Competitive Intelligence

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.

Fuld & Co. is even working with Dow Jones Interactive Inc. in New York to add CI analysis to Dow Jones' standard fare, said Leonard Fuld, president of the company.

But Fuld says he worries that business managers and CIOs will mistakenly believe that tools and customized news service subscriptions will substitute for analysis, which must remain a human function. "CI is a management and organizational behavior issue more than a technology issue," Fuld says. "Technology helps, but it's not a panacea."

When CEOs get involved with creating CI programs and the process is given the attention it deserves, companies can gain tremendously on competitors, according to analysts and practitioners.

Business Benefits

At Hercules Inc. in Wilmington, Del., the $3 billion chemical firm set up a business intelligence (BI) team 18 months ago partly as a response to its difficulty countering competing chemical products, said Rob Sherman, manager of corporate business intelligence. Sherman says that although he can't quantify its value, the BI effort has definitely benefited Hercules.

"Unknowns such as the tactics and strategies a competitor might employ to counter our new product introductions were always known to be critical, but prior to BI, we never had a technique specifically suited to address them," Sherman says.

With the Hercules BI team — a decentralized group of six business unit managers who report to Sherman — analysis a year ago showed an oversupply of a chemical Hercules and its competitors were making. The BI team recommended the politically unpopular solution of closing a plant producing the chemical in the U.S., and it was quickly shut down, he said.

Because Hercules' BI team must act quickly to gather and analyze information, its IT needs are leading edge, and Sherman says he thinks an IT person needs to be assigned to the BI effort.

BI at Hercules has touched database integration, password administration, access to the Internet and intranets, database replication, server access, Web design and e-mail traffic load. "A dedicated IT insider can make navigating this territory much easier . . . and foresee problems much earlier," Sherman says.

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Copyright © 2000 IDG Communications, Inc.

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