Developing Information Systems for Competitive Intelligence Support

8/13/2019 Developing Information Systems for Competitive Intelligence Support

1/13

Developing Information Systems forCompetitive Intelligence SupportBONNIEHOHHOFABSTRACTCOMPETITIVENFORMATION SYSTEMS CIS) are multifaceted servicesthat con tribute to organizational decision making by providinginformation services in the traditional sense, but also, and more parti-cularly, by collecting and analyzing data from primary sources. Thecontinuous systematic CIS provides “intelligence information,” existswithin an organization’s other information systems, and must besupported by all levels of an organization.INTRODUCTION

Librarians and information scientists have long enjoyedgatekeeper status in their organizations, providing service asintermediaries between information and the people who need it.Changing information sources, technologies, management practices,and organizational cultures are transforming the role of intermediaryto one of enabler, providing the mechanisms to supply quicker andmore direct access to information. The development of competitiveintelligence CI) activities in companies has hastened this trend. Thisarticle discusses the issues connected with developing informationsystems for competitive intelligence support. It provides an overviewof CI system elements, defines the elements of an effective competitiveinformation system, and summarizes major issues affecting systemdesign and implementation.

Bonnie Hohhof Intelligent Information 517 Linden Glen Ellyn IL 60137LIBRARY TRENDS Vol. 43 No. 2, Fall 1994 pp. 226-38@ 1994 The Board of Trustees University of Illinois


2/13

HOHHO F/COMPETITIVE INTELLIGENCE SUP POR T 227COMPETITIVE SYSTEMSNTELLIGENCEA competitive intelligence or business intelligence BI) systemis the organizational process for systematically collecting, processing,analyzing, and distributing to decision makers information aboutan organization’s external environment. Such a systematic processorganizes the flow of critical information and focuses it on operationaland strategic issues and decisions. A system may be formalized ina central department or operated through an informal decentralizedassociation. The terms CI and BI are of ten used interchangeably.Technically, CI is a subset of BI, focusing on the activities of competi-tors, markets, and industries. BI, the larger term, covers activitiesthat include the tracking of political, economic, and social forcesthat affect an organization’s ability to effectively compete. Optimally,the system should support BI but most often is limited to competitivelydefined areas. In this article we will focus on CI.A CI system may track:

competitor capabilities, plans, and intentions;markets and customers;industry structures and trends;political, economic, and social forces; ortechnological developments and sources.

The essence of a CI system lies in its function of contributing tobetter and more timely organizational decision making. Its primaryobjectives are to help decision makers avoid surprises from thecompetitive environment and to identify current and potential threatsand opportunities. An effectivesystem provides competitive advantageby reducing reaction time to competitive actions and improving bothstrategic and tactical planning.CI systems are built on three separate, yet interdependent, activi-ties: 1) general information services, 2 primary information col-lection, and 3)analysis. Each activity requires different resources andsets of skills and is often performed by separate individuals. Theseindividuals may work directly for the CI organization or be drawninto projects as needed.

The three activities may be viewed as integrated parts of the CIpyramid see Figure 1). The broadest and most basic activity, infor-mation services, identifies, retrieves, and distributes published orsecondary information. Published or secondary information sourcesinclude commercially published reports, journals, newsletters, studies,and other items-material available through online services such asDIALOG, Dow Jones, and NEXIS. Effective CI information servicesalso track fugitive material from consultants, trade organizations,technical societies, universities, and other sources, for which


3/13

228 LIBRARY TREND YFAL L 1994

Pub lished InformationFigure 1 The CI Pyramid

bibliographic access is difficult. This category of material is oftenthe most specialized and valuable source of competitive informationand is sometimes available by simple request. This kind of serviceis often provided by an individual with a library background whois on the CI staff or in the organization’s library.

The collection activity involves obtaining information fromprimary sources, usually individuals. These individuals may be em-ployees of a n organization or specialists in other companies, con-sulting groups, universities, or government agencies. Competentinformation collection of this kind requires an extensive knowledgeof interviewing techniques and the ability to develop and maintaina personal information network. Effective collectors often havejournalism or investigative government backgrounds. The activityof collecting information in this way is also called “humanintelligence” or “humint.” It is extensively used in government andsecurity agency operations.

