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INF 310 Management Support Systems UCC Level300 C. Executive Information SystemsIntroductionAn Executive Information Systems (EIS) is a type of managementinformation system intended to facilitate and support the information anddecision making needs of senior executives by providing easy access to bothinternal and external information relevant to meeting the strategic goals ofthe organization. It is commonly considered as a specialized form of aDecision Support System (DSS) and otherwise referred to as an ExecutiveSupport System (ESS).EIS are targeted at management needs to quickly assess the status of abusiness or section of business. These packages are aimed firmly at the typeof business user who needs instant and up to date understanding of criticalbusiness information to aid decision making.The idea behind an EIS is that information can be collated and displayed tothe user without manipulation or further processing. The user can thenquickly see the status of his chosen department or function, enabling them toconcentrate on decision making. Generally an EIS is configured to displaydata such as order backlogs, open sales, purchase order backlogs, shipments,receipts and pending orders. This information can then be used to makeexecutive decisions at a strategic level.The emphasis of the system as a whole is the easy to use interface and theintegration with a variety of data sources. It offers strong reporting and datamining capabilities which can provide all the data the executive is likely toneed. Traditionally the interface was menu driven with either reports, or textpresentation. Newer systems, and especially the newer Business Intelligencesystems, which are replacing EIS, have a dashboard or scorecard typedisplay.The Role of ESS in the OrganizationExecutives often face information overload and must be able to separate thechaff from the wheat in order to make the right decision. On the other hand,if the information they have is not detailed enough they may not be able tomake the best decision. An ESS can supply the summarized informationexecutives need and yet provide the opportunity to drill down to more detailif necessary.As technology advances, ESS are able to link data from various sources bothinternal and external to provide the amount and kind of informationexecutives find useful. As common software programs include more optionsand executives gain experience using these programs, theyre turning to Page | 1
INF 310 Management Support Systems UCC Level300them as an easy way to manipulate information. Many executives are alsoturning to the Web to provide the flexibility they need.RationaleThey provide executive information in a readily accessible, interactive formatusing graphics based queries on summarized and detailed data. They are alsoused to analyse, compare and highlight trends to help govern the strategicdirection of a company. They are commonly integrated with operationalsystems, giving managers the facility to drill down to find out furtherinformation on a problem. It usually allows summary over the entireorganisation and also allows drilling down to specific levels of detail. Thusthey described as an MIS for executive use.They are designed to the individual to let chief executive officers oforganisations tie in to all levels of the organisation. They are very expensiveto run and require extensive staff support to operate.In recent years and in the USA, the term EIS has lost popularity in and theterms “business intelligence” and “online analytical processing” are oftenused for these types of applications.Types of Executive Information System • Corporate Management - responsible for business and fiscal planning, budgetary control, as well as for ensuring the corporate information technology needs are met in a co-ordinated and cost effective manner. E.g., Management functions, human resources, financial data, correspondence, performance measures, etc. (whatever is interesting to executives) • Technical Information Dissemination – for the purpose of disseminating the latest information on relevant technologies, products, processes and markets E.g., Energy, environment, aerospace, weather, etc.Executive Information System ComponentsThe components of an EIS can typically be classified as:Hardware: When talking about hardware for an EIS environment, we shouldfocus on the hardware that meet executive’s needs. The executive must beput the first and the executive’s needs must be defined before the hardwarecan be selected. The basic computer hardware needed for a typical EISincludes four components:(1) Input data-entry devices. These devices allow the executive to enter,verify, and update data immediately; Page | 2
