Introduction to Information Systems

People Technology and Processes 3rd

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Introduction to Information Systems, 3e (Wallace)

Chapter 5 Information Systems for the Enterprise

1) Nonprofit and government agencies need additional modules for their financial systems.
Answer: TRUE
AACSB: Information Technology
Chapter LO: 1: Explain the role that financial and asset management information systems play
in an organization and the importance of financial reporting.
Difficulty: Easy

2) Compliance reports can help identify events that fall outside accepted ranges.
Answer: FALSE
AACSB: Information Technology
Chapter LO: 1: Explain the role that financial and asset management information systems play
in an organization and the importance of financial reporting.
Difficulty: Easy

3) In the United States, the Security and Exchange Commission (SEC) mandates many aspects of
compliance.
Answer: TRUE
AACSB: Information Technology
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Copyright © 2018 Pearson Education, Inc.
Chapter LO: 1: Explain the role that financial and asset management information systems play
in an organization and the importance of financial reporting.
Difficulty: Easy

4) Human capital management systems avoid using social networks due to the unregulated
nature of media.
Answer: FALSE
AACSB: Information Technology
Chapter LO: 2: Define human capital management, identify its major components, and describe
several metrics used to quantify aspects of human capital.
Difficulty: Easy

5) Workforce management modules draw on information stored in sales records that shows when
peak demand occurs.
Answer: TRUE
AACSB: Information Technology
Chapter LO: 2: Define human capital management, identify its major components, and describe
several metrics used to quantify aspects of human capital.
Difficulty: Easy

2
Copyright © 2018 Pearson Education, Inc.
6) The corporate responsibility objectives of a company affect its decisions regarding sources
and suppliers.
Answer: TRUE
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Moderate

7) All valuable supply chain metrics stay visible even when no one collects them.
Answer: FALSE
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Moderate

8) Identifying high-cost points along the supply chain is the first step toward reducing
operational costs.
Answer: TRUE
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Easy

9) Long supply chains are less susceptible to disruption than short supply chains.
Answer: FALSE
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Easy

10) Fuel prices affect supply chains.

Answer: TRUE
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Moderate

11) Companies have replaced sharing information through sensing technologies with electronic
data interchange.
Answer: FALSE
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Easy

3
Copyright © 2018 Pearson Education, Inc.
12) Locations communicated through GPS are accurate within no less than a few kilometers.
Answer: FALSE
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Easy

13) Attracting new customers is often more difficult and expensive than retaining existing ones.
Answer: TRUE
AACSB: Information Technology
Chapter LO: 4: Define customer relationship management and its role in an organization, and
describe the metrics and information systems that support it.
Difficulty: Easy

14) A good retention management strategy does not promise a fast return on investment.
Answer: FALSE
AACSB: Information Technology
Chapter LO: 4: Define customer relationship management and its role in an organization, and
describe the metrics and information systems that support it.
Difficulty: Easy

15) Proactive live chats on websites in the customer support context offer considerable savings.
Answer: TRUE
AACSB: Information Technology
Chapter LO: 4: Define customer relationship management and its role in an organization, and
describe the metrics and information systems that support it.
Difficulty: Easy

16) Spammers use "web beacons" routinely to verify that email addresses are valid.
Answer: TRUE
AACSB: Information Technology
Chapter LO: 4: Define customer relationship management and its role in an organization, and
describe the metrics and information systems that support it.
Difficulty: Easy

17) Twitter is growing as a way to provide customer support, largely because it can reach
customers in near real-time.
Answer: TRUE
AACSB: Information Technology
Chapter LO: 4: Define customer relationship management and its role in an organization, and
describe the metrics and information systems that support it.
Difficulty: Moderate

4
Copyright © 2018 Pearson Education, Inc.
18) Engineered suites offer solid integration on the back-end and consistent user interfaces
throughout.
Answer: FALSE
AACSB: Information Technology
Chapter LO: 5: Explain the importance of ERP systems, and describe how they are created,
integrated, and implemented.
Difficulty: Moderate

19) Implementing ERPs very often result in dismal success rates and runaway costs.
Answer: TRUE
AACSB: Information Technology
Chapter LO: 5: Explain the importance of ERP systems, and describe how they are created,
integrated, and implemented.
Difficulty: Easy

20) SaaS ERP solutions are "instant on" products, which require minimal training and
reengineering of workflows compared to on-premise versions.
Answer: FALSE
AACSB: Information Technology
Chapter LO: 5: Explain the importance of ERP systems, and describe how they are created,
integrated, and implemented.
Difficulty: Easy

21) Modules such as budget planning, debt management, travel and expense management, and
contracts management are typically included in a ________ management system.
A) supply chain
B) financial
C) human capital
D) customer relationship
Answer: B
AACSB: Information Technology
Chapter LO: 1: Explain the role that financial and asset management information systems play
in an organization and the importance of financial reporting.
Difficulty: Easy

22) Which of the following organizations requires the most number of modules for their financial
systems?
A) a federal government agency
B) a private-sector bank
C) a steel manufacturing company
D) an IT consulting firm
Answer: A
AACSB: Information Technology
Chapter LO: 1: Explain the role that financial and asset management information systems play
in an organization and the importance of financial reporting.
Difficulty: Moderate

5
Copyright © 2018 Pearson Education, Inc.
23) Which of the following activities is supported by financial management systems?
A) mapping the employee life cycle, starting from recruitment to retirement
B) deciding which suppliers to use for sourcing raw materials
C) negotiating the terms and conditions of payment agreements made with vendors
D) creating and maintaining a repository of employee contact information
Answer: C
AACSB: Information Technology; Analytical Thinking
Chapter LO: 1: Explain the role that financial and asset management information systems play
in an organization and the importance of financial reporting.
Difficulty: Moderate

24) Consistency in a company's financial management system is maintained by ________.

