Chapter 21

Accounting Information Systems, 12e (Romney/Steinbart)
Chapter 21 AIS Development Strategies

1) Which statement below regarding the development of an AIS is false?
A) A newly designed AIS always meets user needs for a time period.
B) hanges to the AIS are often difficult to ma!e after re"uirements have been fro#en into
specifications.
) $he development process can ta!e so long that the system no longer meets company needs.
%) &sers are sometimes unable to specify their needs ade"uately.
Answer' A
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0) When canned software is used for systems ac"uisition1 the conceptual design phase of the S%.
A) involves a ma!e2or2buy decision.
B) is combined with the physical design phase.
) is eliminated.
%) is the same.
Answer' A
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+) When canned software is used for systems ac"uisition1 the physical design phase of the S%.
A) does not involve designing and coding1 although modifications may be made.
B) is combined with the conceptual design phase.
) is eliminated.
%) is the same as for developing custom software.
Answer' A
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3) When canned software is used for systems ac"uisition1 the implementation and conversion phase of
the S%. does not
A) involve the documentation step.
B) re"uire the company to have trained IS personnel.
) re"uire the develop and test software step.
%) include A and above.
Answer' %
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1
opyright 4 0510 (earson /ducation1 Inc. publishing as (rentice 6all
7) When canned software is used for systems ac"uisition1 the maintenance aspect of the operations and
maintenance phase of the S%.
A) is more costly.
B) is not necessary and is eliminated.
) is usually the responsibility of the vendor.
%) re"uires trained personnel.
Answer'
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*) Software development companies write commercial software that can be used by a variety of
organi#ations. Sometimes these companies combine both software and hardware together to sell as one
pac!age. Such a pac!age is commonly referred to as
A) a turn!ey system.
B) a value2added system.
) an application service pac!age.
%) canned software.
Answer' A
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9) What is a ma-or problem with :canned software:?
A) A commercial software development company has developed it.
B) anned software is sold on the open mar!et to a broad range of users with similar re"uirements.
) anned software may not meet all of a company;s information or data processing needs.
%) anned software may offer easy availability and lower costs.
Answer'
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<) Which statement is true regarding canned software and the S%.?
A) anned software cannot be modified to meet uni"ue user needs.
B) ompanies that buy1 rather than develop1 AIS software can still follow the S%. process.
) 8ost canned software meets all of a company;s information or data processing needs.
%) $he S%. process does not apply to purchasing canned software.
Answer' B
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=) $he reasons for >>>>>>>> are to simplify the decision2ma!ing process1 reduce errors1 provide
timesavings1 and avoid potential disagreements.
A) leasing
B) outsourcing
) prototyping
%) sending out a re"uest for a proposal
Answer' %
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15) $otal costs are usually lower1 and less time is re"uired for vendor preparation and company
evaluation1 when re"uests for proposal are solicited based on
A) e?act e"uipment needs.
B) generali#ed software needs.
) specific hardware and software specifications.
%) @one of the above are correct.
Answer'
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11) Information provided on a )e"uest Aor (roposal given to vendors should include
A) a budget for software and hardware.
B) detailed specifications for the AIS.
) timeframe re"uired for completion of the pro-ect.
%) All of the above are correct.
Answer' B
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10) $he system performance evaluation approach that evaluates systems based on the weighted score of
criteria and points totaled is called
A) benchmar! problem.
B) point scoring.
) prototyping.
%) re"uirements costing.
Answer' B
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1+) $he approaches to evaluating vendor proposals that do not incorporate dollar estimates of costs or
benefits are !nown as
A) benchmar! problem and point scoring.
B) point scoring and re"uirement costing.
) re"uirement costing and benchmar! problem.
%) All methods mentioned above include dollar estimates.
Answer' B
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13) A re"uest for proposal sent to software vendors is an important tool since it can reduce errors. Which
statement below supports this reason?
A) All responses are in the same format and based on the same information.
B) Both parties possess the same e?pectations and pertinent information is captured in writing.
