Information Systems & IT Strategy: 12 Important Subjective Questions with Answers
Q1. Explain the difference between Information Technology (IT) and Information Systems (IS).
Answer:
Information Technology (IT) refers to the technological components such as hardware, software, databases, and communication networks used to process information. Information Systems (IS), on the other hand, are socio-technical systems that combine IT with people, processes, organizational structures, culture, and policies to achieve business objectives.
While IT is a tool, IS represents how that tool is embedded within an organization to support decision-making, coordination, and control. For example, an ERP system is IT, but how employees use it, how workflows are redesigned, and how decisions are enforced form the IS. Hence, IS must always be understood in the organizational context, not in isolation.
Q2. Why is IT considered a General Purpose Technology (GPT)?
Answer:
IT is considered a General Purpose Technology (GPT) because it can be applied across industries, functions, and processes, similar to electricity or the steam engine. GPTs enable wide-ranging innovation and productivity improvements but do not generate value on their own.
The true value of IT emerges only when organizations invest in complementary factors such as skilled employees, redesigned business processes, decentralized decision-making, and effective governance. Without these complements, IT investments may fail to improve performance. Therefore, IT’s impact is indirect and depends heavily on how organizations adapt around it.
Q3. What are “complements” in IT investments and why are they important?
Answer:
Complements are non-IT organizational investments required to extract value from IT. These include employee skills, training, new workflows, performance incentives, teamwork, leadership support, and revised decision rights.
IT alone cannot improve performance. For example, installing an ERP system without changing processes or training employees may increase complexity rather than efficiency. Complements ensure that technology is effectively adopted, accepted, and exploited. Research shows that firms investing simultaneously in IT and complements achieve significantly higher productivity and financial performance.
Q4. Differentiate between Functional IT (FIT) and Enterprise IT (EIT).
Answer:
Functional IT (FIT) supports specific functions or departments, such as marketing analytics or HR payroll systems. FIT systems are easier to adopt, require less standardization, and allow greater local flexibility.
Enterprise IT (EIT), such as ERP or core banking systems, supports enterprise-wide processes. EIT requires high levels of standardization, centralized decision-making, and strong governance. While EIT offers greater long-term value through integration and transparency, it is harder to implement and exploit due to organizational resistance and complexity.
Q5. Explain the CCR framework in IT decision-making.
Answer:
The CCR framework stands for Capabilities, Complements, and Responsibility. It helps managers evaluate IT investments holistically.
- Capabilities: What the technology enables the organization to do.
- Complements: Organizational changes required to realize those capabilities.
- Responsibility: Who is accountable for outcomes and adoption.
Successful IT investments align all three. Ignoring complements or unclear responsibility often leads to IT failure, even when capabilities are strong.
Q6. Why do many IT projects fail despite advanced technology?
Answer:
Most IT project failures are not technical but organizational and human. Common reasons include resistance to change, lack of training, poor leadership support, unclear decision rights, and misaligned incentives.
Additionally, organizations often overestimate technology’s ability to create value while underestimating the effort required to redesign processes and manage change. Treating IT projects purely as technical implementations rather than organizational transformation initiatives significantly increases failure risk.
Q7. Discuss the lifecycle stages of IT value creation.
Answer:
IT value creation occurs across four stages:
- Selection: Choosing IT aligned with business needs.
- Acceptance: User attitudes and willingness to use the system.
- Adoption: Actual usage supported by training, incentives, and monitoring.
- Exploitation: Maximizing benefits through advanced usage and process optimization.
Failure at any stage can reduce or eliminate expected benefits. Adoption and exploitation are often the most challenging stages.
Q8. Why is IT commoditization a strategic concern for managers?
Answer:
As IT becomes cheaper, standardized, and widely available, it loses its ability to provide sustained competitive advantage. Competitors can easily replicate IT investments, making differentiation difficult.
Managers must therefore shift focus from IT ownership to IT management, emphasizing reliability, security, risk control, and integration rather than innovation alone. Strategic advantage increasingly comes from how IT is used, not what IT is used.
Q9. Explain the role of governance in IT success.
Answer:
IT governance defines decision rights, accountability, and control mechanisms for IT investments. It ensures alignment between IT and business strategy, controls risk, and optimizes resource utilization.
Effective governance clarifies who decides, who executes, and who benefits. Poor governance leads to overspending, duplication, security risks, and underutilized systems.
Q10. How does IT differ in tech businesses versus tech-enabled businesses?
Answer:
In tech businesses, IT is the core product or service (e.g., software firms). These firms focus on scalability, innovation, and high margins.
Tech-enabled businesses use IT to enhance traditional operations (e.g., retail, banking). Their focus is on efficiency, cost reduction, and process optimization rather than technological innovation.
Q11. Why is board-level involvement critical in IT decisions?
Answer:
IT affects enterprise-wide operations, risk exposure, cybersecurity, compliance, and reputation. Boards must therefore oversee IT investments, risk management, and digital transformation initiatives.
Without board involvement, IT decisions may lack strategic alignment and accountability, increasing organizational vulnerability.
Q12. Can IT still create competitive advantage? Explain.
Answer:
While IT alone rarely creates sustained advantage, it can still enable temporary or indirect advantages when combined with unique processes, culture, data, and execution capability. Continuous innovation, strong governance, and effective complements are key to sustaining value.
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