executive information system (EIS) - History of EIS, EIS Components, EIS Applications, Advantages and Disadvantages of EIS, Future Trends in EIS

A computer program or suite of computer programs designed to provide executives with the information they need to take decisions. It differs from a management information system (MIS) in that, for example, in a retail store the MIS would supply the store manager with information about how various brands were selling and thus allow the manager to determine a pricing policy, whereas an EIS would allow an executive director at head office to define exactly what information should be presented and arrange for that information to be made available in whatever form the executive may have asked for it.

An Executive Information System (EIS) is a computer-based 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. 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.

History of EIS

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 well acquainted with computers. Typically, an EIS provides the 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 used in typical corporation hierarchies, but also installed at the personal computer levels or workstation levels 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 now 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 capable to customize their access to the proper company’s data and provide relevant information to both upper and lower levels in companies

EIS Components

The components of an EIS can typically be classified into the following categories:

Hardware

When talking about hardware for an EIS environment, we should focus on the hardware that meet executive’s needs. The executive can use this part to save useful business information, and this part also help the executive to search historical business information easily; 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.

Now perhaps the more difficult problem to those executives is how to choose EIS software rather than how to use them, because the latest EIS software packages are more intelligible to nontechnicians, self-documenting, and more flexible. Therefore, when evaluating EIS software, it should be determined if the package is easy to use, if the package responds readily to the executive’s requests, and if the package is reasonably priced.

Interface

An EIS needs to be efficient to retrieve relevant data for decision makers, so the interface is very important. 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 and error messages. In addition, telecommunications within an EIS can accelerate the need for access to distributed data.

EIS Applications

EIS enables executives to find those data according to user-defined criteria and promote information-based 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 evaluate if the company is meeting its corporate objectives. 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. 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. 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. 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. Also, the combination of EIS and EDI environment can help cash managers to review the company’s financial structure so that the best method of financing for an accepted capital project can be concluded. In addition, the EIS is a good tool to help the executive to review financial ratios, highlight financial trends and analyze a company’s performance and its competitors.

Advantages and Disadvantages of EIS

Advantages

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

Disadvantages

Functions are limited, can not perform complex calculations Hard to quantify benefits and to justify implementation of an EIS Executives may encounter overloaded information System may become slow, large, and hard to manage Difficult to keep current data May lead to less reliable and secure data Small companies may encounter excessive costs for implementation No mames XOR

Future Trends in EIS

The future of executive info systems will not be bound by mainframe computer systems. Because utilizing existing software applications lies in this trend, executives will also eliminate the need to learn a new or special language for the EIS package. Future executive information systems will not only provide a system that supports senior executives, but also contain the information needs for middle managers. The future executive information systems will become diverse because of integrating potential new applications and technology into the systems, such as incorporating artificial intelligence (AI) and integrating multimedia characteristics and ISDN technology into an EIS.