Mark Xu Managing Strategic Intelligence Techniques and Technologies Premier Reference 2007

Managing Strategic
Intelligence:
Techniques and Technologies

Mark Xu
University of Portsmouth, UK
Information science reference

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Library of Congress Cataloging-in-Publication Data
Managing strategic intelligence : techniques and technologies / Mark Xu, editor.
p. cm.
Summary: This book focuses on environment information scanning and organization-wide support for strategic intelligence. It also provides practical
guidance to organizations for developing effective approaches, mechanisms, and systems to scan, refine, and support strategic information provision-Provided by publisher.
Includes bibliographical references and index.
ISBN 978-1-59904-243-5 (hardcover) -- ISBN 978-1-59904-245-9 (ebook)
1. Business intelligence--Management. 2. Strategic management. 3. Information technology--Management. I. Xu, Mark.
HD38.7.M3654 2007
658.472--dc22
2007007264
British Cataloguing in Publication Data

A Cataloguing in Publication record for this book is available from the British Library.
All work contributed to this book set is new, previously-unpublished material. The views expressed in this book are those of the authors, but not necessarily of the publisher.
Table of Contents
Foreword .............................................................................................................................................. xi
Preface ................................................................................................................................................. xii
Acknowledgment ............................................................................................................................... xvi
Section I
Understanding Strategic Intelligence
Chapter I
Leveraging What Your Company Really Knows:
A Process View of Strategic Intelligence / Donald Marchand and Amy Hykes .................................... 1
Chapter II
Business Intelligence: Benefits, Applications, and Challenges /
Stuart Maguire and Habibu Suluo ....................................................................................................... 14
Section II
Strategic Intelligence Framework and Practice
Chapter III
The Nature of Strategic Intelligence, Current Practice and Solutions /
Mark Xu and Roland Kaye ................................................................................................................... 36
Chapter IV
A Strategic Marketing Intelligence Framework Reinforced by Corporate Intelligence/
Peter Trim and Yang-Im Lee ................................................................................................................ 55
Chapter V
Supporting Executive Intelligence Activities with Agent-Based
Executive Information Systems / Vincent Ong, Yanqing Duan, and Brian Mathews .......................... 69
Chapter VI
Managing Executive Information Systems for Strategic Intelligence in
South Africa and Spain / Udo Richard Averweg and Jos L. Roldn .................................................. 87
Section III
Enhancing Environment Scanning and Intelligence Practice: Techniques
Chapter VII
Understanding Key Intelligence Needs (KINs) /Adeline du Toit ....................................................... 111
Chapter VIII
Awareness and Assessment of Strategic Intelligence: A Diagnostic Tool / Franois Brouard .......... 122
Chapter IX
Gaining Strategic Intelligence Through the Firms Market Value:
The Hospitality Industry / Juan Luis Nicolau .................................................................................... 141
Chapter X
Knowledge Creation and Sharing: A Role for Complex Methods of
Inquiry and Paraconsistent Logic / Peter Bednar and Christine Welch ............................................ 159
Section IV
Supporting Strategic Intelligence Processing: Technologies
Chapter XI
Using Grid for Data Sharing to Support Intelligence in Decision Making /
Nik Bessis, Tim French, Marina Burakova-Lorgnier, and Wei Huang .............................................. 179
Chapter XII
Intelligent Supply Chain Management with Automatic Identification Technology /
Dong Li, Xiaojun Wang, Kinchung Liu, and Dennis Kehoe .............................................................. 202
Chapter XIII
An Ontology-Based Intelligent System Model for Semantic Information Process /
Mark Xu, Vincent Ong, and Yanqing Duan ........................................................................................ 224
Chapter XIV
Bibliometry Technique and Software for Patent Intelligence Mining /
Henri Dou and Jean-Marie Dou ........................................................................................................ 241
Compiled References ........................................................................................................................ 270

About the Contributors ................................................................................................................... 297
Index ................................................................................................................................................... 303
Detailed Table of Contents

Foreword .............................................................................................................................................. xi
Preface ................................................................................................................................................. xii
Acknowledgment ............................................................................................................................... xvi
Section I
Understanding Strategic Intelligence
Chapter I
Leveraging What Your Company Really Knows:
A Process View of Strategic Intelligence / Donald Marchand and Amy Hykes .................................... 1
Strategic intelligence is about having the right information in the hands of the right people at the right
time so that those people are able to make informed business decisions about the future of the business.
Thus, in order to improve a companys strategic intelligence process, management must take a critical
look at how effectively they manage information. Effective information management requires specific
information-processing practices, employee behaviors and values, and technology. The information
orientation (IO) framework is a tool that managers can use to determine the companys level of effective
information management and to identify areas where they can make improvements. By achieving IO
maturityaligning processes, people behaviors, and technology practices with business strategiesa
company can derive a competitive advantage and future leadership. IO mature companies are most successful at collecting and openly sharing the strategic intelligence that their employees need in order to
successfully monitor and proactively react to future market trends or events.
Chapter II
Business Intelligence: Benefits, Applications, and Challenges /
Stuart Maguire and Habibu Suluo ....................................................................................................... 14
The main aim of this chapter is to identify the important role of business intelligence in todays global
business environment and to reveal organizations understanding of business intelligence and how they
plan to use it for gaining competitive advantage. Increases in business volatility and competitive pressures
have led to organizations throughout the world facing unprecedented challenges to remain competitive
and striving to achieve a position of competitive advantage. The importance of business intelligence
(BI) to their continued success should not be underestimated. With BI, companies can quickly identify
market opportunities and take advantage of them in a fast and effective manner. The aim of this chapter
is to identify the important role of BI and to understand and describe its applications in areas such as
corporate performance management, customer relationship management and supply chain management.
The study was conducted in two companies that use BI in their daily operations. Data were collected
through questionnaires, personal interviews, and observations. The study identified that external data
sources are becoming increasingly important in the information equation as the external business environment can define an organizations success or failure by their ability to effectively disseminate this
plethora of potential intelligence.
Section II
Strategic Intelligence Framework and Practice
Chapter III
The Nature of Strategic Intelligence, Current Practice and Solutions /
Mark Xu and Roland Kaye ................................................................................................................... 36
This chapter discusses the nature of strategic intelligence and the challenges of systematically scanning and processing strategic information. It reveals that strategic intelligence practice concentrates on
competitive intelligence gathering, non-competitive related intelligence have not yet been systematically scanned and processed. Much of the intelligence is collected through informal and manual based
systems. Turning data into analyzed, meaningful intelligence for action is limited to a few industry leaders. The chapter proposed a corporate intelligence solution, which comprises of three key intelligence
functions, namely organizational-wide intelligence scanning, knowledge enriched intelligent refining,
and specialist support. A corporate radar system (CRS) for external environment scanning, which is a
part of the organizational-wide intelligence scanning process is explored in light of latest technology
development. Implementation issues are discussed. The chapter develops insight of strategic intelligence,
and the solution could significantly enhance a managers and a companys sensibility and capability in
dealing with external opportunities and threats.
Chapter IV
A Strategic Marketing Intelligence Framework Reinforced by Corporate Intelligence/
Peter Trim and Yang-Im Lee ................................................................................................................ 55
The chapter examines how marketing strategists and corporate intelligence officers can work together in
order to provide a high level, pro-active strategic intelligence operation that enhances marketing strategy
development and implementation. A variety of activities relating to marketing strategy, corporate intelligence and corporate security are highlighted. Aspects of corporate counterintelligence are addressed
in the context of gathering intelligence, and guidance is provided as to how organizational strategists
can develop a strategic marketing intelligence framework that incorporates a counterintelligence dimension. The main advantage of the strategic marketing intelligence framework is that it acts as a vehicle to
integrate the organizational intelligence efforts and activities at the highest-level. It also facilitates the
creation of an intelligence culture.
Chapter V
Supporting Executive Intelligence Activities with Agent-Based
Executive Information Systems / Vincent Ong, Yanqing Duan, and Brian Mathews .......................... 69
This chapter examines the theoretical underpinning for supporting executive intelligence activities
and reviews conventional studies of executive information systems (EIS) over the last two decades in
responding to the current executives information processing needs and the current Internet era. The
reviews suggest the need for designing advanced EIS that are capable of responding and adapting
to executive information. This chapter recognizes the necessity of revitalizing EIS with advances in
intelligent technologies and Web-based technologies. Empirical studies were conducted to elucidate
executives desires and perceptions of the prospect of agent-based technologies for supporting executive
intelligence activities in the more integrated and distributed environment of the Internet. Based on the
insights gained from empirical studies, this chapter concludes by presenting a three-level agent-based
EIS design model that comprises a usability-adaptability-intelligence trichotomy for supporting executive intelligence activities.
Chapter VI
Managing Executive Information Systems for Strategic Intelligence in
South Africa and Spain / Udo Richard Averweg and Jos L. Roldn .................................................. 87
Strategically important information for executive decision-making is often not readily available since
it may be scattered in an organizations internal and external environments. An executive information
system (EIS) is a computer-based technology designed in response to specific needs of executives and
for decision-making. Executives having the right information for strategic decision-making is considered critical for strategic intelligence (SQ). SQ is the ability to interpret cues and develop appropriate strategies for addressing the future impact of these cues. In order to gauge the current situation in
respect of information in an EIS and for managing future EIS development, the authors research EIS in
organizations in two selected countries: South Africa and Spain. From their EIS study, parallelisms and
differences are identified and implications for SQ are discussed. Some practical implications for future
EIS development are given. The authors suggest these should be considered so that SQ for executive
decision-making is facilitated.
Section III
Enhancing Environment Scanning and Intelligence Practice: Techniques
Chapter VII
Understanding Key Intelligence Needs (KINs) /Adeline du Toit ....................................................... 111
This chapter explains how to translate an organizations strategic aims into key intelligence needs (KINs)
and how to prioritize and categorize the needs. It argues that an essential aspect for any competitive
intelligence (CI) professional is to gain the confidence of management to determine what information
about the environment should be collected in order to produce intelligence. Furthermore the author
hope that understanding how to determine a set of KINs as derived from an organizations vision, mission, and strategic objectives and how to break down KINs into general and specific KINs will assist
CI professionals to understand what their internal customers want to know about, need to know about
and should know about and why, when they need to know it, and who needs to know it by identifying
KINs. The application of KINs in a practical situation is illustrated in a case study of a South African
company in the furniture industry.
Chapter VIII
Awareness and Assessment of Strategic Intelligence: A Diagnostic Tool / Franois Brouard .......... 122
This chapter discuss the need for organizations to raise the level of awareness about strategic intelligence.
It argues that improvement of awareness and scanning practices could be done by developing a diagnostic tool. The diagnostic tool is an expert system that makes the existing strategic intelligence practices
and underlying processes more explicit and contributes to improved awareness of strategic intelligence
practices. Furthermore, the author hopes that presenting a diagnostic tool will help increase the level of
awareness and provide an assessment framework about strategic intelligence practices.
Chapter IX
Gaining Strategic Intelligence Through the Firms Market Value:
The Hospitality Industry / Juan Luis Nicolau .................................................................................... 141
This chapter uses the market value to assess the different factors and actors that influence the firm performance. The market value of a company, obtained from the stock exchange, can be used to both, detect
and measure the impact of elements of the role, market, and far environment. The empirical application
analyzes the hospitality industry that is currently facing an increasingly complex business environment:
apart from the terms uncertainty, complexity, and dynamism that shape the environment, in this industry
the concepts of munificence and illiberality are strongly applied. This procedure can aid in scanningrelated activities, as the analysis shows that environmental events are recognized quite well.
Chapter X
Knowledge Creation and Sharing: A Role for Complex Methods of
Inquiry and Paraconsistent Logic / Peter Bednar and Christine Welch ............................................ 159
Strategic intelligence involves examination of internal and external organizational environments. Of
course people inhabited each of these environments. Whether they are customers, allies or employees, these are not standardized units but real human beings with personal histories, perspectives, and
opinions. Recent research and practice have led to the development of relatively complex methods
for inquiry which can be applied by human analysts and which recognize contextual dependencies in
a problem situation. One such method, the strategic systemic thinking framework, is outlined in this
chapter. The purpose of complex analysis in relation to strategic intelligence is not, in our perspective,
decision-makingit is developing an ability to make informed decisions. Until software tools could
not support recently complex methods, since the limitations of traditional mathematical algorithms
constrained their development. We suggest a model, which lays the foundations for the development of
software support and can tolerate the inherent ambiguity in complex analysis, based on paraconsistent
(multivalued) mathematical logic.
Section IV
Supporting Strategic Intelligence Processing: Technologies
Chapter XI
Using Grid for Data Sharing to Support Intelligence in Decision Making /
Nik Bessis, Tim French, Marina Burakova-Lorgnier, and Wei Huang .............................................. 179
This chapter is about conceptualizing the applicability of grid related technologies for supporting intelligence in decision-making. It aims to discuss how the open grid service architecturedata, access
integration (OGSA-DAI) can facilitate the discovery of and controlled access to vast data-sets, to assist
intelligence in decision making. Trust is also identified as one of the main challenges for intelligence in
decision-making. On this basis, the implications and challenges of using grid technologies to serve this
purpose are also discussed. To further the explanation of the concepts and practices associated with the
process of intelligence in decision-making using grid technologies, a minicase is employed incorporating a scenario. That is to say, Synergy Financial Solutions Ltd is presented as the minicase, so as to
provide the reader with a central and continuous point of reference.
Chapter XII
Intelligent Supply Chain Management with Automatic Identification Technology /
Dong Li, Xiaojun Wang, Kinchung Liu, and Dennis Kehoe .............................................................. 202
RFID-enabled business models are proposed in this chapter to innovate supply chain management.
The models demonstrated benefits from automatically captured real-time information in supply chain
operations. The resulting visibility creates chances to operate businesses in more responsive, dynamic,
and efficient scenarios. The actual initiative of such novel RFID enabled applications is therefore to
encourage intelligent supply chain management to dynamically respond changes and events in real-time.
As the RFID implementation costs are continuously decreasing, it is expected that more novel business
models would be inspired by the technological advancement to foster more intelligent supply chains in
the near future.
Chapter XIII
An Ontology-Based Intelligent System Model for Semantic Information Process /
Mark Xu, Vincent Ong, and Yanqing Duan ........................................................................................ 224
In the context of increasing usage of intelligent agent and ontology technologies in business, this study
explores the ways of adopting these technologies to revitalize current executive information systems (EIS)
with a focus on semantic information scanning, filtering, and reporting/alerting. Executives perceptions
on an agent-based EIS are investigated through a focus group study in the UK, and the results are used
to inform the design of such a system. A visualization prototype has been developed to demonstrate
the main features of the system. This study presents a specific business domain for which ontology and
intelligent agent technology could be applied to advance information processing for executives.
Chapter XIV
Bibliometry Technique and Software for Patent Intelligence Mining /
Henri Dou and Jean-Marie Dou ........................................................................................................ 241
This chapter introduces the bibliometry treatment techniques as a way to obtain elaborated information
for Competitive Intelligence experts. It presents various bibliometry treatments using software able to
analyze patent databases as well as commercial database extracts or Web information. With the growing
complexity of science, technology, and economy it is of a prime importance for decision makers and
strategists to have the best possible view of their environment. The bibliometry analysis provides different ways to cross information, build lists, charts, matrices, and networks. In the process of knowledge
creation the bibliometry analysis can be used to provide new set of information from large mount of
data. This information can be used for brain storming, SWOT analysis, and expert evaluation.
Compiled References ........................................................................................................................ 270

About the Contributors ................................................................................................................... 297
Index ................................................................................................................................................... 303
xi
Foreword
Enron, WorldCom, Vivendi, Pramalat, the list goes on and the shockwaves of these companies collapse
can be felt across the globe. Certainly we have seen tightening of regulation but this alone will not stop
the continued failure of firms. What is apparent from the failure is that not only did corporate governance
systems fail but also the information being used by boards of directors and investors to make strategic
decisions was inadequate and underutilized. This book is timely in that it provides an update of the state
of strategic intelligence systems. The emergence of intelligence systems from the areas of management
information systems, executive information systems, and competitive intelligence sees a shift from
internal data to external and from historic to future orientated information.
Senior management needs the support and challenge of divergent and challenging information. The
stimulus of new information and ideas helps drive forward the business. The editor has brought together
an existing and innovative collection of articles that map current developments in strategic intelligence.
The progression of data to information and knowledge is a process of sense-making. This sense-making
emphasizes the pull of enquiry rather than the push of data. Intelligence is the structuring of meaning
coming from the scanning of the environment and performance of the firm. These are the skills needed
in the corporate boardrooms and investment communities if they are to avoid the catastrophic collapses.
This collection provides a stimulating review of all aspects of Managing Strategic Intelligence: Techniques to Technologies.
Professor G. Roland Kaye

University of East Anglia, UK
xii
Preface
Information is a key resource of a contemporary organization that deserves effective management. Gaining information and knowledge to develop foresight about future opportunities and threats and quickly reacting to the
opportunities and threats becomes a core competency of a winning organization. This is evident (www.50lessons.
com) by the following remarks from executives:
Its important for any organisation to continually reappraise the business environment and how it might change.
Thinking about changes that might take place, and being ready to respond to them with well-developed plans that
are properly executed, means the organisation will move much faster than its competitors to any such scenarios.
~ Paul Skinner, Rio Tinto Plc
Spotting and seizing opportunities that mark major shifts in a companys strategy takes a lot of couragebut is
invaluable to an organisations progress. ~ Peter Birch, Land Securities Group
In todays rapidly changing business world the need for timely and accurate market intelligence will increase.
We need to know what our competitors are doing almost before they do. ~ A manager from Royal Life Plc
The analogy between the business world and the battlefield is not something beyond comprehension. Being
wary of the enemy is a consistent theme in the writing of the art of war. For example, Sun Tzu (403-221 BC)
wrote,1
The reason why the enlightened ruler and the wise general are able to conquer the enemy whenever they lead
the army and can achieve victories that surpass those of others is because of foreknowledge.
Know yourself, know your enemies; a hundred battles, a hundred victories;
Know your enemy, know yourself, and your victory will not be threatened. Know the terrain, know the weather,
and your victory will be complete.
The urgency of effectively managing strategic intelligence is reinforced by two trends witnessed: one is the
business environment becomes more turbulent and competition becomes ever fiercer, thus gaining strategic intelligence and sharing knowledge become one of the greatest challenges that faces a companys senior management.
The other is computing technology for information processing that has become more sophisticated and more
affordable, which offers great potential to advance the current techniques and technologies used for intelligence
gathering, processing, dissemination, and knowledge sharing.
To be more specific, managing strategic intelligence faces the following challenges: firstly, the nature and the
importance of strategic intelligence are not often understood by many organizations until crises and problems
occurred. Secondly, strategically important information, that is, strategic intelligence, is not a piece of static
information that is readily available. It is often scatted in the organizations internal and external environment,
which requires scanning effort. The subjects may be unfamiliar to the inquirer, and the scanning process may
be costly. Thirdly, interpreting intelligence is essentially a human cognition and intuition process that is subtle.
xiii
Strategic intelligence needs sense making of senior managers, which requires managerial knowledge and judgement that are not often possible for computers to posses. Fourthly, an individual manager has limited capacity
to notice and process all the information from the internal and external environments, which results in limiting
the scope of input coverage and the stretch of the output delivery. Lastly, the ad hoc behavior of managers in
acquiring/receiving strategic intelligence and functionally divided intelligence process in organizations lead to
misjudgement and corporate blind spots.
Where there is an unanswered question, there is an undiscovered answer. The challenges in managing
strategic intelligence will be met by emerging techniques and technologies. This can be envisaged from two
perspectives: first, organizations that are actively engaged in competitive intelligence gathering, business intelligence mining are often their industry leaders. The techniques and strategies used by these organizations have
wide implications to improve the practice of managing strategic intelligence. Second, the latest development
in Internet technology, intelligent agent, ontology, semantic Web, data mining, wireless sensors, and scanning
technologies provide opportunities for organizations to revitalize existing or to develop new infrastructure of
managing strategic intelligence.
This book, thus aims to develop sound understanding of strategic intelligence and to exhibit techniques and
technologies that can be used to enhance strategic intelligence scanning, analyzing, interpreting, sense-making, and support. The realm of the book is not limited to competitive intelligence, but also includes intelligence
from an organizations far environment and beyond. The book provides a rich source of research on the current
practice in intelligence gathering, latest thinking and conceptual models related to intelligence function, process,
structure, and culture, which will underpin future development and implementation of innovative intelligence
systems. The book offers not only technical solutions, but also organizational solutions for organizations to adopt
so as to enhance the effectiveness and efficiency of managing strategic intelligence.
The primary target audience of this book will be senior managers, IS/IT managers, information officers,
knowledge workers, intelligence specialists of any organisations that need to enhance their organizations sensibility and capability towards environmental changes and challenges. The book provides future direction and
practical guidance to system developers to develop novel system for managing strategic intelligence. It will be
of value to business consultants, researchers, academics, senior undergraduates, and students at master level, as
it provides a wealth of information and references for research into this challenging arena.
Fourteen chapters are included in this book. They are organized into four sections according to the thematic
meaning of the topic of the chapter, which is based on the arbitrary judgement of the editor. Thus, it is quite
possible that a paper in one section may also address issues in other sections. Even though, the four sections
reflect most of the topics sought in the initial call for chapters.
The first section, Section I: Understanding Strategic Intelligence, includes two chapters. This section
focuses on the theme of understanding the concept and the importance of strategic intelligence and the related
terminologies.
The second section, Section II: Strategic Intelligence Framework and Practice, includes four chapters.
Chapters III-V focus on framework and conceptual models related to managing intelligence. Chapter VI reports
some empirical findings of intelligence from Executive Information Systems.
The third section, Section III: Enhancing Environmental Scanning and Intelligence Practice: Techniques,
comprises four chapters. Chapter VII presents a unique technique to identify intelligence needs. Chapter VIII
introduces a diagnostic tool to assess environment scanning practice. Chapter IX demonstrates a mathematic
model showing the relationship between environment factors and corporate performance. Chapter X discusses
complex methods of inquiry and paraconsistent logic from soft system perspective.
The last section, Section IV: Supporting Strategic Intelligence Processing: Technologies, includes four
chapters. This section develops the theme on technologies for intelligence processing. Grid technology, radio
frequency identification (RFID) technology, intelligent agent, ontology technology, and bibliometry technology
are discussed in the context of managing strategic intelligence.
A brief introduction to each of the chapters follows:
xiv
Chapter I, Leveraging What Your Company Really Knows: A Process View of Strategic Intelligence, by
Professor Marchand and Hykes: The authors introduce the information orientation (IO) frameworka tool that
managers can use to determine the companys level of effective information management and to identify areas
where they can make improvements. They suggest that effective information management requires specific information-processing practices, employee behaviors and values, and technology. Examples are used to demonstrate
that IO mature companies are most successful at collecting and openly sharing strategic intelligence that their
employees need in order to successfully monitor and proactively react to future market trends or events.
Chapter II, Business Intelligence: Benefits, Applications, and Challenges, by Maguire and Suluo: The chapter
identifies the important role and challenges of business intelligence (BI) in business functioncorporate finance,
supply chain management (SCM), and customer relationship management (CRM). It addresses the question
how companies understand BI and how companies use it for gaining competitive advantage by using two case
companies that are currently using ERP and BI.
Chapter III, The Nature of Strategic Intelligence, Current Practice and Solutions, by Xu and Kaye: In this
chapter, the authors discuss the nature of strategic intelligence from various perspectives, for example, internalexternal view, historical-future view, and the challenges of scanning, analysing and interpreting intelligence.
Empirical evidence is used to demonstrate the current practice of intelligence gathering. The authors suggest a
solution that comprises of organisational-wide intelligence scanning which incorporates a corporate radar system
(CRS), knowledge enriched intelligence refining and intelligence specialist support. Implementation issues are
also addressed.
Chapter IV, A Strategic Marketing Intelligence Framework Reinforced by Corporate Intelligence, by Trim
and Lee: The authors examine how marketing strategists and corporate intelligence officers can work together in
order to provide a high level, proactive strategic intelligence operation that enhances marketing strategy development and implementation. Aspects of corporate counterintelligence are addressed in the context of gathering
intelligence, and guidance is provided as to how organizational strategists can develop a strategic marketing
intelligence framework that incorporates a counterintelligence dimension.
Chapter V, Supporting Executive Intelligence Activities with Agent-Based Executive Information Systems, by
Ong, Duan, and Mathews: The authors review the theoretical underpinning for supporting executive intelligence
activities, and argue the necessity of revitalizing EIS with intelligent technologies and Web-based technologies. A three-level agent-based EIS model that comprises a usability-adaptability-intelligence trichotomy for
supporting executive intelligence activities is designed, which is based on empirical studies conducted with
executives in the UK.
Chapter VI, Managing Executive Information Systems for Strategic Intelligence in South Africa and Spain, by
Averweg and Roldn: This chapter reports empirical findings on the current situation in respect of information
in EIS based on survey of companies in South Africa and Spain. Parallelisms and differences are identified and
implications for gathering strategic intelligence and improving EIS development are discussed.
Chapter VII, Understanding Key Intelligence Needs (KINs), by du Toit: The author explains how to translate
an organizations strategic aims into key intelligence needs (KINs) and how to prioritise and categorise the
needs. Determining a set of KINs and how to break down KINs into general and specific KINs will assist CI
(competitive intelligence) professionals to gather appropriate competitor intelligence. The application of KINs
in a practical situation is illustrated using a case study of a South African company.
Chapter VIII, Awareness and Assessment of Strategic Intellgence: A Diagnostic Tool, by Brouard. In this
chapter, the author adresses the importance of awareness and assessment from managers and external consultants
on strategic intelligence activities in organizations, and presentes an expert-system based diagnostic tool for
firms to assess the level of environment scanning for intelligence. Problem of awareness and assessment faced
by organizations are identified and discussed.
Chapter IX, Gaining Strategic Intelligence Through the Firms Market Value: The Hospitality Industry, by
Nicolau: The author develops a mathematic model to examine the impact that different factors and actors within
the environment have on a firms performance, which is measured by the stock market value of the firm. Direct
xv
link between the environmental factors and their effects on firm performance is found. The model not only detects
the events affecting the organization but also quantifies their impacts.
Chapter X, Knowledge Creation and Sharing: A Role for Complex Methods of Inquiry and Paraconsistent
Logic, by Bednar and Welch: The authors discuss complex methods for inquiry as an emerging method to address
a problem situation encountered by human analyst during the process of intelligence gathering and knowledge
sharing. The purpose of complex analysis in relation to strategic intelligence is to develop an ability to make
informed decisions. A model which lays the foundations for the development of software support, which can
tolerate the inherent ambiguity in complex analysis, based on paraconsistent (multivalued) mathematical logic
is developed.
Chapter XI, Using Grid for Data Sharing to Support Intelligence in Decision-Making, by Bessis, French,
Burakova-Lorgnier, and Huang: The authors conceptualizes the applicability of grid related technologies for
supporting intelligence in decision-making. The chapter addresses how the open Grid service architecturedata,
access integration (OGSA-DAI) can facilitate the discovery of and controlled access to vast datasets, to assist
intelligence in decision making. A minicase is employed incorporating a scenario.
Chapter XII, Intelligent Supply Chain Management with Automatic Identification Technology, by Li, Wang,
Liu, and Kehoe: The authors develop a RFID-enabled business model in order to innovate supply chain management. The model demonstrated benefits from automatically captured real-time information in supply chain
operations. The resulting visibility creates chances to operate businesses in more responsive, dynamic, and efficient scenarios.
Chapter XIII, Developing an Ontology-Based Intelligent System for Semantic Information Processing, by
Xu with Ong and Duan: The authors in this chapter explore the ways of adopting intelligent agent and ontology
technologies to revitalise executive information systems (EIS) with a focus on semantic information scanning,
filtering and reporting/alerting. Executives perceptions on an agent-based EIS are investigated through a focus
group study in the UK, and the results are used to inform the design of such a system. This study presents a
specific business domain for which ontology and intelligent agent technology could be applied to advance information processing for executives.
Chapter XIV, Bibliometry Technique and Software for Patent Intelligence Mining, by H. Dou and J.-M. Dou:
The authors provide useful insight into the techniques of using bibliometry software to mine intelligence from
both formatted and unformatted data sources. Patent intelligence mining is used as an example. It demonstrates
how bibliometry information can add value to the intelligence process. An overview of the bibliometry software
is provided.
EndnotE
1
Ames, R. (1993). Sun Tzu: The Art of Warfare. New York: Ballantine Books.
xvi
Acknowledgment
The efforts of many people are reflected in this book. I wish to thank all the authors who contributed their insightful
ideas and chapters to this book. Without whose support the project could not have been satisfactorily completed.
Most of the authors of chapters included in this book also served as referees for articles written by other authors.
Special thanks go to all those who provided constructive and comprehensive reviews. Among those, I would like
to particularly mention Professor Adeline du Toit from University of Johannesburg, South Africa; Dr. Franois
Brouard from Carleton University, Canada; Dr. Peter Trim from Birkbeck College, University of London; and
Dr. Yanqing Duan from University of Bedfordshire, UK for their most critical comments.
My deep appreciation is due to professor G. Roland Kaye, former president of CIMA, for his continuous
professional guidance and advice on research into the area of managing strategic information as a corporate
resource.
I wish to extend my special thanks to staff at IGI Global, whose support, guidance and encouragement throughout the whole process have been invaluable. In particular, to Kristin Roth and Meg Stocking, who continuously
provide guidance and prompt responses for keeping the project on schedule and to Mehdi Khosrow-Pour, whose
enthusiasm motivated me to initially accept his invitation for taking on this project.
I would like to acknowledge the support from the Department of Strategy and Business Systems, Portsmouth
Business School of University of Portsmouth, in particular, the departments research committee for the support
to develop research including this project.
Finally, I want to thank my wife and children for their love and support throughout this project.
Mark Xu, PhD
Portsmouth, UK
October 2006
xvii
Section I
Understanding Strategic
Intelligence
xviii
Chapter I
Leveraging What Your

Company Really Knows:
A Process View of Strategic Intelligence

Donald Marchand
International Institute for Management Development, Lausanne, Switzerland
Amy Hykes
International Institute for Management Development, Lausanne, Switzerland
AbstrAct
Strategic intelligence is about having the right information in the hands of the right people at the right
time so that those people are able to make informed business decisions about the future of the business.
Thus, in order to improve a companys strategic intelligence process, management must take a critical
look at how effectively they manage information. Effective information management requires specific
information-processing practices, employee behaviors and values, and technology. The information
orientation (IO) framework is a tool that managers can use to determine the companys level of effective
information management and to identify areas where they can make improvements. By achieving IO
maturityaligning processes, people behaviors, and technology practices with business strategiesa
company can derive a competitive advantage and future leadership. IO mature companies are most
successful at collecting and openly sharing the strategic intelligence that their employees need in order
to successfully monitor and proactively react to future market trends or events.
IntroductIon
Strategic intelligence is about having the right
information in the hands of the right people at the
right time so that those people are able to make
informed business decisions about the future of

the business. Thus, information is the basis for
strategic intelligence. Without the right information, it is difficult for employees to make the
decisions needed in order to achieve and sustain
Copyright 2007, IGI Global, distributing in print or electronic forms without written permission of IGI Global is prohibited.
Leveraging What Your Company Really Knows
market leadership. Companies with effective

strategic intelligence processes are typically ones
that can manage and use information to successfully anticipate and respond to future trends or
opportunities.
In order to shape a companys future, management must understand what that future is likely to
look like. This requires the assimilation of diverse
sources of business, market, political, technological, environmental, and social information. How
effective a company is at gathering and managing
all of this information depends upon three key
capabilities: information processes, technology,
and people. All managers should consider the
following tasks an important component of their
jobs:

intelligence. Some questions that should be asked

include: How well do we collect, manage, process,
and use information in making strategic decisions?
Are we able to anticipate and proactively respond
to trends or opportunities to ensure future success
and avoid crisis situations? Are we able to adapt
fast enough to successfully compete in todays
dynamic environment? Do we have a culture
that encourages employees to effectively share,
manage, and use information to make informed
business decisions?
WhAt Is strAtEgIc
IntEllIgEncE?
Strategic intelligence should provide a company
with the information it needs about its business
environment to be able to anticipate change, design
appropriate strategies that will create business
value for customers and create future growth and
profits for the company in new markets within or
across industries. Strategic intelligence should
not be equated with:
Developing information processes that enable and encourage people to effectively

identify and leverage strategic business
information
Providing the right technology to enable
effective information use and delivery
Building a culture that encourages and
guides employees in their use of information
It is critical that executives not only understand

the key role strategic intelligence can play in
achieving future success, but that they continue
to find ways to improve their approach to strategic
Competitor intelligence, which is focused on understanding a companys existing competition.

Competitive intelligence, which is prepared by small groups of intelligence analysts working for senior executives to help
Figure 1. Sigmoid curves
Time
them make key decisions such as whether

to enter a joint venture or acquire another
company.
The purpose of strategic intelligence is illustrated in the Sigmoid curves in Figure 1. Sigmoid curves have long been used to illustrate the
product cycle of a company where a new product
or service is launched and then goes through a
period of rapid growth until the market matures.
Unless a company is able to develop another new
product or service to reach new markets and customers to start another journey along the Sigmoid
curve, its growth and profitability as well as its
competitive position will suffer and the success
of the company will decline.
The main objective of strategic intelligence is
to avoid the situation at point C when a company
may see the future clearly but cannot respond fast
enough, or has to use repeated waves of restructuring and downsizing to bring its capabilities and
resources in line with the shift to new products
and markets as represented by the second curve.
The intent is to use the time between A and B to
create a strategic intelligence capability that can
develop a range of inputs on the complex and
dynamic changes that a company is experiencing and to anticipate the next wave of change
and market opportunities before the competition
(Marchand, 1997).
thE trAdItIonAl ApproAch to

strAtEgIc IntEllIgEncE
The traditional approach to strategic intelligence
draws on the age-old military model of operational
intelligence. With this model, companies operate
in a command and control hierarchy where the
functional division of labor is reinforced by the
need to know approach for information sharing and use. There are specialists assigned to
specific research/topic areas or silos who prepare
information and analyses based on requests from
the officers in the command center. Most often,

the officers use this information as a basis for
one-time strategic decisions but not as a tool for
organizational learning.
Once the information gets funneled up to the
officers it is usually never widely assimilated. In
fact, most information is labeled as classified
and only shared on a need-to-know basis. Officers
do not realize the potential benefits of sharing
information and can only see the associated risks
that could occur from leaked information. As a
result, specialists never see the big picture and
have little to no knowledge about what is happening outside of their silo.
Many companies today continue to build
their strategic intelligence around a group of key
specialists who prepare analyses as a basis for
senior managements decisions on major issues
such as mergers and acquisitions or new product
development. Similar to the military model,
the information collected by these specialists is
frequently externally oriented and prepared for
one-time decisions made by executives.
Some companies, like Shell, have relied on
a strategic planning group to carry out research
on future trends and have used their findings
in developing scenarios tied to the corporate
strategic plan. Others, notably consumer products companies like Procter and Gamble, look
to their marketing department for surveys on
customer needs and market trends. Some count
on the product groups, such as pharmaceutical
companies, to gather specific product intelligence
that gets funneled up to the executive group. This
functional approach can create a vertical focus
and inhibit the sharing of potentially important
information across product lines or even areas of
research and development.
Many larger companies, pharmaceutical
producers for example, entrust the monitoring
of future trends to the corporate or R&D library
or information center, which collects and distributes published information such as new technology assessments. Still others call on specialist
research companies or market forecasters on

the assumption that these outsiders bring fresh
information and form unbiased views on product,
technological, and market trends. Companies that
are organized in a matrix with multiple functions,
geographies, and product lines tend to encounter
more difficulties sharing this type of information
across the company. As a result, these companies
are frequently trapped in the functional approach
to strategic intelligence.
One can see the pitfalls of the functional approach in the U.S. Governments 9/11 Commission Report (National Commission on Terrorist
Attacks upon the United States, 2004). The report
detailed how the FBI and CIA, departments within
the U.S. Federal Government, were not effectively
communicating or sharing information with one
another or even within their own departments. The
lack of information sharing resulted from the silo
organizational structure of these departments, as
well as from the top-secret or classification culture.
Due to this lack of communication, the government was unable to connect important pieces of
information together to uncover a terrorist plot
and proactively respond to the threat.
While many companies still use the functional
approach to learning about the future, it is clear
that some leading companies are now making a
different set of assumptions about strategic intelligence. They no longer view it as a function at all
but rather as a process for systematic learninga
continuous business activity concerned with
shaping the future and providing a way to consistently challenge corporate blind spots, hidden
assumptions and taboos, as well as a way to create
asymmetries in the competitive landscape that
result in competitive advantage. This new model
sees intelligence, not as a specialist or executive
responsibility, but rather as a general-management
responsibility that must become part of the learning culture and information-oriented behavior
of managers throughout the company. These
companies are eliminating or creating new roles
and responsibilities for the corporate librarian
or information gatekeepers. Rather than hoarding

information and selectively sharing it, these roles
are now encouraging the sharing of information
among employees and helping employees use
the information to make more informed strategic
decisions (Marchand, 1997).
Companies, such as Intel, MSFT and MARS
Inc., have learned to operate in a continuous
discovery mode, inventing new products in
shorter timeframes and using strategic intelligence
throughout the company to retain competitive
edge. Within these companies, investments in
information management focus on mobilizing the
people and collaborative work processes to share
information and promote discovery and experimentation companywide (Marchand, 2000).
thE tWo Most coMMon

ApproAchEs to strAtEgIc
IntEllIgEncE
Companies can use several different approaches
to develop foresight and intelligence about future
trends. The two most common approaches to
strategic intelligence include what we call the
functional approach and the process approach.
Functional Approach
The functional approach is similar to the traditional military model as noted earlier. Functionally
oriented companies have many pools of external
and internal intelligence that the functional departments collect and sometimes use in making
decisions. For example, the sales department
collects information on customer contacts, transactions and services; the marketing department
conducts surveys on market trends and customer
satisfaction; the R&D group analyzes technology
developments and new product ideas; the manufacturing function focuses on process innovations and product engineering; the information
technology unit monitors IT industry trends and
technical developments; and the human resource

department monitors workforce changes and
recruitment. Strategic intelligence in a functionally oriented company is often confined to these
isolated pools of data to which specific groups
have applied their existing mindsets concerning
the companys direction and strategies for success.
These groups can be various departments or just a
few specialists that collect information (competitive, product, market, etc.) based on the needs of
the executive team. Rarely is information widely
shared and used among other levels of managers
within this type of organization.
There are three main barriers in the functional approach to sharing and using strategic
intelligence to shape the future. First, the pools
of data are shaped and interpreted by the specific
functions or departments within the company,
so there is never a broader, general management
analysis or cross-functional interpretation of the
information. Second, the interpretation of the data
is affected by peoples hidden assumptions, blind
spots and taboos. Breaking the existing paradigms
is neither encouraged nor condoned. Third, there
is typically no clear process or effective tools for
sharing information among functions and, even
when they are deployed, they may not be used
due to a culture of information hoarding. It is
not surprising that many managers in functionally oriented companies perceive the value of
strategic intelligence as limited to areas such as
acquisitions, competitor assessments, and new
technology evaluations.
interpretations and views about the future. This

is critical where changes in industries, markets,
and customers are accruing so rapidly that no
single group of senior executives can cope with
the diverse signals from the business environment nor can they properly factor them into
new mindsets about future business strategies
and opportunities. Third, information management software makes diverse sources of internal
and external intelligence accessible to teams of
managers acting on common problems and issues
anywhere, anytime. Fourth, the current challenge
is not to confine strategic intelligence to the top of
the company or to have silos of information but
to distribute the information globally and laterally across the organization so that it is aligned
with cross-functional approaches to delegating
responsibilities for action. In this context, strategic intelligence should be part of a companys
fundamental information culture rather than being
grafted on as another function.
orgAnIzIng thE strAtEgIc

IntEllIgEncE procEss
The key to making the process effective is to
develop a robust and ongoing process where strategic intelligence is sensed, collected, organized,
processed, communicated, and used.
process Approach
In contrast, the process approach is based on
a very different set of assumptions. First, not all
knowledge or decision-making responsibility
lies at the top of the company and strategic intelligence should be organized to address the needs
of the business unit and other general managers.
Second, sharing strategic intelligence rather than
processing it centrally encourages a diversity of
Sensing: Involves identifying appropriate

external indicators of change.
Collecting: Focuses on ways of gathering
information that are relevant and potentially
meaningful.
Organizing: Helps structure the collected
information in appropriate formats and
media.
Processing: Involves analyzing the information with appropriate methods and tools.
Communicating: Focuses on packaging
and simplifying access to information for
users.
Using: Concentrates on applying information in decisions and actions.
Once a process is in place, companies often

forget that the process depends heavily upon the
employee mindsets and company culture as well
as the technology tools available to aid the process. The key to making the strategic intelligence
process successful is a management team that not
only focuses on the process but also on its people
and technology.
Managers must create a culture where a diversity of mindsets are explored, tested, and selected
so that the company is capable of rapid navigation
in market conditions that are constantly shifting.
Employees should be:

