Developing Information Systems for Competitive Intelligence Support

COMPETITIVE INFORMATION SYSTEMS (CIS) are multifaceted services that con tribute to organizational decision making by providing information services in the traditional sense, but also, and more particularly, by collecting and analyzing data from primary sources. The continuous systematic CIS provides “intelligence information,” exists within an organization’s other information systems, and must be supported by all levels of an organization. INTRODUCTION Librarians and information scientists have long enjoyed gatekeeper status in their organizations, providing service as intermediaries between information and the people who need it. Changing information sources, technologies, management practices, and organizational cultures are transforming the role of intermediary to one of enabler, providing the mechanisms to supply quicker and more direct access to information. The development of competitive intelligence (CI) activities in companies has hastened this trend. This article discusses the issues connected with developing information systems for competitive intelligence support. It provides an overview of CI system elements, defines the elements of an effective competitive information system, and summarizes major issues affecting system design and implementation. Bonnie Hohhof, Intelligent Information, 517 Linden, Glen Ellyn, IL 60137 LIBRARY TRENDS, Vol. 43, No. 2, Fall 1994, pp. 226-38 @ 1994 The Board of Trustees, University of Illinois HOHHOF/COMPETITIVE INTELLIGENCE SUPPORT 227 COMPETITIVE SYSTEMS INTELLIGENCE A competitive intelligence or business intelligence (BI) system is the organizational process for systematically collecting, processing, analyzing, and distributing to decision makers information about an organization’s external environment. Such a systematic process organizes the flow of critical information and focuses it on operational and strategic issues and decisions. A system may be formalized in a central department or operated through an informal decentralized association. The terms CI and BI are of ten used interchangeably. Technically, CI is a subset of BI, focusing on the activities of competitors, markets, and industries. BI, the larger term, covers activities that include the tracking of political, economic, and social forces that affect an organization’s ability to effectively compete. Optimally, the system should support BI but most often is limited to competitively defined areas. In this article we will focus on CI. A CI system may track: competitor capabilities, plans, and intentions; 0 markets and customers; 0 industry structures and trends; 0 political, economic, and social forces; or 0 technological developments and sources. The essence of a CI system lies in its function of contributing to better and more timely organizational decision making. Its primary objectives are to help decision makers avoid surprises from the competitive environment and to identify current and potential threats and opportunities. An effective system provides competitive advantage by reducing reaction time to competitive actions and improving both strategic and tactical planning. CI systems are built on three separate, yet interdependent, activities: (1) general information services, (2)primary information collection, and (3)analysis. Each activity requires different resources and sets of skills and is often performed by separate individuals. These individuals may work directly for the CI organization or be drawn into projects as needed. The three activities may be viewed as integrated parts of the CI pyramid (see Figure 1). The broadest and most basic activity, information services, identifies, retrieves, and distributes published or secondary information. Published or secondary information sources include commercially published reports, journals, newsletters, studies, and other items-material available through online services such as DIALOG, Dow Jones, and NEXIS. Effective CI information services also track fugitive material from consultants, trade organizations, technical societies, universities, and other sources, for which 228 LIBRARY TRENDYFALL 1994 Published Information Figure 1. The CI Pyramid bibliographic access is difficult. This category of material is often the most specialized and valuable source of competitive information and is sometimes available by simple request. This kind of service is often provided by an individual with a library background who is on the CI staff or in the organization’s library. The collection activity involves obtaining information from primary sources, usually individuals. These individuals may be employees of an organization or specialists in other companies, consulting groups, universities, or government agencies. Competent information collection of this kind requires an extensive knowledge of interviewing techniques and the ability to develop and maintain a personal information network. Effective collectors often have journalism or investigative government backgrounds. The activity of collecting information in this way is also called “human intelligence” or “humint.” It is extensively used in government and security agency operations. Analysis is the most specialized competitive intelligence activity. It integrates information supplied by the information services and collection activities with an analyst’s expert knowledge. Information HOHHOF/COMPETITIVE INTELLIGENCE SUPPORT 229 is analyzed in a specific environment of problems, transformed into “intelligence,” and delivered to decision makers. Analysts, who frequently possess advanced subject degrees, have extensive knowledge of industries and technologies. INTELLIGENCE INFORMATION Intelligence information is data about an organization’s external environment compiled through a continuous systematic collection process. This information is obtained from both internal and external information sources and analyzed in concert with an organization’s internal data. Intelligence information provides as complete and as accurate an understanding of the external environment as possible and helps minimize the uncertainty associated with managerial decisions. In most situations, both primary and secondary information must be analyzed, which is often a team effort, before it becomes intelligence. However, there are situations in which the very acts of identifying and transmitting a piece of information can transform i t into intelligence-without