Executive Information Systems - CiteSeerX

ExecutiveInformation Systems

Executive Information Systems: A Framework for Developmentand a Survey of Current Practices By: Hugh J. Watson Department of Management University of Georgia Athens, Georgia 30602 R.. Kelly Rainer, Jr. Management Department Auburn University Auburn, Alabama 36849 Chang E. Koh Information Systems and Operations Management University of North Carolina, Greensboro Greensboro, North Carolina 27412

Abstract Executiveinformation systems(EIS) are nowsuccessfully providing computersupport for senior executives in a growing numberof organizations. Previous attempts to support senior executives are discussedwith a focus on whythese attempts failed and what was learned that should be incorporated in future efforts. An EIS development frameworkis presentedthat includes a structural perspectiveof the elementsandtheir interaction, the development process, and the dialog betweenthe.user and the system. Surveydata from 50 firms having an EIS are presented and discussed in the context of the development framework. While most of the findings confirm conventional EIS wisdom, others are somewhat surprising, suchas the significant role that information systems management often plays in initiating the development of an EIS or serving as its operational sponsor. Thefindings lead to additional suggestions for EIS research opportunities, as well as predictions about the future nature of EIS.

Keywords: Executive information systems, executive support systems, decision support, systems development ACMCategories: H.3.5, H.4.0., H.4.2, K.6.0

Introduction The target audience for computer support in organizationshas evolvedover the years. Clerical workerswerethe first to be impactedas transaction processing systemswere automatedin the 1950s and 1960s. At about the same time, engineers gained access to computers and started what is nowrecognizedas end-user computing. Management information systems (MIS) appearedwith muchfanfare in the 1960s. While some envisioned them as "central nervous systems" for organizations, in practice they largely expandedthe reporting systemfor lowerlevel managers. Office automation began two decadesago with the introduction of word processors for secretaries and continues to expand today as a growing variety of support becomes available for office workers.In the 1970s,decision support systems(DSS)provided assistance for specific decision-makingtasks. While DSSs can be developed for and used by personnel throughout the organization, they are most commonly employedby staff and middle and lower managers. Amongthe latest developments are expert systems, which capture the expertise of highly trained, experienced professionals in specific problem domains. As the evolution of computer support for organizational personnel is considered, one group is conspicuously missing: the senior executives of a firm. They have not been omitted by design, and in fact, previous advanceswere originally thoughtto potentially servethem(e.g., MISandDSS),but for a variety of reasons,little support has beenprovided. This lack of support is rapidly changing,however,as executive information systems (EIS) or executive support systems lESS) are being developed in a growing numberof firms (Main, 1989). International Data Corporation, a market research firm, predicts that the U.S. market for EIS is growing at a compound annual rate of nearly 40 percent and that expenditures for EIS software development, including the purchaseof software, custom consulting, and in-house software development,

MIS Quarterly/March

1991 13

ExecutiveInformationSystems

will growto $350.million in 1992(Alexander, 1989). EventhoughEISssupportan importantclientele andare becoming prevalent,little researchhas been done about them. The available EIS literature is casestudyor anecdotal in nature.In orderto learn moreaboutcurrentEISpractices, westudied 50 firms that either havean EIS or are well alongin developingone. Thefindings are presented in the contextof a framework that can be used to understand and guide EIS development efforts.

downallows the user to accesssupporting detail or data that underliesummarized data); ¯ accessandintegrate a broadrangeof internal ¯ andexternal data; ¯ are user-friendly and require minimalor no training to use; ¯ are useddirectly by executiveswithout intermediaries; ¯ presentgraphical,tabular, and/ortextual information.

Theresults of this studyshouldbe of interest to practitioners whoalready have an EIS or are planningto developone. Thefindings provide benchmarks against which individual company experiencescan be compared. Theresults also should stimulate academiciansto do further research.Specific researchquestionsraised by this researchare presentedlater.

TheEIS and ESSterms are sometimes usedinterchangeablyoThe term "executive support system,"however, usuallyrefers to a systemwith a broaderset of capabilitiesthanan EIS(Rockart and DeLong,1988). Whereas the EIS term connotesprovidinginformation,the ESStermimplies othersupportcapabilitiesin additionto information. Consequently, wefind it useful to conceptualize an ESSas including the following capabilities:

The next section defines an EIS, lists EIS characteristics, and distinguishesbetweenEIS and ESS.This is followed by discussionof the failure of previousefforts to supportexecutives. Next, an EIS development frameworkis introducedandthe researchmethodology of the study is described. Then,the findingsof the surveyare discussed in the contextof the framework. Finally, conclusionsare drawnfrom the study.

EIS Definition and Characteristics Researchers haveuseda variety of definitions for EIS(Pallet andLaska,1990;TurbanandWatson, 1989).For our purposes,an EISis defined as a computerizedsystem that provides executiveswith easyaccessto internal andexternal informationthat is relevantto their critical success factors. Whilea definition is useful, a richer understanding is providedby describing the characteristics of EIS. Research(Burkan, 1988; Friend, 1986; Kogan,1986;Zmud,1986) showsthat mostexecutiveinformationsystems: ¯ are tailored to individual executiveusers; ¯ extract,filter, compress, andtrackcritical data; ¯ provideonline status access,trend analysis, exceptionreporting, and"drill-down" (drill-

14 MIS Quarterly~March1991

¯ supportfor electroniccommunications (e.g., email, computerconferencing,and wordprocessing); ¯ dataanalysiscapabilities (e.g., spreadsheets, query languages, and decision support systems); ¯ organizingtools (e.g., electronic calendars, automated rolodex,andtickler files). Theseadditionalcapabilities are typically made available as options on a system’smain menu or by the ability to "hot key"the workstation into a PCmodeof operation. Thedistinctions betweenan EIS andan ESSare not particularly importantfor our purposes other than to recognizethat an ESS influencesandincreases system requirements. For example, manysystems includee-mail; hence,e-mail software and a keyboardmust be available. The materialsprovidedhereapplyequallywell to EIS or ESS, even though the EIS term is used throughout.

