CONCEPTION OF AN EXECUTIVE INFORMATION SYSTEM THAT PROVIDES EXTERNAL INFORMATION FOR THE GERMAN DAIRY

Hauke Mller, 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, 1518 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 1.1 supply market 1.2 market regulations 1.3 suppliers/ customers 1.4 trading area

2. Agrarian Policy 2.1 Results of cabinet council 2.2 milk quota 2.3 duty 2.4 export refunds 2.5 subsidies

3. Administration of Justice 3.1 EC-justice 3.2 German justice 3.3 quality standards

4. Technology 4.1 systems technique 4.2 news of products 4.3 results of research

5. General Things 5.1 list of firms 5.2 labour market 5.4 fairs

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 companys outside environment, the knowledge of which would assist top management in its task of charting the companys 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 viewing

directed viewing

no

not clear

relevancy

formal search

yes

more information necessary?

no yes

yes

monitoring

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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 viewing directed viewing

no

not clear

relevancy

formal search

Planning-Module
+

yes

more information necessary?

no yes

yes

monitoring

sification

relev

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

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 characteristics, 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 Unternehmensfhrung. 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 unternehmensexterner Informationen Verlag Shaker, Aachen 1994. Managementinformationssystems am Beispiel der deutschen zur Bereitstellung Molkereiwirtschaft.

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.