Report On Exective

Information System

Submitted To: Maam Nargis Submitted By: Muhammad Asif (9850) Zahid Ali Masood(9864) (BE-Software Engineering) 7Th Semester

Dated :28-09-2011

National University Of Modern Languages, Islamabad

Table of Contents
TABLE OF CONTENTS..............................................................................2 WHAT IS DATA?......................................................................................3 WHAT IS INFORMATION?.........................................................................3 WHAT IS INFORMATION SYSTEM?............................................................3 EXECUTIVE INFORMATION SYSTEM:.........................................................4 FUNCTIONS OF EXECUTIVE MANAGEMENT SYSTEM...................................6
EXAMPLES OF

THE

ROLE

EIS...............................................................................................................6 OF EIS.............................................................................................................. 6

COMPONENTS........................................................................................7 HARDWARE......................................................................................................................7 SOFTWARE.......................................................................................................................7 USER INTERFACE................................................................................................................ 8 TELECOMMUNICATION........................................................................................................... 8 MANUFACTURING................................................................................................................8 MARKETING......................................................................................................................8 FINANCIAL........................................................................................................................ 9 ADVANTAGES & DISADVANTAGES..........................................................13 ADVANTAGES OF EIS........................................................................................................13 DISADVANTAGES OF EIS.....................................................................................................13

What is Data?
Raw facts such as an employees name and number of hours worked in a week, inventory part numbers or sales orders.

What is Information?
A collection of facts organized in such a way that they have additional value beyond the value of the facts themselves.

What is Information System?

An organized combination of people, hardware, software, networks and data resources that collect, transforms, and disseminates information in the organization. An information system (IS) - or application landscape - is any combination of information technology and people's activities using that technology to support operations, management. .In a very broad sense, the term information system is frequently used to refer to the interaction between people, algorithmic processes, data and technology. In this sense, the term is used to refer not only to the information and communication technology (ICT) an organization uses, but also to the way in which people interact with this technology in support of business processes.

Executive Information System:

An EIS is a tool that provides direct on-line access to relevant information about aspects of a business that are of particular interest to the senior manager. By Floyd Kelly

Introduction:An executive information system (EIS) is a type of management information system intended to facilitate and support the information and decision-making needs of senior executives by providing easy access to both internal and external information relevant to meeting the strategic goals of the organization. It is commonly considered as a specialized form of decision support system (DSS). The emphasis of EIS is on graphical displays and easy-to-use user interfaces. They offer strong reporting and drill-down capabilities. In general, EIS are enterprise-wide DSS that help top-level executives analyze, compare, and highlight trends in important variables so that they can monitor performance and identify opportunities and problems. EIS and data warehousing technologies are converging in the marketplace.

History
Traditionally, executive information systems were developed as mainframe computer-based programs. The purpose was to package a companys data and to provide sales performance or market research statistics for decision makers, such as financial officers, marketing directors, and chief executive officers, who were not necessarily well acquainted with computers. The objective was to develop computer applications that would highlight information to satisfy senior executives needs. Typically, an EIS provides data that would only need to support executive level decisions instead of the data for all the company. Today, the application of EIS is not only in typical corporate hierarchies, but also at personal computers on a local area network. EIS now cross computer hardware platforms and integrate information stored on mainframes, personal computer systems, and minicomputers. As some client service companies adopt the latest enterprise information systems, employees can use their personal computers to get access to the companys data and decide which data are relevant for their decision makings. This arrangement makes all users able to customize their access to the proper companys data and provide relevant information to both upper and lower levels in companies

1. Operations support systems process data generated by business operations Major categories are: i) Transaction processing systems ii) Process control systems iii) Office automation systems 2. Management Support Systems provide information and support needed for effective decision making by managers Major categories are: i. ii. Management Information System Decision Support Systems

iii.