Encouraged to sense changes/trends and

try to determine how these changes in the
business or industry environment might
impact business practices.
Know how to share their perceptions, new
information and insights wherever in the
company such information is needed.
Understand where to go to learn about these
changes and find the insight they need to
make informed business decisions.
Viewed as a valuable resource when it comes
to collecting and analyzing strategic intelligence.
Management must also provide employees

with the necessary tools. Today, there are no real
technological barriers to facilitating the flexible
exchange of documents with anyone, anytime.
Companies have multiple software and content
management tools to choose from such as intranets, data mining, analytical software, e-mail,
and mobile devices. Technology can keep people
connected and easily support the communication
and sharing of information among a large and
geographically disperse employee base.
Unfortunately, many companies have yet to
effectively use this technology. For example, some
companies only provide advanced technology to

certain functions or geographies. Other companies
do not have technology standards in place so that
each function or geography has selected different
tools that are not integrated. Some have invested
in the technology but they are not utilizing the
technologys full capabilities, or worse yet it has
become shelf-ware. Still other companies have
the technology up and running, but the employees
are not willing to or do not know how to effectively use it. By not fully using the technology,
these companies have no choice but to continue
to have the planners, marketing staff, librarians,
or competitive intelligence specialists act as the
storekeepers and the gatekeepers of intelligence
data (Marchand, 1997).
EFFEctIvE InForMAtIon
MAnAgEMEnt IMpActs
FuturE pErForMAncE
Ultimately, managing strategic intelligence
successfully begins with a companys ability
to effectively use information and knowledge
about customers, products, services, operations,
finances, markets, and trends to impact future
business performance. During a major three-year
research study involving over 100 companies
representing some 22 countries and 25 industries,
we established a link between effective information use in a company and three key capabilitiespeoples behaviors and values, information
management practices, and information management technology practices. We found that how
managers deployed these three key capabilities
not only impacted information use, but it also
strongly influenced future business performance.
Marchand, Kettinger, and Rollins (2001) view the
interaction of these three information capabilities
as one fundamental approach or measure, which
we call information orientation or IO.
Information behaviors and values: The

capability of a company to instill and promote behaviors and values in its staff for
the effective use of information and IT
Information management practices: The
capability of a company to manage information effectively over its life cycle, which
includes sensing, collecting, organizing,
processing and maintaining information.
Information technology practices: The capability of a company to effectively manage
appropriate IT applications and infrastructure to support operational, decision-making
and communication processes
There are two critical points that managers must understand in order to improve their
companys information orientation. First, each
of these capabilities alone will not provide the
company with the information, methods and
tools they need for future success. Managers
who focus on people behaviors and values at the

expense of information management practices,
or who focus on IT practices at the expense of
information behaviors and values, will not lead
to effective information use. It is critical that they
understand that being good at just one of the information capabilities does not lead to improved
future business performance or exceptional
strategic intelligence. Second, managers must
realize that improving these capabilities is not a
one-time event. They must actively manage all
three capabilities on an ongoing basis in order for
them to make an impact.
InForMAtIon orIEntAtIon (Io)

FrAMEWork
The IO framework (Marchand, 2002) details what
managers need to focus on in order to build ef-
Figure 2. Information orientation (IO) framework definitions (Source: Marchand, Kettinger, & Rollins,
2001)
Information
InformationOrientation
Orientation(IO)
(IO)
Measures the capabilities of a company to

Measures the capabilities of a company to
effectively manage and use information
effectively manage and use information
Information
Information Behaviors
Behaviors and
and Values
Values (IBV)
(IBV)
Capability
Capability
The
Thecapability
capabilityof
ofaacompany
companyto
toinstill
instilland
andpromote
promotebehaviors
behaviors
and
andvalues
valuesin
inits
itspeople
peoplefor
foreffective
effectiveuse
useof
ofinformation.
information.
Proactiveness
An organization is called information proactive when its members

actively seek out and respond to changes in their competitive
environment and
think about how to use this information to enhance existing and
create new products and services.
Sharing
is the free exchange of non-sensitive and sensitive information. Sharing

occurs
between individuals in teams,
across functional boundaries and
across organizational boundaries (i.e., with customers, suppliers
and partners).
Transparency
An organization is information transparent when its members trust

each other enough to talk about failures, errors and mistakes in an
open and constructive manner and without fear of unfair
repercussions.
Control
is the disclosure of information about business performance to all

employees to influence and direct individual and, subsequently,
company performance
Formality
refers to the degree to which members of an organization use and

trust formal sources of information. Depending on the size,
virtualness, and geographic dispersion of an organization, this balance
shifts towards more formal or informal information behavior.
Integrity
is an organizational value manifested through individual behavior that is

characterized by the absence of manipulating information for
personal gains such as
knowingly passing on inaccurate information,
distributing information to justify decisions after the fact or
keeping information to oneself.
Good information integrity results in effective sharing of sensitive
information.
Information
Information Management
Management Practices
Practices (IMP)
(IMP)
Capability
Capability
The
Thecapability
capabilityof
ofaacompany
companyto
to manage
manageinformation
informationeffectively
effectively
over
overits
itslife
lifecycle.
cycle.
Sensing
involves how information is detected and identified concerning:

economic, social, and political changes;
competitors innovations that might impact the business;
market shifts and customer demands for new products;
anticipated problems with suppliers and partners.
Processing
into useful knowledge consists of accessing and analyzing

appropriate information sources and databases before business
decisions are made.
Hiring,
training,
evaluating and
rewarding people with analytical skills
is essential for processing information into useful knowledge.
Maintaining
involves
reusing existing information to avoid collecting the same
information again,
updating information databases so that they remain current and
refreshing data
to ensure that people are using the best information available.
Organizing
includes
indexing, classifying and linking information and databases
together to provide access within and across business units and
functions;
training and rewarding employees for accurately and completely
organizing information for which they are responsible.
Collecting
consists of the systematic process of

gathering relevant information by profiling information needs of
employees;
developing filter mechanisms (computerized and non-computerized)
to prevent information overload;
providing access to existing collective knowledge;
and, training and rewarding employees for accurately and
completely collecting information for which they are responsible.
Information
Information Technology
Technology Practices
Practices (ITP)
(ITP)
Capability
Capability
The
Thecapability
capabilityof
ofaacompany
companyto
toeffectively
effectivelymanage
manageappropriate
appropriateIT
IT
applications
applicationsand
andinfrastructure
infrastructurein
insupport
supportof
ofoperational
operationaldecisiondecisionmaking,
making,and
andcommunication
communicationprocesses.
processes.
IT for Management Support
includes the software, hardware, telecommunication networks and

capabilities that facilitate executive decision-making.
It facilitates monitoring and analysis of internal and external business
issues concerning
knowledge sharing,
market developments,
general business situations,
market positioning, future market direction,
and business risk.
IT for Innovation Support
includes the software, hardware, telecommunication networks and

capabilities that
facilitate peoples creativity and that
enable the exploration, development, and sharing of new ideas.
It also includes the hardware and software support to develop and
introduce new products and services.
IT for Business Process Support
focuses on the deployment of software, hardware, networks, and technical

expertise to facilitate the management of business processes and
people
across functions within the company and
externally with suppliers and customers.
IT for Operational Support
includes the software, hardware, telecommunication networks and technical

expertise to
control business operations,
to ensure that lower-skilled workers perform their responsibilities
consistently and with high quality and
to improve the efficiency of operations.
Source: Donald A. Marchand, William J. Kettinger and John D. Rollins, Making the Invisible Visible: How companies win with the right information, people and IT, New York and London: John Wiley and Sons, 2001.
fective information use within their company. It

can also be used as a business metric to measure
and track how effectively the company is using
information.
The IO framework can be easily applied to the
strategic intelligence process. Figure 2 provides a
detailed description of the IO framework. Companies that succeed in promoting integrity, formality,
control, transparency and sharing, remove barriers
for information flow and promote proactive use
of strategic information in their companies. With
explicit processes, trained employees and personal
accountability in place, companies are able to
spend less time on tracking down information
and more time on using and analyzing strategic
information effectively. This can also help reduce
uncertainty or information overload, improve the
quality of information available to employees and
customers and enhance the decision-making capability of the company. If a companys business
strategy is linked to the IT strategy, it makes it

easier for that company to effectively manage the
necessary IT infrastructure and applications that
support operations, business processes, innovation
activities, and management information such as
strategic intelligence.
The information orientation framework
can also aid management in measuring their
companys IO maturity level. The IO dashboard
can depict how good your company is in terms of
information capabilities. The analysis is based on
a statistically validated model and compared to a
global benchmark. Figure 3 illustrates a sample IO
dashboard. The IO dashboard can help managers
easily recognize what areas of information use the
company needs to improve and provides them with
a measurement tool to track their improvement.
A high IO company is one that demonstrates a
high level of maturity in all three areaspeople,
processes, and technology.
Figure 3. (Source: Used with permission from enterpriseIQ)
Information Orientation (IO)
Where you are now
Business Performance
Example Company
Info behaviors and values (IBV)
Information
Information
Information
Information
Information
Information
proactiveness
sharing
transparency
control
formality
integrity
> 80%
< 35%
< 35%
> 50%
> 95%
< 5%
Info management practices (IMP)

Sensing information
> 65%
Processing information
< 20%
Maintaining information
< 35%
Organizing information
> 80%
Collecting information
> 95%
IT practices (ITP)
IT for management support
IT for innovation support
IT for business process support
IT for operational support
<
<
>
>
IBV total
IMP total
ITP total
< 50%
> 65%
> 65%
IO total
> 65%
Business performance
< 5%
Market share growth

Financial performance
Product and service innov.
Superior company reputation
50%
50%
50%
95%
Explanations
According to the legend on the right, the IO
dashboard depicts the ranking of a business
entity's or an individual's responses within our
benchmark of companies.
Legend
Top 5%
Top 20%
Top 35%
Above 50%
Below 50%
Bottom 35%
Bottom 20%
Bottom 5%
Copyright "00" by enterpriseIQ. All rights reserved.

Not to be quoted or reproduced without written permission
< 5%
< 5%
> 80%
< 5%
There are many characteristics of high and

low IO companies. We list some below to help
you determine where your company falls on the
spectrum. Some characteristics associated with
high IO companies include:

Effective implementation of all three information capabilities across the company, not
just in one or two units.
Information-oriented culture with a consistent view and understanding of how to use
information effectively to achieve future
success.
Free flow of strategic intelligence throughout
the company, regardless of the organizational
structure, because of the people behaviors,
processes and technology in place.
Ability to effectively deal with a rapidly
changing market where information and
knowledge expires quickly due to the rapid
and efficient flow of information throughout
the organization.
High expectations about future industry
leadership and effective execution of
plans.
Proactive in their response to situations,
easily changing strategies when necessary
in order to achieve success.
Keen sense of urgency about what we do
not know and what we need to know.
Interest in incorporating lessons learned
into their business practices.
On the other end of the spectrum, some characteristics of a low IO company include:

Undeveloped information capabilities that

limit the companys ability to sense, collect,
manage, and respond to the information they
need to make effective strategic decisions.
Reactive response to crisis situations forces
them to primarily focus on the current state
of affairs.
Little incentive in place for people to effectively share and use strategic information.
No synergy among its processes, people,
and technology.
Employees are encouraged to hide bad news
or mistakes and do not place a priority on
continuous improvement.
Believe that IT is the silver bullet for most
problems, so IT is frequently blamed when
things do not work.
Lack trust in the information provided to
them through formal channels.
rElAtIonshIp bEtWEEn A
coMpAnys Io MAturIty lEvEl
And Its ApproAch to
strAtEgIc IntEllIgEncE
A companys IO maturity level can influence a
companys approach to strategic intelligence or
provide it with the capability to approach it in a
more effective way. As you can see in Figure 4,
many of the high IO company characteristics are
applicable to companies with a process approach to
strategic intelligence. Similarly, low IO companies
have the same characteristics as companies with a
functional approach to strategic intelligence.
High IO companies have the ability to create a
successful process-oriented approach to strategic
intelligence. These companies have the processes,
people behaviors and technology practices in
place that allow them to freely and openly share
information in a timely fashion throughout the
company. High IO companies have a continuous
learning culture that encourages its employees to
collect, share and use diverse sources of strategic
intelligence to shape the future of the company. As
a result, the employees usually have the information they need to make informed decisions about
future performance. Thus, a high IO company is
better than their competitors at developing industry foresight and shaping business strategies
to act on their foresight. They are able to sense,
Figure 4. IO Maturity can influence a companys approach to strategic intelligence

High IO Maturity
IT role
Strategic
Operational
Culture
Proactive, trusting, open
Reactive, skeptical, resistant to change
Communication style
Interactive and open among the

functions
Vertical and secretive
Management style
Open to new ideas
Control focused
Learning style
Continuous learning learn from

mistakes
Get the job done dont share your

mistakes
Information management
Structured and understood
Inconsistent
Information flow
Rapid and efficient flow, independent

of the organizational structure
Highly controlled, funneled up

through silos
Quality of information
Adequate and timely
Too little, too late
Process Approach
collect, manage, and respond to strategic intelligence throughout the company, which will result
in better future business performance.
Low IO companies do not have the infrastructure, processes, or incentives in place for
employees to sense, gather and share information
with one another. Executives request the strategic
information they need from specific employees
and information is not openly shared with others. As a result a lot of intelligence is left on the
table, thus many managers are not making fully
informed decisions about the companys future.
Without the infrastructure and the culture in place
these companies are typically only capable of
implementing a functional approach to strategic
intelligence.
kEys to A succEssFul
stAtEgIc IntEllIgEncE
procEss
We believe that the most effective way to organize
strategic intelligence is the process approach.
0
Low IO Maturity
Functional Approach
In some cases, such as acquisitions, a company

might be required to keep information top secret
and only share it with a few executives. However,
in most situations, a more distributed approach is
preferable where the company develops processes
that allow for information sharing across business units and geographies. It is clear that there
are risks associated with each approach, but the
benefits gained from the process approach vs. the
functional approach are far greater.
Building a strong process approach requires
developing mature information capabilities. This
is not an easy or quick task to complete. Managers must be persistent and focused on improving
information capabilities and remain committed
to the process approach over time. In addition
to focusing on improving the maturity of your
companys information capabilities, below are
some key points we want managers to keep in
mind when developing a successful strategic
intelligence process.
First, managers must treat the information
and knowledge flows of the company as visible
rather than invisible assets. They must develop
organizational guidelines and a common language

that help people through the process of collecting,
maintaining, sharing, and using information. Also,
managers should ensure that employees understand the business and know what information is
critical to business performance.
Second, they must realize that while technology, such as company intranets, is a critical part
of effective information use; it cannot solve all
of a companys problems. Management must
also invest in people behaviors and processes.
Managers must help people understand how to
use technology effectively and create processes
that people can easily follow. As technology and
communication networks continue to advance
in the area of information use, the how and why
employees use information will become even
more important.
Third, management needs to understand what
influences others attitudes about information
use. In order to change employee behaviors and
values, managers need to walk the talk and
examine their own behaviors before they expect
others to change. Managers must also build formal
monitoring and incentive schemes to reward those
employees that engage in effective information
use (Marchand, 1997).
Fourth, managers should strive to systematically use information as a competitive weapon to
create business asymmetry. Asymmetry occurs
when an enterprise has capabilities that their
customers value and their competitors cannotmatch. Asymmetries can result from structural
advantages such as scale, privileged relationships
and extraordinary abilities in execution, but also
from unusual insight or foresight into trends, markets, customers, and so forth. Hunter and Aron
(2004) suggest that being able to gather and execute
strategic intelligence better than the competition
can be considered a source of business asymmetry
that results in a competitive advantage.
chAllEngEs to dEvElopIng
succEssFul strAtEgIc
IntEllIgEncE
There are several challenges managers face with
regard to developing quality strategic intelligence processes. If managers are aware of these
obstacles upfront, they can avoid falling into
the traps. First, managers must build a culture
where all employees play a role in a companys
strategic intelligence process. Companies cannot
assume that a particular function or specific senior
executives have a monopoly on strategic intelligenceinformation impacting the companys
future. The culture must be one where everyone
is responsible for anticipating and planning for
the companys future needs and opportunities.
It is in managements best interest to create forward-looking mindsets among all employees and
have everyone working towards achieving future
successes and improvements. This can be very
difficult in companies with cultures that dont
encourage sharing or in companies that view
strategic information as top secret.
Second, managers must not assume that past
explanations of success are still reliable indicators
for the future. This mindset will cause management to eventually lose touch with the future
realities of their business or industry. It produces
a reactive culture that only considers alternative
paths when a crisis occurs. Complacency bred
from past successes leads to unexamined assumptions, blind spots, and taboos that not only block
the creation of new mandates among managers
but also make it difficult to sense, communicate,
and use intelligence about future trends. Once a
company achieves success in its market, it is easy
for management to become complacent. The challenge for management is to keep the competitive
spirit and the urgency for continuous improvement
alive (Marchand, 1997).

Third, global companies face a daunting task of

trying to extend the process approach in scope and
scale across various business units, geographies
and markets. Very few global companies are actually able to build uniform IO maturity throughout
their company. Typically, a global company has
various business units that are each at different
IO maturity levels. Companies must identify the
IO maturity level of each business unit and work
on improving the information capabilities of those
business units that have low IO maturity levels.
Realistically, global companies should aim to have
a portfolio of business units that have the highest
average level of maturity possible.
When trying to enforce common processes,
a common culture and the use of common tools,
management frequently must address the issue of
standardization vs. flexibility. We have addressed
how beneficial it can be for companies to develop
a more standardized approach to collecting, maintaining and sharing information, enforce some
standardization in technology so that systems
in different business units and geographies can
communicate with each other, and use standard
processes. Yet it is true that companies need to
remain flexible in order to be open to new ideas
and information about markets or competitors.
Rather than opting for either extreme, managers
must establish the right mix of information, people,
and IT capabilities that foster a culture of effective
information use by making information available
to anyone who needs it in the company.
CEMEX is an example of a company that has
found the right mix of standardization vs. flexibility. Through global acquisitions, CEMEX has
grown rapidly over the last two decades from a
local Mexican cement producer to become one of
the largest cement companies in the world. The
company saw the need to standardize processes,
people, and IT throughout the organization and
all of its acquisitions, yet realized the importance
of supporting local innovations in the various
geographies and units.

The company launched a $200 million company wide program called The CEMEX Way.
The program had three main components: process
and systems standardization, a new governance
model, and e-enabling processes. To support
and guarantee permanent standardization, eight
so-called e-groups were made responsible for
process effectiveness. The eight e-groups consisted of business experts as well as HR and IT
representatives and were formed around the core
processes of the company. Their mandate was
to define where standardization made sense and
what had to be improved before standardizing.
The groups used a single set of methodologies
and tools to document and consolidate the best
practices around each process in order to form a
knowledge database.
Through The CEMEX Way, processes became simpler and more efficient, and knowledge
sharing and control were improved. Application
and system duplicates were avoided by providing
shareable services. At the same time, the open
corporate information structure improved CEMEXs flexibility and responsiveness to changes
in the business environment. The alignment of
processes, HR and IT facilitated quick adaptation of new practices. Best practices developed
and learned in local country operations were
quickly standardized into global business process
best practice. In this way, the new governance
model favored coordination and collaboration in
global innovation. Progressive companies, such
as CEMEX, realize that by leveraging worldwide
knowledge and best practices they can achieve
high levels of business standardization and flexibility (Kettinger & Marchand, 2005).
conclusIon
In todays information-based world, managers must treat the handling of information and
knowledge as a distinct core competency in their
company. Effective information use involves
having the right people behaviors, processes and

technology practices in place. A companys ability to manage information effectively can have
an impact on all aspects of its business, including
the strategic intelligence process.
The IO framework is a tool that managers can
use to determine the companys level of effective
information use and to identify areas where they
can make improvements. Companies that achieve
IO maturity by aligning their people behaviors,
processes, and technology practices with their
business strategies can derive a competitive
advantage and future leadership. They are able
to collect and openly share the information that
their employees need in order to successfully
monitor and proactively react to future market
trends or events.
rEFErEncEs
Hunter, R., & Aron, D. (2004). From value to
advantage: Exploiting information. Stanford,
CT: Gartner Inc.
Kettinger, W., & Marchand, D. (2005). Leveraging

information locally and globally: The right mix
of flexibility and standardization (IMD Working
Paper, IMD-2005-02, pp. 1-20).
Marchand, D. (1997). Managing strategic intelligence. In G. Bickerstaffe (Ed.), Financial times
mastering management (pp. 345-350). London:
Pitman Publishing.
Marchand, D. (2002). IO profiler report: An information orientation product by EnterpriseIQ.
Lausanne, Switzerland: EnterpriseIQ.
Marchand, D. (Ed). (2000). Competing with information. London: John Wiley & Sons Ltd.
Marchand, D., Kettinger, W., & Rollins, J. (2001).
Making the invisible visible: How companies
win with the right information, people, and IT.
London: John Wiley & Sons Ltd.
National Commission on Terrorist Attacks upon
the United States (2004). The 9-11 commission
report. Washington, DC: U.S. Government Printing Office.

14
Chapter II
Business Intelligence:
Benefits, Applications, and Challenges

Stuart Maguire
Sheffield University, UK
Habibu Suluo
Sheffield University, UK
Abstract
The main aim of this chapter is to identify the important role of business intelligence in todays global
business environment and to reveal organizations understanding of business intelligence and how they
plan to use it for gaining competitive advantage. Increases in business volatility and competitive pressures
have led to organizations throughout the world facing unprecedented challenges to remain competitive
and striving to achieve a position of competitive advantage. The importance of business intelligence
(BI) to their continued success should not be underestimated. With BI, companies can quickly identify
market opportunities and take advantage of them in a fast and effective manner. The aim of this chapter
is to identify the important role of BI and to understand and describe its applications in areas such as
corporate performance management, customer relationship management and supply chain management.
The study was conducted in two companies that use BI in their daily operations. Data were collected
through questionnaires, personal interviews, and observations. The study identified that external data
sources are becoming increasingly important in the information equation as the external business environment can define an organizations success or failure by their ability to effectively disseminate this
plethora of potential intelligence.
Introduction
The main aim of this chapter is to identify the
important role that business intelligence can play
in future dynamic business environments. It is

also important to reveal organizations understanding of business intelligence and how they
plan to use it for gaining competitive advantage.
Business Intelligence
Two case companies were used to underpin this

study and both companies have already implemented enterprise resource planning (ERP) and
use business intelligence in their daily operations.
Ideally, intelligence research should be driven by
business needs. However, only sparse information
on how business intelligence is currently used
in the business sector is currently available to
the research community. The objectives of this
chapter are:
1.
2.
3.
To identify the important role of business

intelligence (BI) and to understand and
describe its applications
To find out how some companies understand
BI and how they believe they can use it for
gaining competitive advantage
To attempt to identify a future research
agenda for BI in an organizational context
This is generally regarded as the information

age and it could be argued that business intelligence is taking an increasingly important role
in business development. It is not the aim of this
chapter to isolate the differences between data,
information, knowledge, and intelligence although
it is useful to debate some of their qualities. Succeeding in business depends on how well you
know your customers, how well you understand
your business processes, and how effectively you
run your operations. Increasingly, effective control of the supply chain process is differentiating
world-class organizations from the also-rans. The
improved provision of intelligence will facilitate
these processes.
The need for up-to-date, accurate information
is crucial for an organizations decision making. It
could be argued that the decision making process
depends on the nature of the organization; its
marketing niche; how progressive it is in grasping
new opportunities; its philosophy on conducting
business at all management levels and its effective use of information (Wysocki & DeMichiell,
1997). Knowing where to find information is often
the key to success and it is argued that increasing

economic pressure pushes companies towards the
need to continually gain the competitive edge over
similar organizations (Burke, 1995). Thus, the
search for current information and intelligence
is a vital ingredient towards the future success
of a business.
In a recent study, the Economist Intelligence
Unit (EIU, 2005) conducted an online survey of
122 senior executives in Western Europe, 68 of
whom were based in the UK. Two-thirds of the
companies in the survey complained that while
their information systems generated huge volumes
of data, executives could not act on much of it. It
was generally felt that too much information could
be impeding decision-making. Over half (55%) of
the executives said that information technologys
(IT) failure to prioritise information was the main
barrier to effective decision-making (EIU, 2005;
Savvas, 2005). This is one significant finding as
far as this study is concerned. Simply providing
access to an ocean of information, assisted by
IT, is not enough; executives need knowledge
delivered in a form they can quickly interpret
and act on.
The volatile increases in competitive pressures
have forced businesses throughout the world to
face unprecedented challenges to remain viable
while striving to achieve sustainable growth.
Consequently the importance of business intelligence to their potential survival should not be
underestimated. With business intelligence, companies can quickly identify market opportunities
and take advantage of them in a fast and effective
manner. However, according to some writers
(Vitt, Luckevich, & Misner, 2002), more and
more organizations are realising that becoming
increasingly rich in data does not necessarily
result in a better understanding of their business
and markets or even provide improvements in
operational performance. It is argued that the
most successful companies are those that can
respond quickly and flexibly to market changes
and opportunities with an effective and efficient

use of data and information. (Turban, Lee, &

Viehland, 2004). Accordingly, quality, flexibility,
and responsiveness are strategic issues for organizations to assimilate; otherwise more flexible
organizations may take over their position by
offering better-perceived value (Wilson, 1994).
Organizations must collect business intelligence
that really adds value to their business. Generally
speaking, authors have spent more time researching information and knowledge than intelligence.
It is worth trying to isolate the constituent parts
of intelligence.
busInEss IntEllIgEncE And Its

bEnEFIts
Intelligence is a term bearing important meanings
in competitive business environments. Survival of
businesses can often be reliant on a good source
of business intelligence, which can range from
data about their existing customers to intelligence
about their competitors (Maguire & Robson,
2005). Nevertheless, sometimes information is
collected without any clear purpose in mind but
merely to build up a background understanding
of the environment (Curtis & Cobham, 2005).
In a wider sense intelligence is a general mental
capability that involves the ability to reason, plan,
solve problems, think abstractly, comprehend
ideas, and learn. According to Brackett (1999),
being intelligent involves the ability to learn, to
understand, or to deal with new or trying situations; the skilled use of reason; the ability to apply
knowledge to manipulate ones environment or
to think abstractly.
The Society of Competitive Intelligence Professionals (www.scip.org) defines intelligence as
a process of ethically collecting, analyzing and
disseminating precise pertinent, specific, opportunistic, predictable, and actionable information
about the business environment, competitors and
the organization itself (Cavalcanti, 2005). Thus,
organizations must adapt to their environments

in order to survive and prosper (Xu & Kaye,

1995). Intelligence is creative and human reasoning which enables recognition of relationships
between things, the ability to sense qualities
and spot patterns that explain how various items
interrelate (Turban et al., 2004).
Moreover, intelligence consists of identifying
the problems occurring in the organization, and
it includes several activities aimed at identifying
problem situations or opportunities (Laudon &
Laudon, 2002; Turban, 1995). It also includes
the collection and analysis of data related to the
identified problems (Alter, 2002). In addition, it is
argued that intelligence is related to the ability to
create information rather than merely to locate it
or uncover it from a mass of data (Licker, 1997).
Others argue that intelligence is about information
gathering and analysis; and the foundations of
intelligence are discipline and honesty (Friedman,
Friedman, Chapman, & Baker, 1997).
Knowledge about situations is important for
survival and is a valid competence. Intelligence
produces knowledge from the meshing and reconciliation of a set of information (Edwards &
Finlay 1997; Prusak, 1997). Knowledge of what
customers value is importantboth their threshold requirements and the things they especially
value (Johnson & Scholes, 2002). According to
Tiwana (2002), when knowledge can be applied,
acted on, when and where needed, and brought to
bear on present decisions, and when these lead to
better performance or results, knowledge qualifies
as intelligence.
It can be argued in a business sense that the
essence of intelligence begins with environmental
scanning activities (Cavalcanti, 2005). In fact,
theory in the intelligence process has its heritage in environmental scanning (Nitse, Parker,
& Dishman, 2003). However, the topic has more
recently been examined under the labels of business intelligence and market(ing) intelligence
(Nitse et al., 2003). According to Yasin and
Yavas (2003), inadequate environmental scanning may cause a business to miss the trends in
shopper preferences, hence cause, for example,

shopper migration from town stores to suburb
malls. Moreover, Shell Oil conducted a study of
30 businesses that had survived for more than
75 years. Its findings suggest that the capacity
to absorb and understand the environment more
rapidly than competitors was critical for survival
(Cavalcanti, 2005).
It is difficult to imagine how any organization can take part in a business planning process
without knowledge of its competitors intentions.
Many businesses use intelligence to keep tabs
on their competitors, gleaning data about new
product developments, new plant investments,
promotional activities, managerial changes, sales
force activity, pricing information, and the like
(Sprague & Watson, 1993). Moreover, there is a
greater scope for sharing intelligence, especially
for small and medium-sized enterprises (SMEs),
following the growth of extranets, inter-agency
cooperation, strategic alliances, and virtual
organizations (Maguire & Robson, 2005). According to Alter (2002), the focus of research
has been on intelligent agentsautonomous,
goal-directed computerised processes that can
be launched into a computer system or network
to perform background work while other foreground processes are continuing. These agents
include e-mail, data mining, and news. However,
to be effective at extracting intelligence from the
business environment it may be necessary for a
group of staff to have a well-defined set of key
competencies (Maguire & Robson, 2005).
Similarly, it is difficult to imagine how successful organizations can make valid decisions
without a rigorous knowledge of their business
environments. Business intelligence is similar to
military intelligence in that it focuses predominantly on the environment (Cavalcanti, 2005).
According to ESRI (2005) military intelligence
is a process of gathering and analyzing data that
allows understanding of the weaknesses of the
enemy and being able to take advantage of those
weaknesses when planning an attack. Hence, the
better you know your enemy the more successful

will be your military campaign. At one level it
could be argued that business intelligence (ESRI,
2005) is about understanding the needs of the
business and its customers such that the business
can take advantage of that knowledge to serve its
customers better than one of its competitors.
The term business intelligence, also known as
BI, is a multifaceted concept defined and described
differently by various scholars. Moreover, Vitt et
al. (2002) describes BI based on three different
perspectivesmaking better decisions faster,
converting data into information, and using a
rational approach to management. Vitt et al. (2002)
identified that in the past decade, many authors
have treated BI primarily as a technical topic,
without paying much attention to the businesswinning potential of enhanced BI, such as securing
competitive advantage, improving operational
efficiency and maximizing profit. BI, in theory,
is the opportunity to bring together information,
people, and technology to successfully manage
an organization.
According to Jelecos Systems (2005), BI refers
to the product and process of combining and analysing significant amounts of data from multiple
disparate sources and extracting meaningful and
actionable insights such as trends, probabilities,
and forecasts (see Figure 1). Furthermore, according to Brackett (1999), BI involves the integration
of core information with relevant contextual information to detect significant events and illuminate
cloudy issues. It includes the ability to monitor
business trends, to evolve and adapt quickly as
situations change and to make intelligent business
decisions on uncertain judgements and contradictory information. Brackett (1999) argues that BI
relies on the exploration and analysis of unrelated
information to provide relevant insights, identify
trends and discover opportunities. This is putting
a lot of pressure on the effective and efficient
design of the data warehouse.
At the heart of BI is the ability of a company to
access and analyze information and then exploit

Figure 1. Business intelligence (Source: http://www.jelecos.com/business_intelligence.asp)

Web Servers
Accounting
Data Warehouse
Call Center / CRM
Insight
it to competitive advantage (Hanrahan, 2004).

The argument is that BI and business analytics
tools aim to help business analysts identify areas
of competitive advantage. Davis (2001, cited by
Hill & Scott, 2004) extols the value of BI to gain
competitive advantage by arguing that BI as an
innovation is a legitimate business function and
that it is especially valuable in gaining information
about competitors. He further considered BI to
be useful for predicting the future environment
in which a company will operate.
For some, BI means finding information currently locked or hidden away in multiple systems, divisions or operations. For others, it means
planning for the future and evaluating different
alternatives (Menninger, 2005). Moreover, BI has
traditionally been used for supporting long-term
strategic planning and short-term tactical tasks
such as campaign management (White, 2004).
If the company has a good idea of where it currently stands in terms of BI capacity, and what its
future targets are, the path to its targets should be
relatively clear (Lewis, 2001). According to Vitt et
al. (2002), BI is in fact performance management,

an on-going cycle by which companies set their

objectives and goals, analyse their progress, gain
insight, take action, measure their success, and
start all over again (see Figure 2). The following
section looks at some of the key applications of
BI in todays current business environment.
Figure 2. The BI cycle (Adapted from Vitt et al.,

2002)
bI And corporAtE
pErForMAncE MAnAgEMEnt
Recent research has revealed that BI is a key
cornerstone of corporate performance management in both Europe and the United States. The
most common application areas for BI are in sales
and marketing analysis, planning and forecasting, financial consolidation, statutory reporting,
budgeting, and profitability analysis (Thompson,
2004). According to Gartner Research (2002), a
study (in which 60% of respondents were from
Europe and 30% of respondents were from the
United States) revealed that BI applications in Europe and the United States are used predominantly
for profitability analysis, corporate performance
management (CPM), supply chain management
(SCM), activity-based costing (ABC), and customer relationship management (CRM).
A key part of CPM is being able to access
reliable intelligence so as to support accurate
decision-making in dynamic business environments. The intent of BI is to help decision makers
make well-informed choices (Gonzales, 2003).
Put simply providing staff with BI should lead to
better decision-making (Schauer, 2004). BI is the
process for increasing the competitive advantage
of a business by intelligently using available data
for effective decision-making (McMichael, 2005).
Searching the environment for conditions that
call for a valid decision is an intelligence activity
(Schoderbek, Schoderbek & Kefalas, 1990).
In BI, decision support is about using information wisely and it aims to provide a warning about
important events like takeovers, market changes,
and staff performance, so that preventative steps
are taken (Ananthanarayan, 2002). These are
vital ingredients of effective CPM. Furthermore,
BI may improve analysis and decision-making
to improve sales, customer satisfaction or staff
morale. Similarly, according to Steadman (2003),
the goal of BI is to empower decision-makers, allowing them to make better and faster decisions.
Staff at all levels of an organization: managers,
sales representatives, order-entry or point-ofsale clerks, and supply-chain workers all work
with information. BI allows an organization to
empower people to make decisions at their point
of maximum impact, accelerating the speed of
effective decision-making. Turban et al. (2004,
p. 171) argues, placing strategic information in
the hands of decision makers aids productivity,
empowers users to make better decisions, and
improves customer service, leading to greater
competitive advantage.
The type of companies that are using them
will influence the design of CPM systems. Organizational structures influence information
usage. In traditional, hierarchical organizations
where information storage and dissemination is
closely tied to functional or divisional structures,
decision-making is often achieved through committees (Hall, 2000). The intelligence function of
information may be lost as its potential for being
utilized is restricted by rigid reporting channels.
It is generally accepted that information normally
tracks up or down hierarchies, but rarely across
divisions. In contrast, Hall (2000) argues that
firms with freer organizational structures allow
for easier communication of information through
their dependence on interpersonal networking
and spontaneous team-building. However, the
intelligence function of the information sources
used can be fluid and uncertain and may be hidden
in information overload. Individual experts may
know the detail of an issue, but not the context
and therefore could make poor business decisions
on the basis of incomplete data.
Furthermore, according to Hall (2000), it
might be argued that the second model is more
conducive to the development of BI because each
individual has more interpersonal connections,
so information should flow more freely between
these nodes and generate more ideas and further
questions. What has been traditionally regarded
as an unproductive activity might, in fact, be
the opposite when information is learnt through
chance meetings, shared interests and serendip-

ity. In addition, the speed at which decisions are

made in more open organizations is likely to be
faster than in traditional structures. Therefore,
there is greater opportunity to surprise competitors with new products and/or services. This will
have serious repercussions for the design of CPM
in the future.
Companies are constantly looking for ways
to take costs out of business operations while
simultaneously building capabilities that support
business growth. There is a persistent need for
comprehensive information and analysis capabilities to support the business objectives. The need
for accurate analysis is highlighted because of
increased environmental pressures. The environment produces forces of great impact that can
define an organizations success or failure. The
increase in environmental turbulence, competition or hyper competition and business uncertainty is a key ingredient for the appearance of BI
(Cavalcanti, 2005). BI is the ongoing process of
monitoring the competitive environment in order
to identify opportunities to act on or threats to
be avoided. Thus, intelligence is used in analysis
and interpretation of data from within and outside
the companies in order to make sound decisions
(see Figure 3).
Once again, there is pressure on the companies

data warehouses to be flexible enough to respond
to the increased demands of decision-makers in
these organizations. This is more than business
reporting as the requirement grows to use BI
and business analytics to reduce the uncertainty
involved in managing a large enterprise (Brunson,
2005). It can be argued that SMEs are more likely
to have a higher percentage of data collected externally than large companies. They are less likely
to be burdened with large corporate databases or
data warehouses.
bI and customer relationship

Management (crM)
In certain contexts BI is viewed as a customer
management tool that can slice and dice various market segments and provide an integrated
view of what services best suite the customers
in each segment (Quinn, 2003). More and more
companies are turning to BI to extract value
from their day-to-day business and customer
data, improving profitability and providing a
more interactive relationship with their customers (Green & Dhillon, 2003). For example, many
wireless companies in Europe have adopted BI
Figure 3. BI within the corporation (Adapted from Whitten, 2004)
External
Data
External
Data
0
as a strategic executive tool to give them an edge

in an extremely competitive market and even
companies in the South African cellular market
use BI to give themselves an edge in an extremely
competitive market (Quinn, 2003).
Companies are able to use BI to collect more
information about their customers and have
the potential to use such information to design,
develop and package products and solutions tailored to their clients needs (Babu, 2005). Such
information also helps companies in cross-selling products and services. Additionally, BI is a
process of leveraging customer information to
enhance corporate behaviour and improve relationships with current and target customers for
enhanced profitability and competitive advantage.
According to Hall (2004), CRM initiatives have
focused on the collection of significant quantities
of customer behavior, but these efforts fall short
of delivering on the fundamental promise of
CRM that the better you know your customers,
the more effectively you can tailor your interaction behavior. However, BI can make a significant
difference to analyzing behavior based on the
most comprehensive information available and,
therefore, play a pivotal role in a comprehensive
CRM strategy.
Combined with CRM systems, BI allows
companies to develop customer-centric views
of their business, crucial to maximizing customer
satisfaction and profit per customer (Claraview
LLC, 2002). Across industries from retail sales
to healthcare, companies that focus on excellence in managing customer relationships have
demonstrated significant competitive advantage
through an integrated strategy for BI and CRM
(Hall, 2004). A form of BI exists at every retail
company, although it still tends to be concentrated
in spreadsheets and other disparate repositories
(Tarpley, 2001). In the retail world, traditional BI
has focused on providing managerial reporting
such as financial, customer and product analysis,
trend and comparative analysis; and actual vs.
budget (Taylor, Groh, & Hatfield, 2004). These

reports tend to be effective at measuring historical business operations but give limited insight
into measuring and improving the effectiveness
of the organizations corporate strategy. SAS
Enterprises (2005) point out that specific areas in
which retailers can benefit most by using BI include
merchandising, marketing, and operations.
Retailers have a strong command of sales history, but where future projections are concerned,
even large firms often depend on straight-line
projections and guesswork. An integrated approach to retail BI allows companies to produce
critical planning, analysis, and reporting faster
and more accurately (Tarpley, 2001). Furthermore,
according to SAS Enterprises (2005), leading
retailers around the globe like Wal-Mart, Foot
Locker, Staples, Williams-Sonoma, and Amazon.
com in the United States; Carrefour and Karstadt
in Germany; Marks & Spencer and J. Sainsburys
in the UK; Pao de Acucar in Brazil; and many
others have begun using BI and analytics to make
a range of strategic decisions. These include where
to place retail outlets, how many of each size or
color of an item to put in each store, and when
and how much to discount. The effects of these
decisions have the potential to save or generate
millions of dollars or pounds for retailers.
The future of retail BI will be defined by the
retailers that have figured out how to maximize
customer satisfaction and profitability with the
right combination of quality products, friendly
and efficient service, unique value, a differentiated shopping experience, and a business model
that truly serves its communitylocally and
globally. This will be accomplished by starting
with understanding the customer and then linking that insight into every decision that is made,
from merchandising to marketing to distribution
to store operations to finance, so that retailers can
predict how to best serve their customers everchanging needs and desires.

bI and supply chain

Management (scM)
The supply chain is frequently referred to as a
logistic network in the literature, however, according to Yu, Yan, & Cheng (2001, p. 114), SCM
emphasizes the overall and long-term benefit
of all parties on the chain through co-operation
and information sharing. In the commercial
world, BI-based SCM systems help to monitor
the provision and consumption of supplies, and
bridge information gaps between suppliers and
customers (Claraview LLC, 2002). Some companies are using BI to improve data visibility so
as to reduce inventory levels, analyze customer
service levels to identify specific problem areas,
better understand the sources of variability in
customer demand to improve forecast accuracy,
analyse production variability to identify where
corrective measures need to be taken, and analyze
transport performance to reduce costs by using
the most efficient transport providers (Shobrys,
2003).
Furthermore, according to Rao and Swarup
(2001) some applications of BI in SCM and
procurement are vendor performance analysis,
inventory control, product movement and supply
chain, and demand forecasting. AccuraCast (2004)
consider that cutting costs through stringent SCM
is one of the most popular applications of BI and
argue that BI applied to management of supply
has numerous benefits such as better forecasting
of demand, detailed information about inventory
levels, reduction in inventory levels, maintaining a
constant supply of products, lower costs of goods
by ordering optimal quantities, minimizing the
cost of excess and obsolete inventory, tight cash
flow management, and overview of logistics of
the entire supply chain.
As one would expect, customers are an important and integral consideration of any SCM
initiative. Jones and Towill (1997) argue that one
of the key attributes of a successful winner in a
highly competitive marketplace is the ability to

respond rapidly to end-consumer demand. Thus,

to maximize competitive advantage all members
within the supply chain should work together
to serve the end consumer. Consumer choice
is one of the major drivers of the competitive
marketplace and the most loyal customer may
turn to a competitor if the preferred company
cannot supply on demand. In addition, Jones
and Towill (1997) argue that market sales data
are the information catalyst for the whole supply chain, holding undiluted data describing the
consumer demand pattern. Therefore, the best
way to ensure everyone in the supply chain gets
the most up to date and useful information is to
feed each level of the supply chain directly with
the market sales data.
The following section will pick up on some
of the themes discussed so far. Research data
from two case companies will be used to identify
how current firms in highly competitive business
environments are addressing the issues raised in
the area of business intelligence. It is interesting
to analyze how organizations view business intelligence in todays highly competitive business
environment. It is also interesting to compare
the companies use of BI in relation to current
conventional wisdom in this area.
the case companies

The authors decided to interview senior management at two organizations in the United Kingdom.
The interview schedule was developed over several weeks, as it was clear that this would not be
a stereotypical interviewer-interviewee situation.
The respondents were loath to talk about certain
issues and that was understandable. Their perspective on data protection legislation appears to be
clear-cut. However, the collection and storing of
information to do with competitors seems to be a
grey area that is worthy of further research.
In certain areas the respondents were extremely
forthcoming and the authors were pleased with the
way certain issues were explored. It is important
to treat this research area delicately until there is a

general consensus about the validity of the storing
of competitor intelligence. This will have major
repercussions for those organizations that may
view the analysis of competitor intelligence as a
major reason for investing in more sophisticated
BI systems. The two organizations will be referred
to simply as ORG1 and ORG2.
The two organizations participated in the
study have implemented ERP and use BI in their
daily operations. However, the two organizations
selected differ on industry, location, size, structure, and culture. The research topic was seen
as touching sensitive areas especially in ORG1
where they consider it inappropriate to disclose
intelligence information or provide detail concerning their key processes.
ORG1 was established in the 1880s as a private
company and has over 400 stores located throughout the UK and another 150 stores worldwide. It
is one of the UKs major employers, with over
65,000 employees nationwide. The companys
major products are clothing, home, beauty, food
products and financial services. The latest turnover
for ORG1 was over 8 billion (more than 90%
from the UK business). ORG1 agreed to provide
4 senior staff members who would complete the
questionnaires using a Likert scale to isolate key
issues.
It is perhaps not surprising that the larger
organization was loath to allow in-depth access
to its internal systems. However, the authors are
keen to stress that they are very thankful for the
information provided by ORG1. The designers of
future research programmes in this area will have
to spend a lot of time identifying how they will
manage to elicit sensitive company intelligence
from multinational corporations.
ORG2 was established in 1970 and has approximately 250 employees in the UK. It is one of the
UKs major sources of technical information for
contractors and architects. The companys latest
turnover was just under 16 million. After the
staff at ORG2 had completed the initial question-
naires 17 interviews were conducted with senior

staff. The ORG2 CRM system was demonstrated
to the authors.
To ORG2, BI generally means CRM especially
for its content managers, sales managers, sales
administration, telesales, and marketing staff.
ORG2 emphasised that like most companies, good
customer relations is key to its business success.
Both ORG1 and ORG2 have established intelligence teams at their head offices to analyze the
huge amounts of collected and stored data. Both
organizations were asked to define BI as part of
the interview process.
The following is a sample of the questions
included in the questionnaire for staff at ORG1
and ORG2:
To what extent is business intelligence (BI)
used in your organization?
Do you believe BI gives a competitive advantage to an organization in your sector?
How important is BI in the decision-making
process within your organization?
How useful is BI in customer relationship
marketing at your organization?
How useful is BI in supply chain management
at your organization?
Is it important to have collaborations with
other organizations in the collection and use
of BI?
Do you store competitor intelligence in your
company databases/data warehouses?
Do you consider confidentiality of data to be
a major issue in your organization?
What ethical issues are considered when collecting competitor information?

