UNIT V
MANAGERS AND THEIR INFORMATION
NEEDS
OBJECTIVES:
At the end of the unit, the student should be able to:
1) explain the link between an organization’s structure and information flow;
2) list the main function and information needs at different managerial levels;
3) identify the characteristics of information needed by different managerial levels; and
4) recognize the influence of politics on the design of, and accessibility to, information
systems.
UNIT V
MANAGERS AND THEIR INFORMATION NEEDS
Information is needed for decision making and operations at all levels of management, but managers at
different levels of an organization’s hierarchy need different types of information. By making information
available to virtually every level of an organization, ISs are changing the way organizations operate.
MANAGERS AND INFORMATION
Generally speaking, managers at different levels of an organizational hierarchy make different types of
decisions, control different types of processes, and therefore have different information needs. While
companies have many different organizational structures, in this chapter we will discuss the most common: a
generic pyramid-shaped hierarchy with a few leaders at the top and an increasing number of workers at each
subsequent managerial and operational level (see Figure 9.1). There has long been a fairly close correlation
between the level of work a person does in an organization and the type of IS he or she uses. But today, with
computers on every desk, the relationship is no longer as clear. The availability of increasingly flexible and
powerful information systems throughout all organizational levels has had a profound effect on
organizational structure. For instance, in the past, companies had specialized staff whose main task was to
process data and generate information to meet manager’s requests. Now, the ability to generate information
has been placed directly in manager’s hands, which has contributed to the downsizing of middle management.
Technology aside, the politics of information within an organization can undermine optimal business decision
making. Trying to retain power in their hands, and realizing that information is power, managers sometimes
oppose the trend of making both data and processing tools available throughout a company. Problems often
arise when the potential politics are not considered when developing system and deciding how people will
support those systems.
THE TRADITIONAL ORGANIZATIONAL PYRAMID
Every organization needs leadership. The top-level leaders of an organization are a small group of people
responsible for running organization and reporting to one person in the group, who usually bears the title
chief executive officer (CEO). Some small, knowledge-intensive companies use a matrix organizational
structure. A matrix structure distributes leadership among several people, varying by project, product, or
discipline. However, the management of most organizations still follows a pyramid model: the CEO at the
top, a small group of senior manager’s one level down who report to the CEO, a larger number of middle
managers who report to the senior managers, and so on down the line (see Figure 9.1).
In general, at the bottom of the organizational pyramid are clerical and shop floor workers; in the next
layer up are operational managers, who are responsible for overseeing the day-to-day operation of a company;
next up is a much narrower layer of middle managers; and the top of the are a few senior managers. Due to
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the nature of their decisions, managers in the top two layers are often referred to as tactical (middle) and
strategic (senior) management. Strategic managers a re expected to establish corporate strategies with a long-term
view, and tactical managers are expected to figure out how to achieve the strategies. Variation in this structure
exists among organizations; not every organization has exactly three layers, and there are often sublayers in
the management levels. Also, the distinction between operational and middle managers is not always clear,
nor it is necessarily important. Remember that this rough categorization is just for the purpose of discussing
information needs. It is best to think of managerial levels as a continuum between two ends, the lowest level
being operational managers, and the highest level being top management. It is very likely that your first
managerial position will be as an operational manager.
Clerical and Shop Floor Workers
In many organizations, clerical and shop floor workers make up the largest group of employees. Included
in this group are all types of service workers, such as tellers in banks, receptionists in hospitals, and sales
associates and cashiers in retail stores, as well as traditional production employees in manufacturing
organizations. The main characteristics common to workers at this level is that they are not managers.
Although they may have high levels of expertise in a particular technology, equipment, or process, the scope
of their decisions is typically narrower and focused on the work at hand. However, they are not required-and
are not expected-to make management-level judgments. Many of these workers operate at their organizations’
boundaries, where they interact with other organizations or individuals, including customers. Many take
orders for products and services, provide customer service, record dales, issue invoices; record shipments of
raw material received and services performed, and provide maintenance services for equipment leased or sold
by their company, and perform any other non managerial work.