A) supporting multiple finance-related activities and processes
B) creating bridges and interfaces to other information systems
C) generating exception reports regarding unusual financial events
D) creating compliance reports that conform to international regulations
Answer: B
AACSB: Information Technology
Chapter LO: 1: Explain the role that financial and asset management information systems play
in an organization and the importance of financial reporting.
Difficulty: Easy

25) The financial management system of a software company automatically updates the general
ledger whenever there are any transactions in the company's accounts receivable and accounts
payable. This is an example of the financial system's ________.
A) compliance reporting
B) exception reporting
C) service delivery applications
D) integration of components
Answer: D
AACSB: Information Technology
Chapter LO: 1: Explain the role that financial and asset management information systems play
in an organization and the importance of financial reporting.
Difficulty: Moderate

26) The first targets of process improvements through integration of modules and creation of
workflows in companies were ________.
A) financial analytics and financial reporting
B) general ledger and asset management
C) cash management and budget planning
D) procurement and accounts payable
Answer: D
AACSB: Information Technology
Chapter LO: 1: Explain the role that financial and asset management information systems play
in an organization and the importance of financial reporting.
Difficulty: Easy

6
Copyright © 2018 Pearson Education, Inc.
27) ________ involves the automatic tagging of unusual events in financial transactions and is
used to spot mistakes and fraudulent activities.
A) Exception reporting
B) Compliance reporting
C) Human capital management
D) Electronic data interchange
Answer: A
AACSB: Information Technology
Chapter LO: 1: Explain the role that financial and asset management information systems play
in an organization and the importance of financial reporting.
Difficulty: Easy

28) Carrie, the finance manager of an insurance company, suspects some of the sales
representatives of submitting their travel expenses receipts twice. Which of the following would
help her spot such fraudulent submissions?
A) electronic data interchange
B) exception reports
C) noncompliance reports
D) compliance reports
Answer: B
AACSB: Information Technology; Analytical Thinking
Chapter LO: 1: Explain the role that financial and asset management information systems play
in an organization and the importance of financial reporting.
Difficulty: Moderate

29) Exception reports that are generated by financial information systems help organizations
primarily in ________.
A) conforming to local, national, and international financial regulations
B) comparing financial results and strategies with competitor companies
C) spotting fraudulent transactions and mistakes that require a manual review
D) developing organization- and industry-specific accounting standards
Answer: C
AACSB: Information Technology
Chapter LO: 1: Explain the role that financial and asset management information systems play
in an organization and the importance of financial reporting.
Difficulty: Easy

7
Copyright © 2018 Pearson Education, Inc.
30) The goal of using eXtensible Business Reporting Language (XBLR) in compliance reporting
is to ________.
A) develop a common language for all accounting and business reports
B) avoid transparency so that financial data are kept confidential
C) ensure that only computer programs know the meaning of tagged concepts in reports
D) ensure that only humans know the meaning of tagged concepts in reports
Answer: A
AACSB: Information Technology
Chapter LO: 1: Explain the role that financial and asset management information systems play
in an organization and the importance of financial reporting.
Difficulty: Easy

31) Which of the following is true of compliance reporting?

A) Supply chain management systems carry the major burden of compliance reporting.
B) Compliance reports primarily help in identifying events that fall outside accepted ranges.
C) Compliance reports relying on XBRL are more advanced than electronic PDFs.
D) In the United States, the South Eastern Conference (SEC) mandates all aspects of compliance.
Answer: C
AACSB: Information Technology
Chapter LO: 1: Explain the role that financial and asset management information systems play
in an organization and the importance of financial reporting.
Difficulty: Moderate

32) Which of the following is true of the eXtensible Business Reporting Language (XBRL)?
A) It reduces the transparency in a reporting process.
B) It makes data computer-readable.
C) It specializes only in financial reporting.
D) It has failed to advance over electronically delivered PDFs.
Answer: B
AACSB: Information Technology
Chapter LO: 1: Explain the role that financial and asset management information systems play
in an organization and the importance of financial reporting.
Difficulty: Moderate

33) Giving clear definitions and tags to financial terms using eXtensible Business Reporting
Language (XBRL) makes data ________.
A) less transparent
B) manually manageable
C) concise and error-free
D) computer-readable
Answer: D
AACSB: Information Technology
Chapter LO: 1: Explain the role that financial and asset management information systems play
in an organization and the importance of financial reporting.
Difficulty: Easy

8
Copyright © 2018 Pearson Education, Inc.
34) The goal of using XBRL in compliance reporting is to ________.
A) identify events that fall outside accepted ranges
B) develop a common language for financial reporting
C) create streamlined, manual workflows
D) encourage diversity in reporting practices
Answer: B
AACSB: Information Technology
Chapter LO: 1: Explain the role that financial and asset management information systems play
in an organization and the importance of financial reporting.
Difficulty: Easy

35) Which of the following is the primary function of the International Accounting Standards
Board (IASB)?
A) representing accountants employed in public sector companies around the world
B) representing accountants employed in public sector companies in developed countries
C) developing and promoting a single worldwide set of financial reporting standards
D) training professional accountants worldwide on ethical accounting practices
Answer: C
AACSB: Information Technology
Chapter LO: 1: Explain the role that financial and asset management information systems play
in an organization and the importance of financial reporting.
Difficulty: Easy

36) Which of the following is the central element of the human capital management (HCM)
information system?
A) employee record
B) customer service
C) marketing campaigns
D) transportation
Answer: A
AACSB: Information Technology
Chapter LO: 2: Define human capital management, identify its major components, and describe
several metrics used to quantify aspects of human capital.
Difficulty: Moderate

37) Which of the following is a function of the human capital management system?
A) optimizing labor schedules
B) planning terrestrial transport rounds
C) tracking all correspondence with customers
D) creating a centralized repository of customer contact information
Answer: A
AACSB: Information Technology
Chapter LO: 2: Define human capital management, identify its major components, and describe
several metrics used to quantify aspects of human capital.
Difficulty: Moderate