Executive Information System

Functions of Executive Management System

EIS organizes and presents data and information from both external data sources and internal MIS or TPS in order to support and extend the inherent capabilities of senior executives. Functions of a EIS in terms of data processing requirements Inputs External Data Internal Files Pre-defined models Processing Summarizing Simulation "Drilling Down" Outputs Summary reports Forecasts Graphs / Plots

examples of EIS
Executive Information Systems tend to be highly individualized and are often custom made for a particular client group; however, a number of off-the-shelf EIS packages do exist and many enterprise level systems offer a customizable EIS module.

The role of EIS

o o o o o o o

Are concerned with ease of use Are concerned with predicting the future Are effectiveness oriented Are highly flexible Support unstructured decisions Use internal and external data sources Used only at the most senior management levels

Components
The components of an EIS can typically be classified as:

Hardware
When talking about hardware for an EIS environment, we should focus on the hardware that meet the executives needs. The executive must be put first and the executives needs must be defined before the hardware can be selected. The basic computer hardware needed for a typical EIS includes four components: 1. 2. 3. 4. Input data-entry devices. These devices allow the executive to enter, verify, and update The central processing unit (CPU), which is the kernel because it controls the other Data storage files. The executive can use this part to save useful business information, Output devices, which provide a visual or permanent record for the executive to save or

data immediately; computer system components; and this part also help the executive to search historical business information easily; read. This device refers to the visual output device such as monitor or printer. In addition, with the advent of local area networks (LAN), several EIS products for networked workstations became available. These systems require less support and less expensive computer hardware. They also increase access of the EIS information to many more users within a company. Software Choosing the appropriate software is vital to design an effective EIS Therefore, the software components and how they integrate the data into one system are very important. The basic software needed for a typical EIS includes four components: 1. 2. 3. Text base software. The most common form of text are probably documents; Database. Heterogeneous databases residing on a range of vendor-specific and open Graphic base. Graphics can turn volumes of text and statistics into visual information for

computer platforms help executives access both internal and external data; executives. Typical graphic types are: time series charts, scatter diagrams, maps, motion graphics, sequence charts, and comparison-oriented graphs (i.e., bar charts); 7

4.

Model base. The EIS models contain routine and special statistical, financial, and other

quantitative analysis.

User interface
An EIS needs to be efficient to retrieve relevant data for decision makers, so the user interface is very important. Several types of interfaces can be available to the EIS structure, such as scheduled reports, questions/answers, menu driven, command language, natural language, and input/output.

Telecommunication
As decentralizing is becoming the current trend in companies, telecommunications will play a pivotal role in networked information systems. Transmitting data from one place to another has become crucial for establishing a reliable network. In addition, telecommunications within an EIS can accelerate the need for access to distributed data.

Applications
EIS enables executives to find those data according to user-defined criteria and promote informationbased insight and understanding. Unlike a traditional management information system presentation, EIS can distinguish between vital and seldom-used data, and track different key critical activities for executives, both which are helpful in evaluating if the company is meeting its corporate objectives. After realizing its advantages, people have applied EIS in many areas, especially, in manufacturing, marketing, and finance areas.

Manufacturing
Basically, manufacturing is the transformation of raw materials into finished goods for sale, or intermediate processes involving the production or finishing of semi-manufactures. It is a large branch of industry and of secondary production. Manufacturing operational control focuses on day-to-day operations, and the central idea of this process is effectiveness and efficiency.

Marketing
In an organization, marketing executives role is to create the future. Their main duty is managing available marketing resources to create a more effective future. For this, they need make judgments about risk and uncertainty of a project and its impact on the company in short term and long term. To assist marketing executives in making effective marketing decisions, an EIS can be applied. EIS provides an approach to sales forecasting, which can allow the market executive to compare sales forecast with past 8

sales. EIS also offers an approach to product price, which is found in venture analysis. The market executive can evaluate pricing as related to competition along with the relationship of product quality with price charged. In summary, EIS software package enables marketing executives to manipulate the data by looking for trends, performing audits of the sales data, and calculating totals, averages, changes, variances, or ratios.

