EIS evolution in Large Spanish Businesses

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paper portrays the current situation of EIS in large Spanish businesses and ..... 58.6 percent of organizations used the software available in the organization,.
WORKING PAPER VERSION EIS evolution in Large Spanish Businesses Jose L. Salmerona* a

Pablo de Olavide University, Ctra. de Utrera, Km. 1, 41013 Seville, Spain

Abstract In a competitive and hostile environment such as the current one, it is no longer enough for the managers to make the right choices, but they must also make and implement them as quickly as possible. For this reason, they need several tools to provide them with information. These tools are called Executive Information Systems (EIS). Comparisons of EIS developed in several countries provide insights that can be used by companies when developing systems for global markets. This paper portrays the current situation of EIS in large Spanish businesses and some interesting elements in the evolution of Spanish EIS. To do this, the author surveyed the three leading Spanish companies in each industry. Keywords: Executive Information Systems, decision support, determination of information requirements, strategic information system.

Tel.: +34-54-349063 E-mail address: [email protected]

EIS evolution in Large Spanish Businesses 1. Introduction Traditional EIS supports a few top executives, but the emerging view is that EIS can spread horizontally across and vertically down to other organizational managers [4]. Frequently, the trend [35,44] is to view EIS as technology for information delivery for all business end users. However, the vital nature of top management commitment to the EIS development is evident from the literature [7,13,29,34,37,38]. It is generally accepted that it is important and necessary to involve the IS users in the design of such applications [2,11,15,16,17,18,20,43,45]. This is particularly true in an EIS project, because more user involvement is required for an IS that deals with higher-level, less-structured problems [1]. Working on an EIS design increases users´ understanding and acceptance, improving requirements determination and reducing problems. User participation is also believed to increase user acceptance of the system with a more realistic expectation about system capabilities and greater commitment from users [21]. When an EIS fails, the cause is probably its inability to meet user expectations [41]. User involvement in the design of an EIS brings about realistic expectations of system capabilities and decreases the risk of failure. An EIS must be flexible enough to adapt itself to changes in the types of problems and the needs of information. If this were not so, it would soon become a useless tool that could only deal with outdated problems and would therefore not contribute to decision making. EIS are clearly a step forward with regard to the structured information (pre-elaborated, in a rigid format) unloaded by TPS. In

addition, EIS encourage the development of a more open and active information culture, since they improve the use of the strategic resources that are at the disposal of organizations, the useful information for making both strategical and tactical decisions. 2. The study In this research, the author studied the three leading Spanish companies in every industry, by means of a survey, since this is one of the most popular research methods in IS [30]. The work started in March 1999, when the author began to look at current practices in the largest Spanish firms. The survey process was carried out in two different stages; the first was a survey where the people in charge of IS were asked about the existence of an EIS in their organization. The companies that agreed to co-operate in this stage amounted to 112, that is, 71.8 percent of the total. 37.5 percent of these companies stated that they did possess an EIS, whereas the others declared that they did not have one. Then, in the second stage which began in May 1999, the companies that had answered ‘yes’ to the question in the previous stage were sent a questionnaire by fax or e-mail; it could be answered by phone or mail. When a week had passed, if there had been no answer, the author contacted the companies again, with the purpose of checking whether the questionnaire had arrived. Of the companies that answered affirmatively in the first stage of the study, 69.0 percent co-operated in the second stage.

In February, 2001 the author repeated the previous survey. The only change in sample was the substitution of a business that no longer used an EIS system. The same questions were asked. The respondents were provided with the answers from the previous 1999 study. Questions relative to methodology of implantation and development were not, however, repeated, because they referred to the implementation of the EIS. 3. Findings and discussion 3.1. Implantation 37.5 percent of large Spanish companies possess EIS systems. In addition, these systems have not been in use for long, since 72.4 percent of the organizations began the development process after January 1996, with 89.6 percent of the companies having completed this process by the time the initial study was carried out. The reasons argued for EIS development are wholly internal; the most frequently mentioned reason was related to the need for information; in particular, the need for updated information was the most often cited reason (in 62.1 percent of the cases), followed by the improvement of the information flow in the organization (48.3 percent), the increase of control (41.4 percent) and the increase of managers’ analysis capacity (27.6 percent). 3.2. Users Although Executive Information Systems are tools designed for the manager’s direct use [9,39], in the EIS in Spanish organizations, the managers at the highest levels use the system themselves in 69.0 percent of the cases analyzed in the 1999 survey.

