ELSEVIER Decision Support Systems 14 (1995) 89-103 EIS adoption, use, and impact: the executive perspective Joyce J. Elam **', Dorothy G. Leidner ° * College of Business, Florida International University Miami, Florida 33199, USA * Hankamer School of Business, Baylor University Waco, Texas 76709, USA Executive decision making continues to gain in importance as competitive situations increase in the fast-paced, global economy facing organizations today. Until recently, however, few executives have had easy access to the timely, complete, and accurate information they need for strategic decision making. The emergence of Executive Information Systems (EIS) provides the opportunity to change this situation. This research examines the role and adoption, use, formation by senior executives in three different organizations order to gain some insights on the and impact of EIS. The results of this examination are presented as a series of testable propositions. Keywords: Executive information systems; EIS; Decision making 1. Introduction Management information systems have be- come a central component in organizations to meet the information needs of management, and decision support systems have provided tremen- dous analytic tools for middle management. How- ever, such systems have tended not to be used by upper executives [24,26]. A primary reason in- cludes these systems’ inability to provide timely, complete, accurate and readable data of the type executives need for decision making [52]. This partially explains the finding that upper managers frequently rely on lower level managers for the identification of problems [6] and the finding that responding author The authors contributed equally to this paper. computers did not emerge as a key medium in executive information gathering (24). Thus, the impact of information technology on executive decision making processes has been negligible. However, the emergence of computer-based systems that are specifically developed for execu- e decision makers enables an examination of the impact of information technology on execu- tive decision making processes. These systems, hereafter referred to as Executive Information Systems (EIS), are defined as computer-based information systems designed to provide a senior manager access to information relevant to his or her management activities. An EIS can be used as an office support system to improve communi: cation and personal efficiency and/or as a moni toring system to improve decision making, plan- ning, and control [35,41]. Early EIS research ef- forts have consisted of descriptions of current 10167-9236 /95 /809.50 © 1995 Elsevier Science B.V. All rights reserved SSDI0167-9236(94)00004-Coo» JJ. Elam, DG. Leidner / Decision Support Systems 14 (1995) 89-103 implementations in organizations (2,3,40,41] stud- ies of why EIS are adopted [47], benefits of EIS use [5,47], and design approaches [8,32,46,48] Much of the prior research has focused on EIS fom the information systems or CIO perspective and has included only those in organizations with an EIS, The research reported in this paper pro- vides a business executive perspective on issues involved in the adoption, use, and impact of EIS. ‘There have been four suggested frameworks for researching EIS based on executive manage- ment activities: EIS as a decision making tool, EIS as a scanning tool, EIS as an internal moni- toring tool, and EIS as a communication tool [8] This study chose to use a decision making frame- work for examining EIS adoption, use, and im- Fact. Given that organizations need to make faster decisions, and need to have better information acquisition and distribution procedures [7,14], an information system designed to meet the needs of executives should address their decision making needs, It has been suggested that a decision mak- ing framework for researching EIS should pro- vide new insights into how EIS provide value [41]. Furthermore, 95% of the respondents in a recent survey [47] indicated that their firm assessed po- tential benefits of their EIS through intuitive feelings about improved decision making. Using this decision making framework, data was collected from senior executives at three highly competitive Texas banks who used differ- ent IS approaches to fulfill their information needs. This paper examines why there is wide variation in the types of information systems used to fulfill the information needs of senior execu- tives in the same industry facing similar external Pressures. A set of propositions induced from this field investigation concerning EIS adoption and use and its potential impacts on executive deci- sion making are then given. 2, Research questions Significant external pressures have been shown, to influence the adoption of EIS in organizations [47]. These external pressures include increased competition, increasing government regulations, and the need to be proactive in dealing with the environment. As a result of these external pres sures, organizations recognize the need for new, better, and more timely information, the need for more efficient reporting systems, and the need for rapid status updates. EIS are adopted to meet these needs. Case studies of EIS have presented similar motivations for EIS adoption. A reason given for Xerox’s adoption of EIS was a business environ- ment characterized by rapidly changing market conditions and shorter product life cycles (both indicative of a highly competitive environment) [40]. Phillip 66's turbulent environment char: ized by attempted takeovers was a primary reason behind the adoption of their EIS [3]. The pre dent of a major supplier of EIS suggests that the desire of executives to be in control amid turbu- lent market environments is the primary reason that many of his clients have shown interest in EIS [18]. While the presence of significant external pressures may be a necessary condition for an organization to adopt an EIS, it is clearly not a sufficient reason since not all organizations that face the same external pressures have adopted EIS. A recent study identified twenty reasons why EIS initiatives fail [20]. Several of these reasons can also explain why an EIS is never adopted in the first place. These include: lack of sponsor- ship, the perception that EIS cannot deliver im- portant information, uncommitted management, and a corporate culture that is not ready for EIS. Other reasons that have been proposed for ex- plaining the non-adoption of