


21.1 Describe how organizations purchase application software, vendor services, and hardware.
1) Identify the statement below that is false with regards to the development of an AIS.
A) A newly designed AIS always meets user needs for a time period.
B) Changes to the AIS are often difficult to make after requirements have been frozen into
specifications.
C) The development process can take so long that the system no longer meets company needs.
D) Users are sometimes unable to specify their needs adequately.
Answer: A
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytic
2) When canned software is used for systems acquisition, the conceptual design phase of the
SDLC
A) becomes a make-or-buy decision.
B) is combined with the physical design phase.
C) is eliminated.
D) is unchanged.
Answer: A
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytic
3) When canned software is used for systems acquisition, the physical design phase of the SDLC
A) does not involve designing and coding, although modifications may still need to be made.
B) is combined with the conceptual design phase.
C) is eliminated.
D) is unchanged.
Answer: A
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytic

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4) When canned software is used for systems acquisition, the implementation and conversion
phase of the SDLC does not
A) involve the documentation step.
B) require the company to have trained IS personnel.
C) require the develop and test software step.
D) include A and C above.
Answer: D
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytic
5) When canned software is used for systems acquisition, the maintenance aspect of the
operations and maintenance phase of the SDLC
A) is more costly.
B) is not necessary and is eliminated.
C) is usually the responsibility of the vendor.
D) requires trained personnel.
Answer: C
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytic
6) When a systems vendor provides both the software and hardware needed to run a system as a
package, this is known as
A) a turnkey system.
B) cloud computing.
C) an application service package.
D) canned software.
Answer: A
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytic
7) Identify one major drawback that is frequently associated with canned software.
A) A commercial software development company develops it.
B) Canned software is sold on the open market to a broad range of users with similar
requirements.
C) Canned software may not meet all of a company's information or data processing needs.
D) Canned software may offer easy availability and lower costs.
Answer: C
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytic

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8) Which statement is true regarding canned software and the SDLC?


A) Canned software cannot be modified to meet unique user needs.
B) Companies that buy, rather than develop, AIS software can still follow the SDLC process.
C) Most canned software meets all of a company's information or data processing needs.
D) The SDLC process does not apply to purchasing canned software.
Answer: B
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytic
9) The reasons for ________ are to simplify the decision-making process, reduce errors, provide
time savings, and avoid potential disagreements.
A) leasing
B) outsourcing
C) prototyping
D) sending out a request for a proposal
Answer: D
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytic
10) When a request for proposal (RFP) is solicited based on ________, total costs are usually
lower and less time is required for vendor preparation and company evaluation.
A) specific equipment needs
B) general software needs
C) exact hardware and software specifications
D) None of the above is correct.
Answer: C
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytic
11) Information provided to potential vendors on a Request For Proposal should include
A) a budget for software and hardware.
B) detailed specifications for the AIS.
C) a timeframe required for completion of the project.
D) All of the above are correct.
Answer: B
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytic

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12) ________ is a performance evaluation approach that evaluates systems based on the
weighted score of criteria and points.
A) Benchmarking
B) Point scoring
C) Prototyping
D) Requirements drafting
Answer: B
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytic
13) ________ and ________ are approaches to evaluating vendor proposals that do not
incorporate dollar estimates of costs or benefits.
A) Benchmark problem; point scoring
B) Point scoring; requirements drafting
C) Requirements drafting; benchmark problem
D) All methods mentioned above include cost information.
Answer: B
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytic
14) The more information a company provides vendors in its request for proposal, the better the
chances of receiving a system that meets the organization's requirements. Which of the below
statements identifies why errors may decrease?
A) All responses are in the same format and based on the same information.
B) Both parties possess the same expectations and pertinent information is captured in writing.
C) The chances of overlooking important factors are reduced.
D) The same information is provided to all vendors.
Answer: C
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytic
15) What is the first step a company should take when evaluating requests for proposals?
A) Carefully compare proposals against the proposed AIS requirements.
B) Determine how much of a given proposal meets the desired AIS requirements.
C) Eliminate proposals that are missing important information or fail to meet minimum
requirements.
D) Invite vendors to demonstrate their systems.
Answer: C
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytic

