38 Executive Info System & Expert Support Systems

Ms.Vinodini Kapoor

1.    Learning Outcome:

After completing this module the students will be able to:

• Develop a basic understanding of EIS and ES
• Understand the components of EIS and ES
• Understand their respective advantage and benefits of deployment.
• Understand their applications in the Industry
• Study successful implementations of EIS and ES

2.  Introduction

You have been now elevated to the position of the Chief Executive Officer of your organization. in your purview lie 35 locations based out of 12 countries with nearly 20,000 employees. How do you keep track of what happens when in your organization? To emerge as an unrivalled effective leader, what information is critical to your success? You don’t have the whole day to read through dozens of reports or listen to a series of presentations. What is needed is a system in place that supports decisions more strategic in nature and long-term. A system that shall be used in many different types of organizations to monitor enterprise performance as well as to identify opportunities and problems.

To sum up, Executive Information Systems (EIS) are enterprise wide Decision Support Systems that help senior level executives to interpret and analyze trends, draw relations. They can monitor performance and identify opportunities and problems. Organizations can achieve this by critical analysis of data helpful for strategic decision making. An EIS comprises of an interactive and easy to use graphic user interface.

They address non routine decisions requiring judgment, evaluation and insight because there is no greed upon procedure for arriving at a solution. Often the information is delivered to executives through a portal, which uses a web interface to display customized content.

Senior management is responsible for a number of different tasks within an organization, including defining an overall vision, strategic planning, strategic organizing and staffing, strategic control and crisis management. An Executive Information System supports number of activities. It puts together crucial information from various functional departments, required to be brought to the attention of senior management.

However an expert system, archives knowledge and experience of the experts over the years using knowledge management tools and enables other users to access them. The ability to arrive at analytical decisions is programmed into the information system. The computer system is able to respond to the data queries just as a human would.. It employs domain knowledge and pre designed processes and uses standard procedures to draw inference to solve problems that would otherwise require human competence or expertise.

The various components of an Executive Information System comprise the following:

1.Hardware – The executive must be put first and the executive’s needs must be defined before the hardware can be selected. The basic hardware needed for a typical EIS include

• Input data entry devices which allow executives to add, modify and update data immediately.
• The central processing unit which is the kernel because it controls the other computer system components.
• Data storage files to accumulate important data which can be retrieved to perform a function and process information.
• Output devices which help to read the output.

2. Software – Decisions involved in choosing the appropriate software is crucial for an effective EIS design. Scalability of software to match business needs and application programming interfaces are important to understand to fulfill business needs.

The basic software includes four components

• Text based software
• Multiple databases may residing open computer platforms for data sharing and help executives access both internal and external data.
• Graphic aids can help analyze volumes of text and statistics into visual information for executives. Examples of these include time series charts, scatter diagrams, motion graphics, and comparison oriented charts.
• Model Base refers to logical, computational and analytical models for statistical, financial and other quantitative analysis.
• An executive system is a viable option if it can be procured at competitive rates and respond to multiple requests and queries of executives. Attributes such as scalability and interoperability are important factors before procuring the EIS software.

3. User Interface – An EIS needs to pull out relevant data for decision makers hence, the user interface is very important. Several types of interfaces include reporting engine, menu driven, command language, natural language and input/output. It is crucial that the interface must fit the decision maker’s objective.
4. Telecommunication – With converging technologies and organizations spanning geographies, telecommunications plays a pivotal role in networked information systems. Data transmission from one place to another is crucial for establishing a reliable network. Telecommunications within an EIS can necessitate the need for distributed data.

3.2 Executive Dashboards

IBM claims that there is nearly 2.5 quintillion bytes of data generated every day. Hence, there lies a need to have a filtering mechanism for segregating information that is most vital to the organization for effective decision making.

An Executive Dashboard can work on humungous amount of data and yield business decisions in real time. Executive or strategic dashboards use real-time data. This allows managers to get a view of the organization in identifying opportunities for expansion and see areas of improvement. Dashboards accrue metrics, key performance indicators (KPIs), and digital scorecards on a single screen, tailored for C-level executives and managers. The chief benefit of executive dashboards is that they provide a vehicle for ongoing improvement throughout your organization.

3.3 Advantages of EIS

It’s Monday morning, the weekend is past, and corporate office managers are pulling out realms of paper and spreadsheets to begin their weekly business analysis in three key areas: product, supplier, and real estate. If all goes well, they should nearly be done by Wednesday!

Today a retail executive’s most powerful tool is an Executive Information System. These systems provide information at the click of a mouse needed to prioritize and strategize corporate decisions. On a single screen, managers can quickly view business performance by key indicators, compile presentations and address meetings. The analysis becomes much viable and not cumbersome.