) $he chances of overloo!ing important factors are reduced.
%) $he same information is provided to all vendors.
Answer'
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17) What is the first step a company should ta!e when evaluating re"uests for proposals?
A) arefully compare proposals against the proposed AIS re"uirements.
B) %etermine how much of a given proposal meets the desired AIS re"uirements.
) /liminate proposals that are missing important information or fail to meet minimum re"uirements.
%) Invite vendors to demonstrate their systems.
Answer'
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1*) $he >>>>>>>> method calculates and compares the processing times of different AIS to compare
system performance.
A) benchmar! problem
B) mandatory re"uirements
) point scoring
%) re"uirements costing
Answer' A
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19) What is a drawbac! to using the re"uirement costing method of software and hardware evaluation?
A) %ollar estimates of costs and benefits are not included.
B) Intangible factors such as reliability and vendor support are overloo!ed.
) $he weights and points used are assigned sub-ectively.
%) $here is no drawbac! to using the re"uirements costing method.
Answer' B
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1<) A costly and labor2intensive approach to systems ac"uisition is creating
A) canned software.
B) custom software.
) modified software.
%) turn!ey software.
Answer' B
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1=) Which of the following is not appropriate for end user development?
A) performing statistical analyses
B) preparing schedules and lists
) retrieving information from databases
%) updating database records
Answer' %
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05) What is the basic function of a help des!?
A) control access to corporate data
B) provide technical maintenance and support
) train end users and assist with application development
%) All of the above are basic functions of a help des!.
Answer' %
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01) Why do so many organi#ations develop their own software1 when many canned software pac!ages
are available?
A) An organi#ation may have uni"ue re"uirements.
B) anned software pac!ages are often less e?pensive than software developed in house.
) $he organi#ation;s si#e and comple?ity necessitates the in2house development of software.
%) A and above are correct.
Answer' %
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00) Which of the following is not a guideline used to select an outside developer for custom system?
A) $he outside developer should have an in2depth understanding of how the company conducts its
business.
B) $he outside developer should have e?perience in the company;s industry.
) $he outside developer should possess a good understanding of business in general.
%) $he outside developer should be able to complete the system independently1 without re"uiring
fre"uent contact to as! "uestions.
Answer' %
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0+) What term is used to refer to users becoming involved in the hands2on development1 control1 and
employment of information systems?
A) amateur user computing BA&)
B) competitive intra2organi#ation systems development approach BI,S%A)
) end2user computing B/&)
%) novice information systems development B@IS%)
Answer'
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03) /nd2user development is inappropriate for some types of systems. What is an e?ample of a system
that end users should not be allowed to develop?
A) a payroll processing program
B) a program that performs :what2if: statistical modeling
) developing an application using prewritten software such as a spreadsheet or database system
%) preparing a schedule or list such as a depreciation schedule
Answer' A
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07) What is an important ris! to be considered when allowing end users to develop a system?
A) IS personnel may not have enough wor! to do.
B) Systems are implemented that have not been ade"uately tested.
) Systems are usually easy to use and modify.
%) &sers control development process and decide what systems are created and implemented.
Answer' B
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0*) Which of the following about end2user computing is true?
A) System users !now best what they need1 so should be able to create their own applications.
B) /nd2users1 while !nowledgeable about their -ob1 are not trained to create systems applications1 and
should not be allowed to do so.
) It is inefficient and costly to as! the IS department to create basic applications that only a few users
need to use.
%) In most companies1 the IS department doesn;t want end2users to create their own applications1 for
fear IS won;t have enough wor! to do.
Answer' A
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09) What would be one duty of second2line help des! personnel?
A) handling complicated "ueries re"uiring research
B) provide callers with scripted answers
) using e?pert systems to "uic!ly find answers
%) @one of the duties listed above pertain to second2line help des! personnel.
Answer' A
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0<) 6ow does outsourcing improve an organi#ation;s utili#ation of assets?
