Chapter 17 Chapter 17 Executive Information Systems

MANAGEMENT INFORMATION SYSTEMS 7/ERaymond McLeod, Jr.

Copyright 1998 Prentice-Hall, Inc

The Executive PositionThe Executive Position

Unique demands of the executive positionUnique demands of the executive positionAn executive is not just a lower-level manager on

a higher level A firm without an executive information A firm without an executive information

system (EIS)system (EIS) A firm with an EISA firm with an EIS

Environmental Information and data

Environmental Information and data

Marketinginformation

system

Manufacturinginformation

system

Financialinformation

system

Human resource

informationsystem

Executive information

system

A Firm With An EIS

What Do Executives Do? - What Do Executives Do? - Definition of ExecutiveDefinition of Executive

Executive manager on the upper level of the Executive manager on the upper level of the organizational hierarchy who exerts a organizational hierarchy who exerts a strong influence on the firm.strong influence on the firm.

"Company" attitude, long term attitude"Company" attitude, long term attitude

Unique Information Needs Unique Information Needs Jones & McLeod StudyJones & McLeod Study

Studied 5 executives in early 1980sStudied 5 executives in early 1980s ObjectivesObjectives

- How much information ?How much information ?- Value ?Value ?- Sources ?Sources ?- Media ?Media ?- Use ?Use ?

HIGHHIGH HIGHHIGH

HIGHHIGH HIGHHIGH

HIGHHIGH

AVGAVG

LOWLOW

AVGAVG

LOWLOWAVGAVG

LOLOWW AVGAVG

LOWLOW

BankCEO

VicePresidentof Tax

The Volume of Information Reaching the Executives

0

10

20

30

40

50

60

Retail ChainCEO

InsurancePresident

VicePresident ofFinance

AVGAVG

LOWLOW

Nu

mb

er

of

Tra

ns

ac

tio

ns

Jones & McLeod Study Jones & McLeod Study (continued)(continued)

How much information reaches the How much information reaches the executiveexecutive- A transaction - a communication involving any A transaction - a communication involving any

mediummedium- Daily volumeDaily volume

• Varies from executive to executiveVaries from executive to executive

• Varies from day to dayVaries from day to day

Jones & McLeod Study Jones & McLeod Study (continued)(continued)

Daily valueDaily value- The vice president of tax probably had a The vice president of tax probably had a

preceptive information gathering style, preceptive information gathering style, accounting for the low valuesaccounting for the low values

0

5

10

15

20

25

30

0 1 2 3 4 5 6 7 8 9 10

All fiveexecutives

Vice President of tax

Bank CEO

Value

Per

cen

tage

of

tran

sact

ion

sThe Value of Information Reaching

Executives

SourcesSources

Some executives went down 7 levels to Some executives went down 7 levels to gather informationgather information

Sources were internal and externalSources were internal and external External sources provided the most volume External sources provided the most volume

but also the lowest average valuebut also the lowest average value

EnvironmentEnvironment

Upper levelsUpper levels

The The executiveexecutive

CommitteesCommittees

Internal support units Internal support units and individualsand individuals

1 level down1 level down

2 levels down2 levels down

3 levels down3 levels down

4 levels down4 levels down

Legend:Legend:Percentage of Percentage of totaltotaltrans-trans-actionsactions

The Sources of Information Reaching the The Sources of Information Reaching the ExecutivesExecutives

.43.433.83.8

.05.055.25.2

.20.205.25.2

.10.105.35.3

.06.064.34.3

.02.024.44.4

.02.027.57.5

.13.134.64.6

Average Average transactiontransaction

valuevalue

Media Used for Media Used for CommunicationCommunication

Written media accounts for 61% of the Written media accounts for 61% of the transactionstransactions- Computer reportsComputer reports- Letters and memosLetters and memos- PeriodicalsPeriodicals

Oral media is preferred by executivesOral media is preferred by executives- ToursTours- Business mealsBusiness meals- Telephone callsTelephone calls

The Executive Does not The Executive Does not Control:Control:

LettersLetters MemosMemos Telephone callsTelephone calls Unscheduled meetingsUnscheduled meetings

The Media Pie The Media Pie (in Percentages of Total Transactions)(in Percentages of Total Transactions)

WrittenWritten

OralOral

Note:Note:Percentages do not add to 1.00 due to rounding

Computer Computer Reports (.03)Reports (.03)

Noncomputer Noncomputer Reports (.09)Reports (.09)

Memos (.19)Memos (.19)

Letters (.20)Letters (.20)Periodicals (.10)Periodicals (.10)

Business Business Meals (.02)Meals (.02)

Telephone Telephone Calls (.21)Calls (.21)

UnscheduledUnscheduledMeetings (.06)Meetings (.06)

Scheduled Meetings (.05)Scheduled Meetings (.05)

Tours (.03)Tours (.03)

Ranking of Media by ValueRanking of Media by Value

Medium Mode Average ValueMedium Mode Average Value

Scheduled meetings Oral 7.4Scheduled meetings Oral 7.4

Unscheduled meetings Oral 6.2Unscheduled meetings Oral 6.2

Tours Oral 5.3Tours Oral 5.3

Social activity Oral 5.0Social activity Oral 5.0

Memos Written 4.8Memos Written 4.8

Computer reports Written 4.7Computer reports Written 4.7

Noncomputer reports Written 4.7Noncomputer reports Written 4.7

Letters Written 4.2Letters Written 4.2

Telephone calls Oral 3.7Telephone calls Oral 3.7

Business meals Oral 3.6Business meals Oral 3.6

Periodicals Written 3.1Periodicals Written 3.1

Information Use by Decisional Role

Disturbance handler (.42)

