chap16.ppt 226KB May 20 2010 09:29:48 PM

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Chapter 16

Executive Information Systems

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The Executive Position

 Unique demands of the executive positionUnique demands of the executive position

 Executives require unique information Executives require unique information

processing processing

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Marketing information

system

Manufacturing information

system

Financial information

system

Human resource information

system

Environmental information and data

Top-level managers

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Environmental Information and data

Marketing information

system

Manufacturing information

system

Financial information

system

Human resource information

system

Executive information

system

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What Do Executives Do?

 Term executive is loosely appliedTerm executive is loosely applied

– No clear dividing line between executives and _{No clear dividing line between executives and}

other managers

 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

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Fayol's Management

Functions

 PlanPlan

 OrganizeOrganize

 StaffStaff

 DirectDirect

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Mintzberg's Managerial

Roles

 Different levels of management perform Different levels of management perform

same roles but relative time spent on each same roles but relative time spent on each

differs differs

 High-level management focusHigh-level management focus

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Kotter's Agenda and

Networks

 John P. Kotter, Harvard professorJohn P. Kotter, Harvard professor

 Executives follow a three step strategyExecutives follow a three step strategy

– _{Agenda -- objectives the firm is to achieve}_{Agenda -- objectives the firm is to achieve} – _{Networks -- cooperative relationships}_{Networks -- cooperative relationships}

» Hundreds or thousands_{Hundreds or thousands}

» _{Inside and outside the firm}_{Inside and outside the firm}

– _{Environment -- norms and values so the}_{Environment -- norms and values so the}

network members can achieve agendas

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How Do Executives Think?

 Daniel J. Isenberg, Harvard professorDaniel J. Isenberg, Harvard professor

 Studied more than one dozen executives Studied more than one dozen executives

over a 2-year period over a 2-year period

 What they think aboutWhat they think about

1. How to get things done

2. A few overriding issues

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How Do Executives Think?

(cont.)

 More concerned with process than solutionMore concerned with process than solution

 Thought processes do not always follow the Thought processes do not always follow the

step-by-step patterns of the systems step-by-step patterns of the systems

approach approach

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Unique Information Needs

 Mintzberg was first to conduct a formal study Mintzberg was first to conduct a formal study of executive information needs

of executive information needs

 Studied 5 executives in early 1970s Studied 5 executives in early 1970s

 Five basic activitiesFive basic activities – _{desk work}_{desk work}

– _{telephone calls}_{telephone calls}

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How Minzberg’s

CEOs Spent Time

Legend:

Interpersonal Communication

Desk Work 22%

Unscheduled Meetings

10% Telephone

Calls 6%

Scheduled Meetings

59%

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Unique Information Needs

 Jones & McLeod StudyJones & McLeod Study

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

 QuestionsQuestions

1) How much information reaches the executive ?

2) What was the information value ?

3) What are the information sources ?

4) What media are used to communicate the information ?

5) What use is made of the information ?

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HIGH

HIGH HIGHHIGH

HIGH

HIGH HIGHHIGH

HIGH HIGH AVG AVG LOW LOW AVG AVG LOW

LOW AVGAVG

LOW LOW AVG AVG LOW LOW Bank CEO Vice President of Tax

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Jones & McLeod Study

(cont.)

 How much information reaches the How much information reaches the

executive executive

– _{A transaction - a communication involving any}_{A transaction - a communication involving any}

medium

– _{Daily volume}_{Daily volume}

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0 5 10 15 20 25 30

0 1 2 3 4 5 6 7 8 9 10

All five executives Vice President of tax Bank CEO Value P er ce n ta ge o f tr an sa ct io n s

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Sources of Information

 Some executives went down 7 levels to Some executives went down 7 levels to

gather information gather information

 Sources were internal and externalSources were internal and external

 External sources provided the most volume External sources provided the most volume

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Environment Environment Upper levels Upper levels The The executive executive Committees Committees

Internal support units

and individuals

1 level down

2 levels down

3 levels down

4 levels down

Legend: Legend: Percentage of Percentage of total total trans-actions actions .43 .43 3.8 3.8 .05 .05 5.2 5.2 .20 .20 5.2 5.2 .10 .10 5.3 5.3 .06 .06 4.3 4.3 .02 .02 4.4 4.4 .02 .02 7.5 7.5 .13 .13 4.6 4.6 Average Average transaction transaction value value 16-18

The Sources of Information Reaching the

Executives

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Media Used for

Communication

 Written media accounts for 61% of the Written media accounts for 61% of the transactions

transactions

– _{Computer reports}_{Computer reports} – Letters and memos_{Letters and memos} – _Periodicals_Periodicals

 Oral media is preferred by executivesOral media is preferred by executives – Tours_Tours

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The Executive Does not

Control:

 LettersLetters

 MemosMemos

 Telephone callsTelephone calls

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The Media Pie

(in Percentages of Total Transactions)

Written

Written Note:Note:

