MGT601 evolution of management


Read the journal article, “Executive Information Systems: Their Impact on Executive Decision Making”. Based on the information presented in the article, discuss the following:

  1. The tools executive managers use when making major decisions
  2. The relationship between the tools the executive managersÂ’ use and the managersÂ’ tasks
  3. The reasons for using the support tools

DECISION MAKING IS RECOGNIZED AS ONE OF THE MOST IMPORTANT roles of executives. The availability of reliable information sources is a key component of executive decision making. Sources of information may be oral, written, or computer-based. The computer-based information sources remain the least studied in the context of executive decision making because executives have tended to use other managers and their own intuition as their primary information sources [25]. Recently though, the emergence of computer-based systems that are directly tailored for use by executive decision makers enables an examination of how executive use of computer-based information systems affects executives’ decision-making processes.
Such systems, hereafter referred to as executive information systems (EIS), are computer-based information systems designed to allow a senior manager access to information relevant to his or her management activities. The idea of using computer based information systems to support management is not new. In fact, a new philosophy of how computers could be used to support managerial decision making emerged under the name DSS during the late 1970s. Today, DSS have become firmly established in the mainstream of IS practice and applications have become common [12]. While DSS have been found to support upper management [19], this support is indirect since intermediaries frequently are responsible for preparing the analysis requested by executives. In addition, DSS tend to be narrow in scope, focusing on a particular decision. For these reasons, the literature on the impacts of DSS [1, 18] may fail to provide a complete picture of the effect of an EIS on executive decision making.
Initial research of EIS has consisted of descriptions of current implementations in organizations [2, 3, 4, 21, 38, 41], and empirical examinations of the important characteristics and purposes of EIS [5,6,50]. Yet research has not extended beyond the descriptive phase to a theoretically based inquiry into the effect such systems can have when used by senior managers. Obtaining responses from multiple users of EIS across many organizations, this research surveys the users of the systems to examine the following research question: what is the effect of EIS use on the decision-making process of executives?
2. Executive Infonnation Systems
WHILE EIS DIFFER CONSIDERABLY IN THE NUMBER AND SOPHISTICATION of features, the most common feature of EIS is immediate access to a single database where all current financial and operational data can be found [35]. In many cases, the information made accessible was previously available but was difficult to access or use [42]. Features distinguishing EIS from such systems as management information systems and decision support systems include a non-keyboard interface, status access to the organizational database, drill-down analysis capabilities (the incremental examination of data at different levels of detail), trend analysis capabilities (the examination of data across desired time intervals), exception reporting, extensive graphics, the providing of data from multiple sources, and the highlighting of the information an executive
feels is critical. In addition, whereas the traditional focus of MIS has been on the storage and processing of large amounts of information, the focus of EIS is on the retrieval of specific information about the daily operational status of the company’s activities as well as specific information about competitors and the marketplace [16, 48]. EIS are also distinct from DSS: whereas the puipose of EIS is the monitoring and scanning of the environment to give executives rapid exposure to changes in the environment, the purpose of DSS is to support ad hoc decisions as well as some routine analysis. And while the core of DSS is extensive modeling and analysis capabilities, the core of ESS is status information about the organization’s performance [48]. Previous research has examined why EIS are used [50], has examined development methods that lead to successful implementation [10,20,49], and has examined the features executives find most useful [5,41]. Research is now needed that examines the impact of EIS use. There are several frameworks that could be used to study EIS, including EIS as a decision-making or problem-solving tool, EIS as a scanning tool, EIS as an intemal monitoring tool, and EIS as a communication tool [8]. This research chose to examine EIS as a decision-making tool because decision making involves scanning, monitoring, and communicating and is therefore a broad framework for early research into the impacts of EIS use. Given that the postindustrial environment demands that organizations make faster decisions, and have better information acquisition and distribution [23], an information system designed to meet the needs of executives should address their decision-making needs. Furthermore, Rockart and DeLong [41, p. 256] suggest that a decision-making framework for researching EIS should provide new insights into how EIS provide value. There are many decision-making variables that may conceivably be affected by the use of EIS. This study chooses to examine three decision-making process variables that have received considerable attention in recent theory on the impact of advanced information technology use on decision making in organizations and are well grotinded in organizational research [22].
3. The Decision-Making Process
THE VARIABLES EXAMINED INCLUDE THE SPEED of problem identification, the speed of the decision-making process, and the extent of analysis in decision making.
3.1. The Speed of the Decision-Making Process
Rapid decision making has become more important as competitive situations have increased and information has become critical to organizational performance [11,22]. Changes in technology and faster communication makes the time span of important changes critical [13]. The time frame of decision making has hardly been studied [33] although speed is considered panicularly important in highly uncertain, dynamic, or “high-velocity” environments. Eisenhardt [11] found that the most effective firms of those studied made strategic decisions quickly. She identified confidence and anxiety
as key components determining the speed of the process. El Sawy [13] suggests that “to compete effectively in [today’s] time-compressed infonnation intensive environment, fast response is increasingly becoming a critical strategic capability.” Managers describe their environment as having increased competition and reduced time to make decisions [17]. One executive states: “we as decision makers are constantly being faced with situations where we are required to make more decisions than ever before” with “faster reaction times” [45]. Because information technology allows fast infonnation processing and analysis, the availability and use of EIS by upper executives may contribute to the speed with which they identify problems and make decisions. The speed of problem identification is defined as the length of time between when a problem first arises and when it is first noticed. The speed of decision making is defined as the time between when a decision maker recognizes the need to make some decision to the time when he or she renders judgment [45].
3.2. The Extent of Analysis
Fredrickson and Mitchell [15] identified six characteristics of strategic decision making: process initiation, role of goals, means/ends relationship, explanation of strategic action, comprehensiveness in decision making, and comprehensiveness in integrating decisions (to form strategy). Analytic comprehensiveness as defined by Fredrickson and Mitchell [15] is the extent of analysis in situation diagnosis, altemative generation, altemative evaluation, and decision integration. This research is interested in the extent of analytic techniques used in decision making. Analysis is defined as the “reflective thought and deliberation given to a problem and the array of proposed responses” [32]. Time spent on interrelating symptoms to get at the root cause of problems and the effort spent to generate solutions are examples of the analytic process [22]. Although sometimes viewed as antithetical to fast decision making, extensive analysis may coexist with speed when an EIS is providing both real-time data and analytic tools. Typical MIS do not provide sufficient inquiry and analysis capabilities compared with their perceived importance to decision makers [31]. However, the information database of an EIS provides a source of raw information that can be used by analytical executives to perform their own analysis [41, p. 102].

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