Operational Management
Operational managers are in charge of small groups of front-line workers. Examples include the foreperson
on a shop floor, a department manager in a department store, and a manager in a bank or insurance company
who is in charge of a small unit and authorized to obligate the company for small amounts of money. The
people in these positions typically follow general policies handed down by their superiors. Within these
policies, they make decisions that affect their superiors. Within these policies, they make decisions that effect
their units in the short term, that is, within days. For instance, if a subordinate calls in sick, an operational
manager in a manufacturing setting is empowered to decide whether to call another employee in from home,
in which case the person will probably report late, or to ask another worker to stay for another shift, in which
case the company must pay time and a half. In a service industry such as an airline, an operational manager
might help ticket agents solve a problem that has cropped up with a passenger’s luggage.
Tactical Management
Tactical managers, also called middle manager, receive general directions and goals from their superiors and,
within those guidelines; they make decisions for their subordinates, affecting the near and somewhat more
distant future. Usually, they are in charge of several operational managers. Tactical managers are so-called
because they are responsible for finding the best means (tactical) to accomplish their superiors’ strategies
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decisions. As you remember from Chapter 2, “Strategies Uses of Information System,” a strategic decision
focuses on what to do, while a tactical decision concentrates on how to do it.
For example, corporate management may make the strategic decision to provide more of a bank’s services
electronically: over the telephone or online via personal computers. This broad goals leaves the tactical
managers to determine how to provide those services. Should the bank develop the necessary computer
software in-house? Should it hire a consulting firm? Which services should be offered first? How should the
bank educate staff and customers about the new offerings? Tactical managers are expected to provide the
best solution to these problems and refer issues to the strategic level only if their decisions may affect the
general strategy outlined.
Strategic Management
It is easier to determine which managers make up the strategic level that it is to discern who belong the
other two levels. The reason is simple: these people are the highest-ranking officers of the organization. In
many companies, the president and vice-presidents make up the strategic management. When member of the
board of directors play an active role in the company’s business, they, too, contribute their share to strategic
decision making. However, do not mislead by titles. Some corporation, such as banks, grants vice-presidential
titles to thousands of their managers. Title alone those not place those people in the strategic level of their
organizations.
Strategic managers make decision that affect the entire organization, or large part of it, and leave an
impact in the long run. For example, such decisions may include the merging with the acquiring other
companies, opening branches overseas, developing a completely new product or services, moving operations
to the internet, or recommending a major restructuring of an organization.
CHARACTERISTICS OF INFORMATION AT DIFFERENT MANAGERIAL LEVELS
People in different management levels have different information needs. The information needed by
different managerial and operational levels varies in the time span covered, level of detail, source, and other
characteristics over a board spectrum. For instance, clerical workers need data that allow them to fulfill daily
operations but not necessarily make decisions. To serve customers and other workers, they must have access
information such as how many units of a certain item are available for sale, how much a certain customer
service costs, and how much over time a center employee worked last week. Usually, these people make ad
hoc inquiries to satisfy immediate information needs.
On the other hand, most of the information that managers require is used to make a decisions.
Operational managers need information based on data that are generally narrow in scope, gathered over a
short period of time, and useful for decision that have an impact in the short run, that is, hours, days, and
weeks. The decisions middle managers make affect a greater number of organizational units for longer
periods of time, and they require information extracted from data that are boarder in scope and time, and that
information may come from outside their departments.
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The decision-making process of middle managers and above is less structured that of operational
managers; despite the boarder scope of the data ---and sometimes because of it---there are no proven methods
for selecting a course of action that guarantees a predicted outcome.
The decision that senior managers make affect whole divisions or the entire organization has a
longstanding impact. Their decision making is much unstructured. Senior managers need information gleaned
from vast amounts of raw data that have collected for long periods of time from many or all of an
organization’s units. The original data for the information come from internal an organizational sources as
well as external sources, such as the mass media, the Web, national and international trade bulletins, and
consulting firms.
Data Range
Data range refers to the amount of data from which information is extracted, in terms of the number of
organizational units supplying data or the length of time the data cover. For example, data gathered from just
one department have a narrower range that data from every department’s data from several months have a
boarder range that the same department’s data from one week.
Data range is different from level of detail. When a lot of data is summarized into a few figures, such
as totals and averages, the level of detail is low; however, the data range may be high if the data are about
numerous people, departments, or events. Data range refers to the number of individuals, departments, or
events about which data were collected.