WhyPrevious Efforts Failed Thereare manyreasonswhypreviousefforts to bring computer supportto senior executiveshave failed. Understanding thesereasonsis important


because they provideinsights into whatproblems mustbe overcome if an EISis to be successful. Oneof the difficulties involvesthe executives themselves.Manyof today’s senior executives missedthe computerrevolution. Consequently, they mayfeel uncomfortableusing computers, havepoor keyboardingskills, or believe’that "real" executivesdo not use computers. Another difficulty involvesthe natureof executive work. Previous studies provide "a better understanding of whatsenior executivesdo and insights into howcomputersupport must be delivered (Isenberg,1984;Kotter, 1982;Mintzberg, 1975). Executives’ busy schedulesand travel requirementsare not amenableto long training sessions,do not permitmuchuninterrupted time for systemuse, anddo not allow a systemto be employed on a daily basis (Albala, 1988).Theresult is that senior executivesare unlikely to employsystemsthat require considerabletraining andregularuseto be learned and remembered.Becausesenior executives havereadyaccess to staff personnel to fulfill their requestsfor information,anysystemmustprove to be moreresponsive than a human(Rockart and DeLong,1988). Anotherproblemin providing computersupport includes technology that is difficult to use,at least from most executives’ perspective, Powerful workstations,improved micro-to-mainframe software, high-quality color graphics, andtouchscreens are just someof the technological developments that nowmake it possibleto deliver appealingsystemsto senior executives. Finally, manyprevioussystemshavecontained little informationof valueto seniorexecutives, whichis a problem relatedto a lack of understanding of executivework. This lack wasexacerbatedby systemsdesignerswhooften possessed excellenttechnicalknowledge but little business knowledge (ReckandHall, 1986).This condition is improvingas organizationsrecognizethat businessskills andthe ability to interact with executives are critical. Threebroad guidelines for developinga successful EIScanbe gleanedfromthesefailures. First, the EISmustmeetthe informationneeds of seniorexecutives. Second, in orderto dothis, the EIS must be developedby personnelwith bothbusinessandtechnicalskills. Finally, the EISmustbe so easyto usethat it mightbe con-

sideredto be "intuitive" or "user seductive." Eventhoughit is challengingto implement anEIS that meetsexecutiveinformationneedsandis extremely easy to use, a numberof EISs has achieved these objectives (Applegate and Osborn,1988; Houdesheland Watson,1987).

An EIS Development Framework According to Sprague(1980), development frameworkis "helpful in organizinga complex subject,identifying the relationshipsbetween the parts, and revealingthe areasin whichfurther developments will be required" (p.6). It guides practitioners in developing systemsandprovides insights for academicians in identifying where researchneedsto be performed.GorryandScott Morton’s (1971) framework for MIS and Sprague’s(1980) for DSSare two of the best knownand most useful frameworks.Turbanand Schaeffer(1987) suggestthe needfor an EIS development framework.This article provides sucha framework basedonthe EISliterature, our experiencesin developingEIS, and discussions with vendors, consultants, and EIS staff members. TheEIS development frameworkintroducedhere is illustrated by the structural perspective depictedin Figure1. Withthis perspective,thers are key elementsand interactions amongthe elementsthat are importantwhendevelopingan EIS.Theelements includeexecutives,functional areapersonnel (e.g., line managers, staff personnel, anddatasuppliers),informationsystems personnel, vendors, data, and information technology.Theinteractions are in the formof pressures,human interactions, anddata flows. Thedevelopment of an EIS is a dynamicprocess that placesthe key elements andinteractionsin motion.In orderfor this to be successful,anappropriate development processmust be used. This considerationis anotherimportantpart of the framework. Fromthe users’ perspective,the dialog with the systemis of fundamental importance. It includes whatmustbe knownin order to usethe system, howto direct the system’sactions, andhowthe output is presentedby the system(Bennett,

MIS Quarterly~March 1991 15


Exterr~l

Environment

External

Pressure

Internal

Vendors

Consultants

Environment Internal Pressure

EIS

External Data

Internal

1 Dat~ E~se

Area

I

I/S

Group

Builders

Figure 1. Structural Perspective of the EIS DevelopmentFramework

1977). Thedialog is anotherimportantpart of the framework. In summary,the EIS developmentframeworkincludes a structural perspective, the development process, and the user- systemdialog. There are a numberof aspects associated with each. Those that are explored in this researchare identified in Table 1.