INF 310 Management Support Systems UCC Level300(2) The central processing unit (CPU), which is the kernel because it controlsthe other computer system components;(3) Data storage files. The executive can use this part to save useful businessinformation, and this part also help the executive to search historicalbusiness information easily;(4) Output devices which provide a visual or permanent record for theexecutive to save or read. This device refers to the visual output device orprinter. In addition, with the advent of local area networks (LAN), severalexecutive information system products for networked workstations becameavailable. These systems require less support and less expensive computerhardware. They also increase access of the EIS information to many moreusers within a company.Software: Choosing the appropriate software is vital to design an effectiveEIS. Therefore, the software components and how they integrate the datainto one system are very important. The basic software needed for a typicalexecutive information system includes four components: 1. Text base software. The most common form of text is probably documents; 2. Database. Heterogeneous databases residing on a range of vendor- specific and open computer platforms help executives access both internal and external data; 3. Graphic base. Graphics can turn volumes of text and statistics into visual information for executives. Typical graphic types are: time series charts, scatter diagrams, maps, motion graphics, sequence charts, and comparison-oriented graphs (i.e., bar charts); 4. Model base. The executive information system models contain routine and special statistical, financial, and other quantitative analysis.Perhaps a more difficult problem for executives is choosing from a range ofhighly technical software packages. Ease of use, responsiveness toexecutives requests, and price are all reasonable considerations. Further, itshould be considered whether the package can run on existing hardware.Interface: An EIS needs to be efficient to retrieve relevant data for decisionmakers, so the interface is very important. Several types of interfaces can beavailable to the EIS structure, such as scheduled reports, questions &answers, menu driven, command language, natural language, and input &output.It is crucial that the interface must fit the decision maker’s decision-makingstyle. If the executive is not comfortable with the information questions &answers style, the EIS will not be fully utilized. The ideal interface for anexecutive support system would be simple to use and highly flexible, Page | 3
INF 310 Management Support Systems UCC Level300providing consistent performance, reflecting the executive’s world, andcontaining help information and error messages.Telecommunication: As decentralizing is becoming the current trend incompanies, telecommunications will play a pivotal role in networkedinformation systems. Transmitting data from one place to another hasbecome crucial for establishing a reliable network. In addition,telecommunications within an EIS can accelerate the need for access todistributed data.Executive Support Systems Characteristics.A number of definitions have been put forward to describe EISs. While adefinition is useful, in a complex area such as EISs a better understanding isobtained by looking at their characteristics. Some of these are given below: • Executive support systems are end-user computerised information systems operated directly by executive managers. They utilise newer computer technology in the form of data sources, hardware and programs, to place data in a common format, and provide fast and easy access to information. • They integrate data from a variety of sources both internal and external to the organisation. • They focus on helping executives assimilate information quickly to identify problems and opportunities. In other words, EISs help executives track their critical success factors. • Each system is tailored to the needs and preferences of an individual user, and information is presented in a format which can most readily be interpreted.Although these characteristics apply to all EISs, each individual system canpotentially differ in scope, nature, purpose and content, depending on theenvironment in which it is implemented.Capabilities of Executive Support SystemsMost executive support systems offer the following capabilities:Consolidation – involves the aggregation of information and features simpleroll-ups to complex groupings of interrelated informationDrill-down – enables users to get details, and details of details, of informationSlice-and-dice – looks at information from different perspectivesDigital dashboard – integrates information from multiple components andpresents it in a unified display. Page | 4
INF 310 Management Support Systems UCC Level300 Fig 4.1 Examples of Digital dashboardAdvantages of Executive Information System • As more executives come up through the ranks, they are more familiar with and rely more on technology to assist them with their jobs. Executive Support Systems dont provide executives with ready- made decisions. They provide the information that helps them make their decisions. Executives use that information, along with their experience, knowledge, education, and understanding of the corporation and the business environment as a whole, to make their decisions. • Executives are more inclined to want summarized data rather than detailed data (even though the details must be available). ESS rely on graphic presentation of information because its a much quicker way for busy executives to grasp summarized information • It provides timely delivery of company summary information. • It provides better understanding of information • It filters data for management. • It provides system for improvement in information tracking • It offers efficiency to decision makers. Page | 5