This data shows that the EIS was not directly used by the managers in most organizations; this means that an EIS turns out to be a system aiding inferior levels in the organization. The managers’ direct interaction with the information provided by the EIS may suggest to them new lines of action, which will not occur if the staff is actually using the EIS, in which case the system is not performing its original function [19]. In the 2001 survey, the research showed that in 75.9 percent of the cases, the executives directly use the EIS. These facts clearly demonstrate a trend towards direct use of EIS by Spanish executives. This phenomenon has two reasons; the first is the realization of the importance of IS by Spanish executives. The second is the emergence of a new generations of managers in large Spanish businesses, with a greater tendency towards technological culture. Regarding the number of users (Table 1), the findings suggest that, in the 1999 survey, the expansion of the EIS throughout all of the organization was far from being the case, the use of EIS being restricted to the executives in the highest levels of the organization and, at the most, to the managers in functional areas. However, the 2001 survey shows an increase in the number of users. A decrease is noted in systems with less than ten users, as well as an increase in systems with more. This is an indicator that the transition from first- to second-generation EIS or ESS or EIS/DSS is being attempted by Spanish companies. Table 1 Numbers of users 1999 < 10

34.5 %

2001 20.7 %

Trend

10 – 50 > 50

58.6 % 6.9 %

69.0 % 10.3 %

3.3. Information An EIS that does not provide updated on-line information will not be able to ensure consistency in the information supplied to every location of the system. In addition, the use of updated on-line information allows the decision maker to act with less uncertainty than those working with off-line information. However, there are people who think that on-line access to information in an EIS causes instability in the organization [26]. In any case, access to updated on-line information is a basic characteristic of EIS [14,22]. This characteristic can only be found in 62.1 percent of Spanish companies in the 1999 survey. On the other hand, in the 2001 survey a great increase of the EIS with on-line access to information is found (82.8 percent). Quantitative information is the most common type of information provided by the EIS of large Spanish companies, due to the fact that the EIS shows mainly financial information, closely followed by commercial information (Table 2). This information applies to both 1999 as well as 2001. Very often, information is defined in terms of its ability to reduce uncertainty [10]; in this sense, it is obvious that the information coming from the environment contributes in a decisive way. Although access to the information from the environment is a fundamental, essential characteristic [42] if we consider how

significant it is for tactical decision making and, above all, for strategic decisions, it is surprising that external information is so seldom included in Spain. Table 2 Types of information, sources and origins

Types of information Financial Budgets Operations Competitors

1999 2001 100 % 69.0% 58.6 % 34.5%

Trend = Commercial = Human Resources =

48.3%

Environment

1999 2001 86.2% 89.6% 65.5%

Trend =

51.7% 69.06%

Others

6.9%

=

Sources of information 1999 Business Strategic Unit Functional Areas

2001

72.4% 65.5%

Trend =

69.0 %

1999 Products Environment

2001

Trend

69.0%

=

51.7% 69.0%

Origins of internal information Operational databases in functional areas Documents

