CONCEPTION OF AN EXECUTIVE INFORMATION SYSTEM

THAT PROVIDES EXTERNAL INFORMATION FOR THE

GERMAN DAIRY

Hauke Müller, Ralf Helbig, Gerhard Schiefer

Department of Agricultural Economics, University of Bonn

Abstract: This paper describes the conception of an Executive Information

System (EIS) that provides external information for a middle class
structured branch. The system is divided into three parts: one for
quantitative (hard) information, one for qualitative (soft) information, which
is based on the ideas of environmental scanning, and one that supports
strategic decision making. The branch used exemplary will be the German
dairy.

Keywords: EIS, environmental scanning, external information.

1 Introduction

The amount of information executives have to deal with and the at the same time increasing technical
possibilities brought the ideas of Management Information Systems back to greater interest. This
paper considers the section of the Executive Information Systems (EIS). EIS shall help the executives
to get those information out of the abundance of existing information they really need to make their
decisions. The information they get usually will be internal, means information from inside the firm
about the firm. And it will mostly be facts, data, so called hard information. But the executives also
need information from outside the firm about facts and things happening in their external
environment.

Efforts to consider this in an EIS are made by including the possibility to contact external databases.
But here the executive again has to handle a lot of information to find the important one. And things
get the more complicated the more soft information becomes. Bigger firms try to receive soft external
information by implementing some kind of environmental scanning. This again has to be realized in
special routines to use it for getting soft information not for one special firm but for a whole branch.
The conceptional work of the project is mainly concentrated on this last point.

Another rather new aspect of information systems is to include ideas of not only providing
information but also of strategic planning methods without becoming a real supporting system. This
aspect will be touched as well, because it is in this case combined with the scanning routines. To use
this module completely internal information are needed too. It will be possible to integrate an internal
part, but that will not be part of the conception of the information system. Therefore it is not at all
correct to talk about an Executive Information System in this case, it is more an Executive External
Information System. But nevertheless here it will be called EIS furthermore.

First European Conference for Information Technology in Agriculture, Copenhagen, 15−18 June, 1997
2 Module “Hard information”

This element of the information system provides that part of external information which is
quantitative like prices or amounts and facts, altogether called hard information. The choice of hard
information that may be interesting for executives in the dairy follows the results of an earlier study
(v. Spiegel, 1994). An overview about its outcome is shown in table 1. Information was divided into
five different main categories with subordinated categories.

The whole list contains 129 points of interest. 33 of the points were identified as containing the most
interesting information, so called key information. That means that 75% of the consulted dairy
executives chose this information points as mainly important. The prototype of the information
system will in this module be concentrated on the key information to get it running.

Table 1: Information List

1. Market 2. Agrarian 3. Administra- 4. Technology 5. General

Policy tion of Justice Things
1.1 supply 2.1 Results of 3.1 EC-justice 4.1 systems 5.1 list of firms
market cabinet 3.2 German technique 5.2 labour
1.2 market council justice 4.2 news of market
regulations 2.2 milk quota 3.3 quality products 5.4 fairs
1.3 suppliers/ 2.3 duty standards 4.3 results of
customers 2.4 export research
1.4 trading area refunds
2.5 subsidies

Origin: made up according to v. Spiegel 1994

The user of the system is leaded to the points of his interest by different tree structures according as
he wants to take a look from the global side or the product side or directly at the key information. And
he can use individually controllable forms to drill down to the basic information, means he can choose
for example between graphics and tables or a monthly or yearly presentation.

3 Module “Soft Information”

3.1Environmental Scanning

Aguilar defines environmental scanning as “scanning for information about events and relationships
in a company’s outside environment, the knowledge of which would assist top management in its task
of charting the company’s future course of action.” (Aguilar 1967, p. 1). Representative for the lot of
different meanings of scanning, from looking at information up to looking for information (Auster, E.,
Choo, C.W., 1993), he took four scanning modes:

• undirected viewing
The viewer does not know what issue he is looking at, he finds information unexpectedly
(an executive for example gets accidental some information while talking to other
executives at a social meeting). The executive practices undirected viewing every time
 and everywhere. With its help he gets the warning that something has happened.
Normally he needs further information about a recognized issue - therefore he can use a
more systematic scanning mode.

• conditioned viewing
Such a potentially important issue now can be viewed conditioned, means that the
viewer is sensitive because of the information he got from undirected viewing.
Conditioned viewing is also used for getting information about not exactly characterized
areas of decision, for instance reading over newspaperpages that often report about
special subjects.

• informal search
In the case of informal search the information wanted is actively sought, but not in a
structured, methodical way. An example may be getting specific information respectively
information about a specific area through reading appropriate published materials.

• formal search
Characterizing for formal search is, that a pre-established structure exists, a special
methodology for instance. This scanning mode would be the most effective. But normally
it is used only if the other modes do not succeed, because environmental scanning has
to follow the rule of efficiency.

To handle environmental scanning it is useful to decompose the environment into sectors that may
have distinct influence on the organization. Duncan defined the organizations' environment as the
relevant physical and social factors outside the boundary of an organization that are taken into
consideration during organizational decision-making (Duncan 1972). Daft et. al. elaborated six
different sectors: the competition, customer, technological, regulatory, economic and sociocultural
sector (Daft et.al.1988).