Industry use cases of EIS are highlighted in exhibit 7. The first image shows multiple use cases in health care while the second image shows where all the EIS are integrated for the doctors to come to conclusions and diagnose. The various advantages of EIS are:

• Executive information systems provide a simplified platform to draw inferences whether they are operations based or product based. They allow the study of sales plans segregated by store, product, supplier performance, and sales operations.
• Executives can view gross margins and markdowns by season/category/department/class or weeks of stock by store or supplier.
• Management can monitor critical variables such as: check outs, visitor traffic conversion rates, sales and inventory contributions, sales and inventory units per square foot, employee cost, and gross margin return on investment

• An EIS portfolio offers a highly robust and consistent work format and exceptional reporting on opportunities. Reporting engine help cover products, sales trends, exceptions, forecasts, performance trends are generated on a weekly basis.
• It gives a current view of the status of inventories; prioritizes markdowns and sales based on an accurate knowledge of aging inventory by season. This method can also be done on a month-to-date and year-to-date basis. These are accomplished by simply double clicking and drilling down throughout the product hierarchy.
• It facilitates the availability of immediate information required for responses to the field staff. Reaction time in pushing goods to the right areas, or purchasing additional goods, is greatly increased providing corporate the ability to increase profitability.

4. Expert Systems

There  are  two  primary  parts  to  expert  systems  –  a  knowledge  base  and  a  reasoning  engine.  The knowledge base contains both factual and judgmental knowledge. The reasoning engine uses inference to solve problems, often using “if-then” decision chains. The process of building an expert system is called knowledge engineering and is done by a Knowledge Engineer. Knowledge Engineering refers to the knowledge  acquisition  from  a  human  expert and programming it in the expert system.

4.1 Expert Systems and Its Components

IBM standardized its prices for after-sales services which consisted of installation, disassembly or relocation. These prices were a base for negotiations among the customer and the field representative. While each customer had different ducting, wiring, and flooring and estimates would vary, consistent bidding was a major problem. The IBM personnel needed a better understanding of how to price complex jobs or how far to alter the standard price.

The Expert system at IBM was a game changer. It used ‘Consultant’ – an Expert System to assist the field staff in price estimates. The representative would only specifiy the machine type and the location-specific factors for the system to generate a bid. Bids needed to be negotiated if there was a price difference by more than 20%. This procedure eliminated many administrative problems.

Components of an Expert System

The various components of the expert system are explained below and depicted in exhibit 12.

1.  The Knowledge Base – It refers to the information stored in the expert system as facts and rules. This is commonly in form of IF statements. The software developer writes the code here.

2.  The User Interface – This is where the user interacts with the expert system. This interface provides a screen to ask questions and seek solution in the form of test and graphics. To simplify, it deals with the ‘how’ and ‘why’ justification.

This allows the user piece to understand why a question is asked or a piece of advice is provided, and can increase their confidence in taking such advice. Interestingly, the interface will highlight areas where the system provides advice not intended by the user.

3. Inference Engine – This determines the rule set and determines the questions to be asked. It is also indicative of the order in which the question is asked. It is that invisible part of the IS which is active during a consultation of the system (when the user chooses to run the program).

An expert system may use different methods of Inference Chaining – Forward Chaining and Backward Chaining.

• A Backward Chaining System (a goal driven system) – This works with the system assuming what the likely outcome will be. Hence, to simplify, the system works backwards to collect the evidence that would support this conclusion. Expert systems used for planning are based on the concept of backward chaining.
• A Forward Chaining Expert System (a data driven system) – This system simply gathers facts and evidences to reach an outcome. It is largely used for diagnosis, advice and classification, although the size and complexity of the system play a part in deciding which method of inferencing to use.

4.2 Advantages of Expert Systems

An Expert System captures the expertise of an expert or group of experts in a Computer Based Information System. However, on the contrary, the ES can compute faster that the human expert himself.

This is because of its programmed intelligence and processor ability for computing. The system is reliable with higher accuracy and low error rate.

Various advantages of the Expert System are summaries below:

• ES source the knowledge and expertise of a qualified human and can become a vehicle for building up organizational knowledge.
• Integrating Information – ES can compile information from numerous sources both internal and external to an organization. Based on integrations, it has the ability to gather information from different, information systems within a company. An ES can work on marketing information with production and finance estimations to yield results.
• Specialized Displays – Hard copies of reports may not always carry holistic information which can be understood better using visual aids of an Expert System. Visual aids imply charts, graphs, and icons to represent its information.
• Rapid Development – Commercial packages include application development tools for rapid system development. These work best in hands of programmers and nonprogrammers (such as systems or business analysts), EIS projects have a broader base of available development resources than traditional programmed-software projects.
• Exception Reporting – The most crucial benefit of ES is the competence to filter out routine data. Executives using such a system are alerted only to key indicators that are outside normal tolerances such as cut of prices, below average targets etc
• Strategic Sales Advantage – An ES can be used as a tool for communicating strategic information about customers from diverse and often informal sources.
• sometimes the information available from a company’s ES is valuable to its customers. By making this information available to customers, a company can gain an advantage over its competitors.