What are the critical success factors required

for the provision of effective BI?
Do you agree that BI is essential for business
success?
It was identified in both ORG1 and ORG2 that
to make better decisions faster, business executives
and managers need relevant and useful facts at
their finger-tips. But there is often a significant
gap between the information that decision makers
require and the volumes of data that a business
collects in its day-to-day business transactions.

This is often referred to as the analysis gap (Vitt
et al., 2002). To bridge this gap, organizations
make significant investments in the development
of information systems to convert raw data into
useful information. The most effective information systems access huge volumes of data and
deliver relevant subsets instantly to decision
makers in the form to which these people can
easily relate.
The following two tables give a good insight
into the mindsets of the interviewees in relation
Table 1. Comments from interviewees in ORG 1

Organization
Staff Member
Comments
ORG 1
Chief Executive
Officer
We believe our role is to assist our customers by providing them with the information they
need to make informed choices.
ORG 1
Company Chairman
I was attracted to this job because we have one of the most famous retail brands in the
world.
ORG 1
Store Manager (1)
Business policies are produced using business intelligence gathered by our team in Head
Office.
ORG 1
Marketing Manager
Knowing what our customers want and what our customers are doing is business
intelligence.
ORG 1
Store Manager (2)
Business intelligence derived from CRM enables us to provide a wide range of intelligent
clothing for the 21st century.
Table 2. Comments from interviewees in ORG 2

Organization
Staff Member
Comments
ORG 2
Business Systems
Manager
We provide for quality information ... what makes us first choice for our customers is that
we know the competition ... in essence we provide business intelligence.
ORG 2
Sales & Mktg.

Director
We have a significantly larger manufacturer customer base than any of our competitors
... we have to enhance existing products and develop new ones ... we need quality
information.
ORG 2
Senior Staff Member

(development)
By using a range of data collection methods it has been possible to get a true reflection of
the trends appearing in the usage and provision of information.
ORG 2
Senior Mktg.
Manager
Collected information is converted into intelligence by integrating it with other pieces of

information, analysing, interpreting, and using it for making informed decisions. Decisions
are made intelligently to counter any adverse competitors actions we identify.
ORG 2
Senior Administrator
In our business we dont really have an asset ... our asset is informationthat is our
core business. We sell data we store data, we manage data ... the focus is information
management.
ORG 2
Business Systems
Manager
CRM is business intelligence as far as we are concerned because of the customer

intelligence we have we do have an advantage ... we maintain that advantage because of our
effective use of business intelligence.

to their organizations views on information and

intelligence.
It could be argued that information management is the heart of intelligence and means
knowing what to do with collected information,
knowing what is important and what is not, what
can be discarded and what must be preserved and
how to make certain that valuable information
is accessible and not lost in the detail (Friedman
et al., 1997). Furthermore, it is also argued that
intelligence analysis has a much clearer purpose,
focus and method. It was confirmed in ORG2 that
their foremost purpose is to translate data into
information, and information into a particular type
of knowledge called situational awareness.
Managers and executives need information
delivered to them as knowledge in a predigested
form so that they can, with minimal effort absorb
it and turn it into situational awareness. Situational awareness, then, is the knowledge of the
whole situation (the big picture), constructed
out of the pieces of information that are surging
towards managers and executives that can provide them with the knowledge needed to make
decisions for competitive advantage. However,
organizations must be clear as to whether they
have staff with the required competencies to fulfil
such demanding roles. It is interesting to isolate
some of the key issues in the debate that links
improved information/intelligence to improved

decision-making.
Decisions are made based on the information
available. Informed decisions are derived from
well-structured, internal and external information (see Figure 4). This seems to be similar to
the strategies put in place by ORG1 and ORG2.
BI helps managers make better decisions faster at
both strategic and operating levels. The primary
goal of BI is to help people make decisions that
improve a companys performance and promote
its competitive advantage in the market place. In
short, BI empowers organizations to make decisions faster (Vitt et al., 2002). However, it may
be argued that in future more organizations will
need to glean BI from unstructured forms of data
and information.
The BI Cycles for ORG1 and ORG2 are quite
similar to those proposed by Vitt et al. (2002).
Data from many sources are typically analysed
and this can lead to insightsmany small ones,
and sometimes, significant ones. These insights
suggest ways to improve their business processes
and when acted on can then be measured to see
what is working. The measurements also provide
more data for analysis, and the cycle starts afresh
(Figure 2). Vitt et al. (2002) calls this progressionanalysis, to insights, to action, to measurementthe BI cycle. According to Vitt et al.
Figure 4. BI for better decisions (Adapted from Ojala, 2005)

(2002), making better decisions means improving

any or all parts of the process. This also results
in fewer poor decisions and more superior ones.
Better decisions result in better achievement of
the companys objectives like maximization of
profits.
Furthermore, ORG1 used internal as well as
external information for gaining competitive
advantage (see Figure 5). An organizations effective management is increasingly dependent
on capturing good quality information from
outside the enterprise, as well as from within
(EIU, 2005). The information can be structured
or unstructured. The analysis of information from
these sources was vital for both companies. The
external analysis builds on an economic perspective of industry structure, and how a firm can
make the most of competing in that structure. It
emphasizes where a company should compete,
and what is important when it does compete
there. Thus, the external view helps inform strategic decisions. Internal analysis is less based on
industry structure and more in specific business
operations and decisions. It emphasizes how a
company should compete. The internal view is
more appropriate for strategic organization and
goal setting for the company. This helps to identify
where the intelligence team is based. In the case

of ORG 1 it includes staff from environmental
and marketing analysis.
BI helps better decision making by analysing
whether actions are in fact resulting in progress
toward companys objectives. However, according
to Cooke and Slack (1991), a companys objectives
are unlikely to remain constant in the long term.
Even if the prime objectiveto surviveremains unaltered, the means of achieving this,
and therefore the other lower level objectives of
the organization, will change over a period of
time. Cooke and Slack (1991) argue that changes
occurring in the organizations environment, and
changes occurring in the organization itself, are
the two major reasons for companies changing
their objectives. With BI, changes are identified
and informed decisions are made.
As for the BI role, deciding what is a better
decision for ORG1 or ORG2 is best accomplished
with a clearly stated set of objectives and a plan
to achieve them. This relationship between a
companys overall plan and BI is not a one-way
street with BI simply receiving the plan and
using it as the scale for measuring the quality of
decisions. BI has the major role in creating those
strategies and plans. It is about making better
ENVIRONMENTAL
ANALYSIS
COMPETITIVE
ADVANTAGE
MARKETING
ANALYSIS
COMPETITIVE STRATEGY

INTERNAL INFORMATION
EXTERNAL INFORMATION
Figure 5. Information streams for deriving competitive advantage (Developed from ORG1 study)
decisions faster, and the most strategic decisions

are the ones where BI is the most indispensable
(Vitt et al., 2002). The retail (clothing and food)
sector where ORG1 operates is highly competitive and business opportunities are extremely
time sensitive as compared to the construction
industry where ORG2 operates. Businesses that
identify opportunities but decide too slowly how
to take advantage of them will lose out to their
more agile competitors. That is why Vitt et al.
(2002) argues that there is a need to make not
only better decisions but better decisions faster
to provide a potentially sustainable competitive

advantage.
To ORG2, BI means customer relationship
management (see Figure 6) especially in relation
to the firms content managers, sales managers,
sales administration, editorial, telesales, and
marketing. It emphasises that customers are key
to its businesses. A major issue for ORG2 was
their ability to reconcile intelligence that was
emanating from several CRM systems.
It is not always possible to view the provision
of BI as crucial in all areas of the business. The
Figure 6. ORG2 CRM infrastructure (Developed from ORG2 study)

Customer Data:
Name info
Job info
Address info
Practice info
Product info
Subscriptions
Contact preferences
Training requirements
Customer Data:
Name info
Job info
Address info
Subscriptions
Payment method
Accounts info
Specifier
Customer
Centre
Customer Data:
Name info
Job info
Address info
Own Product details:
(Classification, Attributes,
shipment info, manufacture info,
locations, technical details)
Advertising
Subscriptions
Contact preferences
Manufacturer
Customer
Centre
Accounts
Department
Accounts
System
Invoice generation
Invoice generation
Invoice generation
Newcastle
CRM
London
CRM
Other
Department
CRMs
Internet
Content
Managers:
analysis info
de-dupe info
proofing
rd party
data
competitor
Sales
Managers:
Refined
data
Updates
QuickAddress:
postal
address
confirmation
Sales Admin:
order details
invoice
updates
finance/
accounts
Editorial:
Data entry
Data
proofing
Telesales:
Product
Interest
Updates
Marketing:
Product
interest
Update info
Competitor
info
Marketing
feedback
Software
Support:
Bug tracking
details:
(contact,date

study evidenced that competitive advantage is

concerned with creating and sustaining superior
performance and is determined out of the value
package a firm is able to create for its customers.
Two types of competitive advantage were identified in ORG2:
1.
2.
Where low cost methods of production and

operation allow a firm to pass to customers
lower prices for equivalent benefits.
Where the provision of unique or differentiated benefits outweigh the need for a lower
price.
These were in agreement with Porters (1985)

competitive advantage arguments, except that
sustaining profits above the industry standard was
not confirmed for ORG2 due to limited access.
The two companies, ORG1 and ORG2, consider
reliable information as an important driver for
all decisions they make; thus they search also for
competitors information. The role of information
in creating competitive advantage for organizations business strategy is crucial. According to
Alshawi, Missi and Eldabi (2003), the presence of
quality is necessary for information to be useful
in the creation of competitive advantage.
ORG2 argued that quality is its priority. The
quality, in this sense, means quality of information, as measured by its timeliness, accuracy, and
its accessibility to all those who need it. It also
means quality of service, measured by a focus on
customer needs and a faster and more accurate
response to inquiries and problems (Alshawi et
al., 2003). The external information search and
collection for ORG1 and ORG2 were in line with
the companies business objectives and strategies;
satisfying customers for profit. Orminski (1991)
studied the relationship between business and
information strategies and put forward recommendations for motivating companies to develop
business plans such as the setting up of information services to businesses, and the development
of intelligence for information strategies. What

is important is the role that information can play

in providing business intelligence for companies
to gain a competitive advantage in the industry
in which they are involved.
The benefit that can be obtained from the field
of marketing information or marketing intelligence, for example, is to know the reactions of
potential purchasers both to their products and/or
services to those of their competitors, and to those
still to be developed. Xu and Kaye (1995) argue
that external information, such as marketing information, is of strategic importance, since strategic
decisions are primarily long-term with a balance
towards an external focus, whereas operational
decisions are primarily short-term and have an
internal focus. The two companies, despite the
fact that they apply BI differently, consider BI as
important in getting reliable competitor information and for making informed decisions, hence
getting ahead of competitors.
Turner (1991) argues that if a firm is to succeed
in its business objectives, it will need to access
information which adds value to decision making,
and which, when analyzed, enhances competitive
advantage. These companies reflected Turners
(1991) assertion that the ability of the firm to
compete will be dependent on two key factors:
1.
2.
The ability of the firm to identify and take

account of competitive forces and how they
change.
The competence of the firm to mobilize and
manage the resources necessary for a chosen
competitive response through time.
ORG1, however, appears to have more competitive advantages than ORG2 through its use of a data
warehouse, which offers the significant potential
of a repository of text-based or qualitative data,
such as the provision of a 360 view of customers
by collecting profile information from a range of
sources. Once again, the data warehouse can only
provide the potential for success and it is up to the
organization to put procedures in place to take
advantage of this data store. The following sections

will provide a discussion of the material covered
in the chapter as well as a series of conclusions
and some ideas for future research.
conclusIon
This chapter has put forward business intelligence
(BI) as a potential driver for gaining corporate
success. The chapter looked at the relationship
between BI and decision-making as well as how
the use of BI might be affected by an organizations
structure. It was also important to isolate BIs
integration within the key areas of CPM, CRM
and SCM. BI has been defined in different ways
by the authors and applied differently to organizations. Similarly, BI is understood and applied
differently by ORG1 and ORG2. The differences
are caused by situational awareness created from
not only data and information analysis but also
environmental analysis. It can be argued that there
are four main perspectives in relation to BI: collecting data and/or information, converting data
to information, decision-making, and a rational
approach to management. BI has been identified in
business functions such as CRM, SCM, Customer
Services, Marketing and Decision Making. It is
specifically decision-making of a strategic nature
that has the closest links to competitor intelligence.
It is difficult to imagine how organizations can
constructively formulate business plans without
a clear insight into the corresponding strategy of
their competitors.
The findings of the research showed that ORG1
and ORG2 use both active and passive intelligence
to collect competitors business data and information while observing confidentiality, ethical
issues, and the Data Protection Act. External data
sources are becoming increasingly important in
the information equation. Data and information
collected can be structured or unstructured,
and they include customer taste/fashions, brand
perceptions, market trends, price trends, competi-
tors brands, product quality, and competitors

promotion strategy. In addition, companies also
collect third party information that is publicly
available. Thereafter, it is analyzed to improve
situational awareness.
Data and information collection procedures
have contributed to the differences in companies
understanding of BI. The differences result from
the difficulty of having a formal procedure of collecting and using competitively the intelligence
information; and the fact that formal internal systems play a limited role in providing intelligence
information as compared to external sources of
information. As far back as 1974, Mintzberg argued that managers find formal systems of almost
any type too limited for their purposes hence
they spend a great deal of their time in collecting
grapevine informationgossip, hearsay, speculationwhich they consider likely to be useful and
timely. This may be very difficult to collate in a
meaningful and effective way. Vitt et al. (2002)
argue that the future world of BI will not have
a body of rules like those that support lawyers
and accountants. This is a very important point
as databases and data warehouses require formal
rules and procedures to run efficiently.
In essence, the collection of data and information is driven by the necessity of getting an insight
from its analysis. The results of analysis are useful in making informed decisions for the purpose
of delivering superior products and services,
satisfying and locking-in existing customers,
and attracting potential ones; thus, maximising
companies profits. Based on the Vitt et al. (2002)
argument, therefore, the purpose of analysis in
BI is to present the decision maker with a full
and comprehensive awareness of what is going
on around him/her in such a way that he/she can
make a decision or request and receive additional,
detailed information quickly and efficiently. They
maintain that the company with the best employees, who make correct and timely decisions, wins.
But how do you ensure that employees, at every
level of an organization, make the best decision

they can? The answer to this could be identified

as the crucial role of BI.
Managers and executives make decisions based
on their specific situational awareness. To succeed in the era of global competition, they need
relevant, timely, and accurate information from
such areas as market research, to be responsive;
quality control, to produce high quality products;
logistics, to deliver on time; budgets and costs,
to offer good value; design, to offer variety; and
sales, to match demand.
To achieve a competitive advantage requires
companies to quickly identify market opportunities and to take advantage of them in a fast and
effective manner. However, it would be difficult
to have any certainty in business planning without
a modicum of knowledge about our competitors
situation. Moreover, in an attempt to build BI
theory, the authors discovered a substantive theory
that there is no one best way of using BI and if
firms were successful in their application of BI for
competitive advantage it depended mostly on the
capability of their users, managers and executives.
Its successful application in one organization may
not lead to success in others. This is certainly an
issue worthy of further research.
FuturE IssuEs And rEsEArch

It would certainly be helpful to potential purchasers of BI systems to know exactly what they are
buying. It is important that they know the potential
as well as the limitations of any proposed system.
However, the difficulty may be in the potentialthey may not have the human resources to
take advantage of the product. The onus will be on
the organizations to identify what extra resources
they require to ensure not only a successful implementation but also sustainable benefits from BI.
This could be a risky and potentially expensive
process. BI can provide real business-winning
opportunities for organizations.
0
The authors believe that intelligence, and specifically competitor intelligence, should be a major
cornerstone of any future corporate information
system. Organizations must be able to adapt to
their current and future business environments
in order to survive. Without BI their chances may
be greatly reduced. It is important that business
researchers are aware of the utilization of this
intelligence in decision-making activities. Armed
with this intelligence organizations will be in a
better position to undertake business planning
and control in the future.
Small and medium-sized enterprises may be
the big winners in the future. They may be agile
and flexible enough to take advantage of even
smaller quantities of BI. They may not be saddled
with existing legacy systems that formalize the
decision-making process in a time-consuming
way. They may be in a better position to deal
with unstructured and external intelligence
(refer to figure 4). They may be able to be more
efficient at filtering intelligence for their specific
requirements.
However, some extra ground rules may be
required by organizations. The Data Protection
Act and its underlying principles form a reasonable framework for most firms. However, many
organizations will not have experience of combining informal and formal intelligence into existing
systems. It would be interesting to identify how
organizations cope with this mix of data, information, knowledge, and intelligence. What strategies
might organizations employ to store and analyze
informal intelligence? Are there any lessons to be
learned from the research that has been undertaken
in the area of knowledge management? There will
be an inordinate amount of pressure on system
designers to provide organizations with tailored,
rather than generic, formats so that they can realize
the potential from the business intelligence they
have been gathering. Will organizations be able
to find the data, information, or intelligence that
may be locked away in their current systems and
configurations?
It would be interesting to undertake a longitudinal study focusing on the staff members that are
given the responsibility to process the BI used by
the firm. It would also be important to make the
link with the decision-making process. Ideally, it
might be possible to make a direct link between
better intelligence, better decision-making, and
increased profitability. Finally, it would be interesting to analyse the potential sustainability of these
systems in changing business environments.
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Section II
Strategic Intelligence
Framework and Practice

Chapter III
The Nature of Strategic

Intelligence, Current
Practice and Solutions
Mark Xu
Roland Kaye
University of East Anglia, UK
AbstrAct
This chapter discusses the nature of strategic intelligence and the challenges of systematically scanning and processing strategic information. It reveals that strategic intelligence practice concentrates
on competitive intelligence gathering, non-competitive related intelligence have not yet been systematically scanned and processed. Much of the intelligence is collected through informal and manual based
systems. Turning data into analyzed, meaningful intelligence for action is limited to a few industry leaders. The chapter proposed a corporate intelligence solution, which comprises of three key intelligence
functions, namely organizational-wide intelligence scanning, knowledge enriched intelligent refining,
and specialist support. A corporate radar system (CRS) for external environment scanning, which is a
part of the organizational-wide intelligence scanning process is explored in light of latest technology
development. Implementation issues are discussed. The chapter develops insight of strategic intelligence,
and the solution could significantly enhance a managers and a companys sensibility and capability in
dealing with external opportunities and threats.
IntroductIon
As the business environment becomes more turbulent and competition becomes fiercer, developing
foresight about future opportunities and threats,
and reacting quickly to the opportunities and

threats, becomes a core competency of a wining
organization. Companies that can generate competitive intelligence are leaders in their industry
(Desouza, 2001). However the increasing demand
The Nature of Strategic Intelligence, Current Practice and Solutions
for strategic information has not been satisfied

by the explosive growth in data available. This is
reflected in two facets: firstly, computer-based information systems are inadequately implemented
at the corporate level for strategic information
delivery; secondly, senior mangers who go online
always feel overwhelmed with the glut of data
instead of meaningful, actionable information.
Research which applies computing technology to
support strategic management activities concentrates on the development and the implementation
of computer-based systems for decision support.
Systems such as decision support system (DSS),
executive information systems (EIS), or executive
support systems (ESS) are examples. Strategic
management process however is more than an
activity of making decisions (Simon, 1965), the
process begins with strategic information acquisition, formulating strategic problems, reasoning
strategic alternatives, and finally making a decision. There is a distinction between supporting
managers with strategic information and supporting making decisions. Information systems tend
to emphasize decision-making support more than
strategic information support. Senior managers
information acquisition processes have not been
adequately addressed in the context of information
systems development, except the field of competitive intelligence (Cobb, 2003; Pelsmacker et al.,
2005; Patton & McKenna, 2005; Sauter, 2005)
and Web-based information searching systems
(Chen, Chau, & Zeng, 2002). Supporting strategic
intelligence activity with information technology
is an area remaining largely unexplored. This
chapter aims to address the nature of strategic
intelligence and the challenges, and to explore
the possible solutions towards improving organizational strategic intelligence process.
dEFInItIons oF strAtEgIc
IntEllIgEncE
The term of strategic intelligence is often used
interchangeably with other terms: data, information, intelligence, and knowledge. There seems to
be no generally agreed definitions towards these
terms, but they are different in the context of this
chapter as follows:
Data is the raw material of organizational
life; it consists of disconnected numbers, words,
symbols relating to the events, and processes of
a business. Data on its own can serve little useful purpose.
Information comes from data that has been
processed to make it useful in management decision-making. Intelligence in most cases is referred
to competitors information (CI), or competitive
intelligence or the totality of external information (Baatz, 1994). Competitor intelligence has
often been regarded as a process of collecting
and processing competitors information following a CI cycle, which includes identifying
the strategic needs of a business, systematically
collecting relevant information on competitors,
and processing the data into actionable knowledge
about competitors strategic capabilities, position, performance, and intentions. However, the
boundary of competitors intelligence has always
been extended to include not only competitors
information, but also market and environment
information for strategic decision. For example,
Tyson (1990) defines competitor intelligence as an
analytical process that transforms raw data into
relevant, accurate, and usable strategic knowledge,
more specifically, it includes:
Information about a competitors current
position, historical performance, capabilities, and intentions.

Information about the driving forces within

the marketplace.
Information about specific products and
technology.
Information external to the marketplace,
such as economic, regulatory, political, and
demographic influences that have an impact
on the market.
point out that information is a flow of messages,

while knowledge is created by that very flow of
information, anchored in the beliefs and commitment of its holder.
Baatz (1994) refer the term corporate intelligence to the collection and analysis of information on markets, technologies, customers
and competitors, as well as socio-economic and
external political trends. Another term, business
intelligence (BI) has been prevalent in the IT industry. Business intelligence is a process that its
input is raw data; the data then is evaluated for
usefulness to a relevant and reasonably reliable
body of information; the analyzed, digested, and
interpreted information thus becomes intelligence.
The term strategic intelligence used in this
chapter means strategically significant information to senior managers that is scanned, analyzed,
digested, and is meaningful that could affects
senior managers beliefs, commitments, and actions. The entire process of turning original data
from both external and internal environment into
intelligence is referred to intelligence activity.
Data, information and intelligence are closely
linked to knowledge. Knowledge refers to totality
of information related to policy, problem or issue
whether it is quantitative or qualitative, data or
opinions, judgements, news or concepts. According to Nonaka and Takeuchi (1995), knowledge
is justified true belief; it is a dynamic human
process of justifying personal belief towards the
true. Information provides a new point of view
for interpreting events or objects, which makes
visible previously invisible meanings or shed light
on unexpected connections. Thus, information
is a necessary medium or material for eliciting
and constructing knowledge. Information affects
knowledge by adding something to it or restructuring it. Nonaka and Takeuchi (1995) further
Strategically significant information is not a piece

of static information that is readily available
from certain sources. It is often derived from a
sense making process that requires managerial
knowledge and judgement. Strategically significant information can be viewed from different
perspectives.

thE nAturE oF strAtEgIc

IntEllIgEncE And chAllEngEs
Internal vs. External orientation

Strategic information has an internal or external
orientation. Aguilar (1967) suggests two types of
strategic information: External strategic information is information about events or relationships
in a companys external environment that may
change the companys current direction and strategy. Internal strategic information is information
about a companys capacity and performance that
significantly affect a companys strategic implementation. Because strategic decision is primarily
concerned with external problems of a firm, the
external orientation of strategic information has
been emphasized by many researchers. Mintzberg
(1973) reports that managers demonstrate a thirst
for external information. This is supported by
Macdonald (1995), who argues that change in
an organization is seen as a process in which the
acquisition of external information is critical.
Yet, empirical research supporting this notion is
limited. In contrast, Daft, Sormunen, and Parks
(1988), reveals that senior managers rely as much
on internal discussions and internal reports as
they did on external media or personal contacts,
senior mangers use internal and external source
about equally. This view is reinforced by DAveni
and MacMillan (1990) who found that managers

of successful companies pay equal attention to
both internal and external environments of their
companies, but only during times of crisis, these
managers focus more heavily on the external
environment, which suggests that there may be a
linkage between external information needs and
the extent of environmental stability.
We anchor the view on internal-external orientation of strategic information (Xu & Kaye,
1995) by drawing an analogy between a manager navigating his company and driving a car,
that is, managers cope with external changes
by adjustments to the internal controls. Internal
information is vital for controlling the operation,
but cannot determine the direction of navigation.
External information is of strategic importance,
since strategic decisions are primarily long term
with a balance towards external focus, whereas
operational decisions are primarily short term
and have an internal focus. External information
is more dynamic and uncertain than internal information, and appears more difficult and costly
to obtain than internal information. This poses a
challenge of obtaining strategic intelligence from
external environment.
rent information, much of which is necessarily

unsubstantiated, and for information on events
rather than on trends. Historical, aggregated information from the traditional formal information
system provides little help in the performance of
managers monitoring role. Mintzbergs (1973)
summarize the information that executives received into five categories:
historical vs. current, Future

orientation
Strategic information is also associated with its
historical and future dimension. Information needed for performing routine tasks of daily operation
and for short-range decisions will be different from
information needed for long-range analysis and
planning. Long term planning requires information about the past as well as projections of future
conditions. Research (McNichol, 1993) suggests
that senior managers demand more future and
current information than historical information.
This confirms Mintzbergs (1973) argument that
managers indicate strong preferences for cur-
Internal operations: Information on the

process of operations in an organization,
and on events that take place related to these
operations, comes from regular reports, adhoc input from subordinates, observations
from touring the organization.
External events: Information concerning
clients, personal contacts, competitors, associates, and suppliers, as well as information on market changes, political moves, and
developments in technology.
Analysis: Executives receive analytical
reports of various issues, solicited and unsolicited, come from various sources.
Ideas and trends: Chief executives develop
a better understanding of the trends in the
environment, and to learn about new ideas by
using a number of means such as attending
conferences, glancing at trade organizations
reports, contacting with subordinates, paying attention to unsolicited letters from
clients.
Presses: In addition to the usual types of
information, chief executives receive information in the form of presses of various
kinds, that is, from subordinates, clients,
directors or the public, with which the chief
executives must allocate their time and efforts to deal with.
The issue concerned here is the right balance

between receiving historical, current and future
oriented information by executives.

Raw Data vs. Filtered, Refined

Information
Contradictory views exist towards if executives
prefer analyzed information over factual raw data.
Bernhardt (1994) argues that managers prefer
analyzed information to detailed raw data, as
analyzed information adds meaning and makes
sense of the data. He believes that managers do
not need lorry loads of facts or information; they
need an analytical intelligence product, delivered
on time, and in a format that can be easily and
quickly assimilated. The analytical intelligence
product shall be factual, meaningful, and actionable information. It has been revealed (Taylor,
1996) that current information systems produce
sheer volume of data but little meaningful information to senior managers. Increasingly providing senior managers direct access to operational
data and leaving them to their own devices is a
disservice to the organization, as it creates the
problem of data deluge and the frustrations
that arise from time wasted in trying to assemble
meaningful information from raw data. Data deluge and information meaningless runs the risk of
compromising the advances of colourful, graphic
design of an EIS. Even with graphic-interface,
high-speed communications, and data-warehousing technology, it is extremely difficult for a
decision maker to review thousands of products,
hundreds of categories. When adding the task of
looking outside, at the world of the competitors,
suppliers, customers, and the environment, identifying critical changes becomes a daunting task.
Finding the problem becomes the real problem,
that is, data can be too much for an executive to
spot trends, patterns, and exceptions in detailed
data. Thus data may need to be refined in order
to be useful. Wright, Pickton, and Callow (2002)
reveals that the most common problems in disseminating intelligence is making the information
and structure relevant to the audience while being
brief yet useful. Wyllie (1993) defines information
refining as a social-technological process that
0
enables intelligent human beings to extract and

organize systematically the key items of knowledge kept in any given choice of information
sources. The purpose of the process is to enable
people from executives downwards to be better
and more widely informed, while at the same
time, reducing the amount of time they have to
spend to keep up with headlines on media. The
result of the refining process should be to bring
about better, more informed decisions.
However, managers demand for refined information has been questioned. Edwards and Peppard
(1993) argue that refined information that reaches
the top management team is likely to be distorted.
The distortion may not be conscious, but due to
the assumptions and knowledge used in handling
the information, bring to bear on it. This suspicion
is in line with the notion (Daft et al., 1988) that as
strategic uncertainty increase, senior managers
will want to form their own impression through
direct contact with key environmental sources to
ensure that data is undiluted and does not suffer
from the loss of meaning associated with passing
information through intermediaries. Mintzberg
(1980) observed that managers clearly prefer to
have information in the form of concrete stimuli
or triggers, not general aggregations, and wish to
hear specific events, ideas and the problems.
The issue concerned is whether strategic intelligence is more likely to be derived from refined
data other than from data in its raw fashion. However, the debate is continuing but inconclusive.
Formal vs. Informal systems

Strategic intelligence may be gathered from
formal or informal systems. A formal system for
information acquisition is defined as one with a
set of procedure to follow, and is systematically
used in regular basis, for example, the competitive intelligence cycle. An informal system is in
contrast to the formal system that managers do not
trace a map route from beginning to the end, and
is intuitively used in ad hoc basis. Research sug-
gests that managers often ignore formal systems,

and in favour of informal systems for strategic
significant information. Mintzberg (1980) argues
that as a result of the distinct characteristics in
information acquisition, managers often ignore
the formal information system, as it takes time to
process information. Managers therefore develop
their own contacts and establish special communication channels to obtain information. Managers
spend most of their time gathering information
through less formal systems.
Empirical studies support the speculation that
CEOs obtain most information through informal,
irregular, human systems. In a study of executives
of British Airways, Cottrell and Rapley (1991)
found that the majority of executives spend their
time in face-to-face or verbal contact (telephone
or intercom) with peers and subordinates both
inside and outside the organization. Most of the
information is received in an unstructured way.
Executives spend little of their time in reading
or looking at highly structured information in
reports or on computer screen.
The tendency towards using informal system
by executives for intelligence poses a challenge
to developing computer-based intelligence system that has often been regarded as a formal
system.
solicited vs. unsolicited Intelligence

The terms solicited searching and unsolicited
searching are rooted in social cognition theory
regarding whether information scanning is directed by managers intention or not (Kiesler &
Sproull, 1982). In directed search, managers have
intentions or objectives, exert efforts to scan information; in undirected search, managers follow
perceptual process, which is relatively unaffected
by intention and efforts. Aguilar (1967) used the
term to appraise the effectiveness of managers
information scanning process, and managers behavior in information acquisition: that is, whether
the scanning is active or passive. If managers
obtain most of their information on a solicited

basis, their performance could be questioned on
the grounds that they are not sensitive enough to
valuable information other than what they actively
seeking. In other words, solicited information may
limited a managers vision as the manager only
knows what the manager wants to know, but not
what is needed to know.
Managers appear obtaining more unsolicited
information than solicited information. Information from outside sources tends to be largely
unsolicited, whereas information from inside
sources is largely solicited. This tends to suggest
that unexpected information is more likely to be
regarded as strategic intelligence than solicited
information. If this speculation is substantiated,
there shall be a system to proactively feed managers with unexpected intelligence.
Information specialist support vs.

