Review
Questions
1.Describe the productivity paradox.
The productivity paradox is the observation that productivity increases at a rate that is lower than expected when new technologies are introduced. Unfortunately, while it is easy to quantify the costs associated with developing an information system, it is often difficult to quantify tangible productivity gains from its use. Information systems may have increased productivity, but other forces may have simultaneously worked to reduce it, the end results being difficult to identify. Factors such as government regulations, more complex tax codes and stricter financial reporting requirements and more complex products can all have major impacts on a firm’s productivity.
2.Describe how to make a successful business case, contrasting faith-, fear-, and fact-based arguments.
Faith—Arguments based on beliefs about organizational strategy, competitive advantage, industry forces, customer perceptions, market share, and so on. Arguments based on faith often hold that an information system must be implemented in order to achieve the organization’s strategy effectively and to gain or sustain a competitive advantage over rivals. Successful business case arguments based on faith should clearly describe the firm’s mission and objectives, the strategy for achieving them, and the types of information systems that are needed in order to enact the strategy.
Fear—Arguments based on the notion that if the system is not implemented, the firm will lose out to the competition or, worse, go out of business. There are several different factors to take into account when making a business case in which you will provide arguments based on fear including a number of factors involving competition and other elements of the industry in which the firm operates.
Fact—Arguments based on data, quantitative analysis, and/or indisputable factors. Many people, including most chief financial officers, want to see the business case for an information system based on some convincing, quantitative analysis that proves beyond the shadow of a doubt that the benefits of the system will outweigh the costs.
3.Compare and contrast tangible and intangible benefits and costs.
Tangible benefit/cost: A benefit/cost of using a particular system or technology that is quantifiable.
Intangible benefit/cost: A benefit/cost of using a particular system or technology that is difficult to quantify.
4.Contrast the perspectives of different stakeholders involved in making information systems investment decisions.
Management—They are representatives or managers from each of the functional areas within the firm. They have a greater strategic focus; largest project sizes; longest project durations.
Steering committee—They are representatives from various interest groups within the organization (they may have their own agendas at stake when making investment decisions). They have a cross-functional focus; greater organizational change; formal cost–benefit analysis; larger and riskier projects.
User department—They are representatives of the intended users of the system. They have a narrow, nonstrategic focus; faster development.
IS executive—They have overall responsibility for managing IS development, implementation, and maintenance of selected systems. They focus on integration with existing systems; fewer development delays; less concern with cost–benefit analysis.
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