A) by allowing a company to completely eliminate its IS department1 which will reduce its payroll costs
B) by allowing the company to sell assets to outsourcers and improve their cash position
) by eliminating the e?pense of !eeping up with the latest technology and1 thus1 eliminate the drain on
cash reserves
%) Both B and above are correct.
Answer' %
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0=) Which of the following is not a benefit of outsourcing?
A) access to greater e?pertise and more advanced technology
B) greater control
) improved development time
%) lower costs
Answer' B
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+5) A company that has outsourced its AIS function can lose a fundamental understanding of its AIS
needs and the strategic uses of AIS with the passing of time. What is this ris! called?
A) focus reduction
B) loss of control
) reduced competitive advantage
%) unfulfilled goals
Answer'
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+1) Which advantage of outsourcing1 given below1 may tend to cause resistance on the part of in2house
IS staff and other organi#ation employees?
A) ,utsourcing allows a company to better use its assets and scarce resources.
B) ,utsourcing can lower a company;s overall IS costs.
) ,utsourcing facilitates downsi#ing.
%) ,utsourcing helps eliminate the pea!s and valleys of system usage.
Answer'
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+0) $he ris! of outsourcing concerned with unauthori#ed disclosure of sensitive information is the ris!
of
A) a loc!ed2in system.
B) a loss of control.
) a reduced competitive advantage.
%) infle?ibility.
Answer' B
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<
++) Business (rocess 8anagement views business processes as
A) strategic organi#ational assets.
B) a series of small tas!s to be closely managed.
) related activities that1 once perfected1 should be managed on an e?ception basis.
%) subsets of organi#ational strategy that should not be owned by any specific person or department.
Answer' A
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+3) Which of the following is not an element of managing a business process :end to end:?
A) identifying process e?perts to oversee specific functions across units
B) designating a process owner
) setting performance standards
%) establishing control and monitoring processes
Answer' A
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+7) Which of the following is not true about business process management BB(8) and enterprise
resource planning B/)() systems?
A) /)( systems encompass all functions and processes in an organi#ation1 but B(8 systems are
implemented at process or unit levels in an organi#ation.
B) B(8 systems are process2centered1 but /)( systems are data2centered.
) ,rgani#ations can use both /)( and B(8 systems at the same time.
%) /)( and B(8 systems rely heavily technology for communication and coordination.
Answer' A
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+*) Which of the following is not one of the ways in which a Business (rocess 8anagement System can
improve internal control?
A) Innovative technology allows access and authori#ation controls to be programmed at the transaction
level.
B) %ocuments or transactions that re"uire approval can be electronically routed to a manager.
) (rocess rules are used to alert users when actions must be ta!en.
%) All actions and processes are monitored and documented in a process log for periodic review.
Answer' A
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+9) $he basic premise of >>>>>>>> is that it is easier for people to e?press what they li!e or disli!e
about an e?isting system than to imagine what they would li!e in a system.
A) modified software
B) outsourcing agreements
) prototyping
%) turn!ey systems
Answer'
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+<) Which statement below regarding prototyping is false?
A) (rototypes are considered :first drafts1: which are "uic!ly built and intended to be discarded when
the real system is finished.
B) %evelopers who use prototyping still go through the systems development life cycle.
) (rototypes help developers and end users ma!e conceptual and physical design decisions.
%) (rototyping allows developers to condense and speed up parts of the analysis and design phases.
Answer' A
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+=) What is the emphasis of the first step involved in developing a prototype?
A) develop a good prototype into a fully functional system
B) speed and low cost rather than efficiency of operation
) users identify changes to be made in an iterative process
%) what output should be produced rather than how it should be produced
Answer' %
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35) $he development of which type of system listed below would not benefit from the creation of a
prototype?
A) decision support systems
B) e?ecutive information systems
) e?pert systems
%) systems that cross a number of organi#ational boundaries
Answer' %
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31) What is a disadvantage to prototyping?