9
Copyright © 2018 Pearson Education, Inc.
38) Which of the following components of the HCM systems is responsible for tracking
employees' demographic information?
A) workforce management modules
B) talent management applications
C) human resources management modules
D) service delivery modules
Answer: C
AACSB: Information Technology
Chapter LO: 2: Define human capital management, identify its major components, and describe
several metrics used to quantify aspects of human capital.
Difficulty: Easy

39) Which of the following components of the HCM systems keep track of employee time and
attendance, sick leave, vacation leave, and project assignments?
A) talent management applications
B) human resources management applications
C) service delivery modules
D) workforce management modules
Answer: D
AACSB: Information Technology
Chapter LO: 2: Define human capital management, identify its major components, and describe
several metrics used to quantify aspects of human capital.
Difficulty: Easy

40) Which of the following components of the HCM systems would airport managers use for
optimizing task schedules of ground personnel?
A) talent management applications
B) service delivery modules
C) workforce management modules
D) human resources management applications
Answer: C
AACSB: Information Technology; Analytical Thinking
Chapter LO: 2: Define human capital management, identify its major components, and describe
several metrics used to quantify aspects of human capital.
Difficulty: Moderate

41) Which of the following components of the HCM systems focuses on employee life cycle and
career development?
A) workforce management modules
B) social networking software
C) service delivery modules
D) talent management applications
Answer: D
AACSB: Information Technology
Chapter LO: 2: Define human capital management, identify its major components, and describe
several metrics used to quantify aspects of human capital.
Difficulty: Easy
10
Copyright © 2018 Pearson Education, Inc.
42) Which of the following modules of the human capital management systems encourages
interactions through wikis and blogs?
A) human resources management applications
B) service delivery modules
C) workforce management modules
D) social networking software
Answer: D
AACSB: Information Technology
Chapter LO: 2: Define human capital management, identify its major components, and describe
several metrics used to quantify aspects of human capital.
Difficulty: Easy

43) Laid-off workers, who are hired back due to their positive attitude and networking
capabilities when businesses recover, are called ________.
A) boomerangs
B) laggards
C) freelancers
D) opinion leaders
Answer: A
AACSB: Information Technology
Chapter LO: 2: Define human capital management, identify its major components, and describe
several metrics used to quantify aspects of human capital.
Difficulty: Easy

44) The percentage of workers who left an organization and were replaced during a time period
is called employee ________.
A) retention
B) turnover
C) attrition
D) termination
Answer: B
AACSB: Information Technology
Chapter LO: 2: Define human capital management, identify its major components, and describe
several metrics used to quantify aspects of human capital.
Difficulty: Easy

11
Copyright © 2018 Pearson Education, Inc.
45) The total of termination costs, hiring costs, training costs, and other costs related to replacing
a worker is referred to as ________.
A) cost per hire
B) sunk cost
C) turnover cost
D) hidden cost
Answer: C
AACSB: Information Technology
Chapter LO: 2: Define human capital management, identify its major components, and describe
several metrics used to quantify aspects of human capital.
Difficulty: Easy

46) Which of the following is calculated by adding the average advertising costs for job postings,
agency fees, recruiter's salary and benefits, and relocation expenses for new employees?
A) turnover cost
B) cost per hire
C) cost of attrition
D) retention cost
Answer: B
AACSB: Information Technology
Chapter LO: 2: Define human capital management, identify its major components, and describe
several metrics used to quantify aspects of human capital.
Difficulty: Easy

47) The monetary gains produced by an organization's expenditures on salaries, benefits,

bonuses, and other costs for employee talent is called ________.
A) turnover cost
B) net profit
C) human capital return on investment
D) rate of earnings on invested capital
Answer: C
AACSB: Information Technology
Chapter LO: 2: Define human capital management, identify its major components, and describe
several metrics used to quantify aspects of human capital.
Difficulty: Easy

48) Which of the following is the primary function of supply chain management in companies?
A) optimizing the flow of products and services from their source to the customer
B) restructuring the organizational hierarchy to facilitate effective communication
C) improving the visibility of a product or service through effective promotional strategies
D) identifying the optimum target market to increase the likelihood of the sale of a product
Answer: A
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Easy

12
Copyright © 2018 Pearson Education, Inc.
49) The first step in the successful management of a next-generation supply chain is ________.
A) sourcing
B) delivering
C) making
D) planning
Answer: D
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Easy

50) Which of the following is a factor that directly affects a company's choice of suppliers?
A) demand forecast accuracy
B) business strategy
C) sunken costs
D) turnover costs
Answer: B
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Easy

51) Which of the following is a part of a company's supply chain management?

A) aligning supply with demand
B) managing company workforce
C) providing customer support
D) managing customer retention
Answer: A
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Easy

52) A steel manufacturing company that follows a low-cost leadership strategy does not accept
any product returns from its customers. The company's "no-return" policy aims to ________.
A) effectively track inventories
B) streamline financial workflows
C) increase the sale of its products
D) reduce supply chain costs
Answer: D
AACSB: Information Technology; Analytical Thinking
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Moderate

13
Copyright © 2018 Pearson Education, Inc.
53) ________ describes how easily managers can track timely and accurate supply chain metrics.
A) Marketability
B) Sustainability
C) Flexibility
D) Visibility
Answer: D
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Easy

54) Demand forecast accuracy is important because underestimating demand leads to ________.
A) high inventory costs
B) lost sales
C) customer satisfaction
D) discount blowouts
Answer: B
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Easy

55) Demand forecast accuracy is important because overestimating demand leads to ________.
A) discount blowouts
B) decreased inventory costs
C) lost sales
D) increased prices
Answer: A
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Moderate

