CTO CTO Budget & Financial Management 1

Question 1

Which budgeting approach allocates resources based on strategic priority rather than prior-year spend?

Accepted Answer

Zero-based budgeting

Answer

Zero-based budgeting requires justifying every line item from scratch each cycle, aligning spend directly to current strategic priorities.

Question 2

A CTO presents a business case for a $5M platform modernization. Which metric best demonstrates financial value to the CFO?

Accepted Answer

Net Present Value (NPV)

Answer

NPV expresses the project's expected financial return in today's dollars, which is the most compelling metric for CFO-level investment decisions.

Question 3

What is the primary purpose of a technology chargeback model?

Accepted Answer

Allocate IT costs transparently to business units

Answer

A chargeback model attributes technology costs to the consuming business units, promoting accountability and informed consumption decisions.

Question 4

Which of the following best describes Total Cost of Ownership (TCO) for a software system?

Accepted Answer

All costs over the system's useful life including maintenance and support

Answer

TCO encompasses acquisition, implementation, ongoing maintenance, support, and eventual decommissioning costs across the full system lifecycle.

Question 5

A CTO must reduce the IT OpEx budget by 15% without impacting critical services. What is the FIRST recommended action?

Accepted Answer

Conduct a portfolio rationalization to identify redundant tools and licenses

Answer

Portfolio rationalization quickly surfaces duplicate tools and unused licenses, delivering cost reduction with minimal operational risk.

(CTO) Certified Chief Technology Officer Practice Test