16 MIS Quarterly/March

1991

The Study The research study was begunin the spring of 1988to investigate current EIS practices. The authors mailed a multi-part questionnaire to a large sampleof geographically dispersed firms. The first part of the questionnaire defined an executive information system. The definition is important because EISs are the most recent

Executivetnformation Systems

Table 1. Aspects of the EIS Development Framework STRUCTURAL Personnel EISInitiator Executive Sponsor Operating Sponsor EIS Builder/Support Staff EIS Users Functional Area Personnel IS Personnel Data Internal External DEVELOPMENT PROCESS External and Internal Pressures Cost/Benefit Analysis Costs Development Costs Annual Operating Costs Development Time Development Methodology Hardware Software Spread Evolution Information Provided EIS Capabilities USER-SYSTEM DIALOG Knowledge Base Training User Documentation System User Action Language User-SystemInterface System Response Time Presentation Language Multiple Information Formats Color computer-basedinformation system to evolve, and, therefore, a precise definition of EIS is not universally accepted amongacademicians and practitioners. The secondpart of the questionnaire gathered demographic data on each organization. Finally, the questionnaire sought

data concerning the development, operation, support, and capabilities of the EIS in the organization. Suggestedchangesmadeafter two pretests were incorporated into the final survey instrument. The survey population was chosen from three groups. The first group attended either the DSS-87 or DSS-88 conferences. One hundred and eighty-five questionnaires weresent to this group. Questionnaireswere not sent to attendees from educationalinstitutions or consulting firms. The second group, all of whomreceived questionnaires, consistedof the 100 firms identified by a Computerworldsurvey as having invested the most effectively in information systems. The authors believed that organizations that are leaders in the use of information systems(IS) are likely candidatesto have an EIS. The third group consisted of 19 firms knownby the authors to havean EIS but were not included into the first two groups. Each firm wascarefully checkedto ensure that the firm was not included in more than one group. Because 18 firms appeared more than once, a total of 286 questionnaires were mailed. The survey was not a randomsample. Becausemost firms had not developed an EIS at this point in time, a frame wasused that maximizedthe likelihood of contacting firms with an EIS. Initially, the authors received 72 usable responses,with 30 of the firms indicating that they had an EIS, and 42 indicating that they did not. Five weeksafter the first mailing, another questionnaire was mailed to non-respondents. This follow-up resulted in responsesfrom 20 additional firms with an EIS and20 with none. The profile of responsesfrom the secondgroup corresponded closely with the profile of the initial responses. A total of 112 usable responseswas receivedfor a responserate of 39.1 percent. The numberof companieswith an EIS was 50, which provides the "n" on which percentages are basedwhendescribing current practices in this article. In somecases, the respondentsdid not answerevery question. In such instances, the percentagescalculated are basedon the number of responses received.

Findings and Discussion Demographics Organizationsin this sur~eyrepresent a variety of industries located in widely dispersed



geographicareas (see Figure 2). Their total corporateassetsaverage $5.37billion, with only three firms reporting total assetsof less than $1 billion. Forty-eightrespondents listed their positionsin their firms (seeFigure2). Thelargest numberof respondentsare IS managers,followedby executivesand IS staff members. The respondentsaveraged18.74 years of workexperience,13.78yearsof IS workexperience,and 2.77 years of EIS experience. Forty-seven firms (94 percent)hadanoperational EIS, andthree firms (6 percent)werefar enough along in developingonethat they wereable to partially answer the questionson the survey.The latter three firms all indicatedthat they would havean operational EISin less than oneyear. While someEISs date back to the late 1970s (Houdeshel andWatson,1987), mostof themare recent. Thesurveyfindings supportthis statementas 40firms (80 percent)indicatedthat their EISswereless than three yearsold. Theaverage ageof an EISin this surveyis two years.

A structural perspective Personnel Thirty-four firms (68 percent)indicated that company executive(s)servedas the initiator of the development of the EIS. Surveyrespondents wereallowedto define the term "executive"in the contextof their ownorganizations.Information systems personnelinitiated EI$ development in 14firms (28 pement).Finally, the information center in one firm (2 percent) initiated EIS development. The finding that IS personnelinitiated EIS development in 14 firms is somewhat Surprising because the literature indicates that executives initiate EIS development (Houdeshel ~andWatson, 1987;Stecklow,1989).However, 11 of these 14firms (79 percent)hadEISsthat wereless than two yearsold. Of the 34 firms with EISinitiated by executives,19 (56 pement)hadEISsthat were less than two years old. Thesenumbers suggest that executivesmotivatedEISdevelopment when thesesystemsfirst evolved.FewIS departments had the confidenceof management and/or the risk-taking propensity to push for an EIS. However,as the numberof EIS successstories

18 MISQuarterly~March1991

hasgrown,moreIS departmentsare taking the lead in advocatingEIS development by keeping abreastof technologicaldevelopments andcommunicating the potential benefits of the technologyto senior executives(Voloninoand Drinkard,1989). EIS development is spurredby a highly placed senior executivewhoservesas the system’sexecutive sponsor (Barrow, 1990; Rockart and De~.ong, 1988).Thispersonis typically the presidentor a vice presidentof the company. Rockart and DeLong(1988) suggest that three major responsibilitiesof the executivesponsorinclude making the initial requestfor the system;staying on top of the system’sdevelopment andproviding direction and feedbackaboutproposed applications; andcommunicating strong andcontinuing interest to those with a stake in the system, such as key staff groups and line managers supplying data. In this study, 42firms (84 percent)reportedhaving executive sponsors for their EISs.Interestingly, 62 percent of the executivesponsorshold positionsother than CEO or president(see Table 2). A partial explanation for this finding relates to the scopeof the EIS.Whileit is not explored in this survey,the authorsare familiar with a number of EISsthat servea functionalarearather thanthe entire organization.In thesesituations, it is logical that the executivesponsorwouldbe the vice president from the functional area served. The executive sponsor typically assigns an operating sponsor to managethe day-to-day developmentof the EIS (Rockart and DeLong, 1988).Theoperatingsponsoris often a senior executivewhohasan interest in havingan EIS for his or her ownpurposes.An information systems project managermayserve as the operatingsponsor.Theoperatingsponsorworks with executives, specializedstaff, functionalarea personnel,IS personnel,andvendorsin creating the EIS. Forty-five firms (90 percent)reportedhaving operating sponsor, and 42 firms listed the operating sponsor’s position. The operating sponsorheld a variety of positions, the most prevalentbeingthe manager or director of IS (42 pement of firms)(seeTable3). Thisfindingis different from whatmight be expectedbecausethe literature suggests that the operatingsponsoris


