Author: Sergiu Medar, ICSS
Revista de Informatii pentru Afaceri – Romanian Business Intelligence Professionals Association (ASIA)
It is obvious that, for a long period of time from now on, the companies will carry out their activities against the background of economic and financial crises overlapping with the process of globalisation. The effect of these two simultaneous phenomena leads to the globalisation of the crises and thus it becomes a major element of risk for the economic, and implicitly, financial development of companies. It is practically impossible for the development of companies, no matter how small they are, to remain untouched by the globalisation of the crises.
Companies can no longer plan their activity without profound and professional understanding of all the elements necessary to manage a company in the decision-making process, among these elements being intelligence. The success, and sometimes even the survival of a company, depends on the quality of intelligence it acquires and which allows it to make correct decisions in an unpredictable environment in which the only predictable thing is its unpredictability. There is a major difference between information and intelligence. Information is a material often descriptive, not evaluated, results from observation, discussions, reports, rumours or images. The pieces of information can be true or false, accurate or not, confirmed or not, real or fanciful. Intelligence is a result of the collection, assessment and interpretation of the pieces of information. Intelligence is always checked using different sources, in a cross-check process.
The above definitions prove clearly that what companies need is intelligence and not information.
In fact, Robert Steel, a well known financial expert, says that “information costs money… intelligence makes money”.
The president of a company has said that he keeps gathering information and he is right since this isn’t intelligence.
Business intelligence has two basic components:
- Competitive Intelligence (CI)
- Competitive Counter Intelligence (CCI)
The phrase “Business Intelligence” is often used with a limited meaning referring only to the IT processing and storing of information. The “confiscation”, on commercial purposes of this phrase by the IT companies, needs to be cleared up so that this concept to be well understood. The association of the Romanian Business Intelligence Professionals Association considers that the phrase “Business Intelligence” means only “Intelligence for Business”.
Competitive Intelligence is the activity of defining, gathering, analysing and disseminating intelligence products on clients, competitors and on other aspects of business environment necessary to business decision makers to make strategic decisions. If Competitive Intelligence means to get intelligence referring to the business environment a company is interested in, competitive counter intelligence means to ensure the security of a company against the competitors’ attempts to get information which later is to be transformed into intelligence. CCI (Competitive Counter Intelligence) also deals with the physical security of a company: documents, personnel, IT systems (INFOSEC) and communications (COMSEC).
A company, in order to be successful, has to combine the two domains: competitive intelligence and competitive counter intelligence.In accordance with some evaluations, conducted by SCIP (Strategic and Competitive Intelligence Professionals) in the USA, between 65%-85% of the big companies have a clear program of business intelligence. Among the companies that most successfully use business intelligence are Motorola, Coca Cola, General Electric, Dell Computers, Merck, Proctor and Gamble, General Motors a.s.o. According to the evaluations made by SCIP (vol.10, no.2, 2007):
- Procter&Gamble gained 40 million dollars a year, for the first five years, after they introduced a BI program.
- Motorola, relying on the intelligence provided by its BI department, bought a European company and the next years its profit was 10 million dollars.
- NutraSweet gained 50 million dollars, for five years, using a BI programme on which its spent only about 450.000 dollars a year.
- NutraSweet also got 38 million dollars as, on the recommendation of its BI department, it didn’t join one of their competitor’s initiative.
- Merck had a profit of 100 million dollars using, on the recommendation of its BI department, a certain sales policy for one of their products.
Unfortunately, most decision-makers of big companies are not interested in calculating accurately the profit obtained by their company as a result of putting into practice the BI solutions, being content to be permanently informed about the developments of the business environment they are interested in, the market trends, the main accomplishments and shortcomings of their competitors. The leadership of the companies that don’t do a hit-or-miss business consider that it is worth paying (even tens of thousand euros) on a monthly, up-to-date, intelligence bulletin regarding a certain business domain or, from time to time, on a business research.
The Nutra Sweet CEO has declared that the BI program of the company helped him make better decisions, improve his strategic planning and make it more competitive and efficient, have successful products and services, contributed to the increase of their sales and also enabled him to identify new market opportunities.
On implementing a BI department in a company, the most difficult thing is to convince the company leadership that they need such a service. As soon as they become aware that this is necessary, BI becomes a multiplying factor of the company’s performances. Thus, the leadership of a company will be able to identify:
- Market opportunities
- Evaluate market niches
- Current and future price trends and how prices are to be affected on a short or medium term by the economic and financial crisis
- The impact of globalisation on a company
- The impact of the political and security environment on one’s own businss
- Future development of the political and security environment and its impact on one’s own business
- The impact of the competitors’ ability of predicting the development of one’s own business
- The current and foreseeable developments of the financial markets
- The investment risk
- The risk regarding the providers and their relationships with the competitors
- The risk regarding the creditors and the evaluation of their current and future financial available funds
- The risk of possible associations with other firms
- The risk factor brought about by the appearance of new companies
- The resources in one’s own company
- The specialised personnel on the market
As far as CCI is concerned , a company will be able to improve its performances since there will be:
- An up-to-date security auditing
- Programs and projects to ensure physical security
- Programs to ensure a safe circulation of the company’s sensitive documents
- Assistance to implement modern methods of vetting when people are employed or promoted
- Specialised training support for the staff in order to be able to protect themselves against the competitors’ intelligence collecting attempts
- Support for implementing protection methods for the IT systems
- Support for implementing protection systems for the company’s communications to prevent illegal access to its data and information from the company
Douglas Bernhardt, president of a famous consulting company and expert in making big companies efficient, mentions in one of his books that “strategy without intelligence isn’t strategy, it’s guessing’’.
In order to get the expected results from a business intelligence department the leadership of a company has to know some basic elements:
- In order to get the intelligence product referring to the Romanian business environment, it is advisable for a company to train its own personnel that is to plan, gather, process and analyse intelligence in order to hand the leadership the required product. The trained staff is certified.
- To get the intelligence products referring to investments, providers, competitors, financial markets etc. which are abroad a company has to sign a contract with a specialised firm with expertise in strategic intelligence and on this contractual basis to get a monthly intelligence bulletin and, on request, business reports on different issues. The company’s decision makers should cooperate directly with this specialised firm.
- In order to implement a CCI position in a company it is advisable to set up a specialised department which is to propose the decision makers the measures to be taken to ensure the physical, personal, document, information, communications security.
Any decision maker who wants to set up a BI department in his company or to use a specialised firm for this has to have in view:
- Competitive Intelligence is not economic espionage. The former uses legal means to get information while the latter uses mainly illegal means.
- The quality of the final intelligence product depends on how accurate the request is made.
- The intelligence product can’t provide everything the customer requires it can provide only the greatest part of the information required.
- The better accustomed the BI firm is with the activity of the company, the better it can anticipate the decision makers’ needs.
- The relation between the organisation leadership and the BI company is efficient only when this relationship is based on trust, otherwise, the cooperation comes to an end.
- Any BI activity is based on the existence or the setting up of a specialised IT system with a secured data base and a hierarchic access decided by the company leadership.
The existence, even on a low budget, of a BI department within a company with low budgets can grant the leadership of the company at least the comfort and self-confidence given by the fact that they will always be better informed than their competitors or associates.
- Herring, Jan P., How Much is your Competitive Intelligence worth, SCIP, vol.10, no.2, 2007;
- Herring, Jan P., Create an Intelligence Program for Current and Future Needs, SCIP, vol.8, no.5, 2005;
- Bernhardt, Douglas, How to acquire and use corporate intelligence and counter-intelligence, Prentice Hall, Financial Times.
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