5.1 Applications of EIS

EIS enables executives to find those data according to pre programmed criteria. They help senior managers to take inputs from the organizational environment and forecast long term trends and undertake strategic decisions. The information in these systems is sourced both externally and internally.

Other application areas of EIS are discussed below:

• Manufacturing – It is the conversion of raw materials to finished goods to be sold commercially. The process requires resource optimization, accuracy and efficiency. EIS facilitates the evaluation process of vendors and buyers during the request for proposal stage. This helps in proper procurement of materials and parts and analysis of critical purchasing areas.
• Marketing – EIS helps assist marketing executives in making effective marketing decisions. It provides a platform for sales automation, past performance analysis and target allocation. This assists the marketing executive to compare sales forecast with past sales. EIS also supports is estimation of product pricing. EIS further can be further applied to manipulate data for trend projections, performing audits of all the sales data and calculating changes, variances and ratios.
• Financial – EIS is a responsibility facilitating planning or budgeting with control and reporting and can be extremely helpful to finance executives. EIS emphasize on financial performance, costing and budgeting.
• Customer Care and Support – EIS supports reporting and information analysis. This helps in back office functions such as service restoration, query handling and improved customer care and assistance.

5.2 Applications of ES

Expert Systems have numerous advantages to their credit which are discussed below:

• financial Decision Making – The financial services sector is an ardent user of predictive technology, artificial intelligence and expert systems. Advisory programs assist bankers in determining loans dispersals to businesses and individuals. Insurance companies have used expert systems for risk assessment and to determine a price for the insurance. A typical application in the financial markets is in forex and share trading.
• Knowledge Publishing – An expert system is to delivers knowledge relevant to the user’s problem. Among the most widely distributed expert systems in the world belong here. The ES assists a user on appropriate grammatical usage in a text. A tax advisor ES that accompanies a tax preparation program advises the user on tax strategy, tactics, and individual tax policy.
• Process Monitoring and Control – Systems falling in this class analyze real-time data from physical devices for predicting trends, and controlling and optimization. Examples of real-time systems are gold prices, share market, oil price determination.
• Design and Manufacturing – These systems assist is the overall design, ranging from high-level conceptual design of entities to configuration of manufacturing processes.
• Planning and Scheduling – Ranging from application involved in project management to procurement and automatic ordering, expert systems have many applications. Other examples include airline scheduling of flights, manufacturing work orders etc.
• Configuration of manufactured objects from subassemblies – Configuration and assembly is a process that has to follow set parameters within certain constraints. The technique has numerous applications like in modular home building, manufacturing, and other problems involving complex engineering design and manufacturing.

6. 6. Successful Implementation of EIS and ES

EIS at Phillips 66

This EIS uses external information from market sources-not internal information from the accounting system-to produce effective decisions made in a decentralized organization.

In 1987, Phillips faced a problem with pricing its petroleum products as a result of a company-wide reorganization. The underlying problem was untimely information, due to which senior executives had to set standardized, corporate-wide petroleum prices.

As part of the reorganization, Phillips decided to do away with middle management positions and set a new pricing regime. This was to support management at all levels in its decentralized organization. This information system needed to integrate information on competitors’ prices, the petroleum market spot prices, and Phillips’ internal cost and supply levels, all on a daily basis.

To deal with this pricing problem, Phillips decided to implement an EIS that gathered daily information on Phillips’ in each local market and compared it to competitors’ prices and to the market spot prices. This price information was then correlated with the daily sales volume of that specific market. The result was displayed as on-screen price-volume graphs and charts, showing trends over the prior sixty days.

This information was made available to both local market managers who were designated with the responsibility of making pricing decisions; the senior executives were free to simply monitor pricing activity.

The impact and importance of this system of decentralized pricing, and the EIS that supported it, was enormous. Phillips estimated that for each day its pricing was off by one penny, the company lost $40 million in annual profits.

Phillips designed its information system to support a key business decision which was daily selling price. They responsibility was then handed to the local market managers who were in the best position to make the decision. Phillips met its business objectives by effectively implementing the key elements of an EIS to support executive decision making.

7. Summary

Executive Information System is a type of Information System platform intended to facilitate and support decision making needs of executives by providing easy access to both internal and external information relevant to meeting strategic goals of an organization. EIS software’s offer drill down capabilities and reporting mechanisms which help cater to multiple use cases. Unlike a traditional management information system presentation, EIS can demarcate between the essential and seldom used data, and track activities for executives which are helpful in evaluating the company to meet corporate objectives. Expert systems facilitate decision making and cannot substitute the same. Expert systems do not have human thinking capacities and use pre programmed capabilities to analyze data They use a knowledge base and inference engine to rely on knowledge for a particular situation at hand.

Web Resources

• http://www.innovativeretailtechnologies.com/doc/eis-systems-cut-time-provide-a-host-of-benefi-0001
• http://www.wtec.org/loyola/kb/c1_s2.htm