To make strategic decision, top management may need a single figure that is collected from a wide
range of data, such as the average monthly expenditure on U.S. television advertising of sport shoes. The data
are collected on as many sport shoes manufacturer as possible to produce information that reflects the entire
industry, not a single company or small number of companies. Although the information provided is a single
figure, it is derived from vast amounts of data spanning a long time and many corporations. Therefore, the
data range is wide. At the other extreme, the managers of the shop in a manufacturing plant may need only
information that is extracted from data collected within that organizational unit. The data range is then
narrow.
Time Span
The time span of data refers to how long a period of time the data cover. Data that cover hours or days
(the time span usually needed by lower-level man-agers) are said to have a short time span relative to data that
cover months, years, or decades, which are said to have a long time span. Senior managers typically use data
that reach far into the past. They also make extrapolations based on the patterns of performance in the past
to forecast what might happen in the future. Data warehouses which accumulate historical data are an
excellent source for data collected over a long time span.
Level of Details
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The level of detail is the degree of the information generated is specific. When a department manager
look at the number of shoes sold every day of the week broken down by style, the information is, obviously,
very detailed. Operational managers usually consider highly detailed information. Senior managers, in
contrast, typically consider information that is highly summarized. This type of information includes totals
and averages for categories of products (rather than individual products) over long period of time. These
different levels of detail serve the different operational purposes. Operational managers typically examine
actual facts relating to present events so they can control immediate situations, while senior managers are
often interested in trends to formulate strategies. The difference can be compared to looking at several pieces
of a puzzle or looking at the entire picture the puzzle forms.
Usually, they more detailed the information, the closer it is to the data from which it is derived, and
thus proportionately less processing is involved in generating it. Daily totals of sales in the shoes department
are more detailed that an annual for the entire chain of stores. The letter requires significantly more
processing because it combines data from many sources.
Source: Internal versus External
Internal data are collected within the organization, usually by transaction processing systems, but also
through employee end customer surveys. External data are collected from a wide array of sources outside
the organization, including mass communications media such as television, radio, and news papers;
specialized newsletters published by private organizations; government agencies; and the vast sources of news
and statistics on the Web. For instance, to plan the expansion or contraction of a national supermarket chain,
top managers cannot rely only on their organization’s internal data. They must track national trends. Thus,
they need information on national annual demographic changes. Without it, they may spend resources on
increasing the number of stores only to find, a few years later, that their customer based has shrunk.
Multinational Corporation relies on even more external data; the data they used come from many different
parts of the world, from many different resources, and often in many different formats. For examples, they
must rely on demographic and economic statistics of several nations rather than one.
In some industries, almost all the information comes from the external sources. For examples,
managers of mutual funds and pension funds must track changes in the prices f stocks and other securities
daily (sometimes even hourly) to be able to optimize the capital gains of the funds. The data the analyze come
mainly from stocks exchange. Firms that operate Web sites that generate advertising revenues rely on data
from companies that rate traffic.
Structured and Unstructured Data
Structured data are numbers and facts that can be can be conveniently stored and retrieved in an orderly
manner for operations and decision making. The sources of such data are primarily internal files and data
bases that capture transactions. Data warehouses also provide highly structured data, such 0as numbers of
units in inventory, numbers of units sold, and the like. Unstructured data are drawn from meeting discussions,
and other “non uniform” sources. What we referred to as knowledge in that discussion is often unstructured
data because its includes data held in the minds of employees.
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Structured data are used for daily operations that are relatively easy to make help of proven models.
The higher a managerial position, the less structured decisions a managers faces; therefore, unstructured data
are extremely valuable in managerial decision making, especially at the higher levels of an organization.
Many people speak of “management science” However, as you may have surmised, many managerial
processes are more an art than science.
THE NATURE OF MANAGERIAL WORK
Managers are paid to plan and control. They plan to minimize uncertainty and reduce risks; they exercise
control to ensure adherence to plan. Both responsibilities involve decision making and leadership.
Information systems are a great support throughout the management process.
