Professional Documents
Culture Documents
Source: Decision Support Systems in the 21st Century, 2nd Edition by George M. Marakas
An EIS is
An
EIS is a special type of DSS designed to support decision making at the top level of an organization.
An
EIS may help a CEO to get an accurate picture of overall operations, and a summary of what competitors are doing. These systems are generally easy to operate and present information in ways easy to quickly absorb (graphs, charts, etc.).
The EIS will allow the executive to drill down from any figure to see its supporting data.
The executive can select a level of detail (for example, sales by state) if further investigation is needed.
They are enterprise-oriented in thinking The possess the broadest span of control They are responsible for establishing policy They represent the organization to the external environment Their actions have considerable financial and human consequences Disturbance management may require around-the-clock attention.
Entrepreneurial activities require the executive to predict changes in the environment. Resource allocation tasks require the manager to choose when and where the limited resources are deployed.
the environment.
Accounting
determining strategy.
The information used is often short-term and volatile. Information that represents key business performance indicators
MGS 8020 Methods of Business Intelligence
(metrics)
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An
A key
problem domain.
for the EIS backbone, and customized modules to meet specific needs.
EIS limitations
right.
Organizational limits
Agendas and time biases: the EIS represents only part of executives
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Political problems
Developer failures Technology failures Costs Time
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EIS of tomorrow
The multimedia EIS: multimedia databases will allow future integration of text, voice and image
The informed EIS: future EISs will make wider use of data external to the company
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Reasons for the Need of a Balanced Scorecard 1. Focus on traditional financial accounting measures such as ROA, ROE, EPS gives misleading signals to executives with regards to quality and innovation. It is important to look at the means used to achieve outcomes such as ROA, not just focus on the outcomes themselves.
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Reasons for the Need of a Balanced Scorecard 2. Executive performance needs to be judged on success at meeting a mix of both financial and non-financial measures to effectively operate a business.
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Reasons for the Need of a Balanced Scorecard 3. Some non-financial measures are drivers of financial outcome measures which give managers more control to take corrective actions quickly. (Example: controls in jet cockpit for pilot)
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Reasons for the Need of a Balanced Scorecard 4. Too many measures, such as hundreds of possible cost accounting index measures, can confuse and distract an executive from focusing on important strategic priorities. The balanced scorecard disciplines an executive to focus on several important measures that drive the strategy.
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1. Financial: How do we look to our Shareholders? 2. Customer: How do our Customers See Us? 3. Internal Business Process: What should we do that is Excellent? 4. Employee and Organization Innovation and Learning: Can we continue to Improve and Add Value?
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Outcomes
Cycle Times Customer Satisfaction Customer order fulfillment Product assembly Quality cycle time Defect rate Scrap rate
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Moderators (lag indicators) Employee Retention Rate Revenues Product and Process Innovations
Outcomes
Growth
Employee Suggestions
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Financial measures are outcomes that represent the executives success at achieving strategic performance goals Financial measures are influenced by the Stage of the Life Cycle which reflects different strategic priorities
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Sustain/Maturity
ROCE EVA
Harvest/Decline
Cash Flow Reduce Unit Costs
Obtain immediate payback on investments from cash cow
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Customer Measures & the Balanced Scorecard (Source: Kaplan & Norton, 1996)
Different Customer Models Business Business
Relevant Customer Metrics
Business
Distributor/Dealer
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Customer Measures & the Balanced Scorecard (Source: Kaplan & Norton, 1996)
Different Customer Models Business Customer
Relevant Customer Metrics
Customer order fulfillment cycle time Customer satisfaction Customer price margin
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Innovation Process
Identify Market
Create Product
Build Product
Deliver Product
Delivery Cycle Time
Relevant Metrics:
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Throughput Time
Throughput Time = Processing time + inspection time + movement time + waiting/storage time MCE MCE 0, implies inefficient process 1, implies less wasted time, greater efficiency
MGS 8020 Methods of Business Intelligence
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Executive Bonus Pool is designed as a percentage of Base Salary The bonus pool represents potential earnings from the bonus for an executive if all performance measures are achieved Partial success with meeting performance measures results in the allocation of a bonus representing a lesser amount of the total potential bonus. Example: The bonus pool for a CEO equals 100 percent of salary. Range of bonus equals 0 to 100 percent of salary depending on success of CEO performance.
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Critical Thinking Questions 1. What happens to the balanced scorecard when the strategy changes? (example: moving from a growth to an extract profits strategy) 2. How should resistance by executives or managers to new measures be handled? 3. What if executives or managers sub-optimize and only focus on categories in the reward matrix with the largest payoff such as EVA and Customer Satisfaction?
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Metrics attributes
(K. H. Rose, 1995)
associated with internal work that address system cost, waste reduction, team work, innovation, customer satisfaction
Provide information directly at level they are applied (no further processing)
Linked to business mission, strategy, and actions Contribute to organizational direction and control
Collaboratively developed by those who provide ,collect, process and use the data
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Sample scorecard
40 30 20 50 60 70 80
20 30 40 50 60 70 80
10
90
10
90
100
100
2004 Target: 40 hr / hr
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500
40 30 20
50
60 70 80
10
90
100
900
10
90
100
1000
100
Customer Service Productivity Metric Sampleper Instruction Hr Developed 1 Resource Hrs Business Unit 2004 YTD: 48 hr / hr Productivity Metric
2004 Target: 40 hr / hr
Sample Business Unit 2 2004 YTD: 625 / hr Productivity hrMetric 2004 Target: 400 hr / hr
40 50
Resource Hrs per Instruction Hr Developed Sample Business Unit 3 2004 YTD: 38 hr / hr Productivity Metric 8 hr / hr 2004 Target: 40 hr / hr
40 30 20
50
60 70 80
60 70 80
30 20
90
10
10
90
100
100
Leadership Metric SampleProductivity Developed Business Unit 4 Resource Hrs per Instruction Hr 2004 YTD: 66 / hr ProductivityhrMetric 8 hr / hr
2004 Target: 40 hr / hr
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10
90
90
10
90
100
100
100
Business unit 1Metric Customer Service Quality 2004 YTD: 83.0% quality metric
2004 Target: 80.0%
E-Learning unit 2 BusinessQuality Metric 2004 YTD: 81.0% quality metric 2004 Target: 80.0%
Enterprise Quality Metric Business unit 3 2004 YTD: 76.0% quality metric 2004 Target: 80.0%
40 30 20
50
60 70 80 20 30
40
50
60 70 80
10
90
10
90
100
100
Business unit 5 2004 YTD: 79.0% 2004 Target: 80.0% quality metric
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