INF 310 Management Support Systems UCC Level300Disadvantages of Executive Information System • Functions are limited, cannot perform complex calculations. • Hard to quantify benefits and to justify implementation of an EIS. • Executives may encounter information overload. • System may become slow, large, and hard to manage. • Difficult to keep current data. • May lead to less reliable and insecure data. • Small companies may encounter excessive costs for implementation. • Highly skilled personnel requirement can not be fulfilled by the small business.Executive Information System FeaturesEIS are intended as decision support tools for senior managers. Since thesestrategic decisions are based on a wide range of input information, theyalways need to be well integrated with operational systems in a business.Some important features of executive support system include the fact that: • They provide summary information to monitoring of business performance. This is often achieved through measures known as ‘critical success factors’ or ‘key performance indicators’ (KPIs). These will be displayed in an easy-to-interpret form such as a graph showing their variation through time. If a KPI falls below a critical preset value, the system will notify the manager through a visible or audible warning. • They are used mainly for strategic decision making, but may also provide features that relate to tactical decision making. • They provide a drill-down feature which gives a manager the opportunity to find out more information necessary to take a decision or discover the source of a problem. E.g. a manager with multinational manufacturing problem might find from the EIS that a particular country is underperforming in production. He could drill down to see which particular factory was responsible for this. • They provide analysis tools. • They must be integrated with other facilities to help manage the solving of problems and the daily running of the business. These include electronic mail and scheduling and calendar facilities. • They integrate data from a wide range of information sources, including company and external sources such as market and competitor. • They have to be designed according to the needs of managers who do not use computers frequently. They should be intuitive and easy to learn.All these facilities require integration with operational data. Since thisinformation is commonly stored in the ERP systems, these are oftenintegrated with EIS or have EIS functions built in. Page | 6
INF 310 Management Support Systems UCC Level300EIS Project TeamThe process of establishing organizational objectives and measures isintimately linked with the task of locating relevant data in existing computersystems to support those measures. Objectives must be specific andmeasurable, and data availability is critical to measuring progress againstobjectives.Since there is little use in defining measures for which data is not available, itis recommended that an EIS project team including technical staff beestablished at the outset. This cross-functional team can provide earlywarning if data is not available to support objectives or if senior managersexpectations for the system are impractical.A preliminary EIS project team might consist of as few as three people. An EISProject Leader organizes and directs the project. An Executive Sponsorpromotes the project in the organization, contributes senior managementrequirements on behalf of the senior management team, and reviews projectprogress regularly. A Technical Leader participates in requirementsgathering, reviewing plans, and ensuring technical feasibility of all proposalsduring EIS definition.As the focus of the project becomes more technical, the EIS project team maybe complemented by additional technical staff who will be directly involved inextracting data from legacy systems and constructing the EIS data repositoryand user interface.Factors influencing the functioning of Executive information systemsOrganizational setupThe policies and procedures followed in an organization have a great impactin the manner management information systems are implemented in anorganization. For e.g. If a company believes in centralization of authority andhesitates to delegate authority then EIS will be provided for the top mostmanagers in the organization. On the contrary if the company is of theopinion that decentralization of authority will help in better governance thenEIS will be introduced in a separate manner. They will be given to a couple ofmanagers even at the junior level if it is believed that it will aid them in oneway or the other.Other factorsThe internal and external factors connected directly or indirectly with theorganization will have their own say in establishing executive informationsystems in an organization. For e.g. if matters relating to compliance of tax, Page | 7
INF 310 Management Support Systems UCC Level300audit and other statutory matters are handled by the senior mangers onlythen EIS will be targeted to them alone.On the other hand if clerical labour is also involved in the same proceduresEIS they will also be able to access EIS and render the necessary supportingfunctions to the senior managers. Whatever be the case the role of men in anorganization plays a crucial part in implementation and functioning ofexecutive information systems.The success of executive information systems lies in two issues. Firstly theinformation should properly reach the concerned executives. Secondly theyshould accord importance and act upon it. Above all whatever they say mustbe given due consideration by the decision making authority. The systemmust be a fool proof one. Only then the results will reveal the true picture.Characteristics of Successful EIS ImplementationsFind an Appropriate Executive Champion - EIS projects that succeed doso because at least one member of the senior