Week 13: Chapter 10

Section 10.1

1. What are some problems associated with assessing the costs of IT?

One of the major challenges is to allocate fixed costs among different IT projects. For IT, fixed costs include infrastructure cost, cost of IT services, and IT management cost. Another complication is that the cost of a system does not end when the system is installed. Costs for maintaining, debugging, and improving the system can accumulate over many years.

2. What difficulties accompany the intangible benefits from IT?

The difficulties that accompany the intangible benefits from IT are that they are difficult to measure/ harder to quantify. This can include such things as improved customer or partner relation or improved decision-making.


3. Define NPV and ROI, and business case approaches.

Net Present Value (NPV) measures the present value of an investment's future net cash flows minus the initial investment.
Return on Investment (ROI) measures management’s effectiveness in generating profits with its available assets.

Section 10.5 –

1. What type of companies provide outsourcing service?

Small or medium-sized companies with few IT staff and limited budgets are best served by outside contractors. Large companies may also choose this strategy in certain circumst6ances. For example, they might want to experiment with new IT technologies without making a substantial upfront investment. They also might use outsourcing to protect their internal networks and to gain access to outside experts.

2. Define ASPs and list their advantages to companies using them.

Application Service Providers (ASPs) are agents or vendors that lease software applications, usually via the Internet.

Some advantages include:
Save costs
Reduces software maintenance and upgrades
Reduces user training
Makes the company more competitive by reducing time-to-market and enhances the company’s ability to adapt to changing market conditions.

3. List some disadvantages of ASPs.

Some disadvantages include:
ASPs might not offer adequate security protection
Software might not be a perfect fit for the desired application
Company must make certain that the speed of the Internet connection between the company nad the ASP is adequate to handle the requirements of the application.

Section 10.6 –

1. List the major steps of selection of a vendor and a software package.

The process of vendor and software selection is composed of six steps: identify potential vendors, determine evaluation criteria, evaluate vendors and packages, chose the vendor and package, negotiate a contract, and establish service level agreements.

2. Describe a request for proposal (RFP).

A Request for Proposal (RFP) is a document that is sent to potential vendors inviting them to submit a proposal describing their software package and how it would meet the company’s needs.

3. Describe SLAs.

Service Legal Agreements (SLAs) are formal agreements regarding the division of work between a company and its vendors.