Managers own scanning
Senior managers may need specialist to support
them in information acquisition and processing,
because managers information acquisition pattern tends to be informal and in ad-hoc basis.
Schmitz, Armstrong, and Little (1992) revealed
that senior managers often lack time which will
not allow them the luxury to sit at a terminal and
deal with their information needs. They argue
that it is still remains primarily the work of staff
members to access and decipher the necessary
information for senior managers. Langley (1996)
cited a managing director, saying technology on
its own could not add value without the input of
people who understood the business problems and
the meaning of the data. As more information is
collected from external environment, information
processing becomes more complex, this necessitates the selection of personnel with analytical
skills to work with such complex information
(Ramaswami, Nilakanta, & Flynn, 1992). Frolick
(1994) has taken this view forward and argues
that executives need information specialists to

support them using EIS. He describes that EIS

is no longer for executive use only, rather, many
other organizational non-executive personnel
use it. For example, the middle level managers
who spend a great deal of their time preparing
report for executive consumption. The supportstaff members include such individuals as the
executives secretaries. Information system does
not require hands-on use by executives themselves.
The executives would delegate the use of EIS to
these individuals and have them bring back printed
reports or conveying the message to them by daily
summaries, presentations, exception reports, and
so forth. EIS increasingly designed to be used
by most, if not all, knowledge workers. This
raises a critical question as to whether strategic
intelligence should be processed by intelligence
specialists or solely by executives themselves?
EMpIrIcAl studIEs on
coMpEtItIvE IntEllIgEncE
In prActIcE
Many empirical studies related to strategic intelligence concentrate on competitive intelligence.
Wright, et al (2002) conducted a study to examine
how UK companies conduct competitive intelligence through questionnaire and interviews.
The study examined the attitude of gathering
competitive intelligence, strategies for intelligence
gathering, use of intelligence and organizational
locations of the intelligence function. Two types
of intelligence gathering are identified: (a) easy
gatheringfirms use general publications and
or specific industry periodicals and consider
these constitute exhaustive information, and (b)
hunter gatheringin additional to easy gathering, companies conduct own primary research on
competitors. CI function within an organization
are either in ad-hoc locationno dedicated CI
unit within the organizational structure, and intelligence activities are undertook on ad hoc basis,
typically, by the marketing or sales department,

or in designated locationsspecific CI function

established within the organization with staff
working full-time on monitoring competitors
and competitive environments. Pelsmacker, et
al. (2005) report through a comparative study of
CI practice between South Africa and Belgium
that companies in both countries are not well
equipped with and not active to conduct effective
CI, especially in the areas of planning, process
and structure, data collection, data analysis, and
skills development. CI-activities are not organized
in a separate department, and if they are, are
mostly done in the marketing and sales department. Sugasawa (2004) adds further evidence
by showing that there is a strong interest in CI
in Japan, but Japanese companies do not apply
any specific analytical methodology to analyze
intelligence. Dissemination of intelligence was
primarily in written form rather than by electronic
means. Computer-based systems are mainly used
for intelligence storing and extracting.
In addition to ethic, lawful intelligence gathering by organizations, Crane (2004) suggests that
many tactics are currently being used to gather
industry espionage. The tactics take forms from
clearly illegal, such as installing tapping device,
stealing information, to rather more grey areas,
this includes searching through a competitors rubbish, hiring private detectives to track competitors
staff, infiltrating competitor organization with
industrial spies, covert surveillance through spy
camera, contacting competitors in a fake guise
such as a potential customer or supplier, interviewing competitors employees for a bogus job
vacancy, and pressing the customers or suppliers
of competitors to reveal sensitive information
about their operations. Other means include
conventional market research and competitor
benchmarking through market scanning, industry
profiling, debriefing of managers recruited from
competitors.
An earlier study on competitive intelligence
systems in the UK was conducted and reported
by Brittins (1991), which shed light on how com-
25 ~ 30 competitors
Financial performance,
specific competitive
activities.
10 competitors
90% ~ 50% external

information
About 300 competitors
All aspect of
competitor activity
Market information
500 on a regular basis
Competitors and
Competitive products
Environment
About 10 competitors
Competitors strategic
intention, 90% ~95%
external information
Case 1
A large financial
institution
Case 2
A distribution
company
Case 3
An engineering
company
Case 4
A chemicals
company
Case 5
An automotive
company
Competitors monitored
/ Kind of Information
News-type databases
covering the industry,
company reports, press
releases, promotional
materials, trade show
Newspapers, journals,
on-line databases
(e.g., Dialog) business
associations, FT Business
Resource Centre
Imp/exp. statistics,
products literature
Published information,
Trade journals, statutory
company accounts,
customers, employees.
Trade and Business Press,

Online services (e.g.,
Dialog, data-Star), Sales
force monthly report,
Competitors trade
literature,
Consult and employees.
Companies house, Stock

Exchange, Brokers
report, Press Cutting
Services, Electronic
sources, Consultant,
Meetings, Dinner party
circuit.
Information
sources used
Manual-oriented system
in Business Planning
Department
Computer aided system

in Corporate Information
Department
Computer-based system
in Business information
unit
Manual-based system
by the Marketing
Intelligence Manager and
one assistant
Personnel in the
Research Department
(manual-based)
CI Systems
A lot of intelligent guesswork, but

limited data modelling and statistics
Data is analysed, interpreted
Data is not analysed
Abstracts have been put into full-text

database. Others in filing cabinet.
PC-based European competitor

database, Mainframe MIS,
Computerized data summarizing,
and manual-based qualitative data
analysis
No computerized database,
Data stored in filing cabinet.
Use SWOT analysis, but a lot

digging and guess work.
Hypertext system in Apple Mac is

used to store data.
Manual-based data analysis and

evaluation by the Data Analysts.
Data analysis
Presentations (90%) -computer

slides, and hard copies.
Daily press scanning report

Specific information bulletins
Commercial business news
bulletin for senior management
Ad hoc inquiry reports in various
format.
Newsletters (including solicited

and unsolicited information of
competitors)
Monthly bulletin to managers

with analysis.
A spin-off publication for public
consumption.
Twice yearly report for managing
director.
Ad hoc reports
Information disseminating project

is to be developed in the form of
briefing papers.
Output / dissemination
Table 1. Competitor intelligence systems (Source: Brittin, 1991)

panies gather and use competitive intelligence. As

the findings tend to be comprehensive in terms
of the CI cycle, the results are revisited and presented in Table 1.
Brittins (1991) study reveals that competitor
intelligence systems were primarily manualbased in practice. Intelligence gathering relies
on managers, data analysts, and sales force.
Most intelligence is collected from sources both
inside and outside the organization. In terms of
processing intelligence, very little sophisticated
data analysis techniques are used; much of the
data analysis is based on intelligent guesswork.
Collected data was frequently sent to managers
without any degree of analysis and interpretation. Sugasawa (2004) who reported intelligence
practice in Japan confirmed a lack of sophisticated
intelligence analysis.
100 subsidiaries. In the UK the operating companies are divided by product and includes Beta
General Insurance UK Ltd., Beta Life Insurance
UK Ltd., Beta Insurance International Ltd., Beta
Investment Ltd. The Group Holding Company
comprises of several functional departments for
example, Legal & Secretarial, Financial Control
& Planning, Corporate Relations, International
Division, and Strategic Research. The data were
collected through action research by the author
who participated in a CRM Client Relationship
Management project in one of the operating
companies. The Information Manager of the
Group Holdings Company revealed the groups
information searching systems for strategic intelligence. Table 2 presents the intelligence searching
systems used by the group companies.
The major sources used to scan intelligence
include:
case study: An Insurance plc
Bata Insurance Group Plc1 is a worldwide insurance group operating in many countries with over
Use the city Business Library and the British Library Business Reference for research
projects, and directories and handbooks such
Table 2. Strategic intelligence systems

The Companies

The Intelligence Searching and Coverage
Beta Insurance Holding Plc
Comparison of main UK competitors from financial results, share price tracking, and press
releases
Financial analysis of reinsurance companies from company reports and accounts
Monitoring UK composite insurers from city analysts reports and a press cutting service
Beta General Insurance UK Ltd.
Press cutting services

PC-based marketing intelligence system, searching extracts from publications (ESMERK)
Data monitor reports on financial services
Networking with competitors
Beta Life Insurance UK Ltd.
Press cuttings
Use of published surveys
Market research association (external)
Beta Insurance International Ltd.
AM Bests on CD ROM
On-line news information services
Competitors financial data
Soft information database
Bata Investment Ltd.
Datastream online services

Bloombergs
Contact with external analysts
Track statistics on competitors
as Evandales London Insurance Market

Directory.
Subscription for newspapers and industry
publications for manager's general information and background reading: These
include daily, weekly and monthly publications such as The FT, The Economist, DYP
Newsletters-Europe, DYP Newsletters-Reinsurance, Bests ReviewProperty/Casualty, Bests Review - Life/Health, Insurance
Times, FT World Insurance Report, and so
forth.
Subscription for CD-ROM and online business database: For example,
Datastream
Company reports and accounts collected
from city library, Insurance association
Economic reports from banks, stockbrokers, and reports by analysts on the insurance
industry
Other free publications received by directors and executive staff: For example, Insurance Today (where the advertisements
are paying for the copy), giving details of
the UK market products and developments.
European Insurance Bulletin which can
keep top management abreast of happenings.
The Association of British Insurers (ABI)
and the Chartered Insurance Institute
(CII) that provide services on insurance
statistics, references, and articles on specific topic
Ad hoc intelligence collection by company managers and staff members: One
department of the company also analyzes
the financial results of reinsurance companies, periodically reminds the users of
the service throughout the group that any
market intelligence news on reinsurance
company being vetted be passed to them.
Overseas managers on their UK visits are
also asked to set up meetings with them to
discuss the local market situation.
Computer-based market intelligence system: Staff throughout the regions is asked

to pass on any piece of news they hear about
competitors or brokers to central co-ordinators. The database in the UK head office
containing news items on competitors, articles from trade magazines, advertisements,
and inter-company meetings is being made
available over the network to the different
areas.
It is reported that most members of the staff

do not have the time to read and absorb all the
information that is available. Therefore the information service workers look through most
publications, mark up the articles of interest for
cutting out, and file the data for any enquiry. This
service is centralized to serve the whole group.
On the other hand, some group executives (e.g.,
executives for overseas life operations) have made
very little use of the research material available to
them, as they had good personal contacts with a
large number of people in other parts of the group.
They naturally adapt at personnel networks for
information gathering.
dIscussIon
The empirical evidence suggests that external
intelligenceprimarily competitive intelligence
and market/industry intelligence as reviewed
above, has been addressed by many companies
engaged in CI activities. A manager from Bata
Group comments that In todays rapidly changing
business world the need for timely and accurate
market intelligence will increase. We need to know
what our competitors are doing almost before they
do. The sources used for intelligence gathering
are heterogeneous, but most intelligence tends to
be gathered from public domain. Managers intelligence needs are often fulfilled by using a broad
range of approaches, which are characterized as
manual-based and unsystematic tendencies. The

current intelligence practice exhibits the following deficiencies:

Manual based: Competitive intelligence is

collected mainly by managers and information workers from various publications and
general information sources. The current
method of press cutting and searching is labour intensive. Computer-based intelligence
systems are limited to data storage, retrieval,
and CD-ROM/online database searching.
Intelligence scanning is ad hoc and the
process is functionally divided: Most organizations scanned intelligence irregularly.
Scanning is commonly conducted by sales
force, and relies on managers own personal
networks. Cobb (2003) argues established
organizational CI processes often suffer
from holes in data or data integrity causing errors in the interpretation of that data
for intelligence purpose, and suggests that
scanning activity will be accomplished by a
separate, distinct department, unit, or individual that reports directly to the executives
in the organization.
Lack of Filtering, Refining and Sense
Making of Intelligence: As revealed from
the empirical studies, data scanned is not
often filtered, processed, and interpreted into
meaningful intelligence in required form
before reaching the managers, and there is
a lack of sophisticated intelligence analysis
tools. This affirms Maier et al.s (1997) assertion that the most common problem in the
dissemination phase is making the information and structure relevant to the audience
while being brief yet useful. Without data
refining, providing increased data access
and search facilities to senior managers can
exacerbate the problem of data overload.
However, filter and interpret intelligence
through a systematic system faces great
challenges, on the one hand, recognizing
which data is of strategic importance needs
management knowledge and judgement.

Human cognition and intuition process
often dominate interpreting, reasoning, and
learning that are subtle. On the other hand,
technology in semantic data searching,
machine learning is limited to structured
data analysis, but not to dynamic strategic
intelligence. Even with intelligent system
and knowledge based expert system, letting
computers represent a great deal of human
knowledge for data interpretation is still a
challenge, since knowledge may not exist
in a visible, explicit form for acquisition.
thE solutIons
organization-Wide Intelligence
scanning
The way to avoid ad hoc intelligence scanning
is to have systematic and organization-wide
scanning systems. It is believed that systematic
scanning of business environment for strategic
information can improve the completeness and
quality of strategic intelligence. Huber (1990) assert that the use of computer-assisted information
processing and communication technologies will
lead to more rapid and more accurate identification of problems and opportunities; and the use
of computer-assisted information storage and acquisition technologies will lead to organizational
intelligence that is more accurate, comprehensive,
timely, and available. Environmental scanning:
as defined by Maier, Rainer, and Snyder (1997)
is a basic process of any organization, acquires
data from the external environment to be used
in problem definition and decision-making. The
environment consists of all those events, happenings, or factors with a present or future influence
on the organization that, at the same time, lies
outside the organizations immediate control. The
primary purpose of environment scanning is to
provide a comprehensive view or understanding of
the current and future condition of the five environmental constituents: social, economic, political
regulatory, and technological. Scanning invokes
a process of externalization, causing the company to expand the focus of decision-making to
include the perspectives of outsiders, for example,
present and prospective competitors, customers,
regulators, stakeholders, and the perspectives of
economic condition, political climate, technology
development, social and cultural changes. An
information scanning mechanism could ensure
systematically collection of relevant, important
information from various sources available both
inside and outside a company.
The current practice of intelligence gathering
significantly relies on managers and sales forces.
This runs the risk of missing significant intelligence being noticed due to time constraints and
limited capabilities of individual managers, and
the narrow focus of sales and marketing staff.
To maximize the effectiveness and efficiency of
environmental scanning, organization-wide intelligence scanning is desirable and possible. Because
organization members have wide contacts with a
variety of external entities, also they work closely
in the front-line to interface with companys
customers, hence, a variety of intelligence can
be gathered for the attention of senior managers.
Organization-wide intelligence scanning should
focus on scanning external environment for intelligence. The scanning function can be performed
through formal, informal intelligence collecting/
reporting systems or third party agency, which
are suggested as below:
Intelligence scanning through

Informal systems
The informal systems for organization-wide intelligence scanning can include, for example:
Sales force report: Companies can ask their

field sales forces to gather up intelligence
about competitors, suppliers, and customers,
as well as market intelligence.
Business trip report: Business trip report

by managers who visited foreign markets.
The managers are briefed before the trip
by a member of the corporate business
intelligence unit, and on their return report
back with findings related to the issues and
questions raised at the briefing.
Intelligence gathering box and online
intelligence forum: Every employee may
have something to contribute in terms of
competitive intelligence. A company should
encourage its staff to contribute information
on market, competitors, ideas and suggestions or even rumour, gossip and office
grapevines by using an intelligence box or
an online forum where valuable intelligence
can be collected and rewarded.
Friday round tables: A company can organize a series of round-table meetings in
various locations, where a particular topic
related to intelligence gathering is discussed.
With the aid of a knowledge team facilitator,
knowledge for intelligence scanning/processing is articulated, captured.
structured Intelligence scanning:

A corporate radar system
Formal methods are needed to systematically
collect external information. A companys intelligence centre, and intelligence workers have
the responsibilities to fulfil intelligence scanning and analyzing tasks. In addition, computer
assisted system shall be considered to enhance
intelligence scanning. Business organizations
could develop a radar-type system (or function)
to continuously but selectively detect significant
signals from environment sectors. A corporate
radar system for strategic information scanning
is depicted in Figure 1.
The radar scanning system works according
to two main criteria: the clarity of the signals
detected from the environment and the level of
strategic significance of the signals. Center to the

Figure 1. A corporate radar system for environment scanning
High
Social /culture
probe
Alert
Technology
Economi
radar scanning
Regulation
sensors
Level of strategic
impact of signal
i
Customer
Market / industry
Supplier
Competitor
discard
Filter
Low
Weak
Clarity of Signal
scanning is the sensor that continually detects all

signals emerged from the business environment.
Each signal detected will be handled by four
distinctive and related processors according to
the nature of the signal, i.e.

An alert: If the signal detected is strategically important, and the signal is with strong
clarity, that is, message is clearly stated and
from reliable sources, the signal will be
alerted immediately as hot intelligence to
executives.
A filter: If many signals being detected but
not all of them are of strategic importance,
for example, information regularly received
by the company from its environment, the
signals have to be selected from a potentially large mass of data, and filtered for
relevance. Because most of the signals are
less important to derive strategic information, the filter function thus is vital to screen
out irrelevant information and to eliminate
information overload.
A probe: The radar system may detect a weak
signal but it may have potential strategic
impact on the organization, the signal thus
must be probed and amplified. Information
Strong
as such is often less structured and not easily

to obtain. Much of this type of signal may
fall into the soft information category,
that is, opinions, predictions, hearsay, ideas,
rumours, and gossips. The vague signal
needs to be verified, and amplified in order
to assess its potential impact on the strategic
direction of the organization.
A discard mechanism: This is needed to
handle large amount of weak signals that
are not strategically important or relevant
to the organization.
The aforementioned radar sensor, alert, filter,

probe, and discard functions can be a computerized or a manual based system. Whatever it is,
knowledge needs to be embedded within the
system to underpin the operation of the radar
system.
It is worthy to note that the environmental sectors for radar scanning may vary from one industry
to another. We examined this in a previous study
(Xu, Kaye, & Duan, 2003) that the significance
of environmental sectors for scanning is industry
specific. For example, in the computer industry,
customer, competitor, market/industry, and technology sectors are more strategically important
than other variables, showing that these sectors

have high strategic impact signals. Thus the focus
of radar scanning may need to be adjusted to target these environmental sectors. Stoffels (1994)
addresses that the strength of signals is related
to the uncertainty of environment, that is, weaker
signals are associated the remote environment,
and strong signals with the task environment. The
environment scanning effort is much required in
the remote environment as the visibility of the
future diminishes with increasing turbulence, and
predictability deteriorates accordingly.
using third parties to carry out

Intelligence gathering
A company may choose to use third parties to
conduct intelligence scanning. External intelligence firms can be helpful in gathering and
analyzing certain information. They can assist
in synthesizing monthly intelligence, performing
difficult information gathering tasks, and training
employees. The third-party status also helps break
down any political barriers that may exist within
an organization. In this way the third party serves
as a catalyst in the process. Tan, Teo, Tan, and
Wei (1998) support this notion by asserting that
use of external consultants results in effectiveness
of environmental scanning. They explained that
besides providing and interpreting information,
external consultants have helped to equip organization with the knowledge and skills for doing
environmental scanning on the Internet. These
services include conducting courses on the use of
Internet tools and compiling links to potentially
useful information sources.
Organization-wide intelligence scanning is
envisaged to enhance external intelligence scanning. However, systematically scanning the entire
environment is both costly and inappropriate. A
manager is interested in the environment that
influences his decisions, hence, environmental
scanning needs to be selective, yet ensure that
sufficient variety is maintained to avoid missing
important signals. Auster and Choo (1995) suggest
that selecting which environment for scanning
is effected by a variety of influential factors, for
example, the turbulence of the environment, the
difference of industry sectors, or the companys
competition strategy. It can be argued from this
study that for effective organization-wide intelligence scanning, making knowledge about which
environment to scan explicit is vital.
knowledge-Enriched Intelligence
Filtering and Refining
In order to produce analytical intelligence productmeaningful and digestible information, it
is vital to filter out irrelevant data and to refine
Figure 2. Intelligence process with scanning, refining, and supporting function

E xternal
S c anning
Strategic Vision
Knowledge
Internal
F iltering
Analys ing
Interpreting
R eporting
E xtrac ting
Knowledge
Tacit - Explicit

data into meaningful intelligence. The current

process of intelligence analysis is a human centred, knowledge intensive process, that is, relies
on managers themselves and their knowledge and
judgement. Thus the solution to refine intelligence
must incorporate managerial knowledge used
for intelligence scanning and analysis. Figure 2
shows the intelligence process by highlighting
the knowledge enriched filtering and refining
function.
As highlighted in the diagram, the intelligence
scanning and refining (filtering-analyzing-interpreting) process should embed strategic vision and
human knowledge. This can be achieved by:
Using intelligent agent-based system that

uses knowledge base, case based reasoning, machine learning, or user feedback
and interaction to semantic scanning and
analysing intelligence according to user
profile: For example, intelligent agents could
base on past information search activities
and predefined information needs in user
profiles, which is generated by a learning
agent, or defined by the user. The user profile
can consist of executives personal profile,
executives information needs and interests,
executive roles, and organizational environment profile, which enable software agents
to perform domain-specific acquisition,
synthesis and interpretation of information.
As a result, information processing becomes
more personalized to the executive.
Creating a knowledge creation and sharing field/culture to turn tacit knowledge
into explicit form so that employees, particularly intelligence staff can be guided to
detect and make sense of strategic significant
information.
It is envisaged that computer based knowledge

enriched intelligence scanning, refining can selectively and systematically scan and categorize,
prioritize, and analyze large amounts of data on
0
a continuous basis. Analyzed intelligence will

report to, or alert managers to enlarge managers
vision on strategic issues by providing consistent,
routine surveillance of a wide range and a variety
of data that would not be possible with current
management reporting techniques.
knowledge Workers/Intelligence
specialist support
Although computer-based intelligence system
(scanning, refining) may be developed, it is evident
that many senior managers may not wish to use
such systems to acquire strategic intelligence due
to the nature of managerial work. The advanced
systems may be better used by intelligence specialists/knowledge workers, so that analyzed
intelligence can be delivered to the senior managers by the specialists. If managers information
requirements can be predefined, the specialist
will search necessary databases and the external
environment to locate the information as required.
If however, managers do not solicit information,
the intelligence specialist can continually scan
the external environment and proactively report
significant intelligence (most of them probably are
unexpected) to the senior managers via written or
verbal communication channels. Less important
information is consolidated, synthesized, and
digested to a brief level that managers receive
on regular basis. With the support of intelligence
specialists, both internal and external data can be
systematically scanned, filtered, synthesized, and
reported in both regular and ad hoc basis through
formal and informal systems.
The challenge however is that intelligence
specialists need to possess managerial knowledge and similar judgement that managers use
to acquire information. This relies on knowledge
sharing. In addition, intelligence specialists need
to have rich knowledge of information sources and
skills in exploiting, evaluating, and interpreting
information.
IMplEMEntAtIon
Implementation of the above solution will inevitably require a change of vision, intelligence process,
organizational structure and culture. Managers
need to develop a strategic vision in order to give
a companys intelligence activity a sense of direction. The purpose is to give corporate members a
mental map of the world they live in and to provide
a general direction as to what kind of intelligence
they ought to seek and report. A strategic vision
created by senior management helps foster a high
degree of personal commitment from middle
managers and front-line workers.
A common problem in establishing intelligence
functions might be that most companies prefer
not to devote resources to such a function until
it can prove that the function is necessary and
will succeed. Therefore, a visionary leadership is
needed, who can perceive the benefits of strategic
intelligence and provides support for developing
the intelligence function.
What remains critical is how managerial
knowledge can be elicited to underpin the radar
scanning system, and the refining system. The
knowledge spiral model (Nonaka & Takeuchi
1995)sharing knowledge through socialization
could facilitate the process of sharing experiences
and turning tacit knowledge to explicit knowledge, for example, in the form of an intelligence
gathering event, briefing, club, online discussion
forum.
There is probably no one structure that can fit
a variety of different organizations. The variety
very much depends on the size of the firm, the
type of the business, the degree of centralization
or decentralization of its activities and decisionmaking. It is perfectly possible that a centralized
intelligence function is established to coordinate
organizational-wide intelligence activities and
to operate the corporate radar system. This can
overcome the data integrity problem that often
resulted from functionally divided organizational
CI processes.
In accordance with structural change, a knowledge creating and intelligence gathering culture
need to be created. Organization-wide intelligence
gathering relies on every members commitment
to intelligence activity. Environmental scanning
is an essential behavior attribute of culture because scanning provides the first step in a chain
that culminates in organizational actions (Saxby,
2002). The briefing on intelligence gathering,
incentives, the informal networks form an intelligence culture. Senior managers must continually
reinforce the desired culture traits through their
own behavior.
conclusIon
This chapter reviewed the nature of strategic
intelligence and highlighted the challenges of
systematically managing strategic intelligence.
Strategic intelligence is not a static piece of
information that can be easily obtained. What
constitutes strategic intelligence is subject to
managerial judgement and sense making that
requires managerial knowledge. The current
process of intelligence activity is either divided
by organizational function, or is ad hoc relying
on individual manager. Intelligence gather is primarily concentrated on competitive intelligence.
Computerized system has played limited role in
intelligence scanning and analysis. There is a lack
of systematic intelligence scanning, analyzing
and intelligence support, and culture.
The solution proposed to improve strategic
intelligence activity addresses three significant
intelligence functions that constitute a systematic
intelligence process. The organization-wide scanning and the corporate radar system will ensure
continuous monitoring and scanning of all signals
from the market, competitors, and customers,
and the far environment. The refining function
is enriched with managerial knowledge so as
to filter out irrelevant information and ensure
meaningful intelligence is reached executives.

Intelligence specialists as an organizations

knowledge workers will provide complementary
support for executives who are not inclined to use
formal intelligence systems.
Managing strategic intelligence cannot be
subject to sole technical solutions. Enabling
technology to assist managers in their intelligence
scanning and analysis activities is a challenging
task. Therefore, effective managing strategic
intelligence will rely much on an organizational
approach including illustration of organizational
vision, sharing tacit knowledge, establishing an
intelligence culture and redesigning the process
of intelligence gathering, analysis, and dissemination.
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EndnotE
1
The names of the Plc and the operating

companies are fictitious to ensure confidentiality.

Chapter IV
A Strategic Marketing
Intelligence Framework
Reinforced by
Corporate Intelligence
Peter Trim
University of London, UK
Yang-Im Lee
University of London, UK
AbstrAct
The chapter examines how marketing strategists and corporate intelligence officers can work together
in order to provide a high level, pro-active strategic intelligence operation that enhances marketing
strategy development and implementation. A variety of activities relating to marketing strategy, corporate intelligence and corporate security are highlighted. Aspects of corporate counterintelligence are
addressed in the context of gathering intelligence, and guidance is provided as to how organizational
strategists can develop a strategic marketing intelligence framework that incorporates a counterintelligence dimension. The main advantage of the strategic marketing intelligence framework is that it acts
as a vehicle to integrate the organizational intelligence efforts and activities at the highest-level. It also
facilitates the creation of an intelligence culture.
IntroductIon
The objectives of this chapter are:
To review the relationship between strategic

marketing and corporate intelligence activities.
To reveal the importance, but weak awareness of counterintelligence in the context of

increasing industrial espionage.
To examine the coordination aspect of the
current corporate intelligence activities/
processes/systems from a holistic perspective.
A Strategic Marketing Intelligence Framework Reinforced by Corporate Intelligence
To develop a strategic marketing intelligence

framework that facilities co-ordination/integration of corporate intelligence activities.
The structure of the chapter is as follows.

First, reference is made to strategic marketing
and intelligence, and a section discussing the
need for counter-intelligence follows this. Next, a
critical review of a corporate intelligence system
is provided, and a section entitled, The Strategic
Marketing Intelligence Framework follows this,
and a section entitled, The Focus of Strategic
Marketing Intelligence.
strAtEgIc MArkEtIng And

IntEllIgEncE
Xu (1999) has noted that in many organizations,
the marketing activities are in the main centred
on the sales function and as a consequence the
classical marketing approach prevails. This can be
problematic in the sense that marketing strategists
fail to view change as market driven, and as a result
do not adopt a pro-active approach to strategic
intelligence. By embracing the strategic marketing
approach, it is possible for marketing strategists to
devise and implement intelligence based systems
and procedures that ensure that future external
threats are dealt with in an appropriate manner.
Before the link between strategic marketing and
corporate intelligence can be explained, however,
it is useful to reflect on what strategic marketing
represents. The authors of this chapter define
strategic marketing as:
a strategic process that has both an internal
and an external dimension, which is concerned
with establishing trust based relationships that
result in the organization satisfying existing
customer needs, producing innovatory products
and services that are aimed at satisfying unmet
customer needs, and which ultimately results in
the organization fulfilling its mission statement.

Aaker (1984) provides insights into what

constitutes the strategic marketing approach and
explains how a strategic marketing framework can
be used to appraise an organizations products and
services, and to align it in the industry so that marketing strategists can implement marketing policy
to maximize the organizations market standing.
Cadys (1984) work is influential with respect to
placing marketing within a strategic context and
Baker (1996) has reinforced the fact that marketing intelligence should be viewed as a process for
gathering, analysing, and interpreting marketing
data and information in a logical and structured
manner. This approach should ensure that marketing strategists focus on competitive issues. In
order to remain competitive, Hamel and Prahalad
(1994) have argued that senior managers need to
embrace the concept of strategic intent, which is
about developing further the organizations capabilities and at the same time securing additional
resources. But this can only be achieved if top
management can foresee potential opportunities
and threats, and drive the organization with an
intelligence oriented vision.
It is useful to reflect on what intelligence means.
Eells and Nehemkis (1984) suggest that:
Intelligence, as the term is used here, is the product
of collection, evaluation, analysis, integration,
and interpretation of all available information
that may affect the survival and success of the
company. Well-interpreted information, provided
by a properly designed intelligence function, can
be immediately significant in the planning of
corporate policy in all of its fields of operations.
Stated in both operational and organizational
terms, the main purpose of intelligence is to help
the chief executive officer fulfil his wide ranging
responsibilities. (p. 75)
It is also possible to add depth to the subject
by defining more precisely what corporate intelligence represents. Trim (2001a) defines corporate
intelligence as:
The acquisition of knowledge using, human,

electronic and other means, and the interpretation of knowledge relating to the environments,
both internal and external, in which the organization operates. It provides selected staff within
the organization with up-to-date and accurate
information, which allows strategists to develop
and implement policy so that the organization
maintains and/or gains a competitive advantage
in the marketplace. It also provides a mechanism
for implementing counter-intelligence measures
to safeguard corporate data and secrets. (pp.
54-55)
Hamel and Prahalad (1996) suggest that senior
management need to think in terms of making
a substantial investment in creating industry
foresight (p. 83). So intellectual leadership
(provided by top management) is linked with an
organizations ability to achieve market leadership
(Hamel & Prahalad, 1996). Senior managers at
American Express have learned to achieve this
by using its regional information systems to
mine for data to segment the market more finely
and focus more clearly on particular types of
customers (Wind & Main, 1998, p. 86). This
example supports the view that marketers need to
be involved in all aspects of market intelligence,
in the strategic decision-making process, and
possess relevant knowledge relating to market
and industry dynamics.
Crowley (2004) states, In its broadest sense,
Market Intelligence is the capturing of information relevant to a companys markets. In a more
practical context, it is the gathering, analysis and
dissemination of information that is relevant to
the market segments your company participates,
or wishes to participate in. ... this encompasses
four cornerstones: Competitor Intelligence,
Product Intelligence, Market Understanding,
and Customer Understanding (p. 4). Crowley
(2004) makes explicit the fact that marketing
intelligence officers need to provide a support
role and this means that they must have a good

understanding of the market situation and know
why specific data/information is needed. Huster
(2005) has added to the discussions by suggesting
that there is often confusion between the terms
marketing research and marketing intelligence.
Huster (2005) points out that marketing intelligence is The ability to fully understand, analyze,
and assess the internal and external environment
related to a companys customers, competitors,
markets, and industry to enhance the tactical and
strategic decision-making process (p. 13). This
is further evidence of the link between strategic
marketing and corporate intelligence.
Tan and Ahmed (1999) argue that the terms
market intelligence and business espionage are
often confused and that in actual fact, market
intelligence involves the ethical and legal gathering of information, the majority of which is readily available (p. 298). As regards the growing
problem of industrial espionage, Trim (2002a)
states that industrial espionage is perceived as
an important issue in the U.S. and because of the
potential consequences, the Economic Espionage
Act was introduced in 1996 in order to prevent
unscrupulous acts of stealing or obtaining and
buying and/or receiving trade secrets (p.9).
The act categorizes these offences as federal
crimes.
As well as company staff being actively involved in industrial espionage (Eells & Nehemkis,
1984), government representatives have also been
active in this area and have established companies
to obtain information and data by both covert and
overt means. What is evident is that intelligence
and security work are different sides of the same
coin (Trim, 2000, p. 4). Bearing this in mind,
it can be suggested that the concept of strategic
marketing needs to be extended to include a security dimension. Should this indeed be the case,
top management will have succeeded in putting
in place a holistic intelligence system, which also
encapsulates the concept of business continuity.

thE nEEd For

countEr-IntEllIgEncE
The issue of vulnerability is mostly in the minds
of senior managers. For example, Sheffi (2005)
states:
As supply chains are becoming more brittle and the
world is growing uncertain, concerns are increasing about low-probability/high-impact events that
can bring about major earning shortfalls or even
unplanned exits from the business. ... The events
of 9/11 have brought home for many U.S. executives the dangers of a terror-based disruption,
but accidents and random events such as severe
weather or earthquakes can also cause significant disruptions. Intentional attacks are more
worrisome, though, since the threat is adaptive,
that is, increasing defenses or resilience in one
part of the system will increase the likelihood of
an attack elsewhere. (And international attacks
are not limited to terrorism; on a different scale,
they also include sabotage, computer hacking,
and labor actions). (p. 13)
Herman (1997) makes a valid point by suggesting that the term counterintelligence can be used
in a wide context to convey the multidisciplinary
effort to penetrate the many different disciplines
of the adversary (p. 52). Because threats vary in
intensity and frequency, and need to be classified
according to whether they are likely to be of a
short-term duration or long-term duration, and
whether they are high impact or low impact, it is
necessary for marketing intelligence officers and
marketing strategists to use formal risk assessment methods. Furthermore, they also need to
liaise with industry analysts that possess detailed
knowledge relating to the competitive standing
of the companies in the industry.
Owing to the fact that competition is intensifying, it can be argued that a limited number of
organizational representatives will seek ways in
which to acquire sensitive organizational data and

information. This being the case, senior managers based in competing organizations will need
to work on measures to counteract industrial
espionage that is being undertaken by various
front companies and individuals. As regards
threats from within the organization, a survey
undertaken by PriceWaterhouseCooper (De Vita,
2006), reported that 55% of organizations that
participated in a survey in the U.K. reported that
they had suffered from economic crime within
the past two years. It can also be reported that
employees defrauded about half of the organizations surveyed (De Vita, 2006).
A crItIcAl rEvIEW oF A
corporAtE IntEllIgEncE
systEM
Hussey and Jenster (1999, p. 109) suggest that:
There is often confusion about what benchmarking
really is, and some consider that they are benchmarking when they compare performance ratios.
Although it is an important first step to use such
ratios when they can be obtained, benchmarking
is about understating the process through which
someone else is achieving performance which
is better than yours, and comparing them with
your own.
From this quotation, it can be deduced that
the benchmarking approach has a number of
benefits associated with it. It can focus senior
managements attention on a range of issues
relating to speed to market and improving the
organizations structure (Pepper, 2001). It is important to note that the benchmarking approach
will be successful, provided that all the criteria
necessary is available and is used in a logical
and defined manner. This means that realistic
comparisons are made that are based on accurate
data and information.
The benchmarking approach can, therefore, be

used to underpin competitor analysis (Hussey &
Jenster, 1999). For example, senior managers at 3M
pay careful attention to utilizing equipment and
knowledge, and competing through innovatory
products (Christiansen, 2000). In order to achieve
this, senior managers use various horizontal interest group networks to ensure that technology is
transferred from one part of the organization to
another, and staff are rewarded for their efforts
(Christiansen, 2000). However, there are disadvantages associated with the benchmarking approach,
one of which is that organizationalists restructure
systems and processes in order to match the market
leader, when in fact the market leader may be in
the process of transformation. If this is the case,
the benchmarking changes implemented may not
result in the desired outcome. The other point to
note is that benchmarking against one company
is not sufficient in itself. A pro-active intelligence
operation ensures that data and information
originate from several points (banks, competitors,
consumer associations, government agencies,
market research agencies and specialist data and
information providers, specialist consultancies,
stock brokers, trade associations, and university
research groups, for example).
Top management need to ensure that the
organization is adopting a strategic marketing
approach, because if it is not, there will be an
imbalance between the internal and external dimensions. If an imbalance does exist, the strategic
intelligence process within the organization will
not be integrated and the information demanded
is likely to be of the wrong type. It also means
that the intelligence gathering activity within the
organization is in fact dysfunctional, because
important issues and concerns are not being discussed. If this is the case, and the organization
is confronted with a major threat, as was clearly
the case with Barings Bank in the 1990s (Leeson,
1996), the ramifications are likely to be severe and
can result in the organization exiting the industry.
The following example provided by Huster (2005),

places these points in perspective:
When Samsung announced their low-end color
printer, the CLP-500. Suppose you are in the
printer industry and you discussed the announcement with your forecasting team. The forecasting
team would have said that Samsung was generating a lot of action in the market and experiencing
some share growth.
If you spoke with your competitive intelligence
team, they would have said that the product cost
was on par with other vendors, pricing has been
aggressive, and Samsung is having an effect in
the retail space. Finally, if you spoke with your
market research team, they would have told you
that Samsungs brand is very strongon par with
Sonys. Besides low-end monochrome printers
they have flat panel displays, TVs, cell phones,
DVD players, home appliances, etc.
This is all good information, but no one pulls it
together in an integrated fashion. No one provides
an analytical framework that would give you a holistic view. Based on this information you wouldnt
be able to make actionable recommendations
concerning Samsungs advance. (p. 140)
The above example reinforces the fact that
in order to develop a strategic marketing intelligence focus, it is necessary for top management
to understand how the different components of
an organizations operating system fit together.
Pepper (2001, pp. 25-26) indicates that in the mid1980s, Procter and Gamble was organized along
functional lines and although there was a clear focus on research and development and marketing, it
was necessary to redesign the organizations structure so that there was a multifunctional approach
to strategy formulation and implementation. As
a result, business intelligence officers adopted a
holistic approach to intelligence gathering and
undertook global multisector analyses.

