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Part 1: Return on Investment 28 points

You have been asked to calculate the Return on Investment (ROI) for a project whose development will be accomplished during a single calendar year with the go-live date of Jan 1^st The project, to develop a new Web-based ordering and fulfillment system, has already been conceptualized, and the team has provided estimates and a partial resource plan. Labor Operating expenses in years 2 through 5 are projected to be $55,000 annually. Miscellaneous expenses in years 2 through 5 are projected to be $6,000 annually. The benefit is projected to be $225,000 the first year of operation, increasing 11% each year. Hardware cost that would be installed for development is $100,000. Youll need to complete the resource plan, the 5 year planning sheet, and calculate a 5 year ROI. Please finish filling out these tables and answer the associated questions.

Development Team	Quantity	$/hour	Hours/each resource	Total Hours	Total Dollars
Program Director	1	99	500
Project Manager	1	99	1000
BA	1	99	750
Development Lead	1	75	1000
QA Lead	1	75	1000
Off-Shore Developers	5	26	750
Off-Shore QA	3	26	750
Total

Expense	Year 1	Year 2	Year 3	Year 4	Year 5
Labor
Hardware
Misc

Benefit	Year 1	Year 2	Year 3	Year 4	Year 5
Benefit

Question 1 [4 points]: What is the total labor cost of development?

Question 2 [4 points]: What is the total expense of this project projected to be for the first 5 year period?

Question 3 [4 points]: What is the total benefit projected to be for the first year?

Question 4 [4 points]: What is the total benefit projected to be for the first five years?

Question 5 [4 points]: Given ROI % = ((Benefit Cost) / Cost)*100, what is the 5 year ROI for this project?

Question 6 [4 points]: If the company could just put the money to cover the project expenses in the bank (instead of doing this project) it could make a investment gain of 7% over this same 5 year period. Should the company invest in this project, or put the money in the bank? Why?

Question 7 [4 points]: For the each step below, which COBIT 5.0 model element (from the list provided) most closely describes or covers the step?

The list of prioritized projects to be evaluated?APO______.__

Determining the ROI threshold to fund projects? APO______.__

The annual budget allocation percentages to use for investment management? APO______.__

List of projects to actually fund? APO______.__

COBIT Elements

APO05.01

APO05.02

APO05.03

APO05.05

APO06.02

APO06.03

Part 2: Investment Management - 28 Points

You have been asked to assist with preparing for a senior leadership meeting regarding the annual budget. The wish list of projects has been provided by various business units. Your manager has asked you to consolidate the multiple lists into one and determine a way, in additional to ROI, to categorize the wish list that would aid in decision process of which projects to fund. No further recommendations regarding categorization was made you are on your own for this first pass.

Line of Business	Project	Cost	ROI	Business Case/Value	Category	Fund
Corporate Services	HR System Upgade	$ 225,000	1%	Better Information
Corporate Services	Expense System Reporting	$ 115,000	1%	Better Information
Corporate Services	General Ledger Enhancements	$ 120,000	1%	Better Integration
Corporate Services	HR Application Process Automation	$ 375,000	28%	Cut Costs
Corporate Services	Payroll System enhancement	$ 450,000	11%	Cut Costs
Corporate Services	E-mail Records Retention automation	$ 550,000	3%	Cut Costs
Corporate Services	Legal Document Repository	$ 435,000	1%	Cut Costs
Corporate Services	Billing system improvements	$ 425,000	2%	Increase Throughput
Infrastructure	Active Directory Enhancement	$ 125,000	NA	Business Flexibility
Infrastructure	Server Farm Improvement	$ 380,000	NA	Reduce IT Costs
Infrastructure	Recovery System Replacement	$ 355,000	NA	Reduce IT Costs
Infrastructure	Disaster Recovery improvements	$ 750,000	NA	Standardization
Infrastructure	Exchange Server upgrades	$ 350,000	NA	Standardization
Infrastructure	Oracle upgrade	$ 650,000	NA	Standardization
Infrastructure	Dell Server Replacement	$ 690,000	NA	Standardization
Infrastructure	Cloud Pilot	$ 225,000	NA	Standardization
Marketing	Business Intelligence Program	$ 375,000	12%	Increased Sales
Marketing	Social Media Tracking	$ 415,000	8%	Increased Sales
Procurement	Order Tracking System	$ 650,000	14%	Better Information
Procurement	Upgrade Purchasing System	$ 450,000	9%	Better Information
Procurement	Order Management System	$ 160,000	5%	Increased Control
Agencies	Client Profile Upgrade	$ 830,000	4%	Faster Cycle Time
Agencies	New Underwriting System features	$ 625,000	8%	Competitive Advantage
Agencies	Enhanced Performance Reporting	$ 750,000	7%	Competitive Advantage
Agencies	Mobile Enablement	$ 935,000	5%	Competitive Advantage
Corporate Management	Cross LOB Real-time policy premium vs claim analytics	$ 585,000	12%	Better Information
Corporate Management	Reduce Application inventory	$ 175,000	3%	Better Integration

