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EXECUTIVE SUPPORT SYSTEM: AN

INTEGRAL PART OF SUCCESSFUL


ORGANIZATIONS

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EXECUTIVE SUMMARY

Executive Support Systems have become valuable tools for business organizations. These
systems compare, highlight and analyze data and present them in a easy to use format. The
companies which have implemented the ESS have found it easy to measure their Key
Performance Indicators and to monitor the balanced scorecard framework.

The report highlights the various areas in which the ESS plays a key role like minimizing the
transaction cost and by providing tools for managers to reduce time in decision making and by
flattening the organization by removing many layers of management.

The report also takes into consideration two studies done on the effective use and
implementation of ESS.

In the end a few recommendations are provided which need to be taken into account before
implementing an ESS in an organization.

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Table of Contents
INTRODUCTION ............................................................................................................................................. 4
DISCUSSION................................................................................................................................................... 5
ESS and the Balanced Scorecard Framework............................................................................................ 6
Key Elements of an Organization in relation to ESS implementation:...................................................... 6
People: .................................................................................................................................................. 6
Business Processes:................................................................................................................................... 8
VALUE OF ESS ............................................................................................................................................ 8
Research on ESS ........................................................................................................................................ 8
RECOMMENDATIONS: .............................................................................................................................. 9
CONCLUSION:................................................................................................................................................ 9
REFRENCES .................................................................................................................................................. 10

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INTRODUCTION

Executive Support Systems have come to play an important role in an organization. Many
companies have adopted the ESS as a reporting tool that helps to transform the company data
into useful summarized reports. These reports are generally used by executive level managers
for quick access to reports coming from all company levels and departments such as finance,
HR, sales etc.

In addition to providing summarized reports, the ESS also analyzes the data for easy decision-
making. This analysis is useful to executives as it provides quick reference to statistics and
numbers needed for decision-making. (Executive Support System, 2004).

The Saudi-German Hospital is considered the largest private healthcare company in the MENA
(Middle East and North Africa) region. The group is a multi-functional healthcare company
which is considered a healthcare developer and not just an operator. It constructs its own
hospitals and finances its developments with the support of local governments and
development banks.

Managing the various departments and monitoring patient information and keeping the various
departments in contact with each other is a huge task. With the help of the ESS, executives,
managers and doctors at the hospital can:

 Summary reports and detailed information across all departments


 Check historical trended information
 Get standardized report on patients
 Compare data and analyze data historically

The Executive Support System used in the Saudi German Hospital in Jeddah, offers the hospital
executives and department managers a powerful management tool to gather and analyze
information throughout the hospital’s network. It products user-defined reports
instantaneously enabling decision makers at all levels to view integrated financial, clinical and
statistical information from all departments, facilities and corporations.

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DISCUSSION

Executive support systems (ESS) help senior management address strategic issues and long-
term trends, both in the firm and in the external environment. ESS addresses nonroutine
decisions requiring judgment, evaluation, and insight because there is no agreed-on procedure
for arriving at a solution. (Kenneth C. Loudon, 2010).

An ESS is a computerized system that provides executives with easy access to internal and
external information relevant to their critical success factors. (Hugh J. Watson, 2006) The ESS
are tailored to executives information needs, extract, filter, compress and track critical data;
provide on-line status access, trend analysis, exception reporting etc. The ESS also access and
integrate a broad range of internal and external data.

ESS are spreading rapidly in organizations. (Hugh J. Watson, 2006). For example, the CEO of
Leiner Health Products, the largest manufacturer of private-label vitamins and supplements in
the United States, has an ESS that provides on his desktop a minute-to-minute view of the
firm’s financial performance as measured by working capital, account receivable, accounts
payable, cash flow, and inventory. The information is presented in the form of a digital
dashboard, which displays on a single screen graphs and charts of key performance indicators
for managing a company. (Kenneth C. Loudon, 2010)

ESS Workstation/
Portal
 Menus
 Graphics
 Communications
 Digital Dashboards

Internal Data External Data


ESS Workstation/
ESS Workstation/
 TPS/MIS data  Dow Jones Portal
Portal
 Financial Data  Internet News
 Office Systems feeds
 Modeling/analysis  Standard &
Poor’s

 Menus  Menus
 Graphs  Graphs
 Communications 5  Communications
 Digital Dashboards  Digital Dashboards
Figure 1: Model of an Executive Support System

Digital Dashboards are becoming an increasingly popular feature of ESS. As shown in the above
diagram, ESS incorporates data from both internal as well as external sources like the World
Wide Web. Thus a web-interface is useful in the presentation of data.

The Saudi German Hospital also uses a similar ESS where doctors and hospital managers can
follow and analyze data which they use on a daily basis.