1999

2001

82.8%

93.1 %

41.4%

Trend

=

1999

2001

Trend

Data warehouse

75.9%

=

People

17.2%

=

It is important to note that the increases in the trend to use information from the environment (51.7 percent in 1999 to 69.0 percent in 2001). These percentages are rather low considering the importance of this type of information. Regarding the origin of the internal information, operative databases in functional areas constitute the main source of internal information provided by EIS,

closely followed by data warehouses and, to a lesser extent, other sources (such as documents and people). This information is already well-established in 82.7 percent of cases in 1999, and has reached 93.1 percent in 2001. The extent to which information coming from the environment is included in the EIS of large Spanish businesses should reach higher figures, due to the fact that all elements that are part of the economy are interrelated. Regarding the organizations that do have information of external origin, 13.3 percent combine it with information coming from within the organization in equal shares, while the rest incorporate 75 percent of information of internal origin with the residual coming from the environment. In none of the cases is the quantity of information from the environment reaching a higher value than that of internal information. Its origins are greatly diverse, but the most outstanding ones are the services of financial institutions, having access to the Internet from their EIS just 3.4 percent of the companies surveyed in 1999. In 2001 it increased to 24.1 percent. These findings show the impact of the Internet in Spain. On the other hand, despite the importance of information of a quantitative character, so-called soft information, of a markedly qualitative character, shows a minimal degree of inclusion, although this type of information may be crucial for understanding complex problems [27,49]. None of the EIS include soft information such as rumours, gossip, opinions, feelings and ideas (Table 3). Similarly, explanations, justifications, assessments and

interpretations reach very low values. These findings remain constant in both surveys. Table 3 Soft Information in EIS 1999 2001 Trend

1999

2001

Rumours and gossip

0%

=

Explanations, justifications, assessments and interpretations

Opinions, feelings and ideas

0%

=

Programmes and formal plans

34.5%

37.9%

=

Reports, news, tendencies in the sector and external surveys

72.4%

75.9 %

Predictions, speculations, forecasts and estimations

65.5%

6.9%

Trend =

Broadly speaking, the navigation system is just the transition from screen to screen. Frequently, EIS have the ability to gradually increase the degree of detail in the information, this is called drilldown. Such a popular, intrinsic characteristic of EIS [5,24,28] can be found in all the organizations surveyed. On the other hand, only 6.9 percent of the organizations surveyed stated that they possess such a simple and efficient navigation system as hypertext. This information remained the same for both 1999 as well as 2001. Only 27.6 percent of the EIS analyzed in 1999 possessed simulation devices and 24.1 percent the possibility of performing data analysis. The percentage in 2001 increased to 44.8 percent. These figures are another sign that the EIS used in large Spanish businesses are experiencing a transition from both first-generation to second-generation EIS, because they must include means of data analysis [46].

The inclusion of electronic mail does not mean that the system is an EIS, notwithstanding the fact that this is a very useful complementary element [47]. In Spain, the organizations that include electronic mail in their EIS are only 17.2 percent. This information remained the same for both 1999 and 2001. This is a very limited number, if we take into account the fact that there are some papers [33] that show that the Spanish are the group of European managers most likely to use electronic mail (94 percent). However, video conferencing is almost non-existent in the organizations surveyed. 3.4. Investment 96.5 percent of the users consider that investment in EIS was profitable in 1999. By 2001 this percentage had reached 100 percent, regardless of the fact that only 17.2 percent performed some kind of cost/profit study prior to the development and implementation of the EIS; moreover, none of them did it once the system was implemented. This may be due to the fact that EIS offer benefits of an intangible nature, which is very difficult to quantify. The reduced figures about organizations that perform cost/profit analysis may be regarded as surprising, if we consider that such systems are very often seen as high-risk projects [36,48]. In any case (Table 4), the group of satisfied and partially satisfied users is remarkably superior to that of unsatisfied ones. There is an increase in satisfied users. This is the consequence of the high degree of interest in the EIS user requirements; by 2001 companies had improved their systems.