Respondents by Geographical Area No~hea~40% Midwest 26%

"Other 6% West 12%

Respondents by Industry Manufacturing 28O/o Financial 18%

Communications14% Other 24%

Health Care 8% Utilities 8%

Respondents by Position in the Firm IS Managers38%

Other12% IS Staff Members 19%

FunctionalArea Staff Members 10%

Figure 2: Respondentsby Location, Industry,

and Position



typically a seniorexecutive(RockartandDeLong, 1988). TheEISbuilder/supportstaff is responsiblefor creating and maintainingthe EIS (Paller and Laska, 1990; Rockart and DeLong,1988). The staff maybe either newlycreatedor an existing organizationalunit given a newcharge.For example,a unit that providesspecializedinformation and presentation materials to senior management can be given EIS responsibilities (Houdeshel andWatson,1987). It is likely that anexistinggroupwill requirehelpwith technical matters.Thislack of technicalskills is not the casewhenIS personnelare responsiblefor the EIS,but IS personnelare often judgedto beout of sync with the needsof senior management or too busywith other activities. Consultantsand vendorscanalso be involved, especiallyduring initial development. All firms in this surveyhadEISbuilder/support teams,with 37 firms (74 percent)indicating that their groupconsisted of five or fewerfull-time people. Theaveragesize of the teamwasfour people. Table4 showsthat the four categoriesof personnelmostcommonly foundon the EIS team are end-usersupportpersonnel(58 percent of firms), systemsanalysts(54 percent), programmers(44 percent), and executivestaff support personnel (40 percent).Onlysevenfirms (14 percent) reported using vendor personnel when developingtheir EIS. Thebuilder/supportteamshouldinclude personnel witha mixtureof business andtechnicalskills becausethe teammust workclosely with many different peoplein the firm (e.g., executives, the IS department,and functional area personnel) (Reck and Hall, 1986; Rockart and DeLong, 1988). Thebusinessskills typically comefrom peoplewhohaveexperiencein the company. The technical skills often comefrom IS personnel, either by virtue of beingassigned to the staff or givenspecific responsibilitiesfor supporting EIS activities (see the dotted-line relationship in Figure1). Respondents were askedto rank the top five skills in order of importance.Five points were awarded to the mostimportantskill, four points to the second mostimportantskill, andso on. The ability to workwell with executiveswasfoundto be the mostnecessaryskill for a development team member,followed by knowledgeof the

20 MIS Quarterly/March 1991

businessandinterpersonalskills (see Table5). Technicalskills rankedonly fourth. Whileit wasnot explored in the survey,it is worth noting that the EIS builder/support groupcan havea variety of organizationalstructures. One approachis to have a centralized group that reports to IS or a functional area. Anotherapproachis to havea small, centralizedgroupwith functionalareapersonnelworkingon a part-time basisperformingtaskssuchas identifying informationrequirementsand supplyingdata, These tasksarein additionto otherjob responsibilities. This arrangement matches up well with the skills that the supportgroupneedsin orderto workeffectively with executives. Theexecutivesponsor,operating sponsor,and EISstaff identify theusersof theEIS.Thisgroup is usuallysmallinitially andexpands overtime. A keyto the success of the EISis identifying the systemandinformation requirements of the executive users (Stecklow, 1989). A variety methods canbe used,including participation in strategic planning sessions, formal CSFsessions, informaldiscussions,monitoringexecutive activities, discussions with staff supportpersonnel, software tracking of systemusage, and others (WatsonandFrolick, 1988). Functional area personnel are an important sourceof data for the EIS, and an implementation strategy shouldbe pursuedthat encourages their cooperationandsupport for the system. Before implementationof an EIS, muchof the needed data are alreadybeinggatheredbut often only for the executivesof the functionalareain which the data originate. Twoof the major organizationalresistancesto EISare staff personnelwhofeel threatenedby the possibility of a diminishedrole in supplyinginformationto executives andsubordinateline managers whofear that their operationswill be too visible to top management (Argyris, 1971; Carroll, 1988; Rockart and DeLong,1988). Informationsystemspersonnelmaynot lead the EISproject, but their support,cooperation,and assistanceare critical (Leibs, 1989). Helping select andinstall hardwareandsoftware, providing maintenance, trouble-shootingproblems, and providing accessto machine-resident data are some of the supportresponsibilitiesthat fall to IS personnel.In organizationswhereIS personnelhasthe attention andconfidenceto top


Table 2. Positions Held by Executive Sponsors Percent of Firms

Position

21 17 14 42 6

Chief Executive Officer President Chief Financial Officer Vice President Controller

Table 3. Positions Held by Operating Sponsors Percent of Firms

Position

50 14 12 10 7 7

Manageror Director of IS Manageror Director of Functional Areas Vice President Analyst Staff Consultant

Table 4. EIS Development Team Members Category

Percent of Firms

End-user support personnel Systems analysts Programmers Executivestaff Executive Vendor personnel Others

58 54 44 40 22 14 14

Table 5. Important Skills for the EIS DevelopmentTeam Skill Ability to workwell with executives Knowledgeof the business Interpersonalskills Technicalskills Ability to organize data Other management, they maybe able to create an interest in the creation of an EIS (Volonino and Drinkard, 1989). This task is accomplishedby demonstratingwhat an EIS is and the kind of information it provides. Possible demonstration

Total Points 161 143 141 .133 115 12 strategies include showinga potential executive sponsor an EIS in another company;arranging a vendor-provideddemonstration, ideally using company data important to the executive; or prototyping an EIS in-house.