EIS include the lack of executive computer-literacy [47] and the ease to which executives can obtain needed informa- tion through staff personnel (24,41]. In this study, we seek to provide additional insights into the following question: Given organizations facing similar external environmental pressures, why have some of these organizations adopted EIS and others not adopted EIS? Rapid decision making has become more im- portant as competitive situations have increased and faster communication makes the time span of implementing important changes criticalJJ. Elam, D.G. Leidner / Decision Support Systems 14 (1995) 89-103 1 (7,14,15,21], While the time frame of decision making has received little study in the past [37], the presence of highly uncertain, dynamic or “high-velocity” environments will make speed of. decision making a more important topic to exam- ine. Recent studies have found that effective firms in such environments make strategic decisions quickly [7,14]. The availability of real-time infor- mation was seen as an important factor in reduc- ing the time frame for making decisions. It has been proposed that the use of advanced informa- tion technologies will lead to more rapid identifi- cation of problems and opportunities and will reduce the time required to make a decision [21]. Because EIS can compress time, executives gain time in which to make decisions, obtain addi- tional detailed information when needed, con- sider more thorough analysis of the situation, review more possible courses of action, and make decision at an earlier date [34]. Initial research has indicated that executives who use EIS are able to take action faster [41,47] Another way in which the use of an EIS can effect executive decision behaviour is in terms of who participates in decision making activities. Advanced information technologies which allow managers to obtain information quickly and accu- rately may change the role that subordinates have traditionally played in decision making activities [21]. In fact, many executive EIS users have been pleased with their EIS because it lowered the extent of their reliance on subordinates for prob- Jem identification and analysis [41]. Exception reporting and trend analysis help in problem de- tection and may cause executives to rely less on subordinates to initiate problems. Similarly, drill-down analysis and graphical representation of relationships among the data may cause execu- tives to rely less on subordinates for problem analysis. In this study, we examine the impact of EIS on executive decision making by comparing the deci- sion making behaviour of executives who use and do not use EIS. In particular, we address the following question: How does decision making by executives using an EIS compare to decision mak- ing by executives not using an EIS in terms of the time required to recognize problems and to make decisions and in terms of subordinate partici tion in decision making? Also well-documented in the current EIS liter- ature is the importance of executive commitment to the EIS (2,3,40,41], Such commitment allows an EIS to be developed to meet senior executives’ s information needs. In this study, we are inter- ested in examining how organizations which do not have this executive commitment to an EIS meet these same information needs. The final research question that we address is as follows: In organizations that choose not to adopt an EIS, how are existing information systems altered to meet the new information needs of senior execu- tives that emerge when external or internal pres- sures demand changes on an organization? In order to answer the research questions out- lined above, we compared senior executive infor- mation usage and decision making in three orga- nizations: one where the CEO uses an EIS, one where a planned EIS implementation was halted, and one where there exists a well-established paper system with no past or future plans for an EIS. 3. Methodology 3.1. Research design An objective of this research was to develop a set of propositions concerning FIS adoption, use, and impact that could be empirically tested. A case study approach was chosen as the research strategy. The CEO and several senior executives at three different banks were interviewed using a set of open-ended, semi-structured questions. In case studies, results are generalizable to theoreti- cal propositions rather than to populations or universes [51] and are an important way to de- velop novel, testable and valid theories particu- larly in new topic areas [13]. 3.2. Data gathering In case studies, the appropriate selection of a population serves to control extraneous variance and to define the generalizability of the results9% J. Elam, D.G, Leidner / Decision Support Systems 14 (1995) 89-103 [13]. Thus, to prevent results confounded by envi- ronmental factors, by industry maturity factors, or by grossly varying competitive situations, we opted to choose three highly competitive organizations within a single industry. The industry chosen — financial services - was chosen because it was identified to have widespread incorporation of advanced decision making technologies, is highly competitive, and has recently faced uncertainties in the external environment. Hence, the ability to make rapid responses to externally driven change was expected to be important to the upper man- agers in this industry and the availability of reli- able, current information critical to strategic deci sion making. Upper level executives across three banks were interviewed. At Bank Alpha, the CEO, the CIO, and a senior vice president, as well as the COO, CAO (Chief Accounting Officer), and the direc- tor of marketing research at the eastern head- quarters (henceforth referred to as Bank Alpha- National) were interviewed. The executives at the Bank Alpha met frequently with the executives at Bank Alpha-National. At Bank Beta, the CEO, the senior vice president of IS, a senior vice president of finance, and a president of a large branch bank were interviewed. At Bank Delta, the CEO, the executive vice president of strate panning who worked closely with the CEO, and two vice presidents of strategic planning were interviewed. The interviews ranged from two to five hours. They were conducted during the spring 0° 1990, fall of 1990, and spring of 1991. Each interview was conducted by two researchers - ‘one asking questions; the other, recording the responses, Table 1 summarizes the