PLANNING
In an ideal world, manager would have some way of knowing what the future portends. Then, they could
make their decision accordingly. Unfortunately, managers do not have a crystal ball. But through both short-
and long-terms planning, they can have something better: a hand in shaping t he future, not just living through
it. As illustrated in Figure 9.3, planning starts with a long term-mission and includes establishing goals and
objectives, as well as resource planning and budgeting for both the short and long term. Most of all, good
planning requires good information. The better information, the clearer the picture managers have to the
present and the past and the more prepared they are to plan for the most future. By extracting only the most
useful facts from raw data. Is can provide the most salient information.
As any entrepreneur will tell you, the first step in planning to create a mission statement. How do you
envision the organization one year, five years, and ten years in to the futures? Within the framework of the
mission statement, top management sets goals. Goals are a wish list without specific quantities or dates. Goals
roughly correspond to strategy. Within the framework of each goal, top managers and middle managers set
objectives. Unlike goals, objectives are specific in dollar terms, market share percentages, completion dates,
and other results that can be measured. Whereas the mission statement is the basis longer-term planning,
objectives as the basis for short-term planning.
After objectives are outlined, planning includes steps such as the calculation of person-hours required
to complete the project and, thus, the size of staff needed; detailing of a master production schedule; and the
specification of quantities of raw materials and their supply lead times. Probably the most important of any
business plan is the budget. The organization’s budget is the aggregate of the budgets of all its units. The
reason that ERP (enterprise resource planning) systems are so called is that while they support daily
operations, they also collect vast amounts of the data that can be processed into useful planning information.
Controlling
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Once plans are in place, managers use them to control ongoing activities by comparing the planned
outcome with the actual results, as shown in Figure 9.5. Thus, plans are the control tools of an organization.
When discrepancies between planned and actual performance are found, managers determine the reason for
the variances, if the performance is the better than planned. Then the plan may be modified. If the
performance is worse than planned, then the cause of the discrepancy is investigated and corrected, if
possible, or the remaining plan is revised to be realistic. Different levels of management used different parts
of plant of control operations for which they are responsible. For instance, strategic and tactical mangers are
concerned with locating source to projects, while operational managers are usually concern allocating
resources among the task of a project. So, once a budget for hiring temporary workers to complete a project
is approved, too, ERP systems play a major role by providing daily facts and figures.
Decision Making
Both planning and control activities involve decision making. We will cover decision making at length in
Chapter 12, but you may remember from previous chapter that a decision is a commitment to act. A decision
is made when a person has to select a course of action from several possible courses. For the time being, we
can simply say that the higher the level of management, the less routine the manager’s activities are the more
open the options are, and the more decision making is involved. For instance, operational managers usually
make relatively simple decisions, such as resolving problems with individual customers, scheduling work
shifts, and evaluating employee performance. Many of their other activities require fulfillment of tactical
manager’s directives. At the very top of the organizational pyramid, on the other hand, virtually all of an
executive’s work day is devoted to meetings to reach decisions. All along the managerial hierarchy,
information system are used provide information to support decision-making activities.
Managing by Exception
Some people think that more information is always better than less. However, there is a limit to the
amount of information that managers can handle. A better goal would be to provide managers with
information that communicates the most important facts. Too much information creates information
overload, a situation in which a person is confused and cannot make optimal decision.
One method of reducing the amount of information managers reviews consume is management by
exception. With this approach, managers review only exceptions from expected result that are a certain size
or type, assuming that smaller deviations are immaterial. For example, a department mangers may ask for a
periodic report that compares actual and budgeted expenditures and highlights only those line items that are
greater that 110 percent or less than 90 percent of budgeted figures. (In this example, the 10 percent deviation
ecause it is the limit of deviation that is tolerated.) Or a periodic report on a
is referred to as the tolerance, b
project schedule may include only activities that have not been completed within the situation. If 95 percent
of the deviations of time, money, and other resources fall within the tolerances, the manager saves much time
what would otherwise be devoted to detailed investigation of what caused the devotions.
Leading
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Reviewing exception reports focuses on adhering to an organization’s agreed upon plan, which is small
part of a manager’s job. Managers must also lead, which requires having a vision and creating confidence in
others to follow that vision. Leadership requires to achieves corporate goals, inspire subordinates, present a
role model for desired behaviors, take responsibility for undesired consequences of decision made under his
or her direction, and delegate authority.