management team agrees tochampion the project. The executive champion need not fully understand thetechnical issues, but must be a person who works closely with all of thesenior management team and understands their needs, work styles and theircurrent methods of obtaining organizational information. The championscommitment must include a willingness to set aside time for reviewingprototypes and implementation plans, influencing and coaching othermembers of the senior management team, and suggesting modifications andenhancements to the system.Deliver a Simple Prototype Quickly - Executives judge a new EIS on thebasis of how easy it is to use and how relevant the information in the systemis to the current strategic issues in the organization. As a result, the best EISprojects begin as a simple prototype, delivered quickly, that provides dataabout at least one critical issue. If the information delivered is worth thehassle of learning the system, a flurry of requirements will shortly begenerated by executives who like what they see, but want more. Theserequests are the best way to plan an EIS that truly supports the organization,and are more valuable than months of planning by a consultant or analyst.One caveat concerning the simple prototype approach is that executiverequests will quickly scatter to questions of curiosity rather than strategy inan organization where strategic direction and objectives are not clearlydefined. A number of methods are available to support executives in definingbusiness objectives and linking them to performance monitors in an EIS.These are discussed further in the section on EIS and OrganizationalObjectives below. Page | 8
INF 310 Management Support Systems UCC Level300Involve Your Information Systems Department - In some organizations,the motivation for an EIS project arises in the business units quite apart fromthe traditional information systems (IS) organization. Consultants may becalled in, or managers and analysts in the business units may take theproject on without consulting or involving IS. This is a serious mistake.Executive Information Systems rely entirely on the information contained inthe systems created and maintained by this department. IS professionalsknow best what information is available in an organizations systems and howto get it. They must be involved in the team. Involvement in such a projectcan also be beneficial to IS by giving them a more strategic perspective onhow their work influences the organization.Communicate & Train to Overcome Resistance - A final characteristic ofsuccessful EIS implementations is that of communication. ExecutiveInformation Systems have the potential to drastically alter the prevailingpatterns of organizational communication and thus will typically be met withresistance. Some of this resistance is simply a matter of a lack of knowledge.Training on how to use statistics and performance measures can help.However, resistance can also be rooted in the feelings of fear, insecurity andcynicism experienced by individuals throughout the organization. Theseattitudes can only be influenced by a strong and vocal executive championwho consistently reinforces the purpose of the system and directs theattention of the executive group away from unproductive and punitivebehaviours.Executive Support System ApplicationsEIS enables executives to find those data according to user-defined criteriaand promote information-based insight and understanding. Unlike atraditional management information system presentation, EIS can distinguishbetween vital and seldom-used data, and track different key critical activitiesfor executives, both which are helpful in evaluate if the company is meetingits corporate objectives. After realizing its advantages, people have appliedEIS in many areas, especially, in manufacturing, marketing, and financeareas.Manufacturing - Basically, manufacturing is the transformation of rawmaterials into finished goods for sale, or intermediate processes involving theproduction or finishing of semi-manufactures. It is a large branch of industryand of secondary production. Manufacturing operational control focuses onday-to-day operations, and the central idea of this process is effectivenessand efficiency. To produce meaningful managerial and operationalinformation for controlling manufacturing operations, the executive has to Page | 9
INF 310 Management Support Systems UCC Level300make changes in the decision processes. EIS provides the evaluation ofvendors and buyers, the evaluation of purchased materials and parts, andanalysis of critical purchasing areas. Therefore, the executive can overseeand review purchasing operations effectively with EIS. In addition, becauseproduction planning and control depends heavily on the plant’s data baseand its communications with all manufacturing work centres, EIS alsoprovides an approach to improve production planning and control.Marketing - In an organization, marketing executives’ role is to create thefuture. Their main duty is managing available marketing resources to createa more effective future. For this, they need make judgments about risk anduncertainty of a project and its impact on company in short term and longterm. To assist marketing executives in making effective marketing decisions,an EIS can be applied. EIS provides an approach to sales forecasting, whichcan allow the market executive to compare sales forecast with past sales. EISalso offers an approach to product price, which is found in venture analysis.The