Chapter 8: The Business of Information Technology Flashcards
Framework that displays the demands on the business side and the IT offerings on the supply side to help understand differences in capabilities
IT Maturity Model
What are the three levels of the IT Maturity Model
- Business Efficiency (IT = Order Taker)
- Business Effectiveness (IT = Solutions Provider)
- Business Transformation (IT = Business Partner)
This IT Maturity Level represents an immature IT organization where IT managers maintain an inward focus.
IT Maturity Level 1
This IT Maturity Level shifts the focus to business processes and IT personnel search for solutions to business problems
IT Maturity Level 2
This IT Maturity Level is reached when IT managers are considered business partners who search for ideas that provide value to the organization and value relationships both inside and outside not only the IT organization but also the firm
IT Maturity Level 3
What three (3) firm characteristics affect what the IT organization is expected to do?
- Firm Size
- Organizational Structure
- Level of IT Maturity
Name the 14 core IT support activities
- developing and maintaining information systems
- managing supplier relationships
- managing data, information * Knowledge
- managing Internet and network services
- managing human resources
- operating the data center
- providing general support
- planning for business discontinuities
- Innovating Current Processes
- Establishing Architectual Platforms and Standards
- Promoting Enterprise security
- anticipating new technologies
- participating in setting and implementing strategic goals
- integrating social IT
What are the 8 common IT activities are considered Level 1
- developing and maintaining information systems
- managing supplier relationships
- managing data, information * Knowledge
- managing Internet and network services
- managing human resources
- operating the data center
- providing general support
- planning for business discontinuities
What are the 3 common IT activities are considered Level 2
- Innovating Current Processes
- Establishing Architectual Platforms and Standards
- Promoting Enterprise security
What are the 3 common IT activities are considered Level 3
- Anticipating new technologies
- Participating in setting and implementing strategic goals
- Integrating the use of social IT
True or False
IT professionals should not have the sole responsibility for deciding which business projects receive IT dollars
True
Business partners participate in prioritizing IT projects to ensure that resources are applied appropriately
True or False
IT professionals should not solely decide the acceptable level of IT services or security.
True
senior managers run the business, they are the ones who must decide on the level of service and security that should be delivered by the IT organization.
The most senior executive in the enterprise responsible for technology vision and leadership for designing, developing, implementing, and managing IT initiatives for the enterprise to operate effectively in a constantly changing and intensely competitive marketplace
Chief Information Officer
Track emerging technologies; advise on technology adoption; design and manage IT architecture
Chief technology officer (CTO)
Create knowledge management infrastructure; build a knowledge culture; make corporate knowledge payoff
Chief knowledge officer (CKO)
Create and maintain the definition, storage, and retirement of data in the firm; streamline access to the data; reduce data redundancy
Chief data officer (CDO)
Take advantage of data analysis opportunities, often used for understanding customers, transactions, markets, or trends
Chief analytics officer (CAO)
Manage phones, networks, and other communications technology across the entire enterprise
Chief telecommunications officer (CTO)
Chief network officer (CNO)
Build and maintain internal and external networks
Chief resource officer (CRO)
Manage outsourcing relationships
This person Ensure that information management practices are consistent with security requirements
Chief information security officer (CISO)
Establish and enforce processes and practices to meet privacy concerns of customers, employees, and vendors
Chief privacy officer (CPO)
Oversee and ensure the viable use of mobile platforms and apps
Chief mobility officer (CMO)
Maintain a social IT perspective that results in effectively implementing social media
Chief social media officer (CSMO)
What are the 10 components to a Business Case?
- Executive summary
- Overview and introduction
- Assumptions and rationale
- Project summary
- Financial discussion and analysis
- Benefits and business impacts
- Schedule and milestones
- Risk and contingency analysis
- Conclusion and recommendation
- Appendices
What are the four (4) categories of benefits
- Financial Benefits
- Quantifiable Benefits
- Measurable
- Observable
A way to express the benefit in financial terms
Financial Benefit (Ex. Profit)
A way to measure the size or magnitude of the benefit, but financial benefits are not directly determinable.