Analysis is the most specialized competitive intelligence activity.It integrates information supplied by the information services andcollection activities with an analyst’s expert knowledge. Information


4/13

HOHHOF/COMPETITIVE INTELLIGENCE SUP POR T 229is analyzed in a specific environment of problems, transformed into“intelligence,” and delivered to decision makers. Analysts, who fre-quently possess advanced subject degrees, have extensive knowledgeof industries and technologies.INTELLIGENCENFORMATION

Intelligence information is data about an organization’s externalenvironment compiled through a continuous systematic collectionprocess. This information is obtained from both internal and externalinformation sources and analyzed in concert with an organization’sinternal data. Intelligence information provides as complete and asaccurate an understanding of the external environment as possibleand helps minimize the uncertainty associated with managerialdecisions.

In most situations, both primary and secondary information mustbe analyzed, which is often a team effort, before it becomes intel-ligence. However, there are situations in which the very acts ofidentifying and transmitting a piece of information can transformi t into intelligence-without additional analysis Chitwood, 1994).In order to be considered intelligence, it must be relevant to thedecision at hand and must support an action or decision. Unfocusedor “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;changes in competitors’ products, staffing, strategy, or finances;mergers, acquisitions, and alliances that rapidly change theindustry; orstructural changes in the market or in national political andeconomic systems.

To provide maximum benefit to a decision-maker, intelligenceinformation must be relevant, delivered quickly, and presented ina way that facilitates rapid comprehension. Intelligence is actionableinformation. Major problems arise when managers receive in-formation that:

arrives too late to be factored into a decision;is irrelevant to the critical issues;obscures trends, ratios, and other relationships; orarrives without commentary, context, or explanations.

COMPETITIVE SYSTEMSNFORMATIONCompetitive information systems CIS) help managers to stay

abreast of market, competitive, and world events. Of ten information


5/13

230 LIBRARY TRENDWFALL 1994technology IT) is used to help organizations keep ahead of theircompetition. However, CIS does not simply deliver large amountsof information; i t provides information for informed decisions. Thekey to a successful implementation is facilitating the sys temat ic col -lect ing of intelligence information. This function is of ten translatedinto c o m f ~ u t e r i z i n gthe process. The two processes are often andincorrectly used synonymously. Creating and using an automatedtool for its own sake, without considering the required applicationsof an entire system, is not the same as establishing a systematicprogram of intelligence information collecting.Unders tanding the E xis t ing Znformat ion FlowA good competitive information system works with anorganization’s other existing information systems wherever they maybe: the executive suite, the marketing department, or sales offices.Because many of these systems were designed largely to produce paperreports and to support a different set of managerial decision needs,they can be awkward to work with. It is important to spend timeearly in the CIS design process to learn about these systems and tocomplement their activities. An organization’s structure can of tenmake identifying these systems difficult, particularly across divisionsor geographic lines. However, because a CIS requires access to allavailable information, it is essential to understand where this business-critical information exists, where i t travels, and, most importantly,who creates, controls, and uses it.

Before starting the competitive information systems design, manyorganizations first complete an information audit. Stanat 1993)suggests specific procedures for such a process, which can identifylocations of information creation and modification and paths of infor-mation transferral throughout an organization pp. 79-89).An auditprovides a “roadmap” of the information infrastructure and a sum-mary of the uses of the information.D efi n in g Customers’ Key Znformat ion Requirem ents

Because management decisions involve problems that may becomplex, unstructured, and may be affected by unpredictable humanelements, i t is impossible to anticipate all information needs. Forthis reason, most competitive information systems include highlypersonalized search and browsing capabilities which draw upon awide variety of information sources. These systems typically allowusers to filter desired information through sets of key criteria basedon users’ individualized and ever-changing requirements.

Most target CIS customers consider themselves to be effectivedecision-makers using their own systems of information gatheringand analysis. Many resist devoting their limited time and resources


6/13

HOHHO F/COMPETITIVE INTELLIGENCE SUP POR T 231to learning a new system even though they may recognize theadvantages of a CIS. To overcome this obstacle, the system mustprovide some immediate and obvious advantages. Customers will notbe motivated to use a system that offers only incremental advantages.SUCCESSACTORS

Organizations can be extremely complicated, and their environ-ments are even more complex. From organizational culture andmanagement level support to choices of competitive informationsystems software and long-term maintenance, several major factorshave been shown to influence the design and ultimate success ofCIS Hohhof, 1994).

The most important factor affecting the design and operationof competitive information systems is the culture of the organization.To be successful, a system must support operational and culturalchanges in progress, but i t cannot force them. Many CIS failurescan be traced back to cultural incompatibility and organizationalconflicts. An organization’s culture affects not only how a CIS isused but also the ways in which information is contributed to it.For example, a culture that allows managers to hoard informationcannot support CIS. Thi s situation must be changed before a systemof intelligence information sharing can be successfully deployed.

