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September 25, 2000 |
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Keeping An 'I' On The Competition
Internet resources have changed the landscape for competitive-intelligence professionals
By Larry Kahaner
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on't call them spies. they hate that. Competitive-intelligence professionals admit that what they do may seem like spying or business espionage, but there's one defining difference: Most of their information comes from sources that are open or public, and is gathered legally and ethically. Increasingly, this information is coming from the Internet."The Internet is invaluable to our business," says Jim Walsh, director of special markets for SBC Communications Inc., who handles competitive intelligence for the Dallas carrier. "It's still only one part of our collection process, but it's an important part."
Although nobody knows how many businesses engage in competitive intelligence, most large U.S. companies, and many smaller ones, devote people and resources to collecting and analyzing information about their competitors. If their association, the Society of Competitive Intelligence Professionals (SCIP) in Alexandria, Va., is an indicator, business is booming. The group boasts almost 7,000 members, a quarter of them from outside the United States. Before its ranks swelled to their current level, SCIP was for several years the world's fastest-growing professional association. Competitive intelligence can be so effective that many companies, including drugmaker Merck & Co. in Whitehouse Station, N.J., and Swedish conglomerate ABB Group in Zurich, Switzerland, have replaced their business-or strategic-planning offices with competitive-intelligence departments.
Competitive-intelligence personnel use the same four-step intelligence cycle devised during World War II by the Office of Strategic Services, the forerunner of the Central Intelligence Agency. First, pose a question and set a plan of attack; second, gather information; third, analyze the information; and last, disseminate it to the decision makers. The Internet is used extensively in the information-gathering step--a huge change from pre-Web days.
"I remember having to be on the telephone when I wanted a copy of an annual report or SEC filing," says Martha Clampitt, a research analyst for Reynolds Metals Co. in Richmond, Va. "Now I have them the minute they're filed, by using a push service." Push services automatically E-mail specified documents to users. "Any competitive-intelligence person must know Internet searching inside and out," says Pat Bryant, president of SCIP and the director of the Drug Information Center at the University of Missouri-Kansas City. "It's a must."
SBC's Walsh employs competitive intelligence to research competitors and customers alike. "We use the Net extensively to study the competitive local exchange carriers," he says. "They're customers of ours, and we need to know if we're keeping up with their needs and interests." Walsh, who directs about 10 area managers on SBC's wholesale side, notes that company Web sites have become such a rich source of competitive-intelligence data that some companies have chosen to limit their scope. "Our competitors have pared down their Web sites because they know we're looking at them," he says.
Indeed, one trick that surfaced about a year ago involves domain-name identification, in which Web sites are configured to detect browsing competitors by their domain names, and divert these visitors to special pages. Cisco Systems redirected such visitors to a page containing holiday-party scenes, then shunted them to a page about employment opportunities at Cisco. To avoid detection, many competitive-intelligence personnel have taken to browsing competitors' Web sites incognito by using a different account from their employer's--usually one with a large Internet service provider or online service such as America Online.
Mary Ellen Mogee, president of Mogee Research & Analysis Associates in Reston, Va., dwells in the esoteric competitive-intelligence discipline of patent analysis. By drilling deep into patent data, her company helps clients assess their positions among peers, as well as discover trends and patterns in new technology. She recently finished a study of deodorant and antiperspirant patents--having found more than 2,000 records via the Web--and used her own software to slice and dice the information. "The big change for us is that patent data is available for free on the Web," says Mogee, "but it's raw information." Mogee complements these sources with value-added databases such as Derwent World Patent Index from Derwent Information in Alexandria, Va., which cleans the raw patent data, adds codes, and corrects spellings, all to facilitate keyword searches. The cost for Derwent's services vary widely.
Like Mogee, many competitive-intelligence professionals draw from a mix of free and for-pay information sources, sometimes at the same Web site. Eric Timm, VP of strategy and business development at Monsanto Co.'s nutrition section in St. Louis, says he's seeing more free material but he's noticing a trend toward hybrid services--part free, part for a price. "If you want to go deeper, you pay," he says.
Costs for these services range from a few dollars for a specific, single request, such as a criminal or civil record for a company or an individual, to hundreds of dollars a year or more for services from sites that offer complete, regularly updated financial and historical data about a competitor.
Timm also sees a huge influx of previously classified information, such as satellite photos, from government sources. "For the first time on a large scale, commercial people and those in the government are looking at the same open sources," he says. The wide availability of this type of information affects not only competitive-intelligence personnel, but those who work in government intelligence agencies. For instance, the CIA has begun a program of using open-source information in an effort to keep agents out of trouble and the agency's name clean.
One of Timm's biggest uses of the Web is to find documents, such as competitors' profiles, that he stores and updates in his group's network, along with material from other sources. This information, kept fresh through updates, is often used to respond quickly to queries from top company executives.
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Illustration by Brian Stauffer
Photo of Walsh by Steve McAlister
Photo of Timm courtesy of PhotoCorp.com
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