TRENDS IN ORGANIZATIONAL STRUCTURE
Information technology (IT) is the most powerful tool available for increasing efficiency, solving
problems, and making decision in businesses to day. Its impact contributed to vast organizational
restructuring in the 1980s and 1990s, with a trend toward downsizing and “flattening,” which often
eliminated levels of management.
IT Flattens the Organization
Before the introduction of computer in to business, lower-level managers spent much of their time
processing data to produce useful information for their supervisors. Over the past two decades, many
companies have use ISs to automate these activities, eliminating the need for several layers of middle
managers. This shift has led to flatter organizational structures and has been a major force behind the
enormous downsizing in both the manufacturing and service sectors. In 1993, the U.S. alone, some 450,000
middle managers lost their jobs. In 1994, more than a half million workers lost their jobs, almost all of them
middle managers. There are signs the trend is continuing. And studies have been conducted showing that as
IT proliferates, organizational staffing in general becomes leaner.
Strategic and operational managers have been affected much less by this trend. Strategic managers are
still needed because of their responsibilities for setting the organizational course, and operational managers
run the daily operations of the organization. Today, easy-to-use graphical the user interfaces and affordable
data communications allow senior managers to produce their own information and communicate directly
lower-level managers who are simply no middle managers at all between strategic managers and operational
managers.
The Matrix Structure
In the 1980s, the increasing power of information systems organizations led to an organizational
experiment: matrix management. Matrix management replaced a strict hierarchical structure with a flexible
reporting structure, where be people to different supervisors, depending on the project, product, or location
of the work. While this structure has been successful in some small entrepreneurial organizations that consist
predominantly of knowledge (such as young high-tech companies), it was less successful in large, non
high-tech organizations.
A matrix organization might work, with the personnel of each unit reporting both divisional and a
functional manager. The manager of the personnel in cell 1 report to both the vice-president of marketing
and sales and the general manager of Division A. the vice-president of marketing is responsible for the
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marketing of all company’s products and services. The general manager of Division A is responsible for all
activities related to Division A products and services, including engineering, manufacturing, and marketing.
Technologically, IT supports a matrix structure, because both divisional and functional managers can have
access to cross-sectional information. The same data base can provide the executive information to the
vice-president of engineering for all three division product information to a division general manager for
marketing, manufacturing, and engineering activities related the product.
The matrix structure came about because sometimes divisional supervision (by geography or product,
for instance) and functional supervision are equally important. If so, then top management has to be
composed of both divisional executives (such as general managers of the divisions and corporate
vice-presidents) and functional executives (such as vice-president of finance, marketing, engineering, and the
like).
CHARACTERISTICS OF EFFECTIVE INFORMATION
ISs be design to accommodate the different ways in which human being process data. Some managers
like their information in graphic format, some like it in text, some like table, and some like to hear the
information from their staff. Most people are comfortable with some form visual data, such as diagrams and
pictures.
Tabular and Graphical Representation
Studies have investigated the relationships between personal characteristics and data-representation
preferences. One study found that when solving problems, engineering students performed better when the
data were presented as tables of numbers, while business student solved problems more successfully when
data were presented in graphs.
The certain types of information that most people grasp more quickly when they are presented
graphically. For instance, trends are immediately recognized when presented as lines on graphs; distributions
of data (such as percentages of respondents‘responses) are easily comprehended when displayed in pie charts;
and comparison of performance is best displayed with bar charts. However, when solving complex problems
many people prefer tabular raw data so that they can extract the information they deem necessary. Many
managers think that a graph tenders only one interpretation of the data, possibly masking other meaningful
relationships.
In the past researchers found that information system design should accommodate the psychological
type of the intended user. However, such customization was always highly impractical or prohibitively
expensive. Now, though, many applications provide a wide array of data displayed options, allowing users to
select their performances. In these systems, the users may display and examine raw data, selected from
database or a spreadsheet, in tables or graphs. Many applications allow users display the same information a
number of different forms at the same time, such as in tables and graphs, or in graphs embedded in tables in
vise-versa. You may have noticed that many Web sites give you the option to display the information in many
different form-tables, bar graphs, and pie-charts and for different lengths of time weekly, monthly, and
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annually. Thus, managers can, too some degree, tailor information presentation to their liking when using
online resources.
