Building a Business Case for an IT Investment

question 23

Multiple Choice

Building a business case for an IT investment:

• A) Allows management to establish priorities for investing in different projects.
• B) Helps gain commitment for the IT investment from business managers.
• C) Creates a basis for monitoring the investment.
• D) Identifies the benefits of the investment.
• E) All of the above.

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Definitions:

Sensitivity Analysis

A strategy for determining the influence that different independent variable levels have on a targeted dependent variable, under predefined assumptions.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the degree to which a company can increase profits by increasing sales.

Forecasting Errors

Discrepancies between predicted values and the actual outcomes that were not anticipated in statistical forecasts.

Contribution Margin

The difference between the sales revenue of a product and its variable costs.