3.2Conception of a Scanning System

In the following part the conception of a scanning system for a whole branch will be described like it
is outlined in figure 1. It founds on ideas of Jain for initiating environmental scanning in an
organization (Jain 1984) and on the Strategic Issue Scanning Technique developed by Murphy
(Murphy 1989).

Problems present the filtration of relevant information. In this system it is thought of different filters
to get it. The first one is a necessary step because in the case of a branch it cannot be delegated to
employees to scan possibly strategical relevant information in their special working area. A
possibility to solve this problem is to use “pre-scanned” sources, dairy publications or publications of
federations for example. There information is already filtered in aspect of its usefulness for members
of the dairy. Perhaps undirected viewed information can be gotten here. But mainly some kind of
directed scanning or informal search will be used.

This will be complemented by filtering with the help of predetermined criteria which help scanning
people to find the information in assigned publications according to a sector given to them. These
people do not have to be real experts, but they should be familiar with the branch. It will be tested
how far parts of their work perhaps could be done by computerized searching engines.

The scanned information passes another filter: experts decide about the relevancy of this information
while looking on the impact of found issues on special criteria. These criteria will be taken from the
part market attractiveness of the McKinsey Portfolio after fitting them to the branch. If it is not
possible to judge the relevancy of an issue, further information is searched formally. If it is not clear
anyhow, the issue will be monitored until it is possible to judge it.

Soft information that is provided in the EIS will be classified in groups according to their “softness”,
from industry trends over predictions to rumors (Watson et al., 1996), to help the user to judge them.
The system will also provide the possibility to get the most basic source of the information, like the
original newspaper articels for example.

Figure 1: A possible proceeding for environmental scanning

undirected directed
viewing viewing

no not clear formal

relevancy search

yes more yes

information monitoring
necessary?

no

yes
classification relevancy
not clear

no

EIS

4 Module “Supporting Strategic Planning”

Part of the information provided in the EIS is already judged by experts with regard of its underlying
impact to the dairy branch. Benchmarks for the judging are the criteria of the McKinsey Portfolio.
Therefore it is possible to use this judging as input for instruments of strategic planning. The most
obvious instrument is the Portfolio. But the system can only support the part of market attractiveness.
The part of relatively power of competition has to be filled by the user itself, only possible criteria can
be proposed.
Following the division of soft information in the above mentioned groups it is thought about the
construction for two different kinds of portfolios: one that is able to show the more probable direction
of market development, some kind of “Prediction Portfolio”, and one that shows a direction which is
more speculative, some kind of “Rumor Portfolio”. The second one could be an assisting tool for
more risky executives. Another nearby tool is the strengths/weakness analysis. It could work with the
same criteria as the axis of relatively power of competition of the McKinsey Portfolio. So it would not
be too much work to get an additional overview.

2 Conclusion

The planned conception of the information system is described in figure 1. The front picture shows
the opening screen of the system, build with the help of a special development software.

Figure 2: Diagrammatic description of the EIS

Scanning-Routines
undirected directed
viewing viewing

no not clear formal

relevancy search

Planning-Module yes more

information
necessary?
yes
monitoring

-
no

+
sification
yes
relev Information List
2. Agrarian 3. Administration
Policy of justice
2.1 results 3.1 EC justice
cabinet council 3.2 German
2.2 milk quota jusice
2.3 duty 3.3 quality
2.4 export standards
refunds
2.5 subsidies

4. Technology 5. General Things

4.1 systems 5.1 list of firms

techniques 5.2 labout market
4.2 news of 5.3 fairs
products
4.3 results of
research

A prototype, that works with the key information and the reduced environmental scanning routines
and planning module, will be presented in the internet. For the complete version the system had to be
installed at the users PC, means he needs the runtime version of the development software and the
basic system programming. Only updates will be delivered with the help of the internet to reduce the
costly time using it.
3 References.

Aguilar, F.J.: Scanning the Business Environment. The Macmillan Company, New York
1967

Auster, E., Choo, C.W.: Environmental Scanning: Acquisition and use of information by
managers. in: Annual Review of Information Science and Technology, Medford 1993

Daft, R.L., Sormunen, J., Parks, D.: Chief executive scanning, environmental charac-
teristics, and company performance: an empirical study Strategic Management Journal,
Vol.9, 1989, S. 123-139.

Duncan, R.B.: Characteristics of organizational environments and perceived environmental

uncertainty. Administrative Science Quarterly, Vol. 17, 1972, S. 313-327.

Hinterhuber, H.H.: Strategische Unternehmensführung. De Gruyter Verlag, Berlin 1996

Jain, S.J.: Environmental Scanning in U.S. Corporations. Long Range Planning, Vol.17,
1984, S. 117-128.

Murphy, J.J.: Identifying Strategic Issues. Long Range Planning, Vol.22, 1989, S. 101-105.

Spiegel von, J.: Konzeption eines Managementinformationssystems zur Bereitstellung

unternehmensexterner Informationen am Beispiel der deutschen Molkereiwirtschaft.
Verlag Shaker, Aachen 1994.

Watson; H.J., O`Hara, M.T.; Harp, C.G.; Kelly, G.G.: Including soft information in EISs.
Information Systems Management, Summer 1996, P. 66-77.