Business Intelligence (BI) is inward looking towards your own organization. Business intelligence (BI) comprises the strategies and technologies used by enterprises for the data analysis of business information. BI technologies provide historical, current, and predictive views of business operations. Common functions of business intelligence technologies include reporting, online analytical processing, analytics, data mining, process mining, complex event processing, business performance management, benchmarking, text mining, predictive analytics, and prescriptive analytics. BI technologies can handle large amounts of structured and sometimes unstructured data to help identify, develop, and otherwise create new strategic business opportunities. BI is centred on internal factors that the organization can affect and the impact that may result from altering those factors. Value chain analysis is an analytic technique commonly used to evaluate the core competencies of a business.
Market, Competitive & Business Intelligence
Market intelligence (MI) involves surveying larger field and typically is far broader in scope with long-term implications. Rather than simply focusing on direct competitors and customers, it expands your vision to other aspects that can have an impact on your business. A major intelligence technique in Market Intelligence is STEEP (or PESTEL): Social, Technological, Economic, Environmental, and Political/Legal.
Effective use of MI helps make the business environment more manageable. Market intelligence can help companies recognize new, unconventional competitors as well as new opportunities. MI is necessary to guide more long-term strategy – whereas CI is frequently more short term and tactical. Market intelligence and competitive intelligence are both environmental (outward facing) assessments that consider external forces on the company.
Competitive Intelligence (CI) is an analysis of the all external components of the business environment that impact your business, and the impact that these components may have. CI involves using analytic methods and techniques such as SWOT (Strengths, Weaknesses, Opportunities and Threats) and Porter’s Five Forces. Many businesses engage in CI activities either formally or informally. However, they may lack the focus, maturity, and process – or combination thereof – to execute CI effectively. Effective CI derives an actionable analysis on how to improve your own position, distinguishing “competitive intelligence” from just “gathering information about a competitor”.
Competitive Intelligence is generated from open source information and through conversations with customers (or competitors), rather than under-the-table activities.
Purpose and Analysis to be done
Business intelligence Analysis is done by enterprises to support a wide range of business decisions ranging from operational to strategic. Basic operating decisions include product positioning or pricing. Strategic business decisions involve priorities, goals, and directions at the broadest level. In all cases, BI is most effective when it combines data derived from the market in which a company operates (external data) with data from company sources internal to the business such as financial and operations data (internal data).
BI + CI + MI = Competitive Advantage
successfully employing all three forms of intelligence within your business can help drive strategies and tactics leading to competitive advantage. The three most commonly referred to competitive strategies are cost-leadership, differentiation, and niche.
Cost-leadership is one of the easiest to understand and involves a company winning market share by having the lowest price in the market and typically favours economies of scale.
Differentiation is slightly harder to define concisely but for our purposes we will refer to it as value; a customer may not be as price-sensitive and so is looking for a product or service that addresses a customer’s needs better than alternatives – even though price may not be lowest.
Niche strategy relies on a business’s ability to fill a gap in the market by fulfilling a specific need in a very narrowly defined market. As the name suggests, niche markets are small but may be used to create a specialized market within a larger market. Defending a niche market against broader, more generalist competitors is easier due to a narrow focus and competitive advantage.