A) developers may shortchange the testing and documentation process
B) errors are li!ely to be detected and eliminated early in the development process
) prototyping may be less costly than other approaches
%) prototyping usually produces a better definition of user needs than other approaches
Answer' A
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30) Which is not a problem with AS/ technology?
A) cost
B) incompatibility
) lac! of system documentation
%) unmet e?pectations
Answer'
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3+) Which of the following were AS/ tools not designed to do?
A) replace s!illed designers
B) plan1 analy#e1 design1 program1 and maintain an information system
) automate important aspects of the software development process
%) enhance the efforts of managers in understanding information needs
Answer' A
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33) Benathir %onathat1 director of the pro-ect committee1 has received approval from management for
implementation of a new accounting information system. After putting out an )A(1 the committee settled
on a vendor that will deliver all hardware and software re"uired on a lease basis. $he committee decided
to go with
A) canned software.
B) a turn!ey system.
) an outsourced system.
%) an end2user developed system.
Answer' B
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37) Benathir %onathat1 director of the pro-ect committee1 has received approval from management for
on a Web2based application service provider that will manage all hardware and software re"uired by the
system1 with fees based on usage. $he committee decided to go with
A) canned software.
Answer'
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3*) Benathir %onathat1 director of the pro-ect committee1 has received approval from management for
on a vendor that will provide an industry standard software pac!age and post2sale technical support. $he
committee decided to go with
A) canned software.
Answer' A
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39) Airms should consider developing custom software only if
A) it will be used for critical functions li!e accounts receivable.
B) it will contribute to development of a significant competitive advantage.
) the firm has the necessary e?pertise available in2house.
%) the available canned software is very e?pensive.
Answer' B
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3<) /nd2user computing is li!ely to result in aBn)
A) well tested system.
B) well documented system.
) rapidly developed system.
%) efficient system.
Answer'
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3=) What is a benchmar! 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
) $he cost2benefit tradeoff defined by the relationship between increased costs and increased benefits
from a system
%) A method used to test the compatibility of a new accounting information system with e?isting
hardware and software
Answer' B
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75) 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 pro-ect
criteria?
A) (oint scoring
B) )esource clearing
) )e"uirements costing
%) 8ulti2ob-ective optimi#ation.
Answer' A
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71) Where is the responsibility for the development of end2user computing applications typically
placed?
A) /nd users
B) 6elp des!
) Information $echnology Services %epartment
%) (rogrammers
Answer' A
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1+
70) allow Couth lothing BC) declared ban!ruptcy in 0559 and has since closed 09 stores1 which
amounts to over half of its retail outlets. ,ne of the conditions specified for emergence from ban!ruptcy
is a reduction in the cost of operating the firm;s accounting information system. Which of the following
may be recommended?
A) )eplace the e?isting system with one of a smaller scale.
B) ustomi#e the e?isting system.
) ,utsource system operations.
%) (urchase a canned software system.
Answer'
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7+) Software as a Service BSaaS) refers to Web2based computing services provided by aBan)
A) application service provider BAS().
B) Internet service provider BIS().
) end2user system B/&S).
%) help des!.
Answer' A
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73) Airms should consider preparing a software prototype if the software
A) will be used for a critical function li!e accounts receivable.
B) automates an unstructured or semi2structured tas!.
) can be produced using e?pertise available in2house.
%) is available as a canned pac!age.
Answer' B
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77) Airms should consider preparing a software prototype if the application
A) will be used for a critical function li!e inventory management.
B) automates a structured tas!.
) can be produced using outside developers.
%) inputs and outputs are not clearly defined.
Answer' %
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7*) Which of the following is an advantage of AS/?
A) It e?hibits a high degree of cross2system compatibility.
B) It is an ine?pensive technology that is accessible to small businesses.
) %ocumentation is generated automatically.
%) It enhances the congruence between user e?pectations and the final system.
Answer'
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79) As part of the development process for a new -ob bidding software system for 6alide onstruction1
..1 Don helide prepared and distributed diagrams that represent input and output screenshots. $he
diagrams are an e?ample of
A) AS/.
