MANAGEMENT INFORMATION SYSTEMS 8/E

Raymond McLeod, Jr. and George Schell

Chapter 16
Executive Information Systems

16-1
Copyright 2001 Prentice-Hall, Inc.
 The Executive Position

Unique demands of the executive position

An executive is not just a

lower-level manager on a
higher level!

Executives require unique information

processing
16-2
A Firm Without Environmental information and data
An EIS

Top-level
managers

Human
Marketing Manufacturing Financial resource
information information information information
system system system system

Environmental information and data 16-3

A Firm With Environmental Information and data
An EIS

Executive
information
system

Human
Marketing Manufacturing Financial resource
information information information information
system system system system

Environmental Information and data

16-4
 What Do Executives Do?
Term executive is loosely applied
No clear dividing line between executives and
other managers
Executive manager on the upper level of the
organizational hierarchy who exerts a strong
influence on the firm
Long term planning horizon

16-5
 Fayol's Management Functions

Plan
Organize
Staff
Direct
Control

16-6
 Mintzberg's Managerial Roles

Different levels of management perform

same roles but relative time spent on each
differs
High-level management focus
Long-range, entrepreneurial improvements
Responding to unanticipated situations

16-7
 Kotter's Agenda and Networks

John P. Kotter, Harvard professor

Executives follow a three step strategy
Agenda -- objectives the firm is to achieve
Networks -- cooperative relationships
Hundreds or thousands
Inside and outside the firm
Environment -- norms and values so the
network members can achieve agendas

16-8
 How Do Executives Think?

Daniel J. Isenberg, Harvard professor

Studied more than one dozen executives
over a 2-year period
What they think about
1. How to get things done
2. A few overriding issues

16-9
How Do Executives Think? (cont.)

More concerned with process than solution

Thought processes do not always follow the
step-by-step patterns of the systems
approach
Intuition is used at each step

16-10
 Unique Information Needs
Mintzberg was first to conduct a formal
study of executive information needs
Studied 5 executives in early 1970s
Five basic activities
desk work
telephone calls
unscheduled meetings
scheduled meetings
tours
16-11
 How Minzbergs
CEOs Spent Time
Telephone
Calls
6%
Tours
3%

Scheduled Desk Work

Meetings 22%
59%

Unscheduled
Meetings
10%

Legend:
Interpersonal
Communication 16-12
 Unique Information Needs

Jones & McLeod Study

Studied 5 executives in early 1980s
Questions
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 ? 16-13
The Volume of Information Reaching the Executives
HIGH HIGH
60

50 HIGH HIGH
AVG
AVG
Transactions

40
Number of

LOW AVG
30 LOW AVG
LOW HIGH
20
LOW
AVG
10
LOW
0
Retail Chain Bank Insurance Vice Vice
CEO CEO President President President of
of Tax Finance

16-14
 Jones & McLeod Study (cont.)

How much information reaches the

executive
A transaction - a communication involving any
medium
Daily volume
Varies from executive to executive
Varies from day to day

16-15
 The Value of Information Reaching Executives

30 Bank CEO
Percentage of transactions

25 Vice President
of tax
20
All five
15
executives
10

0
0 1 2 3 4 5 6 7 8 9 10

Value
16-16
 Sources of Information

Some executives went down 7 levels to

gather information
Sources were internal and external
External sources provided the most volume
but also the lowest average value

16-17
The Sources of Information Reaching the Executives
Upper levels
.05 Committees
5.2
Environment .02
7.5
.43 Internal support units
3.8 The
executive and individuals

1 level down .13

4.6
.20
5.2
2 levels down

.10
5.3
Legend:
3 levels down
Percentage of
.06 total
4.3
trans-
4 levels down actions Average
transaction
16-18 .02 value
4.4
 Media Used for Communication
Written media accounts for 61% of the
transactions
Computer reports
Letters and memos
Periodicals
Oral media is preferred by executives
Tours
Business meals
Telephone calls
16-19
 The Executive Does not Control:

Letters
Memos
Telephone calls
Unscheduled meetings

16-20
 The Media Pie
(in Percentages of Total Transactions)
Periodicals (.10)
Letters (.20) Unscheduled
Meetings (.06)

Scheduled Meetings (.05)

Tours (.03)

Memos (.19)
Telephone
Calls (.21)
Noncomputer Computer Business
Reports (.09) Reports (.03) Meals (.02)

Written Note:
Percentages do not add to 1.00
Oral due to rounding
16-21
 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 16-22
Information Use by Decisional Role