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16) The ________ method calculates and compares the processing times of different AIS to
compare system performance.
A) benchmark problem
B) mandatory requirements
C) point scoring
D) requirements costing
Answer: A
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytic
17) What is a drawback to using the requirement costing method of software and hardware
evaluation?
A) Dollar estimates of costs and benefits are not included.
B) Intangible factors such as reliability and vendor support are overlooked.
C) The weights and points used are assigned subjectively.
D) There is no drawback to using the requirements costing method.
Answer: B
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytic
18) Carmie Iria, the director of a systems project committee, has received management approval
for the implementation of a new accounting information system. After sending out an RFP to
multiple vendors, the committee settled on purchasing a system from Optibase, a vendor who
will provide the company with all of the required hardware and software. Carmie's committee
has opted to purchase
A) canned software.
B) a turnkey system.
C) an outsourced system.
D) cloud computing.
Answer: B
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytic

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19) Carmie Iria, the director of a systems project committee, has received management approval
for the implementation of a new accounting information system. After sending out an RFP to
multiple vendors, the committee settled on purchasing a system from Sysys, a vendor who will
provide a standard software package and post-sale technical support. Carmie's committee has
decided to go with
A) canned software.
B) a turnkey system.
C) an outsourced system.
D) an end-user developed system.
Answer: A
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytic
20) What is a benchmark problem?
A) a difficulty encountered when attempting to bring an accounting information system up to
industry best practices
B) a method used to compare the efficiency of alternative accounting information systems
C) the cost-benefit tradeoff defined by the relationship between increased costs and increased
benefits from a system
D) a method used to test the compatibility of a new accounting information system with existing
hardware and software
Answer: B
Objective: Learning Objective 1
Difficulty: Difficult
AACSB: Analytic
21) Which of the following is a method for comparing alternative vendor proposals for
development of an accounting information system when the vendors differ with regard to their
ability to meet the project criteria?
A) point scoring
B) resource clearing
C) requirements costing
D) multi-objective optimization
Answer: A
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytic

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22) Software as a Service (SaaS) refers to Web-based computing services provided by a(n)
A) application service provider (ASP).
B) Internet service provider (ISP).
C) end-user system (EUS).
D) help desk.
Answer: A
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytic
23) Describe the difficulties that could be encountered when developing an AIS.
Answer: Demand for development resources is very high and can backlog AIS projects for
several years. The development process can be lengthy. System developers may not understand
the company's business, and consequently the new system may not always meet user's needs. The
time taken to develop an AIS may make it obsolete when the new system is ready to launch.
Users may not be able to articulate their demands adequately, and therefore they may be
dissatisfied with the finished product. Changes to the AIS are difficult to make beyond a certain
point, so the AIS remains in a state of "perpetual development" and flux.
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytic
24) What are the three methods to obtain a new information system? What is a turnkey system?
Answer: The three methods to obtain a new information system are purchasing new software,
developing software in-house (either by development staff or by the system end-users
themselves), or hiring an outside company to create a system. A turnkey system is a software and
hardware package, which is complete and ready to be used "at the turn of a key." Vendors for
turnkey systems primarily specialize in a particular industry.
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytic
25) Explain the concept of an application service provider.
Answer: An application service provider (or ASP) is a third-party provider of software to
organizations. An ASP is Web-based, providing delivery of software to its clients over the
Internet. An organization that uses an ASP "rents" the software, thus eliminating the tasks of
buying, installing, and maintaining the software. Among the advantages to using this approach as
opposed to the outright purchase of software is a reduction of software costs and administrative
overhead, automated software upgrades, scalability as the organization itself grows, global
access to information, access to skilled IT personnel, and ability to focus on core competencies
rather than IT requirements.
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytic

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26) Identify the ways an organization can gain full advantage of using a Request For Proposal
(RFP).
Answer: The more information an organization provides in its RFP, the better its chances are of
receiving a system that meets its requirements. It is important to include detailed specifications
for the new AIS, including required applications, inputs, outputs, files, databases, frequency and
ways of updating files and creating queries, and any unique characteristics or requirements. It is
also essential that the RFP distinguishes between what are mandatory requirements and what are
"desirable but not essential" requirements.
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytic
27) What are the advantages and disadvantages of custom software and of canned software for
meeting application software needs?
Answer: Custom software: tailored to needs; potential competitive advantage; and better control
over the process: expensive; difficult to write; error prone; and time consuming. Canned
software: easy to acquire; fast to acquire; inexpensive; good documentation; updates are
inexpensive; and can be tested: not tailored to needs; not as efficient as custom software; does
not develop in-house expertise in creation; and developer may go out of business.
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytic
28) According to Deloitte & Touche, most chief information officers
A) do not expect to replace their current information systems.
B) prefer to replace their current information systems.
C) expect to replace their current information system(s) with commercially available packages.
D) expect to replace their current information system(s) with packages developed in-house.
Answer: C
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytic
29) Who is typically responsible for installing turnkey systems?
A) an organization's IT department
B) the vendor who provides the system
C) a third-party hired by the system vendor
D) Nobody. Turnkey systems install themselves.
Answer: B
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytic

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30) ________ are one example of a cloud computing solution.


