Business Intelligence/Competitive Intelligence
Business Intelligence/Competitive Intelligence
Deepak Ainani
Kent State University
I am the sole author of this work and have correctly used and attributed all
sources used in this paper
Deepak Ainani
Copyright©2010, Deepak Ainani
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Business Intelligence/Competitive Intelligence
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Abstract
Intelligence is being considered as an important, if not mandatory part of the
business. In today’s world, where there are virtually no trade boundaries, organizations
have immense market potential to grow. But at the same time, each organization is
vulnerable to competition from across the globe. This makes it imperative for every
organization to maintain some level of intelligence to be successful. In this paper we will
look into the various types of intelligence in use by industries and how are they affecting
their decision making process.
What is Intelligence?
Intelligence is defined as the ability to comprehend; to understand and profit from
experience [1]. We know, all intelligence is data but not all data is intelligence. Hence it
becomes extremely important to be able to differentiate between data and information in
order to be successful. In business world we need intelligence to avoid surprises,
support decision making and maintain secrecy of our own organization.
Internet is a computer network consisting of a worldwide network of computer
networks that use the TCP/IP network protocols to facilitate data transmission and
exchange [1]. Today more than half of the world have access to internet and is able to
receive, add or edit data available. With so many people able to freely share their
knowledge, views, thoughts, etc. we have too much data available on our finger tips.
With the abundance of data available to us it becomes difficult to pick the right data and
turn it into intelligence. This is what Business Intelligence and Competitive Intelligence
helps to achieve based on our requirements and goals.
Copyright©2010, Deepak Ainani
Business Intelligence/Competitive Intelligence
Intelligence Cycle
Intelligence is carried out by the professionals who are able to produce results in
a timely fashion for the decision makers and take appropriate action. For intelligence to
be successful there must be smooth flow of communication across the organization.
This is achieved by understanding of the intelligence cycle as shown below in Figure 1
[7].
Figure 1: The Intelligence Cycle
Intelligence cycle is a process of converting raw data into real intelligence for
decision makers to take appropriate action. Intelligence cycle consists of five steps:
1. Planning: Decide how to get your work done
2. Collection: Collect necessary information through various sources
3. Processing: Process information collected into a form where the concerned
people can understand it
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Business Intelligence/Competitive Intelligence
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4. Analysis: Analyze the available information
5. Dissemination: Distribute the analysis results to the concerned parties.
Why do we need intelligence in organization?
We need intelligence for four main reasons [6]:
1. To avoid strategic surprises: Intelligence needs to keep track of threats or
advancements that could directly or indirectly affect the business.
2. To provide long-term expertise: The goal is to provide the required exposure to
the people within the organization to be successful and to retain it for long time.
3. Support decision making: Decision makers in the organization are constantly in
need of information about the market, competitors, warnings, and their customers.
It is imperative to provide them with the right input so they can take better
decisions.
4. Maintaining secrecy: Organizations want to keep their information about their
operations, planning, research, etc. under wraps in order to gain market share
from their competitors and come up with a new break through.
What is Business Intelligence?
Business Intelligence was first defined by an IBM researcher Hans Peter Luhn as
“the ability to apprehend the interrelationships of presented facts in such a way as to
guide action towards a desired goal” [2]. In other words, we can say Business
Intelligence is knowledge about internal business activities which in turn helps in making
effective, important and strategic business decisions.
Business Intelligence currently refers primarily to data mining, a practice that is
heavily driven by Information Technology. It gathers enormous amounts of unstructured
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Business Intelligence/Competitive Intelligence
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data to slice, dice and otherwise process it via specialized software. The purpose is to
produce historical and current views of internal business operations, sales statistics,
customer satisfaction and project assessments (Sharp, 2009, p. 22).
Figure 2. shows the Business Intelligence cycle consisting of four steps [5]:
1. Analysis: In this step we collect data about our business and understand it based
on our understanding of the business e.g. customers purchasing patterns
2. Insight: Once we have data about our business we look to gain information from
it by asking various questions e.g. why is price fluctuating?
3. Action: This step enables business to take better and faster decisions which give
strength and courage to decision taker which is typically clear in its purposes.
4. Measurement: This step helps to measure results against set standards and thus
leading to another cycle of analysis, insights and possible corrective action.
Figure 2: The Business Intelligence Cycle
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What is Competitive Intelligence?
Competitive Intelligence as defined by the Society of Competitive Intelligence
Professionals (SCIP), states Competitive Intelligence is a necessary, ethical business
discipline for decision making based on understanding the competitive environment [3].
Though, both Business Intelligence and Competitive Intelligence help you to make
decisions, the major difference between the two is that Competitive Intelligence is
knowledge focused on external environment. It is knowledge about your competitors
and competitive market.
A broad definition of Competitive Intelligence is the action of gathering, analyzing,
and distributing information about products, customers, competitors and any aspect of
the environment needed to support executives and managers in making strategic
decisions for an organization [8].
Competitive Intelligence is not Spying
The greatest myth about Competitive Intelligence is that Competitive Intelligence
is spying. This could be blamed on media or governments of various countries who use
spying as the key element behind their intelligence success. But, Competitive
Intelligence is about collecting information of an organization which is publically
available. It is about predicting the next move of your competitor based on the
information collected in Market Research. There are code of ethics laid out by Strategic
and Competitive Intelligence Professionals (SCIP) which clearly states to reveal one’s
identity and organization prior to all interviews, and be honest at all times. Industrial
Espionage or spying is more than the legal methods of examining competitor’s
information. Following are the SCIP code of Ethics for CI professionals [9]:
Copyright©2010, Deepak Ainani
Business Intelligence/Competitive Intelligence
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To continually strive to increase the recognition and respect of the profession