interviewees by bank and title, 3.3. Data analysis and presentation Within eight hours after an interview had been conducted, the researcher responsible for note- teking transcribed the hand-written notes into readable text in exactly the question-answer se- quence in which the questions were addressed during the interview and added personal impres sions in italics. Once all the interviews were com- pleted, the researcher did multiple cross-com- Table 1 Interviews Bank Alpha CEO cio Senior vice president Bank Alpha-national CFO cao Director of marketing research Bank Beta CEO Senior vice president, IS Senior vice president, finance President, branch Bank Delta CEO Executive vice president, strategic planning Vice president, strategy planning (2) parisons in which the interview data was com- pared/contrasted according to the major ques- tions to be addressed. The data was then an: lyzed a final time for unexpected insights - inter- esting questions which should form the basis of future research, Background of organizations studied 4.1, The industry environment ‘Texas banks faced major problems in the last half of the 1980s triggered by the unanticipated drop in oil prices in 1986, Loan quality reached record lows; outstanding debts, record highs. Well-established banks in Texas soon found themselves being bought by Eastern banks. The internal changes brought about by restructurings, recapitalizations, and layoffs, common in Texas banks during this period, continued well into the 1990's. Such dramatic shifts in the environment — both internal and external — strain an organi tion’s information structure which must quickly adjust to the new information needs of senior executives as they attempt to cope with environ- mental changes.Jl. Elam, D.G. Leiner / Decision Suppon Systems 14 (1995) 89-103 93 4.2. Company backgrounds Bank Alpha-National bought a struggling Texas Bank ~ Zeta in 1988 and renamed it Bank Alpha. Bank Zeta had in 1985 bought a Bank Gamma, who had struggled unsuccessfully to move from unit to branch banking in the early 1980s. Thus, the current Bank Alpha had experienced three name changes and three management changes during a six year period. Bank Alpha kept only one top executive from Zeta. The other execu- tives of Alpha were brought from Alpha-Na- tional. Bank Alpha was totally autonomous from the Alpha-National for its first year but then began to operationally merge with the Alpha-Na- tional. Bank Beta was bought by a northeast bank in 1987 but has remained very autonomous; the name remained the same as did the managers Beta just recently named a new CEO, a man who had been with Beta for 20 years. Bank Delta recently underwent recapitalization and restruc- turing and brought in a CEO from outside the bank. In addition to these organizational changes, each of the banks has been undergoing major changes in its information systems over the past year, in part related to the takeovers and in part related to the new CEOs. Bank Alpha is working with IT consultants to restructure the underlying IT architecture. Bank Beta is making incremental changes in-house as necessity dictates. Bank Delta has chosen outsourcing and an EIS. 4.3. Executive decision making and information system use ‘There was a clear distinction in each of the banks between routine financial decisions, which were well supported by advanced decision sup- port systems used by staff analysts, and non- routine strategic decisions which were largely un- supported by computer-based information sys- tems. This research was interested in the non- routine strategic decisions of executives. At Bank Alpha, non-routine decisions were examined by committees of top executives. How- ever, the CEO typically made most of these deci- sions himself, although he listened to the sugges tions of the committee. Several recent strategic decisions, including the decision to put in an extraordinarily high bid for a failing bank in the region, were made entirely by the CEO with little consultation with other top managers and without extensive analysis. According to the CEO, such decisions were made based on his feel for the business. The CEO at Bank Alpha gets several monthly operational reports but finds them more “inter- esting” than “actionable”. For his decisions, the analytical work is done by levels below him and he rarely requests more information. The CEO rarely requests special reports, relying instead on his sense of the business to make these decisions. Decisions on expansion ~ both in terms of buying troubled savings and loan institutions and ex- panding branches ~ were only indirectly affected by any information provided by a computer-based information system. According to the CEO, in- vestments in IT should be made where it directly impacts the way in which customers do business with the bank rather than for management sup- port. In fact, a project to develop an EIS was halted when no clear payoff from the system was seen. Non-routine decisions at Bank Beta are much more consensually made than those at Bank Al- pha. Committees of top managers assigned to study a particular strategic problem are very in- volved in the process. Unlike the CEO at Bank Alpha, the CEO at Bank Beta frequently asks for ad hoc reports and gets involved with analysing alternatives. The committee at Bank Beta votes to determine the final decision; the CEO’s vote counts twice, The CEO very rarely made deci- sions without a committee vote. At Bank Beta, the primary senior management information tool is a Briefing Book distributed the tenth of cach month. The Briefing Book contains the previous month's performance and operating data on a bank-by-bank basis as well as a more detailed report of cach specific bank. A company-wide report is also given to the top managers at the corporate headquarters. The word “information” seemed to be automatically associated with “Briefing Book” by the four indi- viduals interviewed at Bank Beta. The Briefing Book is used for financial planning and control“4 JJ. Elam, D.G. Leidner / Decision Support Systems 14 (1995) 89-103 and also as an early warning system. The briefing book allows managers to look at the maturity structure in investment banking and to keep man- agers focused on targets. The CEO at Bank Beta also uses the reports to evaluate the performance of the whole organization to determine where the bank is falling short from month to month and to determine individual compensation: Information on deposits at