Chapter 10 Information Systems Sourcing

Chapter 10, Information Systems Sourcing Multiple Choice 1. Kellwood, the American apparel maker, decided to consolidate and bring IT operations back in-house in order to reduce costs. Kellwood choose which of the following strategies? a) Outsource b) Backsource c) Offshore d) Captive center e) Farshore Ans: b (Medium) Response: See page 208 2.Outsourcing to a company located in the same time zone is referred to as this type of sourcing. a) Farshoring b) Nearshoring c) Zoneshoring d) Insourcing e) Cloud computing Ans: b (Easy) Response: See pages 220-221 3.If a company decides to make and develop IS, they are using this type of sourcing. a) Outsourcing b) Cloud computing c) Inshoring d) Offshoring e) Insourcing Ans: e (Medium) Response: See page 210 4.The purchase of a good or service that was previously provided internally, or that could be provided internally, is called: a) Outsourcing b) c) d) e) Insourcing Inshoring Offshoring Nearsourcing Ans: a (Easy) Response: See page 211 5. The most common driver for insourcing is to: a) Keep employees loyal to the company. b) Make a system that cannot be bought. c) Develop internal skill sets. d) Maintain control over the development of the system e) Keep core competencies in-house. Ans: e (Medium) Response: See page 210 6.Which one of the following needs would suggest outsourcing as an option? a) Reduced capacity. b) Ease of transition to new technologies c) Increase supplier relations d) Growth of data centers e) All of the above. Ans: b (Hard) Response: See page 212 7. In 1989, Kodak chose a(n) _____ approach to outsourcing IS activities and chose to work with suppliers like IBM, DEC and Businessland. This approach was soon dominated by other firms. a) offshore b) multivendor c) nearshore d) centralized e) full outsourcing Ans: b (Medium) Response: See page 211 8. The initial reason organizations outsourced IT was which one of the following? a) Downsizing b) c) d) e) Innovation Cost reduction Standardization Capacity Ans: c (Medium) Response: See page 211 9. Organizations choose to outsource IT activities for all of the following reasons EXCEPT: a) To realize cost savings b) To have access to specialists they do not have in-house c) To create a core competency d) To infuse cash into the company e) To support capacity on demand Ans: c (Hard) Response: See pages 211-212 10. Outsourcing providers have more experience dealing with a large number of IS staff and as a result, are often good at doing all of the following EXCEPT: a) Marketing IS talent b) Providing relevant technical training c) Retaining IT workers for short-term employment d) Hiring good IT professionals e) Developing and sharing best practices Ans: c (Medium) Response: See page 212 11. All of the following are risks associated with IS outsourcing EXCEPT: a) Loss of control b) Dependency on outsourcing providers c) Inadequate adaption of newer technologies d) Requiring more training of in-house staff e) Potential loss of competitive secrets Ans: d (Medium) Response: See pages 212-213 12. Of the following list, the newest sourcing option for today’s IT organizations is: a) b) c) d) e) Outsourcing Insourcing Farshoring Cloud computing Onshoring Ans: d (Easy) Response: See page 216 13. Ensuring a cultural fit with an outsourcing provider is especially important when an organization is considering which one of the following? a) Offshoring b) Insourcing c) Onshoring d) Cloud computing e) Selective outsourcing Ans: a (Medium) Response: See page 219 14. Organizations may shy away from cloud computing because _________ a) it does not support multiple time zones. b) it costs more money than offshoring. c) of increased data security and privacy concerns. d) SLAs cannot be established. e) short term contracts are required. Ans: c (Medium) Response: See page 217 15. The functions of an entire data center can be replaced by which one of the following cloud computing providers? a) Software as a Service (SaaS) b) Application Service Provider (ASP) c) Platform as a Service (PaaS) d) Infrastructure as a Service (IaaS) e) Outsourcing as a Service (OaaS) Ans: d (Medium) Response: See page 218 16. iCloud is an example of which one of the following? a) b) c) d) e) Offshoring Insourcing Farshoring Cloud computing Backsourcing Ans: d (Easy) Response: See page 216 17. This is when an IS organization uses contractor services, or even builds its own data center, in a distant land. a) Cloud computing b) Insourcing c) Inshoring d) Offshoring e) Nearsourcing Ans: d (Easy) Response: See page 219 18. IT organizations will outsource which one of the following IT activities? a) Programming b) IT transactions c) Knowledge-based business processes d) Data storage e) All of the above. Ans: e (Medium) Response: See page 215 19. A small cluster of three countries (China, Malaysia and Korea) are creating a reputation for this type of outsourcing. a) Farshoring b) Nearshoring c) Cloud computing d) Captive center e) Full outsourcing Ans: Hard (b) Response: See page 221 20.To provide potential customers an idea of an outsourcing provider’s development capabilities, the Software Engineering Institute developed this rating. a) Tier * b) IaaS c) ISO9001 d) CMM e) Six Sigma Ans: d (Medium) Response: See page 221 21.Which of the following makes countries attractive for offshoring? a) English language proficiency. b) Political stability. c) Economic stability. d) Countries with friendly relationships. e) All of the above. Ans: e (Easy) Response: See page 221 22. This is a type of captive center that performs core business processes for a parent company and outsources noncore work offshore. a) Hybrid Captive b) Shared Captive c) Divest Captive d) Terminated Captive e) Core Captive Ans: a (Medium) Response: See page 211 23. What is it called when a company brings IS capabilities that were previously outsourced back in-house? a) Backsourcing b) Insourcing c) Software as a Service d) Nearshoring e) Cloud computing Ans: a (Easy) Response: See page 223 24. Outsourcing decisions can be difficult and expensive to reverse because of: a) Cultural differences. b) The complicated infrastructure and staffing considerations. c) Data