B) an operational prototype.
) a )A(.
%) a nonoperational prototype.
Answer' %
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7<) As part of the development process for a new -ob bidding software system for 6alide onstruction1
..1 Don helide prepared and distributed functional programs that simulate the system;s input and
output interface. $hese programs are an e?ample of
A) AS/.
B) an operational prototype.
) a )A(.
%) a nonoperational prototype.
Answer' B
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7=) In which of the following cases is outsourcing li!ely to be the best solution to the firm;s data
processing needs?
A) Sad lown (a-amas produces and wholesales clothing products to retailers worldwide. /ighty
percent of its sales orders are ta!en during the months of ,ctober and @ovember. Sad lown re"uires a
system that will manage online ordering and fulfillment.
B) 8odest /?pectations Investment Services manages highly diverse portfolios and provides personal
services to high income investors worldwide. $he firm needs a system that will pull together selected
investment data from a large variety of sources and allow account managers to prepare customi#ed
reports for customers.
) D.%. Cacht is in the business of buying businesses1 managing them for no more than two years1 and
then selling them at a profit. $he firm re"uires a fle?ible system that will allow them to effectively
manage the various types of businesses it controls.
%) 6alide onstruction1 ..1 manages the design and construction of desalini#ation plants and re"uires
a system that will allow it to manage the process from bid to billing.
Answer' A
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*5) %escribe the difficulties that could be encountered when developing an AIS.
Answer' %emand for development resources is very high and can bac!log AIS pro-ects for several
years. $he development process can be lengthy. System developers may not understand the company;s
business1 and conse"uently the new system may not always meet user;s needs. $he time ta!en to develop
an AIS may ma!e it obsolete when the new system is ready to launch. &sers may not be able to
articulate their demands ade"uately1 and therefore they may be dissatisfied with the finished product.
hanges to the AIS are difficult to ma!e beyond a certain point1 so the AIS remains in a state of
:perpetual development: and flu?.
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*1) What are the three methods to obtain a new information system? What is a turn!ey system?
Answer' $he three methods to obtain a new information system are purchasing new software1
developing software in2house Beither by development staff or by the system end2users themselves)1 or
hiring an outside company to create a system. A turn!ey system is a software and hardware pac!age1
which is complete and ready to be used :at the turn of a !ey.: Eendors for turn!ey systems primarily
speciali#e in a particular industry.
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*0) What guidelines should be followed when contracting with an outside developer to create custom
software?
Answer' arefully select a developer by chec!ing into references and in"uiring about reputation and
past e?periences from other organi#ations. Sign a contract with clearly defined areas of responsibility for
the developer. (lan and monitor each step by designing each step of the pro-ect in detail1 and ma!ing
fre"uent chec!points for monitoring the pro-ect. 8aintain effective communication with the developer.
ontrol all costs and minimi#e cash outflow until the pro-ect has been completed and is accepted.
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*+) %escribe the purposes of a help des!.
Answer' A help des! consists of analysts and technicians that encourage1 support1 coordinate1 and
control end2user activities. Some of the duties and activities of the help des! includes the following'
6ot2line assistance to solve problems. learinghouse for information1 coordination1 and assistance.
$raining1 maintenance1 and support center for the software and hardware. Application development
assistance center. Approval point for development and implementation standards for hardware and
software purchases1 documentation and application testing1 and security issues. ontrolling access to
corporate data by using access matri? controls1 etc. /valuating new end2user hardware and software
products.
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*3) %escribe outsourcing and identify the two types of outsourcing agreements.
Answer' ,utsourcing is the hiring of an outside company to handle all or part of a company;s data
processing activities. $here are two main types of outsourcing agreements' 8ainframe outsourcing and
lientFserver or des!top outsourcing. 8ainframe outsourcing is when the outsourcer buys the client;s
e"uipment1 hires the client;s employees1 and operates on the client;s site or connects the system to
outsourcer;s computer. lientFserver or des!top outsourcing is when a particular service1 segment of
business1 function1 or ( support is outsourced.