Executive InformationSystems

Data Dataplay a critical role in anEISbecause they are the basis for the information provided (Houdesheland Watson, 1987; Rockart an.d DeLong,1988). Thedata can comefrom internal or externalsourcesandcanbe hardor soft. TheEIS canrequire that newdata be collected andstored.Much of the internal datais extracted fromexisting organizationaldatabases that are used by transaction processing systemsand functional areaapplications. This tendsto be harddata. Theuse of this harddata in an EIS is not as straightforward as it might seem, however,because of different reporting andupdating cycles, functional areafeelings of data ownership,andmultiple, incompatibledatabases (e.g., inconsistentdatadefinitions). Otherinternal data comefrom human sourcesand often are soft in natureandare critical to understanding complex problems (Mintzberg, 1975; Zmud, 1986).Includedcan be news,rumors,opinions, ideas, predictions,explanations,andplans. Collecting, analyzing,andenteringthesedatato an EIStendsto beverylabor-intensive but addsconsiderably to the richness of the information provided. Firmsin the surveylisted a varietyof internaldata sources. Thecorporate databaseis a common sourceof internal data for most(82 percent) the firms. Otherinternal datasourcesincludethe functional areas of the firm (62 percent), documents(38 percent), and humans(34 percent). These dataindicatethe richnessandvariety of data sourcesthat can be usedby an EIS. Further,the dataillustrate theextensive dataaccess requirementsassociatedwith an EIS. External data are also important to an EIS (Runge,1988). Like internal data, they can hard or soft and can comefrom existing databases or require specialcollection efforts. Datasourcesinclude external databases (e.g., DowJones NewsRetrieval), published data, customers,andsuppliers. Externaldata sources primarily notedin this surveyinclude newsservices(56 percentof firms), stockmarkets (46percent), andtrade/industrydata (34 percent).

The development process Theexecutivesponsor’sinterest in the developmentof an EIS can be the consequence of ex-

22 MISQuarterly/March 1991

temalandinternal pressures(GuldenandEwers, 1989; Houdeshel andWatson,1987;Rockartand DeLong,1988). The external pressures come fromthe firm’s external environment andcaninclude environmentalturbulence(e.g., rapidly changing costs of rawmaterials), increasedcompetition, andincreasedgovernment regulations. Intemalpressures include the needfor new,better, or moretimely information;havingto manage organizationsthat are increasinglycomplexand difficult to run; andthe needfor moreefficient reporting systems. Thestudy askedrespondentsto rank order the three mostimportantexternal pressuresandthe three mostimportantinternal pressures.Three points were awardedto the most important pressurein eachcategory, two points to the secondmostimportant pressure, and onepoint to the third mostimportantpressure. Themostcritical externalpressureis anincreasingly competitiveenvironment. Othercritical external pressures,in descending order,includethe rapidly changingexternal environmentand the needto be moreproactivein dealingwith the external environment (see Table6). Thesurveyfindings for internal pressures(see Table 6) reveal that respondents considerthe needfor timely informationto be mostcritical. Otherinternal pressuresincludethe needfor improvedcommunication, the needfor accessto operationaldata, andthe needfor rapid status updates. An interesting finding is that respondentsplace the needfor moreaccurate information as theleast critical internalpressure. This seemsto indicate that EIS users already considerthe informationthey receiveto be accurate. Manyresearchers observe that cost/benefit analysesare difficult to performon EISbecause of thedifficulty in quantifying many of thebenefits (Houdeshel and Watson, 1987; Moad, 1988; Rockartand DeLong,1988; Rockartand Treacy, 1982). Theseresearcherssuggestthat there is simplyan intuitive feeling that the systemwill justify its costs. After the system becomes operational, specific benefits and cost savingsmay be identifiable (Wallis, 1989).Forty-four firms answered this questionnaire item. Their responsessupportthese assertions; forty-two respondents (95 percent)indicatethat their firms assessed potential benefitsof their EISthrough intuitive feelings aboutimproved decisionmak-


Table 6. Pressures Leading to EIS Development External Pressures increasingly competitive environment Rapidly changing external environment Need to be more proactive in dealing with external environment Needto access external databases Increasing governmentregulations Other

Total Points 113 59 46 25 15 8

Internal Pressures Needfor timely information Need for improved communication Needfor access to operational data Needfor rapid status updates on different businessunits Needfor increased effectiveness Needto be able to identify historical trends Needfor increased efficiency Need for access to corporate database Other Need for more accurate information

61 39 35

ing. Only two firms (5 percent) assessedhard dollar benefits.

were found to average $117,000 on personnel, $46,000 on software, $29,000 on hardware, and $16,000on training. Thesenumberssuggest that an EIS is expensive and, consequently, maybe limited to larger firms with considerablefinancial resources.