branch banks are available on-line but such on-line access from the CEO's office is not used. However, the CEO does ‘requently use a personal computer on his desk chat is tied into an investment lending system in order to access client records when talking to an mportant client on the phone. There is also a special terminal connected to an external system Table 2 Company backgrounds that provides up-to-date information on money market rates and interest rates. Like Bank Alpha, the non-routine strategic decisions at Bank Delta are more autocratically than consensually made. A recent non-routine decision at Bank Delta was the decision to de- velop a new retail product. The decision was made by the CEO based on “30 years of banking experience and gut feel.” Committee meetings and analysis play only a limited role in strategic decisions. Rather, the CEO personally analyzes alternatives and makes decisions. ‘Only at Bank Delta was there an EIS in use; it is used religiously by the CEO. The CEO at Bank Delta spent most of his time outside the bank raising capital, talking to security analysts, and Bank Alpha Bank Beta Bank Delta Size 11 banks, 89 branches Bi banks, Wbranches __—_—‘S banks, 74 branches Employees 5083, 8300 32 Assets (in Millions) 1988, $25,574 $11,993 $6,297 1989 $33,748 $1977 $7,623 1990 332,729 $9,379 $6,893 Income before extraordinary items (in thousands) 1988, ($227,731) $64,348, ($13,192) 1989 $308,833 ($15,319) $61,682 1990 $334,202, $70,040 ($137,259), Pre-restructuring structure Decision making Bank Zeta Is Two entirely different systems-one for customers of Gamma, one for ‘customers of Zeta Post-restructuring structure Decision making Zeta becomes Alpha One former Zeta officer remained on top team 21 banks; 70 branches Banks act autonomously Well-established reports, Beta bought, remains Beta ‘The 21 banks still autonomous 20 legal stand-alone autonomous fashion 8 separate loan systems 8 data centres Restructuring and recapitalization Move toward centralization Interact heavily with Beta rarely interacts and control national headquarters with the Eastern bank that bought Beta CEO ‘Came from national New CEO, from within New CEO who hheadquarters(1988) (1989) took over Delta (1988) Is Major changes on-going Revising information Outsources. Developed IS primarily aids middle in reports but no new EIS ‘managers and not upper implemented systems or major Souree: Financial Reports, Interviews, Sheshunoff Bank Quarterly, December 1990.J. Elam, D.G. Leiner / Decision Support Systems 14 (1995) 89-103 95 marketing the bank to large corporate clients. When he was at the bank, which most often was on weekends and nights, he needed to be able to find out what was going on. For him the EIS was used as a proxy for physically being present at the bank. The EIS in place at Bank Delta is a moni- toring system with no querying or modelling ca- pabilities and thus, is not substantially different than the hard-copy reports of the other two banks except that the information is available daily. In fact, the CEO at Alpha did not consider Delta’s EIS as a “true EIS” because it was laid on top of existing systems from which it extracted data rather than being centred around a central repos- itory of data specifically created and maintained for the EIS. The CEO at Bank Delta recognized the current limitations of the EIS but saw it as the first step toward instituting a new manage- ment system within the bank. The reasons for Bank Delta's decision to adopt an EIS include: (1) the CEO was paper adverse (2) the CEO wanted daily information related to performance, (3) the CEO wanted to demon- strate that after a takeover it does not take long for him to get his “arms around the company,” and (4) the CEO wanted to educate managers internally on what was important to him. The first season involves the CEO's personal preference for one information source over another [24]; the second deals with the CEO's time orientation, and the latter two involve the use of IS as a signal [16], Bank Delta’s CEO has a formal office, a workroom office (where the system resides), a connection from his home, and a connection in the board room (no other executives have home access to the EIS). Although the recent decision to develop a new retail product was not influ- enced by the EIS, the EIS is used by the CEO to tell by region how this product is doing, Table 2 shows the company structures and nature of information systems in place before and after restructuring. 5. Analysis One of the objectives of this study was to address the following question: Given organiza- tions facing similar external pressures, why have some of these organizations adopted EIS and others not adopted EIS? This study uncovered a factor ~ decision style — that has not been identi- fied in the existing EIS research literature as a relevant factor to consider in explaining EIS adoption decisions. ‘At each of the banks, the interviews revealed that the CEO desired information systems which he felt “fit” with his decision style — where deci- sion style appeared to be a combination of the manner in which decisions were made as well as a management philosophy concerning the impor- tance of data for managerial decision making. The CEO at Bank Alpha initially agreed to have an EIS developed at the suggestion of consul- tants. This was due in large part to the fact that an EIS was being developed for Bank Alpha-Na- tional at the same time. The CEO became more and more uncomfortable as the scope and cost of the project escalated. The CEO halted the pro- ject, saying that the bank was “interested in oper- ating efficiencies in which EIS plays no role.” In fact, the CEO was quite pleased that the perfor- mance of his division had improved by several millions of dollars per month over the last year without the detailed information that Bank Al- pha-National had at its disposal. Another execu- tive stated that “important decisions are based on long term business relationships.” The EIS was therefore seen as being incompatible with the decision style of the executives at Bank Alpha. The new CEO at Bank Beta stated that the Briefing Book “reflected [the previous CEO's] management objective.” He went on to explain that he looked at certain performance and prof- itability measures differently than the previous CEO and therefore found it necessary to make rather extensive changes. However, the decision styles of the current and previous CEO were very