A) Application service providers
B) Turnkey vendors
C) SDLC implementations
D) Canned software providers
Answer: A
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytic
31) Identify one of the benefits associated with procuring software from application service
providers.
A) lower cost
B) scalability
C) greater effectiveness
D) faster processing speed
Answer: A
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytic
32) When an organization seeks to modify canned software, it is best when ________ because
unauthorized modifications may make the program unreliable.
A) the vendor modifies the software
B) a firm changes its business processes, not the software
C) only programmers with software experience modify the software
D) all of the above
Answer: A
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytic
33) Moneka Jones is the CIO for Noela Incorporated. Moneka wants to replace the firm's
existing system, but wants to leave the technical issues to the vendor because she is not wellinformed on the latest technologies. When preparing an RFP, Moneka most likely should
A) disclose exact hardware and software specifications.
B) disclose specific performance objectives and requirements.
C) disclose general software requirements.
D) disclose general performance objectives and requirements.
Answer: B
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytic

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34) Moneka Jones is the CIO for Noela Incorporated. Moneka wants to replace the firm's
existing system. However, she wants to spend as little time as possible preparing and evaluating
RFPs. When preparing an RFP, Moneka should probably
A) disclose exact hardware and software specifications.
B) disclose specific performance objectives and requirements.
C) disclose general software requirements.
D) disclose general performance objectives and requirements.
Answer: A
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytic
21.2 Explain how information systems departments develop custom software.
1) Which approach systems acquisition is generally costly and labor-intensive?
A) canned software
B) custom software
C) modified software
D) turnkey software
Answer: B
Objective: Learning Objective 2
Difficulty: Easy
AACSB: Analytic
2) There are frequently many canned software packages are available. However, many
companies choose to develop their own software. Why?
A) An organization may have unique requirements that are not addressed by canned software
packages.
B) Canned software packages are often less expensive than software developed in house.
C) The organization's size and complexity necessitates the in-house development of software.
D) A and C above are correct.
Answer: D
Objective: Learning Objective 2
Difficulty: Easy
AACSB: Analytic

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3) Which of the following is not a guideline that should be used to select an outside, customsystem developer?
A) The outside developer should have an in-depth understanding of how the company conducts
its business.
B) The outside developer should have experience in the company's industry.
C) The outside developer should possess a good understanding of business in general.
D) The outside developer should be able to complete the system independently, without requiring
frequent contact to ask questions.
Answer: D
Objective: Learning Objective 2
Difficulty: Moderate
AACSB: Analytic
4) Firms should consider developing custom software only if
A) it will be used for critical functions like accounts receivable.
B) it will contribute to development of a significant competitive advantage.
C) the firm has the necessary expertise available in-house.
D) the available canned software is very expensive.
Answer: B
Objective: Learning Objective 2
Difficulty: Moderate
AACSB: Analytic
5) What guidelines should be followed when contracting with an outside developer to create
custom software?
Answer: Carefully select a developer by checking into references and inquiring about reputation
and past experiences from other organizations. Sign a contract with clearly defined areas of
responsibility for the developer. Plan and monitor each step by designing each step of the project
in detail, and making frequent checkpoints for monitoring the project. Maintain effective
communication with the developer. Control all costs and minimize cash outflow until the project
has been completed and is accepted.
Objective: Learning Objective 2
Difficulty: Easy
AACSB: Analytic
6) Discuss how an organization can develop custom software.
Answer: Custom software can be developed and written in-house. Many organizations develop
their own software because their requirements are unique or their size and complexity necessitate
the creation of a custom package. Specific applications or functions can often be developed inhouse by end-users. End-users can use spreadsheet or database software programs to create
reports, perform "what-if" analysis, prepare depreciation schedules, or prepare budgets.
Alternatively, third-party developers can be contracted to develop custom software for an
organization. Custom software should only be developed when it results in a distinct, competitive
advantage to the organization.
Objective: Learning Objective 2
Difficulty: Moderate
AACSB: Analytic
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7) Although Gillette uses canned software in its business operations, it does so with the intention
of creating a competitive advantage. Identify how Gillette aims to gain a greater competitive
advantage from using canned software.
A) from deciding how the software should be used
B) from deciding what software should be used
C) from the cost savings it gains by using canned software
D) from the reduced training associated with canned software
Answer: A
Objective: Learning Objective 2
Difficulty: Difficult
AACSB: Analytic
8) Why does Pepsi create most of the software it uses in business operations?
A) Pepsi does not trust canned software.
B) Using canned software actually cost Pepsi more than using custom software.
C) Pepsi could not find canned software sophisticated enough to meet its needs.
D) There is no canned software available in Pepsi's industry.
Answer: C
Objective: Learning Objective 2
Difficulty: Moderate
AACSB: Analytic
21.3 Explain how end users develop, use, and control computer-based information systems.
1) Which of the following is not an appropriate task end users to perform?
A) performing statistical analyses
B) preparing schedules and lists
C) retrieving information from databases
D) updating database records
Answer: D
Objective: Learning Objective 3
Difficulty: Moderate
AACSB: Analytic
2) What is the basic function of a help desk?
A) control access to corporate data
B) provide technical maintenance and support
C) train end users and assist with application development
D) All of the above are basic functions of a help desk.
Answer: D
Objective: Learning Objective 3
Difficulty: Difficult
AACSB: Analytic