Table 4 Satisfaction of users 1999 Satisfied users Partially satisfied users Unsatisfied users

41.4% 48.3% 10.3%

2001

Trend

51.7% 41.4% 6.9%

Of the organizations surveyed, 72.4 percent have invested more than $25,000 and none were able to build the system with an investment under $3,300, this investment matched the initial estimate in 79.3 percent of cases. No changes were found in 2001. In order to study the distribution of costs, the author distinguished two stages; first, the development and implementation portion (those costs spent in the initial version of the EIS) and second the stage when the system was actually working (the costs caused by subsequent versions and maintenance). For both stages, the author considered the following elements: technical factors, staff, and training. Technical factors include all purchases caused by MIS development and implementation. The author will deal with the two aspects separately. The Staff category includes all costs related to the human resources required for the development and implementation of an EIS (working hours and external aid, among others), except those that involve Training (all costs of training both the members of the EIS staff and the users). From the data shown in Table 5, we can conclude that the cost, during the stage of development and implementation, is significantly made up of the

investment in software. Thus, technical resources require the greatest part of the investment during this stage. On the other hand, during the stage of maintenance, the ‘staff’ category is the one that requires the greatest investment. In this stage, the human factor is the most costly aspect of the EIS. In general terms, aspects such as staff and training, the human factors, are more important for operating costs than for development and implementation costs (once the initial investment in the EIS is done, important quantities are not usually assigned either to hardware or software). However, the recruitment and training of new staff is likely to be required in order to face the increase in the number of users, screens and capabilities of the system. The changes in maintenance costs from 1999 to 2001 are due to an increase in staff (the most significant) and software costs. In addition, there is a decrease in training and hardware costs. Table 5 Distribution of costs Human Resources Staff 1999 Development and Implementation Maintenance

2001 15.0%

40.8%

Trainning Trend =

47.9%

1999

2001 3.5%

29.6%

Trend =

21.4%

Technical Factors Software 1999

2001

Hardware Trend

1999

2001

Trend

Development and Implementation Maintenance

56.6% 21.1%

=

24.4%

24.8% 8.4%

= 6.2%

3.5. Benefits The benefits generated by EIS are greatly varied and can be grouped in three basic categories: information, management support and organization support. From the results (Table 6), the benefits related to a speedier access to information and the manager’s saving of time are the most significant. The only category showing much of a change is in the benefits of the information. The reason for these changes is that the information in EIS experiences many modifications during the life cycle. The only benefits that experience a decrease in both 1999 and 2001 are the use of briefer and more relevant information. Spanish EIS now include more information. Table 6 EIS benefits in large Spanish businesses. 2001

93.1%

96.5%

Improvement in data presentation

89.6%

More timely information

86.2%

More accurate information

69.0%

75.9%

Briefer information

65.5%

58.6%

More relevant information

44.8%

41.4%

More information about competitors

51.7%

69.0%

Improvement in the access to external information

51.7%

69.0%

Better access to informal information

3.4%

Manager’s saving of time

93.1%

Improvement in the manager’s efficiency

75.9%

Better visualization of the environment

62.1%

Executi ve Suppor t

Information

Speedier access to information

1999

TREND

= =

= = = =

Better understanding of problems Increase of control

31.0%

37.9%

Improvement in planning

20.7%

24.1%

Improvement in decision making

13.8%

Better development of alternatives

13.8%

Minimizing paper

Organization Support

48.3%

Improvement in communications Saving of costs Greater sensibility to changes in the necessities of clients TQM programme support Organization downsizing support

44.8%

= =

65.5%

41.4% 27.6%

=

=

31.0%

10.3%

=

0%

= =

0%

3.6. Technical elements 58.6 percent of organizations used the software available in the organization, although a user’s interface has to be added to it (Open EIS), a combination of commercial software and all-purpose software [8], being the most frequently chosen option, while the rest used a tool independent from the rest of the software installed in the organization (Package EIS) gets 41.4 percent of answers. The resulting system is compatible with Microsoft Windows in 93.1 percent of companies. 69.0 percent of answers confirm that the configuration chosen to support the EIS is a net of PCs with one or more servers, while in 24.1 percent a mainframe is used, and other configurations in 6.9 percent of cases. The use of keyboards amounts to 93.1 percent of cases, the mouse 86.2 percent, and only 3.4 percent use other types of entry devices. Significantly, the keyboard is still one of the most widely employed, notwithstanding how cumbersome its use is in a menu system in comparison to the mouse. All the organizations surveyed have safety devices, of which 72.4 percent are related to general safety and 27.6 percent to the EIS itself. None of these findings have changed in 2001.