similar. Therefore, the Briefing Book persisted as an important information system and all changes occurred within this system. The Briefing Book - while needing changes to fit with this new CEO's style ~ still seemed to him better than another alternative - EIS - which he said would be “incompatible with my management style.” His feeling was that an EIS was geared toward an96 JJ, Elam, D.G. Leider / Decision Support Systems 14 (1995) 89-103, executive with an autonomous decision style who monitored the decision making of others in the organization; his style was one of relying on the other top managers and placing a great deal of confidence in the decision making of his subordi- nates, At Bank Delta, changes were made to the IT to make it fit with the CEO's decision style. When the CEO first arrived here, there were eight loan systems (one per region) as well as eight data centres. He wanted a centralized, standardized environment and he chose outsourc- ing for both data centre operations and systems development to deliver this environment as quickly as possible. But more importantly, he wanted to build a culture where decisions were based on facts not intuition. He described his management philosophy in the following way: “I believe in setting a vision of the future and man- aging toward that. This can only be accomplished by having data to guide the way. The organization must strive to develop an integrated view of its operations that can be used by different levels of management to make better and more informed decisions. An EIS is critical to providing this integrated view.” When asked to describe his managerial style, he stated: “My style is based on intelligence; not inspiration.” The CEO at Bank Delta very much saw a compatibility between his decision style and the EIS. Decision style and its relationship to strategic decision making has long been of interest to management researchers. Research has shown chat managers do have different styles 11,22,25,29,36,42,43], and these styles affect the way they conduct their day-to-day managerial ac- ivities, such as problem formulation [9,33], prob- jem solving [38] and information processing [23] t is, therefore, not surprising that an executive's decision to adopt an EIS might be related to his or her decision style. Decision style is formally defined as the way in which one perceives and comprehends stimuli followed by the way in which one chooses to respond [43]. Two approaches have been used to measure decision style. One approach is based on a set of decision functions — sensing, intuiting, thinking, and feeling [25] — that in different com- binations, identify what is called decision making styles [38]. Traditionally, researchers have used the Myer-Briggs Type Indicator to measure these functions. Another approach uses a 20-question Decision Style Inventory to classify people according to four basic styles: directive, analytical, conceptual, and behavioral [43]. Individuals with a directive style are action oriented and decisive, and look for speed, efficiency, and results. They acquire information through short reports with limited data and evaluate information using intuition, experiences, or rules. The individual who is ana- lytical employs a logical approach to tasks and problems. Every aspect of a given problem is considered by careful analysis, using a large num- ber of data. Information is evaluated through abstract thinking using as much data as possible Conceptual executives focus on people and the broad aspects of a problem. Such individuals ac- quire information using intuition and discussion with others and evaluate information by integrat- ing diverse cues to reach conclusions and by applying judgment. The behavioral style is the one that is most people-oriented. Executives with a behavioral style focus on people and social aspects of the work situation. Information is ac- quired by sensing, listening, and interacting with others and evaluated using feelings and instincts. ‘We used the decision style inventory as a basis for assessing the basic decision style of the three executives in our study since it is more manageri- ally oriented than the Myer-Briggs Type Indic tor. The DSI has been used on over 10,000 indi- viduals and has been thoroughly validated [43]. Studies have shown a highly significant relation- ship between the DSI and the Myer-Briggs Type Indicator [10,12,31]; that is, they are conceptually and empirically consistent. Our analysis indicated that executives who plan and analyze carefully and focus on facts and figures are more likely to embrace an EIS than executives who use qualitative and subjective formation for decision making. The interviews with executives from Bank Alpha’s top manage- ment team revealed a preference for a concep- tual/behavioral decision style with the CEO making the final decision. Bank Beta’s was also aJJ. Elam, D.G, Leidner / Decision Support Systems 14 (1995) 89-103 ” conceptual/ behavioral style although the final decision was made consensually. The directive / analytic decision style of Bank Delta was comple- mented by the EIS. It has been suggested that such a decision style may be incompatible with the demands of many top executive positions and that few individuals with this style may occupy top management slots [33]. If so, this would ex- plain the low incidence of EIS that is currently observed in practice. Research has found that the accessibility of information is more important than its quality in predicting use (39). However, our interviews sug- gest that information sources are not developed that do not support the the dominant decision style of senior executives. Information sources which are perceived as being contrary to this style will not be used, regardless of their accessibility and accuracy. Pethaps more significantly, those sources which are perceived to fit well are devel- oped, used, and made more accessible. An IS must fit with an organization's structure [28]; this research suggests that an IS for upper manage- ment must fit with their decision styles as well. This discussion leads to the following propos’ tion: Proposition 1. Executives whose decision styles are analytical or directive will adopt and use EIS to a greater extent than executives whose decision styles are conceptual or behavioral. Clearly, executives will not adopt EIS if they see no value in doing so. As mentioned eartic the ability to speed up both problem identific: tion and decision