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3) ________ refers to involving users in the development, control, and deployment of


information systems.
A) Amateur user computing (AUC)
B) Competitive intra-organization systems development approach (CIOSDA)
C) End-user computing (EUC)
D) Novice information systems development (NISD)
Answer: C
Objective: Learning Objective 3
Difficulty: Easy
AACSB: Analytic
4) Identify the system below that end users should not be allowed to develop.
A) a payroll processing program
B) a program that performs "what-if" statistical modeling
C) developing an application using prewritten software such as a spreadsheet or database system
D) preparing a schedule or list such as a depreciation schedule
Answer: A
Objective: Learning Objective 3
Difficulty: Easy
AACSB: Analytic
5) Identify one of the primary risks associated with end-user computing below.
A) IS personnel will not have enough work to do if users develop their own systems.
B) Systems that have not been adequately tested may be implemented.
C) System costs may skyrocket.
D) System development time may increase substantially.
Answer: B
Objective: Learning Objective 3
Difficulty: Easy
AACSB: Analytic
6) Which of the following about end-user computing is true?
A) System users know best what they need, so should be able to create their own applications.
B) End-users, while knowledgeable about their job, are not trained to create systems
applications, and should not be allowed to do so.
C) It is inefficient and costly to ask the IS department to create basic applications that only a few
users need to use.
D) In most companies, the IS department doesn't want end-users to create their own applications,
for fear IS won't have enough work to do.
Answer: A
Objective: Learning Objective 3
Difficulty: Moderate
AACSB: Analytic

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7) A second-line help desk operator would most likely


A) handle complicated queries requiring research.
B) provide callers with scripted answers.
C) use expert systems to quickly find answers.
D) None of the duties listed above pertain to second-line help desk personnel.
Answer: A
Objective: Learning Objective 3
Difficulty: Moderate
AACSB: Analytic
8) End-user computing is likely to result in a(n)
A) well tested system.
B) well documented system.
C) rapidly developed system.
D) efficient system.
Answer: C
Objective: Learning Objective 3
Difficulty: Easy
AACSB: Analytic
9) Where is the responsibility for the development of end-user computing applications typically
placed?
A) end users
B) help desk
C) Information Technology Services Department
D) programmers
Answer: A
Objective: Learning Objective 3
Difficulty: Easy
AACSB: Analytic
10) Describe the purposes of a help desk.
Answer: A help desk consists of analysts and technicians that encourage, support, coordinate,
and control end-user activities. Some of the duties and activities of the help desk includes the
following: Hot-line assistance to solve problems. Clearinghouse for information, coordination,
and assistance. Training, maintenance, and support center for the software and hardware.
Application development assistance center. Approval point for development and implementation
standards for hardware and software purchases, documentation and application testing, and
security issues. Controlling access to corporate data by using access matrix controls, etc.
Evaluating new end-user hardware and software products.
Objective: Learning Objective 3
Difficulty: Easy
AACSB: Analytic

