An executive information system (EIS) provides key information, gathered from both internal and
external sources, to senior executives and managers. It accomplishes the multiple purposes of
supporting decision making, communicating information, and providing awareness.
EISs typically present summarized information, but allow the user to drill down to more detailed
information. EISs should also present information in a userfriendly format to facilitate easy
analysis, and employ graphical user interfaces (GUIs), which can be tailored to individual
preferences. Often, EISs are integrated with spreadsheet, word processing, and other decision-
support software.
A key ability of an EIS is easily communicating the comments and conclusions of executives to
others. As a result, EISs are typically supported by an electronic mail (e-mail) system.
Benefits of an Executive Information System
A typical executive works in a very unstructured and ad hoc way. To be effective, executive
information systems must be able to support a variety of work styles and be able to assimilate
information from many sources.l7 Consequently, EISs should be designed to provide summaries
about key business indicators and support decision making. They present a summarized view of
information for exception monitoring, as well as a detailed view for resolving the exception and
understanding its root causes.
Integrating Information
Often, a key feature of an EIS is its ability to gather information from different, unconnected
information systems within a company. For example, an EIS could combine operational
information from the shop-floor production system with financial information from the
accounting system and statistical information from the research and development (R&D)
system. The EIS designed by Dictaphone handled worldwide product and financial
information, as well as a five-year history of all financial reports. 19
Just as significant is the ability of an EIS to gather external information. For example, an EIS could
combine internal company information with external information from government statistics,
industry databases, and on-line news services.
Specialized Displavs
Traditional printed reports sometimes do not represent information clearly or concisely. An EIS
uses visual means such as charts, graphs, and icons to represent its information. And because
the EIS uses a highly graphic environment, it often helps senior executives with little computer
experience to overcome their resistance to computers. As Dictaphone executives became
comfortable using their EIS for monitoring financial information, they began to use their personal
computers for other functions.20 •
The use of specialized drill-down displays to link summarized information ~' with lower levels
of detail is also important. This ability to display underlying unsummarized data helps
management to determine the cause of many problems flagged at the summary level by studying
detailed source data.
Rapid Development
Most commercial EIS software packages include application development tools for rapid
system development. And since these tools can be used by both programmers and
nonprogrammers (such as systems or business analysts), EIS projects have a broader
base of available development resources than traditional programmed-software projects.
A working model of key EIS screens can normally be developed very quickly. This
provides EIS projects with an additional advantage over traditional programmed-software
projects since management will usually support a project once they have seen a working
modeL In fact, studies show that initial EIS screens must be demonstrated to the
executive group during the first six weeks of development or the project may not receive
support for continued development. 21
Exception Reporting
A primary benefit ofan EIS is its ability to filter out routine data. Executives using
•t
such a system are alerted only to key indicators that are outside normal tolerances.
Mainframe-based Commander EIS software allows executives to define their own
personalized range for exception reporting; the numbers outside the range are
displayed in color.
BENEFITS OF AN EXECUTll/E IlllFORl.,1ATION
SYSTEM
Some EISs even have alarm systems that monitor these key indicators and send visual or
audible alarms when a deviation outside normal tolerances occurs. PC-based software ,Forest &
Trees, for example, uses predefined alarm settings for each key indicator, with visual or sound
options for communicating the alarm.
The capacity of an EIS to monitor huge quantities of data makes it very attractive to use for
business processes with critical, time-sensitive reporting requirements. For example, a
comprehensive quality control program could utilize the display and alarm features ofan EIS.
Improved Organizational Communication
An EIS is normally designed with intercompany communication in mind. In an EIS designed by
Consolidated Edison, executives, project engineers, and staff used the system to jointly report on
and evaluate project management tasks. 22 The EIS highlighted those projects that were behind
schedule; executives could then simply click an on-screen mail icon and send a message to the
managers involved with the current percentage-completion information about their project.
Strategic Sales Advantage
An EIS can be used as a tool for compiling and communicating strategic information about
customers from diverse and often informal sources. For example, sales executives can have
access to information about customers (or competitors), as reported by people in the field, news
reports, and other company executives. According to one study, a very promising EIS application
is automating the sales and marketing process. 23 The EIS becomes the information database for
sales support information. An EIS developed by Pratt & vVhitney Corporation included a database
strictly for detailed customer information and profiles. 24
Competitive Advantage
Sometimes the information available from a company's EIS is also valuable to its customers. By
making this information available to customers, a company can gain an advantage over its
competitors. In industries such as banking and insurance, where there is often little product
differentiation, information can be a key factor in customer loyalty. \\-'hen CIGNA Health Care
Information Services developed an EIS for monitoring health-care utilization trends for its medical
insurance business, they found their customers could use that same information about their
company to better manage and trim their employee benefits costs. The EIS, known as elGNA
ExpTess, provides CIGNA's customers with access to its internal health-care
utilization/management information reports. 25
The initial EIS was developed in response to demands from CIGNA's customers for detailed
information to support the steep rise in CIGNA's health insurance premiums during the 1980s. The
current system updates information quarterly and shows customers their actual health-care
utilization results as compared to industry norms or to other organizational units. As a valuable
marketing tool, CIGNA enables its customers to make their own executive decisions based on
information extracted from CIGNA's EIS.
