Executive Information Systems
From Isopedia
Executive Information Systems (EIS) EIS information are systems used by upper level executives in organizations to assist in the decision making that their jobs require of them. EIS information is processed through computer based systems that summarize the majority of the organization’s data in a format that enable CEOs to make more effective, timely decisions. Top executives need to be aware of both internal and external factors that affect their company and the decisions they need to make. Executive Information Systems provide them with both forms of information in an easily accessible and organized manner. In today’s competitive, technologically advancing business world, the need for efficient decision making by CEOs and upper level management is even more vital because of the push to downsize company workforces. With the help of EIS, company executives can become more aware of the status of their organization at any given time and can aid them in providing “better decisions, successful solutions and better management performance” (http://www.cs.ui.ac.id/staf/sjarif/eis1.htm).
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History of EIS
Executive Information Systems were developed during the seventies and early eighties at the Massachusetts Institute of Technology and almost immediately began to make their way into major organizations across the United States. In today’s business world, the benefits of these systems are experienced by mid-level, as well as upper level management and executives, but originally, EIS were some what limited.
When EIS were first introduced, they were used through mainframe computer programs. They were developed in this way so company data could be condensed to better assist CEOs, unfamiliar with computer usage, in their decision making processes. The EIS retrieved information from the mainframe systems of an organization’s many departments and presented the information in a summarized, easy to interpret form. These original mainframe Executive Information Systems were limited, being that they were essentially for CEO use only and were also quite expensive at the time. Fortunately, EIS have evolved into organization-wide systems which are now accessible on local area networks and through personal computers, as well as the original mainframes. Recently, minicomputers have also taken on EIS capabilities. The Executive Information Systems of today allow for more middle management input while maintaining easy access to corporate-wide information summaries which, through their dual action, lead to better decision making by upper level executives overall.
EIS Applications
Manufacturing
A vast majority of manufacturing control systems’ packages simply process and store large amounts of manufacturing data. This data can hold significant strategic value for an organization if it can be transformed into meaningful information. Manufacturing operational control focuses on day to day operations and the central idea of this process is effectiveness and efficiency. Executive Information Systems can be applied here to distinguish between vital and seldom used data and to track key activities. Executives can use EIS to make important decisions that could inevitably cut back through-put time, cycle time, and prevent bottlenecks from occurring. EIS also provides the evaluation of buyers and vendors, Just-In-Time calculations, the analysis of critical purchasing areas, as well as the evaluation of purchased materials and parts. Within manufacturing plants, intermediaries, and warehouses, production planning and control is imperative and EIS is a stepping stone towards improving both.
Marketing
Organizations need the ability for their executives to quickly analyze several aspects of its business, including category management, price performance, market-basket analysis and store performance.Executive Information Systems provides an approach to sales forecasting, which can allow the market executive to compare sales forecast with past sales. EIS enables marketing executives to manipulate the data by looking for trends, performing audits of the sales data, and calculating totals, changes, variances, ratios, and averages. EIS also provides marketing an analytical tool for instant analysis of retail performance at the unit, store, district, and regional levels. An accurate picture of sales and merchandise data offers marketing the leverage to couple data with individual knowledge to identify and react to opportunities to increase profitability, reduce costs and manage promotions.
EIS Components
Hardware
A great deal of storage space, or hardware, is necessary when using Executive Information Systems. The disk space of the EIS is so large because the information that it provides comes from all aspects of a business. To maintain and ensure the development of this large computer-based system, technicians and computer personnel are needed.
Executive Information Systems are very expensive, which is why only executives can use them through the use of a PC, or personal computer. Because of the new development of LAN, or local area networks, EIS products for networks have begun to flourish. This new system of using networked systems is very attractive to companies because it requires less expensive computer hardware and less support, while also providing more EIS information and more use of PCs. The PC is advantageous because it is very efficient in determining data summaries, graphics, and analyses.
The PCs are connected by a LAN and a midrange computer. When processing data, this midrange computer is more powerful than a PC, and it acts as a client/server to the network. The midrange can also unite several databases at once and it is very useful with backing up critical company information, such as the general ledger and accounting information.
The EIS combination of the PC and the midrange system is very useful and beneficial to companies for many reasons. First of all, it allows data to be viewed in various ways, and less money is wasted in purchasing new hardware. The combination is also very flexible, and it can change according to company changes. And finally, this combined system provides realistic, timely, and concise data, which gives companies a competitive edge when making decisions.
Software
A key component of any Executive Information System is the system’s software. This essential element promotes efficiency and allows information and data to be integrated into one main system. Different classifications of EIS software include text base software, database, graphic base, and model base software.
The most predominant and commonly found type of software is text based. It is observed and used in the daily life of most executives in the form of textual documents. The prime goals of executives, when using textual documents, are to extract and manipulate the information needed from the file and apply it the decision or research at hand. The documents not only contain text, but they also include numerical and graphical data. When working with text documents, one of the advantages is that documents of relevance or comparability can be melded together and are easily integrated among one another.