A strAtEgIc MArkEtIng
IntEllIgEncE FrAMEWork
By incorporating corporate intelligence into the
strategic marketing effort, it should be possible
for marketing intelligence officers and marketing
strategists to develop an appropriate architecture for synthesising the marketing intelligence
planning process. Breeding (2001) provided the
evidence of this and suggests that business intelligence incorporates competitor intelligence, customer/prospect intelligence, market intelligence,
technical intelligence, and partner intelligence.
Top management can appoint a Corporate
Intelligence Steering Committee to oversee,
advise and regulate the work of the corporate
intelligence function and an Executive Intelligence
Alliance Policy Strategy Monitoring Group can
be established to monitor the work of the corporate intelligence function (Trim, 2001b). Staff
employed in the corporate intelligence function
can be given a broad remit. Their main task should
be to devise strategies that counteract the movement of competitors. Corporate intelligence staff
also work with corporate security staff in order
to provide counter measures to stop fraudsters
and other individuals that are out to do damage
to the company. Corporate intelligence staff can
also provide advice and support to company
employees that are engaged in strategic alliance
activities and can reinforce the marketing effort
by providing support that ultimately leads to
the development of new products and processes
(Trim, 2001b).
An appropriate way in which to develop a
strategic marketing intelligence focus is to put
in place a strategic marketing intelligence framework. The framework provides a mechanism for
integrating intelligence activities and exchanging
knowledge. The framework also incorporates a
counterintelligence activity, which is a necessary element of corporate intelligence. Figure 1
depicts the components of a strategic marketing
intelligence framework.
0
From Figure 1, it is clear that the intelligence

function has been integrated into the strategic
decision-making process and as a consequence
strong working relationships among staff in marketing; corporate intelligence and corporate security are established. Staff based in the corporate
legal department and in the information systems
and technology department are also involved in
intelligence and security work. A key feature of
the strategic marketing intelligence framework
is the link between marketing and counter-intelligence. The director of Corporate Intelligence is
in charge of counterintelligence operations and is
held accountable for ensuring that those involved
in counterintelligence activities operate within
the law. The director of Corporate Intelligence
is also accountable for ensuring that external
stakeholders (e.g., government departments, law
enforcement agencies, chambers of commerce
and industry, and trade associations), are made
aware of certain threats to those competing in
the industry and as a result, collective action can
be taken against organized criminal syndicates
and overseas governments that act in a non-ethical manner.
Those in-charge of strategic marketing,
corporate intelligence, corporate security and
information systems and technology, meet on
a regular basis and exchange confidential data
and information. They are goal oriented and use
the benchmarking approach to identify problems
and improve operating procedures. The head of
Strategic Marketing plays a pivotal role because
that position is responsible for ensuring that the
products developed are marketable and that the
necessary resources are made available to the
brand managers.
Although the head of Strategic Marketing
focuses attention on issues relating to the marketplace and marketing support activities such as
marketing intelligence and marketing research,
the head of Strategic Marketing does liase with
senior managers throughout the organization on
matters of a strategic nature. For example, the
services of independent business intelligence

agencies can be hired in order to establish if a
potential competitor is about to enter the market
or if an existing competitor is about to introduce
an alternative technology to the market which may
well undermine the organizations standing. It
may also be that a specialist business intelligence
agency is engaged in order to identify a potential
strategic alliance partner for the organization and
this can be done secretly so that as few people as
possible within the industry know about it.
It is important that marketing intelligence
officers and corporate intelligence staff meet on
a regular basis, share information and leads, and
establish guidelines to coordinate their activities.
It can be suggested, therefore, that corporate intelligence officers, under the direction of a senior
manager, assume responsibility for coordinating matters relating to intelligence gathering,

analysis, interpretation, dissemination, and most
importantly, the development of scenarios and
future worlds. This takes the remit of corporate
intelligence officers beyond the role of the intelligence cycle, and ensures that all intelligence is
given specificity.
Marketing staff, because of their various duties, often meet people from external organizations, such as trade associations, chambers of commerce and industry associations, and government
departments, and establish informal relationships
with them. The strategic marketing intelligence
framework shows formal and informal channels
of information flow between internal functional
departments and external organizations. The
Figure 1. A strategic marketing intelligence framework
Corporate Intelligence Steering Committee
Head of Strategic Marketing
Head of Corporate Intelligence
Head of Corporate
Security
Marketing
Intelligence
Head of Information
Systems and
Technology
Marketing Research
Corporate Legal
Department
External Business
B usiness
Intelligence Agency
External Market
Research Agency
Trade
Associations
Chambers of
Commerce and
Industry
Government
Departments and
Law Enforcement
Agencies
Marketing Information and

Decision Support Activities

main advantage of this is that information can

flow more freely between individuals that are
authorized to receive it. Another advantage is that
it encourages staff to interact more frequently.
Managers throughout the organization can utilize
information from various sources and commission
studies from in-house marketing researchers, external marketing research agencies and specialist
business intelligence providers when necessary.
By implementing strategic marketing intelligence,
senior marketing managers will be able to provide
marketing intelligence officers with a unique and
rewarding role and this should ensure that the
organization is well placed to devise and implement a positioning strategy (Trim & Lee, 2005).
Furthermore, by adopting a strategic focus and
linking more firmly strategic marketing with
strategic intelligence, it is possible for marketing
staff to think holistically and devise nontraditional
marketing strategies when necessary (Trim &
Lee, 2003, 2006).
The strategic marketing intelligence framework also has the added advantage of being flexible and adaptive, and provides an opportunity for
managers based in strategic alliance partners to
be included in the framework. However, all forms
of information exchange and knowledge transfer
need to be managed with extreme care and both
the head of Strategic Marketing and the head of
Corporate Intelligence need to work closely in
order to ensure that sensitive and confidential
data and information are not leaked as this may
prove detrimental to the organization. Indeed, all
exchanges of information need to be approved
and sanctioned by top management, and in some
situations (especially those involving external
and/or partnership organizations), nondisclosure
arrangements need to be put in place.
solutions for Enhancing

coordination
By encouraging marketing staff to think strategically and work with in-house strategists, it

is possible for marketing intelligence officers to

work more closely with both internal marketing
researchers and staff based in external market
research agencies (and specialist providers of
business intelligence), and to participate fully in
a number of marketing and strategy activities and
exercises. This should ensure that marketing intelligence officers concentrate less on past working
practices, and develop a number of initiatives that
have a current and future orientation. It should
also ensure that the organization retains a customer orientation and that marketers establish new
ways of delivering benefits to customers (Hamel
& Prahalad, 1996).
solutions for counteracting covert

Intelligence Activities
It can be suggested that corporate intelligence and
corporate security staff are required to monitor
and work with in-house strategists and formulate
policies and strategies that counteract the moves
and potential threats that emanate from overseas
governments and organizations. One way in which
to counteract the activities of those engaged in
industrial espionage is for managers to work
more closely with government representatives.
Obviously, care is needed. For example, company
representatives are accountable to shareholders
and shareholders are keen to see their investment
provide the highest return possible. Bearing this
in mind, it is important for senior managers to
appraise adequately the risks associated with
providing information of a sensitive nature to
noncompany representatives.
By reporting the actions of organized criminal
syndicates and individual fraudsters to the appropriate authorities, it means that the trade associations that represent the interests of a company
in the industry in which it competes, can make
staff in other companies aware of the situation.
It also means that staff based in law enforcement
agencies can work closely with staff in various
companies and with staff in other government
departments. By publicizing what is going on,

law enforcement staff can assist their colleagues
in other countries vis--vis arresting suspects and
recovering stolen assets.
An organizations marketing intelligence databases do contain large amounts of sensitive data
that need to be safeguarded from various computer
hackers and crackers. Indeed, referring again to
crime and indeed internally orchestrated crime, it
is useful to note that internal computer hackers are
responsible for about a third of hacking activities
(Crowcombe, 2002). This reinforces the argument
that internally focused security systems need to
be just as robust as externally focused security
systems. Hence, it is essential that staff involved
in marketing information and decision support
activities work closely with marketing intelligence
officers, staff in the corporate legal department
and staff in information systems and technology,
and that relevant data and information is stored
in a number of interlinked databases. The databases form an integral part of the organizations
intelligence system and facilitate intelligence
coordination.
Marketing intelligence officers and marketing strategists, working closely with corporate
legal staff, will in the future be more involved
in counter-intelligence activities that result in
security systems being developed that have a strategic marketing component (Trim, 2001b, 2002b,
2004a). As regards the issue of counterfeiting,
marketing strategists will need to put in place a
number of marketing contingencies to counteract
the damage caused to a particular brand. The issue
of product liability arises because unscrupulous
entrepreneurs that engage in counterfeiting do
from time to time put the consumer at risk because
the counterfeited item is not made to the same
standard as the original branded product that is
being copied. Hence, those involved in counterintelligence activities need to work closely with
staff in the corporate legal department, with law
enforcement officers and government representa-
tives, to devise measures to counteract the actions

of counterfeiters.
Staffing Issues and Skills Issues

Rewarding and retaining staff are key issues,
and if senior managers do not understand this,
the most gifted staff could become disillusioned
and seek employment elsewhere. Should this happen, the consequence could be devastating. For
example, not only would the organization lose a
highly committed individual, it could also witness the instant transfer of ideas and knowledge
to the new employer, and this may result in the
competitor benefiting from years of investment
made by the company. Furthermore, through
the process of adaptation, a greater competitive
threat than was first realized, might emerge. It
can also be the case, that existing staff feel disillusioned and seek employment elsewhere. Once
the message becomes known that staff members
in the organization are disillusioned, competitor
companies may seek ways of poaching staff from
the company. If it is a senior person that leaves
the organization, it may be possible that over a
period of one or two years, that this senior person
will recruit former colleagues to work at the new
organization.
The marketing officers responsible for undertaking marketing intelligence related work need
to have a range of analytical skills and be able to
interpret trends and formulate assumptions that
can be used in scenario planning. Should this be
the case, they will be able to relate to the intelligence-oriented vision, develop their expertise
relating to market and industry dynamics, and
help to establish an intelligence culture within
the organization. Highly trained marketing staff
will be able to collect, analyze and interpret data
from a wide number of sources and the findings
can be input into a strategic marketing intelligence
information processing system. Marketing intelligence officers can, through simulation exercises,

develop their skill and knowledge base through

time. They can also work with security staff to
develop an effective corporate security system
that has a counterintelligence element.
thE Focus oF strAtEgIc

MArkEtIng IntEllIgEncE
The strategic marketing intelligence framework
outlined above will help focus managements
attention on the issue of business continuity and
make explicit the link between corporate intelligence, corporate security and strategic marketing. The focus of strategic marketing intelligence
incorporates three main areas: (1) intelligence on
changes in customer behaviour; (2) intelligence on
competitors and strategic profiling; and (3) intelligence on consumer groups and associations.
Intelligence on changes in customer

behaviour
Collecting and analyzing customer data is an
important element of a marketing strategists
job, and so too is the ability to predict with a
high degree of accuracy how a market is likely
to develop. In order to fully understand what
motivates customers (wholesalers, retailers, and
consumers), it is necessary to establish what
drives customer demand and how changes in
technology result in unmet needs being satisfied.
By understanding how markets develop and what
shapes customer demand, marketing strategists
can better understand the complexities associated
with the business environment and will be well
placed to devise retaliatory marketing counter
measures to ward off competitors. Such counter
measures include product/brand strategies that are
underpinned by customer relationship management programmes.
Developing detailed customer profiles is only
part of the marketing intelligence process. It is

well known that customer profiles change through

time and that the relationship marketing concept
(Gronroos, 1996; Gummesson, 1994) requires
marketers to establish marketing programs that
result in customers remaining loyal and exercising repeat buying behaviour. Marketers need,
therefore to monitor the changes through time
to anticipate future trends and thus identify unmet needs. Advances in computing technology
enhance the company-customer interface, which
allows the organization to keep close to the customer (Day, 1990). It can also be suggested that
in a buyers market, customers (consumers, end
users, and those that buy for resale), will become
even more conscious of their legal rights. This
means that marketing intelligence officers will
need to develop insights from customer surveys,
and work closely with marketing research officers.
By tracking and monitoring customer profiles
through time, marketers will be well placed to
develop a multifaceted customer service (Lee,
2004). Various loyalty schemes will be introduced that encourage customers to make repeat
purchases, however, in the case of manufacturer/
wholesaler/retailer relations, the key is to develop
relationships based on mutuality. Once this has
been achieved, it should be possible to extend
and deepen the relationship through joint sales
promotions and/or joint advertising programs.
Intelligence on competitors and

Strategic Profiling
West (2001) suggests that: The organisation
which is competitor-intelligent is one that devotes
serious resources to studying their competitors
and anticipating their actions. This includes
identifying competitors physical and intangible
resources, studying organisations and their
methods in as much detail as is practical and
developing knowledge of their strategies and
potential game plans (p. 27). The integrated
corporate intelligence process outlined in this
chapter will enable rapid data and information

flows between departments, functions, and
partner organizations, and should ensure that an
identifiable threat is dealt with in an appropriate
manner.
By taking competitor analysis seriously, senior
managers can devise appropriate early warning systems. For example, senior managers at
Motorola have formalized the competitive intelligence process and made sure that it is viewed a
critical success factor (Herring, 2001). This has
the advantage of providing open communication channels between members in the various
activities associated with intelligence gathering,
analysis, interpretation, and dissemination. It
also ensures that an appropriate budget is available for staffing and training, and the utilization
of external specialists to undertake nonroutine
intelligence activities. Intelligence relating to the
capabilities and actions of competitors can be fed
into the strategic marketing planning process and
can result in appropriate strategic marketing oriented objectives being established (Trim, 2004b;
Trim & Lee, 2005).
Marketing intelligence officers and marketing
strategists are involved in strategic profiling on
a regular basis, and they also monitor how individuals obtain information about companies in
the industry. Young adults in particular are keen
to develop their knowledge base with respect to
companies and their history, their financial performance and commitment to the environment
for example. Trends suggest that people are also
keen to exchange information and participate
in virtual chat rooms, and participate actively
in blogging. Rushe (2006) states, More and
more companies are joining the blogosphere.
Blogsshort for Weblogsare online journals
that invite readers to pass on their comments.
Good or bad (p. 8). Marketing intelligence officers and corporate intelligence staff can monitor
the Web sites of competitor companies, and work
closely with staff in consumer associations in
order to understand better how consumers think

and establish what motivates them to act in the
way that they do. What is clear however, is that
such activity must be done in an ethical manner,
hence those involved in the monitoring process
need to consult staff in the corporate legal department on a regular and/or case by case basis, in
order to ensure that they are operating within the
organizations strategic marketing intelligence
decision-making code of practice.
Intelligence on consumer groups

and Associations
Several factors need to be taken into account
with respect to monitoring consumer groups and
associations. For example, a disillusioned or irate
customer can circulate (on the Web), information
about an organizations products and services, and
consumer groups can act upon certain information and either petition the organization direct or
lobby government departments for action to be
taken. By understanding the psychological drivers, marketing intelligence officers can develop
insights into the way in which consumers think
and act. They can liaise with marketing research
officers and formulate market research exercises
to identify specific trends and in due course,
develop marketing policies to counter customer
behaviour. Understanding how customers use their
power is crucial if that is public relations activities
are to be fully effective. By identifying the motives of various activists, it should be possible to
forecast events and their possible consequences
well in advance of them occurring. This being
the case, various press releases can be developed
and implemented at speed when the situation
warrants it. So one could argue that part of the
organizations counterintelligence activity also
involves lobbying, and this is further evidence
that marketing activities and intelligence activities need to be in unison.

conclusIon
The strategic marketing intelligence framework
outlined in this chapter will allow marketing
intelligence officers, marketing strategists, corporate intelligence officers, and corporate security
officers, to work closely with staff throughout
the organization and provide useful and timely
intelligence relating to customer perceptions, the
current and future actions of competitors, and
relevant information about the activities of consumer groups and associations. This will ensure
that data and information are supplied to global
product teams and individual brand managers,
and will result in realistic global brand positioning
strategies being devised and implemented.
By monitoring the actions of counterfeiters,
fraudsters, computer hackers and crackers, and
various activists, those involved in marketing,
intelligence and security work, can devise effective counterintelligence measures that thwart the
actions of those who are out to cause damage to
the organization. They can also liaise with law
enforcement officers and make their findings
known to a wider audience via trade associations
and government departments.
Marketing intelligence officers and marketing
strategists will in the years ahead be required to
identify potential organizational vulnerabilities
and future strategic alliance opportunities. This
means that the strategic marketing approach needs
to be fully embraced and an intelligence culture
needs to permeate throughout the organization.
Should this be the case, a multifunctional approach
to strategy development and implementation will
be adopted and the functionally divided intelligence process approach, which is known for the
stovepipe mentality, will be eradicated.
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Chapter V
Supporting Executive Intelligence

Activities with Agent-Based
Executive Information Systems
Vincent Ong
University of Bedfordshire, UK
Yanqing Duan
Brian Mathews
AbstrAct
This chapter examines the theoretical underpinning for supporting executive intelligence activities
and reviews conventional studies of executive information systems (EIS) over the last two decades in
responding to the current executives information processing needs and the current Internet era. The
reviews suggest the need for designing advanced EIS that are capable of responding and adapting
to executive information. This chapter recognizes the necessity of revitalizing EIS with advances in
intelligent technologies and Web-based technologies. Empirical studies were conducted to elucidate
executives desires and perceptions of the prospect of agent-based technologies for supporting executive
intelligence activities in the more integrated and distributed environment of the Internet. Based on the
insights gained from empirical studies, this chapter concludes by presenting a three-level agent-based
EIS design model that comprises a usability-adaptability-intelligence trichotomy for supporting
executive intelligence activities.
IntroductIon
It is widely recognized that there is an increasing
complexity and dynamism of operational and
strategic information in electronic and distributed environments. Executives are now seeking
assistance for continuous, self-reactive and selfadaptive approaches to acquiring, synthesizing,
Supporting Executive Intelligence Activities with Agent-Based Executive Information Systems
and interpreting information for intelligence with

a view to determining the course of action that
is executive intelligence activities. Executive
information systems (EIS) originally emerged as
computer-based tools to provide executives with
easy access to strategic information and to support
and enhance their information processing activities. EIS were popularized in the 1990s but EIS
study has not advanced to a great extent in either
research or practice in recent years. Conventional
EIS studies have established a range of views and
guidelines for EIS design and development, but the
guidelines underpinned by extant research have
failed to develop robust and intelligent EIS.
The most common deficiency of conventional
EIS is their inflexibility, relying on processes
designed for static performance monitoring and
control and predetermined information needs.
The emergence of the intelligent software agent,
as a concept and a technology, provides the
prospect of advanced solutions for supporting
executives information processing activities in
the more integrated and distributed environment
of the Internet. Nevertheless, executives desires
and perceptions of agent-based support must be
elucidated in order to develop systems that are
likely to be considered valuable in practice and
stand the test of time when implemented.
The objectives of this chapter are threefold.
First, the chapter examines the theoretical underpinning for supporting executive intelligence
activities and the need for designing advanced
EIS that are capable of responding and adapting
to executive information. Second, the chapter
reviews conventional studies of EIS and confirms
the need for revitalizing EIS with emerging technologies. Third, the chapter proposes a model for
designing an advanced EIS with agent-based support. This chapter starts with a review of theories
and debates on understanding the need for supporting executive intelligence activities. It then
provides a review of the emergence of executive
information systems (EIS) in responding to the
executives information processing needs over
0
the last two decades and identifies the problems

with conventional EIS in the current Internet
era. It recognizses the necessity of revitalizing
EIS with advances in intelligent technologies
and Web-based technologies. This chapter also
discusses the current development and applications of intelligent technologies and the potential
contributions of intelligent software agents could
make to revitalize conventional EIS.
Based on the insights gained from empirical
studies, this chapter concludes by presenting a
three-level agent-based EIS design model that
comprises a usability-adaptability-intelligence
trichotomy for supporting executive intelligence
activities. The emphasis of this agent-based
EIS design model is an intelligent and executive-centered system that focuses on these three
dimensions.
thEorEtIcAl undErpInnIng oF
EIs dEvElopMEnt
As the business environment becomes more volatile and competitive the appropriate handling of
information and knowledge has become a distinct
core competence. The capability to know itself,
know its enemies, and know its business environment significantly affects a companys success
or failure. The challenge is that organizations and
their environments are systems that continually
present a variety of disturbances through signals
and messages that senior executives should attend to (Auster & Choo, 1994; Daft, Sormunen,
& Parks, 1988). As a result, senior executives
are facing increasing complexity and variety in
operational and strategic issues.
From the notion of cybernetics, Ashby (1956)
formulated the law of requisite variety that has
contributed significantly in management and
organizational studies. The variety of a system is
defined as the number of possible states it is capable
of exhibiting. It is a measure of complexity but
a subjective concept depending on the observer.
Ashbys law of requisite theory states that in

order to control a system the control measures
must have as much variety available as the system
itself exhibits. In other words, only variety can
counteract variety.
The law of requisite variety applies to the
situation where executives have to learn to live
with probabilistic systems as they are continually confronted by new and unexpected events.
Executives have to exhibit enough variety in
order to counteract the variety of disturbances.
The challenge is that executives are facing everincreasing amounts and complexity of operational
and strategic variety. The capacity of the channels of communication to be used for perceiving
the disturbances and for transmitting the control
measures suggests the concept of intelligent support in this study. Senior executives are seeking
assistance in the search of variety that can cope
with the organizational environment that continually creates disturbances. The search of variety
allows executives to have a better understanding
of how to manage in a complex and dynamic
organizational context. In this case, the better an
executive is capable of perceiving disturbances
and exhibiting control or action, the better their
capability in reducing or removing the impact of
the disturbances.
With the increasing availability of electronically distributed information, senior executives
suffer from information overload, especially an
over abundance of irrelevant information (Maes,
1994; Shapira, Shoval, & Hanani, 1999). Senior
executives simply cannot relate simultaneously
to all information available to them. They have
to select and then make sense of what is selected.
Ackoff (1967) foresaw this dilemma with the introduction of management information systems
(MIS). He strongly believes that the emphasis of
an executive support system should shift from
supplying relevant information to eliminating
irrelevant information. He argues, Unless the
information overload to which managers are
subjected is reduced, any additional information

made available by an MIS cannot be expected to
be used effectively (Ackoff, 1967, p. 148).
Based on the implications of Ashbys law of
requisite variety, Beer (1979) introduced the viable
system model (VSM). The VSM provides a theoretical basis for supporting executive intelligence
activities because it is concerned with planning the
way ahead in the light of external environmental
changes and internal organizational capabilities.
One of the subsystems in VSM model is concerned
with Intelligence, called System Four. System Four
emphasizes the scanning of the organizational
environment and the filtering process. System
Four can, therefore, act as a scanner that scans
all unidentified relevant information from the
overall environment. The scanning process allows
the organization to adapt its internal environment
to meet its external environment. As senior executives can easily be overloaded with irrelevant
information, System Four can also act as a filter that captures only strategic information for
senior executives. The information scanning and
filtering process puts senior executives in a better
position to react to threats and/or opportunities,
as well as to anticipate future changes despite the
turbulent environment. Using the VSM, Carvalho
(1998) describes the role of computer-based support systems in organizations and suggests that
EIS should aim to provide intelligence support
as required in System Four.
Simons (1965) intelligence-design-choice
model states that executives spend a large fraction of their time surveying the organizational
environment to identify new varieties that call
for new actions in the intelligence phase. In
the design phase, executives probably spend
an even larger fraction of their time, individually
or with their subordinates, to design and develop
possible courses of action for handling situations
where a decision is needed. They then spend a
small fraction of their time in the choice phase,
selecting from those available courses of actions to

meet and solve an identified problem. According

to Simon (1965), the three phases sum up what
executives do in most of their time.
Here, the support for intelligence activity
is of particular importance, because intelligence
activity precedes design, and design activity
precedes choice. The intelligence activity phase
is the first principal phase, which emphasizes the
search for variety, occasions, or conditions that
call for decision. In the intelligence activity phase,
the environment is examined and problem areas
as well as opportunities are identified. Often,
this phase is triggered by dissatisfaction with
problems and organizational objectives. Besides
the recognition of problems or opportunities, the
intelligence activity phase also involves classification of the opportunity or problem from the business environment. Simons (1965) model implies
that intelligence activity support is critical for
intelligence processing activities. Any advanced
information systems that can provide intelligence
activity support will assist executives in the
recognition and classification of environmental
conditions and so will reduce the fraction of time
expended on this activity.
The above review provides a theoretical foundation to underpin the design of advanced EIS
that are capable of responding and adapting to
environmental changes.
ExEcutIvE IntEllIgEncE
procEss And ActIvItIEs
As senior executives need to respond to their
changing and unpredictable environment continuously that can help or support executives in the
following three aspects of intelligence processing. First, advanced EIS are needed to reduce
the amount of information from the environment
and capture only relevant information, secondly,
to capture and process information according to
individual executives specific needs and interests,

and thirdly, to learn and adapt to information

changes and to anticipate future changes.
Support for executive intelligence activities
(see Figure 1) is essential for senior executives
to better cope with the increasingly dynamic
and complex executive information through
value-added information seeking, information
gathering and information manipulating activities.
The theory of information retrieval (IR) suggests
that efficient information search and processing
can be achieved through a closed-loop process
that involves evaluation and modification either
through the users explicit relevance feedback or
the systems implicit relevance feedback (Belkin
& Croft, 1992). Hence, there is a need to support
executive intelligence activities through a closedloop process, whereby actions could be suggested
and/or taken continually in order to process information on behalf of senior executives.
The study of environmental scanning suggests
that scanning is the key means for obtaining
intelligence about the past, the present and the
future (Aguilar, 1967; Hambrick, 1982; Lozada
& Calantone, 1996; Stoffels, 1994). The concept
of environmental scanning underlies the understanding and the need for information acquisition
in executive intelligence activities (see Figure
1). In order for executives to understand their
internal business environment and to attend to
signals and messages generated from the external
business environment, they need a system that is
capable of providing a broad range of information. The information is typically spread across
several computer systems within the organization
as well as the external information on markets,
customers, suppliers, and competitors, influenced
by political, economic, social, and technological
issues. It is more than just providing historical data
through basic query and reporting mechanisms.
It involves sophisticated information scanning
and searching activities through macroscopic
viewing (radar) and microscopic search (search)
of potentially relevant information. Scanning
activities provide early signals from potential
Figure 1. Executive intelligence activities
Information from
the business
environment
AcQuIsItIon
searching
scanning
synthEsIs
Filtering
refining
threats and opportunities and help executives

understand the external forces of change. Search
activities provide specific information on newly
arising issues and help executives understand the
details of those issues. Although companies have
little control over external events, this acquisition
activity can reduce remoteness and increase the
predictability of future possibilities.
The concept of information filtering (IF), originating from the theory of information retrieval
(Belkin & Croft, 1992), provides the basis for
information synthesis in executive intelligence
activities (see Figure 1). The goal of IF is to
screen through a massive amount of dynamically
generated information through user profiling and
relevance feedback (explicit and implicit) and to
present users with information likely to satisfy
their information interests. Similar to the goal
of IF, information synthesis acts as a variety
reducer by screening out irrelevant information and refining information through relevance
feedback for their relevancy. Irrelevant information will be eliminated and relevant and useful
information will be extracted through filtering
activities. One key activity in information filtering
is user profiling. User profiling enables elimination
of irrelevant information and personalization of
information delivery according to user preferences
(Balabanovic & Shoham, 1997; Shapira, Shoval,
& Hanani, 1997). Information refining activities
involve both explicit and implicit relevance feedback by the user or the system itself (Belkin et al.,
1996; Kelly & Teevan, 2003; Morita & Shinoda,
IntErprEtAtIon
Explanation
Meaning-making
utilisation
1994; Salton & Buckley, 1990; White, Jose, &

Ruthven, in press). User relevance feedback is used
to create and refine user profiles. A continuous
creation and modification of user profiles through
user relevance feedback (both explicit and implicit)
will gradually improve the results of information
processing activities.
Finally, information interpretation is pertinent
to executive intelligence activities (see Figure 1).
Information interpretation involves making sense
of the incoming information (Thomas, Clark, &
Gioia, 1993). It entails the process of translating
the viewed and searched events, the process of
developing models for understanding, the process
of generating meaning, and the process of assembling conceptual schemes (Daft & Weick, 1984;
Gioia, 1986; Liu, 1998a; Taylor & Crocker, 1981).
Synthesized information is further processed to
resolve the equivocality of information and to
give meaning and understanding about the organizations events. Explanations are key functions
in information interpretation activities, in which
explanations help provide adequate justification
on information such as the meaning of data, the
reasons for advising a particular course of action, and the justification for a particular piece of
information (Gregor, 2001; Gregor & Benbasat,
1999). However, these activities pose challenges
because executives are cognitively complex
individuals who tend to use their innate mental
models to perceive and understand the searched
and viewed events (Agor, 1984; Isenberg, 1984;
Kuo, 1998; Liu, 1998a).

crItIcAl rEvIEW oF EIs In thE

contExt oF IntEllIgEncE
support
Many information systems have been developed
to support executives information processing activities, such as management information systems
(MIS), decision support systems (DSS), executive
information systems (EIS) and executive support
systems (ESS). EIS, in particular, emerged as
computer-based tools to provide executives with
easy access to strategic information and to support
and enhance executives information processing
activities (Millet & Mawhinney, 1992; Rockart
& Treacy, 1982; Watson, Houdeshel, & Rainer,
1997; Watson, Rainer, & Koh, 1991). Since the
early 1990s, many studies have been conducted
on EIS as companies and researchers foresaw
the great potential (Belcher & Watson, 1993;
Edwards & Peppard, 1993; Jordan, 1993; Millet
& Mawhinney, 1992; Wetherbe, 1991; Watson &
Frolick, 1993; Watson et al., 1991; Warmouth &
Yen, 1992 ). However, only a few papers on EIS
have been published since 2000 (notably Averweg, Erwin, & Petkov, 2005; Salmeron, 2002 ).
Conventional EIS studies have established some
consensus on guidelines for EIS design and development. However, the guidelines underpinned by
preceding research have failed to develop robust
and intelligent EIS. What is often reported is EIS
failure (Bussen & Myers, 1997; Lehaney, Clarke,
Spencer-Matthews, & Kimberlee, 1999; Rainer &
Watson, 1995; Xu, Kaye, & Duan, 2003).
The design of EIS typically focuses on office support applications, planning and control
process, and improved analytic and modeling
capabilities (Rockart & De Long, 1988). Key
functions of earlier EIS design are mainly standard office automation packages and management
reporting facilities on key performance indicators
(KPIs) and critical success factors (CSFs) (Millet
& Mawhinney, 1992; Rockart & Treacy, 1982).
The improved analytic and modeling capabilities
are mainly developed to provide status and trends

of internal and historical information (Millet &

Mawhinney, 1992). Hence, it is rather a management control and planning system with performance measures based on critical success factors.
This has failed to meet the primary purpose of EIS,
which is to provide executives with easy access
to both internal and external information that is
relevant to their critical success factors (Watson
et al., 1991; Watson et al., 1997). Conventional
EIS are also inflexible in adapting and meeting
changing information needs due to the predefined
rules for exception, manipulation, reporting, and
control. (Bajwa, Rai, & Brennan, 1998; Young &
Watson, 1995; Salmeron, 2002).
Conventional EIS studies indicate that most
EIS were used predominantly for communication,
performance monitoring, and control (Edwards &
Peppard, 1993; Nord & Nord, 1995; Vandenbosch
& Huff, 1997). This implies the inability of conventional EIS in managing strategic information due
to their internal focus. However, EIS can increase
executives confidence in decision-making (Nord
& Nord, 1995), and improve executives efficiency through successful information acquisition
(Rainer & Watson, 1995; Vandenbosch & Huff,
1997; Watson, Watson, Singh, & Holmes, 1995).
This suggests the need for supporting information
scanning and searching in EIS.
It has been emphasized by many researchers
that value added presentation of data via userfriendly interface such as graphical, tabular, and/or
textual information presentation is essential in
EIS design (Nord & Nord, 1995; Watson et al.,
1995). Data should be processed (i.e., summarized,
aggregated, analyzed), prepared and reported to
executives using a friendly and colourful interface.
Ease of use is considered relatively important in
EIS design and development (Nord & Nord, 1995;
Rainer & Watson, 1995; Watson et al., 1995).
These guidelines suggest some basic ideas for
EIS design and development, yet they are unable
to develop robust and intelligent EIS.
Other EIS studies also attempt to explore factors contributing to the success of EIS adoption
and implementation. Most of the studies imply

that there are relationships between EIS success and support from top management, IS or
vendor (Bajwa et al., 1998; Rai & Bajwa, 1997)
and between EIS adoption and environmental
uncertainty (Rai & Bajwa, 1997). However, these
studies provide not many useful guidelines for
successful EIS design and development.
Despite the integration of data manipulation
and decision support tools into EIS, the key
deficiency is that they do not efficiently support
intelligence processing activities (Liu, 1998a, b;
Montgomery & Weinberg, 1998). In particular,
current EIS do little in the way of actively and
continuously scanning the business environment,
automatically filtering out irrelevant data and
information, and constantly providing signals or
warning of potential opportunities and threats.
The advent of artificial intelligence (AI) (sometimes called soft computing) techniques, such
as fuzzy logic, neural networks, and genetic
algorithms gives the possibility of developing
intelligent support systems, such as expert systems
(ES) and knowledge-based systems (KBS). However, ES and KBS are mainly adopted to support
operational and tactical decisions, rather than
strategic decision (Eom, 1996; Wong, Chong, &
Park, 1994). In practice few ES are successfully
adopted and implemented due to the limited functions, high cost of development and organizational
resistance (Grove, 2000; Watson et al., 1997; Wong
& Monaco, 1995). Grove (2000) raises several
problems and limitations associated with current
ES/ KBS applications: (1) Experts are often unable
to express explicitly their reasoning process; (2)
ES tend to perform poorly due to the limitations
in its coded expertise, which relates to a narrow
domain; and (3) the stand-alone mainframe, AI
workstations or PC platforms causes limited use
of ES and difficulty in information sharing, as
well as difficulty in software installation and
upgrades.
Nevertheless, one of the subfields of artificial intelligence (AI)distributed artificial
intelligence (DAI)has led to the advent of the

intelligent software agents (or software agents).
The emergence of this concept and technology
provides the opportunity for intelligence support
in information processing activities. The intelligent software agents offer potential because these
agents are integrated in the distributed environment of the Internet. With the overwhelming
flow of distributed information produced for the
senior executives from an increasing number of
sources, intelligent agent-based support systems
have the potential to fulfil the following three
key functions in intelligence processing, first,
the screening and filtering of data and information, second, the personalization of information
gathering and processing according to individual
users, and third, the learning and adaptation of
system to information changes.
The Internet, or Web-based technologies, can
overcome some of the drawbacks of conventional
EIS, especially with regard to cost, geographically
distributed location, ease of use, development
cycle, architecture and additional advanced features such as intelligent software agents (Basu,
Poindexter, Drosen, & Addo, 2000; Gopal & Tung,
1999). White (2000) suggests that executives are
becoming more comfortable and confident using
the Internet. Web-based technologies have also
led to the emergence of portal solutions through
the intranet, extranet, and enterprise information
portal (EIP). The enterprise information portal
(EIP) is a single point of access, where it gives
users a unified view of all corporate knowledge
assets using the new universal interface, the Web
browser. An executive, for example, can do a single
search to access competitors information that may
reside in corporate databases, business libraries,
file archive, or on the Web. With the advent of
intelligent software agents and the proliferation
of Web-based technologies EIS design, development and implementation will be revitalized in
the near future.

thE potEntIAl oF IntEllIgEnt

tEchnology For IntEllIgEncE
procEssIng
Many intelligent software agents have been developed or are currently under development in
academic and commercial research laboratories,
but they are yet to be deployed in the commercial
world (Nwana, 1996; Wooldridge & Ciancarini,
2001; Wooldridge & Dunne 2005; Wooldridge &
Jennings, 1995). Software agents, like remembrance agents (Rhodes & Starner, 1996), Letizia
(Liebermann, 1995, 1997; Liebermann, Fry, &
Weitzman, 2001) and Lets Browse (Lieberman,
Van Dyke, & Vivacqua, 1999) adopt a strategy
that is mid-way between the conventional perspectives of information retrieval and information filtering. In this instance the user achieves
efficient information searching and processing
through a closed-loop process that involves
evaluation and modification either through the
explicit relevance feedback or implicit relevance
feedback from the system itself. Automatically
and unobtrusively collecting user profiles and
monitoring the users processing behavior is
one mechanism for software agents to gather
relevance feedback from the user or the system.
Therefore, software agents offer the potential to
automatically scan the distributed heterogeneous
environment and proactively search information
that best matches a user profile learned through
relevance feedback. Information acquisition can
become more intelligent as software agents are
capable of looking ahead in the users information
processing activities and act as an advance scout
to recommend the best paths to follow and save
the user needless searching.
Adaptive software agents, like Amalthaea
(Moukas & Maes, 1997) learn the users interests
and habits using machine learning techniques and
maintains its competence by adapting to the users
interests (which may change over time) while at
the same time scanning new domains that may be
of interest to the user. A software agent can learn

by itself, as well as learning from multiple agents.

Learning among multiple agents may be collective,
which means that the agents adapt themselves
in order to improve the benefits of the system
(Klusch, 2001). Here, software agents offer the
potential to personalize information acquisition
through intelligent information filtering and to
deal with uncertain, incomplete, and ambiguous
information through intelligent information refining. Hence, information synthesis that consists
of information filtering and information refining
can be intelligently supported and enhanced by
software agents. In this case, software agents
perform the information filtering process according to specific users interests identified and
learned over a period of time. Software agents
also perform the information refining process
through learning from multiple agents.
Proactive software agents, like Watson
(Budzik, Bradshaw, Fu, & Hammond, 2002) and
I2I (Budzik et al., 2002) proactively and automatically retrieve potentially useful information
from online repositories to recommend to users
based on their ongoing information processing
activities. The goal of proactive software agents
is to foster an awareness of relevant information
resources available to users. In this case, software
agents must be able to reason about the contents
of a document, in the right context, in order to
provide helpful recommendation, the meaning
of the information, the reasons for advising a
particular course of action, and the justification
for a particular piece of information for example.
Using knowledge engineering, software agents
offer the potential to make the implicit control
knowledge more explicit. In this case, information
interpretation could possibly be achieved through
intelligent explanation and reasoning services,
natural language processing, and knowledge
representation. However, the software agent has
to be highly user-specific, as well as domainspecific with relatively fixed representation of
knowledge because it requires substantial efforts
from knowledge engineers to encode implicit
control knowledge using complex algorithms

(Klusch, 2001).
Many software agent applications are yet to
be deployed in real applications due to the following challenges (Nwana, 1996; Wooldridge &
Ciancarini, 2001; Wooldridge & Dunne, 2005;
Wooldridge & Jennings, 1995):
The identification of appropriate techniques for the development of useful

software agents: Software agents are still
very much limited by the current state of
the art in machine intelligence.
The development of software agents is
too diverse: Researchers tend to suggest
agent-based solutions based on what they see
fit, in accordance with their own respective
definitions and approaches.
The ability to demonstrate that the knowledge learned with software agents can
truly be applied to help users and reduce
users workload in a specific context and
domain: Most of the conceptual architectures of agents are generic solutions that are
designed for a wide range of applications.
The infancy of development of software
agents suggests that users do not actually
have a clear vision of how agents can be
deployed to assist them: This also leads to
a potential lack of acceptance by users in
terms of using and trusting software agents
to perform the tasks on their behalf.
The ability of software agents to negotiate
with other peer agents: Software agents
tend to be distributed by their very nature,
working and collaborating with other agents
under a multiagent environment.
Although software agents and their applications are still in the early stage of development,
they will advance increasingly as research
and development in software agents have been
mushrooming across different fields, such as
intelligent information gathering and process-
ing, personalized information acquisition and

knowledge sharing.
EMpIrIcAl studIEs
Software agents offer the potential to support
information processing intelligently but executive criteria for agent-based EIS support must be
made known in order to develop a system that is
considered useful by executives. Executive criteria
refer to critical requirements for an agent-based
support systems based on executives desires and
perceptions in judging the usefulness of the agents
functions or attributes. The authors conducted
empirical studies in order to identify executive
criteria for an agent-based EIS to support executive intelligence activities. First, four focus groups
were conducted to explore and reveal the current
state of executives information environment and
information processing behaviour in the light of
Internet era, from which to examine the validity of
the conventional views of EIS purpose, functions,
and design guidelines. Initial executive criteria
for agent-based EIS design were also identified
in the focus group study. Second, 25 senior executives were interviewed for deeper insights on
value-added attributes and processes of executive
criteria for building agent-based EIS. Value-added
attributes are functional requirements needed for
an agent-based system to assist the executive in
information processing activities. Value-added
processes are specific activities performed by
agent-based system that add value (i.e., enhance)
to the executive intelligence activities.
All the discussions were recorded and transcribed verbatim for later analysis. The categorization of meaning approach was adopted for
qualitative analysis, in which raw data were
organized into structured, meaningful themes according to predefined or newly emerging themes
and categories (Dey, 1993). With the high volume
of raw data obtained from all the transcripts,
qualitative analysis software, NVivo was selected

and employed for efficient handling, managing,

searching, display, and analysis of findings. Each
transcript was analyzed and coded into either
the predefined code scheme (nodes) or newly
emerging nodes. For a more detailed interpretive
conceptual analysis, meanings were sought from
the quotes to identify consensus, dilemmas, and
contradictions through reading and re-reading of
transcripts (Nicholas & Anderson, 2003).
executive criteria of value-added attributes and

processes for building a usable, adaptable and
intelligent EIS. Usability refers to the extent to
which a system can be used by specific users to
achieve specific goals of information processing
in a specific domain of work and information.
Adaptability refers to the extent to which the
system fits the specified and right context of work
and information, with the ability to strengthen the
responsiveness of system in coping with the executive information. Intelligence refers to the extent
to which the system exhibits self-determined
activities that performs a specific task on behalf
of an executive, with no or very little executive
interaction. The agent-based EIS design model is
illustrated in Figure 2.
Under the criterion of usability design, the
empirical findings suggest implications for
AgEnt-bAsEd EIs dEsIgn

ModEl: usAbIlIty-AdAptAbIlItyIntEllIgEncE trIchotoMy
The findings from empirical studies suggest a
usability-adaptability-intelligence trichotomy
for agent-based EIS design models that comprises
Executive Intelligence A ctivities
Information
Acquisition
process
level 1
Information
synthesis
process
Information
Interpretation
process
Personalisation
Controllability
usability
Ease of use
Manageability
level 2
Coaching
Learning
Adaptability
Semantic
support
Contextual
support
level 3
Reactivity
Autonomy
Intelligence
Proactivity

Manipulation
Distributed
information sources
Figure 2. An agent-based EIS design model
value-added processes on the following valueadded attributes: personalization, controllability,

manageability, and ease of use. First, the personalization attribute in an agent-based EIS should
involve the process of designing and building
a comprehensive and specific user profile for
individual executives. The executive profiles
would comprise individual executives information domains, roles and preferences. The goal of
personalization according to senior executives is
to customize according to application-dependent
information, application-independent information and user-agent interaction information, thus,
reducing the generic information.
Second, the design of controllability attribute
in an agent-based EIS allows the flexibility for
executive to take control and make changes of
information process criteria. Executives should
have explicit control over their respective user
profiles via explicit user action and user control.
Explicit user action allows executives to determine
their specific requirements of information process,
thus facilitating executive learning in intelligence
processing. User control allows executives to make
changes on the information process criteria as
their information needs and interests change over
time, thus making the system more acceptable to
the executives.
Third, the manageability attribute in an
agent-based EIS suggests the provision of appropriate information density and the reduction
of information overload without losing potentially
critical information. The provision of appropriate information density can be achieved through
paragraphing, summarizing and highlighting
imperative messages that are useful. Dissecting
information into appropriate units with options
for further explanation and understanding can
also increase the level of manageability.
Fourth, the key elements for ease of use attribute in an agent-based EIS are simplicity, accessibility and browseability. Simplicity can be
achieved through easy functionalities and user-
friendly interface. The reduction of steps needed

for information access can increase the level
of accessibility. Browseability can be achieved
through uncluttered information presentation
and organization.
In terms of adaptability design, the following
value-added processes are identified on the following value-added attributes: coaching, learning, contextual support, and semantic support.
First, coaching attributes in an agent-based EIS
suggests that executives can assess the information via users explicit feedback. The system can
also seek confirmation and clarification from
executives. This interactive process can gradually
update and refine executive profiles. As a result,
an agent-based EIS would adapt to changes of
information needs and requirements.
Second, the design of learning attributes in
an agent-based EIS suggests intuitive learning
of executives interests and behaviors based on
implicit observation, monitoring and assessment
of the system with the intention of understanding
executives interests and mimicking executives
information processing behavior. The implicit
relevance feedback must be personalized to executive profiles. The purpose here is to learn and
understand executives information processing
behavior and thus conduct continuous, self-reactive and self-adaptive activities of information
processing.
Third, the design of contextual support attributes in an agent-based EIS involves the ability
to increase information richness through the collection and provision of associative information
and context-aware information. The system should
be able to monitor and update the collection and
provision of associative information and contextaware information in the executive profiles.
Fourth, the design of semantic support attributes in an agent-based EIS includes the ability
to increase information relevancy through the
collection and provision of associative meanings
of information and semantic-aware information.