56) A company resorts to discount blowouts to get rid of excess merchandise. Which of the
following scenarios is most likely to have triggered this action?
A) increase in inventory costs
B) ineffective tracking of the inventory
C) overestimation of demand
D) increase in the price of raw materials
Answer: C
AACSB: Information Technology; Analytical Thinking
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Moderate

14
Copyright © 2018 Pearson Education, Inc.
57) The distortions in a supply chain caused by changes in customer demand, resulting in large
swings in inventory levels as the orders ripple upstream from the retailer, to the distributor and
manufacturer, is referred to as the ________.
A) accelerator effect
B) bullwhip effect
C) loyalty effect
D) local multiplier effect
Answer: B
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Easy

58) Which of the following illustrates a practice that can dramatically reduce supply chain costs?
A) a supplier company depending on the sales of a market leader to supply products accordingly
B) a company replacing its supplier with another larger and more competitive supplier
C) a company supplying products directly to customers by omitting all middlemen
D) a company closely monitoring and tracking each and every inventory in its supply chain
Answer: C
AACSB: Information Technology; Analytical Thinking
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Easy

59) Which of the following will typically have a major impact on global supply chain costs?
A) increasing attrition rate in companies
B) decreasing focus on international business ethics
C) restrictions on grants from governments for research and development
D) restrictions on carbon emissions
Answer: D
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Moderate

60) Which of the following is a function of a supply chain planning software?

A) fleet routing
B) predicting demand
C) cross-docking
D) optimizing shipping
Answer: B
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Easy

15
Copyright © 2018 Pearson Education, Inc.
61) Which of the following is a function of warehouse management software?
A) cross-docking
B) predicting demand
C) fleet routing and scheduling
D) ensuring compliance for cross-border transactions
Answer: A
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Easy

62) Which of the following supply chain management software is used to manage and optimize
inventories, space allocation, shipments, and cross-docking?
A) supply chain planning software
B) transportation management software
C) warehouse management software
D) global trade management software
Answer: C
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Easy

63) Which of the following is a function of transportation management software?

A) fleet routing and scheduling
B) predicting demand
C) optimizing inventory
D) cross-docking
Answer: A
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Easy

64) Which of the following supply chain management software is used to manage and optimize
shipping, logistics, fleet routing, and scheduling?
A) supply chain planning software
B) warehouse management software
C) transportation management software
D) global trade management software
Answer: C
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Easy

16
Copyright © 2018 Pearson Education, Inc.
65) A bag manufacturing company had suffered financial losses due to overestimation of
demand, which led to overproduction. Which of the following software can help the company
prevent such situations in the future?
A) sales force optimization software
B) supply chain planning software
C) manufacturing execution system
D) customer relationship management software
Answer: B
AACSB: Information Technology; Analytical Thinking
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Moderate

66) Which of the following software is used to ensure compliance for cross-border transactions
for importers and exporters?
A) warehouse management software
B) supply chain planning software
C) global trade management software
D) manufacturing execution system
Answer: C
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Easy

67) The bullwhip effect can be reduced if ________.

A) suppliers occasionally receive faxed purchase orders from the retailer
B) suppliers are provided with warehouse management software
C) suppliers have real-time access to up-to-date retail sales data
D) suppliers are provided with global trade management software
Answer: C
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Easy

17
Copyright © 2018 Pearson Education, Inc.
68) An electronic bridge between partner companies in a supply chain that is used to transmit
real-time information about orders, inventories, invoices, and other data is called a(an)
________.
A) electronic market
B) financial network
C) expense and cost recovery system
D) electronic data interchange
Answer: D
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Easy

69) Which of the following is true regarding the use of electronic data interchange (EDI)
between partner companies in a supply chain?
A) EDI often relies on private networks and proprietary software.
B) EDI takes very little time to set up.
C) EDI enables companies to easily switch partners when required.
D) EDI is more flexible than systems with machine-readable formats.
Answer: A
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Moderate

70) An advantage of electronic data interchange (EDI) is that it ________.

A) does not rely on any proprietary software
B) takes very little time to be set up in a company
C) enables a company to easily switch partners when required
D) improves supply chain performance
Answer: D
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Moderate

71) A disadvantage of electronic data interchange (EDI) is that it ________.

A) increases the time required for a product to reach the end customer
B) fails to build trust among the partners in a supply chain
C) tends to lock partners into their relationship
D) is not always reliable and may result in wastage of goods
Answer: C
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Moderate

18
Copyright © 2018 Pearson Education, Inc.
72) When compared to electronic data interchange, the use of collaborative systems with XML
formats to improve visibility between partner companies in a supply chain ________.
A) requires no trust between partners
B) is more flexible
C) is difficult to create
D) requires less time to create
Answer: B
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Moderate

73) ________ help commercial shippers to read the barcodes on packages during transit and
upload tracking number, date, time, and place to servers.
A) RFID chips
B) Wireless scanners
C) GPS devices
D) EDI systems
Answer: B
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Easy

74) ________ are attached to packages or crates and can transmit data as they pass by readers at
seaports, railway stations, or warehouses.
A) RFID chips
B) Wireless scanners
C) GPS devices
D) EDI systems
Answer: A
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Easy

75) Which of the following devices receives signals from orbiting satellites that transmit time
and location data?
A) electronic data interchange system
B) wireless scanner
C) global positioning systems device
D) RFID chip
Answer: C
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Easy
19
Copyright © 2018 Pearson Education, Inc.
76) ________ help drivers navigate while transporting materials and keep managers in touch
with their transportation fleets.
A) EDI systems
B) Wireless scanners
C) GPS devices
D) RFID chips
Answer: C
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Easy

77) ________ encompasses the strategies, processes, and information systems that an
organization uses to build and maintain relationships with the current and prospective users of its
products or services.
A) Enterprise resource planning
B) Customer relationship management
C) Human capital management
D) Supply chain management
Answer: B
AACSB: Information Technology
Chapter LO: 4: Define customer relationship management and its role in an organization, and
describe the metrics and information systems that support it.
Difficulty: Easy

78) Which of the following is true regarding customer retention?