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11) Describe end-user computing and the advantages and risks involved.
Answer: End-user computing is the hands-on development, use, and control of computer-based
information systems by users. The suitable applications are: Producing simple reports and
answers to one-time queries by accessing the company database. Sensitivity, statistical, or "whatif" analysis. Using spreadsheets or database software to analyze data. Preparing schedules and
lists such as depreciation schedule, accounts receivable aging, and loan amortizations. User
computing has seen an explosive growth because: Users realized that computers can be used to
meet more and more information needs. Increased access to data created many new uses and
needs for information. One prediction is that end-user computing may account for 75% to 95%
of all information processed in the near future. Advantages of end-user computing: The user is
involved in the creation, control, and implementation of the software; systems tend to meet user
needs; programs can be created timely; end-users creating programming can free up IS
resources; and programs tend to be versatile and easy to use. Disadvantages of end-user
computing: Logic and development errors; inadequately tested applications; inefficient systems;
poorly controlled and documented systems; systems incompatibilities; duplication of systems
and data; and wasted resources and increased costs.
Objective: Learning Objective 3
Difficulty: Moderate
AACSB: Analytic
12) End-user development is inappropriate for which types of systems?
A) systems that process a large number of transactions
B) systems that need to be developed rapidly
C) systems that must be easy to use
D) organizations that have large IT departments
Answer: A
Objective: Learning Objective 3
Difficulty: Moderate
AACSB: Analytic
13) Identify the system below that is likely to be most appropriate for end-user development.
A) an accounts receivable system
B) a general ledger system
C) an inventory system
D) a loan amortization spreadsheet program
Answer: D
Objective: Learning Objective 3
Difficulty: Moderate
AACSB: Analytic
14) True or False: The IT department should be given control of end-user computing (EUC).
Answer: FALSE
Objective: Learning Objective 3
Difficulty: Easy
AACSB: Analytic

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15) True or False: End-user computing can eliminate many of the analyst-programmer
communication problems associated with the traditional program development.
Answer: TRUE
Objective: Learning Objective 3
Difficulty: Easy
AACSB: Analytic
16) If recent trends in end-user computing (EUC) persist, EUC will represent ________ of all
information processing by the end of 2020.
A) 15% - 24%
B) 20% - 49%
C) 50% - 74%
D) 75% or more
Answer: D
Objective: Learning Objective 3
Difficulty: Moderate
AACSB: Analytic
17) Why are end-user created systems often poorly documented?
A) Users often do not know how to document systems properly.
B) Users often consider systems documentation to be unimportant.
C) Users often believe it is too expensive to properly document systems.
D) Users are often unaware they need to properly document systems.
Answer: B
Objective: Learning Objective 3
Difficulty: Moderate
AACSB: Analytic
18) Who should maintain control of access to date in a user-created system with proper controls?
A) end-users
B) management
C) the IT department
D) a help desk
Answer: D
Objective: Learning Objective 3
Difficulty: Moderate
AACSB: Analytic

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21.4 Explain why organizations outsource their information systems, and evaluate the benefits
and risks of this strategy.
1) How does outsourcing improve an organization's utilization of assets?
A) by allowing a company to completely eliminate its IS department, which will reduce its
payroll costs
B) by allowing the company to sell assets to outsourcers and improve their cash position
C) by eliminating the expense of keeping up with the latest technology and, thus, eliminate the
drain on cash reserves
D) Both B and C above are correct.
Answer: D
Objective: Learning Objective 4
Difficulty: Easy
AACSB: Analytic
2) Which of the following is not a benefit of outsourcing?
A) access to greater expertise and more advanced technology
B) greater control
C) improved development time
D) lower costs
Answer: B
Objective: Learning Objective 4
Difficulty: Moderate
AACSB: Analytic
3) The risk of losing a fundamental understanding of a company's AIS needs and the strategic
users of an AIS as a result of outsourcing is referred to as
A) focus reduction.
B) loss of control.
C) reduced competitive advantage.
D) unfulfilled goals.
Answer: C
Objective: Learning Objective 4
Difficulty: Moderate
AACSB: Analytic
4) Why might outsourcing cause employee resistance?
A) Outsourcing often allows a company to better use its assets and scarce resources.
B) Outsourcing can lower a company's overall IS costs.
C) Outsourcing often facilitates downsizing.
D) Outsourcing helps eliminate the peaks and valleys of system usage.
Answer: C
Objective: Learning Objective 4
Difficulty: Easy
AACSB: Analytic

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5) The unauthorized disclosure of sensitive information is an example of what risk associated


with outsourcing?
A) a locked-in system
B) a loss of control
C) a reduced competitive advantage
D) inflexibility
Answer: B
Objective: Learning Objective 4
Difficulty: Easy
AACSB: Analytic
6) Benathir Donathat, director of the project committee, has received approval from management
for implementation of a new accounting information system. After putting out an RFP, the
committee settled on a Web-based application service provider that will manage all hardware and
software required by the system, with fees based on usage. The committee decided to go with
A) canned software.
B) a turnkey system.
C) an outsourced system.
D) an end-user developed system.
Answer: C
Objective: Learning Objective 4
Difficulty: Easy
AACSB: Analytic
7) Sabella Cycles declared bankruptcy in 2013 and has since closed 5 outlets, or approximately
25% of its locations. Sabella needs to reduce the costs of operating the firm's information
systems. To accomplish this, Sabella might decide to
A) replace the existing system with one of a smaller scale.
B) customize the existing system.
C) outsource system operations.
D) purchase a canned software system.
Answer: C
Objective: Learning Objective 4
Difficulty: Moderate
AACSB: Reflective Thinking