Costs Even though most firms do not measurehard dollar benefits, manyfirms do consider the costs involved before undertaking EIS development. Most firms estimate software costs (79 percent), hardwarecosts (68 percent), and personnelcosts (68 percent). Fewerfirms (32 percent) estimate training costs, perhapsbecausetraining costs are anticipated to be. minimal. In conjunction with data on firms that estimated EIS costs before development, this study gathered data on actual EIS developmentcosts and operational costs. Developmentcosts are thosecosts incurred creating the first version of the EIS. Thirty-three firms provided development costs for their EIS. The firms averaged$128,000 on software, $129,000on hardware, $90,000 on personnel, and $18,000on training. Thesefirms also supplied annual EIS operating costs, which

34 27 27 25 25 17 15

Of note is that annualoperatingcosts for personnel appearto be higher than personnel developmentcosts. A possibleexplanationfor this finding is that companiesmayneedadditional people to handle increases in the number of users, screens, and systemcapabilities. Thetime to developthe initial version of an EIS is important. As with other systemsthat support decision making, the first version of an EIS should be developed quickly and presented to users for their reactions (Moad, 1988; Runge, 1989). Forty-six firms (92 percent)developed their EIS using an iterative, prototyping methodology andfour firms (8 percent) useda formal systems developmentlife cycle approach. The hardware and especially the software used in developingthe first version mayor maynot be whatare usedin later versions. At oneextreme,



a few screenscan be designedusing existing softwareto run onworkstationsalreadyin place (Rinaldi andJastrzembski, 1986).Informationfor the screenscan be enteredmanually,This approachminimizesdevelopment time and cost. At the other extreme, a commercialEIS package canbe purchased andinstalled. TheEISbuilders usethe package to createthe initial screensand to supplythemwith information. This approach minimizes the difficulties of moving to later versions if the EISprovesto be successful. Thereare severalhardware configurationspossible with an EIS(Paller andLaska,1990;Rockart and DeLong,1988). Forty-eight companies indicatedthe hardware configurationusedfor their EIS,Fortyfirms (83 percent)usea mainframe approach, The mainframeapproachincludes 18 firms (37 percent) that employa sharedmainframe,17 firms (35 percent) that usea PCnetworkconnectedto a mainframe,and five firms (11 percent)that employa dedicatedmainframe. Eight firms (17 percent) usea PCnetworkwith a file serverfor their hardware configuration. Morevendors have beenoffering local area network-based EISproducts(e.g., Lightshipfrom Pilot) since this studywasconducted. Theavailability of commercial softwarehascontributed considerably to the growthof EIS. Products from vendors such as Comshare (Commander EIS), Pilot (Command Center), (Executive Decisions), and EXECUCOM (Executive Edge)facilitate the development and maintenance of an EIS. Theseproductssupport easeof use(e.g., mouse or touchscreenoperation), access .to data, screen design and maintenance, interfacesto other software(e.g., Lotus 1-2-3), and other systemrequirements. An EIS can be developed using in-house developed software,vendor-supplied software,or somecombinationof the two (Paller and Laska, 1990;RockartandDeLong,1988). Twelvefirms (24 percent) developed their EISusing custombuilt, in-housesoftware;12 firms (24 percent) usedvendor-supplied software;and26 firms (52 pement)useda combination of in-houseandvendor software.Of the 38 firms that employ at least somevendor-suppliedsoftware, nine firms (24 percent) use Pilot’s Command Center, seven firms (18 percent) use Comshare’s Commander EIS, five firms (12 percent)useInteractive Image’sEASEL, andthe remaining17 firms (46 percent)usea widevariety of othervendorsoftware.


Theseresults are not surprising; Pilot andComshare are generally recognizedto be the two leading vendorsof EIS software. Overtime an EISevolvesin termsof the number of users, the number of screens,the contentand format of the screens, and EIS capabilities (Houdeshel and Watson, 1987; Rockart and DeLong,1988). In somecases the EIS maybe "pushed"on users, but a moredesirable appro~achis to allow "demand pull" to occur. The latter normallyoccursas subordinates learn that their superiorshaveaccessto certain information andthey "wantto seewhattheir bossesare looking at." Still, someexecutives may legitimatelyhavelittle interest in usingthe EIS because it containslittle informationrelevantto them,or they havewell-establishedalternative sourcesof information. Executiveinformation systemsusually spread over time. Spreadrefers to the increasein the numberof users whohave access to the EIS (Rockartand DeLong,1988). It can be argued that an EISthat doesnot spreadis likely to fail (Friend, 1990).Thesurveyquestionaboutspread referred only to the numberof users over time anddid not specifythat the usersbeexecutives. Therefore,the users couldinclude executives, executivestaff, andotherorganizationalpersonnel. This studyfoundthat the EISsupportedan average of 7.75usersinitially, witha steadilyincreasingnumberof users over time, as can be seenin Figure3. The"n"s shownin Figure3 are the numberof respondentswhoprovided data for the variouspoints in time. Evolutionrefers to additionalcapabilitiesandinformationprovidedby an EISover time (Rockart andDeLong,1988). This study gathereddata on the numberof screensavailable to users over time. Anaverageof 55.8 screenswereavailable initially, andthe number of availablescreens increasedin eachtime period(seeFigure3). This increaseimpliesthat usersusuallywantmoreinformation as time passes and they become familiar with the system. Eventhoughthe data showthat the numberof screensconsistentlyincreases,outdatedscreens mustbe deletedandother screensmodified. Adding, modifying,anddeleting screensis an important responsibility of the EISsupportstaff. Softwaretracking of systemuseis very helpful in identifying screens that mayneedto be changed.Screencontentand format can change