additional analysis (Chitwood, 1994). In order to be considered intelligence, it must be relevant to the decision at hand and must support an action or decision. Unfocused or “nice-to-know” information is not appropriate in CI activities. Intelligence information may identify: new information about customers or suppliers; research and development activities in the industry; 0 changes in competitors’ products, staffing, strategy, or finances; 0 mergers, acquisitions, and alliances that rapidly change the industry; or 0 structural changes in the market or in national political and economic systems. To provide maximum benefit to a decision-maker, intelligence information must be relevant, delivered quickly, and presented in a way that facilitates rapid comprehension. Intelligence is actionable information. Major problems arise when managers receive information that: 0 arrives too late to be factored into a decision; is irrelevant to the critical issues; 0 obscures trends, ratios, and other relationships; or 0 arrives without commentary, context, or explanations. COMPETITIVE SYSTEMS INFORMATION Competitive information systems (CIS) help managers to stay abreast of market, competitive, and world events. Of ten information 230 LIBRARY TRENDWFALL 1994 technology (IT) is used to help organizations keep ahead of their competition. However, CIS does not simply deliver large amounts of information; i t provides information for informed decisions. The key to a successful implementation is facilitating the systematic collecting of intelligence information. This function is of ten translated into comf~uterizingthe process. The two processes are often and incorrectly used synonymously. Creating and using an automated tool for its own sake, without considering the required applications of an entire system, is not the same as establishing a systematic program of intelligence information collecting. Understanding the Existing Znformation Flow A good competitive information system works with an organization’s other existing information systems wherever they may be: the executive suite, the marketing department, or sales offices. Because many of these systems were designed largely to produce paper reports and to support a different set of managerial decision needs, they can be awkward to work with. It is important to spend time early in the CIS design process to learn about these systems and to complement their activities. An organization’s structure can of ten make identifying these systems difficult, particularly across divisions or geographic lines. However, because a CIS requires access to all available information, i t is essential to understand where this businesscritical information exists, where i t travels, and, most importantly, who creates, controls, and uses it. Before starting the competitive information systems design, many organizations first complete an information audit. Stanat (1993) suggests specific procedures for such a process, which can identify locations of information creation and modification and paths of information transferral throughout an organization (pp. 79-89).An audit provides a “roadmap” of the information infrastructure and a summary of the uses of the information. Defining Customers’ Key Znformation Requirements Because management decisions involve problems that may be complex, unstructured, and may be affected by unpredictable human elements, i t is impossible to anticipate all information needs. For this reason, most competitive information systems include highly personalized search and browsing capabilities which draw upon a wide variety of information sources. These systems typically allow users to filter desired information through sets of key criteria based on users’ individualized and ever-changing requirements. Most target CIS customers consider themselves to be effective decision-makers using their own systems of information gathering and analysis. Many resist devoting their limited time and resources HOHHOF/COMPETITIVE INTELLIGENCE SUPPORT 231 to learning a new system even though they may recognize the advantages of a CIS. To overcome this obstacle, the system must provide some immediate and obvious advantages. Customers will not be motivated to use a system that offers only incremental advantages. SUCCESS FACTORS Organizations can be extremely complicated, and their environments are even more complex. From organizational culture and management level support to choices of competitive information systems software and long-term maintenance, several major factors have been shown to influence the design and ultimate success of CIS (Hohhof, 1994). The most important factor affecting the design and operation of competitive information systems is the culture of the organization. To be successful, a system must support operational and cultural changes in progress, but i t cannot force them. Many CIS failures can be traced back to cultural incompatibility and organizational conflicts. An organization’s culture affects not only how a CIS is used but also the ways in which information is contributed to it. For example, a culture that allows managers to hoard information cannot support CIS. This situation must be changed before a system of intelligence information sharing can be successfully deployed. If individuals do not make maximum use of information already available on paper, they will not take advantage of information on a computer. If anything, changing the delivery vehicle actually decreases initial use of information because users must learn new procedures. Because of the need to match the existing culture, there currently is no one right system for all competitive intelligence situations. Some existing off-the-shelf systems are easily modified and can be customized to match the organization’s unique requirements. A major determinant of success in competitive information systems development lies in the attitude, efforts, and skills of those managing the system. CIS project managers bridge the worlds of competitive analysis, information processing, computers, and senior management. They must understand their organization’s key success factors, possess sound communication skills, and understand information and system design. While many innovative and comprehensive systems are not developed by information technology specialists, there are certain skills and attitudes that are shared by all successful CIS managers: competence in competitive analysis, information processing, and