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8) In which of the following cases is outsourcing likely to be the best solution to the firm's data
processing needs?
A) Peterson International is a trenchcoat wholesaler to retailers around the world. Sixty percent
of sales orders are taken during the months of August and September. Peterson needs a system to
manage online ordering and fulfillment.
B) Battlegoat Investment Strategies manages investors' portfolios and provides services to
wealthy customers. The firm needs a system that will pull together selected investment data from
a variety of sources and that allows account managers to prepare customized reports.
C) Yachtman Limited is in the business of buying businesses, managing them for a few years,
then selling them for a profit. The firm requires a flexible system that will allow it to manage the
types of businesses it controls.
D) Desalinas LLC, manages the construction of desalinization plants. It needs a system that will
allow it to manage the construction process from bid to billing.
Answer: A
Objective: Learning Objective 4
Difficulty: Difficult
AACSB: Reflective Thinking
9) Describe outsourcing and identify the two types of outsourcing agreements.
Answer: Outsourcing is the hiring of an outside company to handle all or part of a company's
data processing activities. There are two main types of outsourcing agreements: Mainframe
outsourcing and Client/server or desktop outsourcing. Mainframe outsourcing is when the
outsourcer buys the client's equipment, hires the client's employees, and operates on the client's
site or connects the system to the outsourcer's computer. Client/server or desktop outsourcing is
when a particular service, segment of business, function, or PC support is outsourced.
Objective: Learning Objective 4
Difficulty: Moderate
AACSB: Analytic

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10) Discuss how information system outsourcing can provide the organization with both a
business solution and asset management.
Answer: Many companies have come to view information system outsourcing as not merely an
IS solution but a true business solution. Outsourcing has become a plausible business solution
because it allows the organization to focus and put its concentration into its core competencies.
This transfer of IS responsibilities can be liberating to the organization, as it frees up more
resources to devote to the mainstay of its business efforts. The viewpoint is that a company
should be allowed to do what it does best; so the outsourcer is better at IS operations and
management, while the organization is better in its areas or core competencies. Many
organizations treat outsourcers as business partners, working closely to meet the strategic
business objectives of the organization. An additional benefit of IS outsourcing is asset
management. Many organizations tie up millions of dollars in their IS efforts, and the attempt to
keep up with technological improvements can create a steady drain on cash reserves and other
organizational resources. One way to significantly improve an organization's cash position and
reduce annual expenses is to sell off IS assets, or lease them to the outsourcing organization. This
can have positive benefits for both the organization and outsourcing vendor as well, as it helps
the organization with cash and expense management, and can provide an outsource vendor with
the equipment (and even people) it needs to properly service its client.
Objective: Learning Objective 4
Difficulty: Difficult
AACSB: Analytic
11) WorldWide Supermarket, a grocery store with 5,000 locations around the world surprised
financial markets by announcing that it was selling all of its computers to CompuService and
hiring the firm to operate and manage the supermarket's system. WorldWide Supermarket just
engaged in which type of outsourcing agreement?
A) a locked-in agreement
B) a mainframe agreement
C) a client/server agreement
D) a cloud computing agreement
Answer: B
Objective: Learning Objective 4
Difficulty: Moderate
AACSB: Analytic
12) All of the following are reasons a company might choose to outsource its systems operations
and maintenance except
A) increased flexibility.
B) increased innovation.
C) reduce costs.
D) foster competition.
Answer: B
Objective: Learning Objective 4
Difficulty: Moderate
AACSB: Analytic

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13) According to a survey discussed in your textbook, what percentage of outsourcing


experiences have been labeled as "disasters" by company executives?
A) 5%
B) 17%
C) 33%
D) 50%
Answer: B
Objective: Learning Objective 4
Difficulty: Difficult
AACSB: Analytic
14) Which or the following does not typically cause outsourcing failures?
A) lukewarm company buy-in
B) blind imitation of competitors
C) ill-defined outsourcing agreements
D) downsizing
Answer: D
Objective: Learning Objective 4
Difficulty: Moderate
AACSB: Analytic
21.5 Explain the principles and challenges of business process management.
1) Business Process Management views business processes as
A) strategic organizational assets.
B) a series of small tasks to be closely managed.
C) related activities that, once perfected, should be managed on an exception basis.
D) subsets of organizational strategy that should not be owned by any specific person or
department.
Answer: A
Objective: Learning Objective 5
Difficulty: Moderate
AACSB: Analytic
2) Which of the following is not an element of managing a business process "end to end"?
A) identifying process experts to oversee specific functions across units
B) designating a process owner
C) setting performance standards
D) establishing control and monitoring processes
Answer: A
Objective: Learning Objective 5
Difficulty: Moderate
AACSB: Analytic

