Leveraging the business intelligence quotient.

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.

* Gathering published information. Even though this information is often out-of-date and equally accessible by competitors, it provides background, a context, and potential sources.

* Collecting from human sources. Employees are one of the best sources of good information. They are in constant contact with customers, suppliers, and technical experts. The simple step of telling them what you are interested in and having them send it to one central location will increase your knowledge base considerably. Additional intelligence can be gleaned by regularly interviewing industry experts.

* Analysis and production. Executives are often too busy leading to spend adequate time interpreting the raw data they receive. Moreover, if the entire management team analyzes the same information, the analyses will not only be redundant, but also inadequate, because all the findings are not always shared. By assigning trained analysts to priority topics, executives can focus on decisions and action, rather than analysis.

* Dissemination. Software is not the solution to the dissemination dilemma. Remember the old caveat, GIGO: garbage in, garbage out. In analyzing information, software is a tool - necessary, but insufficient by itself. Nothing replaces face-to-face reviews with key decision makers.

FORD CREDIT'S BI KITs

In 1994, Ford Credit realized it would have to improve its business intelligence process to help it remain the largest automotive finance organization in the world and stay more than one step ahead of its competitors. So it engaged The Futures Group, a consulting firm specializing in business intelligence and scenario-based planning, to conduct an objective capabilities audit and offer specific recommendations for improvement.

To ensure the maximum skill and process transfer, as well as employee buy-in, a joint employee/consultant team was formed. It identified BI needs, evaluated current capabilities, designed a process that would fit the company culture, and developed an implementation plan for management review and approval. Small interview teams, consisting of one employee and one consultant, began by interviewing the top 22 company executives on their business intelligence needs. The team identified 122 significant business intelligence questions, which it organized into 48 Key Intelligence Topics (KITs) in three categories: strategic decisions and issues, early warning, and key players.

Examples of KITs included:

* Intelligence support for the implementation of regional growth strategies - how real are the opportunities?

* How serious is the threat of emerging competitors, such as used-car superstores? What actions must we take?

* What technological "surprises" might fundamentally change the nature of distribution (e.g., home banking)?

* What new types of competition could be created from government regulatory changes?

* Who is developing new technologies/systems for automotive finance?

* Which reorganization or re-engineering efforts are likely to have a significant impact on operating cost structures?

Next, the teams interviewed another 95 company employees - including directors, managers, supervisors, and senior operational/technical personnel - to identify existing data and information sources, information flows, and analysis efforts. Many of the biggest problems were organizational. Some illustrative quotes about the existing business intelligence "process" included: "We need a better mechanism to share information. Lots of information sits around until somebody asks the question. Nobody on the staff writes trip reports when we go out on visits."

In the end, Ford Credit created a small business intelligence unit, with a full-time manager who reports to the vice president of strategic planning. The business intelligence activity drafted a set of legal and ethical guidelines for all employees that, while clearly delineating what actions company personnel must not engage in, also identified acceptable behaviors. For example, one guideline states: "Do not request a consultant to do something you are prohibited from doing, including delivering proprietary or confidential information or documents." A series of awareness-building workshops were held to acquaint employees with the activity and help dispel any misconceptions about business intelligence being "espionage" and, thus, involving illegal or unethical activities. At the workshops, employees learned what BI was, how it worked, how it would be used, and what their role was.

Finally, the unit participated in a formal training program over three months conducted by The Futures Group, which was followed up by on-the-job experience under the supervision of an experienced coach over the next year. Senior management - including the chairman, who also reviewed all intelligence action plans and outputs and participated in intelligence gathering and interpretation - attended a workshop on "How to Ask for and Use Business Intelligence."

Of the 48 Key Intelligence Topics prioritized by the executive committee, the six most important were used as training vehicles. After a series of classroom sessions and exercises, business intelligence personnel developed project plans that were reviewed for relevance by individual executive committee members. The business intelligence unit then gathered published data, interviewed employees and industry experts, conducted analysis, and prepared reports that ultimately were used to brief management.