security. d) Data loss. e) CMM. Ans: b (Medium) Response: See page 223 True/False 25. The global outsourcing market is growing. Ans: True (Medium) Response: See page 209 26. Only large, multi-national organizations pursue outsourcing arrangements. Ans: False (Medium) Response: See page 209 27. Using outsourcing providers frees up a business’s employees so that they can devote their energies to core competencies for the business. Ans: True Response: See page 210 28. Outsourcing an IT infrastructure will always save an organization money. Ans; False Response: See page 213 29. The reasons given for backsourcing are similar to the reasons given for outsourcing in the first place. Ans: True Response: See page 223 30. More highly developed countries tend to offer higher levels of skills at lower costs. Ans: False Response: See page 222 31. Outsourcing of IT services began in 1949 with Eastman Kodak. Ans: False Response: See page 211 32. From the perspective of outsourcing clients, one of the best things about outsourcing are the 10-year long-term agreements. Ans: False Response: See page 217 Short Answer 33. This is the formal contract between clients and an outsourcing provider that describes the expected performance of the service. Ans: Service Level Agreement (SLA) Response: See page 217 34. This was the first country to make IT outsourcing a total industry. Ans: India Response: See page 221 35. To reduce its dependence on a single outsourcing provider, an organization will seek flexibility and take a “best-of-breed” approach. What is the term used to describe this use of multiple outsourcing vendors? Ans: Selective outsourcing or strategic sourcing Response: See page 215 36. This is the most widely used form of cloud computing. Ans: SaaS, Software as a Service or Application Service Provider Response: See page 218 37. To manage control yet realize the financial benefits that come with outsourcing, firms have created these subsidiaries to operate on their behalf and provide services. Ans: Captive center Response: See page 210 38.This is the most traditional approach to sourcing. Ans: Insourcing Response: See page 210 39. Cloud computing is a form of outsourcing in which IT services are provisioned over the __________. Ans: Internet Response: See page 216 40. If a company decides to outsource to a company in another country that is close in proximity as well as culturally, economically, and politically similar, they are using this type of outsourcing Ans: Nearshoring Response: See page 220 Essay 41. Explain the options a company has when the quality of work done by an outsourcing firm is no longer satisfactory. 42. Explain how an IS outsourcing provider is able to derive savings that companies themselves cannot realize. 43. How can an organization benefit from outsourcing an IS capability for which it internally has no skills or experience? 44. An outsourcing organization may not recommend the use of newer technologies. Why not? 45. Make the argument for why an outsourcing provider may actually provide better data security than an organization’s IT organization can. 46. Compare and contrast cloud computing with offshore outsourcing. 47.How can a government create an environment where companies from other nations will want to offshore work to their country? List several specific examples. Matching 48. Match the work activity as something that a company would ideally either outsource or insource. Outsource Insource Insource Insource Outsource Commodity work Confidential work A core competence Value-added activities Work based on a skill lacking in the organization 49. Determine if the following scenario warrants a make or buy decision. Buy Make An organization would like to venture into social analytics but has no experience or skills to begin the efforts. A retailer wants to upgrade its website bidding system; the bidding system is developed internally and it provides a strategic advantage over other retailers. Make Buy An innovative approach to customized manufacturing needs to be kept a secret; the hope is that this new process will surprise and shakeup the industry. The internal website designer has limited availability and is always consumed by the marketing department. 50. Match the decision made to mitigate outsourcing risk with the major decision area it represents. Selection Choose a compatible outsourcing provider. Contracting Define the length of the outsourcing relationship. Scope Outline which IT capabilityan outsourcing provider will deliver. Contracting Establish appropriate SLA’s. 51. Match the IT activity with the cloud computing provider that can satisfy that service. IaaS PaaS SaaS Using virtualization, networks and capacity on demand, replacesthe functions of a company’s data center. Provides computing capacity on needed hardware for a company. Provides software application functionality through a web browser. 52. Match the various cloud computing forms with their definition. Private cloud Community cloud Public cloud Data is managed within the company’s existing infrastructure Data is managed for several companies who share a specific concern Data is managed by the cloud provider 53. Match the region/country with its development tier. Tier 1: Mature Software Exporting Nation Tier 2: Emerging Software Exporting Nation Tier 3: Infant State Software Exporting Nation The 3 I’s: India, Ireland and Israel Some Eastern European countries Vietnam Tier 2: Emerging Software Exporting Nation Brazil 54. Match the scenario with its sourcing option. Insourcing Cloud Computing Onshoring Offshoring Nearshoring Captive Center Bank One develops and deploys IS services using internal groups. Rather than build data centers, Netflix “rents” an IS infrastructure and accesses it via the Internet. A US pharmaceutical firm has established an IT support center in a rural part of Pennsylvania. DHL entrusts 90% of its IT development and maintenance projects to a large Indian-based company, InfoSys. Outsourcing giant Tata Consulting provides British customers IS services from Budapest, Hungary. A German-based firm has developed a large subsidiary in India that handles all of its mobile application development tasks.