Online Analytical Processing
Tables, even if joining data from several sources, limit the review of information to only two dimensions.
Often, executives need to view information in three dimensions. For example, an executive may want to see a
summary of the quantity of each product sold within each city of a region. And she may also want to view
quantities sold of specific product in all cities of all regions. Simple relational data base processing
applications (called online transaction processing, or OLTP, applications) cannot yield such tables. Another
approach called OLAP, is specially designed to answer queries such as these.
Online analytical processing (OLAP) applications are design to let a user virtually rate cubes of
information, whereby each side of the cube provides another two dimensions. Figure 9.10 shows the interface
of one OLAP application. The users view a cube of table showing relationships among several related
variables. The user can rotate the cube on a computer monitor to place the relationship he or she wants to see
in clear view. OLAP application either operate on data that are organized especially for such use or process
data from relational data bases for three-dimensional presentation. A dynamic OLAP application respond to
commands by composing tables “on the fly” OLAP applications can easily answer questions such as, “What
product are selling well” or “Where are my weakest-performing sales offices?” which would not be possible
using the simpler OLTP. Note that although the word cube is used to illustrate the multidimensionality of
OLAP tables, the number of tables is not limited to six, which is the number of cubes sides. It is possible to
produce table showing relationship of any two related variables contained in the database.
Dynamic Representation
Knowledge workers and managers much make many decisions based on real time activity, not on data
about something that has already taking place. This need for currency requires a new type of display, called
dynamic representation. Dynamic representation usually includes moving image that represents either the
speed or direction of changes happening in real time. For instance, in stock trading, brokers are interested not
just in the stock’s price, but also in how fast its price changes, which indicates the level of activity of buying
and selling. In new stock-trading software, columns with list of selected stocks rotate to indicate buying and
selling activity: the faster they rotate, the greater the activity. The direction in which the stock price has
changed Since the start of the trading day may be presented by a column above the surface for “up” and
under the surface “for down,” where the length of the column changes to represent how far the price rose or
fell.raw data for this representation are taken directly from the computers of the stock exchange. Rates of
change may also be presented by changing colors: blue or slowest, red for fastest, and hues of these colors for
intermediate rates. It is expected that the use of dynamic representation will grow in information systems.
MANAGER AND THEIR INFORMATION SYSTEMS
Employees at different levels in an organization must make decisions that vary in scope and type, as we
mentioned earlier in this chapter. The traditional view of the types of information systems needed for an
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organization’s different operational and managerial levels. While this relationship generally holds true,
information needs vary widely in practice. With ISs making information available throughout organizational
hierarchies, this traditional correlation can become blurred.
Transaction Processing System
As you may remember from Chapter 1, “Business Information Systems: An overview,” workers at the
bottom of the organizational hierarchy use point-of-sale (POS) terminals, order-entry systems, and other
transaction processing system (TPSs) to enter data at its source at the time transaction take place. These data
are the raw materials to producing useful information. TPSs are linked to application to provide clerical
workers operational manager with up-to-date information, such as the quantity-on-hand of a certain inventory
item, the latest deposit in a customer bank account, the shipping date and contents of a customer’s order, or
the latest prescription filled for a customer in a drugstore. Clerical workers use the systems to perform their
routine responsibilities: serving customers, placing purchase orders with suppliers, and providing information
to other employees. TPSs are also used by operational managers, mainly to generate ad hoc reports, usually
on-screen.
Decision Support Systems and Expert Systems
Middle managers must solve the problems that are typically more complex and non-routine that those
faced by operational managers. Their decision-making tasks require significantly more data. Therefore, they
used computer-based decision aids, including decision support system (DSSs) and expert systems (ESs), to
assist them. (DSSs, ESs, and EISs, are discussed in detail in Chapter 12, “Decision Support, Executive
Support, and Geographic Information System” and Chapter 13, “Artificial Intelligence and Expert Systems.”)