A) Research has proved that existing customers tend to be less profitable than new customers.
B) The only accurate metric that calculates customer retention is the number of repeat customers.
C) A retention strategy increases the number of loyal customers, but provides no return on
investment.
D) Attracting new customers is often more difficult and expensive than retaining existing ones.
Answer: D
AACSB: Information Technology
Chapter LO: 4: Define customer relationship management and its role in an organization, and
describe the metrics and information systems that support it.
Difficulty: Easy

20
Copyright © 2018 Pearson Education, Inc.
79) Which of the following is a metric commonly used in CRM?
A) customer satisfaction index
B) human capital return on investment
C) turnover costs
D) demand forecast accuracy
Answer: A
AACSB: Information Technology
Chapter LO: 4: Define customer relationship management and its role in an organization, and
describe the metrics and information systems that support it.
Difficulty: Easy

80) An online retail website has a low rate of customer retention. Which of the following would
be the most effective way to help the company increase its retention rate?
A) using uninvited pop-up chat to encourage customers to buy products
B) using a CRM system to track customer behavior when they visit the site
C) promoting the website through conventional advertising to gain visibility
D) building seamless financial workflows
Answer: B
AACSB: Information Technology; Analytical Thinking
Chapter LO: 4: Define customer relationship management and its role in an organization, and
describe the metrics and information systems that support it.
Difficulty: Moderate

81) Which of the following is a CRM strategy used to earn more revenue from existing
customers?
A) cross-selling
B) permission marketing
C) predictive analytics
D) foot-in-the-door technique
Answer: A
AACSB: Information Technology
Chapter LO: 4: Define customer relationship management and its role in an organization, and
describe the metrics and information systems that support it.
Difficulty: Easy

82) The use of live chats as a CRM strategy in the context of customer support will most likely
result in ________.
A) high employee turnover costs
B) decreasing profitability
C) considerable savings
D) a decreasing retention rate
Answer: C
AACSB: Information Technology
Chapter LO: 4: Define customer relationship management and its role in an organization, and
describe the metrics and information systems that support it.
Difficulty: Easy

21
Copyright © 2018 Pearson Education, Inc.
83) ________ helps organizations classify user-generated content as pro, con, or neutral toward
the company or product.
A) Predictive analytics
B) Affective computing
C) Polarity item-analysis
D) Sentiment analysis
Answer: D
AACSB: Information Technology
Chapter LO: 4: Define customer relationship management and its role in an organization, and
describe the metrics and information systems that support it.
Difficulty: Easy

84) The information systems used by customer relationship management (CRM) are often
________.
A) outdated
B) unified
C) fragmented
D) redundant
Answer: C
AACSB: Information Technology
Chapter LO: 4: Define customer relationship management and its role in an organization, and
describe the metrics and information systems that support it.
Difficulty: Easy

85) E-marketing information systems provide extensive tracking capabilities by embedding a

_____________ in the HTML email.
A) web trojan
B) web beacon
C) server log
D) web log
Answer: B
AACSB: Information Technology
Chapter LO: 4: Define customer relationship management and its role in an organization, and
describe the metrics and information systems that support it.
Difficulty: Easy

86) ________ boosts the performance of an organization's sales reps by helping them track and
manage their accounts, contacts, leads, and to-do lists.
A) Sales outsourcing
B) Sales force automation
C) Sentiment analysis
D) Email marketing
Answer: B
AACSB: Information Technology
Chapter LO: 4: Define customer relationship management and its role in an organization, and
describe the metrics and information systems that support it.
Difficulty: Easy
22
Copyright © 2018 Pearson Education, Inc.
87) Sellers Forever Inc. makes use of a system that sends emails to all employees in the
organization with requests to recognize and congratulate the top performing sales reps at the end
of every week to encourage and motivate the sales team. Which of the following has the
company employed?
A) sales outsourcing
B) email marketing
C) sentiment analysis
D) sales force automation
Answer: D
AACSB: Information Technology
Chapter LO: 4: Define customer relationship management and its role in an organization, and
describe the metrics and information systems that support it.
Difficulty: Easy

88) Early integrated application suites evolved from systems that supported ________.
A) supply chain management
B) manufacturing resource planning
C) customer relationship planning
D) human capital management
Answer: B
AACSB: Information Technology
Chapter LO: 5: Explain the importance of ERP systems, and describe how they are created,
integrated, and implemented.
Difficulty: Easy

89) An integrated application suite to support a whole establishment that includes modules to
manage financials, human resources, supply chain, customer relationships, and other business
processes is called ________.
A) enterprise resource planning
B) total quality management
C) business process automation
D) business process management
Answer: A
AACSB: Information Technology
Chapter LO: 5: Explain the importance of ERP systems, and describe how they are created,
integrated, and implemented.
Difficulty: Easy

23
Copyright © 2018 Pearson Education, Inc.
90) In an ERP suite that includes modules specialized for higher education, which of the
following would be used to track donations, pledges, gifts, and manage contacts and donor
relationships?
A) enrollment management
B) institutional advancement
C) e-learning
D) human resources
Answer: B
AACSB: Information Technology
Chapter LO: 5: Explain the importance of ERP systems, and describe how they are created,
integrated, and implemented.
Difficulty: Easy

91) Which of the following strategies for integrating ERP modules is built from the ground up
with consistent user interfaces, integrated backend database, and a single architectural
foundation?
A) suite with synchronized modules
B) global positioning system
C) best-of-breed suites
D) engineered suite
Answer: D
AACSB: Information Technology
Chapter LO: 5: Explain the importance of ERP systems, and describe how they are created,
integrated, and implemented.
Difficulty: Easy

92) Which of the following approaches for integrating ERP modules has high switching costs?
A) suite with synchronized modules
B) engineered suite
C) best-of-breed suite
D) electronic data interchange
Answer: B
AACSB: Information Technology
Chapter LO: 5: Explain the importance of ERP systems, and describe how they are created,
integrated, and implemented.
Difficulty: Easy

93) Which of the following is a disadvantage of the engineered suite?