Limitations of an Executive Information System
EISs do not come without limitations. The development of an EIS can result in some security
problems. In addition, the nature of accounting data can limit data analysis and management's
view of the organization. Although an EIS may initially aim at meeting the needs of the executives,
it is typically not long before that focus changes to include those who work for them. EISs can also
misdirect an executive's attention to drilling ever downward through quantitative information, even
though the real issues could be qualitative.
Further, there are some important development and maintenance issues. The EIS must
integrate all of a company's databases to be effective. Executives must be actively involved in the
EIS development process or the system is likely to fail, which can be costly in both executive time
and money. When the EIS operates on a network, it can also markedly increase the need for
network support.
Security In mainframe environments, EISs pose a security concern because they bypass normal
password and other security devices. In a network or PC environment,
EISs can allow unauthorized access to data because they are operated in
a nonsecure environment. (The AICPA Information Technology Division's
practice aid, Information Security, to be published in 1994, will contain
more detailed information about data security.)
Passwords
In some systems, the EIS has the normal password capabilities for
restricting access. However, the levels of password control that are
implemented in the EIS must be the same as those that exist in the
database. If the level of password control interferes with the operation of
the EIS, the password restrictions are often scrapped in favor of system
performance. In other EISs, there is no such parallel password structure,
so even if the developers wanted to ensure security, they cannot.
Data Access
Often during the development phase ofan EIS project, users are allowed
to have expanded database access, whether at read-only or write levels.
Generally, this access is needed to fully accommodate the EISs drill-down
capabilities. Once the EIS is implemented, users' database access may
remain unrestricted.
If EIS data can be accessed by unauthorized users, sensitive
information can be gathered and used against the company or its officers.
This sensitive data may include accounting information such as salaries or
R&D expenditures, or softer information such as reports on competitors. If
data access is not secure, unauthorized users may even change the data
used by the EIS. In this unsecured environment, the EIS may lead users to
inappropriate conclusions.
III
LIMITATIONS OF l'.N EXECUTfI/E LVFORMATION SYSTEM
Financial Data chart of accounts constrains the way financial data can be analyzed.
Interrelationshi Unfortunately, if specialized data, such as details by region or department,
ps are not captured in the chart of accounts and the corresponding database,
The then it will not be possible for EIS users to manipulate the data on a regional
preestablished or departmental basis.
accounting data In addition, these data interrelationships are likely to force the same
can ultimately outdated hierarchical view of the company promulgated by the chart of
limit the nature of accounts. For example, a traditional chart of accounts is tied to the tree-like
EIS models of organizations. Thus, the chart of accounts and the models implied
investigations. by it would hinder the ability of the executives to employ more current
Typically, the network models of a company.
Executive Information EISs are designed primarily for executives,
often for the senior executives in the company. However, there are few
employees who would not benefit from the information provided by the
EIS. If the president is interested in the EIS information, then everyone
who works for the president, and is evaluated by the president, would be
interested in the same data. An EIS establishes information needs for
senior executives, and often, as a result, for the rest of the company.
However, it is rarely limited to senior executives for long. 26 As middle and
lower management levels begin to use the EIS, the system may be
modified to meet their needs. As a result, the overall focus of the EIS may
be shifted away from the needs of senior executives.
Drill Down The drill-down feature is a useful vehicle for analyzing data. However, the
and Other focus on quantitative data can divert attention from issues that are more
Analysis qualitative in nature. The EIS must be viewed, therefore, as only one in a
portfolio of tools available to the executive.27
Limited virtually all of the company's internal databases, and possibly other external
Integrated View databases, then the value of its use for integrated views is diminished. The
EISs are often cost ofdeveloping these integrated views can be substantial.
touted as a
means to provide
executives with
integrated views
of the company.
However, the
executive's ability
to have this
integrated view is
limited to the
extent to which
the entire range
of databases are
accessed by the
EIS. If the EIS
does not access
Executive Involvement Executives must be an integral part ofthe EIS development
process or their interests will not be represented appropriately.
For example, if executives are not involved in the design of the
system, then the appropriate databases will not be available
and the appropriate rule bases will not be defined. However, the
cost of involving executives in the development process can be
substantial.
II
EXECUTIVE L'VFORM1TION SYS11:~MS
Network Support When the EIS is operated over local or
enterprise-wide networks, the business may be faced with
unstable applications. Supporting a combination of software
and network systems may require additional technical support
and management. And since enterprise-wide networks rely on
complex LANs, bridges, routers, and gateways, it is unrealistic
to expect end-users to support such functions. Additionally,
software edit checks must be in place so that EIS software
updates do not crash the entire system. And if the EIS is
operated on a departmental network, additional support will be
needed to ensure it can access data on the enterprise-wide
network.
Costs Finally, the total cost to develop an EIS can be substantial, beyond the mere cost
of executive involvement. These costs include hardware, software, and opportunity
costs. Throughout the EIS implementation process, it is important that an appropriate
cost-benefit evaluation is developed and used to monitor the functions and size of the
EIS.