On the other hand, the EIS in large Spanish businesses were accessible from places other than the user’s usual working place in 62.1 percent of the cases in 1999. In 2001, the percentage reached 69.0 percent. 3.7. Human Resources in EIS development The author distinguish among several roles, such as: executive sponsor, operating sponsor and EIS staff. Executive sponsor is the executive who promotes the system, whose mission is not focused on the daily activity of the process of development, but on supporting the EIS with his or her authority and influence over the rest of the executives. The most common name for this role is Executive sponsor [6,25]. However, there are authors who use other names such as Executive champion [3]. Regarding his/her hierarchical position, the executive sponsor belongs to the top management in 75.9 percent of cases, while the rest may be said to belong to the tactical level. The sponsor is never placed in the inferior hierarchical levels of the organization; this seems reasonable since EIS are tools specifically designed for managers. None of these findings have changed in 2001. Operating sponsor is the person directly responsible for the process of development, since he or she will be the person in charge of directing it. This role has different names and is even fragmented in some cases [32]. The author believes that it is not worthwhile distinguishing among so many roles with vague functionalitys and exceedingly subtle differences.

Regarding the position in the organization (Table 7), the top management is rarely directly responsible for the system. However, managers of functional areas had an increase in both 1999 as well as 2001, both showing a decrease in the operating sponsors at inferior levels. EIS staff is the role played by the rest of the people required for the development and implementation of an EIS. It will usually have a reduced size, 82.8 percent of organizations have teams of five or less members, with four the average number. None of these findings have changed in 2001. Table 7 Operating sponsor position 1999 Top management Managers of functional areas Inferior levels

2001 3.4%

62.1% 34.5%

Trend =

79.3% 17.2%

This EIS staff is made up of expert personnel, both in technical devices and in the activity of the organization. Its multidisciplinary composition is crucially important, to such an extent that a competent and balanced development team is one of the most basic elements for success [31,40]. In general, executive support people need strong interpersonal skills and a broad range of technical and business knowledge [23]. Among the skills that EIS staff must possess (Table 8), the most important is that of having a thorough knowledge of the business, followed by the skill in dealing with managers and that of interpersonal relations.

Table 8 EIS staff skills 1999 Social skills Technical skills

Skill in dealing with managers Skill in interpersonal relations Knowledge of the business Data management Technological Technical skills

2001

82.8% 93.1% 82.8% 72.4% 96.5% 100% 41.4% 65.5% 69.0%

Trend

=

With regard to the origin of the EIS staff, 62.1 percent of the organizations have exclusively developed the system with internal staff, 34.5 percent used a combination of both internal and external staff, and the others have entirely used external staff. None of these findings have changed in 2001. Respecting hierarchical dependence (Table 9), in 82.76 percent of the cases, the Department of Information Systems is the basis of the EIS staff, since both the whole EIS staff and its core belong there. The most frequently chosen alternative in the organizations surveyed occurs when the core of the development team is directly under the Department of Information Systems. In 2001 there was an increase in the trend of the EIS staff depending on the Department of Information Systems. Table 9 Hierarchical dependence of the EIS staff EIS staff core 1999