A) high switching costs
B) independent modules
C) high IT support costs
D) multiple architectural foundations
Answer: A
AACSB: Information Technology
Chapter LO: 5: Explain the importance of ERP systems, and describe how they are created,
integrated, and implemented.
Difficulty: Easy
24
Copyright © 2018 Pearson Education, Inc.
94) The advantage of using a suite with synchronized modules is that ________.
A) the switching costs are far lower for ERP systems with interdependent modules
B) a common architecture overlays the systems to improve consistency across the modules
C) the introduction of changes in such systems to meet new business needs takes little time
D) modules can have very rich functionality and can be implemented individually, reducing risk
Answer: B
AACSB: Information Technology
Chapter LO: 5: Explain the importance of ERP systems, and describe how they are created,
integrated, and implemented.
Difficulty: Easy

95) In which of the following approaches for integrating ERP modules does the vendor provide
middleware to connect systems that may be running on different platforms?
A) best-of-breed suite
B) engineered suite
C) suite with synchronized modules
D) global positioning system
Answer: C
AACSB: Information Technology
Chapter LO: 5: Explain the importance of ERP systems, and describe how they are created,
integrated, and implemented.
Difficulty: Easy

96) Which of the following requires application suites with synchronized modules?
A) building ERP products from the ground up
B) creating platforms that match user requirements closely
C) building modules that are highly interdependent
D) enhancing ERPs through mergers or acquisitions
Answer: D
AACSB: Information Technology
Chapter LO: 5: Explain the importance of ERP systems, and describe how they are created,
integrated, and implemented.
Difficulty: Moderate

97) A disadvantage of using a suite with synchronized modules is that ________.

A) they have high switching costs
B) the bridges between modules can be fragile
C) there is no consistency across the modules
D) required information will appear only in one system
Answer: B
AACSB: Information Technology
Chapter LO: 5: Explain the importance of ERP systems, and describe how they are created,
integrated, and implemented.
Difficulty: Easy

25
Copyright © 2018 Pearson Education, Inc.
98) Software used as a bridge to integrate separate information systems and synchronize data
across multiple systems is referred to as ________.
A) malware
B) web beacon software
C) middleware
D) bundled software
Answer: C
AACSB: Information Technology
Chapter LO: 5: Explain the importance of ERP systems, and describe how they are created,
integrated, and implemented.
Difficulty: Easy

99) Which of the following is a characteristic of best-of-breed suites?

A) They are built from the ground up.
B) Processes, interfaces, and data are integrated and consistent across systems.
C) They match user requirements closely.
D) They have a single architectural foundation.
Answer: C
AACSB: Information Technology
Chapter LO: 5: Explain the importance of ERP systems, and describe how they are created,
integrated, and implemented.
Difficulty: Easy

100) Which of the following is a disadvantage of best-of-breed suites?

A) failure to meet changing business needs
B) lack of features that users require
C) error-prone synchronization between systems
D) high switching costs due to module interdependence
Answer: C
AACSB: Information Technology
Chapter LO: 5: Explain the importance of ERP systems, and describe how they are created,
integrated, and implemented.
Difficulty: Moderate

101) The "big bang" approach for implementing ERP involves ________.
A) implementing software-as-a-service (SaaS) or on-demand software products
B) going live with all the core modules in the engineered suite at the same time
C) matching ERP modules to company needs
D) using best-of-breed suites for enhancing ERPs through mergers
Answer: B
AACSB: Information Technology
Chapter LO: 5: Explain the importance of ERP systems, and describe how they are created,
integrated, and implemented.
Difficulty: Easy

26
Copyright © 2018 Pearson Education, Inc.
102) Vendors are providing software-as-a-service (SaaS) products because of the need to
________.
A) lower implementation costs
B) standardize ERP services
C) address security concerns
D) lower turnover costs
Answer: A
AACSB: Information Technology
Chapter LO: 5: Explain the importance of ERP systems, and describe how they are created,
integrated, and implemented.
Difficulty: Easy

103) In the case of ________, companies pay subscription fees to access a vendor's software in
the cloud, via the web.
A) software-as-a-service (SaaS) products
B) remote web-application frameworks
C) middleware
D) web beacons
Answer: A
AACSB: Information Technology
Chapter LO: 5: Explain the importance of ERP systems, and describe how they are created,
integrated, and implemented.
Difficulty: Easy

104) A company tried implementing an ERP system and failed. Which of the following is the
most likely reason for its failure?
A) lack of security
B) lack of integration
C) lack of preparatory training
D) unsuitability for small or medium businesses
Answer: C
AACSB: Information Technology; Analytical Thinking
Chapter LO: 5: Explain the importance of ERP systems, and describe how they are created,
integrated, and implemented.
Difficulty: Easy

27
Copyright © 2018 Pearson Education, Inc.
105) Sam, the CEO of a product development company, is planning to implement an ERP
system in his company. However, most of his colleagues advise him against implementing such a
system saying that such systems have more weaknesses than strengths. Why should Sam still go
ahead with the implementation?
A) ERP systems are very easy to implement, especially in large organizations.
B) Research shows that almost all ERP implementations have been a success.
C) Once in place, the ERP can dramatically enhance operational efficiencies and reduce costs.
D) ERP implementation rarely affects workflow and therefore requires very little usage training.
Answer: C
AACSB: Information Technology; Analytical Thinking
Chapter LO: 5: Explain the importance of ERP systems, and describe how they are created,
integrated, and implemented.
Difficulty: Easy

106) How does integration of components in a financial management system lead to paperless
workflows?
Answer: Integration among the modules involves linking the various financial modules; for
instance, the details from accounts receivable and accounts payable transactions should
automatically update the general ledger. Such integration of the various components of the
financial system allows all the staff to have real-time access to the same underlying information.
For example, an employee can use online shopping carts to generate procurements from
established vendors and route their requests to supervisors for approval, after which the
electronic order goes directly to the supplier. The software builds online, interactive forms so
staff can make corrections along the way, with customized workflow tables that determine the
routes. This results in a streamlined and paperless workflow in an organization.
AACSB: Information Technology
Chapter LO: 1: Explain the role that financial and asset management information systems play
in an organization and the importance of financial reporting.
Difficulty: Moderate

107) How does exception reporting differ from compliance reporting?