To comply with all the applicable laws, domestic and international

To accurately disclose all relevant information, including one’s identity and
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organization, prior to all interviews

To avoid conflicts of interest in fulfilling one’s duties

To provide honest and realistic recommendations and conclusions in the
execution of one’s duties

To promote this code of ethics with one’s company, with third-party contractors
and within the entire profession

To faithfully adhere to and abide by one’s company policies, objectives and
guidelines
Other Myths of Competitive Intelligence
Competitive intelligence has its own set of myths and the most common ones are
(Sharp, 2009, p. 225-243):

Everyone has access to competitive intelligence, so there is no advantage doing
it: As mentioned above, Competitive Intelligence is data that is available but
someone needs to spend time and find it out. Also one needs to spend time and
energy to verify the facts and/or data collected. Two people can have same data
but the one who analyzes and interprets it better will have greater chance of
success.

The most valuable information is already known within my organization: Most of
the information may or may not reside within the organization but even if it does
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the major challenge is to unearth the information and pass it on to the right
people.

Our executives are very knowledgeable about our industry: Most executives are
well experienced and aware of industries but they don’t know everything. They
could miss out on some major facts. Studies have shown when the competitive
intelligence results are reviled to the executives often data falls into two
categories:
o Data contradicted what they knew (which was outdated or never true)
o It was a signal or indication of change of which they were unaware

Information is free: Everyone has access to internet which houses enough data
that some of it does qualify as information that we need. But how do we
differentiate between data and information when we have this enormous pile of
data access? Search engines like Google are not meant for retrieving market
specifics results. Market information is generally available in major newspapers,
trade publications and specialized newsletters which are rarely cited by regular
search engines. Some fee-based commercial databases like LexisNexis, Factiva
and others are good sources of information.

Intelligence costs too much: How much does it cost an organization to fix a
blunder (consider all the recalls and image tarnished)? How much market share
is lost by a company for not responding to the customer’s needs? Does it costs
more than doing it right first time? Yes. So spend time and resources to get it
right the first time and avoid bad name in the market and keep your customers
happy.
Copyright©2010, Deepak Ainani
Business Intelligence/Competitive Intelligence
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There’s no information about private companies: There is a lot of information
available about private companies. The amount of information available varies
from the public face presented by the company, media interest and the support
from the industry.

