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Sunday, March 30, 2014


Many firms have tried to take transaction processing to a higher level by creating Enterprise Information Systems that encompass the transaction processing done in the various functional silos. The idea of these efforts is to create unified databases that permit any authorized individual to obtain whatever information would be helpful in making decisions across the organization. So having all this information in a unified database should improve decision-making. Enterprise information systems are quite controversial because the effort to create them is enormous. They involve much more than changing the format of databases. Often it is necessary to change business processes to suit the needs of the information system instead of vice versa. Nonetheless, many organizations have found that the integration resulting from this large investment seems to be worthwhile. The last part of this discussion explains why these information systems are usually called Enterprise Resource Planning (ERP) systems even though planning is not their main focus. 

Management and Executive Information Systems

A Management Information System (MIS) provides information for an organization’s managers. The idea of MIS predates the computer age. For example, as long ago as the middle 1500s, the Fogger family in Augsberg, Germany, had business interests throughout Europe and even into China and Peru. To keep in touch, they set up a worldwide news reporting service through which their agents wrote letters about critical political and economic events in their areas of responsibility. These letters were collected, interpreted, analyzed, and summarized in Augsberg and answered through instructions sent to the family’s agents. This paper-based system encompassing planning, execution, and control helped the family move more rapidly in the mercantile world than their rivals. Instructions went out to the agents; the agents executed their work’ and the agents reported their results. 

Computerized MIS generates information for monitoring performance, maintaining coordination, and providing background information about the organization’s operation. Users include both managers and the employees who receive feedback about performance indicators such as productivity.  

The concept of MIS emerged partly as a response to the shortcomings of the first computerized TPSs, which often improved transaction processing but provided little information for management. Computerized MISs typically extract and summarize data from TPSs to allow managers to monitor and direct the organization and to provide employees accurate feedback about easily measured aspects of their work. For example, a listing of every sale during a day or week would be extremely difficult to use in monitoring a hardware store’s performance. However, the same data could be summarized in measures of performance, such as total sales for each type of item, for each salesperson, and for each hour of the day. The transaction data remains indispensable, and the MIS focuses it for management. 

As part of an organization’s formal control mechanisms, an MIS provides some structure for the comparatively unstructured task of management by identifying important measures of performance. The fact that everyone knows how performance is measured helps in making decisions and helps managers motivate workers. 

From MIS to EIS

An Executive Information System (EIS) is a highly interactive system that provides managers and executives flexible access to information for monitoring operating results and general business conditions. These systems are sometimes called Executive Support Systems (ESS). EIS attempts to take over where the traditional MIS approach falls short. Although sometimes acceptable for monitoring the same indicators over time, the traditional MIS approach of providing prespecified reports on a scheduled basis is too inflexible for many questions executives really care about, such as understanding problems and new situations. 

EISs provide executives with internal and competitive information through user friendly interfaces that can be used by someone with little computer-related knowledge. EISs are designed to help executives find the information they need whenever they need it and in whatever form is most useful. Typically, users can choose among numerous tabular or graphical formats. They can also control the level of detail, the triggers for exception conditions, and other aspects of the information displayed. Most EISs focus on providing executives with the background information they need, as well as help in understanding the causes of exceptions and surprises. This leaves executives better prepared to discuss issues with their subordinates.


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