Answer: Exception reports can help identify events that fall outside accepted ranges. Financial
systems generate exception reports that automatically tag unusual events-ones that human beings
must review. Such reports are used to spot mistakes and fraud. For example, average losses per
incident may not be huge, but if the same mistake or fraud is repeated over and over, major
losses can add-up. For example, if sales reps exaggerate mileage for trips, or travelers submit
receipts twice, exception reports would spot the fraud.
Financial systems also carry the major burden of compliance reporting, and in doing so they
must conform to local, national, and international regulations that grow increasingly strict. In the
United States, the Security and Exchange Commission (SEC) mandates many aspects of
compliance, and electronic reporting is required, relying on eXtensible Business Reporting
Language.
AACSB: Information Technology
Chapter LO: 1: Explain the role that financial and asset management information systems play
in an organization and the importance of financial reporting.
Difficulty: Moderate

28
Copyright © 2018 Pearson Education, Inc.
108) List the components of human capital management systems.
Answer: Human capital management (HCM) encompasses all the activities and information
systems that support effective management of an organization's human capital. The HCM
information system includes a growing suite of applications with the employee record as the
central element. Together, these applications support recruitment, hiring, payroll, benefits, taxes,
career development, training programs, employment histories, employee self-service, and more.
The components of human capital management systems include workforce management
applications, talent management applications, service delivery applications, and core human
resources management application.
AACSB: Information Technology
Chapter LO: 2: Define human capital management, identify its major components, and describe
several metrics used to quantify aspects of human capital.
Difficulty: Easy

109) How does social networking affect human capital management systems? Explain with an
example.
Answer: HCM systems often add social networking software, and organizations are finding
innovative ways to use it. Dow, for instance, wanted to tap the extensive knowledge and skills of
its retirees, employees on maternity leave, and others who were loyal to the company but not
currently working. It launched a social "alumni" network for this population-well over 40,000
people-and invited them to reconnect with colleagues, search for job opportunities, share news,
and mentor less-experienced workers. Part of the company's motivation was the looming skills
shortage; therefore, Dow encourages their own scientists to interact with young people who
might want to pursue scientific careers.
Dow also invited employees who had been laid off during a business downturn to participate.
Some managers feared these members might just vent on the alumni network, but most did not.
In fact, some laid-off workers-called "boomerangs"-were hired back when business recovered,
based on their positive attitude and networking capabilities.
AACSB: Information Technology
Chapter LO: 2: Define human capital management, identify its major components, and describe
several metrics used to quantify aspects of human capital.
Difficulty: Easy

29
Copyright © 2018 Pearson Education, Inc.
110) List some of the common metrics used in HCM systems.
Answer: Some common HCM metrics include:
1. Turnover: The percentage of workers who left and were replaced during a time period
2. Turnover costs: The total of termination costs, hiring costs, training costs, and other costs
related to replacing a worker
3. Cost per hire: Average advertising costs + agency fees + recruiter's salary and benefits +
relocation expenses for new employees
4. Human capital return on investment: The return on investment produced by an organization's
expenditures on salaries, benefits, bonuses, and other costs for human talent
5. Employee satisfaction: Measures of job satisfaction, usually assessed through employee
surveys or exit interviews
AACSB: Information Technology
Chapter LO: 2: Define human capital management, identify its major components, and describe
several metrics used to quantify aspects of human capital.
Difficulty: Easy

111) What are the different steps that underlie the successful management of a next-generation
supply chain?
Answer: The different steps are (1) plan, (2) source, (3) make, (4) deliver, and (5) return.
Supply chain management (SCM) starts with planning, with the goal of building a nimble supply
chain that aligns with actual business goals. If the corporate strategy calls for low-cost
leadership, for example, a company will strive to reduce costs for transportation and inventory
storage. In step 2, managers make decisions about sources, and which suppliers to use. Again,
the business strategy should guide many choices, such as whether to commit to long-term
contracts or encourage frequent and fierce competition among potential suppliers. The "make"
step transforms the resources into something with more value. Supply chain managers track
inventory at each stage, fine-tuning the flow so that some parts don't run short while others are
overstocked. Managers' keen interest in inventory levels continues through the delivery step, as
products are transported to distribution centers and retailers. Finally, SCM includes returns.
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Moderate

112) What are some of the causes for the lack of visibility of supply chain metrics?
Answer: Visibility describes how easily managers can track timely and accurate supply chain
metrics. Some metrics, such as total sales by product, are easy to get, but a lack of transparency
plagues many others. This is because the data might be housed in a supplier's or customer's
database with no real-time access, and only slow-moving paper reports transmit critical
information. Valuable metrics may also be invisible simply because no one is collecting them.
For example, many matrices are fleeting time durations that are too costly and cumbersome to
collect.
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Easy