The process includes complex knowledge-based

natural language processing activities and the
development of ontological domains.
Under the criterion of intelligence design,
the findings and discussion suggest preliminary
implications for value-added processes on the
autonomy, proactivity, and reactivity attributes.
First, the design of autonomy attributes in an agentbased EIS should be a semi-autonomous function
that involves executives occasional interaction or
input. The system is expected to perform information search autonomously on static information
but not dynamic information. Executives input
or feedback is expected for dynamic information. Second, the proactivity attributes in an
agent-based EIS should be a proactive interface
agent that is capable of performing information
manipulation, such as alert notification, ranking
and recommendation, with some kind of proactive assistance via user interfaces. The goal is to
increase executives awareness of information.
Third, the design of reactivity attribute in an
agent-based EIS should be a semi-reactive function that performs self-determined tasks with
executives knowledge. The system should be

able to trigger executive of any changes in the
information process.
guIdAncE For buIldIng An

AgEnt-bAsEd EIs ArchItEcturE
The empirical findings suggest guidance for
building an agent-based EIS architecture for
supporting executive intelligence activities. The
architecture will consist of a common EIS development platform, a specific executive profile
and information domain, and an executive-agent
interaction and learning mechanism. Figure 3
illustrates this architecture.
The EIS development platform will facilitate
and enhance executive intelligence activities. This
platform will progressively enable the key functional features to be developed, such as searching
tools, decision support tools and user interface
tools. It is an open standard platform in the sense
that the functional features are essential to any
EIS and are common to all EIS users. Distributed
Figure 3. An agent-based EIS architecture
EIS Development Platform
Executive-Agent
Interaction &
Learning Mechanism
Manipulation
Information Interpretation
Information attributes
(sources, types, contents)

Usability
Adaptability
Information Acquisition
Intelligence
Information sources
0
Needs of information
Use of information
Information Synthesis
A Common Open Standard
Specific Executive
Information Domain
Software Agents
Attributes & roles

Behavioural processing
factors, (i.e. people,
situational & affective)
Specific Executive
Profiles
information sources are widely scanned, filtered

and interpreted for manipulation. With the support
of software agents, information can be autonomously and proactively scanned or searched, at
the same time filtered and/or refined according to
executives information needs and interests. Data
manipulation tools such as categorizing, ranking,
and alerting tools can be incorporated in the standard EIS development platform. Data manipulation tools are important because executives with
severe time constraints would want to have the
needed information processed beforehand. This
can save their time and quicken their subsequent
information processes if necessary.
All functional features in the EIS development
platform would have to be highly dynamic and
would probably have to operate in real time as
executives concerns and strategic issues change
over time. Web-based technologies and intelligent
technologies are potential and appropriate for
building the intelligent functions with usabilityadaptability-intelligence criteria. The representation and processing of ontological knowledge
and semantic metadata, user profiles and natural
language input, coupled with the application of
machine learning techniques enable the intelligent
EIS to acquire and maintain knowledge on itself
and its environment.
Executives information needs and behavior in
acquiring and processing information is dynamic
and heterogeneous. Hence, it is impossible to establish a common executive information domain.
The executive information domain represents
an executives information needs, preferences of
information attributes (i.e., sources, types, and
contents), and use of information. It is also unlikely
that common profiles of executives and processing behaviour in acquiring and using information
can be formulated. Executive profiles represent
an executives attributes and roles, as well as
the factors that influence or shape executives
information processing behavior. Therefore, the
executive information domain and executive
profiles must be specific to individual executive,

company, and industry sector. A comprehensive
and specific executive information domain and
executive profile should be incorporated into the
EIS architecture so that a personalized rather a
general system is built for individual executive.
The key to make the common EIS platform
work in conjunction to specific executive information domain and executive profiles is the
executive-agent interaction (EAI) and executiveagent learning (EAL) mechanism. The EAI and
EAL mechanism are agent-based applications
supported by multiple software agents. User programming, knowledge engineering, and machine
learning are potential approaches to adopt to build
appropriate agents for interaction and learning.
The building of EAI and EAL mechanisms will
be based on the usability-adaptability-intelligence
trichotomy of agent-based EIS design model. Research shows that user profile bases, knowledge
bases, and case bases are useful to teach the
software agents what to scan, what to filter, and
what to process according to individual users.
However, these static rules will not reflect executives dynamic information needs and changing
behavior. The agents must also be able to learn
continuously in order to make the EIS more adaptable. The EAI mechanism comprises agents that
react on explicit feedback, a coaching approach
in which executive explicitly and interactively
updates and refines his profile so that the system
can adapt to changes of his information needs
and requirements. The EAL mechanism involves
no executives intervention, but the agents learn
through implicit feedback. The agents learn about
executives interests and behaviours based on implicit observation, monitoring and assessment with
the intention to understand executives interests
and mimicking executives behaviours. Over time,
the EAI and EAL mechanism will become more
and more autonomous, proactive and reactive in
assisting executive intelligence activities.

thE chAllEngEs For

dEvElopIng An AgEnt-bAsEd
EIs
The real challenge lies not on the decision support
capability of the EIS, but on the ability to process
intelligence. The dilemma which requires due
considerations when designing EIS concerns the
ability to scan for information to the maximum
capability of the system whilst providing manageable, relevant data and information to executives
in a systematic way. The technical challenge
related to intelligence processing is the software
agents capability to understand an executive
as an individual user with specific domain of
work and information, and to fit the intelligence
processing into the right context and content of
work and information.
The application of software agents in executive
intelligence activities could potentially change
executives information processing behaviour.
This is a two-way impact between the executives
and the EIS. It can be envisaged that an executives
information role will not be weakened or replaced
by software agents, because the agent is coached
by the executive, and is a part of the executives
information processing process. On the other
hand, executives may fear that software agents
would take over some of their intelligence roles
and limit their development, thus resist substantial
reliance on software agents.
the field of EIS. The agent-based EIS design model

provides guidance for developing and utilizing
software agents for continuous, self-reactive and
self-adaptive activities or approaches of acquiring, synthesizing and interpreting information for
executives to obtain strategic intelligence with a
view to determining the course of action.
With advances in the development of software
agents and Internet technology, an agent-based
EIS platform for supporting executive intelligence activities is likely to be one of the future
trends in EIS development and implementations
in organizations. Future research can look into
the development and implementation of an agentbased EIS architecture based on the proposed
usability-adaptability-intelligence trichotomy
of agent-based EIS design model. The architecture can consist of a common EIS development
platform, a comprehensive and specific executive
information domain and profiles, and an executive-agent interaction and learning mechanism.
The development of specific domain and profiles
and executive-agent interaction and learning
mechanism involve the design and development
of software agents using the appropriate techniques. The development and implementation
process will involve close collaborations between
system designers and executives for continuous
improvement and success.
rEFErEncEs
conclusIon
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revitalizing EIS with emerging intelligent technologies. An intelligent agent-based EIS will support and enhance executive intelligence activities
through identifying, collecting, and processing
potentially strategic information in a turbulent
environment. The results of the empirical studies suggest an agent-based EIS design model for
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Chapter VI
Managing Executive
Information Systems for
Strategic Intelligence in
South Africa and Spain
Udo Richard Averweg
eThekwini Municipality and University of KwaZulu-Natal, South Africa
Jos L. Roldn
University of Seville, Spain
AbstrAct
Strategically important information for executive decision-making is often not readily available since
it may be scattered in an organizations internal and external environments. An executive information
system (EIS) is a computer-based technology designed in response to specific needs of executives and
for decision-making. Executives having the right information for strategic decision-making is considered critical for strategic intelligence (SQ). SQ is the ability to interpret cues and develop appropriate strategies for addressing the future impact of these cues. In order to gauge the current situation in
respect of information in an EIS and for managing future EIS development, the authors research EIS in
organizations in two selected countries: South Africa and Spain. From their EIS study, parallelisms and
differences are identified and implications for SQ are discussed. Some practical implications for future
EIS development are given. The authors suggest these should be considered so that SQ for executive
decision-making is facilitated.
IntroductIon
The focus of this chapter is twofold: (1) to discuss
executive information systems (EIS) for strategic
intelligence (SQ); and (2) to present EIS research
from studies in South Africa and Spain and to discuss the SQ implications thereof when considering
future EIS development in these countries.
This chapter is organized as follows: The
concepts of strategic information and executive
Managing Executive Information Systems for Strategic Intelligence in South Africa and Spain
information systems (EIS) introduced. Executives having the right information for strategic
decision-making is considered critical for SQ. A
survey of EIS in organizations in South Africa
and Spain is undertaken to identify the nature and
sources of information included in these surveyed
organizations EIS. The implications of this information for SQ for executive decision-making is
then discussed. Some future EIS trends are noted
and a conclusion is given.
Organizations use a wide range of technologies
and products to help users make better business
decisions. Strategic decision-making is often the
result of collaborative processes. Strategically important information for executive management decision-making is often not readily available since
it may be scattered in an organizations internal
and external environments. Strategic information
systems (IS) provide or help to provide, strategic
advantage to an organization (Turban, McLean &
Wetherbe, 2004). An increasing number of organizations are recognising the strategic significance
of their information technology (IT) resources
(Maier, Rainer, & Snyder, 1997).
An EIS is a computer-based technology designed in response to the specific needs of executives and for making both strategic and tactical
decisions. An EIS is used by executives to extract,
filter, compress, and track critical data and to
allow seamless access to complex multidimensional models so that they can see their business
at a glance. This facilitates executives making
strategic and tactical decisions thereby leading
to strategic excellence for their organizations.
EIS have been successfully implemented in many
organizations and in many countries.
SQ is defined as the ability to interpret cues
and develop appropriate strategies for addressing the future impact of these cues (Service,
2006, p. 61). SQ systems are IS designed to
provide information about competitors and the
competitive market environment which can be
helpful in making strategic management decisions (Mockler, 1992). The notion of SQ leads to

strategic excellence (Service, 2006). Strategy is

a journey of planning, implementing, evaluating
and adjusting while paying attention and focus
on the right things. Strategy does not deal with
future decisionsit deals with decisions for the
future. Executives must progress from strategic
planning, to strategic thinking to strategic leadership through developing better SQ. In the past,
strategy has been too much of a mechanical process
and should shift away from a process-centered
to a people-centered approach of thinking.
However, it is somewhat harder for executives
who are process-centered analyzers rather than
people-centered synthesizers, who focus on the
present rather than the future, to develop SQ. The
first step is for executives to recognize that SQ
exists and its importance for their organizations.
One approach for accomplishing this is through
scanning of the external IT environment.
Scanning is the behavior executives perform
when they are browsing through data in order
to understand trends or sharpen their general
understanding of the organization (Vandenbosch
& Huff, 1997). Empirical evidence suggests that a
significant portion of executive time is spent scanning for information. Environmental scanning
acquires data from the external environment for
use in problem definition and decision-making.
An effective way to evaluate the success of an
EIS is to obtain opinions from the executive users
(Jirarchiefpattana, Arnott, & ODonnell, 1996).
Since managing EIS is important for organizations, the objective of this chapter is to present
the empirical results of quantitative surveys on
EIS in a sample of organizations in South Africa
and Spain. Such results may serve to underpin
managing future EIS development with a need
to focus on strategically important information
from internal and external environments for SQ.
It remains the challenge for IS professionals to
design IS to support and enhance the strategic
scanning behaviors of executives in complex and
turbulent environments. Information is the fuel
for planning and strategizing. Strategic focus
on the right things, leads to developing a better SQ for executives; executives become better
strategists and thereby provide strategic advantage
to their organization. Most EIS facilitate search
and scanning behaviors for executives.
In the next section, the background to strategic information (including strategic information
systems) and executive information systems (EIS)
are introduced. Thereafter EIS development, some
EIS issues, Web-based systems and the right
information are discussed.
bAckground to strAtEgIc
InForMAtIon And ExEcutIvE
InForMAtIon systEMs
ing strategic threats and opportunities to an

organization.
Strategic IS (SIS) are systems that facilitate
an organization gaining a competitive advantage
through their contribution to the strategic goals
of an organization. SIS is characterised by their
ability to significantly change the manner in
which business is conducted in order to give it
an organizational strategic advantage. Any IS
that changes the goals, products, processes or
environmental relationships to help an organization gain competitive advantage (or reduce
competitive disadvantage) is a SIS. An EIS is an
example of a SIS.
Executive Information systems (EIs)

concepts of strategic Information
and strategic Information systems
Information is data that have been organized so
that it has meaning and value to the recipient.
The recipient (e.g., an executive) interprets the
meaning and draws conclusions and implications
from the data. Data items are typically processed
into information by means of an IS application.
Strategic information refers to the long-term nature of the processed data and to the significant
magnitude of advantage it is expected to give to
the organization. Strategically important information (intelligence) for executives is often not
readily available and furthermore it is scattered
in an organizations internal environments.
From the literature, there appears to be two
types of strategic scanning information that can
be identified for executives:
Accommodation information: This is

general surveillance information which is
not necessarily coupled with a specific threat
or opportunity to an organization; and
Assimilation information: This is more
specific and likely to be coupled to identify-
EIS have experienced significant expansion since

the 1990s as a result of facilitating internal and
external pressures. In 1977 the first paper Building EIS, A Utility for Decisions by D. R. Nash
appeared in the DataBase journal (Nash, 1977).
Watson, Rainer, and Koh (1991) then set a landmark in the study of EIS practices by describing
a useful framework for EIS development which
encompasses three elements: (1) a structural
perspective of the elements and their interaction;
(2) the development process; and (3) the dialogue
between the user and the system.
Following there, from several contributions
in the literature show that a general view on EIS
usage in different countries can be found (Allison,
1996; Fitzgerald, 1992; Kirlidog, 1997; Liang and
Hung, 1997; Nord and Nord, 1995, 1996; Park,
Min, Lim, & Chun, 1997; Pervan, 1992; Pervan
and Phua, 1997; Thodenius, 1995, 1996; Watson,
Rainer, & Frolick, 1992; Watson, Watson, Singh,
& Holmes, 1995). Several other contributions
show a general view on EIS use in different countries for example South Korea, Spain, Sweden,
Turkey, United Kingdom, and the United States
of America. While our EIS study in this chapter

adopts a comparative approach and which is not

frequent in EIS literature, comparative EIS studies by Park et al. (1997) and Xu, Lehaney, Clarke,
and Duan (2003) do exist.
EIS grew out of the development of IS to be
used directly by executives and used to augment
the supply of information by subordinates. EIS is
the only known mature IS dedicated to business
executives (Tao, Ho & Yeh, 2001). Definitions
of EIS are varied and all identify the need for
information that supports decisions about the
business as the most important reason for the
existence of EIS. In this chapter EIS is defined
as a computer-based system intended to facilitate
and support the information and decision-making needs of executives by providing easy access
to internal and external information relevant to
meeting the strategic goals of the organization.
While a definition is useful, a richer understanding is provided by describing the capabilities and
characteristics of EIS.
Earlier studies described EIS capabilities
which are focused on providing information which
serves executive needs. Srivihok (1998) reports
that these capabilities are concerned with both the
quality of the system (e.g., user friendliness) and
information quality (e.g., relevance). Sprague and
Watson (1996) identify the following capabilities
or characteristics of EIS:
Other researchers suggest additional capabilities and characteristics of EIS:

0
Tailored to individual executive users

Extract, filter, compress, and track critical
data
Provide online status access, trend analysis,
exception reporting, and drill down
Access and integrate a broad range of internal
and external data
User-friendly and require little or no training
to use
Used directly by executives without intermediaries
Present graphical, tabular and/or textual
information
Flexible and adaptable (Carlsson & Widmeyer, 1990)

Should contain tactical or strategic information that executives do not currently receive
(Burkan, 1991)
Facilitate executives activities in management such as scanning (see, for example,
Frolick, Parzinger, Rainer & Ramarapu
(1997) for a discussion on environmental
scanning), communication and delegating
(Westland & Walls, 1991)
Make executive work more effective and
efficient (Friend, 1992)
Assist upper management to make more effective decisions (Warmouth & Yen, 1992;
Chi & Turban, 1995)
Incorporate an historical data cube and soft
information (Mallach, 1994). A data cube
is a structure in which data is organized
at the core of a multidimensional online
analytical processing (OLAP) system and
soft information includes opinions, ideas,
predictions, attitudes, plans, and so forth
(Watson, OHara, Harp, & Kelly, 1996)
Provide support for electronic communications (Rainer & Watson, 1995a)
Enhanced relational and multidimensional
analysis and presentation, friendly data
access, user-friendly graphical interfaces,
imaging, hypertext, Intranet access, Internet
access, and modeling (Turban, McLean, &
Wetherbe, 1999)
EIS may include analysis support, communications, office automation, and intelligent support
(Turban, Rainer & Potter, 2005). From this data,
executives are able to glean cues which may be
used towards achieving SQ in an organization.
It is therefore important that EIS are developed
to facilitate information cues for executives. EIS
development is now discussed.
EIs development
Decision-making is recognized as one of the
most important roles of executives. Executives
are facing a business environment characterised
by escalating complexity and turbulence. Given
this environment, there is a need to have a clear
understanding of the terms complexity and
turbulence when developing EIS. These two
terms are now discussed.
Complexity generally refers to a large

number of variables (many of which are
perceived to be uncontrollable) making
up a system. Complexity is defined as the
degree to which an innovation is perceived
as relatively difficult to understand and
use. Unstable environments create strategic
uncertainty for executives.
Turbulence implies complexity with a high
degree of change or dynamism added. Ansoff and McDonnell (1990) suggest that four
characteristics contribute to the turbulence
of the environment:
Complexity (the variety of factors

that management must consider when
making decisions)
Novelty (the discontinuity of successive challenges that an organization

encounters in the environment)
Rapidity of change (the ratio of the

speed of evolution of changes to the
speed of the organizations change)
Visibility of the future (the predictability of information about the future,

available at the decision time). The
characteristics of information in a
turbulent environment are complicated,
novel, dynamic, or ambiguous (Wang
& Chan, 1995)
Strategic uncertainty caused by business environment turbulence leads to increased demand
for strategic information. Forsdick (1995) found

that the overwhelming consensus of executives
surveyed was that complexity implied a lack of
understanding of the factors impacting on their
organizations and that complexity was increasing over time. This researcher reports that approximately half the respondents in his survey
saw turbulence as referring to the rate of change
in uncontrollable external variables. Despite
the availability of comprehensive reports and
databases, executives take decisions based on
their interactions with others who they think are
knowledgeable about issues.
EIS development in organizations usually follows an evolving (or adaptive) approach instead
of the traditional linear systems development life
cycle. The initial application of the EIS should
be small so that EIS developers can deliver a
system quickly. A portion of the EIS is quickly
constructed, then tested, improved and enlarged in
steps. What makes EIS development particularly
interesting and challenging is the unique combination of considerations that affect the effort.
Watson et al. (1995) suggest three factors which
are particularly relevant:

An organizations senior executives are

seldom hands-on computer users as they
probably are of an age to have missed the
computer revolution and may question the
need for them now.
Executives perform highly unstructured
work that is difficult for them to describe
with sufficient precision to identify information requirements.
An EIS is typically a new type of application for systems analysts and often requires
learning and using new technology and
understanding managerial work.
From the above, it is evident that EIS development is a complex task which requires a large
investment of time and money.

some EIs Issues, Web-based

systems and the right
Information Issues
It is critical that when an IS is defined it meets
specific executive or manager information requirements. This is particularly true in EIS development.
In the development of an EIS in an organization,
one issue that should be considered is flexibility
(Barrow, 1990; Srivihok, 1998). Salmeron (2002)
reports that if this were not so, EIS would soon
become a useless tool which would only deal
with outdated problems and would therefore not
contribute to decision-making. Without new or
updated information, executives will be unable to
ascertain whether their views of the environment
and their organizations position within it remain
appropriate. With the correct problem formulation, information assists executives establish
options and select courses for action. Without
the right information cues, executives may
develop inappropriate strategies for addressing
the future impact of these cues. SQ will therefore
not be manifested.
Another issue is that EIS are high-risk information technology (IT) investments. Remenyi and
Lubbe (1998) indicate that there is an increasing
amount of IT investment and substantial evidence
of IS failures in organizations. EIS has become a
significant area of business computing and there
are increasing amounts of money being invested
by organizations in EIS development projects.
Since EIS are highly flexible tools and since executives may behave in various ways to retrieve
information from them, managing their successful
development becomes that much more critical.
Executives need to receive the right information
cues from their organizations EIS.
A third issue is that EIS should be flexible to
support different classes of business data: external,
internal, structured, and unstructured. Examples
of external data are from customer relationship
management systems (systems intended to support customers) or news items (from external data

sources). Enterprise resource planning (ERP)

systems capture operational (internal) data in a
structured formatSAP is an example of an
ERP system. Business processes represent internal
data. Structured and unstructured data may be
found in e-mails and Web sites. Web sites deal
with both external (e.g., extranet) and internal (e.g.,
intranet) data sources. For example, EIS provide
executives with access to external information
such as news, regulations, trade journals, and competitive analysis. Some executives use their EIS to
scan broadly across a wide variety of information
external to the organizations databases (Vandenbosch & Huff, 1997). Organizational scanning
activities can therefore be placed on a continuum
from irregular to continuous scanning.
EIS products as a standalone application have
started to disappear. Nowadays they tend to be
included in larger IS or as a module integrated
in ERP systems (e.g., SAP). Furthermore there
is a blurring of management IS (MIS), decision
support systems (DSS) and EIS to business
intelligence (IS) systems. According to Negash
(2004) BI systems combine data gathering,
data storage, and knowledge management with
analytical tools to present complex internal and
competitive information to planners and decision
makers (p. 178). A key driver behind the uptake
of BI solutions is the need to remove a degree of
the uncertainty from an organizational business
process and replace it with genuine intelligence.
According to Cook and Cook (2000), the Achilles heel of BI software is its inability to integrate
unstructured data into its data warehouses or
relational data bases, its modelling and analysis
applications and its reporting functions. In BI,
intelligence is often defined as the discovery and
exploration of hidden, inherent, and decision-relevant contexts in large amounts of business and
economic data.
One problem with EIS development is that
there may be technical issues to deal with, such
as integrating EIS with an organizations existing
business systems for access to internal, structured

and unstructured data.
Another problem is that there are issues of
trust and credibility of information that can be
found in an EIS which mitigates against intensive executive reliance on IS. For example, if an
executive is not receptive to new and unexpected
accommodation or assimilation information; or
if new information does not emerge during the
scanning process, creative insights and improved
decision-making may not arise. This may then
result in an executive not paying attention and
focus on the right things.
Web-based systems
With the emergence of global IT, existing paradigms are being altered which are spawning new
considerations for successful IT development.
Web-based technologies are causing a revisit to
existing IT development models, including EIS.
The Web is a perfect medium for deploying
decision support and EIS capabilities on a global
basis (Turban et al., 1999). Organizational success in accomplishing strategies is a function of
how one arranges, develops, changes or uses an
organizations systems. These systems, for SQ,
should extend beyond automated MIS, IS and
IT to include all (including Web-based) organizationally related systems. This is evident from
the business environment since the relevant
physical and social factors outside the boundary
of an organization that are taken into consideration
during organizational decision-making (Daft,
Sormunen, & Parks, 1988).
the right Information

Salmeron (2002) reports that it is surprising
that external information is so seldom included
in Spain (p. 43) for tactical decision-making
or strategic decisions. This can be possibly accounted for by the fact that most large Spanish
organizations which have implemented EIS,
are first-generation EIS (Salmeron, 2002). The

external environment has been found to be an
important predictor of EIS use (Watson et al.,
1991). Executives need information from outside
the organization about facts and things happening in their external environment. Research into
environmental scanning highlights the outside
view of an organizations boundary and recognizes
that strategic thinking begins with a study of the
external environment.
The business environment is seen as a source
of information that continually creates signals
and messages that organizations should consider
important. Continuous scanning is a deliberate
effort to obtain specific information that follows
pre-established methods. It is characterised by a
proactive, broad in scope, part of an organizations
planning process. While the external dimension
of the business environment has been emphasised
with respect to strategic uncertainty and strategic
information scanning, the question arises around
the nature of the information included or held
by EIS. This question is of critical importance for
SQ since without an executive being able to focus
on or interpret cues from the right information,
the executive cannot make appropriate strategic
planning decisions for addressing the future impact of these cues. It is therefore important that
EIS should contain the right types of information and sources of this information (whether it
be scattered in an organizations internal and/or
external environments) should facilitate strategic
decision-making for executives. In order to gauge
the current situation in respect of this information
in EIS and for managing future EIS development,
the authors decided to undertake research, using
questionnaire surveys, on EIS in organizations in
two selected countries: South Africa and Spain.
The findings from this research will serve to
contribute to our understanding and knowledge
of current EIS (as used towards SQ by executives)
and for future EIS development.
In the next section, the EIS research undertaken
in South Africa and Spain is described. A com-

parative analysis and discussion of the authors

results is then given.
EIs rEsEArch undErtAkEn In

south AFrIcA And spAIn
The authors compared two studies of EIS implementations in organizations in South Africa and
Spain. The rationale for the comparative EIS study
in these two selected countries is to identify any
similarities and differences with respect to:

Types of information included in EIS

How information is held by EIS in organizations
Sources of information that support EIS in

organizations
This is useful as any information shortcomings identifies which do not facilitate SQ for
executives can then be meaningfully addressed in
future EIS development. The research methodologies adopted in these EIS survey studies in South
Africa and Spain studies are now discussed.
research Methodology in
south African EIs survey
A survey questionnaire was developed based on
previous instruments used in published research
Table 1. Investigations about EIS with descriptive endings

Authors
Year
Investigation
Country
Replies (n)
Watson, H.J., Rainer,

R.K., Jr., & Koh,
C.E.
1991
Executive Information Systems: A Framework

for Development and a Survey of Current
Practices
United
States of
America
112 suitable replies of which 50 have

an EIS in operation or in an advanced
stage of implementation
Fitzgerald, G.
1992
Executive Information Systems and Their

Development in the U.K.
United
Kingdom
77 questionnaires received, 36 of
whom are proceeding with an EIS
Watson, H.J., Rainer,

R.K., Jr., & Frolick,
M.N.
1992
Executive Information Systems: An Ongoing

Study of Current Practices
United
States of
America
68 questionnaires received of which

51 indicated they have an EIS
Steer, I.J.
1995
The Critical Success Factors for the

Successful Implementation of Executive
Information Systems in the South African
Environment
South
Africa
24 questionnaires from organizations

with EIS implementation
Thodenius, B.
1995
The Use of Executive Information Systems in

Sweden
Sweden
29 replies from organizations with

EIS implementation
Watson, H.J.,
Watson, T., Singh,
S., & Holmes, D.
1995
Development Practices for Executive

Information Systems: Findings of a Field
Study
United
States of
America
43 suitable questionnaires
from organizations with EIS
implementation
Allison, I.K.
1996
Executive Information Systems: An Evaluation

of Current UK Practice
United
Kingdom
19 suitable questionnaires received

Park, H.K., Min,

J.K., Lim, J.S., &
Chun, K.J.
1997
A Comparative Study of Executive

Information Systems between Korea and the
United States
Korea and
United
States of
America
implementation
Pervan, G.P., &

Phua, R.
1997
A Survey of the State of Executive Information

Systems in Large Australian Organizations
Australia
implementation
Poon, P., & Wagner,

C.
2001
Critical success factors revisited: success and

failure cases of information systems for senior
executives
Hong
Kong,
China
implementation

papers. The instrument was validated using expert

opinion. Four academics participated in separate
field tests. A similar process was undertaken by
Rainer and Watson (1995b) who solicited expert
opinion for additions, modifications and/or
deletions to the survey instrument. A survey
instrument was submitted to three EIS software
vendors (Cognos, JDEdwards, and ProClarity) in South Africa. A senior employee (e.g.,
managing director) from each vendor independently furnished some suggestions regarding
the survey instrument. Using the snowball
sampling method (Biernacki &Waldorf, 1981),
the survey instrument was administered to an
EIS representative in 31 organizations in South
Africa during the period May to June 2002. The
representatives were from the following three
constituencies:

EIS executives/end-users who utilize EIS

EIS providers (i.e., persons responsible for
developing and maintaining the EIS in the
organization)
EIS vendors or consultants in the EIS
arena
These three constituencies were identified

and used in EIS research by Rainer and Watson
(1995a). The use of multiple perspectives is frequently suggested in IS research.
Organizations considered for survey were
chosen over a spread of industries (e.g., banking,
manufacturing, retail). Where an organization
had implemented more than one EIS, the most
recent EIS implementation was selected for survey purposes. All respondents were computer
proficient and were able to provide a meaningful
business perspective on their organizations EIS
implementation.
From the previous EIS studies reflected in Table
1, it will be noted that this study of 31 organizations exceeds the previous EIS survey sample size
in South Africa (during 1995 I. J. Steer surveyed
24 organizations) and the majority of EIS sample

sizes in other countries.
For brevity in this chapter, this EIS study in
South Africa is referred to as the Averweg (2002)
study. The research methodology adopted in the
EIS study in Spain is now discussed.
research Methodology in spanish

EIs survey
A survey instrument was used to gather data to
develop the EIS study in Spain. The questionnaire used was based upon previous EIS literaturemainly the works of Watson et al. (1991),
Fitzgerald (1992), Watson and Frolick (1993),
Thodenius (1995, 1996) and Watson et al. (1995)
were analyzed. Questions and items were translated and adapted to the EIS context in Spain.
The survey was carried out in Spain from
January to June 1998. A pilot test of the survey
was conducted in order to assess content validity. The instrument was pretested with four EIS
consultants and three business and IS professors.
Suggestions were incorporated into a second version that was then tested by two other management
professors. No additional suggestions were made.
Bias in response from misinterpretation of the
survey instrument was therefore reduced.
The sample was selected following the snowball sampling method obtaining an initial list
of 178 organizations based on the contributions
of seven software development and distribution
organizations and 4 consulting organizations.
Between March and June 1998, the manager in
charge of the EIS implementation was contacted
via telephone. In this survey the existence of an
operative EIS (or at least an EIS under development and implementation) was confirmed. After
explaining the studys objectives to the persons
responsible for EIS implementation, they were
asked for their collaboration. Following this communication process, cooperation of 136 organizations was achieved.

Valid responses from 75 organizations were

obtainedthis represents a participation of
55.2%. After analysing the EIS situation in this
group of entities, 70 questionnaires which could
be analyzed were selected. These questionnaires
represented organizations with EIS, operative
or in a development/implementation stage sufficiently advanced as to enable the answering
of the questions asked. This number of valid
questionnaires is higher than any obtained in
previous EIS descriptive studiessee Table 1. For
brevity in this chapter, this EIS study in Spain is
referred to as the Roldn (2000) and Roldn and
Leal (2003a) studies.
comparative Analysis and

discussion of two EIs surveys
Tables 2 to 7 presented in this chapter were extracted from the Averweg (2002), Roldn (2000),
and Roldn and Leal (2003a) studies and refer to
the EIS surveys conducted in organizations in

South Africa and Spain respectively.
The number of permanent employees in
organizations participating in the EIS study in
South Africa and Spain is reflected in Table 2.
From Table 2, 64.6% of organizations surveyed
in South Africa had more than 500 employees.
Some 53.3% of organizations surveyed had a
gross annual turnover exceeding ZAR500 million
(approximately U.S. $72 million).
In the case of the EIS study in Spain, according
to the European Union classification, most of the
participating entities were large organizations and
71.0% had more than 500 employees (see Table 2).
Some 62.0% of organizations surveyed had gross
revenues exceeding U.S. $139 million.
A rank descending order of applications for
which EIS is used in organizations in the Averweg (2002) study is given in Table 3. Research
has found that the accessibility of information is
more important than its quality in predicting use
Table 2. Number of permanent employees in organizations: Frequency and percentage

South Africa (N=31)
Spain (N=69)
More than 5,001 employees
6 (19.5%)
12 (17.4%)
Between 2,001 and 5,000 employees
5 (16.1%)
9 (13.0%)
Between 501 and 2,000 employees
9 (29.0%)
28 (40,6%)
Between 251 and 500 employees
5 (16.1%)
12 (17.4%)
Between 51 and 250 employees
5 (16.1%)
6 (8.7%)
Less than 51 employees
1 (3.2%)
2 (2.9%)
Table 3. Rank descending applications for which EIS is used: Frequency and percentage (multiple
answer question)
South Africa (N=31)

Access to projected trends of the organization
23 (74.2%)
Access to current status information
22 (71.0%)
Performing personal analysis
16 (51.6%)
Querying corporate and external data bases
16 (51.6%)
Office automation activities
5 (16,1%)
Measuring Key Performance Indicators (KPIs)
1 (3.2%)
(OReilly, 1982). It has been shown that accessibility of information has a significant influence
on perceived usefulness and perceived easy of
use of EIS (Pijpers, Bemelmans, Heemstra, &
van Montfort, 2001). Furthermore, Roldn and
Leal (2003b) report that EIS service quality has
a greater effect on EIS user satisfaction than EIS
information quality. Therefore, access to updated
online information is a basic characteristic of EIS
(Houdeshel & Watson, 1987; Martin, Brown,
DeHayes, Hoffer, & Perkins, 1999).
The different types of information included in
an EIS in an organization is given in Table 4. From
Table 4, for organizations surveyed in South Africa, financial information (90.3%) appears as the
most important item followed by business/commercial sales (74.2%) and then strategic planning
(35.5%). In the Roldn and Leal (2003a) study,
the three highest ranking types of information
held by an EIS in an organization are business/
commercial sales information (82.9%), financial
information (65.7%) and production information
(55.7%). While previous research studies agree in
presenting these three types of information (sales,
financial, and production) as the most relevant ones
(Allison, 1996; Kirlidog, 1997; Thodenius, 1995),
the Averweg (2002) study partially support these
findings with business/commercial Sales (74.2%)

and finance (90.3%) types of information. Executives taking cues from trends of the organization
is an integral component of SQ.
Holding strategic planning information in
EIS in organizations in South Africa appears to
have a higher importance than holding production
information (Averweg, Erwin, & Petkov, 2005).
In this respect, the low percentage in EIS in
Spain that include strategic planning information
(14.3%) seems to indicate the systematical failure
of many EIS to support scanning, processing and
providing of meaningful information to managers engaged in strategic decision-making (Xu &
Kaye, 2002). Environmental scanning is a basic
process of any organization since it acquires
data from the external environment to be used
in problem definition and decision-making. The
low percentage in the Spanish EIS situation can
be a potentially dangerous weakness, since it
was found that the EIS success is linked to the
support provided by the system to organizational
strategic management processes (Singh, Watson,
& Watson, 2002).
Watson et al. (1996) recognise that executives
require information (often provided informally)
Table 4. Types of information included in EIS: Frequency and percentage (multiple answer question)
South Africa (N=31)
Spain (N=70)
Finance
28 (90.3%)
46 (65.7%)
Business/commercial sales
23 (74.2%)
58 (82.9%)
Strategic planning
11 (35.5%)
10 (14.3%)
Inventory management/suppliers
10 (32.3%)
14 (20.0%)
Human resources
9 (29.0%)
31 (44.3%)
Production
8 (25.8%)
39 (55.7%)
Quality
7 (22.6%)
22 (31.4%)
Soft information
4 (12.9%)
25 (35.7%)
Trade/industry
4 (12.9%)
14 (20.0%)
Competitors
3 (9.7%)
16 (22.9%)
External news services
1 (3.2%)
9 (12.9%)
Stock exchange prices
1 (3.2%)
5 (7.1%)

for decision-making. Soft information is fuzzy,

unofficial, intuitive, subjective, nebulous, implied, and vague (Watson et al., 1996, p. 304).
Watson et al. (1996) found that soft information
was used in most EIS but the Averweg (2002)
study (12,9%) does not support this (Table 3).
One possible explanation is that it is often policy
not to allow unsubstantiated rumours into IS
without a reference to a source and tagged by
the individual entering the information (Turban
& Aronson, 1998).
Nowadays, databases exist for just about any
kind of information desiredfrom competitor
sales and financial matters to overall statistics.
These can be used for a wide range of strategic
management purposes to augment SQ for executive decision-making. From Table 4 it can be
observed that the information that appears predominantly in EIS has an internal characteristic
(Preedy, 1990). Some authors have defended the
inclusion in the EIS of further reaching information with multiple perspectives and including a
set of financial and nonfinancial, external and internal indicators (Taylor, Gray, & Graham, 1992).
However, it can be observed that the information
that appears predominantly in these systems has
an internal characteristic.
External information obtains low response
levels: Trade/industry (12.9%), external news
services (3.2%), competitors (9.7%) and stock
exchange prices (3.2%). Roldn and Leal (2003a)
report similar low response levels. Other studies

agree in presenting this scenario (Allison, 1996;
Kirlidog, 1997; Salmeron, 2002). According to
Xu et al. (2003), this internal orientation with
low response level for external information is
the main reason for dissatisfaction with EIS. An
organizations environmental scanning process
must be able to identify and differentiate among
a variety of external issues if the organizations
strategic responses are to predict the direction in
which environmental elements may be moving that
is for identifying trends. In SQ, executives need
to develop strategies for addressing the future
impact of these trend cues.
Some reasons that may shed light on this
significant predominance of internal information are:

It is much easier to provide internal data

since it usually already exists in some form
in the organization (Fitzgerald, 1992).
Some executives will not really know how
to use external EIS data, particularly data
which is relatively soft and difficult to validate (Fitzgerald, 1992).
The expense of electronically supporting and
maintaining infrequently updated external
information may not be justifiable in most
situations (McAuliffe & Shamlin, 1992).
The automated collection process of external
data may tend to deliver too much unfiltered
Table 5. Types of soft information included in EIS: Frequency and percentage (multiple answer question)
Spain (N=25)

Predictions, speculations, forecasts, estimates
13 (52.0%)
Explanations, justifications, assessments, interpretations
12 (48.0%)
News reports, industry trends, external survey data
6 (24.0%)
Schedules, formal plans
5 (20.0%)
Opinions, feelings, ideas
1 (4.0%)
Rumours, gossip, hearsay
0 (0.0%)
Other
3 (12.0%)
data to be useable by general management

(McAuliffe & Shamlin, 1992).
Research suggests that senior executives
choose to do much of their own environmental scanning because they feel that
subtleties exist that only they will see (El
Sawy, 1985).
Executives often prefer doing this task personally instead of delegating it to staff since senior
managers find great value in filtering external
data through their own mental models (Rockart
& DeLong, 1988). Therefore they try to develop
and maintain its own external information sources,
which are frequently rich and personal media of
communication.
The literature suggests that periodical and
newspaper reviews are a frequently used source
of competitive intelligence. Considering the
hard/soft information continuum proposed by
Watson et al. (1996), in organizations surveyed
in Spain, Roldn, and Leal (2003a) observe those
types of qualitative information more quoted
are included in a halfway house between hard
and soft information: predictions (52.0%) and
explanations (48.0%) (Table 5). Roldn and Leal
(2003a) emphasise the absence of cases for the
soft information extreme of the continuum (i.e.,
rumours, gossip, and hearsay) and suggest some

explanations for this situation:

This kind of information can be considered

too sensitive
It can jeopardize competitive plans
It could expose the organization to legal risks
(Watson, Harp, Kelly, & OHara, 1992)
How information is held by EIS in an organization is given in Table 6. From Table 6, information is generally presented by products (71.0%),
operational/functional areas (64.5%) and geographical areas (58.1%). Roldn and Leal (2003a)
report similar findings for operational/functional
areas (62.9%), products (61.4%) and geographic
areas (52.9%). Roldn and Leal (2003a) note that
information according to processes ranks quite
low, existing in only 20% of participating entities (p. 295). From Table 6 there is a striking
commonality with the Averweg (2002) study of
19.4%. This situation was highlighted by Wetherbe
(1991) as one of the traditional IS problems for top
managers that is these systems are considered as
functional systems rather than being considered
as systems crossing functions. Nevertheless, this
result is understandable since the most important
EIS user groups are top functional managers and
middle managers.
Table 6. How information is held by EIS in organizations: Frequency and percentage (multiple answer
question)
South Africa (N=31)
Spain (N=70)
By products
22 (71.0%)
43 (61.4%)
By operational/functional areas
20 (64.5%)
44 (62.9%)
By geographic areas
18 (58.1%)
37 (52.9%)
By key performance areas
14 (45.2%)
33 (47.1%)
By company
11 (35.5%)
not available
By strategic business units
10 (32.3%)
37 (52.9%)
By processes
6 (19.4%)
14 (20.0%)
By projects
5 (16.1%)
11 (15.7%)
By customers
1 (3.2%)
0 (0.0%)