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3) Which of the following is not true about business process management (BPM) and enterprise
resource planning (ERP) systems?
A) ERP systems encompass all functions and processes in an organization, but BPM systems are
implemented at process or unit levels in an organization.
B) BPM systems are process-centered, but ERP systems are data-centered.
C) Organizations can use both ERP and BPM systems at the same time.
D) ERP and BPM systems rely heavily technology for communication and coordination.
Answer: A
Objective: Learning Objective 5
Difficulty: Moderate
AACSB: Analytic
4) Which of the following is not one of the ways in which a Business Process Management
System can improve internal control?
A) Innovative technology allows access and authorization controls to be programmed at the
transaction level.
B) Documents or transactions that require approval can be electronically routed to a manager.
C) Process rules are used to alert users when actions must be taken.
D) All actions and processes are monitored and documented in a process log for periodic review.
Answer: A
Objective: Learning Objective 5
Difficulty: Difficult
AACSB: Analytic
5) Describe each of the four important principles underlying Business Process Management
(BPM).
Answer: Business processes can produce competitive advantages through innovative
processes and technology to respond to changing consumer, market and regulatory demands
before competitors are able to respond. Business processes must be managed end to end,
meaning a process owner should have responsibility to set performance standards, control and
monitor processes, and communicate with other functional units. Business processes should be
agile, which emphasizes continuous improvement and adaptability. Business processes must be
aligned with organizational strategy and needs to be effective and efficient.
Objective: Learning Objective 5
Difficulty: Moderate
AACSB: Analytic
6) True or False: Business process management (BPM) evolved from business process
reengineering (BPR) because BPR had such a high success rate that firms wanted to expand it to
cover all aspects of a firm's business process operations.
Answer: FALSE
Objective: Learning Objective 5
Difficulty: Easy
AACSB: Analytic

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7) Which of the following is a one-time event that can yield dramatic performance
improvements?
A) Business process reengineering (BPR)
B) Business process management (BPM)
C) Business process innovation (BPI)
D) Business process diagramming (BPD)
Answer: A
Objective: Learning Objective 5
Difficulty: Easy
AACSB: Analytic
8) Identify a key advantage of a business process management system (BPMS) as compared to
an event-based system.
A) ease of use
B) processing speed
C) cost
D) built in audit trail
Answer: D
Objective: Learning Objective 5
Difficulty: Moderate
AACSB: Analytic
21.6 Describe how prototypes are used to develop an AIS, and discuss the advantages and
disadvantages of doing so.
1) The basic premise of ________ is that it is easier for people to express what they like or
dislike about an existing system than to imagine what they would like in a system.
A) modified software
B) outsourcing agreements
C) prototyping
D) turnkey systems
Answer: C
Objective: Learning Objective 6
Difficulty: Easy
AACSB: Analytic
2) Which statement below regarding prototyping is false?
A) Prototypes are considered "first drafts," which are quickly built and intended to be discarded
when the real system is finished.
B) Developers who use prototyping still go through the systems development life cycle.
C) Prototypes help developers and end users make conceptual and physical design decisions.
D) Prototyping allows developers to condense and speed up parts of the analysis and design
phases.
Answer: A
Objective: Learning Objective 6
Difficulty: Moderate
AACSB: Analytic
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3) The first step in developing a prototype emphasizes


A) developing a good prototype into a fully functional system.
B) speed and low cost rather than efficiency of operation.
C) that users identify changes to be made in an iterative process.
D) what output should be produced rather than how it should be produced.
Answer: D
Objective: Learning Objective 6
Difficulty: Easy
AACSB: Analytic
4) Identify the system below where development would not likely benefit from treating a
prototype.
A) decision support systems
B) executive information systems
C) expert systems
D) systems that cross a number of organizational boundaries
Answer: D
Objective: Learning Objective 6
Difficulty: Moderate
AACSB: Analytic
5) Identify one disadvantage in prototyping.
A) Developers may shortchange the testing and documentation process.
B) Errors are likely to be detected and eliminated early in the development process.
C) Prototyping may be less costly than other approaches.
D) Prototyping usually produces a better definition of user needs than other approaches.
Answer: A
Objective: Learning Objective 6
Difficulty: Easy
AACSB: Analytic
6) Firms should consider preparing a software prototype if the software
A) will be used for a critical function like accounts receivable.
B) automates an unstructured or semi-structured task.
C) can be produced using expertise available in-house.
D) is available as a canned package.
Answer: B
Objective: Learning Objective 6
Difficulty: Difficult
AACSB: Analytic