Helpful hints

Not all the following questions will have EXACT answers.Budgets categories total should be within 10% (+/-).

The Total Project Costs, of those recommended, should be within 3% (+/-) of the Budget.

Question 1 [4 points]: After your initial shock wore off, you recall an article that you read in an MIS class you took at Metropolitan State University with the title of Generating Premium Returns on Your IT Investments by Weill and Aral. From the article, fill in the average percentage allocations for the following investment categories:

Category	Average Percent Allocation
Infrastructure
Transactional
Informational
Strategic
Total	100%

Question 2 [4 points]: Based on a $8.1 million dollar annual budget calculate how many dollars should be allocated to each category:

Category	Budget Allocation in USD
Infrastructure
Transactional
Informational
Strategic
Total	$8,000,000

Question 3 6: [4 points each] You realize that you could further prepare for the budget meeting, by actually recommending projects based on the categorization and ROI. Sort the categorized list by category and ROI, and using the category budgets from Question 2, list the projects that you would fund, their cost and ROI, total category budget, and variance percentage ( ( Budget - Category cost)/Budget ) * 100

Question 3: a. List the recommended Infrastructure Projects to fund:

Project	Cost	ROI

Question 4: a. List the recommended Transactional Projects to fund:

Project	Cost	ROI

Question 5: a. List the recommended Informational Projects to fund:

Project	Cost	ROI

Question 6: a. List the recommended Strategic Projects to fund:

Project	Cost	ROI

Question 7: [4 points] Provide a summary of recommendations by category:

Category	Total Cost for Category (from questions 3 through 6)	Category Budget (from Question 2)
Strategic
Informational
Transactional
Infrastructure
Total

Part 3: Outsourcing 12 points

Purush P., a manager in the IT Department, has been tasked with developing a Vendor Management strategic direction. Your task is to help Purush with the options and strategy.

Question 1 [6 points]: List 3 types of outsourcing models, and describe the risk to your company for each model.

Question 2 [2 points]: Describe what type of work could be outsourced.

Question 3 [2 points]: Describe what type of work should not be outsourced.

Question 4 [2 points]: From COBIT 5.0, Process APO07.06, of the 8 activities listed, choose 1, and describe why it is important.

Part 4: Process Improvement 15 points

Ann, an IT Director, has chosen you to lead a process improvement effort. As you are starting the planning for the effort you recall several topic areas from a class you took:

Question 1 [4 points]: Describe, in your own words, the four most common reasons people resist change that you recall from an HBR paper?

Question 2 [4 points]: Describe, in your own words, four things that can be done to overcome those resistances.

Question 3 [5 points]: What are the five key activities of the IDEAL process improvement model from the Carnegie Mellons Software Engineering Institute and the key activity/deliverable of each?

Question 4 [2 points]: From COBIT 5.0, Process BAI05.02 How would you form an implementation team? (That is, in your own words, summarize the activities.)

Part 5: Enterprise Architecture 4 points

Question 1 [4 points]: Enterprise Architecture is commonly defined by four key architecture components. Name AND provide an example of each.

Part 6: Knowledge Capital 2 points

Question 1 [1 points]: Describe the difference between a patent, copyright and trademark.

Question 2 [1 point]: Software can most easily be protected by which method? Why?

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