Executive Information Systems

’~00 190 180 170 160 150 140 130 120 110 100 90 80 70 60 50 40 30 2O 10 0 n-~7

2 yr~ TimeAfter Initial

Introduction

TimeAfter Initial

Introduction

700

5OO

40O

,.30O

200

I0O

Figure

3, EIS Spread

MIS Quarterly~March

1991 25


over time. As an example of this change,screens maybecome denserin content as users become morefamiliar with them(Houdeshel andWatson, 1987).Informationthat wasspreadover several screensmaybe placedon a single screen,which can result in format changes. To bemosteffective in supportingexecutives,an EIS mustprovide information from manyareas (Houdeshel and Watson, 1987; Rockart and DeLong,1988). It can supplyinformationabout the industryin whichthe firm competes, company information,workunit information,andinformation that maybe of interest to only a single executive. Theinformationcanspansubsidiaries, divisions, functional areas, anddepartments. Thesurveyedfirms reportedthat their EISsprovidedinformationby strategic businessunit (88 pement),functional area (86 percent), key performance indicator(71 percent),product(67 percent), and location (53 percent). These percentages demonstratethat EISsare able to supplyinformationfor variousperspectives,thus allowingusersflexibility in the informationthey can access. AnEIScanhavea variety of capabilities(Friend, 1986;Kogan,1986).Eighty-eightpercentof the firms in this studystate that their EISprovides accessto current status information aboutthe company. Othercapabilities providedin a majority of firms are electronicmail, externalnewsaccess, and accessto other external databases (see Table7). Executivesmaywantaccessto the EISwhile at home (Wallis, 1989).Executiveswhoare traveling mayalso wantto accessthe EIS. This offsite usecreatesspecialcommunications, security, andsupportresponsibilities.Thisis just one

example of a systemrequirement that can evolve over time.

The dialog Fromthe executive’sperspective,the dialog with the EISis the mostimportantcomponent of the system (Zmud, 1986). As was pointed out previously, because of the natureof executives and executivework,the systemshouldbe quite user-friendly.It shouldavoidelaborateIogonprocedures. MovementamongEIS components shouldbe seamless (e.g., e-mail mightbe a main menu optionandnot requirea separateuser ID). The systemshould provide context-dependent online help. Menusand a keywordindex for locating screensshouldbe includedto help the executive find information. Sequence or commandfiles should be created that allow executives to page through regularly viewed screens.Theinclusionof a "drill-down"capability allowsexecutivesto go into moredetail whenan exceptionalsituation is encountered. Thescreens canprovide the names’and telephonenumbers’ of people who can discuss the information presented. Trainingonthe useof the EISshouldbe one-onone. Anysystemthat requires morethan a few minutesof training probablydoesnot satisfy ease-of-userequirements (Carroll, 1988).User documentationshould not be necessaryfor a well-designed EIS. If documentation is provided, it shouldbe kept to a single page. Thesystemuser of the EISmaybe the executive, or it maybeoperatedby anintermediary (Rockart and DeLong,1988). Forty-eight respondents answered this item on the questionnaire.Forty-

Table7. CapabilitiesAvailableon the EIS Capability Accessto current status Electronicmail Other external database External newsaccess Wordprocessing Spreadsheet Automated filing Other


Percentof Firms 88 65 57 56 34 37 22 14


three firms (89 percent) report that their executives use the EIS directly, and five firms (11 percent) report that intermediaries operate the system. In keeping with the fact that an EIS must be highly user-friendly, the user interface and responsetime of the EIS are critical (Houdeshel and Watson, 1987; Rockart and DeLong,1988). Ninety-two percent of the EISs employ a keyboardinterface, one-half a mouse,and onefourth a touch screen. Th~sepercentages indicate that there are multiple interfaces available on manyof the EISs in this sample. The mean responsetime of the EISsin this survey was2.8 seconds, with 42 firms (84 percent) reporting average response times of less than five seconds. TheEIS can provide a variety of capabilities for selecting screens, Keystrokes can be employed to movethrough menusor to identify particular screens. Even though some executives are adverseto using keyboards,this typically is not a major problemif the required skills are not too great. A keyboardless system can be provided by using a mouse or a touch screen. Most vendor-suppliedsoftware offer these methodsof systemoperation as options. Icons are commonly used to makethe system more intuitive. Screensshould include graphical, tabular, and textual presentation of information. Mostsupplied softwareprovidesa large variety of screendesign capabilities. Standardsshould be established for any terms used, color codes, andgraphic designs (Smith and Mosier, 1984; Tullis, 1981). These standards help to avoid misunderstandingsand reduce the amountof mental processing required to interpret information. Executive information systemsshould be able to presentinformation to the user in multip/e formats (e.g., graphical, tabular, and textual) (Friend, 1988; Houdesheland Watson, 1987; Rockart and DeLong,1988). Ninety percent of the EISsin this study have graphical formats available, 90 percent use textual formats, and 88 percent employ tabular formats. Thesepercentagessuggest that many EISs present information in multiple formats. Executive information systems makeextensive use of color in presenting information (Friend, 1988; Houdesheland Watson,1987; Rockart and DeLong, 1988). Out of 47 respondents who

answeredthis question, 39 EISs (83 percent) this study employcolor displays and eight (17 percent) do not.

