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QuickStudy: Competitive Intelligence

January 31, 2000 12:00 PM ET

Everybody working in the competitive intelligence (CI) arena can tell a story about being asked over cocktails if they are just corporate spies.

But there isn't really any cloak and dagger, even though the field has attracted a few former members of the CIA.

"I have a CIA background, and that's the best school for training in intelligence, so it makes it a little bit hard to tell people that CI isn't spying," says Ken Sawka, vice president of consulting at Fuld & Co., one of the most prominent CI consultancies, in Cambridge, Mass. "But I make it clear that you don't do wiretapping or paying off sources, and a CI professional mainly assesses the external impact on a business decision."

Not Spying

So if CI isn't spying, what is it, other than watching competitors and government regulators who might make a move that could cripple a company?

CI has developed in recent years in many Fortune 1,000 companies as a line of business activity, sometimes as a central unit of researchers with marketing or accounting expertise who advise top management. It can also involve heads of business units that meet regularly.

CI professionals gather data and analyze it using many software tools and systems on the market. But they also interpret the data for upper management, affecting decisions about, for example, whether to withdraw a product dominated by a competitor or to close a plant that produces products that aren't expected to be profitable.

At all stages in the CI game, the information technology department is vital, helping coordinate information gathered from voice mail or e-mail systems, storing it and organizing it, and helping business units move it around for human analysis, analysts say.

IT workers "can contribute significantly to the CI effort by gathering information on competitors when they interact with other IT people at conferences," says analyst Helen P. Burwell, president of Burwell Enterprises Inc. in Dallas. "And a company's information technology can have a great impact on how they perform."

Analysts urge IT leaders to get involved at the ground level when a company creates a CI unit to help assess software tools and decide which budget the tools will be paid from. IT managers are also vital to protecting security by helping create rights and firewalls to determine who has access to CI, analysts add.

CI Projects

Analysts say IT departments in U.S. companies are working on a wide range of CI projects. Some are operating toll-free call-in lines so frontline salespeople can quickly make a call while on the run to describe what a customer just told them about pricing on a competitor's product. Others are testing software agents that search electronically for information.

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