2001

EIS staff as a whole

Trend

Information Systems 55.2% Other functional areas

6.9%

3.8. Development methodology

1999

2001

Trend

27.6% 37.9% =

10.3%

1999

2001

82.8% 86.2% =

17.2% 13.8%

Trend

Findings of this category were not analyzed in the 2001 study, because the same businesses were used as in the 1999 study. The development of an EIS (which usually takes around six to twelve months according to 62.1 percent of answers, or a shorter period of less than six months in 24.1 percent of cases) is a risky task, due to the fact that many elements take part in this process and they are so closely linked to one another, the probabilities that something will go wrong are high. This risk requires that the process be based on a suitable methodology in order to increase the possibilities of success. In 44.83 percent of the cases, a methodology owned by the organization was used, otherwise it was external. If we compare these results with those obtained with regard to the staff in charge of building the EIS, we find that, although more methodologies of an external origin have been used, this is not the case with respect to the development team, which was exclusively internal in 62.1 percent of the cases. The development wholly performed by external staff is the worst option, because it generates dependence. Our results, as well as those obtained by others, confirm that it is the least accepted alternative. Similarly, the Department of Information Systems is responsible for co-ordination on its own in 37.9 percent of cases, and that it shares this responsibility with another functional unit in 48.3 percent of cases. 3.9. Keys to EIS success

In order to study the basic elements for success (Table 10), the author established three categories: human resources, technical and information resources, and system operation. For the first category, the users’ interest was argued as a key element to success. This occurs for all of the 2001 answers. For technical and information resources, the right determination of information needs is the main benefit factor in this category, again it is 100 percent in 2001.It seems reasonable that, if an EIS intends to satisfy the managers’ needs of information, their right determination is seen as the main element for success. With respect to the category called system operation, the simplicity and flexibility of the system is the critical factor, because it is inherent to the concept of EIS [12,50]. Table 10 Keys to EIS Success Human Resources Users´ interest 1999

2001

96.55%

100%

Trend

Competent and balanced EIS staff 1999

2001

65.5%

69.0%

Trend

Executive sponsor´s support 1999

2001

62.1%

Trend

Others 1999 2001 Trend

=

6.9%

=

Technical and Information Resources Right information needs 1999

2001

96.5%

100%

Trend

Suitable Soft/Hard 1999

2001

69.0%

Others

Trend =

1999

2001

10.3%

Trend =

System operation Flexible and sensitive system 1999

2001

Trend

Speedy development of a prototype 1999

2001

Trend

Others 1999

2001

Trend

79.3%

=

48.3%

=

6.9%

=

3.10. EIS Difficulties The benefits brought about by an EIS may seem, to a certain extent, obvious: they may even hide some difficulties (Table 11) that appear during the process of development and implementation of the EIS. Findings relative to difficulties of development and implementation process were not analyzed in 2001, because the same businesses were used. In 87.7 percent of cases, the users’ interest in the system was slight or none (this being the most common difficulty). In 71.4 percent, the definition of information needs caused serious problems; this is not surprising if we take into account the complexity inherent to this process and also its importance. Political causes reached 57.1 percent and erroneous uses of the system (as, for example, using the EIS for printing reports) reached 42.9 percent. Table 11 Difficulties in the EIS Development and Implementation Users´ slight interest

Definition of information needs

85.7%

71.4%

Political causes 57.1%

Erroneous uses 42.9%

Again, this data shows how crucial the human factor is in EIS, so that communication and motivation are the main cure for the most common difficulties that may be encountered when these systems are being implemented. 4. Conclusions

This paper has presented the current situation of Executive Information Systems in Spanish big businesses. The author have come to the following conclusions. EIS are currently in a stage of expansion. There are signs that suggest thefre is a transition from first- to second-generation EIS. This results in an advance, because fairly poor systems with limited possibilities are moving towards more capabilities and versatilities. On the other hand, the number of executives that directly use EIS has increased. This phenomenon is related to two things: first, the realization of the importance of information systems by Spanish executives, and second the emergence of new generations of managers in Spanish big businesses, with greater technological culture. References [1]

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Acknowledgments The author would like to thank E.H. Sibley for his support. Jose L. Salmeron is an associate professor of Information Systems at the Faculty of Business in Pablo de Olavide University at Seville (Spain). Dr. Salmeron has also taught and researched at Texas Tech University, Seville University and Huelva University. Currently, he is Director of New Technologies in his university. He was also a researcher of some projects both within the European Union framework and at the national level and author/coauthor of eight books. His papers have been published in journals such as Journal of Systems and Software, Computer Standards & Interfaces, Technovation, Industrial Management and Data Systems and others. At present, he is researching into EIS evolution, web assessment and e-business.