Executive Information System (EIS):
Definition and Explanation:
Executive information System (EIS) or Executive Support System (ESS) provides selected and summarized information for senior executives. They assist top management by providing information on critical areas of the organization's activities drawn from both internal and external databases.
Senior managers use a category of information systems called executive support systems (ESS) to make decisions. ESS serves the strategic level of the organization. They address unstructured decisions and create a generalized computing and communications environment rather than providing any fixed application or specific capability. ESS is designed to incorporate data about external events such as new tax laws or competitors, but they also draw summarized information from internal MIS and DSS. They filter, compress, and track critical data, emphasizing the reduction of time and effort required to obtain information useful to executives. ESS employs the most advanced graphics software and can deliver graphs and data from many sources immediately to a senior executive's.
Unlike the other types of information systems, ESS is not designed primarily to solve specific problems. Instead, ESS provides a generalized computing and telecommunications capacity that can be applied to a changing array of problems. While many DSS are designed to be highly analytical, ESS tends to make less use of analytical models.
Executive Information System (EIS) assists in answering include the following:
- What business should we be in?
- What are the competitors doing?
- What new acquisitions' would protect us from cyclical business swings?
- Which units should we sell to raise cash for acquisitions?
It consists of workstations with menus, interactive graphics, and communications capabilities that can access historical and competitive data from internal corporate systems and external databases. Because ESS are designed to be used by senior managers who often have little, if any, direct contact or experience with computer-based information systems, they incorporate easy-to-use graphic interfaces.
Features/Properties of an Executive Information System (EIS):
a. Easy To Use:
The system must be fast and extremely simple to use as it will be used by busy executives. The use of touch screens, mouse and icons, popup menus, etc. is normal.
b. Access To Data:
There must be unhindered rapid access to data permitting vertical and horizontal exploration. This is known as drill downing the data.
c. Data Analysis:
EIS should provide facilities for such things as ratios, trend calculations, and data integration forecasts.
d. Quality Presentation:
The system should provide interesting and understandable formats using colors, graphics, and diagrams.
For example, a sales and distribution manager monitoring sales in six different regions would first of all wish to view the sales total for each region with a comparison of budget against actual. If total for five regions are in line with budget, he will not immediately wish to review the underlying detail; he will be more concerned with the performance of the sixth region. On selecting the sixth region which is not in line with budget for further investigation, will still not wish to see an individual sales transaction listing, but will prefer to look at, for example, a report of budget against actual by product group, or customer type. Only when he has identified the individual product group or customer type, which is responsible for the difference between actual and budget, will he wish to look at individual products, or customers, to see where the difference lies.
From the above example we see that EIS works is by exception reporting and drill-downing to investigate the causes. The advantages of EIS are therefore:
Executive Information System (EIS):
- Access information faster.
- Access a broader range of information.
- Retrieve selected information in a more focused way.
- Reduces the amount of data to be reviewed.
- Incorporates the amount of data to be reviewed.
- It is screen based, with printouts only being required for specific matters.
- It can display output in graphical form,
- A committed and informed executive sponsor.
- An operating sponsor.
- A clear link to business objectives.
- The best use of technology.
- Recognize the existence of data problems and managing the solution of those problems.
- Managing organizational resistance crises management.
- Managing the spread and evolution of the system.
- Strategic long term planning and objectives.
- An EIS should be able to integrate with all other systems both internal & external system.
Executive decision making also requires access to outside information, like, competitors, federal authorities, trade groups, consultants, and news gathering services. A high degree of uncertainty and a future orientation are involved in most executive decisions. Once again successful
Executive Information System (EIS) software must be easy to use, flexible, and customizable. The
Executive Information System (EIS) is therefore, the ultimate in information systems, but the cost of developing and running such a system is extremely high. This factor alone means that only the very large, probably multinational organizations, could afford to develop such a system. One other point is that executives have different views regarding their business. Software which meets the requirements of an organization may not be well suited for another organization. So the general purpose
Executive Information System (EIS) is difficult to build.
Once the organization has built the EIS to fulfill their requirements, the organization will never be willing to sell it in market because this software has a competitive edge to the organization from others.