making is a major benefit of using a EIS. However, if an organization does not perceive a need for this ability, it is likely that the EIS will have little perceived value. This was confirmed in this study. The CEOs who saw no benefits to adopting EIS technology did not place as great an emphasis on time as the CEO who brought an EIS into his bank. The CEO from Bank Alpha stated that the benefits of informa- tion on a timely basis at upper levels is “much over-rated. Such information has no impact on selling and cross-selling, the bread and butter of the bank.” Furthermore, he stated that the bank needs “to sell rather than needing more data.” At Bank Beta, timing is important but secondary to cost-effectiveness. Information is delivered ac- cording to what is deemed cost-effective. In fact, monthly indicators are considered too frequent for some smaller banks because the cost of ob- taining these indicators is greater than the value gained by having them. The CEO from Bank Beta himself claimed to “happy with the timing” of the information he received from the monthly Briefing Book. In contrast, time is a key issue at the bank using an EIS (Bank Delta). Evinced in the emphasis on daily information, the CEO us- ing the EIS felt a greater time pressure in deci- sion making than the two CEOs not using EIS. Decision makers react to time pressure by using less information and fewer communication channels and by having less interaction than they would under nonthreatening conditions [19]. Ex- ccutives feeling such pressure would desire a few trusted sources of information. An EIS has as a goal the bringing together of an executive's im- portant sources of information into a single source. A successful system should provide the executive the necessary real-time information which he needs for decision making under time pressure. The EIS would thus become a trusted source of information under time pressure, as occurred at Bank Delta. It is therefore proposed that: Proposition 2. Executives perceiving time pres- sure to make decisions quickly will adopt and use EIS to a greater extent than executives not per- ceiving time pressure. The second research question involved a com- parison of the decision making behaviour of exec- utives who use and do not use EIS. In particular, we addressed the following question: How does decision making by executives using an EIS com- pare to decision making by executives not using an EIS in terms of the time required to recognize problems and to make decisions and in terms of subordinate participation in decision making? In each of the banks the information made available by customer-based information systems was used by the CEO in order to keep his under-98 JJ. Elam, D.G. Leidner / Decision Support Systems 14 (1995) 89-103 ‘anding of the bank current, to satisfy “curiosity”, to keep managers focused on targets, to keep managers focused on what is important, and/or to serve as an early warning system. The use of information at the top management level at all three banks - whether provided by paper reports or EIS — was primarily focused on the problem identification stage of decision making (there was no evidence in any of the banks of senior execu- tives performing analysis themselves using infor- mation technology). However, there appears to be a difference in problem identification ap- proaches between the bank using an EIS and the two relying on monthly paper reports. ‘The CEO at Bank Alpha who viewed reports as interesting as opposed to actionable relied mote on subordinates to initiate problems while he scanned the environment for “opportunities While the CEO at Bank Beta relied on the monthly Briefing Books primarily for financial planning and control, he also used the reports as an early warning system; however, any problems revealed in the monthly reports were generally known well in advance of the actual report by the division responsible for the problem so that cor- rective action was already being taken before the CEO had the Briefing Book for the month. Thus, subordinates largely identified problems and the CEO questioned them about actions they were taking to improve performance when he noticed in his reports that performance of a division did not match targets. On the contrary, the CEO from Bank Delta used the EIS to identify potential problems and to increase the speed of problem identification. Here, the CEO began identifying problems him- self by looking at the daily data and then ques- tioning those below him whereas the CEOs re- ceiving monthly information felt that little was actually revealed by the reports as far as major problems. The CEO at Bank Delta used the EIS to help establish for himself whether plans put in place were going forward as expected. When they were not, staff and line managers were convened to address the problems that were identified. Thus, the timing of the information seems to be related to problem identification and to influence which level in the organization exhibits primary responsibility for the identification of problems. ‘The closer the information accessed by top man- agement is to real-time, the greater the propen- sity for problems to be identified at the top level. The problem identification phase is the foun- dation for the rest of the decision process [11,50] Experts originate (pose the initial problem) only a small proportion of problems but have substantial influence on decisions regarding means and exe- cution on a high proportion of identified prob- lems [49]. Similarly, although upper levels en- joyed considerable independence and discretion upwards, they rely heavily on subordinates to bring problems to their attention [6]. Upper-level managers also tended to involve their subordi- nates in the decision making process to a greater degree than managers at lower levels. It has been suggested that advanced information technologies which allow managers to obtain information quickly and accurately may change the role that subordinates have traditionally played in decision making activities (21]. ‘The EIS tends to shift the problem identi tion upward in the organization as demonstrated by Bank Delta. With access to more timely data than subordinates, the CEO is able to notice declines in performance and financial or opera- tional problems before his subordinates. It is therefore proposed that: Proposition 3. Executives who use EIS will rely on subordinates to initiate problems to a lesser extent that