Today, upper managers no longer receive big binders of outdated information. Rather, for a four-month project, they might receive executive briefings conducted with five overheads (25 bullets total), supported by a dozen pages of detailed findings.

COMMON KNOWLEDGE

One of the most significant benefits of the decision to launch a business intelligence effort is that now employees are sharing much more relevant information across traditional boundaries. Whenever possible, the BI unit brings other departments into the business intelligence process, from gathering and analyzing the information to sharing the findings. Instead of everyone having his or her own opinion about a topic or competitor, based on different microbits of information, the company is creating a common knowledge base. Previously, management at times wondered about the quality or accuracy of the information, or whether it was merely speculation or rumor. Now, even though everyone doesn't always agree on what the conclusions mean, the focus is on using the information, not questioning its validity.

Is Ford Credit where it wants to be? Not yet: The business intelligence unit has only been operational for about a year, and as Motorola Chairman Bob Galvin has said, it takes at least a decade to fully integrate the process into the corporate culture. However, to date, Ford Credit has developed a much better understanding of its competitors, particularly how they operate and compete and what they are doing. This has enabled the company to identify and implement more effective responses to specific competitive actions and initiatives and to find new and better ways of successfully meeting consumer needs.

RELATED ARTICLE: THE CEO DIFFERENCE

Pacific Enterprises employees call, e-mail, and fax the director of Business Strategies information on what they hear or read about emerging trends in the marketplace, new customer demands, and opportunities or threats requiring a company response. U S West Media Group's Strategic Intelligence division helps its business units develop a data collection plan and identifies primary sources for sophisticated projects. Xerox collects intelligence on global, national, and local levels via its Xerox Business Divisions, U.S. Customer Operations, and Customer Business Units.

While modelled somewhat differently, these three BI initiatives share a common cornerstone: CEO involvement. "The reporting and supporting relationships between a highly trained intelligence advisor and an open-minded CEO and his executive team are what makes or breaks a BI initiative," says Ben Gilad, president of the Academy of Competitive Intelligence in Alexandria, VA, and creator of Pacific Enterprises' BI model. Gilad points to Duracell, Motorola, IBM NA, CPC/Best Food, and Dow Jones Business Information Division as other examples of companies with successful BI efforts spearheaded by their chief executives.

Jim Thomas, director of Strategic Intelligence for Englewood, CO-based U S West, coordinates with CEO Charles Lillis and top executives to find out what they need to know to make decisions. "I ask them what keeps them up at night," Thomas says. "As a result, we look at the marketplace, at systems cost, at other industries entering our business, at possible synergies, and at our customer desires."

At Los Angeles-based Pacific Enterprises, a holding company for utility Southern California Gas, the BI function has to come up with something CEO Bill Wood finds of interest and can act on, says Director of Business Strategies Chuck Rooney. "The utility business is being deregulated, so we have created a human intelligence network to learn about our competition, become more market-focused, and concentrate on discovering the long-term strategic implications of the changes."

How can a company tell if its BI initiative is succeeding? A few have tried to put a dollar figure on it: Gary Costley, former president of Kellogg NA, has estimated that a BI model created by Gilad saved the company $25 million the first year. Bob Flynn, former CEO of Nutrasweet, has said the benefit of his company's BI program came to around $50 million. But most agree that valuing BI in terms of money saved or lost or opportunity saved or lost is a futile endeavor.

"BI by itself has no value," Thomas says. "It must be coupled with strategic planning, market planning, and a scenario development proposition. The information collected is only valuable if it is used in the decision-making process."

- Lorri Grube

William E. Odom is chairman of Dearborn, MI-based Ford Credit, the automotive finance unit of Ford Motor Co. with assets of more than $110 billion. David Harkleroad is the chief operating officer of The Futures Group, a Glastonbury, CT-based consulting firm specializing in business intelligence and scenario-based planning.