30
Copyright © 2018 Pearson Education, Inc.
113) What is the bullwhip effect in the context of supply chain management?
Answer: The bullwhip effect describes the distortions in a supply chain caused by changes in
customer demand, resulting in large swings in inventory levels as the orders ripple upstream
from the retailer to the distributor and manufacturer. Small fluctuations in retail sales trigger
large swings in inventory levels, as the retailer sends orders to the distributor to replenish the
stock, and the distributor follows up with orders to the manufacturer. As orders are filled and
products shipped, inventory builds up in some places but shortages occur in others.
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Easy

114) Describe, with the help of an example, how a company can reduce its operating costs by
omitting middlemen.
Answer: Dell reduced its operating costs by bypassing the distributors and retailers in its supply
chain. At dell.com, the customer selects a computer online, customizes it, clicks the "Buy"
button, and then tracks the order until it arrives at the front door, shipped directly from the
manufacturer. The monitor, shipped in a separate box, may come from a different manufacturer,
but Dell synchronizes the delivery so all the hardware arrives at the same time. This low-cost
strategy helped Dell dominate the PC market for a while.
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Moderate

115) Why do companies use electronic data interchange? What are its advantages and
disadvantages?
Answer: Since the 1970s, companies have been using electronic data interchange (EDI) to
transmit information about orders, inventories, invoices, and other data electronically between
partners in a supply chain. This approach to bridge building, which predates the Internet, often
relies on private networks and proprietary software and is time-consuming to set up. While it
dramatically improves supply chain performance by alerting suppliers and customers about real-
time demand, it also tends to lock partners into their relationship. After spending a lot of time
and energy building a data bridge, companies are less likely to switch partners.
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Easy

31
Copyright © 2018 Pearson Education, Inc.
116) How do supply chains benefit from sensing technologies?
Answer: Supply chains benefit from sensing technologies that improve visibility during transit
and in storage. RFID chips are especially useful in supply chains. Attached to packages or crates,
they can transmit data as they pass by readers at seaports, railway stations, or warehouses. For
high-risk supply chains, organizations use a combination of sensors and tracking software.
Global positioning systems (GPS) are a critical feature of navigation and transportation systems.
These devices receive signals from 32 orbiting satellites that transmit time and location data, and
the GPS receiver computes its own 3-dimensional location based on distances from the three or
four closest satellites. Location is accurate within a few meters. GPS devices help drivers
navigate to their destinations and keep managers apprised of their fleets. Live GPS tracking
software shows the speed and location of every vehicle overlaid against live traffic maps.
AACSB: Information Technology
Chapter LO: 3: Define supply chain management, and describe the metrics, technologies, and
information systems that support supply chain processes.
Difficulty: Easy

117) What is sentiment analysis? Explain, with an example, how it can help businesses.
Answer: Sentiment analysis is the capability of specialized software to scan text input surveys,
blogs, or other user-generated content and classify the opinions as pro, con, or neutral towards a
company or product. For example, an online ticketing company called StubHub used sentiment
analysis software from Scout Labs to spot a surge in complaints from baseball fans on social
media. The stadium mistakenly announced to some ticket holders that a Yankees-Red Sox game
was rained out, so the ticket holders requested refunds. The game was only delayed, however,
and StubHub initially denied fans' requests. The company quickly reversed that policy when
sentiment analysis caught the growing tide of negative posts about StubHub on sports blogs.
AACSB: Information Technology
Chapter LO: 4: Define customer relationship management and its role in an organization, and
describe the metrics and information systems that support it.
Difficulty: Easy

118) Explain how e-marketing information systems track customer behavior.

Answer: Technically, e-marketing software tracks customer behavior by embedding in the
HTML email a web beacon or web bug, which is a tiny, invisible image, typically a single pixel
with a unique identifier. The image is actually located on the e-marketing server, and when the
customer opens the message, a request is sent from the recipient's computer to retrieve the
invisible image and download it. The request includes the date, time, and IP address of the
computer making the request, and the unique identifier links the request to the customer's email
address as well.
AACSB: Information Technology
Chapter LO: 4: Define customer relationship management and its role in an organization, and
describe the metrics and information systems that support it.
Difficulty: Easy

32
Copyright © 2018 Pearson Education, Inc.
119) What are the advantages and disadvantages of the different integration strategies of ERP
modules?
Answer: The engineered suite offers solid integration on the back-end and consistent user
interfaces throughout. Its single architectural foundation can translate to lower IT support costs
because staff can focus on just one platform. However, the individual modules may lack all the
rich features users want. Also, switching costs are far higher for ERPs in which all the modules
are so interdependent.
Another drawback is that tightly integrated ERP systems can be more difficult to modify to meet
changing business needs, compared to more loosely linked best-of-breed systems. What seems
like a simple change in the structure of a field will ripple throughout the organization with
unintended consequences. Making changes in such systems to meet new business needs can
often take longer than expected.
Organizations that use either the synchronized or best-of-breed approach must pay close
attention to master data management, since the same information will appear in more than one
system. Avoiding the fate in which the different systems report inconsistent versions of the
"truth" is a constant challenge.
AACSB: Information Technology
Chapter LO: 5: Explain the importance of ERP systems, and describe how they are created,
integrated, and implemented.
Difficulty: Easy

120) What are the strengths of ERP systems?

Answer: Despite implementation hurdles, the ERP, at least to integrate finance and human
resources, is becoming a near necessity for most organizations. Once in place, it can dramatically
enhance operational efficiencies and reduce costs. A key ingredient, of course, is that the
organization's employees actually change the way they work to take best advantage of the
integrated back-end and paperless workflows. If used properly, ERP systems can standardize and
streamline business processes across the whole enterprise, eliminating the waste and redundancy
that creep in when everyone's work is so focused on a single department. An ERP helps people
appreciate the full process, spanning departments, not just the part that touches their unit.
AACSB: Information Technology
Chapter LO: 5: Explain the importance of ERP systems, and describe how they are created,
integrated, and implemented.
Difficulty: Easy

33
Copyright © 2018 Pearson Education, Inc.