executives who do not use EIS. By allowing a focus on daily information, the EIS has changed the time frame and time orien- tation of the managers within Bank Delta, Al- though the system may not provide radically dif- ferent information, the issue of timing may have rather noticeable effects on strategie decision making. In fact, by focusing on daily data, the CEO at Bank Delta has forced other managers to think on a daily rather than monthly average basis. And knowing that the CEO has access to daily figures has quickened the pace of activity at the bank. The other managers were forced to begin looking at daily figures as well in order to be able to explain apparent discrepancies to theJJ. Elam, D.G. Leidner / Decision Support Systems 14 (1995) 89-103, ” CEO. Other senior executives feel that the sys- tem has made managers quicker to react. Whether this will advantageously affect decision making will perhaps not be discernible until the system has been in place a little longer. The need for fast decision making is frequently attributed to the increased competition and glob- alization of world markets. Causes of slow speed include the consideration of many alternatives, wide participation [49], political behaviour [27], comprehensiveness [17], and scheduling and feed- back delays [37]. Decision speed affects firm per- formance in high-velocity environments and is a key characteristic differentiating good from poor strategic decisions [7]. But how is fast decision making accomplished? Arguing that the aspects of the decision process following problem or op- portunity recognition might be more effective when using advanced IT, it has been suggested that the use of sophisticated information tech- nologies would lead to more rapid and accurate identification of problems, would reduce the time required to authorize proposed organizational ac- tions, and would reduce the time required to make decisions [21]. An EIS that provides real- time, accurate, and easily accessible information may allow executives to make decisions quicker. The CEO at Bank Delta felt that his EIS enabled him to notice problems sooner and take action faster. It is thus proposed that: Proposition 4a, The use of EIS will lead to more rapid problem identification than before the EIS was used, Proposition 4b. The use of EIS wil more rapid de was used, lead to jon making than before the EIS Proposition 4c. The use of EIS will lead to a shorter time frame for decision making than be- fore the EIS was used. ‘The final research research question ad- dressed by this study was the following: When an organization chooses not to adopt an EIS, how are existing information systems altered to meet the new information needs of senior executives that emerge when external or internal pressures demand changes on an organization? One issue the interviews elicited is that there is a great difference between the adoption of a new technology and the continuous adaptation of existing systems. The latter seems to occur piec meal until eventual revamping is absolutely nec- essary (or until “disaster” occurs [45)). IS plan- ning in this context would appear to follow Lind- blom’s model of organizational decision making (30). In other terms, this adapting process could be considered a response to single-loop learning correcting errors by changing organizational strategies within a constant framework of norms of performance (changing habits and everyday practice) whereas the adoption of a new IT may be associated with double-loop learning - re- structuring organizational norms, and restructur- ing strategies and assumptions associated with those norms [4,44] ~ in which strategic re-evalu: tions have occurred that require significant changes in IS to support the new way of thought. Double-loop learning is occurring at Bank Al- pha. The bank is currently “redefining what it means to be a nationwide bank”, not a “money centre,” but rather a “financial institution.” They think they can make a “quantum leap” and avoid the slow gradual improvement common in the world of business. To this end they engaged in a contract with IT consultants to thoroughly ana- lyze the bank's needs and think about the tech- nology that could help make this leap possible. From the viewpoint of the senior IS executive the key is to define customer segments and customer needs and then apply the appropriate technology. The senior IS executive says that they are cur- rently in the process of putting the architecture in place for a “true EIS”. If an EIS ultimately gets implemented in Bank Alpha, it will be the result of senior executives learning about and recogniz- ing the value of having the right information at the right time to effectively manage the organiza- tions. Bank Delta's decision to outsource can like- wise be seen as a case of double-loop learning necessitating adoption of new information tech- nology. Bank Delta’s learning involved a change from viewing the bank as consisting of eight sepa-100 1, Elam, D.G. Leidner / Decision Support Systems 14 (1998) 89-103, rate and independent entities to viewing the bank as a consolidated organization. Contrarily, the process at Bank Beta can be described as a process of continuous adjustments as the situation dictated. Two thirds of the pro- grammers in the technology group spend all their time on maintenance and enhancement leaving one third for development and support. The sys- tem has had so many minor adjustments that there is no longer accurate documentation and it would be difficult for the most experienced sys- tems analyst to comprehend the logic behind it The senior vice president of IS said that “quick and dirty programming” is used to respond to external events such as deregulation. Now, rather han having an architecture amenable to change, only minor changes are possible. How long the system can continue by minor adjustments to support management in a fast-paced environment S open to question. Interestingly, Bank Beta hrough its small continuous strategic adjust- ments avoided the major restructurings that the other two banks underwent. As such, they were not experiencing strategic reevaluation or strate- tic renewal. The strategic changes that did occur involved changing the way things were measured rather than changing what was measured. For example, the CEO wanted a change in the way the customer profitability system measured prof- itability. This is a case of single-loop learning: whereas what they were