Percentages do not add to 1.00

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) Unscheduled Unscheduled Meetings (.06) Meetings (.06)

Scheduled Meetings (.05)

Tours (.03)

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Ranking of Media by Value

Medium Mode Average Value Medium Mode Average Value Scheduled meetings Oral 7.4

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Information Use by Decisional Role

Disturbance

handler (.42)

Entrepreneur (.32)

Resource

allocator (.17)

Unknown (.06)

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Jones & McLeod Study

Findings

 Most executives’ information came from Most executives’ information came from environmental sources, but the internal

environmental sources, but the internal

information was valued higher

 Most of the executives’ information came in Most of the executives’ information came in written form, but the oral information was

written form, but the oral information was

valued higher

 Executives receive very little information Executives receive very little information directly from a computer

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Disturbance handler .42

Entrepreneur .32

Resource allocator

.17

Negotiator .03

Unknown .06 Environment

.43

Lower levels

.38

Internal support units &

individuals .13

Upper levels .05

Committees .02

Sources of Decisional Information

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Unique Information Needs

 Study conducted by John Rockart and Study conducted by John Rockart and

Michael Treacy, both of MIT Michael Treacy, both of MIT

 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

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EIS Features

 A central purposeA central purpose

 A common core of dataA common core of data

 Two principal methods of useTwo principal methods of use

– _{Retrieve reports}_{Retrieve reports} – _{Conduct analyses}_{Conduct analyses}

 A support organizationA support organization

– EIS coach_{EIS coach}

– EIS chauffeur_{EIS chauffeur}

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Putting Computer Use in

Perspective

Two key points: Two key points:

1. Computer use is personal

2. Computer produces only a portion of the

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Suggestions to Improve

EISs

1. Take an inventory 1. Take an inventory

2. Stimulate high-value sources 2. Stimulate high-value sources

3. Take advantage of opportunities 3. Take advantage of opportunities

4. Tailor the system to the executive 4. Tailor the system to the executive

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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 Executive workstation Corporate mainframe Corporate mainframe To other executive workstation To other executive workstation

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Make corporate information

available

Information requests

Executive database

Corporate database

Electronic mailboxes

Software library

Current news, explanations

External

Information displays

Executive workstation

Corporate mainframe

To other executive workstation To other

executive workstation

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Dialogue Between

Executive and EIS

 Typically by a series of menus, keyboarding Typically by a series of menus, keyboarding

is minimized is minimized

 Drill down to specific information needed Drill down to specific information needed

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MEDIAL INTERNATIONAL GROUP MIG

N P U P

0 100 200 300 400 500

N P U P

Actual/P

lanned Product Profitability AnalysisProduct 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)

Actual Planned Variance %Variance

Newspapers 1,421,709 1,559,184 (137,475) (8.82) Magazines 490,855 518,687 (27,832) (5.37)

x 1 0 0

An Information Display That Includes a

Computer-Generated Narrative Explanation

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Incorporation of

Management Concepts

 Critical success factorsCritical success factors

 Management by exceptionManagement by exception

 Mental modelMental model

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0 500 1000 1500 2000

90 91 92 93 94 J F M A M J J A S O N D 95 96 97 98 99 SALES - $ IN MILLIONS

AS OF NOVEMBER 1994

SOURCE GLORIA YANDERS BILL BLASS SALES SALES CURRENT HISTORY

YEAR TO DATE OVER/ UNDER MB

PROGRAM ACTUAL THIS MO LAST MO HERC $861.4 $30.7 $59.1 C-5B 621.9 0.3 4.5 OTHER 398.7 12.9 10.1 TOTAL $1,882.0 $43.9 $44.4

YEAR-END FORECAST CURRENT FORECAST

_{Y-L O/U MB YR CURRENT O/ U PRIOR}

$949.8 $28.6 95 $2102.6 $ 8.0 699.0 1.2 96 2400.0 105.0 458.8 13.6 97 3130.0 98.0 $2107.6 $43.4 98 3390.0 58.0 99 2110.0 281.0

COMMENTS

COMMENTS FAVORABLE VARIANCE PRIMARILY DUE TO TWO ADDITIONAL HERCULESFAVORABLE VARIANCE PRIMARILY DUE TO TWO ADDITIONAL HERCULES

FORECAST BUDGET

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EIS Implementation

Decisions

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

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Advantages of Prewritten

Software

1. Fast 1. Fast

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

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EIS Critical Success

Factors Rockart and

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

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Prerequisite Activities for the EIS

Purchasing and Performance

Systems

Information

technology standards

Information needs

Analysis of Organization

Information Systems Plan

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Future 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

(41)

Summary

 Executives have unique information needsExecutives have unique information needs

– _{Need for EIS}_{Need for EIS}

– Specific uses of EIS_{Specific uses of EIS}

 EIS developmentEIS development

– Personal productivity software_{Personal productivity software} – _Prewritten_Prewritten

– _Custom_Custom