Disturbance Entrepreneur
handler (.32)
(.42)

Resource Unknown
allocator (.06)
(.17)

Negotiator
(.03) 16-23
 Jones & McLeod Study Findings

Most executives information came from

environmental sources, but the internal
information was valued higher
Most of the executives information came in
written form, but the oral information was
valued higher
Executives receive very little information
directly from a computer
16-24
Sources of Decisional Information
Disturbance
Environment handler
.43 .42

Lower Entrepreneur
levels .32
.38

Internal
support units & Resource
individuals .13 allocator
.17

Upper
Negotiator
levels
.03
.05

Committees Unknown
.02 .06

16-25
 Unique Information Needs

Study conducted by John Rockart and

Michael Treacy, both of MIT
Studied 16 companies in early 1980s
Found many computer users
Found some executives interested in detail
Coined the term executive information
system

16-26
 EIS Features
A central purpose
A common core of data
Two principal methods of use
Retrieve reports
Conduct analyses
A support organization
EIS coach
EIS chauffeur

From Rockart and Treacy

16-27
 Putting Computer Use in
Perspective
Two key points:

1. Computer use is personal

2. Computer produces only a portion of the
executive's information

16-28
 Suggestions to Improve EISs

1. Take an inventory
2. Stimulate high-value sources
3. Take advantage of opportunities
4. Tailor the system to the executive
5. Take advantage of technology

16-29
 An EIS Model
Information
requests

Executive Personal
database computer
Information
displays
Executive workstation
To other To other
executive executive
workstation workstation
Corporate
database

Electronic
Make
mailboxes corporate
Current news,
information explanations
Software
library available
Corporate mainframe

External
data and
information 16-30
An EIS Model
Executive workstation Information
requests
Executive
Information
database
displays

To other To other
executive executive
workstation workstation
Corporate
database Make Current news,
corporate explanations
Electronic
information
mailboxes
available
Software Corporate mainframe
library
External
data and
16-31
information
 Dialogue Between
Executive and EIS

Typically by a series of menus, keyboarding

is minimized
Drill down to specific information needed
from the overview level

16-32
 An Information Display That Includes a Computer-
Generated Narrative Explanation
MEDIAL INTERNATIONAL GROUP MIG

500
Actual/P Product Profitability
400 lanned Analysis
x
1 300
0 Magazines in Europe have been
0 200 performing poorly. While sales are
up, production costs have soared.
100 This is due to the labor disputes in
the pulp and paper industry.
0 Starting next month, costs should be
N P U P back in line with earlier projections.

Actual Planned Variance %Variance

Newspapers 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)
16-33
 Incorporation of
Management Concepts
Critical success factors
Management by exception
Mental model
Information compression

16-34
 SALES - $ IN MILLIONS
SALES SOURCE
GLORIA YANDERS
AS OF NOVEMBER 1994 BILL BLASS

HISTORY BUDGET CURRENT

2000 ACTUAL
1500
1000
500
FORECAST
0
90 91 92 93 94 J F M A M J J A S O N D 95 96 97 98 99

YEAR TO DATE OVER/ UNDER MB YEAR-END FORECAST CURRENT FORECAST

PROGRAM ACTUAL THIS MO LAST MO Y-L O/U MB YR CURRENT O/ U PRIOR
HERC $861.4 $30.7 $59.1 $949.8 $28.6 95 $2102.6 $ 8.0
C-5B 621.9 0.3 4.5 699.0 1.2 96 2400.0 105.0
OTHER 398.7 12.9 10.1 458.8 13.6 97 3130.0 98.0
TOTAL $1,882.0 $43.9 $44.4 $2107.6 $43.4 98 3390.0 58.0
99 2110.0 281.0

COMMENTS FAVORABLE VARIANCE PRIMARILY DUE TO TWO ADDITIONAL HERCULES

SALES
16-35
 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?

16-36
 Advantages of Prewritten
Software

1. Fast
2. Doesn't strain information services
3. Tailored to executives

16-37
 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 16-38
 Prerequisite Activities for the EIS
Information
needs
Information
technology standards Analysis of
Organization

Corporate
data model
Information
Systems Plan
Purchasing and
Performance
Systems

EIS 16-39
 Future EIS Trends

Use will become commonplace

Decreasing software prices
Will influence MIS/DSS
The computer will always play a support
role

16-40
 Summary

Executives have unique information needs

Need for EIS
Specific uses of EIS
EIS development
Personal productivity software
Prewritten
Custom
EIS success factors
16-41