If individuals do not make maximum use of information alreadyavailable on paper, they will not take advantage of information ona computer. If anything, changing the delivery vehicle actuallydecreases initial use of information because users must learn newprocedures. Because of the need to match the existing culture, therecurrently is no one right system for all competitive intelligencesituations. Some existing off-the-shelf systems are easily modified andcan be customized to match the organization’s unique requirements.

A major determinant of success in competitive informationsystems development lies in the attitude, efforts, and skills of thosemanaging the system. CIS project managers bridge the worlds ofcompetitive analysis, information processing, computers, and seniormanagement. They must understand their organization’s key successfactors, possess sound communication skills, and understandinformation and system design. While many innovative andcomprehensive systems are not developed by information technologyspecialists, there are certain skills and attitudes that are shared byall successful CIS managers:

competence in competitive analysis, information processing, andsenior management;


7/13

232 LIBRARY TRENDWFALL 1994committment to a project’s mission; andability to determine what is important, why i t is important, andto whom i t is important.

High level support, while necessary, does not guarantee success.A competitive information system must have a project sponsor atthe senior management level, often a vice-president or CEO. He orshe provides the system with the high visibility and patronagenecessary to develop and maintain the focus and drive of a program.This sponsor also supplies the support and resources to successfullyintegrate the CIS in to an organization’s decision-making process.However, in many situations, high-level support that guaranteessystem success is taken for granted. Although no CIS will prosperwithout this kind of support, i t cannot substitute for deficienciesin planning, implementation, and end-user acceptance.

High-level support must also come from an organization’sinformation services IS) group or department. An IS sponsor canmake the entire automation process significantly simpler and moreeffective by utilizing the staff’s knowledge of existing communicationsystems and hardware configurations. Organizations are politicalsystems made of individual constituencies with specific requirements,beliefs, and objectives. To be effective, a CIS project must gain theendorsement and support of these various groups. Effective projectmanagement ensures that the system meets the actual needs of theorganization and its people.

Successful competitive intelligence systems do not require moreinformation, but rather useful detailed information that supportsdecision making. A successful CIS provides unique information andclearly identifies what i t does and does not do. Because informationfrom external commercial print sources can easily be accessed, manysystems acquire information from such sources and redistribute i tin electronic form, sometimes resulting in an electronic equivalentof junk mail. Additionally, tracking the printed press and newswireswill at best keep the organization even with its competitors sinceevery company has equal access to these information sources.

Traditional print and electronic sources support, but do notsatisfy, all competitive information needs. Much information aboutcutting-edge technologies or future technologies, for example, issimply not published. Engineers, scientists, and developers who leadin their fields often do not have the time nor motivation to publish.No t surprisingly, many individuals and companies do not want towrite about their progress because this could provide competitorsinsight into their business strategies.


8/13

HOH HOF/COM PETITIVE INTELLIGENCE SUPPOR T 233Basic system assumptions and design decisions should coincide

with the target audience’s goals. The phrase, “the system passed al lacceptance tests, but they the users) will not use it” often rings truewhen, after initial consultation and interviews with system customers,project teams create their own assumptions about users’ reactionsto system designs and capabilities. Even more egregious assumptionsoccur when project teams assume that the users’ goals andrequirements coincide with their own views and experiences.

Competitive information systems software is rarely the root causeof system failure. Most failures are caused by inadequately translatingan organization’s information requirements into an appropriatesystem. In practice, while software usually functions as specified andrarely is at fault, it usually receives the blame for CIS failure. Duringsystem design, the project team can easily become enamored withthe software, because a major emphasis at that point is on the useof technology to create a system. However, developers must resistthe temptation to add functions simply because the software cansupport it. The final system should not primarily showcase softwarecapability, but instead meet specific use requirements.

Computer-based systems need to be introduced clearly and care-fully to minimize the target customers’ resistance to new or differenttechnology. Although the competitive information system is designedto help managers make better decisions, i t competes with otherdemands of time and resources. Many target customers will find i tdifficult to set aside appropriate time for learning a new system.Increasingly, managers have been forced to learn several new computersystems such as e-mail, groupware, and Windows) and are sufferingfrom the computer equivalent of jet lag. The CIS must demonstrateto its potential users a substantial and short-term return on theirinvestments of time and effort or risk being avoided or ignored.