ESS and the Balanced Scorecard Framework

To understand the important information needed by a firm’s executives is called the balanced
scorecard method. The balance scorecard is a framework for operationalizing a firm’s strategic
plan by focusing on measurable outcomes on four dimensions of firm performance: financial,
business process, customer and learning and growth. Performance on each dimension is
measured using key performance indicators (KPIs).The balanced scorecard framework is
thought to be “balanced” because it causes managers to focus on more than just financial
performance. Once these systems are implemented they are typically referred to as “executive
support systems”. (Kenneth C. Loudon, 2010)

ESS has the ability to drill down data which is useful not only to senior executives but also to
employees at lower levels of the firm who need to analyze data.

Key Elements of an Organization in relation to ESS implementation:

People:

The use of networks and systems such as the ESS, helps firms to lower the cost of market
participation (Transaction costs), making it worthwhile for firms to contract with external
suppliers instead of using internal sources. As a result, firms can reduce the number of
employees because it is far less expensive to outsource work to a competitive marketplace
rather than hire employees.

IT reduces both agency and transaction costs for firms and thus with an investment in an ESS,
we can expect to see revenue per employee increase over time. With the help of ESS, the
managers receive much more accurate information on time, they become much faster at

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making decisions, so fewer managers are required. Management costs decline as a percentage
of revenues, and the hierarchy becomes much more efficient.

A traditional hierarchical organization with many levels of management

An organization that has been “flattened” by removing layers of management

Figure 2: Flattening Organizations

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Business Processes:

All organizations, including business firms, become very efficient over time because individuals
in the firm develop routines for producing goods and services. A business firm is in turn is a
collection of business processes. With the use of ESS, the business processes become more and
more efficient. The IT systems reduce transaction costs.

VALUE OF ESS

ESS has the flexibility and the ability to analyze, compare and highlight trends. The easy use of
graphics enables the user to look at more data in less time with greater clarity and insight than
paper-based systems. Executives are using ESS to monitor key performance indicators for the
entire firm and to measure firm performance against changes in the external environment.
(Kenneth C. Loudon, 2010)

ESS systems are business problem based and linked to visions of change. Well-designed ESS
dramatically improves management performance and increase upper management’s span of
control. ESS is an invaluable tool in times of making critical decisions by providing relevant and
fact based data in a easy to understand format.

ESS based on enterprise-wide data potentially increase management centralization, enabling


senior executives to monitor the performance of subordinates across the company and to take
appropriate action when conditions change. (Kenneth C. Loudon, 2010)

Research on ESS

The implementation of Executive Support Systems by Eliot Levinson, discusses the role of ESS as
an effective tool for personal management and communication. It also highlights the use of ESS
as a decision support tool based on a business problem. The research also discusses the five key
elements most affective of the development and utilization of ESS. (Levinson, 2004)

Another research by A. Kaniclides and C. Kimble from the University of York, England provides A
Framework for the Development and Use of Executive Information Systems. The research
discusses the framework to classify the various components involved in development and use
and highlights the relations between them.

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RECOMMENDATIONS:

Companies need to be competitive and competition means faster and better decision making.
The use of ESS is a company in large companies is common place. But the following
recommendations need to be taken into consideration before implementing an ESS:

i) The high cost of development of ESS should be taken into consideration before
implementing it.
ii) The ability of the employees to effectively use the ESS should be taken into
consideration.
iii) The ability of the ESS to provide relevant information.

CONCLUSION:

The ESS has become an integral part of a company’s management information system. The
companies which have implemented the system have found it to be effective as a tool for
providing relevant information for decision making and providing a framework for measuring
KPIs.

ESS has also reduced the transaction costs involved in business as well as increasing the return
per employee in an organization by reducing the number of employees needed for a particular
task. Several layers of management have been removed with the help of ESS.

It has provided companies with a means to be more competitive as well as guarantee high ROI
for the stakeholders.

But as many researchers have found out that there are certain drawbacks if the ESS is not
utilized fully or not utilized properly. The ROI on the use of ESS can be guaranteed if the users
know how and when to use the system. Research has also focused on the high investment
required for implementing the ESS, thus a careful analysis is necessary before implementing ESS
in an organization.

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REFRENCES

Executive Support System. (2004, October 25). Retrieved April 2010, from Webopedia:
http://www.webopedia.com/TERM/E/Executive_Support_System.html

Hugh J. Watson, R. R. (2006). A manager's guide to executive support systems. Business Horizons , pp.
50-78.

Kenneth C. Loudon, J. P. (2010). Management Information Systems, Managing the Digital Firm. New
Jersey: Prentice Hall.

Levinson, E. (2004). The Implementation of Executive Support Systems. Cambridge: Sloan School Of
Management.

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