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*7) %escribe computer2aided software Bor systems) engineering BAS/) and identify the advantages and
disadvantages of AS/?
Answer' AS/ refers to an integrated pac!age of computer2based tools that automate important aspects
of the software development process. AS/ tools can be used to plan1 analy#e1 design1 program1 and
maintain an information system. AS/ tools do not replace s!illed designers1 but they provide effective
support for all phases of the S%.. Advantages Improved productivity1 improved program "uality1
cost savings1 improved control procedures1 and simplified documentation. %isadvantages
Incompatibility1 cost1 and unmet e?pectations.
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**) /?plain the concept of an application service provider.
Answer' An application service provider Bor AS() is a third2party provider of software to organi#ations.
An AS( is Web2based1 providing delivery of software to its clients over the Internet. An organi#ation
that uses an AS( :rents: the software1 thus eliminating the tas!s of buying1 installing1 and maintaining
the software. Among the advantages to using this approach as opposed to the outright purchase of
software is a reduction of software costs and administrative overhead1 automated software upgrades1
scalability as the organi#ation itself grows1 global access to information1 access to s!illed I$ personnel1
and ability to focus on core competencies rather than I$ re"uirements.
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*9) Identify the ways an organi#ation can gain full advantage of using a )e"uest Aor (roposal B)A().
Answer' $he more information an organi#ation provides in its )A(1 the better its chances are of
receiving a system that meets its re"uirements. It is important to include detailed specifications for the
new AIS1 including re"uired applications1 inputs1 outputs1 files1 databases1 fre"uency and ways of
updating files and creating "ueries1 and any uni"ue characteristics or re"uirements. It is also essential
that the )A( distinguishes between what are mandatory re"uirements and what are :desirable but not
essential: re"uirements.
(age )ef' *17
AASB' Analytic
*<) %iscuss how an organi#ation can develop custom software.
Answer' ustom software can be developed and written in2house. 8any organi#ations develop their
own software because their re"uirements are uni"ue or their si#e and comple?ity necessitate the creation
of a custom pac!age. Specific applications or functions can often be developed in2house by end2users.
/nd2users can use spreadsheet or database software programs to create reports1 perform :what2if:
analysis1 prepare depreciation schedules1 or prepare budgets. Alternatively1 third2party developers can be
contracted to develop custom software for an organi#ation. ustom software should only be developed
when it results in a distinct1 competitive advantage to the organi#ation.
(age )ef' *19
AASB' Analytic
*=) What are the advantages and disadvantages of custom software and of canned software for meeting
application software needs?
Answer' ustom software' tailored to needsG potential competitive advantageG and better control over
the process' e?pensiveG difficult to writeG error proneG and time consuming. anned software' easy to
ac"uireG fast to ac"uireG ine?pensiveG good documentationG updates are ine?pensiveG and can be tested'
not tailored to needsG not as efficient as custom softwareG does not develop in2house e?pertise in
creationG and developer may go out of business.
(age )ef' *131 *1<
AASB' Analytic
1<
95) %escribe end2user computing and the advantages and ris!s involved.
Answer' /nd2user computing is the hands2on development1 use1 and control of computer2based
information systems by users. $he suitable applications are' (roducing simple reports and answers to
one2time "ueries by accessing the company database. Sensitivity1 statistical1 or :what2if: analysis. &sing
spreadsheets or database software to analy#e data. (reparing schedules and lists such as depreciation
schedule1 accounts receivable aging1 and loan amorti#ations. &ser computing has seen an e?plosive
growth because' &sers reali#ed that computers can be used to meet more and more information needs.
Increased access to data created many new uses and needs for information. ,ne prediction is that end2
user computing may account for 97H to =7H of all information processed in the near future. Advantages
of end2user computing' $he user is involved in the creation1 control1 and implementation of the softwareG
systems tend to meet user needsG programs can be created timelyG end2users creating programming can
free up IS resourcesG and programs tend to be versatile and easy to use. %isadvantages of end2user
computing' .ogic and development errorsG inade"uately tested applicationsG inefficient systemsG poorly
controlled and documented systemsG systems incompatibilitiesG duplication of systems and dataG and
wasted resources and increased costs.