Another essential type of software used in Executive Information Systems is a database. A database allows executives to access data both internally and externally. When using a database, executives and officials are able to create new reports, amend current reports, and get rid of false or irrelevant data in old reports. One of their main objectives is to gain a competitive advantage in their industry. They do this by using the database to access quick and important data pertinent to their work. The most essential aspect of the database is its structure. This structure determines how information is accessed and obtained. With an organized structure, executives may then use the database and relate it to any aspect in which they need to. The “easy to use” database proves to be simple for many executives, easily modified, and capable of being retrieved in a variety of formats. All of these characteristics about the a database help make it an essential part of the software component of an Executive Information System.
While text base software and databases are the most often used software in an EIS, graphic base software is also eminent. Different executives learn and grasp data in different ways. Some obtain more from reading a document, while others need to visualize the data in a graphic presentation. Graphic base software allows these executives to do so. This software employs the help of scatter graphs, bar graphs, sequence charts, time series charts, and other graphs and charts applicable. These graphical presentations allow executives to manage information and visualize relationships. Although these graphs and charts prove to be an excellent source for executives, they must review them carefully. Executives are much more apt to misread or misjudge data in a graph than when it is written directly in a text.
The final group of software is model base software. This software is a direct representation of its name. It serves as “model” software and illustrates real or planned out situations for executives. These models cover a broad range of topics and categories. Each model is not prefect for every executive. Executives must find their way through certain models in order to find the one the best fits their needs. Models can branch off into groups of optimization and non-optimization. Optimization models deal with merging and acquisition decisions, while non-optimization models deal with shutdown and ending decisions. The greatest problem that can be found when using the model base software is misinterpretation and confusion of data. The model may seem to be appropriate, but it is sometimes difficult to understand where the data is coming from and how it is being applied. Business executives must use their knowledge to determine the usefulness of any model base software.
Interface
Interface is very important because it ultimately determines the success of the Executive Information System in a company. The main objective of EIS is to acess data quickly to make decisions; and this can only happen if the correct interface is implemented for the particular executive.
There are several types of interface:
1. Scheduled Reports
2. Questions/answers
3. Menu-driven
4. Command and Natural language
5. Input/output
Scheduled reports are not flexible, and they are based around consignments of information. Since data is straightforward, there is no intercommunication among people, and all reports are prepared.
Question/answer interface is extremely different from scheduled reports because with question/answer interface, there is interaction involved, and users are able to ask “what if” questions.
Menu-driven interface is easy to use, and it provides step by step instructions. It also usually contains reports made for the user.
When using command language interface, the user must learn short codes; in contrast, when using natural language interface, the user can use English to interact.
With input/output interface, the user already has knowledge of data and information before using the system.
Executive Information Systems can use any and all of these types of interface, provided that the interface type fits the executive’s preference in decision-making.
Telecommunications
Another important component on any Executive Information System is telecommunications. Telecommunications can be defined as signal transmissions resulting in communication. In establishing databases and networks, data must be transmitted from one site to another. Telecommunications allows this to be possible. It conducts data, and allows it to be accessed rapidly. Both of these are extremely important functions and an Executive Information System would not be able to function without them. The telecommunications systems that an EIS might use are made up of a transmitter, transmission medium, and receiver. It may seem like a simple concept, transferring information from one location to another, however, this simplicity is essential and ties together the other various components of an Executive Information System.
Advantages and Disadvantages of EIS
Advantages
Executive Information Systems are very efficient for executives wanting to collect summary information; thus, they have many advantages. EIS is very easy to use, as the user does not have to be particularly computer-savvy to understand how it works or how to find data. The information produced by an EIS is quick and timely. This characteristic of EIS is invaluable because many decisions that executives have to make are quick. With EIS, an executive can find information promptly and with no troubles, which gives the executive’s company a competitive advantage with decision-making. The information that EIS produces also incorporates all system data as a whole, and summarizes the data it finds within the system. This is important because executives can more clearly understand and apply the information. When executives make queries using EIS, the query looks at external (from online data) and internal data. Because the data is wide-spread, an executive can more thoroughly understand what is needed for his or her company to make it successful. EIS has proven to be a very advantageous integrated system.
Disadvantages
Executive Information Systems have proven to be extremely resourceful to their users, but like all other things, they do have disadvantages. One of their greatest downsides is that their functions are limited. There is only so much that these systems can do for executives. They cannot perform complex calculations and do prove to be fairly simple. Even though these systems seem to be very austere, they may still become very extensive and cover a plethora of data and information. In the eyes of some executives, it may even lead to information overload and become too extensive for an executive to understand and relate to. The extensive nature of the system causes other problems as well. Since the system can become so large, it is often difficult to keep up with current data relating to the systems’ components. With such a broad range of information, updates to everything in the system seem to be rather unobtainable and would take a long period of time to achieve. The keeping of such a large system may also be very expensive. Many smaller companies would find this to be an issue, and they would therefore be at a disadvantage in the competitive market. Finally, one of the most important issues is the issue of security. The large scope of the system also may create less reliable data. With so much information being integrated at once, there is a greater possibility of flaws or inconsistencies within the system. Although these detriments to the EIS seem to be serious and widespread, the advantages and usefulness of these systems help weigh down these downsides, and makes any Executive Information System an efficient resource in the business world.
References
http://www.cs.ui.ac.id/staf/sjarif/eis1.htm
http://en.wikipedia.org/wiki/Executive_information_system
Group Members
Mary Crowley
Nicole Farella
Lauren Farrell
Kristen Sauvigne