Conclusion This study has presented a framework for the developmentof executive information systems and data related to this framework from 50 organizations. In most cases, the data support the "conventional wisdom" found in the literature: ¯ EISs are a recent development. ¯ EIS development is typically driven by a senior executive. ¯ AnEIS has an executive sponsor, and this person is normally a CEOor a vice president. ¯ The developmentof an EIS is approved with little formalcost/benefit analysis. ¯ EIS developmentgroups include a variety of personnel with a mixture of business and technicalskills. ¯ AnEIS obtains data from multiple internal and external sources. ¯ An EIS provides broadly based information. ¯ Pilot’s CommandCenter and Comshare’s Commander EIS are the two most popular vendor products for creating an EIS. ¯ The initial quickly.

version of an EIS is developed

¯ Most EISs are mainframe-based. ¯ AnEIS is createdusing an iterative, prototyping development methodology. ¯ The number of users and the number of screens of an EIS increase over time. ¯ Nearlyall EISsare useddirectly by executives without intermediaries. ¯ An EIS presents information in graphical, textual, andtabular formats. ¯ MostEISs use color in presenting information. The study also provides insights about areas wherelittle is previously reported: ¯ The increasingly competitive environmentand the needfor timely information are the mainex-



ternal andinternal pressuresthat lead to the development of an EIS. ¯ Onaverage,the total costs of developingan EIS are $365,000,and the annual costs to maintainoneare $208,000.It shouldbe noted that the firms in this study are large, and smallercompanies mightdevelopmorelimited, andthereforeless expensive,EISdueto cost considerations. ¯ Theaveragesize of an EISdevelopment group is four people. ¯ Onaverage,aboutone-fourthof the EISsare created using in-house developedsoftware, one-half with vendorsupplied plus in-house software, and one-fourth with only vendorsuppliedsoftware. ¯ Onaverage,it takes4.9 monthsto developthe initial versionof anEIS. ¯ Onaverage,92 percentof all EISsemploya keyboard interface, one-halfa mouse, andonefourth a touchscreen. Andfinally, therewerea fewsurprisingfindings: ¯ In somefirms, EISdevelopment is initiated by IS, and this seems to be a growingtrend. ¯ A vice presidentis mostoften the executive sponsorfor an EISo ¯ An IS manager or director is mostoften the operating sponsorfor an EIS. Whilethis andotherstudies provideinformation aboutEIS, there is muchthat still needsto be learned.After readingthe MISliterature, oneis surprised by howlittle academicresearchhas beenconducted onEIS. Mostof the literature only providesglowingdescriptionsof specific EISs andhowthey are beingused.In conductingthis research,a variety of interesting andimportant EIS researchquestionssurfaced. ¯ Is the organizational positionandlevel of commitment of the executivesponsorrelatedto EIS success? ¯ Whatconsiderationsare mostimportant when selecting an operating sponsor? ¯ Howcan the benefits of an EIS be assessed in advance? ¯ Howdoesthe softwareusedin building an EIS affect the developmentprocessand system success?

28 MIS Quarterly~March 1991

¯ Whatlevel of staffing andorganizationstructure are bestfor the EISbuilder/support staff? ¯ Whatmethods can be mosteffectively usedto identify executives’informationrequirements? ¯ Whatare the major EISdata management problemsand their solutions? ¯ Whatimpact doesthe inclusion of soft data have on EIS success? ¯ Whatare the majorproblemsassociatedwith EIS "spread" and its evolution? ¯ HowcanEIS functionality be increasedwhile maintainingease-of-use? ¯ Whatemergingtechnologies(e.g., voice, optical disc) canbe effectively usedwith EIS? ¯ Whatare the mosteffective screenpresentation formatsfor an EIS? Currently, the technologyfor EIS is evolving rapidly, andfuture systems are likely to be different fromthosethat are in usetoday.A number of interesting andpromisingchanges that canbe anticipatedinclude: ¯ Better integration with otherapplications.For example,better supportcanbe providedby integrating EISwith decision supportsystems, group decision support systems,and expert systems. A DSS can provide analysis capabilities whenproblems are identified using an EIS; an EIScanbe usedto provideinformationin a decision roomsetting; and an expertsystemcanbecreatedto help guideexecutivesin usingthe EISeffectively. ¯ Better commercialEIS software. Some of the advances to expectincludebetter interfacesto organizationaldata andother organizational systems,enhanced capabilities for monitoring systemusage, industry-specific template screens,andexpanded sets of builders’ tools (e.g., icons for usein screendevelopment). ¯ Better executive-systeminterfaces. While keyboardsare required for e-mail and most decision support applications, mouseand touchscreens are attractive alternatives for othertypesof systemuse. Animation is likely to beincreasinglyusedto "addlife" to information.Televisionmaybe available in a window.Voicemaybe usedto direct the system. AnEISis a high-risk system,andmanyfailures have occurred(Watsonand Clover, 1989).


following the EIS development framework, however,the likelihood of havinga failure should be reduced. Over time, as more experience is gained, better products emerge, and more research findings are available, the chancesfor having an EIS success should grow.

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1991 29


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Aboutthe Authors HughJ. Watsonholds the C. Hermanand Mary Virginia Terry Chairof BusinessAdministration andis the director of MISprograms at the University of Georgia.Heis the authorof 15booksand over60articles in journalssuchas MI$Quarterly, Communications of the ACM,Journal of Management Information Systems and Management Science.Hedirects the EISprogramof reseamh at the Universityof Georgia. R. KellyRainer,Jr. is assistantprofessorin the Departmentof Management at AuburnUniversity, Auburn, Alabama. Heis the authorof articles in several journals, including the Journalof Management InformationSystems,Journalof Information SystemsManagement,Journal of SystemsManagement,and Decision Support Systems. His current reseamh involvesexecutive informationsystems. ChangE. Kohis assistant professor in the Department of Information Systemsand Operations Management at the University of North Carolinaat Greensboro. Hereceivedhis B.A. in economics from YonseiUniversity, Seoul,South Korea,and an M.B.A.from BowlingGreenState University. Heis currently a doctoralcandidate in MISat the Universityof Georgia.His current reseamh interests include executiveinformation systems, end-user computing, and data management.