Chapter 17 Executive Information Systems MANAGEMENT INFORMATION SYSTEMS 7/E Raymond McLeod, Jr. Copyright 1998 Prentice-Hall, Inc

The Executive Position n Unique demands of the executive position An executive is not just a lower-level manager on a higher level n A firm without an executive information system (EIS) n A firm with an EIS

Environmental Information and data Marketing information system Manufacturing information system Financial information system Human resource information system Executive information system A Firm With An EIS

What Do Executives Do? - Definition of Executive n Executive manager on the upper level of the organizational hierarchy who exerts a strong influence on the firm. n "Company" attitude, long term attitude

Unique Information Needs Jones & McLeod Study n Studied 5 executives in early 1980s n Objectives -How much information ? -Value ? -Sources ? -Media ? -Use ?

HIGHHIGH HIGH HIGH HIGH AVG LOW AVG LOW AVG LO W AVG LOW Bank CEO Vice President of Tax The Volume of Information Reaching the Executives Retail Chain CEO Insurance President Vice President of Finance AVG LOW Number of Transactions

Jones & McLeod Study (continued) n How much information reaches the executive -A transaction - a communication involving any medium -Daily volume Varies from executive to executiveVaries from executive to executive Varies from day to dayVaries from day to day

Jones & McLeod Study (continued) n Daily value -The vice president of tax probably had a preceptive information gathering style, accounting for the low values

Vice President of tax Bank CEO Value Percentage of transactions The Value of Information Reaching Executives

Sources n Some executives went down 7 levels to gather information n Sources were internal and external n External sources provided the most volume but also the lowest average value

Environment Upper levels The executive Committees Internal support units and individuals 1 level down 2 levels down 3 levels down 4 levels down Legend: Percentage of total trans-actions The Sources of Information Reaching the Executives Averagetransactionvalue

Media Used for Communication n Written media accounts for 61% of the transactions -Computer reports -Letters and memos -Periodicals n Oral media is preferred by executives -Tours -Business meals -Telephone calls

The Executive Does not Control: n Letters n Memos n Telephone calls n Unscheduled meetings

The Media Pie (in Percentages of Total Transactions) Written Oral Note: Percentages do not add to 1.00 due to rounding Computer Reports (.03) Noncomputer Reports (.09) Memos (.19) Letters (.20) Periodicals (.10) Business Meals (.02) Telephone Calls (.21) Unscheduled Meetings (.06) Scheduled Meetings (.05) Tours (.03)

Ranking of Media by Value Medium Mode Average Value Scheduled meetings Oral 7.4 Unscheduled meetings Oral 6.2 Tours Oral 5.3 Social activity Oral 5.0 Memos Written 4.8 Computer reports Written 4.7 Noncomputer reports Written 4.7 Letters Written 4.2 Telephone calls Oral 3.7 Business meals Oral 3.6 Periodicals Written 3.1

Information Use by Decisional Role Disturbance handler (.42) Entrepreneur (.32) Resource allocator (.17) Unknown (.06) Negotiator (.03)

Jones & McLeod Study Findings n Environmental sources - highest volume n Internal sources - highest value n Written media- highest volume n Oral media -highest value n Little information direct from computer

Unique Information Needs Rockart and Treacy Study n John Rockart and Michael Treacy, both of MIT n Studied 16 companies in early 1980s n Found many computer users n Found some executives interested in detail n Coined the term ‘executive information system’

Rockart and Treacy Study EIS n A central purpose n A common core of data n Two principal methods of use n A support organization -EIS coach -EIS chauffeur

Rockart and Treacy Study EIS Characteristics n Used for planning and controlling n Importance of database -Internal/environmental -Past/present/future

Rockart and Treacy Study EIS Characteristics (continued) n Two principal methods of use -Retrieve reports -Conduct analyses n Support organization -EIS coach -EIS chauffeur

Putting Computer Use in Perspective Two key points: 1. Computer use is personal 2. Computer produces only a portion of the executive's information executive's information

Personal computer Make corporate information available Information requests Executive database Corporate database Electronic mailboxes Software library Current news, explanations External data and information Information displays Executive workstation Corporate mainframe To other executive workstation To other executive workstation An EIS Model

Dialogue Between the Executive and the EIS n Typically by a series of menus, keyboarding is minimized n Drill down to specific information needed from the overview level

MEDIAL INTERNATIONAL GROUP MIG Product Profitability Analysis Magazines in Europe have been performing poorly. While sales are up, production costs have soared. This is due to the labor disputes in the pulp and paper industry. Starting next month, costs should be back in line with earlier projections. Actual Planned Variance %Variance Newspapers 1,421,709 1,559,184 (137,475) (8.82) Magazines 490, ,687 (27,832) (5.37) Periodicals 1,912,564 2,077,872 (165,308) (7.96) Actual Planned Variance %Variance Newspapers 1,421,709 1,559,184 (137,475) (8.82) Magazines 490, ,687 (27,832) (5.37) Periodicals 1,912,564 2,077,872 (165,308) (7.96) x100x100 An Information Display That Includes a Computer- Generated Narrative Explanation

Incorporation of Management Concepts n Critical success factors n Management by exception n Mental model -Information compression

EIS Implementation Decisions Three Key Questions: 1. Do we need an EIS? 2. Is there application-development software available? 3. Should we purchase prewritten EIS software? software?

Advantages of Prewritten Software 1. Fast 2. Doesn't strain information services 3. Tailored to executives

EIS Critical Success Factors - Rockart and David DeLong 1. Committed/informed executive sponsor 2. Operating sponsor 3. Appropriate information services staff 4. Appropriate information technology (IT) 5. Data management 6. Link to business objectives 7. Manage organizational resistance 8. Manage the spread and evolution

Future EIS Trends n Use will become commonplace n Decreasing software prices n Will influence MIS/DSS n The computer will always play a support role