Google is a great source of competitive intelligence: If it’s not available on
Google, it probably doesn’t exist.” We have heard this quote several times.
Google and several other search engines does a good job of collecting enormous
amount of data but these engines offer very limited business information.

Every decision should include competitive intelligence: Competitive Intelligence is
necessary to be successful but don’t overdo it. Consider, if someone wants to
know which is the biggest university in Ohio, it doesn’t take a detailed research
and analysis but a quick search or even existing knowledge is sufficient to
answer this question.

Competitive intelligence software provides intelligence: Competitive Intelligence
software does a good job of collecting large amount of information but they lack
the critical thinking or common sense.

Data, information and intelligence are the same: Data is important but not
sufficient by itself to the business and only when enough relevant data is brought
together, analyzed, and fit into a meaningful picture that the resultant data and
information may move up to the level that we can call intelligence. In other words,
data is a subset of information, and information is a subset of intelligence.

Competitive intelligence is a waste of time: Competitive Intelligence helps you
forecast the changing market and its needs. The results of Competitive
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Intelligence clearly details the changing market drivers, new strategic and
marketing approaches, alternative uses of your product or services, unknown
customers, emerging competitors, different distribution channels and more.

Competitive intelligence is only for Business-to-Consumer (B2C) industries:
Competitive Intelligence is knowing the right information for making the smarter
decisions which is equally true for Business-to-Customers (B2C) and Businessto-Business (B2B), as well as to non-profits.
Intelligence Collection
With an easy access to internet we take it for granted that the information we
need is only a few mouse clicks away. But as mentioned earlier, with the deluge of data
available on the internet it becomes more difficult to filter out the unnecessary data and
keep the useful information. It involves obtaining the raw data that would be turned into
useful information. Some of the most common sources of Intelligence are:

Online and Newspaper articles

News updates

Company’s website

Stock market

Annual reports

Blogs, wikis

Various intelligence databases

Trade magazines

U.S. Department of Commerce

Case studies
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Business Intelligence/Competitive Intelligence
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Intelligence Professionals
Now we know how important role intelligence plays in the success of any
organization, it should be taken into account that the people who are involved in the
intelligence collection and processing are highly skilled and qualified. In a successful
organization, intelligence people have access to key decision makers at all times. These
professionals are often referred as information workers.
The three classes of information workers are [10]:
1. The knowledge worker: this class of information worker works with ideas and
manages teams. They want to develop and improve processes and forms by
encouraging collaboration and creating workspace environments. They need to
create, consume, transform and analyze data but tend to work in an unstructured,
free-form way, usually starting with ideas that are collaborated upon and built into
document/report/form/business process. Examples include middle/senior
managers, consultants and marketing executives.
2. The structured task worker: these individuals tend to work only with data and
information, not ideas. They create and consume information but don't transform
or manage it. They typically must find facts quickly, create documents based on
the information found, and edit, write and even process data. Microsoft believes
that this category makes up 80% of the business user base in most organizations.
Examples include a bank clerk, call center operator, nurse and people in
supervisory roles such as a shop manager, bank manager and nursing
supervisor.
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3. The data entry worker – this final class of information worker creates and
consumes information, but rarely transform or manage it. They want easy access
to information, like standardized processes and forms, and list management.
They do not tend to do free-form document creation and typically work in
administrative, secretarial or receptionist roles.”
Conclusion
Both Business Intelligence and Competitive Intelligence play a pivotal role in the
success of organization. It needs to be adopted in a right way by having right people
doing their job else it may backfire spectacularly. These fields are for highly skilled and
experienced professionals and should be addressed with utmost importance. Once it is
implemented in a right way, intelligence goes a long way in planning, decision making,
and avoiding operational and strategic surprises which may hurt organization’s progress.
The right intelligence solution enables executives, decision makers, business users,
processes and technology to work together to make more information decisions.
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References
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Copyright©2010, Deepak Ainani