market executive can evaluate pricing as related to competition alongwith the relationship of product quality with price charged. In summary, EISsoftware package enables marketing executives to manipulate the data bylooking for trends, performing audits of the sales data, and calculating totals,averages, changes, variances, or ratios. All of these sales analysis functionshelp marketing executives to make final decisions.Medical - Executive information systems are coming to hospitals a little laterthan they did to other industries, but there appears to be tremendousinterest at the executive level. These systems provide information that ismore timely, relevant, and concise than paper-based systems. With thechanging environment in healthcare, the ability to monitor key areas of theoperation in near real time is critical.Hospitals are unusually information-rich environments. In fact, managementsconsider hospitals to be perfect models of information-based organizations.Within the hospital environment, EIS can gather up-to-the-minute informationfrom all vertical areas of the enterprise--finance, nursing, clinical areas,medical staff--to provide executives with a high-level, real-time perspectiveon indicators and trends that affect business success.In truth, all hospitals already have some type of executive informationsystem; every paper report, procedural update, telephone message, fax, ormemo that executives receive serves as part of an information system. Atworst, the system may provide information that is outdated, inaccurate, oropen to misinterpretation. At best, it offers a temporary, static analysis ofdata that cannot meet the needs of the fast-moving, highly competitiveatmosphere of todays healthcare operation. Page | 10
INF 310 Management Support Systems UCC Level300Financial - A financial analysis is one of the most important steps tocompanies today. The executive (Eddie Frame) needs to use financial ratiosand cash flow analysis to estimate the trends and make capital investmentdecisions. An EIS is a responsibility-oriented approach that integratedplanning or budgeting with control of performance reporting, and it can beextremely helpful to finance executives. Basically, EIS focuses onaccountability of financial performance and it recognizes the importance ofcost standards and flexible budgeting in developing the quality of informationprovided for all executive levels. EIS enables executives to focus more on thelong-term basis of current year and beyond, which means that the executivenot only can manage a sufficient flow to maintain current operations but alsocan figure out how to expand operations that are contemplated over thecoming years. Also, the combination of EIS and EDI environment can helpcash managers to review the company’s financial structure so that the bestmethod of financing for an accepted capital project can be concluded. Inaddition, the EIS is a good tool to help the executive to review financial ratios,highlight financial trends and analyze a company’s performance and itscompetitors.Government - Executive Information Systems in government have beenconstructed to track data about Ministerial correspondence, casemanagement, worker productivity, finances, and human resources to nameonly a few. Other sectors use EIS implementations to monitor informationabout competitors in the news media and databases of public information inaddition to the traditional revenue, cost, volume, sales, market share andquality applications.Future Trends in Executive Information SystemThe future of executive info systems will not be bound by mainframecomputer systems. This trend allows executives escaping from learningdifferent computer operating systems and substantially decreases theimplementation costs for companies. Because utilizing existing softwareapplications lies in this trend, executives will also eliminate the need to learna new or special language for the EIS package. Future executive informationsystems will not only provide a system that supports senior executives, butalso contain the information needs for middle managers. The futureexecutive information systems will become diverse because of integratingpotential new applications and technology into the systems, such asincorporating artificial intelligence (AI) and integrating multimediacharacteristics and ISDN technology into an EIS.Examples of ESS Page | 11
INF 310 Management Support Systems UCC Level300 • The Sutter Home Winery uses mostly external data, including information from the Internet, in its ESS. It organizes the information in order to help executives make decisions based on trends in the marketplace. The information includes data on competitors and information from market research. Sutter uses its system output to determine sales forecasts, marketing campaigns, and investment plans. • Managers at the Royal Bank of Canada are able to choose their own criteria (from among 15 choices) to drill down and navigate data through easy-to-use interfaces. They dont have to accept data in formats chosen by someone else who may not understand individual managers needs. Data analysis is more timely because the information is quicker to obtain and more convenient than before.SummaryExecutive Support Systems meet the needs of corporate executives byproviding them with vast amounts of information quickly and in graphicalform to help them make effective decisions.ESS must be flexible, easy to use, and contain both internal and externalsources of information. Page | 12