Senior managers also use DSSs and ESs, although historically they have been more reluctant to used
computers in their decision making. Until several years ago, it was rear to find a PC on the desk of corporate
president or vice-president. This reluctance was partly because they perceived desktop computers to be more
appropriate for lower-level managers and clerical staff. The sophistication and ease of use of many systems
nowadays has probably contributed to the adoption of the system by many high-ranking executive.
Executive Information System
In additional to the more traditional DSSs and ESs, executive information systems (EISs) provide
managers with timely and concise information the performance of their organization. EISs deliver and
summarized and concise information that helps managers quickly grasp business conditions. For instance,
summary information (such as revenue per employee in a specific region) may attract the attention of a
manager. Then, the mangers can use an EISs to “drill down” and isolate the data that are related to the cause
of a problem. Executive who use EISs can usually connected their computer (or have them permanently
connected) to an OLAP sever so they can view information in different combinations and receive such as
information fast.
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Many executive also have their microcomputers connected to external commercial services that
provide business and general news, including economic indices, stock and commodity prices, and summaries
of information sorted by industry on a regional, national, and internal basis.
While there is a general correlation between managerial level and type of IS, it is important to note
that nothing prevents any member of an organization for using any type of IS. Of course, management may
not put an EIS at the routine discretion of a clerk, but clerk may use DSSs, ESs, and sometimes even EISs for
their work. Also, while we discuss different types of ISs, many application actually combinations of several
type of such ISs. For example some decision support systems are combined with expert system techniques
and OLAP capabilities to serve as sophisticated EISs.
Customer Relationship Management System
Since an increasing number transaction is executed trough the Web, managers can use data that already in
electronic form to analyze and strategize. One type of system proven to be highly useful is a customer
relationship management (CRM) system. CRM systems help collect data about customers and analyze the
data into useful information to help serve customer better. They can also help managers find effective and
efficient marking strategies. The challenge is to address the right customer, at the right time, with the right
offer, instead of spending millions of dollars in mass marketing or covering numerous Wed site with ads.
Some companies, such a Double-Click, Engage, and Avenue A, including cookies and Web bugs to track
Wed users click streams.
By compiling billions consumer click stream data and creating behavioral models these companies
can glean individual consumers interests from the site they visited (what do they like) the frequency of visit
(are loyal) the times they surf (are they at work or at home?), and the number of times they click on ads or
complete a transaction. Then, sites can display ads that match the typical interests at sites where the likely
customers tend to visit. They can use software that will change the ad for each visitor by detecting the
computer (IP number) from which the individual visit.
Consider the challenge that was facing Drugstore.com, a web-based drugstore based in Bellevue,
Washington. Management wanted to reach more customers who were likely to purchase its products, but they
did not have the tools to know those people were. While Drugstore.com had plenty of information about
customers – including name, address, and a list of past purchases – the company still did not know where
exactly to find those customers on the Web or where to find more people who have same buying habits.
Management hired Avenue A, Inc,. a firm that specializes in customer profiling . Avenue A managers say they
know where 100 million Web users visit, shop, and buy. During a previous marketing campaign for
Drugstore.com, Avenue A had compiled anonymous information about every Drugstore.com customer who
made a purchase during the campaign. Avenue A knew what specific as or promotion a given customer had
responded to, what that customer had browsed for on the Drugstore.com site, whether the customer had
made a purchase, and how many times the customer had returned to purchase.
Using its CRM application and the services of another firm, Web Affinity Analysis, Avenue A could track
Drugstore.com’s individual customers across more than 3,000 Web sites. Avenue A then constructed
common themes in the customers’ online behavior, such as the general Web sites they visited, visits to
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competing online drug retailers, and the likelihood that those individuals would click on ads. Drugstore.com
managers used the information to build a marketing strategy, assuming that those common characteristics and
habits would be shared by as yet unconverted customers. (A converted customer is a shopper that is
convinced to buy.) Using similar software, Eddie Bauer Inc. was able to decrease its marketing cost per sale
by 74 percent over three months, and the Expedia Inc.’s travel site cut its cost per sale by 91 percent over
eight months.
Additional Readings from the INTERNET
1). http://en.wikipedia.org
References:
1) Oz, Effy: Management Information Systems Third edition, Thomson Learning Center, 5 Shenton
Way UIC Building, Singapore 2002.
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