A system’s value-added contributions must be defined in termsof an organization’s expectations requirements. The success of anynew system depends heavily on how well the system developersunderstand their key constituents and how well these users takeadvantage of intelligence information. Time should be spentidentifying the system’s primary and secondary customers-who mayor may not be the end-users of the information or intelligence providedthrough the system-and ensuring that their individual needs aremet. This is not an easy task. Competitive information system usersoften have few concrete ideas about what they want the system todo “I’ll know i t when I see it”). Even when individuals ororganizations provide detailed design criteria, these criteria are validonly for the point in time when they are made. The composition


9/13

234 LIBRARY TR EN DU FA LL 1994of the user group will also evolve, so design assumptions must bereevaluated continuously.

System maintenance and information-gathering costs must beconfronted at the outset. The ultimate value of a competitiveinformation system should be measured against the total system cost.Plans should include reasonable estimates of al l the system’sdevelopment, maintenance, an d inform ation-gathe ring costs.Unexpected system maintenance costs will appear and increase afterthe CIS is released, expanded, and enhanced. Under the pressure ofmeeting schedules and performance milestones, emphasis is of tenplaced on the creation of a system rather than on designing amaintainable one. Although maintenance costs over a system’s lifeare often overlooked, they can far exceed the costs of the originaldesign. Because of resulting unplanned maintenance burdens, a CISmay be discarded before the end of its useful life.By ignoring the maxim, “imperfection i s okay; waiting too longis not,” too much time may be spent trying to design a flawlesssystem. An implicit assumption is that a system, once built, willnot be altered. As a result, much energy is spent identifying all possiblecustomer needs and evaluating all options. Not only does this consumetime, but i t can dull a project team’s enthusiasm and cause individualsor an organization to lose interest. A CIS does not have to be perfect.If fundamental requirements have been analyzed, focus groupslistened to, and environmental restrictions identified, the system willmeet its key objectives. Two ways to approach an imperfect situationpragmatically is to: 1) rank the CIS goals based on the affected usersand their relative importance to the business, and 2) plan a schedulethat quickly delivers the crucial functions and gradually phases inthe remainders.TECHNICALEVELOPMENTS

The rising sophistication of computer software and the fallingcost of computer hardware have fueled the introduction of automatedinformation retrieval systems into many management processes,including competitive intelligence. The development and imple-mentation of decision support systems DSS) and executive infor-mation systems EIS) have also accelerated the acceptance ofcompetitive information systems. Pressures to develop such systemshave grown during the last decades. Prior to the early 1980s, mainframecomputers dominated all corporate computing. Within organizations,all data were collected, analyzed, and distributed on mainframe sys-tems managed by management information or information tech-nology or information services) departments. These departmentsbecame the gatekeepers of information and determined


10/13

HOHHOF/COMPETITIVE INTELLIGENCE SUP PO RT 235how information would be collected;what information would be collected;how the information would appear when presented;where i t would be distributed; andwho would have access to it.

A major benefit of this kind of structure was that all data containedwithin the organization were maintained in a central location.Everyone worked from the same files, which were gathered andorganized under uniform processes and procedures. If individuals hadaccess to the central mainframes, they had access to all availablecomputerized information in the organization.

In the early 198Os, personal computers PCs) began appearingin organizations. Electronic information gathering, analyzing, anddistributing became decentralized, and PCs assumed increasinglyimportant roles for storage and manipulation. More sophisticatedand powerful PCs eroded mainframes’ advantages of internal memorycapacity, speed, larger storage, and software availability.

Within only a few years by the late 198Os), the personal computermade further advances through networking and communicationstools, primarily local area networks LANs), modems, and client-server architecture. Management information systems MIS) groupsbegan linking individual PCs to each other and connecting themto corporate mainframes. This permitted analysts to use theircomputers as they wanted, and facilitated the systematic andcentralized) collection of data throughout organizations.

Client server architecture, which can assure both independenceand interdependence, is the current solution to fragmentation anddecentralization of corporate data. Client-server architecture is adesign in which a client the system’s user) accesses a server or acentralized computer). This architecture interconnects computerhardware to share data throughout an organization, using LANs orwide area networks WANs), in which two or more LANs areconnected. Many organizations are implementing these networks to“reconnect” users throughout their organizations to corporate-widecomputer systems. In client-server architecture, the hardwaredevelopment has outpaced the software. Now that the industry hasanswered the question, What can be done? they are wrestling with,How do we do it? As a result, the industry is placing increasedemphasis on developing groupware. Groupware is software whosecentral purpose is to inform or coordinate people. Group schedulingprograms and workflow automation programs are groupware, because


11/13

236 LIBRARY TREND S /FALL 1994their principal purpose is to coordinate people or work processesinvolving people. E-mail, conferencing, and shared-knowledgesystems may be considered to be groupware because their core functionis to inform people.Current Sys tem Sof tware