Entrepreneur (.32)

Resource allocator

(.17)

Unknown (.06)

Negotiator (.03)

Jones & McLeod Study Jones & McLeod Study FindingsFindings

Environmental sources - highest volumeEnvironmental sources - highest volume Internal sources - highest valueInternal sources - highest value Written media- highest volumeWritten media- highest volume Oral media -highest valueOral media -highest value Little information direct from computerLittle information direct from computer

Unique Information Needs Unique Information Needs Rockart and Treacy StudyRockart and Treacy Study

John Rockart and Michael Treacy, both of John Rockart and Michael Treacy, both of MITMIT

Studied 16 companies in early 1980sStudied 16 companies in early 1980s Found many computer users Found many computer users Found some executives interested in detailFound some executives interested in detail Coined the term ‘executive information Coined the term ‘executive information

system’system’

Rockart and Treacy StudyRockart and Treacy StudyEISEIS

A central purposeA central purpose A common core of dataA common core of data Two principal methods of useTwo principal methods of use A support organizationA support organization

- EIS coachEIS coach- EIS chauffeurEIS chauffeur

Rockart and Treacy StudyRockart and Treacy StudyEIS CharacteristicsEIS Characteristics

Used for planning and controllingUsed for planning and controlling Importance of databaseImportance of database

- Internal/environmentalInternal/environmental- Past/present/futurePast/present/future

Rockart and Treacy StudyRockart and Treacy StudyEIS Characteristics EIS Characteristics

(continued)(continued) Two principal methods of useTwo principal methods of use

- Retrieve reportsRetrieve reports- Conduct analysesConduct analyses

Support organizationSupport organization- EIS coachEIS coach- EIS chauffeurEIS chauffeur

Putting Computer Use in Putting Computer Use in PerspectivePerspective

Two key points:Two key points:

1. Computer use is personal1. Computer use is personal

2. Computer produces only a portion of the 2. Computer produces only a portion of the

executive's informationexecutive's information

Personal computer

Make corporate

information available

Informationrequests

Executivedatabase

Corporatedatabase

Electronicmailboxes

Softwarelibrary

Current news,explanations

Externaldata and

information

Informationdisplays

Executive workstationExecutive workstation

Corporate mainframeCorporate mainframe

To otherexecutive

workstation

To otherexecutive

workstation

An EIS Model

Dialogue Between the Dialogue Between the Executive and the EISExecutive and the EIS

Typically by a series of menus, keyboarding Typically by a series of menus, keyboarding is minimizedis minimized

Drill down to specific information needed Drill down to specific information needed from the overview levelfrom the overview level

MEDIAL INTERNATIONAL GROUP MIGMEDIAL INTERNATIONAL GROUP MIG

N P U P0

100

200

300

400

500

N P U P

Actual/Planned

Product Profitability Product Profitability AnalysisAnalysis

Magazines in Europe have been Magazines in Europe have been performing poorly. While sales performing poorly. While sales are up, production costs have are up, production costs have soared. This is due to the labor soared. This is due to the labor disputes in the pulp and paper disputes in the pulp and paper industry. Starting next month, industry. Starting next month, costs should be back in line costs should be back in line with earlier projections.with earlier projections.

Actual Planned Variance %VarianceNewspapers 1,421,709 1,559,184 (137,475) (8.82)Magazines 490,855 518,687 (27,832) (5.37)Periodicals 1,912,564 2,077,872 (165,308) (7.96)

Actual Planned Variance %VarianceNewspapers 1,421,709 1,559,184 (137,475) (8.82)Magazines 490,855 518,687 (27,832) (5.37)Periodicals 1,912,564 2,077,872 (165,308) (7.96)

x100

An Information Display That Includes a An Information Display That Includes a Computer-Generated Narrative Computer-Generated Narrative

ExplanationExplanation

Incorporation ofIncorporation ofManagement ConceptsManagement Concepts

Critical success factorsCritical success factors Management by exceptionManagement by exception Mental modelMental model

- Information compressionInformation compression

EIS Implementation EIS Implementation DecisionsDecisions

Three Key Questions:Three Key Questions:1. Do we need an EIS?1. Do we need an EIS?

2. Is there application-development software 2. Is there application-development software available?available?

3. Should we purchase prewritten EIS 3. Should we purchase prewritten EIS

software?software?

Advantages of Prewritten Advantages of Prewritten SoftwareSoftware

1. Fast1. Fast

2. Doesn't strain information services2. Doesn't strain information services

3. Tailored to executives3. Tailored to executives

EIS Critical Success EIS Critical Success Factors -Rockart and Factors -Rockart and

David DeLongDavid DeLong1. Committed/informed executive sponsor1. Committed/informed executive sponsor

2. Operating sponsor2. Operating sponsor

3. Appropriate information services staff3. Appropriate information services staff

4. Appropriate information technology (IT)4. Appropriate information technology (IT)

5. Data management5. Data management

6. Link to business objectives6. Link to business objectives

7. Manage organizational resistance7. Manage organizational resistance

8. Manage the spread and evolution8. Manage the spread and evolution

Future EIS TrendsFuture EIS Trends

Use will become commonplaceUse will become commonplace Decreasing software pricesDecreasing software prices Will influence MIS/DSSWill influence MIS/DSS The computer will always play a support The computer will always play a support

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