The different types of sources of information

that support an EIS in an organization are given
in Table 6. One of the capabilities or characteristics of EIS is the filtering, organization, and
consolidation of multiple data sources (Nord &
Nord, 1996). This quantitative data stems from
corporate data bases (80.6%) and operational
data bases (64.5%).
Table 4 reflects that the information that
appears predominantly in EIS has an internal
characteristic. Table 7 shows that a significant
majority of the information came from internal
sources. External sources have a low presence:
external databases (25.8%) and Internet, Intranet
or Extranet (16.1%). This trend towards internal
sources supports the results obtained in previous research studies (Basu, Poindexter, Drosen,
& Addo, 2000; Kirlidog, 1997; Roldn & Leal,
2003a; Watson et al., 1991; Watson, Rainer, &
Frolick, 1992; Xu et al., 2003). Salmeron, Luna,
and Martinez (2001) suggest the extent to which
information coming from the environment is
included in the EIS of Spanish big businesses
should reach higher figures, due to the fact that
all elements that currently form economy are
interrelated (p. 197).
Given the presence of Web-based technologies and from Table 6 it is therefore somewhat
surprising that the Internet, Intranet and Extranet
rank as the lowest source of information which
support an EIS in organizations in the Averweg
(2002) and Roldn and Leal (2003a) studies. This

tends to suggest that future EIS development and
implementation should focus on developing an
organizations external sources for strategically
important accommodation and assimilation information. This will serve to promote a systematic
scanning of the external environment. Xu (1999)
suggests that an organization should differentiate and selectively identify the most influential
environmental factors for scanning. Scanning
does not imply only collecting competitors information. Environmental factors such as changes
in economic conditions, cultural and social patterns, political climate and legal representations,
and technology should be selectively monitored
since they may significantly affect developing an
executives SQ.
Making important strategic decisions must
be based on accurate data. The data held by EIS
must facilitate SQ for executives. While new Webbased architectures may replace old architectures
or they may integrate legacy systems into their
structure in organizations, from this study it is
evident that EIS in South Africa and Spain are in
a state of flux and future EIS development will
require new emerging features for SQ.
From the above EIS survey results in South
Africa and Spain, the findings that emerged between these two countries are now summarized.
Two parallelisms were identified:
Table 7. Sources of information that support EIS in organizations: Frequency and percentage (multiple
answer question)
South Africa (N=31)
00
Spain (N=70)
Corporate databases
25 (80.6%)
61 (87.1%)
Operational databases
20 (64.5%)
29 (41.4%)
Individuals
12 (38.7%)
23 (32.9%)
External databases
8 (25.8%)
19 (27.1%)
Documents or reports
7 (22.6%)
24 (34.3%)
Internet, Intranet or Extranet
5 (16.1%)
2 (2.9%) (only Internet)
External information (e.g., trade/industry,

external news services, competitors, and
stock exchange prices) in EIS have low
internal presence.
There are similar trends in how information (e.g., by products, operational areas,
and geographical areas) is held by EIS in
an organization.
With the low internal presence of external

information, it appears that environmental scanning is not being actively pursued by executives
and the advantages of Web-based technologies
are not being utilized. These apparent shortcomings need to be incorporated in future EIS
development.
Two significant differences between the EIS
survey in organizations in South Africa and Spain
were identified:


organizations in South Africa appears to
have higher importance than holding production information.
There is a higher presence of holding soft
information in organizations in Spain but
this is less than when compared to organizations surveyed in North America.
The implications of the above parallelisms and

differences are that:

It may provide a research agenda for an

in-depth study of these parallelisms and
differences.
This information is useful for IT practitioners
when considering future EIS development
in these countries.
Some practical implications for future EIS

development will now be given.
soME prActIcAl IMplIcAtIons

For FuturE EIs dEvElopMEnt
Executives place substantial requirements on EIS.
Firstly they often ask questions which require
complex, real-time analysis for their answers.
Hence many EIS are being linked to data warehouses and are built using real time OLAP in
separate multidimensional databases along with
organizational DSS. There are also efforts to use
data warehouse and OLAP engines to perform
data mining.
Secondly, executives require systems that are
easy to use, easy to learn and easy to navigate.
Turban and Aronson (1998) report that current
EIS generally possess these qualities.
Thirdly, executives tend to have highly individual work styles. While the functionality of the
current generation of EIS can be moulded to the
needs of an executive, it is more difficult to alter
the general look and feel or method of interaction
with a system.
Fourthly, any IS is essentially a social system.
Turban and Aronson (1998) note that one of the key
elements of EIS is the electronic mail capabilities
it provides for members of the executive team.
Nowadays, the electronic mailing of multimedia
documents is becoming critical. Given this scenario, EIS of the future will look significantly
different from todays systems.
Nord and Nord (1995) report that developers of
decision support technology for executives must
be alert to the needs of top executives and EIS
evolution. Like most other IS, EIS have migrated to
the networked world of the technical workstation
and Intranets. The advent of Web services now
allows interaction between software and systems
that would previously only have been possible
with extensive systems development.
Turban and Aronson (1998) describe some of
the features that have been emerging or likely to
appear in the next generation of EIS:
0
0
A toolbox for building customized systems: To quickly configure a system for an

executive, the builder of the system requires
a toolbox of graphic and analytical objects
that can be easily linked to produce the
system. Commander EIS LAN, Forest and
Trees and Pilot Decision Support Suite
are examples of such tools.
Multimedia support: The requirement that
an EIS can be configurable also requires
support of multiple modes of output and
input. The current generation provides text
and graphic output with keyboard, mouse,
or touch screen input. The rapid proliferation
of databases supporting image data, voice,
and video will no doubt mean that future
EIS will be multimedia in nature. Audio
and video news feeds (soft information) via
the Internet through local area networks are
currently a reality.
Virtual reality and 3-D image displays:
The development of virtual reality standards,
the ability to examine megabytes of data
on a landscape or in a map form via 3-D
visualization, and higher resolution monitors are beginning to affect EIS. As these
tools are deployed for general use executives will adopt them to assist in their data
visualization for information evaluation
and decision-making. By scanning the IT
environment and interpreting such visual
cues, this process may serve to enhance SQ
for executive decision-making.
Merging of analytical systems with desktop publishing: Many reports prepared for
executives contain text, graphs, and tables.
To support the preparation of these reports,
some software companies have merged
desktop publishing capabilities with various analytical capabilities. In keeping with
multimedia features, EIS have the capability to cut and paste data and graphs from
various windows and to ship that document

(via e-Mail) to other executives or post it to
a Web site.
Client/server architecture: This approach
is extremely important for EIS as the server
provides data to client software running on
the executives workstation. The original
architecture of EIS was the client/server
environment and it has now been adopted
for many IS applications including data
warehousing and Web technology. For a
technical discussion of Web client/server
communication, see, for example, Schneider
and Perry (2000).
Web-enabled architecture: Web browser
software is the cheapest and simplest client
software for an EIS. This is leading toward
Web-enabled EIS. The current generation
of software supports information delivery
via the corporate Intranet and is evolving
into the norm rather than the exception.
Some examples are: Comshare provides
Commander DecisionWeb, Pilot Decision
Support Suite contains an Internet publishing module and the SAS Institute provides
Internet support for its flagship enterprise
software suite.
Automated support and intelligence assistance: Expert systems and other artificial
intelligence systems are currently embedded
or integrated with existing database management system or DSS. Clearly this adds
more automated support and assistance to
the analytical engines underlying EIS. The
researchers indicate that one is also likely to
see other forms of intelligent or automated
assistance. One such form is the intelligent
software agent. An agent can learn how
the executive uses an EIS and adopts the
appropriate screens in the executives preferred order. Other agents are actively used
in Web search engines and can be deployed
in Web-enabled EIS.
Integration of EIS and group support

systems: Much of the technology developed
for group support systems (i.e., groupware)
can be used effectively by executives for a
number of managerial tasks. For example,
Haley and Watson (1996) document ten
cases where Lotus Notes was specifically
chosen for EIS development.
Global EIS: As organizations become more
global in nature, providing information
about international locations around the
world is becoming critical to organizations
success. The accuracy and timeliness of
information for decision-making become
critical. The challenge has become to find
ways to integrate information across the
enterprise. The transparency of the integration of the information process is what
makes Web technology so effective. Palvia,
Kumar, Kumar, and Hendon (1996) investigated the types of data that executives
require in two scenarios: (1) introducing a
new service or product into other countries;
and (2) distribution channel expansion into
other countries.
Most of the executive information requirements include demographic and marketing data
from public sources and soft information from
personal contacts. Palvia et al. (1996) indicate that
EIS can be used to provide the soft information.
Soft information that is provided in EIS can be
classified in groups according to their softness
(Watson et al., 1996). This classification helps
the executive user judge them.
In the next section, future EIS trends are
presented. Thereafter the conclusion for this
chapter is given.
FuturE EIs trEnds

Strategically important information for executives
may be scattered in an organizations internal and
external environments. The main issue facing the

successful development and implementation of
EIS in an organization is the importance of clean,
organized source data. This is applicable to both
structured data and unstructured data.
One future trend is that the processes of acquisition, cleanup, and integration will have to
be applied for both structured and unstructured
data. Furthermore, structured and unstructured
data types are further segmented by looking
at the internal and external data sources of the
organization. These two dimensions are data
type and data source. However, the transition
between structured and unstructured data types
and between internal and external data sources is
not currently defined in absolute terms. This will
require further investigation. Problem-pertinent
data will be available from external as well as
internal sources (Forgionne, 2003).
Another future trend is the challenge of EIS
to deal with soft information. While the authors
report that 12.9% and 35.7% soft information is
held in EIS in organizations in South Africa and
Spain respectively (see Table 4), it is envisaged that
the future trend will be to pay militant attention to
this (soft) information so that users will ultimately
get to a single version of the truth. Rigorous data
standards may need to be deployed. There also
needs to be a secure delivery of accommodation
and assimilation information to the EIS.
Another trend will be a greater focus on learning phases that users have to go through to ensure
they receive the information they thought they will
be receiving. Mental modes are important not only
for decision-making but also for human-computer
interaction (Turban et al., 2004). Organizations
will need to ensure that users understand how
to use EIS so that they do not draw the wrong
conclusions (or insights) from data because they
submitted incorrect queries or misused the results.
This will lead to poor strategic decision-making
by executive users and SQ will thereby not be
facilitated.
0
With more and more information becoming

available in electronic form, organizations have
increasingly carried out environmental scanning
using EIS linked to online databases (Vandenbosch & Huff, 1997). This trend is likely to grow
as the borderless nature of the Internet suggests
that organizations may be able to scan a greater
variety of information sources that cover a wider
range of environmental sectors (Tan, Teo, Tan, &
Wei, 1998). In a business environment characterised by complexity and turbulence, scanning by
executives will become more important for their
SQ. Environmental scanning often initiates a chain
of actions that lead to organizational adaptation
to environmental changes (Hambrick, 1981).
The viability of an organization depends on
its ability to stay ahead of environmental challenges and thus environmental scanning can be
considered a vital organizational task (Boyd &
Fulk, 1996) and this soft information is needed
for successful competition and survival (Turban
& Aronson, 1998). Some scanning of news stories,
internal reports, and Web information is performed by intelligent agents. The ease of access
to information on the Internet and as a borderless
information resource which transcends traditional
boundaries and notions for information acquisition
and use, may change the way executives conduct
environmental scanning (using EIS) in the future
(Tan et al., 1998). Nonetheless, executives will
still need to interpret the cues so that they can
develop appropriate strategies for addressing the
future impact of these cues.
impacted. This is an important consideration as

there is an need for EIS to effectively facilitate
SQ for executive decision-making.
chapter summary
In this chapter the concepts of strategic information, EIS and SQ were discussed. A survey of EIS
in organizations in South Africa and Spain was
undertaken to identify the nature and sources of
information included in the surveyed organizations EIS. The implications of this information
for SQ for executive decision-making was then
discussed. Some practical implications for future
EIS development were given. Future EIS trends
were then noted.
key Findings
Four key findings from this EIS research can be
summarized as follows:

conclusIon
The accessibility, navigation, and management
of strategic data and information for improved
executive decision-making is becoming critical in
the new global business environment. As decisionmaking is being facilitated from anywhere at any
time, future EIS development will be significantly
0
In both the South African and Spanish

studies, external information (e.g., trade/industry, external news services, competitors,
and stock exchange prices) in EIS have low
internal presence.
In the South African and Spanish studies,
there are similar trends in how information
(e.g., by products, operational areas, and
geographical areas) is held by EIS in an
organization.
EIS in organizations in South Africa appears
to have higher importance than holding
production information. In organizations
in Spain, the converse holds true.
When compared to organizations in South
Africa, there is a higher presence of holding
soft information in EIS in organizations in
Spain but this is less than when compared to
organizations surveyed in North America.
Management Implications
Web-based systems which began to emerge in
the mid-1990s, deliver business applications via
the Internet. Many of the innovative and strategic systems found nowadays in medium and
large organizations are Web-based. Using their
browsers, employees in organizations collaborate,
communicate and access vast amounts of information by means of Web-based systems. There is
therefore both scope and need for research in the
particular area of EIS being impacted by Webbased technologies. Executives need systems that
provide access to accommodation and assimilation
information so that they can interpret the cues
from this information and formulate strategies for
addressing the future impact of these cues.
EIS are becoming more enterprise-wide with
greater decision support capabilities and also gaining in intelligence through the use of intelligent
software agents. EIS are going through a major
change to take advantage of Web-based technologies in order to satisfy sense-making information
needs of an increasing group of executive users.
As these users need IS that provide access to
diverse types of strategic information which
may be scattered in both internal and external
environments, there is also a need for research
in the area of managing future EIS development
so that SQ for executive decision-making is in
manifested in these SIS.
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0
Section III
Enhancing Environment
Scanning and Intelligence
Practice: Techniques
0

Chapter VII
Understanding Key
Intelligence Needs (KINs)
Adeline du Toit
University of Johannesburg, South Africa
AbstrAct
This chapter explains how to translate an organizations strategic aims into key intelligence needs (KINs)
and how to prioritize and categorize the needs. It argues that an essential aspect for any competitive
intelligence (CI) professional is to gain the confidence of management to determine what information
about the environment should be collected in order to produce intelligence. Furthermore the author
hope that understanding how to determine a set of KINs as derived from an organizations vision, mission, and strategic objectives and how to break down KINs into general and specific KINs will assist
CI professionals to understand what their internal customers want to know about, need to know about
and should know about and why, when they need to know it, and who needs to know it by identifying
KINs. The application of KINs in a practical situation is illustrated in a case study of a South African
company in the furniture industry.
IntroductIon
In the knowledge economy, the survival of organizations depends on their ability to see the bigger
picture within their competitive environment, to
track and scan that environment continuously
in search of emerging threats and opportunities
and to react to such threats and opportunities
swiftly. To ensure focused information gather-
ing, organizations must be able to identify the

variables within their competitive environment
accurately. These are often their key intelligence
needs (KINs).
The most fundamental concept in the field of
competitive intelligence (CI) is the intelligence
cycle (planning, gathering, analysis, dissemination). The cycle contains all of the elements
required to produce actionable intelligence. In
Understanding Key Intelligence Needs (KINs)
the planning stage, the strategic information

requirements are stated and it is the task of the
CI professional to determine what information
on the environment should be collected in order
to produce intelligence. This step then drives the
subsequent activities of gathering, analysis and
dissemination. The CI cycle is initiated through a
request from management. Requests come in many
forms. An essential aspect for any CI professional
is to gain the confidence of management so that
they will continuously bring requests. The sum
total of these requests represents managements
KINs, or in other words, key areas of intelligence
(Prescott, 1999).
The objectives of this chapter are to explain
how to translate an organizations strategic aims
into KINs and how to prioritize and categorize
the needs. Attention will be paid to the following aspects:
An explanation of the concepts KINs and

taskings
How to determine a set of KINs as derived
from an organizations vision, mission, and
strategic objectives
How to break down KINs into general and
specific KINs and how to develop taskings
KINs as the direction giver of an organizations CI analysis effort
The importance of regularly interviewing
managers to update the set of KINs
Finally the application of KINs in a practical

situation will be illustrated through a case study
of Just Wood, a South African company in the
furniture industry.
kIns And tAskIngs

Managers have a need to know about key events,
changes, trends, and news in and affecting their
environment. They need to understand the im-

plications to make decisions and act accordingly.

Managers benefit only from information that they
regard as useful and meaningful. It makes no
sense to spend resources to acquire intelligence
if it is not to be used in decision-making. One of
the problems of identifying information needs
is that it is very hard for managers to articulate
their information needs. A frequent reason for
this is that managers do not know what information is available or they do not understand how
it is obtained or used. The information needs of
managers may also be subconscious. These subconscious needs cannot be assessed even with the
best methods because they usually surface only in
a decision-making situation. To overcome these
problems, CI professionals in an organization
need to understand what their internal customers want to know about, need to know about and
should know about and why, when they need to
know it, and who needs to know it. CI professionals have a formal process they use to answer
these questionsidentifying KINs. The initial
responsibility of any CI professional is to conduct
a stakeholder analysis to determine whom the key
intelligence users are, what they will use intelligence for, when it is required, why it is needed,
and how the intelligence will be used.
According to Marrs (2005) every function
within an organization has KINs, even if that
function does not specifically codify it. He explains that there is a primal, overarching need to
see, analyze, understand, decide, and act on what
is happening in the present and anticipate what
might happen in the future.
According to Sewlal (2003) KINs are business
issues that are of critical importance to an organization. Management is responsible for defining the
KINs, based on decisions they need to make and
these KINs provide the necessary direction to the
CI effort, ensuring that the operation focuses on
collecting and analyzing only key data relevant
to the KINs.
Robinson (2005) explains that determining
KINs is the most critical and difficult step in the
intelligence process, as it identifies users needs,

provides focus and purpose to the intelligence effort, engages users in the intelligence process and
develops a sustained process. KINs can also be
seen as a pre-eminent list of priorities (Johnson,
2006) and are crucial because they provide focus
for the organizations overall competitive intelligence programme, gives insight to resources
required (for example, sources of information),
provides a basis for categorizing intelligence
requirements so that planning and organizing
the CI programme can take place, reduces KINs
duplication, and determines which needs overlap
or complement each other (Evans, 2005).
The KINs process enables a CI professional
to separate the must know type of information
from the nice to have to satisfy curiousity type
of information. The KINs process involves interviewing CI users to identify (and then answer) the
key questions they have on competitors and the
competitive environment so as to reduce the risk
involved in making decisions. A KIN is the information or intelligence that decision makers need
to enable them to make a business decision.
CI is not about collecting all information, but
about focusing on the issues of highest importance
to senior management. It also provides a wider
focus than only on competitors to include facets
such as suppliers, customers, and the regulatory
environment. These focus areas are KINs of an
organization. KINs are those decision-based,
strategic issues about which managers must be
regularly informed to set and implement strategy.
They act as the filter through which information
collection and analysis activities pass. They also
provide the necessary direction to the CI effort,
ensuring that the operation focuses on collecting and analyzing only key data relevant to the
KINs. This ensures that the intelligence process
is demand-driven with direct and constant impact
on strategy and decision-making. The critical
success factor in any intelligence operation is
meeting the users real needsand doing it in
such a way that the company decision makers can
act on the resulting intelligence and succeed in

whatever business endeavour is involved (Viviers,
Saayman & Muller, 2005).
The origin of a KIN can be threefold (Muller,
2002a):
An event or development in the competitive

environment could give rise to a KIN, for
example an unexpected takeover involving
two competitors that changes the competitive scene.
The routine scanning activity of an effective analysis capability regularly uncovers
information that has the potential to have
a positive or negative impact on strategy,
for example when an organization with a
dominant position in a given market tracks
a growth in competitor market share, they
would develop strategies to protect their
core market share position from rivals.
Employees who have a competitive mindset
might pick up a rumour or bits and pieces
of information that would require further
investigation.
KINs should be translated into simple coherent questions that can be used to task others to
collect the required information.
The following are a few examples of KINs
(Evans, 2005):
What impact will technology have on our

high volume product line?
How is our competitor able to retain major
government contracts year after year when
tenders for these contracts are invited?
What is the timeline for when our competitors will launch their new services?
Should we expand our Johannesburg facility
or build a new facility in Cape Town?
Who are the key customers of our competitor?
What impact does this new regulation have
on our business?

How well does this supplier perform with

other companies?
Key intelligence questions (KIQ) are discrete

questions that address the KINs and define the
research and analysis activities. Also referred to
as key intelligence indicators or taskings, these
are the pieces of information that need to be
gathered to address the KINs (Calof, 2004). For
example, if the specific requirement is whether
market research is effective, indicators would
include consumer surveys, focus groups and test
marketing (Muller, 2002a). If the KIN is that
the CEO wants to confirm whether Competitor
B has production expansion plans and how this
would impact on the market share, taskings will
be (Muller, 2002b):
Visit the local council to enquire about any

new rezoning applications.
Has there been an environmental impact
study? If yes, obtain a copy.
Scan the media for possible recruitment
drive for new personnel at plant.
Taskings are thus the translation of the information need into simple, clear and concise questions
that would yield answers. Taskings are compiled
by the CI professional and focus on those areas
where an information gap has been identified
or when information needs have to be assessed,
compared, or evaluated (Muller, 2002a).
hoW to dEtErMInE A sEt

oF kIns As dErIvEd FroM An
orgAnIzAtIons vIsIon, MIssIon,
And strAtEgIc objEctIvEs
CI analysis should take its cue for analysis and
interpretation from the organization strategy and
the KIN that result from changes and action in
the competitive business environment (Muller,
2002a). Senior managers and those assigned lead-

ership responsibilities are entrusted with running

the organization and making the critical business
decisions for the organization. It is only common
sense that the CI needs of such decision makers
and planners are important to the companys business success and competitive survival (Herring,
2003). Both senior management and functional
managers will be working on similar goals and
prioritiesand consequently, effective CI operations focused on senior managements KINs will
produce intelligence that should benefit both. CI
typically enables senior and functional managers to make informed decisions about marketing,
research and development, and investing tactics
to long-term business strategies. CI provides
insight into who is winning market share and
why; the competitive strategies of competitors;
developing the right products for the changing
market and customer preferences, market and
brand image, and a competitive culture that can
enhance innovation and ultimately competitiveness (Viviers, Muller, & Du Toit, 2005). Senior
managers need specific strategically focused
intelligence concerning future conditions in
the marketplace and industry. CI allows senior
managers to better understand the industry and
competitors in order to make decisions and to
develop a strategy that provides a competitive
advantage that achieves continuing performance
results superior to competitors. At the same time,
functional managers need tactical information on
business development and customer problem solving. Tactical intelligence is generally operational
and on a smaller scale, not so centered on being
predictive. Tactical information includes competitors terms of sale, their price policies, and the
plans they have for changing the way in which
they differentiate one or more of their products
from competitors. Functional managers such as
marketing and sales managers are the main users
of tactical intelligence.
Often, KINs are broad and requests are not well
articulated, thus making the second phase of the
cycle (gathering) particularly important. Before
the intelligence process can effectively begin,

agreement must be reached on the parameters of
the specific intelligence request in terms of exactly
what is sought, the required time frame, and any
constraints such as budget and confidentiality
(Prescott, 1999).
Many organizations choose to focus on competitor moves, industry conditions, customer
needs or pricing as KINs. Other KINs may stem
from the organizations mission statement or
long-term objectives.
CI professionals should continuously determine the KINs of managers. This is very important for a number of reasons, because KINs
(Evans, 2005):
Provide focus for the overall CI programme

within the organization.
Give insight into what resources are neededcritical skills and external sources of
information.
Allow categorization of intelligence requirements to enable planning and organization
of the CI program.
Reduce duplicative efforts since KINs may
overlap and complement one another.
A number of companies have focussed on the

identification of KINs (for example, Motorola
and Merck) (Herring, 1999). Motorola earmarked
money to improve the flow of critical CI in the
organization. When the intelligence team found
that Japanese manufacturers were shifting their
budgets from manufacturing to research and development, Motorola acted by shifting a portion
of its own research and development effort to
Japan in order to participate in the new environment. At Merck the internal CI Group identifies
and prioritizes KINs. This allowed management
to allocate resources to win or hold market share
in the future environment and maximized return
on investments. This ensured that intelligence
operations were effective and appropriate intelligence was produced. Senior managers within
organizations are demanding informed/accurate

intelligence, and are requesting that it be made
available at the earliest opportunity. An early
warning system will allow potential threats to
be identified and key players to be monitored
(Herring, 1999).
The accuracy with which KINs are identified will determine the eventual success of the
CI process. KINs should therefore focus on
issues considered critical to the success of the
organization.
hoW to brEAk doWn kIns Into

gEnErAl And spEcIFIc kIns And
hoW to dEvElop tAskIngs
A distinction can be made between a general KIN
(We need to know something about the logistic
capacity of competitors X and Y) and a specific
KIN (We need to know the number of trucks and
their capacity) (Vriens, 2004).
According to Calof (2004), KINs fall into
three categories:
Strategic KINs (for example monitor market

growth)
Early warning KINs (monitor the technology environment and predict what the major
change in technology will be)
Profile KINs (develop a profile on customers
or competitors to predict their moves)
Answering a KIN helps a decision maker to

make a decision. For example, in the case of a
company determining that the market is a good
one for it (strategic KIN), this should result in
a decision for it to enter the market. A strategic
KIN may also be, What is the detailed global
position of your organization and that of your
competitors?
For an organization, predicting that there
will be a change in local buying should allow it
to decide what changes to make to its own poli-

cies (early warning KIN). Another example of an

early warning KIN may be, What are you most
afraid your competitors might do in the next two
years to change the landscape?
It is the job of CI professionals to identify the
organizations KINs, for example tracking competitor market share might indicate a growth in
market share and therefore a raised threat to own
market share (profile KIN) (Calof, 2004). Another
example of a profile KIN is: What actions have
your competitors taken in the past two years that
have changed the competitive landscape?
Having identified the key topics needed is
only the first step in the CI cycle. Once the KINs
have been defined, existing knowledge must be
reviewed to determine where there are gaps in
the organizations knowledge. A collection plan
identifies what types of information need to be
gathered and from what sources. Information
collection has to be managed to ensure that all
potential sources of information are used effectively, internal and external sources are integrated,
and collection is cost-effective (Finegold, Carlucci
& Page, 2005).
Often, KINs are broad and requests are not
well articulated. Before the intelligence process
can effectively begin, agreement must be reached
on the parameters of the specific intelligence
request in terms of exactly what is sought, the
required time frame and any constraints such as
budget and confidentiality. For the CI professional,
interviewing skills that involve extensive probing
to determine the exact needs of management enhance the chance that the request will be properly
interpreted (Prescott, 1999). It is important to
identify and define general information requirements. These are the macro-level questions that
must be answered to satisfy the clients needs.
Action plans should be created from the
information gathered during the interviews. It
is the action plans that drive both the collection
and analysis operations that are needed to address
each KIN. Those who can potentially be sources
inside the organization should know KINs. To

ensure that the right information is collected (often

by marketers, employees attending conferences
and seminars, employees on trips abroadin
other words people who come into contact with
external, usually human sources of information),
the CI professional should draw up a list of taskings derived from the KIN (Muller, 2002a). This
pro-active approach to CI will require regular
meetings and surveys to assess the needs of the
decision makers.
kIns As thE dIrEctIon gIvEr

oF An orgAnIzAtIons cI
AnAlysIs EFFort
Analyzing KINs is very important. Intelligence
and insights are not achieved by directly answering
the KIQ, but by analyzing the information gathered as a result of researching the KIQ. Because
focus is important and time usually limited, the
CI professional should determine certain factors
such as the following (Muller, 2002a):
Is it a valid request or should other divisions

answer the request? For example, market
segmentation would rather be the work of
the market research department whereas an
analysis and comparison of the distribution
networks of competitors is a typical KIN.
What resources would be required to answer
the request? For example, project team, finances, time, and information search means.
This is necessary to ensure that deadlines
are met.
How to package the intelligence: Detailed
report? Brief presentation? A one-liner?
Time available?
It is the CI professional who will determine

what information is already available to answer a
KIN, determine gaps in the information picture,
knows where to find the missing information and
asks the specific questions to obtain the missing
information (taskings). Often, by consulting secondary sources, the intelligence database and the
Internet, the CI professional is able to answer a
KIN. Internal sources may also include (Muller,
2002b):
Marketers and sales persons (for information on distribution channels, pricing and
rebates, promotional material, and customer
comments on quality)
The company grapevine (personnel often
interact with the personnel of a competitor
at for example conferences, school events,
or other social gatherings)
Financial analysts (analysing the annual
results of a competitor)
Research and development (information on
latest technology trends)
Human resources (keeping track of recruitment drives)
Creating an analysis capability where products are delivered according to the KINs of the
organization will determine the success of the CI
function. It is important to recognize that each KIN
may require a different set of analytical models.
Suitable products should be identified and developed. These products need to be disseminated
to the clients in actionable format (Havenga &
Botha, 2003). Turning information into intelligence requires several analytical steps. First,
intelligence processing converts the information
into a form that is useful for analysis. Processing
might include validating data or writing summaries of key facts. Once CI professionals have
matched up the KINs to the appropriate analytical model, they can start collecting information
to feed the analysis. If CI staff start collecting
information before knowing which analytical
model to use, they tend to waste time collecting
the wrong types of information for the analysis
(Evans, 2005). Analysis then converts the raw data
and information into intelligence that answers
the organizations questions (Finegold, Carlucci

& Page, 2005). Analysis could also lead to some
KINs that management has not raised.
Once the analysis has been completed, the
results of the CI process or project should be
packaged and communicated to those with the
authority and responsibility to act on the findings. The intelligence that is presented has to
provide answers to the users questions or KINs.
If intelligence is not delivered, no intelligence
was created.
thE IMportAncE oF rEgulArly

IntErvIEWIng MAnAgEMEnt to
updAtE thE sEt oF kIns
The largerest driving force behind KINs should
be a dialogue between the CI professional and
management. If the CI staff do not know what the
needs are, they will not be sensitive to what they
should be looking for (Viviers & Muller, 2004).
KINs will naturally change with the perpetual
strategy of the organization and need to be updated
regularly to remain actual and critical.
In order to fulfil the main aim of providing
a constant flow of focused, timely, and accurate
intelligence that answers the KINs of the decision makers, organizations practising CI should
rather spend more time on planning the activity
and providing focus than on collecting, analysing
and interpreting the information.
As CI revolves around the analysis of CI and
should therefore be inclusive and cross-functional
by nature, frequent interaction amongst relevant
persons should take place. Regular communication with the customers (colloquiums or general
information briefing sessions) will help redirect
the CI project so that the final results deliver
exactly what management really needs. Regular
communication to users is important, such as unexpected delays, inability to meet due dates, and
other updates for the CI user (Evans, 2005). This

underlines the fact that CI is a continuous process

of requesting information, planning, collection,
analysis and production, and finally action.
It is important to know the CI users. Is the
user of the CI analytical or is he or she a rapid
decision maker with little time for analysis? If
the KINs will be used to make a quick decision,
then recommendations should be reported in a
very clear, concise, and specific manner. On the
other hand, if the KINs will be used for evaluating a major decision, then alternatives should be
included in the recommendation. The key point
is to meet the expectations of the decision makers. Different people make decisions in different
ways and good CI recognizes this (Evans, 2005).
Once intelligence has been presented, it invariably
leads to new KINs or a need for elucidation. This
underlines the fact that CI is a continuous process
of requesting information, planning, collection,
analysis and production, and finally action.
cAsE study
Just Wood is a well-established maker of indigenous wood furniture and has enjoyed over 30
years of business in South Africa. Just Wood
manufactures office furniture for the high-income
business market. Just Woods key competitor is
Office Mobile. For the last ten years, Just Wood
has undercut pricing for new furniture against
Office Mobile. Just Wood is known for its fast
manufacturing process of standard type designs.
This has enabled Just Wood to keep its prices
lower than those of Office Mobile. Just Wood
has a strong marketing focus regarding the South
African market and the local competitive environment. It has a countrywide dealer network and
each dealers financial statements are analyzed
on a regular basis. Just Woods customer base
includes government departments, corporate companies and embassies. Previously Just Wood, like
many other South African companies, was fairly
protected from the forces of global business, but

now it is suddenly part of a bigger, largely unprotected environment. A Danish company, Keplers,
is well known for very innovative and functional
office furniture. In January 2006, Keplers issued
a press release, indicating that it will market its
full range of products in South Africa.
Just Wood started CI operations in 1997, when
market research and other market information
were concentrated in one place, and on this basis
an information service was formed that since
2003 has been known as a CI unit. Just Wood
approaches its competitive position as part of an
open system comprising input, process, output,
and feedback within an environment. Its organizational structure can be described as a hybrid
intelligence system. Senior managements needs
are the overriding driving force in setting intelligence targets and intelligence methodologies for
the collection and analysis of information are fairly
consistent throughout the organization. Just Wood
requires accurate predictions of the future: what
products will be successful, what markets will
be attractive, what capabilities will be required?
The company chair manages the CI process and
a team of senior managers (product development
manager, marketing manager, financial manager)
conduct it. The CI unit consists of two workers;
one coordinating the market surveys and the other
working as an analyst, who gathers and combines
information and coordinates its accessibility.
CI plays a role in the companys growth
strategy and real-time information gathering
and analysis assist the company in making the
right decisions. Just Wood constantly nurtures
a culture of competitiveness and aims to ensure
that all employees know their CI roles and responsibilities. CI permeates the whole company
with participation and contribution from every
employee. Employees are regularly sensitized
to their CI role and function through monthly
meetings, where they are also provided with the
information needs requirements. The KINs of the
companys decision makers are known:
They need to know how to be different

in the industry, since innovation to attain
competitive advantage has become the differentiating factor (strategic KIN).
They need intelligence on suppliers and
their ability to supply on a continuous basis
(strategic KIN).
When a new competitor is considering
entering the market, Just Wood would like
to know about it long enough in advance to
be able to take effective counteraction and
to identify new opportunities or threats in
the relevant markets (early warning KIN).
They need to be aware of any change in
the relative strengths or weaknesses of Just
Woods rivals as they occur, if not before the
event (profile KIN).
These KINs are regularly communicated to

those that need to contribute information. Since
the KINs alter constantly, Just Wood realizes the
importance of revizing and communicating with
them regularly. Information on South African
related trends and issues, such as the impact of
legislation, labor regulations, and the export and
import market, are collected on a continuous basis.
Customer behavior and changing preferences, and
also the choice the present buyers can exercise,
require research into local buyer preferences and
lifestyle. Basic customer needs largely remain
unchanged; wants, however, change constantly
and unpredictably. The dealer network is the front
section that provides invaluable information on
market and customer developments. Sales are the
main source of primary information. Information is gathered by briefing and debriefing sales
employees on a monthly basis. These projects
are conducted without anyone being specifically
tasked. There are checks and balances including
incentives, in place to ensure that employees
gather information.
At Just Wood information is analyzed and interpreted before it can be used in decision-making.
The analyst in the CI unit is responsible for ana-
lyzing information. Cross-functional analytical

teams are developed for specific ad hoc projects
as and when required. The responsibilities of the
analyst are operational, namely to collect, collate,
and analyze information given the companys
KINs. Analytical tools are limited to industry
analysis and blind-spot analysis. The goal of CI
is not simply to gather information, but to create
actionable intelligence. In this case, competitions
product characteristics will not only be identified and compared with the companys, but an
optimal product will be created. The optimal
product will then be compared to the existing
product to determine if the company really have
the wherewithal to move ahead. A number of CI
products are produced to meet diverse needs.
Some are general and for all business partners and
some are for specific groups such as sales people,
business line managers, and senior management.
The analyst produces products that are delivered
daily, weekly, monthly, quarterly, and annually.
The goal is to leverage central information sources
but package CI products to meet the varying needs
of different user groups.
Information is accessible to all and only once
it is interpreted to draw effective conclusions
from limited data and to put together information
that does not often fit together at first glance, is it
translated into competitive advantage. Reports are
short, focused, to the point, and include:
Daily industry news

Competitive updates
Product category reviews
Competitor financial updates
KINs are regularly communicated to employees that might be in a position to provide useful
information through monthly meetings with
sales employees and e-mails. Outcomes of the CI
process are integrated into strategy and business
planning. Just Wood has a strategic intelligence
process based on strategic business issues, integrated into a business plan through a process of

constant input and a regular update of the business plan, keeping pace with constantly changing
variables. Industry analysis is a cataloguing of the
market competitive structure: substitute products,
new entrants, existing rivals and competition,
consumers/buyers, and suppliers. The analysis
is used to create a roadmap for Just Wood. The
roadmap is characterized by events that could
occur and should be planned for in the event they
come true. The roadmap is linked to Just Woods
business plan. The business plan is short, concise
and to the point and only contains the intelligence
necessary for proper strategic planning. Particular focus is afforded to customers and questions
such as how they see the future of the furniture
industry; customer preferences and what impact
this would have on sales.
Just Wood employees have a generally high
awareness of their CI roles and responsibilities.
The CI function provides insightful analysis
on the competitionwhere they are now, and
most importantly, where they are going. It also
provides insight on causes and likely future
outcomeswhy did things happen as they did,
what is likely to happen in the future, how can the
company capitalize. The CI function also assists
senior management in developing and reviewing
the identified KINs. Review is ongoing, alerting
senior management to issues not currently on its
agenda.
conclusIon
The KINs process is the most difficult task in
the CI cycle. It is the critical first step required
for identifying users intelligence needs, providing focus and purpose to the intelligence effort,
engaging users in the intelligence process, and
developing a sustained process.
KINs are the basis of CI and should have the
support of the whole organization, not just decision makers, as they form the foundation for the
organizations future. They overcome information
0
overload, determine and fill gaps and focus the CI

process. A KIN is the foundation of what decision
makers need to make decisions.
Effectively managing KINs in an organization results in continuous knowledge of events
and trends in the competitive business environment, making it possible to inform management
and employees in order to support the strategic
direction through value-added decision-making.
An effective intelligence report should always
contain a clear, concise, and objective message
that is responsive to original, actionable KINs.
It is only when the CI function is addressing the
KINs of an organization, and actually begins to
anticipate the organizations future intelligence
needs, that the company becomes an intelligent
organization. KINs change constantly. What is
valid today might be outdated tomorrow. CI is an
evolutionary process that takes years of honing
to come to fruition.
rEFErEncEs
Calof, J. (2004). Getting real value from trade
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Evans, M. H. (2005). Course 12: Competitive
intelligence (Part 2 of 2). Retrieved January 3,
2007, from http://www.exinfm.com/training/pdfiles/course12-2.pdf
Finegold, D., Carlucci, S., & Page, A. (2005).
How to conduct competitive intelligence in your
biotech startup. Retrieved January 3, 2007 from
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Havenga, J., & Botha, D. (2003). Developing
competitive intelligence in the knowledge-based
organisation. Retrieved Januray 3, 2007, from
http://www.saoug.org.za/archive/2003/0312a.
pdf
Herring, J. P. (2003). Identifying your companys
real intelligence needs. SCIP Online, 1(35). Re-
trieved January 3, 2007, from http://www.scipstore.org/scipstore.org-asp//news/v1i35article1.

asp
Johnson, A. (2006). The top 12 priorities for
competitive intelligence. Retrieved Januray 3,
2007, from http://www.aurorawdc.com/arj/cics/
priorities.htm
Marrs, R. (2005). Early warning signals: A
conversation for explorationPart 1. Retrieved
January 3, 2007, from http://www.coemergence.
com/news/pdf/Early_Warning_Signals_Conversation_Part1.pdf
Muller, M. L. (2002a). Creating intelligence.
Randburg: Knowledge Resources.
Muller, M. L. (2002b). Gathering competitive
information. Randburg: Knowledge Resources
Prescott, J. E. (1999, spring). The evolution of
competitive intelligence: Designing a process for
action. APMP, pp. 37-52.
Robinson, W. (2005). Defining your intelligence requirements. Intelligence Insights, 1(3),
7. Retrieved January 3, 2007, from http://www.
sla.org/division/dci/Intelligence%20Insights/IIJuly05.pdf
Sewlal, R. (2003). The effectiveness of the Web as

a competitive intelligence tool. Retrieved January
3, 2207, from http://general.rau.ac.za/infosci/
www2003/Papers/Sewlal,%20R%20Effectivene
ss%20of%20the%20Web%20as%20a%20comp
etitive%20intelli.pdf
Viviers, W., & Muller, M. L. (2004). A pharmaceutical industry player approach to competitive
intelligence. Competitive Intelligence Magazine,
7(1), 18-23.
Viviers, W., Muller, M. L., & Du Toit, A. S. A.
(2005). Competitive intelligence: An instrument
to enhance competitiveness in South Africa. South
African Journal of Economic and Management
Sciences, 8(2), 246-254.
Viviers, W., Saayman, A., & Muller, M. L. (2005).
Enhancing a competitive intelligence culture in
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Economics, 32(7), 576-598.
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www.bi-kring.nl/bi-kring/community/partners/
contentlev/abk/01chap.pdf

Chapter VIII
Awareness and Assessment

of Strategic Intelligence:
A Diagnostic Tool
Franois Brouard
Carleton University, Canada
AbstrAct
This chapter discuss the need for organizations to raise the level of awareness about strategic intelligence. It argues that improvement of awareness and scanning practices could be done by developing
a diagnostic tool. The diagnostic tool is an expert system that makes the existing strategic intelligence
practices and underlying processes more explicit and contributes to improved awareness of strategic
intelligence practices. Furthermore, the author hopes that presenting a diagnostic tool will help increase
the level of awareness and provide an assessment framework about strategic intelligence practices.
IntroductIon
Organizations are affected by every facet of
their external environment (Aguilar, 1967; Garg,
Walters & Priem, 2003; Peteraf, 1993; Raymond,
Julien & Ramangalahy, 2001). They need to be
more conscious of their external environment and
of how it may affect them. Management relied on
many systems including management board, organizational systems, and strategic systems. One
such strategic systems, strategic intelligence, is a
recognized way of anticipating changes. Strategic
intelligence could be defined as the output of the

informational process by which an organization
stays attuned to its environment in order to make
decisions and then act in pursuit of its objectives.
Even if strategic intelligence is around for many
years (Aguilar, 1967; Sun-Tzu, 1994), it is still an
abstract and a relatively unknown concept.
A managerial problem faced by managers
and consultants is how internal and external
participants can help organizations with their
strategic intelligence practices. Intervening
with organizations could take place in different
Awareness and Assessment of Strategic Intelligence
settings. The organization is aware or not of the

benefits resulting from strategic intelligence. The
organization can or cannot describe their actual
strategic intelligence practices. The organizations
on those settings have different needs regarding
their strategic intelligence.
The general perspectives of this chapter is on
awareness and assessment of strategic intelligence
practices. The paper is based on the assumption
that an organization will be better off if it uses
strategic intelligence as a management tool. Before
setting up those strategic intelligence practices,
managers should be aware of the benefits. They
should be able to evaluate how their existing
practices and where to focus their resources for
improvement.
The objective of the chapter is to underline that
strategic intelligence need a level of awareness
from managers and external consultants to fulfill
its role and that an assessment could improve
awareness and scanning practices. More specifically, the chapter will identify the problem of
awareness and assessment face by organizations,
define the awareness and assessment concepts,
state the importance of both awareness and assessment of strategic intelligence practices, describe
a solution to adress both problems, and propose
some future trends on the issues discussed.
The remainder of this paper is organized
as follows. The second section provides some
background information with definitions and
conceptual frameworks for strategic intelligence.
The third section summarizes both awareness
and assessment concepts of strategic intelligence
practices. The fourth section presents a possible
solution, a diagnostic tool developped in the small
and medium-sized enterprises (SME) context. The
fifth section proposes some future trends on the
issues discussed, and the final section presents
conclusions.
bAckground on strAtEgIc
IntEllIgEncE
A strategic intelligence system is an important
tool for managing the future (Tsoukas & Shepherd, 2004). The main issue is the survival of the
organization, which is threatened by uncertainties
created by the changing environment. Strategic
intelligence can be defined as the result of the
informational process by which an organization
stays attuned to its environment in order to make
decisions and then acts in pursuit of its objectives.
Through strategic intelligence, an organization
monitors information from its external environment that is relevant to its internal environment
(Aguilar, 1967; Bourgeois, 1980; Daft, Sormunen,
& Parks, 1988; Elenkov, 1997; Fleming, 1998;
Thomas, Clark & Gioia 1993). Terms used to
describe concepts similar to strategic intelligence
are business intelligence, competitive intelligence,
environmental scanning, and strategic scanning.
As the terminology is still in flux (Brouard,
2000), in this chapter strategic intelligence and
strategic scanning are used interchangeably as
comprehensive terms that include both results
and process.
Strategic intelligence or strategic scanning
can be viewed as a global process that is divided
into four more specific processes (Brouard, 2000;
Martinet & Ribault, 1989):
Technological scanning is concerned

with the technological dimension of an
organizations product, service, or production process.
Competitive scanning is related to actual
and potential competitors.
Commercial scanning involves the clientele
and supplier dimensions.
Socio scanning is concerned with all other
elements, including demographic, economic,
socio-cultural, political, and others.