The pressure is on information systems managers and softwaredevelopers to supply applications that support critical businessfunctions including competitive intelligence, which at first seem todefy automation. Gains in computerized information servicesautomation augment the basic processes of handling information,filtering it, and distributing it through some intelligence function.The original text-handling systems developed from government-funded research in the late 1970s. They placed text in unstructuredrecords and retrieved information by matching words and phrasesby means of Boolean operators. Large text files could be searchedquickly through inverted word indexes. Few major advances havebeen made in this area since. Many of the current software programsused to support competitive analysis promote their own particularcapabilities by developing their own specific terms and definitions.In many cases a software company will place its own “proprietaryspin” on an existing industry term to enhance the product’s salesappeal and to promote i t as something new.

Several information retrieval advances have found applicationsin competitive intelligence systems. Retrieval speed has beenincreased, and searching has been linked to customized thesauri ortopic trees. Several systems have provided features that allow searchersto “relevance rank” search output by the frequency of search termsin a given text or to assign “weight” to certain search terms accordingto their relative importance. “Fuzzy” or fault-tolerant searching, anoutgrowth of optical character recognition functions, allows wordsto be accurately retrieved even when misspelled. Natural languageprocessing principles are also being supported by software systems.These provide:

morphological analysis, the ability to match terms such as “mouse”and “mice”;syntactic analysis, giving insight into the relationship betweenwords;semantic analysis, resolving the different meanings of a single wordsuch as “plant”; andnatural user) language interfaces.

The Next TechnologyThe next technology shift may also be generated from

government-funded research. This development may be driven by


12/13

HOHHOF/COMPETITIVE INTELLIGENCE SUP POR T 237the increased pressure on government agencies to provide informationto U.S. companies, allowing them to become more competitive inter-nationally. As a reaction to this information demand, some govern-men t research has turned to developing more sophisticated retrievalsystems as alternatives to providing more information directly.

One such new technology is context vectors. Context vectorsrepresent words or documents as numbers, specifically vectors. Vectorsfor words with similar meanings will point in the same direction.The system is able to learn relationships among words in a trainingtext and exploit such relationships for better precision and recallin text processing. The retrieval process identifies documents withcontext vectors close to the query context vector.

Text extraction or message understanding) systems representanother rising technology for competitive intelligence systems. Theyhave developed from finite state automated research and analyze thecontent of a document, extract lists of data, and place them intostructured databases. Such an approach is effective for text-scanningtasks in which only a fraction of the text is relevant. There is apredetermined, relatively simple, rigid target representation intowhich the information is mapped; subtle nuances of meaning andthe writer’s goals are of no interest. A sample application wouldbe the tracking of joint ventures in which a manager would wantto keep current with a minimum investment of time.Developing Co mp et i t i ve Inte l ligence Cy brar ian s

The characteristics of information professionals are changingquickly in competitive information systems environments. The in-creasing availability of information sources, the wide presence ofinformation technologies throughout organizations, and unrelentingneeds for current and changing information at the highestorganizational levels including the needs of competitive intelligenceactivities) are hastening the evolution of librarians int o “cybrarians”Bauwens, 1993).These new information professionals are librarians

who need not rely on physical locations for information resourcesor for themselves) in order to provide actionable information. They

cultivate close relationships with their clients via electronic networksand provide information through a variety of electronic delivery mediato users in a just-in-time fashion.

Electronic delivery media extend beyond the established externalinformation databases; crucial to their success are systems of accessto internal information and to internally developed informationsystems. In support of the demands of organizations’ competitive


13/13

238 LIBRARY TRENDWFALL 1994intelligence activities and as CI practitioners become moresophisticated information users the trend toward cybrarianship willaccelerate.REFERENCESBauwens, M. 1993). Corporate cybrary networks: An idea whose time has come. ZnternetBusiness Journ al I ) , 25-27.Chitwood, L. 1991). Integrated information and the intelligent corporation.Com pet i t ive Intel ligence Rev iew 2 2), 33-35.Chitwood, L. 1994). AGSI, information, and cybrarians. Competi t ive Intel l igenceRe v ie w 5 1), 69-70.Hohhof, B. 1994). Com pe t i t iv e in formation sy s t e m de v e lopme nt . Glastonbury, CT:

The Futures Group.Stanat, R. 1990). Th e inte l l igent corporat ion: Creating a shared ne two rk forinformat ion and prof i t . New York: American Management Association.

Documents

Developing Information Systems for Competitive Intelligence Support