(age )ef' *192*1=
AASB' Analytic
91) %escribe prototyping and identify when prototyping is appropriate. Identify the steps involved in
prototyping. %iscuss the advantages and disadvantages of prototyping.
Answer' (rototyping is the development of a simplified wor!ing model Bprototype) of an information
system. It is a :first draft1: that is "uic!ly and ine?pensively built and provided to users for testing.
(rototyping is appropriate if' $here is uncertainty about the e?isting AIS. $he "uestions to as! are
unclear. $he final AIS is not clearly visuali#ed. Speed is an issue. $here is a high li!elihood of failure.
$he system is a decision support system1 e?ecutive information system1 e?pert system1 or information
retrieval system. Suitable when the system involves e?perimentation and trial2and2error development.
Suitable when the system re"uirements evolve as the system is used. (rototyping is not appropriate if'
$he system is large or comple? and serves ma-or organi#ational components or crosses a number of
organi#ational boundaries. Steps in developing a prototype' Identify basic system re"uirements based on
users; needs for what output should be produced. %evelop initial prototype emphasi#ing speed and low
cost instead of efficiency of operation and demonstrate it for users. 8a!e changes needed as identified
by users1 may ta!e several iterations. %evelop and use the user2approved system. Advantages of
prototyping' Better definition of user needs. 6igher user involvement and satisfactionG faster
development timeG fewer errorsG more opportunity for changesG and less costly to the organi#ation.
%isadvantages of prototyping' significant user timeG less efficient use of system resourcesG incomplete
system developmentG inade"uately tested and documented systemsG negative behavioral reactionsG never2
ending development.
(age )ef' *0+2*07
AASB' Analytic
1=
90) %iscuss how information system outsourcing can provide the organi#ation with both a business
solution and asset management.
Answer' 8any companies have come to view information system outsourcing as not merely an IS
solution but a true business solution. ,utsourcing has become a plausible business solution because it
allows the organi#ation to focus and put its concentration into its core competencies. $his transfer of IS
responsibilities can be liberating to the organi#ation1 as it frees up more resources to devote to the
mainstay of its business efforts. $he viewpoint is that a company should be allowed to do what it does
bestG so the outsourcer is better at IS operations and management1 while the organi#ation is better in its
areas or core competencies. 8any organi#ations treat outsourcers as business partners1 wor!ing closely
to meet the strategic business ob-ectives of the organi#ation. An additional benefit of IS outsourcing is
asset management. 8any organi#ations tie up millions of dollars in their IS efforts1 and the attempt to
!eep up with technological improvements can create a steady drain on cash reserves and other
organi#ational resources. ,ne way to significantly improve an organi#ation;s cash position and reduce
annual e?penses is to sell off IS assets1 or lease them to the outsourcing organi#ation. $his can have
positive benefits for both the organi#ation and outsourcing vendor as well1 as it helps the organi#ation
with cash and e?pense management1 and can provide an outsource vendor with the e"uipment Band even
people) it needs to properly service its client.
(age )ef' *05
AASB' Analytic
9+) %escribe each of the four important principles underlying Business (rocess 8anagement BB(8).
Answer' Business processes can prouce competitive avantages through innovative processes and
technology to respond to changing consumer1 mar!et and regulatory demands before competitors are
able to respond. Business processes must be manage en to en1 meaning a process owner should
have responsibility to set performance standards1 control and monitor processes1 and communicate with
other functional units. Business processes shoul be agile1 which emphasi#es continuous improvement
and adaptability. Business processes must be aligne !ith organi"ational strategy an nees to be
effective and efficient.
(age )ef' *012*00
AASB' Analytic
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Chapter 21 AIS Development Strategies

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