Quantifiable Benefit (% increase=?Financial Impact)
A way to measure the benefit, but it is not necessarily connectable to any organizational outcome.
Measurable Benefit (Ex. Satisfaction Survey)
They can be detected only by opinion or judgment. These are the subjective, intangible, soft, or qualitative benefits
Observable Benefit (Ex. Happier Customers)
Refers to “evaluating new and existing applications collectively on an ongoing basis to determine which applications provide value to the business in order to support decisions to replace, retire, or further invest in applications across the enterprise.
IT portfolio management
What are the four (4) asset classes that make-up a company’s IT portfolio?
- Transactional Systems
- Infrastructure Systems
- Infromational Systems
- Strategic Systems
What type of IT asset class streamlines or cuts costs for how business is done
Transactional Systems
What type of IT asset class provides the base foundation of shared IT services used for multiple applications such as servers, networks, tablets, or smartphones?
Infrastructure Systems
What type of IT asset class provide information used to control, manage, communicate. analyze, or collaborate?
Informational Systems
What type of IT asset class helps an organization to gain a competitive advantage in the marketplace?
Strategic Systems
What are the six (6) methods to value IT investments
- Return on Investment (ROI)
- Net Present Value (NPV)
- Economic Value Added (EVA)
- Payback Period
- Internal Rate of Return (IRR)
- Weighted Scoring Methods
Valuation method that takes into account the time value of money in which cash inflows and outflows are discounted.
Net Present Value (NPV)
Valuation method that calculates the percentage rate that measures the relationship between the amount the business gets back from an investment and the amount invested.
Return on Investment (ROI)
Length of time needed to recoup the cost of an investment.
Payback Period
Valuation method that accounts for opportunity costs of capital to measure true economic profit and revalues historical costs to give an accurate picture of the true market value of assets.
Economic Value Added (EVA)
Represents the rate that is earned on an investment. The rate is compared to a target that is determined by corporate policy.
Internal Rate of Return
Costs and revenues are weighted based on their strategic importance, level of accuracy or confidence, and comparable investment opportunities.
Weighted Scoring Methods
Method that focuses attention on the organization’s value drivers (which include, but are not limited to, financial performance). Companies use it to assess the full impact of their corporate strategies on their customers and workforce, as well as their financial performance.
Balanced Scorecard
What are the four (4) perspectives applied to balanced scorecards?
- Customer perspective
- Internal business perspective
- Learning perspective
- Financial perspective
What are the two (2) types of monitoring IT Metrics
- Balanced Scorecard
- IT Dashboards
What are the four (4) types of IT Dashboards
- Portfolio Dashboards
- Business-IT Dashboards
- Service Dashboards
- Improvement Dashboards
These dashboards show senior IT leaders the status, problems, milestones, progress, expenses, and other metrics related to specific projects
Portfolio Dashboards
These dashboards show relevant business metrics and link them to the IT systems that support them.
Business-IT Dashboards
These dashboards show important metrics about the IS such as up time, throughput, service tickets, progress on bug fixes, help desk satisfaction, and so on
Service Dashboards
These dashboards monitor three to five key improvement goals for the IT group
Improvement Dashboards
What are the three (3) main IT funding methods?
- Chargeback
- Allocation
- Corporate Budget
IT costs are recovered by charging individuals, departments, or business units based on actual usage and cost
chargeback funding method
recovers IT costs based on something other than usage, such as revenues, log‐in accounts, or head count (number of employees) in each business unit or department.
allocation funding method
IT costs fall to the corporate bottom line, rather than levying charges on specific users or business units
corporate budget funding method
What are the two (2) major types of IT costing Methods
- Activty-based Costing
- Total Cost of Ownership
Costing method that calculates costs by counting the actual activities that go into making a specific product or delivering a specific service
Activity-based Costing
Costing method that looks beyond initial capital investments to include costs associated with technical support, administration, training, and system retirement and so on.
Total Cost of Ownership