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7) Firms should consider preparing a software prototype if the application


A) will be used for a critical function like inventory management.
B) automates a structured task.
C) can be produced using outside developers.
D) inputs and outputs are not clearly defined.
Answer: D
Objective: Learning Objective 6
Difficulty: Moderate
AACSB: Analytic
8) As part of the bidding process required for bidding on providing a new software system to
Kinect Incorporated, Thorton Wilder prepared diagrams that represent input and output
screenshots. These diagrams are an example of
A) CASE.
B) an operational prototype.
C) a RFP.
D) a nonoperational prototype.
Answer: D
Objective: Learning Objective 6
Difficulty: Moderate
AACSB: Analytic
9) As part of the bidding process required for bidding on providing a new software system to
Kinect Incorporated, Thorton Wilder prepared a functional program that simulated the new
system's input and output interface. This program is an example of
A) CASE.
B) an operational prototype.
C) a RFP.
D) a nonoperational prototype.
Answer: B
Objective: Learning Objective 6
Difficulty: Easy
AACSB: Analytic

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10) Describe prototyping and identify when prototyping is appropriate. Identify the steps
involved in prototyping. Discuss the advantages and disadvantages of prototyping.
Answer: Prototyping is the development of a simplified working model (prototype) of an
information system. It is a "first draft," that is quickly and inexpensively built and provided to
users for testing. Prototyping is appropriate if: There is uncertainty about the existing AIS. The
questions to ask are unclear. The final AIS is not clearly visualized. Speed is an issue. There is a
high likelihood of failure. The system is a decision support system, executive information
system, expert system, or information retrieval system. Suitable when the system involves
experimentation and trial-and-error development. Suitable when the system requirements evolve
as the system is used. Prototyping is not appropriate if: The system is large or complex and
serves major organizational components or crosses a number of organizational boundaries. Steps
in developing a prototype: Identify basic system requirements based on users' needs for what
output should be produced. Develop initial prototype emphasizing speed and low cost instead of
efficiency of operation and demonstrate it for users. Make changes needed as identified by users,
may take several iterations. Develop and use the user-approved system. Advantages of
prototyping: Better definition of user needs. Higher user involvement and satisfaction; faster
development time; fewer errors; more opportunity for changes; and less costly to the
organization. Disadvantages of prototyping: significant user time; less efficient use of system
resources; incomplete system development; inadequately tested and documented systems;
negative behavioral reactions; never-ending development.
Objective: Learning Objective 6
Difficulty: Difficult
AACSB: Analytic
11) Prototyping is often appropriate when
A) there is a low level of uncertainty.
B) it is clear which questions need to be addressed.
C) there is a high likelihood of failure.
D) there are limited financial resources available.
Answer: C
Objective: Learning Objective 6
Difficulty: Difficult
AACSB: Analytic

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21.7 Explain what computer-aided software engineering is and how it is used in systems
development.
1) Which is not a problem with CASE technology?
A) cost
B) incompatibility
C) lack of system documentation
D) unmet expectations
Answer: C
Objective: Learning Objective 7
Difficulty: Easy
AACSB: Analytic
2) Which of the following were CASE tools not designed to do?
A) replace skilled designers
B) plan, analyze, design, program, and maintain an information system
C) automate important aspects of the software development process
D) enhance the efforts of managers in understanding information needs
Answer: A
Objective: Learning Objective 7
Difficulty: Easy
AACSB: Analytic
3) Which of the following is an advantage of CASE?
A) It exhibits a high degree of cross-system compatibility.
B) It is an inexpensive technology that is accessible to small businesses.
C) Documentation is generated automatically.
D) It enhances the congruence between user expectations and the final system.
Answer: C
Objective: Learning Objective 7
Difficulty: Moderate
AACSB: Analytic
4) Describe computer-aided software (or systems) engineering (CASE) and identify the
advantages and disadvantages of CASE?
Answer: CASE refers to an integrated package of computer-based tools that automate important
aspects of the software development process. CASE tools can be used to plan, analyze, design,
program, and maintain an information system. CASE tools do not replace skilled designers, but
they provide effective support for all phases of the SDLC. Advantages Improved productivity,
improved program quality, cost savings, improved control procedures, and simplified
documentation. Disadvantages Incompatibility, cost, and unmet expectations.
Objective: Learning Objective 7
Difficulty: Moderate
AACSB: Analytic

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