Financial
A financial analysis is one of the most important steps to companies today. The executive needs to use financial ratios and cash flow analysis to estimate the trends and make capital investment decisions. An EIS is a responsibility-oriented approach that integrates planning or budgeting with control of performance reporting, and it can be extremely helpful to finance executives. Basically, EIS focuses on accountability of financial performance and it recognizes the importance of cost standards and flexible budgeting in developing the quality of information provided for all executive levels.

Barriers of Effectiveness
There are many ways in which an EIS can fail. Dozens of high profile, high cost EIS projects have been cancelled, implemented and rarely used, or implemented and used with negative results. An EIS is a high risk project precisely because it is intended for use by the most powerful people in an organization. Senior managers can easily misuse the information in the system with strongly detrimental effects on the organization. Senior managers can refuse to use a system if it does not respond to their immediate personal needs or is too difficult to learn and use.

Unproductive Organizational Behavior Norms

Issues of organizational behaviour and culture are perhaps the most deadly barriers to effective Executive Information Systems. Because an EIS is typically positioned at the top of an organization, it can create powerful learning experiences and lead to drastic changes in organizational direction. However, there is also great potential for misuse of the information. Green, Higgins and Irving (1988) found that performance monitoring can promote bureaucratic and unproductive behaviour, can unduly focus organizational attention to the point where other important aspects are ignored, and can have a strongly negative impact on morale. The key barrier to EIS effectiveness, therefore, is the way in which the organization uses the information in the system. Managers must be aware of the dangers of statistical data, and be skilled at interpreting and 9

using data in an effective way. Even more important is the manager's ability to communicate with others about statistical data in a non-defensive, trustworthy, and constructive manner. Argyris (1991) suggests a universal human tendency towards strategies that avoid embarrassment or threat, and towards feelings of vulnerability or incompetence. These strategies include:

stating criticism of others in a way that you feel is valid but also in a way that prevents others from deciding for themselves failing to include any data that others could use to objectively evaluate your criticism stating your conclusions in ways that disguise their logical implications and denying those implications if they are suggested

To make effective use of an EIS, mangers must have the self-confidence to accept negative results and focus on the resolution of problems rather than on denial and blame. Since organizations with limited exposure to planning and targeting, data-based decision-making, statistical process control, and teambased work models may not have dealt with these behavioural issues in the past, they are more likely to react defensively and reject an EIS.

Technical Excellence
An interesting result from the Vandenbosch & Huff (1988) study was that the technical excellence of an EIS has an inverse relationship with effectiveness. Systems that are technical masterpieces tend to be inflexible, and thus discourage innovation, experimentation and mental model development. Flexibility is important because an EIS has such a powerful ability to direct attention to specific issues in an organization. A technical masterpiece may accurately direct management attention when the system is first implemented, but continue to direct attention to issues that were important a year ago on its first anniversary. There is substantial danger that the exploration of issues necessary for managerial learning will be limited to those subjects that were important when the EIS was first developed. Managers must understand that as the organization and its work changes, an EIS must continually be updated to address the strategic issues of the day. A number of explanations as to why technical masterpieces tend to be less flexible are possible. Developers who create a masterpiece EIS may become attached to the system and consciously or unconsciously dissuade managers from asking for changes. Managers who are uncertain that the benefits outweigh the initial cost of a masterpiece EIS may not want to spend more on system maintenance and

10

improvements. The time required to create a masterpiece EIS may mean that it is outdated before it is implemented. While usability and response time are important factors in determining whether executives will use a system, cost and flexibility are paramount. A senior manager will be more accepting of an inexpensive system that provides 20% of the needed information within a month or two than with an expensive system that provides 80% of the needed information after a year of development. The manager may also find that the inexpensive system is easier to change and adapt to the evolving needs of the business. Changing a large system would involve throwing away parts of a substantial investment. Changing the inexpensive system means losing a few weeks of work. As a result, fast, cheap, incremental approaches to developing an EIS increase the chance of success.

