(Information Technology for Managers, 2e George Reynolds)
1-1
(Solution Manual all Chapters)
Chapter 1
Managers: Key to Information Technology
Results
Solutions to End of Chapter Material
Answers to What Would You Do Questions
1. A new financial analyst at your firm has been tasked with performing a competitive
analysis of your firm’s IT spending versus your three top competitors. Over lunch with you
and a couple of other recent hires, the coworker shares that her analysis shows your firm is
spending just over 4 percent of revenue (recent annual revenue for the firm was $150
million) on IT while your company’s competitors are all spending less than 3 percent
(recent revenue ranges from $300 million to $400 million). She asks the group if they think
this spending difference is significant and if she should highlight it in her report. What
would you say?
Students’ answers will vary. However, students may mention that organizations typically
spend 1 to 6 percent of their total revenues on IT. This spending is generally higher for
industries in which IT is more critical to success, such as health care and financial services.
IT spending as a percentage of revenue is also typically higher within small organizations
than large organizations.
Students may also mention that these numbers represent rough averages. IT-related
spending varies greatly, even among similar-sized companies within the same industry.
While one company may outspend a competitor on IT, it is not necessarily making more
effective use of IT. The most important consideration is what organizations are getting out
of their investments in IT, not how much they are investing in IT. The most effective users
of IT maximize value from IT investments that are aligned with their organization’s
strategic needs and that are well managed and executed. Managers must evaluate IT
investment opportunities against existing business needs and help frame these
opportunities so others can understand them. Managers must provide the leadership to
recognize and advocate for those opportunities that fit with the organization’s business
strategy.
2. Imagine instead that the new Avon order management system was well designed and
extremely easy to use. Identify key actions that the Avon management team must take to
© 2016 Cengage Learning®. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in whole or in part, except
for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved
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,Information Technology For Managers 1-2
ensure a successful rollout of an easy-to-use system for the Canadian sales reps.
Students’ answers will vary. Students may mention that to implement an IT system
successfully, Avon might need to change its business processes, worker roles and
responsibilities, reward systems, and decision making. Many organizations have tried to
implement a promising new IT system, only to have employees never use it or not use the
system to its full potential. Managers must be able to overcome this resistance so that the
new IT system is accepted and used throughout the organization. Several theories on
organizational change management can help smooth the introduction and adoption of IT.
Three such theories are: the Change Management Continuum Model, the Unified Theory
of Acceptance and Use of Technology, and the Diffusion of Innovation Theory.
3. The board of directors at City Hospital is determined not to be fined for violation of
HIPAA rules. They asked your consulting group to prepare a comprehensive strategy to
communicate to employees and contractors the importance of following HIPAA
regulations. Brainstorm the key elements of your communications strategy. What actions
might you request of the board of directors and other executives at the hospital to
strengthen your strategy?
Students’ answers will vary. However, students may mention that the introduction of an
enterprise IT system requires large amounts of resources and significant changes in
procedures, roles and responsibilities, reward systems, and decision making. In other
words, it represents a major organizational change. Managers should have their work cut
out to gain acceptance of all these changes. To strengthen the communications strategy, the
board of directors and other executives should impose standards and procedures that spell
out exactly how transactions must be conducted and how the supporting information must
be captured, stored, and shared. Senior management may sometimes encourage adoption of
enterprise IT by threatening penalties for nonconformance.
4. You are the new office manager for a small accounting firm of 12 people. You just received
a complaint of an employee viewing pornography while at work. Not only is the employee
wasting company time but he is also creating a potential liability for a sexual harassment
lawsuit if the practice is allowed to continue. What action would you take to handle this
situation?
Students’ answers will vary. The office manager should ensure that there is no
inappropriate use of IT resources such that it reduces employees’ productivity. Employees
should not waste time visiting Web sites unrelated to their work. Additionally,
inappropriate use of IT resources to view sexually explicit material could subject the firm
to a sexual harassment lawsuit. Failure to ensure that IT risks are mitigated can lead to
serious problems, such as business disruptions, data breaches exposing employee and/or
© 2016 Cengage Learning®. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in whole or in part, except
for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved
learning management system for classroom use.
,Information Technology For Managers 1-3
customer personal data, and legal penalties. Hence, the manager must tell the employee
about the consequences of breaking the rule.
Answers to Discussion Questions
1. Reflecting on what you read in this chapter and looking forward to a successful course,
identify three learning objectives you want to meet this term.
Students’ answers will vary. The response will be different for every student.
2. Identify and briefly discuss an example of an enterprise or interorganizational system with
which you have recently interacted.
Students’ answers will vary. They might describe a system from their personal experience.
3. Based on your own experience and reading, identify and briefly discuss an example of an
organization that has invested greatly in IT and yet has relatively little to show as a result.
Identify and briefly discuss an organization where the opposite is true. To what do you
attribute the difference?
Students’ answers will vary. However, students may mention that while one company may
outspend a competitor on IT, it is not necessarily making more effective use of IT. The
most important consideration is what organizations are getting out of their investments in
IT, not how much they are investing in IT. The most effective users of IT maximize value
from IT investments that are aligned with their organization’s strategic needs and that are
well managed and executed. Managers must evaluate IT investment opportunities against
existing business needs and help frame these opportunities so others can understand them.
Managers must provide the leadership to recognize and advocate for those opportunities
that fit with the organization’s business strategy.
4. What percentage of revenue should an organization spend on IT? Explain the rationale for
your answer.
On average, organizations spend between 1% and 6% of their total revenue on IT. This can
vary greatly depending on what opportunities and threats a given organization is facing.
Spending also depends on how wise management is in spending its IT dollars effectively.
5. What are the basic reasons that people resist change? How can this resistance be
overcome?
Four basic reasons that people resist change are:
© 2016 Cengage Learning®. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in whole or in part, except
for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved
learning management system for classroom use.
, Information Technology For Managers 1-4
• Parochial self-interest—some people are more concerned with the impact of the
change on themselves than with how it might improve the organization.
• Misunderstanding—some people have misconceptions or lack information about the
change.
• Low tolerance to change—some people require security and stability in their work.
• Different assessments of the situation—some people disagree about the reasons for
the change or do not support the change process.
One approach to help overcome resistance to change is to take people through the three
phases (inform, educate, and commit) and seven stages (contact, awareness, understanding,
positive perception, adoption, institutionalization, and internalization) of the change
management continuum model.
6. What is meant by management expectations, and how can they affect the acceptance of
new IT?
Management expectations is the degree of belief that management wants employees to use
the system. Management expects everyone to use the new technology and to behave in a
manner consistent with the new work processes. Management must communicate their
expectations, measure progress toward meeting those expectations, and provide feedback
to end users regarding their use of the new information system and work process.
7. Develop a timeline that identifies the approximate times at which the various stages of the
Change Management Continuum Model should occur for the implementation of a major
enterprise system. Assume that the project will last 18 months and has these key
milestones:
• Systems definition complete at 3 months
• System design complete at 7 months
• System construction complete at 12 months
• System testing complete at 16 months
• System cutover starts at 18 months
The approximate times at which the various stages of the Change Management Continuum
Model should occur for the implementation of a major enterprise system are as follows:
• Contact at 0 month
• Awareness at 3 months
• Understanding at 7 months
• Positive perception at 12 months
• Adoption at 16 months
• Institutionalization at 18 months
© 2016 Cengage Learning®. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in whole or in part, except
for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved
learning management system for classroom use.
