Leveraging the business intelligence quotient - includes related article on BI programs

Chief Executive, The, Dec, 1996 by William E. Odom, David Harkleroad, Lorri Grube

Business intelligence isn't about spies and cloak-and-dagger assignations on dark street corners. It's about implementing a process that organizes, analyzes, and utilizes information to stay one step ahead of the competition.

Ford Credit executives used to receive thick binders chock full of published facts about the company's competitors. Yet little of this less-than-up-to-the-minute information proved useful in supporting strategic decisions, long-range planning, or growth in new markets. In addition, interviews with employees revealed that, "the grapevine is faster than the reports. Employees in the field are asked to report information to someone in headquarters who is just down the hall from someone who asked for the same thing three months ago. We do a lot of water-cooler analysis...there is no way to compare new information to history."

The problem? Ford Credit collected lots of data, but didn't have a business process in place to organize, analyze, and utilize that information and turn it into intelligence - up-to-date, valid information that compels action and is in the hands of the people who have both the authority and the responsibility to do something about it. The solution did not entail establishing a CIA-like operation with massive resources, unlimited manpower, banks of supercomputers, and a hefty budget. Instead, Ford Credit created a small BI unit focused around selected key intelligence topics and a common knowledge base.

Today, Ford Credit executives get succinct reports and briefings describing the probable impact of new competitor activities, the threats and opportunities posed by new technology initiatives, and how current or potential competitors might change the dynamics of the industry.

JUST GIVE ME EVERYTHING

A 1995 survey of 104 U.S. corporations by The Futures Group revealed that only 58 percent of the respondents had an organized BI system. And those who currently have BI systems only gave them so-so marks for effectiveness - a 5.9 average on a scale of 10. It appears that many companies think keeping up with the market and competitors is as easy as reading a few business publications and a specialized industry newsletter or two - information that is, at best, dated and incomplete. Others subscribe to clipping services or electronic news feeds, which offer similar information, only quicker. Some circulate weekly activity reports from the sales staff or assign an employee to summarize competitors' annual reports and product literature, but no vital decision-making analysis is done.

Lack of focus and action is why so many corporate business intelligence operations fail. Companies assign an eager employee to find out "everything" on the competition for "everybody." Early enthusiasm wanes as the employee collects years of annual reports and company filings. All of this is supplemented with reams of data from on-line searches, and the result is the endless propagation of thick reports and competitor newsletters. These monstrous compilations end up in the in-box - or worse, the circular file - and are deleted from e-mail because no one has the time or the incentive to read them. Even those who do have time quickly lose interest because the information is not relevant to their specific needs.

A few possible solutions:

* Create a database to house all the information the company could possibly need on its competitors.

* Subscribe to one of the increasing number of on-line services that promise to deliver a stream of articles to individual desktops.

* Outsource the whole intelligence function to a consulting firm.

Unfortunately, none of these addresses the problem of a fundamentally flawed process. Good business intelligence must be a priority. If you decide it is not a priority, then put your money into advertising. A half-baked effort in which a junior analyst just summarizes the latest wave of on-line news clippings is a waste of your time, even if you spend only 10 minutes a week reading it.

Effective business intelligence production requires six basic operations:

* Defining decision-maker needs. The decision maker must be involved from the beginning. At a minimum, answering the following questions before starting a BI operation will allow you to avoid the "just give me everything" request:

* What specific information is needed and why?

* How will it be used and by whom?

* What do we already know?

* Will this be a one-time request or ongoing?

* When do we need it?

* Planning and direction. A good plan should contain a concise definition of the issue, why it is important, how the business intelligence will be used, who will use it, what specific questions must be answered, what types of analysis will be performed, and when each of these will occur. The plan then should be reviewed by the decision maker, which helps ensure both that the right intelligence will be collected and that it will be used. After approval, the BI unit can begin the task of identifying specific information sources and in which sequence they will be contacted.