Technical Problems
Paradoxically, technical problems are also frequently reported as a significant barrier to EIS success. The most difficult technical problem -- that of integrating data from a wide range of data sources both inside and outside the organization -- is also one of the most critical issues for EIS users. A marketing vicepresident, who had spent several hundred thousand dollars on an EIS, attended a final briefing on the system. The technical experts demonstrated the many graphs and charts of sales results, market share and profitability. However, when the vice-president asked for a graph of market share and advertising expense over the past ten years, the system was unable to access historical data. The project was cancelled in that meeting. The ability to integrate data from many different systems is important because it allows managerial learning that is unavailable in other ways. The president of a manufacturing company can easily get information about sales and manufacturing from the relevant VPs. Unfortunately, the information the president receives will likely be incompatible, and learning about the ways in which sales and manufacturing processes influence each other will not be easy. An EIS will be particularly effective if it can overcome this challenge, allowing executives to learn about business processes that cross organizational boundaries and to compare business results in disparate functions. Another technical problem that can kill EIS projects is usability. Senior managers simply have the choice to stop using a system if they find it too difficult to learn or use. They have very little time to invest in learning the system, a low tolerance for errors, and initially may have very little incentive to use it. Even 11

if the information in the system is useful, a difficult interface will quickly result in the manager assigning an analyst to manipulate the system and print out the required reports. This is counter-productive because managerial learning is enhanced by the immediacy of the question - answer learning cycle provided by an EIS. If an analyst is interacting with the system, the analyst will acquire more learning than the manager, but will not be in a position to put that learning to its most effective use. Usability of Executive Information Systems can be enhanced through the use of prototyping and usability evaluation methods. These methods ensure that clear communication occurs between the developers of the system and its users. Managers have an opportunity to interact with systems that closely resemble the functionality of the final system and thus can offer more constructive criticism than they might be able to after reading an abstract specification document. Systems developers also are in a position to listen more openly to criticisms of a system since a prototype is expected to be disposable. Several evaluation protocols are available including observation and monitoring, software logging, experiments and benchmarking, etc. (Preece et al, 1994). The most appropriate methods for EIS design are those with an ethnographic flavour because the experience base of system developers is typically so different from that of their user population (senior executives).

Misalignment Between Objectives & EIS

A final barrier to EIS effectiveness was mentioned earlier in the section on purpose. As noted there, the powerful ability of an EIS to direct organizational attention can be destructive if the system directs attention to the wrong variables. There are many examples of this sort of destructive reporting. Grant, Higgins and Irving (1988) report the account of an employee working under a misaligned reporting system. I like the challenge of solving customer problems, but they get in the way of hitting my quota. I'd like to get rid of the telephone work. If (the company) thought dealing with customers was important, I'd keep it; but if it's just going to be production that matters, I'd gladly give all the calls to somebody else. Traditional cost accounting systems are also often misaligned with organizational objectives, and placing these measures in an EIS will continue to draw attention to the wrong things. Cost accounting allocates overhead costs to direct labour hours. In some cases the overhead burden on each direct labour hour is as much as 1000%. A manager operating under this system might decide to sub-contract 100 hours of direct labor at $20 per hour. On the books, this $2,000 saving is accompanied by $20,000 of savings in overhead. If the sub-contractor charges $5,000 for the work, the book savings are $2,000 + $20,000 12

$5,000 = $17,000. In reality, however, the overhead costs for an idle machine in a factory do not go down much at all. The sub-contract actually ends up costing $5,000 - $2,000 = $3,000. (Peters, 1987)

Advantages & Disadvantages

Advantages of EIS

Easy for upper-level executives to use, extensive computer experience is not required in Provides timely delivery of company summary information Information that is provided is better understood Filters data for management Improves tracking information Offers efficiency to decision makers

operations

Disadvantages of EIS

System dependent Limited functionality, by design Information overload for some managers Benefits hard to quantify High implementation costs System may become slow, large, and hard to manage Need good internal processes for data management May lead to less reliable and less secure data

13