EXECUTIVE INFORMATION SYSTEM
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 a Decision Support System (DSS).
The emphasis of EIS is on graphical displays and easy-to-use user interfaces. 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.
In recent years, the term EIS has lost popularity in favour of Business Intelligence.
Traditionally, executive information systems were developed as mainframe computer-based programs. The purpose was to package a company’s data and to provide sales performance or market research statistics for decision makers, as such 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 company’s data and decide which data are relevant for their decision makings. This arrangement makes all users able to customize their access to the proper company’s data and provide relevant information to both upper and lower levels in companies.
Components of EIS
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 executive’s needs. The executive must be put first and the executive’s needs must be defined before the hardware can be selected.
The basic computer hardware needed for a typical EIS includes four components:
- Input data-entry devices. These devices allow the executive to enter, verify, and update data immediately;
- The central processing unit (CPU), which is the kernel because it controls the other computer system components;
- Data storage files. The executive can use this part to save useful business information, and this part also help the executive to search historical business information easily;
- Output devices, which provide a visual or permanent record for the executive to save or read. This device refers to the visual output device 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:
- Text base software. The most common form of text is probably documents;
- Heterogeneous databases residing on a range of vendor-specific and open computer platforms help executives access both internal and external data;
- Graphic base. Graphics can turn volumes of text and statistics into visual information for executives. Typical graphic types are: time series charts, scatter diagrams, motion graphics, sequence charts, and comparison-oriented graphs (i.e., bar charts);
- Model base. The EIS models contain routine and special statistical, financial, and other quantitative analysis.
Perhaps a more difficult problem for executives is chosing from a range of highly technical software packages. Ease of use, responsiveness to executives’ requests, and price are all reasonable considerations. Further, it should be considered whether the package can run on existing hardware.
- 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. It is crucial that the interface must fit the decision maker’s decision-making style. If the executive is not comfortable with the information questions/answers style, the EIS will not be fully utilized. The ideal interface for an EIS would be simple to use and highly flexible, providing consistent performance, reflecting the executive’s world, and containing help information.
4. 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 of EIS
EIS enables executives to find those data according to user-defined criteria and promote information-based insight and understanding. After realizing its advantages, people have applied EIS in many areas, especially, in manufacturing, marketing, and finance areas which are as follows :
- 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 Manufacturing operational control focuses on day-to-day operations, and the central idea of this process is effectiveness and efficiency. To produce meaningful managerial and operational information for controlling manufacturing operations, the executive has to make changes in the decision processes. EIS provides the evaluation of vendors and buyers, the evaluation of purchased materials and parts, and analysis of critical purchasing areas. Therefore, the executive can oversee and review purchasing operations effectively with EIS. In addition, because production planning and control depends heavily on the plant’s data base and its communications with all manufacturing work centers, EIS also provides an approach to improve production planning and control.
- 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 For this, they need make judgments about risk and uncertainty of a project and its impact on 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 sales.
- 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 integrated 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. EIS enables executives to focus more on the long-term basis of current year and beyond, which means that the executive not only can manage a sufficient flow to maintain current operations but also can figure out how to expand operations that are contemplated over the coming years.
Advantages and Disadvantages
- Easy for upper-level executives to use, extensive computer experience is not required in operations
- Provides timely delivery of company summary information
- Information that is provided is better understood
- Filters data for management
- Improves to tracking information
- .Offers efficiency to decision makers
- Functions are limited, cannot perform complex calculations
- Hard to quantify benefits and to justify implementation of an EIS
- Executives may encounter information overload
- System may become slow, large, and hard to manage
- Difficult to keep current data
- May lead to less reliable and insecure data
- Small companies may encounter excessive costs for implementation