measuring did not change, the method of measuring it did change. Thus, because the organizational strategy changed very little, the information system at Bank Beta has remained relatively unaffected by the environmental changes. In fact, the adoption cf new technology in general is very difficult at Bank Beta. Business units are relied on to keep up to date on new technologies. However, no Proposal will be accepted that is unable to demonstrate a twelve month or less payback in terms of increased productivity or absolute neces- sty for control on any system proposal. It is therefore proposed that: Proposition 5a. The adoption of new informa- tion systems to support upper management deci Table 3 ‘The propositions Proposition 1: Executives whose decision styles are analytical ‘or directive will adopt and use EIS to a greater extent than executives whose decision styles are conceptual or behavioral Proposition 2: Executives perceiving time pressure to make decisions quickly will adopt and use EIS to a greater extent than executives not perceiving time pressure. Proposition 3: Executives who use EIS will rely on subordi- fates 10 initiate problems to a lesser extent that executives who do not use EIS, Proposition 4a: The use of EIS will lead to more rapid sation than before the EIS was used The use of EIS will lead to more rapid decision making than before the EIS was used. Proposition de: The use of EIS will lead to a shorter time frame for decision making than before the EIS was used. Proposition Sa: The adoption of new information systems t0 support upper management decision making is associated with double-loop organizational learning. Proposition Sb: The adaptation of existing information to support upper management decision making is associated with single-loop organizational learning. sion making is associated with double-loop orga- nizational learning. Proposition 5b. The adaptation of existing in- formation to support upper management decision making is associated with single-loop organiza- tional learning. 6. Conclusion and future research Based on the data gathered from this study, propositions were developed concerning EIS adoption, use, and impacts. Table 3 summarizes the hypotheses. This paper has presented results from inter- views with fourteen senior executives across three large banks. The interviews were conducted to determine how IS and particularly EIS are used by upper executives in decision making, and how the systems impact the decision making process. ‘A comparison of the decision making processes of an executive using an EIS, an executive relying on monthly reports, and an executive relying on neither, provided indication that an EIS mayJJ. Elam, D.G. Leidner / Decision Support Systems 14 (1995) 89-103 01 increase the rapidity of problem identification as well as the speed of the decision process. Future research is needed to examine the effects of a decision making culture with an emphasis on time. The interviews also revealed that a major reason for variation in the use of ITT at this level (from virtually no use of any IT to the daily use of the EIS) is the different decision style with which the system must “fit” well. The external environ- ment has been found to be an important predi tor of EIS use [47]. However, this study has shown that executive decision style is perhaps an even stronger predictor. Looking at information systems use, particularly an EIS, as part of an approach for implementing @ new management philosophy within an organization is another area of future research since a decision style embodies its own management philosophy for the value of data in managerial decision making. Finally, an examination of the organization's different reac- tions to changes in information needs suggests that double-loop learning may necessitate a com- plete readjustment of the information system whereas single-loop learning may be handled through minor adaptations to the existing infor- mation system. EIS are expected to follow from double-loop learning. References [1] Adorno T.W., BE. Frankel-Brunswik, DJ. Levinson, and RUN. Sanford, The Authoritarian Personality (New York Free Press), 1950, (2] Applegate LM., Lockheed-Georgia Company: Executive Information Systems. Harvard Case (9-187-135), Harvard Business School, Boston MA, Tune 1987, 13} Applegate LM. and CS. Osborn, Phillips 66 Company: Executive Information Systems, Harvard Case (9-189- (006), Harvard Business School, Boston, MA, December 1988, [4] Argyris, Chris, and Donald A. 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Knight Eminent Scholar in Management In- formation Systems in the Department ‘of Decision Sciences and Information Systems, College of Business Adi istration, Florida International Uni versity, Miami, Florida, Before join ing the faculty of Florida Interna- tional University in 1990, she was an assistant professor at the University of Pennsylvania's Wharton School, an associate professor in the College of Business Administration at the University of Texas at Austin, and a Marvin Bower Fellow at the Harvard Business School, Dr. Elam earned both her Ph.D. in operations research (197) and her BA in mathematics (1970) ftom the University of Texas. Dr. Elam’s research deals with the competitive use of information technology, the management of the information services function, and the use of information technology to support both individual and group decision making. She is the author of numerous articles appearing in such journals as Information Systems Research, Decision Sciences, Operations Research, and Decision Support Systems on these topics. She is a co-author of the book, Transforming the IS Organization, Published by ICIT Press, Washington, D.C., in 1988. She has served as associate editor for MIS Quarterly and is currently (on the editorial board for Information Systems Research.JJ. Elam, D.G. Leidner / Decision Support Svstems 14 (1995) 89-103 103 Dorothy E. Leidner is an assistant of information systems in the Hankamer Schoo! of Business at Baylor Univer- sity in Waco, Texas. She received an MBA in 1988 from the University of Texas at Austin and a PRD in 1992 from the University of Texas at Austin, Her primary research inter ests are Executive Support Systems and Iaformation Technology Use in Education and Training. She has pub lications in Information Systems Re search and the Proceedings from the Twenty Sixth Annual Hawaii Incernational Conference on System Sciences.