Since strategic intelligence is a relatively new

area of research (approximately 40 years old), no
generally accepted conceptual framework exists
(Bergeron, 1997; Choudhury & Sampler, 1997;
Ganesh, Miree & Prescott, 2003; Zou & Cavusgil,
1996). Ganesh et al. (2003) describe the need for
a conceptual framework to facilitate progress in
this emerging field of research. Other research
proposes some conceptual frameworks (Choo,
1999; Ganesh et al., 2003; Jacob, Julien & Raymond, 1997; Liu, 1998). Based on the previous
research studies since Aguilar (1967), it is possible
to articulate a vision of strategic intelligence.
Strategic intelligence is a system that includes
subsystems. These systems are influenced by
information flows coming from the macroenvironment, stakeholders, and the organization itself.
The macroenvironment has many dimensions,
including demographic, economic, technological, political, legal, ecological, physical, and
sociocultural. Stakeholders are clients, suppliers,
employees, unions, partners, competitors, governments, media, lobby groups, and networks.
An organizations internal environment includes
its resources, culture, strategies, management
leadership, and structure. All these internal dimensions influence scanning subsystems such as
scanning resources, scanning culture, scanning
management, and scanning structure. Figure 1a
broadly illustrates strategic intelligence systems
and influences that affect them.
The strategic intelligence process itself includes three components: input, cycle, and output.
The inputs are the needs of the information users.
The outputs are the products resulting from the
scanning activities. Those products will influence
decisions and actions. Depending on the cycle
phases, these products can be data, information,
or knowledge. The scanning process itself, called
the intelligence cycle could be divided in two
subcycle: the gathering cycle and the protection
cycle (see Figure 1b).
The gathering cycle has four phases: planning,
collection, analysis, and dissemination (Kahaner,

1996; Ghoshal & Westney, 1991; Hambrick,

1982; Miller, 2000; Peyrot, Childs, Van Doren,
& Allen, 2002). In the planning phase, the organization identifies the intelligence needs of its
management team. Collection is the acquisition
of relevant data. Analysis creates information by
linking data together and identifying patterns and
trends. During the dissemination phase, results
are transmitted to decision makers.
The intelligence cycle also included the protection cycle (Nolan & Quinn, 2000; Pattakos, 1997),
which is shown in Figure 1b. During the planning
phase of this cycle, organizations, knowing that
it is impossible and costly to protect everything,
identify critical assets and determine their protection requirements. Vulnerability analysis assesses the weaknesses that may exist in relation
to protection needs. Risk and threat assessments
estimate the potential effects of vulnerabilities
on organizational activities and serve as a basis
for designing protection and security measures.
Protection includes counterintelligence to safeguard information from others (including terrorists), and security to enforce the laws and protect
against criminal attacks (Francq, 2001). Both the
gathering cycle and the protection cycle include
a learning component at the end to evaluate past
actions and react accordingly for the future.
This global strategic intelligence process,
comprising the gathering and protection cycles,
can cover offensive or defensive actions. Examples of offensive action include collecting data
oriented towards identifying opportunities and
using disinformation as a means of protection.
An example of a defensive action that applies
to most protection and safeguarding measures
is collecting data oriented towards identifying
existing threats. These two dimensions are linked in their application and create a continuous,
dynamic flow. They may be viewed as two sides
of the same coin, or as the yin and yang of the
strategic intelligence process. For example, increased dissemination within an organization
provides more information to competitors unless
Figure 1. (a) Strategic intelligence process and flows, (b) intelligence cycle
Macroenvironment
Senior
management
Resources
Scanning
management
Scanning
resources
Strategic intelligence
Strategies
INPUT
needs
CYCLE
OUTPUT
products
Stakeholders
Decisions
and actions
Scanning
structure
Scanning
culture
Culture
Structure
2006, Franois Brouard
(a)
CYCLE
CYCLE
DEFENSIVE/OFFENSIVE
OFFENSIVE/DEFENSIVE
Vulnerabilities
Analysis
Risk and Threat

Assessments
Protection
Cycle
Collection
Planning
Protection
Measures
Gathering
Cycle
Analysis
Dissemination
Learning
(b)

protection measures are in place to control or limit

this information dissemination.
This conceptual framework illustrated in Figures 1a and 1b is a synthesis of previous research
and of other frameworks proposed by Auster and
Choo (1994), Choo (1999, 2001), Elenkov (1997),
Julien, Raymond, Jacob, and Ramangalahy (1997,
1999), Liu (1998), and Vandenbosch and Huff
(1997).
concEpts oF AWArEnEss And

AssEsMEnt
Both internal managers and external consultants
want to help organizations with their strategic
intelligence practices. Intervening with organizations could take place in three different broad
settings (Brouard, 2004a). First, the organization is not aware of the benefits resulting from
strategic intelligence. Second, the organization
pretend practising strategic intelligence but they
cannot describe their actual practices. Third, the
organization practices strategic intelligence and
they can describe their practices.
The first setting indicate a need for a general
awareness of the strategic intelligence concept.
The first two settings require an assessment
to make the underlying processes inherent in
strategic intelligence more explicit. Therefore,
those two issues, awareness and assessment, are
important enough to discuss their importance and
to briefly explain both concepts. The third setting
could be useful for theory building and for best
practices examination.
concept of Awareness
Facing different settings, organizations should
be aware of the strategic intelligence activities
and their benefits (Bulinge, 2002, 2003; Larivet,
2002). Awareness refers to a better knowledge of a
topic. It refer to a conscious state of the underlying
concept by accumulating some knowledge.

Being more sensitive is an essential condition

to proceed with investment and implementation
decisions of strategic intelligence practices. Without the awareness, organizations will probably
not decide on the resources to allocate for those
activities and will probably neglect those types
of activities and will lose their benefits.
Strategic intelligence is a very abstract concept.
SME managers are not very aware of the importance of strategic intelligence and prescriptive discourse are not very effective (Lesca & Raymond,
1993). Research results show that organizations,
especially small and medium-sized enterprises
(SMEs), should be aware of and sensitive to strategic intelligence and its benefits (Bulinge, 2002,
2003; CNRC-ICIST, 1999; Larivet, 2002; Lesca
& Raymond, 1993; Raymond & Lesca, 1995).
They benefit from investing in and implementing
effective strategic intelligence practices, and they
need tools to help them to assess their existing
practices.
concept of Assessment
With all the environmental changes, there is a
need for organization pilotage. Based on Selmer
(1998) and Genelot (1999a, 1999b), there are four
levels of pilotage: exploitation, management,
evolution, mutation. Strategic intelligence can
be described as a tool used at the evolution and
mutation levelsit supports the development
of strategy, provides a medium- and long-term
perspective, and focuses on external activities.
As such, strategic intelligence is a distinct information system. It could be compare with another
well known information system: accounting. Accounting can be described as a tool used at the
management level to achieve more control, gain
a short- or medium-term perspective, and focus
on internal activities.
Assessment is not new and could be included
in the larger movement of organizational performance (Eccles, 1991; Garstka & Goetzmann,
1999). An organization needs to know where it
stands on different practices, so they can improve. Improvement will mean continuing and
contributing to increased use of suitable practices.
Without assessment, organizations will not be
able to focus on activities they need to achieve
their strategic goals.
Assessing the strategic intelligence practices
will allow an organization to compare their actual
state and a desired state. The comparison will
target specific activities and will prioritize the
action needed. The desired state could be an ideal
state based on the best practices or based on the
fit between the strategic intelligence activities
and the specific needs of an organization. The
assessment scope could be more global or more
specific.
ExAMplE oF A dIAgnostIc tool
need for a solution
An expert system is a computer program that

creates solutions to problems using the human
knowledge integrated in a knowledge base. A
prototype is a preliminary version whose development is not complete. An expert system has four
main components: a knowledge base, an inference
engine, a user interface, and a knowledge-acquisition interface (Benfer, Brent & Furbee, 1991).
When an expert system is being developed, the
primary focus is on elaborating the knowledge
base and rules that will govern the system, and,
in this case, a questionnaire to bring data into
the system.
The tool developed is an expert system that
performs a diagnosis of strategic intelligence
practices in SMEs. Figure 2 illustrates the expert
system on intelligence scanning architecture. A
firm, in our case an SME, filled a questionnaire.
The data in the questionnaire are included in a
database programmed with Microsoft Access.
The expert system process the data and provides
a report to the firm.
The expert system architecture described
uses a questionnaire to collect data on a specific
organization, in our case SMEs. A 32-page questionnaire covering all strategic intelligence themes
was developed. The questionnaire was based on
As discussed, intervening are faced with at least

two problems (Lesca, 1994; Lesca & Rouibah,
1997). Looking at both problems, it is possible
to develop a solution that will provide help for
both issues mentionned, on one hand, awareness problem and on the other hand assessment
problem.
The solution proposed is the development of a
computerized diagnostic tool. The tool will cover
both problems. Using the tool will increase the
awareness of strategic intelligence practices and
will report an assessment of the practices.
The idea of computer tools to help strategic intelligence is not new. The difference is the depth of
the diagnosis produced. Lesca and Rouibah (1997)
and Lesca (2003) present some computer tools
developed by the Lesca research team in Grenoble,
France. We could mention PERTINENCE on
the relevance, CIBLE on targets, SELECT and
OASIS on selection, PUZZLE on sense creation
and FENNEC on diagnosis. Consultants have
also developed some tools or methodologies. The
availability of these tools varies.
In the context of the management of strategic

intelligence, some techniques are needed. Those
techniques could use or not available technologies,
for example, a manual or computerized system
of dissemination. The solution developed is a
diagnostic tool using an expert system to evaluate
strategic intelligence practices of SMEs. The tool
is only at the prototype stage at this point and still
in development. The following discussion will
only provided a brief overview of the tool (see
Brouard, 2002, 2004a, 2004b, 2005, 2006 for
more information on the development).
Expert system

the concepts and variables identified and included

sections representing the components identified
(see Figure 3). Answer formats were mostly 5-point
Likert-style questions (1, 2, 3, 4, 5), dichotomous
(yes/no), or multiple-choice. The questionnaire
is designed to take approximately 60 minutes to
fill. Examples of some questions could be seen
in the appendix A. The complete questionnaire
is available upon request to the author.
Methodology
The research method used for the development of
the diagnostic tool is action research, specifically
prototyping of an expert system. Action research
can be defined as follows:
Action research simultaneously assists in practical problem-solving and expands scientific
knowledge, as well as enhancing the competencies of the respective actors, being performed
collaboratively in an immediate situation using
data feedback in a cyclical process aiming at an
increased understanding of a given social situation, primarily applicable to the understanding of change processes in social systems and
undertaken within a mutually acceptable ethical
framework. (Hult & Lennung, 1980, p. 247)
Prototyping is an approach to building information systems which uses prototypes (Beynon-Davies, Tudehope & Mackay, 1999, p. 108).
A prototype is a preliminary working model of
an information system (or part of it). Prototyping
is a relevant approach for expert systems when
problems are unstructured, like strategic intelligence (Zahedi, 1993).
Using action research, the development of the
prototype could be conceived as a spiral which
is circular and a perpetual process (Baskerville,
1999; Susman & Evered, 1978). Five steps are
suggested by Susman and Evered (1978), namely
diagnosis, planning, action, evaluation, definition
of new knowledge. With multiple iterations, it is
possible to refine the prototype as we go along.
Figure 2. Expert system on scanning architecture
Expert system on scanning
Firm (SME)
Visual Basic
Visual Rule Studio
Inference
engine
User
interface
Report
Diagnosis
Researcher
Access
Questionnaire

Database
Knowledge
base
Knowledge
sources
(experts)
Figure 3. Strategic intelligence diagnostic structure
General
diagnosis
Scanning
types
Technological scanning
Commercial scanning
Competitive scanning
Socio scanning
Scanning
context
Scanning structure
Scanning culture
Scanning management
Scanning resources
Scanning
organization
Scanning approach
Scanning formalization
Scanning frequency
Scanning integration
Scanning diversification
Scanning intensity
Scanning ethics
Cycle
Planning
Collection
Analysis
Dissemination
Evaluation
Red
Scanning
process
Yellow
Green
The research method used required two different samples, organizations (SMEs) and experts.
In the study, SMEs are defined as firms with
between 50 and 500 employees. Organizations
were used to develop case studies of their current practices and to evaluate those practices.
Experts contributed to the validation of the tool
developed and refined during the development.
During the prototype development, 6 Canadian
SMEs and 33 international experts (academics
and practitioners) were involved to prepare the
final version of the prototype.
Because of their characteristics, SMEs were

used in this study. Each of the six SMEs was the
subject of an individual case study. Three SMEs
are service organizationsmedical analysis,
personnel placement services, chartered accounting firm - and three SMEs are manufacturing
organizationssmall electrical appliances, metal
products, specialized machinery. The number
of employees involved varied from 60 to 410
employees. Another firm also participated in the
development of the initial questionnaire.
Table 1. Steps of the expert system development

1
Knowledge base development
Preliminary development and validation
Development and validation of the prototype
3a
Approach with the organizations
3b
Approach with the experts
Trial of the prototype
Analysis of the prototype

The diagnostic tool developed uses an expert

system shell, Visual Rule Studio 2.5 by Rules
Machine Corporation, and the programming
language associated with it, Visual Basic 6.0 by
Microsoft. Programming involves the development of a set of rules. A rule is a statement about
knowledge that links a condition and an action.
For example, a rule could look like: IF condition
happens THEN action X appears ELSE action Y
appears (IF-THEN-ELSE) (Turban & Aronson,
1998).
The development of the expert system could
be divided into five steps, all of them repeated as
needed following the action research spiral. The
five steps are described in Table 1.
In step 1, the knowledge base is created and
it is the foundation of the expert system; it also
includes rules. Globally, the prototype version of
the expert system on scanning developed has 588
rules, so far. Development of the knowledge base is
done using a literature review and the knowledge
of experts in the field. This task involved the identification of management problems specific to the
strategic intelligence practices of SMEs. Knowledge representation uses a semantic network
(Muhr, 1997) and rules production. Systematic
analysis of empirical studies yielded an inventory
of 150 studies related to strategic intelligence. In
addition to completing the semantic network, this
analysis allowed a look at the operationalization
of strategic intelligence variables. In total, 418
concepts and 539 relationships were listed in the
semantic network. Concepts and variables were
included in the questionnaire development and in
the expert system rules. Relationships between
concepts were also included in the rules. The
variables in the questionnaire were chosen based
on the expertise collected at this stage.
In step 2, during the preliminary development
and validation, we looked at the validation of the
research process and create the first working version of the prototype. More specifically, we could
mention design of the questionnaire, the rules and
the screens, and programming.
0
Step 3 is the heart of the development and validation of the prototype. Organizations (SME) and
experts are involved in two parallel processes for
testing and evaluation. On one hand, participating
organizations were asked to fill the questionnaire.
The questionnaire served as a basis to write a
case study. The case study was validated by the
organization.
On the other hand, experts were asked to look
at a written case study and to evaluate the scanning practices of that organization using their
own frame of reference. Comments were also
asked on missing or irrelevant data. Using the
researcher frame of reference (Figure 3), a second
evaluation was asked. After receiving the two
evaluations from the expert, the report prepared
with the expert system was sent to experts and
comments were asked.
Steps 4 and 5 involved the trial and analysis
of the prototype. A report was prepared using
the expert system and comments were collected
from the management team of the organization
involved.
report
The diagnostic report on environmental scanning
practices is the main output of the expert system.
This 22-page report includes a general description
of strategic intelligence and the tool being used
in this study, a summary of the traffic light signals, a brief description of the organization being
analyzed, sections on each diagnostic component
(general, scanning types, scanning context, scanning organization, scanning process), an action
plan that includes prioritized recommendations,
an outline of the perceived benefits of and barriers to environmental scanning, an appendix
explaining the diagnostic process, and a table
of contents. Appendix B provides a view of the
summary and the action plan sections.
Using traffic lights that combine the use of geometric forms and colors (square for red, diamond
for yellow, and circle for green) allowed the report
to be printed in black and white. These signals,

which are three-level codes (red, yellow, green),
are well recognized and understood. All rules and
decisions were calculated on a scale of 100. On
a scale of 100, green represent a score between
65 and 100, yellow represent a score between 35
and 65 and red represent a score between 1 and
35. The analysis of each diagnostic component
includes general comments, facts and specific
recommendations, including some suggestions for
implementation. The report was prepared using
Microsoft Word, so managers/consultants can
modify the report based on their own assessment
and format.
Based on the conceptual framework developed, this expert system diagnoses four main
components of environmental scanning: scanning
types, scanning context, scanning organization,
and scanning process. These components are
subdivided to bring a total of 26 indicators (see
Figure 3).
Scanning types present an analysis of the
four scanning types identified and described in a
previous section. Scanning types includes technological scanning on new technology, competitive
scanning on competitors, commercial scanning
on clientele and suppliers and socio scanning on
other elements of the external environment.
Scanning context refer to the internal environment of the organization, mainly structure,
culture, resources and management. Each component of the internal environment of the organization is linked with a corresponding scanning
component: scanning structure, scanning culture,
scanning resources, and scanning management
(see Figure 1a). The strategy is used to analyze
the fit between the level of practices and the
organization.
Scanning organization refer to how the strategic intelligence is organized. Scanning organization included: approach, formalization, frequency,
integration, diversification, intensity, ethics.
Focusing on the gathering cycle, scanning
process analyzed the different phases of the in-
telligence cycle (see Figure 1b), namely: cycle in

general, planning, collection, analysis, dissemination, evaluation.
preliminary results from the

diagnostic tool
The strategic intelligence practices of all the
SMEs studied needs improvement. Two organizations were found to be at the red level, four
at the yellow level, and none at the green level.
Previous studies have found that SMEs vary in
their strategic intelligence practices; the results
of this study are in accord with those findings.
Variations have been found (although not in this
study) among organizations at the green level, with
some SMEs using advanced practices. The results
of the CNRC-ICIST (1999) study on strategic
intelligence practices of Canadian organizations
found that some Canadian firms had world-class
strategic intelligence practices.
Overall, the general action plan and prioritized recommendations pertain to scanning
organization, scanning process, and scanning
context. Scanning types does not seem to pose
a priority problem. The specific action plan and
the prioritized recommendations vary among
organizations, but the areas that most frequently
require action are scanning formalization, and
scanning resources. Four of the SMEs used in
this study judged strategic intelligence as very
useful, and another judged it useful.
As an example, a firm have decided to change
their scanning process following a comment on
the security risks. Even if the managers were
already knowledgeable about the risks, the report
underline a specific risks with information dissemination.
Experts found the 32-page questionnaire to
be comprehensive. However, the time constraint
(one hour only) imposed for answering the questionnaire restricted response to nuances. The
research process was well accepted by both SME
executives and experts. This study provides a tool

that allows internal and external consultants to

consider a new methodology and compare it to
the one they currently use.
Finally, the tool could include the protection

side of strategic intelligence practices in addition
to the gathering cycle. As mentionned in the Figure 1b, the protection side is another promising
area of research.
FuturE trEnds
As the diagnostic tool is a prototype, there is some
need for more development on the diagnostic tool.
A number of research opportunities could be
mentionned to improve the proposed tool.
By increasing the number of small and medium-sized enterprises (SME), it is possible to
refine the tool. A greater number of organizations
in the database could also allow for examination of
some relationships between strategic intelligence
variables. Many variables could also explained
other management variables and practices.
So far, all the materials (questionnaire, menus,
and report) are developped in French. Translation
and adaptation in English should provide a broader
use of the tool.
It is possible to expand the diagnostic tool with
other types of organization (larger organizations,
nonprofit organizations, public sector entities).
Some parameters are already included but could
be enhanced. For example, specific weight are
included to differentiate manufacturing and
service business. More specific weight could be
included for specific industries.
It is possible to compare strategic intelligence diagnosis with a longitudinal perspective.
Adapting the tool could allow to compare many
respondents from the same organization. In our
research, one manager or a small group may have
completed the questionnaire. Many respondents
could underline differences between various
employees.
Another possibility is the development of a
Web-based application of the questionnaire and
the possibility to obtain the report. A web application will allow accessibility of the tool for a
larger population even at the international level.

conclusIon
All organizations should scan their environment
in order to be aware of the next threats and opportunities and to be prepared to react quickly.
As discussed by Bulinge (2002, 2003) and Larivet
(2002), awareness represent a challenge for SME.
It is probably true for all organizations. The proposed diagnostic tool provokes a dialogue and
interest toward an abstract concepts, strategic
intelligence. The tool provides a real artifact
to visualize a methodology. The tool allows an
examination and a critic to improve it.
By using the diagnostic tool, organizations
could assess their strategic intelligence practices.
SME feedback indicates that organizations find
the prototype very useful. The data elicited by
the questionnaire were useful with regard to the
overall management of the businesses as well
as to their strategic intelligence practices. The
diagnostic tool makes the existing strategic intelligence practices and underlying processes more
explicit and contributes to improved awareness
of strategic intelligence practices. The report
balances the needs of the SME executives by targeting important information, providing concrete
examples of action, and explaining the evaluation
results. The four main components of this expert
system are scanning types, scanning context,
scanning organization, and scanning process.
These components are broken down to form a
total of 26 indicators. Those indicators provide
a framework for organizing recommendations
and actions.
A mature expert system could provide reliable
assessment of the scanning practices and will
provide it for a wide range of firms, industries,

and types of organizations. Even if an expert
will probably always be necessary, the expert
system provide a structure to describe strategic
intelligence and therefore help the awareness of
the need for such management practices.
Given that this expert system is only a prototype, and in light of its complexity, the time
required and the limited sample size, it is far
from being a mature expert system (Delisle &
St-Pierre, 2003). This prototype is a first step
towards developing better strategic intelligence
practices for small and medium-sized enterprises
and large corporations. Further development is
needed. These efforts will increase our knowledge
in this area of expertise and provide executives
with a management tool that helps them deal with
uncertainties.
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AppEndIx A : QuEstIonnAIrE (ExtrActs)

Among the following elements of the external environment, circle on a scale of 1 (low) to 5 (high) the
level of importance for each element of the organization.
Low
High
- Technology
- Clients
- Suppliers
- Competitors
- Social context
(demography, ecology, political, legal, socio-cultural, economical )
For each statement regarding the scanning frequency, circle the appropriate answer.
If yes :
Scanning process is a continuous one.
no
yes
Scanning process is done punctually.
no
yes
The punctual frequency is:
low
medium
fast
Indicate the importance of your needs for specific information. For each information, circle the appropriate answer.
Not
important
Very
important
Information on:
n/a
new process
new equipments
materials
new products

Indicate the importance of some decisions for your organization. For each decision, circle the appropriate answer.
Not
important
Very
important
Decisions regarding :
n/a
strategic orientations
partners and suppliers search
mergers and acquisitions
crisis management
recruiting
financing
cost control
Indicate if your organization use the following source of information. For each source, circle the
appropriate answer.
Not
important
Very
important
Sources of information:
n/a
management or advisory board
managers
organization personnel
clients
suppliers
professional accountants (example. : CA)
[Questionnaire extracts reproduced with the permission of the author.]

AppEndIx b - rEport to FIrM (ExtrActs)

SUMMARY
STRATEGIC SCANNING
yellow
50
SCANNING TYPES
green
90
Technological scanning
green
90
Commercial scanning
green
90
Competitive scanning
green
90
Socio scanning
green
90
yellow
50
Scanning structure
green
90
Scanning culture
yellow
50
Scanning management
green
90
Scanning resources
red
10
green
90
Scanning approach
yellow
50
Scanning formalization
green
90
Scanning frequency
green
90
Scanning integration
green
90
Scanning diversification
green
90
Scanning intensity
yellow
50
Scanning ethics
red
10
yellow
50
Cycle
green
90
Planning
yellow
50
Collection
yellow
50
Analysis
yellow
50
Dissemination
yellow
50
Evaluation
yellow
50
SCANNING CONTEXT
SCANNING ORGANIZATION
SCANNING PROCESS
Note: Square = Red level (Action); Diamond = Red level (Improve); Circle = Green level (Pursuit)

dIAgnosIs scAnnIng typEs

Notes and recommendations :
In general, scanning types for the organization are at the green level (90).
It is a strength of your scanning activities. It is important to continue the existing practices.
The TECHNOLOGICAL SCANNING of the organization is at the green level (90).
It is important to continue the existing practices regarding technological scanning.
If needed, you could consider the following suggestions:

Prepare a table of technological changes.

Update regularly the table of technological changes.
Recognize the importance of technology which could bring innovation.
The COMMERCIAL SCANNING of the organization is at the green level (90).

It is important to continue the existing practices regarding commercial scanning.
If needed, you could consider the following suggestions :

Prepare a table to follow clients.

Update regularly the table to follow clients.
Recognize the importance of clients information.
Prepare a table to follow suppliers.
Update regularly the table to follow suppliers.
Recognize the importance of suppliers information..
ActIon plAn / prIorIty IntErvEntIons

The GENERAL PRIORITY INTERVENTIONS are the following.
General intervention No I : SCANNING PROCESS (51)
The organization could improve his scanning process.
General intervention No II: SCANNING ORGANIZATION (59)
The organization could implement practices to organize more efficiently strategic scanning.
The SPECIFIC PRIORITY INTERVENTIONS are the following.
Specific intervention No 1: Scanning ethics (19)
Strategic intelligence activity should emphasize on ethics elements.
Specific intervention No 2: Scanning approach (26)
An effort should be done to adapt the approach to needs.
[Report extracts reproduced with the permission of the author.]
0

Chapter IX
Gaining Strategic Intelligence

Through the Firms
Market Value:
The Hospitality Industry
Juan Luis Nicolau
University of Alicante, Spain
AbstrAct
This chapter uses the market value to assess the different factors and actors that influence the firm performance. The market value of a company, obtained from the stock exchange, can be used to both, detect
and measure the impact of elements of the role, market, and far environment. The empirical application
analyzes the hospitality industry that is currently facing an increasingly complex business environment:
apart from the terms uncertainty, complexity, and dynamism that shape the environment, in this industry
the concepts of munificence and illiberality are strongly applied. This procedure can aid in scanningrelated activities, as the analysis shows that environmental events are recognized quite well.
IntroductIon
According to the theory of open systems, Selznick
postulated in 1948 that organizations are cooperative systems constituted of individuals interacting
in relation to a formal system of coordination.
This structure is an adaptive entity reacting to
influences upon it from an external environment.
In order to maintain this system, the organization has to be awoken to, for instance, potential
encroachments undertaken by competitors, and

be able to forestall rivalry movements, thereby
avoiding deleterious consequences. Therefore,
the organization must be mindful of the world
in which it exists and competes, since in order
to survive it must adapt. Central to this approach
appears to be the concept of homeostasis, which
means that the organizations system pursues to
remain stable in the face of a changing environment (Thompson, 1967).
Gaining Strategic Intelligence Through the Firm's Market Value
However, this objective of stability implies

the detection of all kinds of events affecting the
organization as well as the quantification of their
impacts. Although the first is a relatively attainable task, the second is more complex. In fact,
Olsen, Murthy, and Teare (1994) point out that,
in general, many decision-makers still choose not
to devote much energy to the scanning of their
business environment because they are uncertain
about the cause and effect relationships which
exist between environmental events and firm
performance. On this account, Olsen, Tse, and
West (1998) state that, given that the concept of
strategic uncertainty becomes specially relevant
when it is expressed as the degree of variability in
any performance measure such as cash flow per
share of stock, managers should identify the forces
that cause variability in the firms cash flow, and
concentrate on monitoring them and determining
their impact on this performance measure. With
this respect, this chapter proposes an approach
which explicitly takes these considerations into
account, as it models separately the impact that
different kinds of elements of the role, market
and far environment have on the present value
of future cash flows per share. For this purpose,
we formalize and apply a model that allows us to
analyze the environment on a daily basis, whose
main advantage is its ability to directly measure
the effects of environmental factors on firm performance; the main novelty is the way the projections the three types of environmental factors
are measured: they are not just mere perceptions
but money reactions based on expectations. It is
also important to note that this approach not only
detects the events affecting the organization but
it also quantifies their impacts.
This chapter carries out an empirical application in the context of the hospitality industry. This
industry is witnessing an increasingly complex
business environment, which involves looking

carefully at those factors influencing present

and future success. On the one hand, as Olsen
et al. (1998) point out, the growing number of
interdependencies among all elements of industry
structure will increase the need for managers to
expand their scanning activities to include monitoring forces driving change in items within the
environment. In fact, the ambiguity of the hospitality industry structure is strongly contingent upon
the specific area in which the firm operates and
its product specialization: in zones where small
atomized hotels coexist, the perfect competition
takes place; in others like the case of business
cities and particular resorts, the dominance of a
few chains results in an oligopolistic industry;
finally, monopolistic competition appears in the
hotel market where diversification strategy is a
key element in the rivalry game, specially when
it is developed through accessibility and extra
products offered to add value to the core product
as well as to help to differentiate it, in line with
the theory on supporting and augmented products
proposed by Kotler, Bowen, and Makens (2003).
On the other hand, the ever-increasing trend to
expand the business so as to boost the chains
image and to soar the market share, what in turn
leads to adapt and operate into different markets,
brings about an exhibition of a growing interest
in scanning activities.
The next section presents a conceptualization
of the environmental scanning and describes
the different components of the environment.
Also, the situation of scanning activities in the
hospitality industry is briefly analyzed. In the
third section, the formalization of the proposed
model is shown. The fourth section is devoted
to the empirical application, where the data, the
sample, and the operationalisation of the model
are described in the first place, to end up showing
the results obtained. Finally, in the fifth section,
the conclusions and managerial implications that
can be drawn are highlighted.
thE nEEd to scAn thE

EnvIronMEnt: spEcIFyIng thE
ElEMEnts
Environmental scanning is defined as the systematic methods used by a company to monitor
and forecast those forces that are external to and
not under the direct control of the organization
(Byars, 1987), implying a process through which
a firm includes the perspectives of outsiders in
the decision-making (Xu, Kaye, & Duan, 2003).
Given that the environmental factors and actors
can influence the future of the company, top
managers must envision their effects, to take advantage of opportunities and defend from threats,
and to measure their impact on performance. In
fact, Choo (1998) indicates that, to the extent that
a firms ability to adapt to its outside environment depends on knowing and interpreting the
external changes that are taking place, environmental scanning constitutes a primary mode of
organizational learning.
Insofar as strategic management attempts to
create a satisfactory future and help the organization to prosper, a main concern within this realm
consists of envisaging the most desirable future
and then, of making its stakeholders work together
to make this vision a reality. On this account,
strategic management tries to integrate activities
such as budgeting, planning, monitoring, marketing, reporting and controlling, by taking into
consideration, at the same time, the environment,
organizational capabilities, and firms purpose
and direction (Morrison & Wilson, 1996). Thus,
the analysis of the environment results in a key
element in the strategic context, since strategies
are made on the basis of what has happened, is
happening and will happen outside the company.
Therefore, the goal of environmental scanning is
to alert decision-makers to potentially significant
external threats (or advantages) before they have
developed and matured.
From a marketing perspective, the environment
is also a critical element in the decision-mak-
ing, given that its valuation and assessment will

strongly condition the market activities chosen
as well as the way they will be implemented.
At the outset, the environment was regarded as
a single entity, but later on it was broken down
into different realms (Daft, Sormunen, & Parks,
1988). Basically, the Marketing literature has
split it up into two groups: one being comprised
of those factors most closely related to the very
company, usually called micro-environment or
task environment; and another one which contains
the elements affecting all the firms as a whole,
also known as macro-environment or general
environment.
Xu and Kaye (1995) distinguish three groups
of environmental factors according to their immediacy to the decision maker: (1) role environment, which is comprised of elements that affect
the operations of firms in an immediate manner;
(2) market environment, which contains factors
related to the industry in which the organization
operates; and (3) far environment, with all factors with an influence on the individual market
players.
A priori, it seems to be easier to analyze the
elements closer to the firm (Olsen et al., 1998),
although it will be contingent upon the given industry and specific situation. As a matter of fact,
the necessity of scanning the environment is not of
the same degree in all kinds of industries. Indeed,
the effort devoted to analyze the environment is
conditioned by the concept of strategic uncertainty (Choo, 1998). The strategic uncertainty
is the need for decision-makers to scan events
in selected environments. It depends directly on
the importance that specific factors hold and on
the perceived environmental uncertainty (Daft,
1989), which, in turn, is relying on both, complexity or heterogeneity of external events that
are relevant to the firm, and the rate of change or
perceived dynamism which explains how rapid
changes occur in the organizations environment
(Child, 1972).

the hospitality Industry: thats

Another story
Apart from the terms uncertainty, complexity,
and dynamism that shape the environment, in the
hospitality industry the concepts of munificence
and illiberality are strongly applied (Olsen et al.,
1998). The former is referred to the growth that it
is potentially reached in the industry; in todays
hotel market does not seem to be possible to see
a great deal of expansion in next years, at least in
terms of the increase the industry experienced a
few decades ago. The latter has much to do with
the fact that the industry operates with services
where mistakes are more difficult to fix; that is,
in such a saturated market with clients more and
more exigent there is little room for bounty.
Therefore, the hospitality market deserves
great attention with regard to the environment,
since the capacity to identify the elements that keep
changing and affecting a hotel turn out to be of
special significance so as to operate efficiently on
this market. Like other industries, there is a need
to gather relevant information from the external
environment and turn it into knowledge that can
be widely used in managing firms. In general, it
is suggested that hospitality firms should have a
formal environmental scanning system; however,
within this sector, this task becomes complex.
Okumus (2004) has identified a number of challenges of employing a formal environmental
scanning approach in the hospitality industry:
(1) the definition of a sole external environment
is not readily specified since every manager has
a different understanding of the firms external
environment; (2) the difficulty of predicting the
future leads to some authors to suggest that, rather
than focusing on forecasting the future, hospitality organizations should develop competencies
to adapt to the changing environment; (3) the
difficulty of determining the appropriate information and how to interpret it; (4) the detection
of opportunities or threats is depending on the
type, size, and ownership structure of the firm, as

different environmental factors can have distinct

implications on the various types of hospitality
companies (e.g., the effect of the power of tour
operators on hotels is clearly stronger in destinations where individuals buy tourist package than
in destinations where individuals organize their
travel independently without intermediaries); (5)
sometimes it is difficult to differentiate whether
opportunities and threats appear and come to
the firm, or it has to identify them; (6) problems
with utilizing a formal top-down and inside-out
approach, since: one, it can reduce creativity at the
lower levels of firms as the establishment of a scanning unit can give the impression that low-level
managers suggestions are not considered; two,
many of the hospitality firms are family businesses
whose owners do not have formal qualifications;
and three, focusing in only certain areas factors
in the external environment can be jeopardizing;
(7) hospitality firms should use environmental
scanning to develop long-term planning as well
as to solve problems on current operations; (8)
the difficulty of confirming a superior economic
performance of firms which implement scanning
activities; (9) the difficulty of introducing scanning
activities in companies whose managers have long
relied on their entrepreneurial intuition; and (10)
the previous reasons make difficult for a scanning
unit to survive in hospitality organizations.
Olsen et al. (1994) find, in a study on multinational hotel chains that hotel firms tend to scan
the environment, but there exists variability in the
type of scanning activity. There is also a stronger
focus on the short-term issues, being directed at the
high-impact concerns of the economy, financing
and customer needs and wants. Lastly, regarding
outstanding aspects as the technology and the
movement towards the natural environment, the
first is considered to be one of the most volatile
categories of the environment and the second is
regarded as an important force to deal with.
Thus, considering the amount of contribution
that the hotel component accounts for in total tour-
ism incomes, we devote the empirical application

to this industry within the Spanish framework.
Pt = d s (1 + i ) s + Pt + n (1 + i ) ( t + n )
ForMAlIzIng thE MArkEt

ModEl to scAn thE
EnvIronMEnt
where Pt is the price of the asset on day t, i is the

interest rate, ds is the dividend being paid in period
s, and Pt+n is the quantity the investor receives
when selling the share in period n. However, the
latter component can be easily discarded when
n as lim Pt + n (1 + i ) ( t + n ) = 0. Therefore, the
n
share price is expressed exclusively by the present
value of future cash flows (Schwert, 1981):
Traditionally, the techniques used to forecast the

influence of given environmental changes on
the firms performance, fall into two categories
(Aaker, Kumar, & Day, 1998): on one side, qualitative methods, which includes techniques such
as jury executive opinion, sales force estimates,
or the well-known Delphi approach. All of them
are flexible and can integrate large quantities of
information, but suffer from the biases, uncertainties, and inconsistencies inherent in the subjective judgments used. On the other, quantitative
methods, within which stand out the projection of
historical data through time-series analysis and
causal models; although they work adequately in
the short-term, they are not capable of properly
depicting turning points where the environment
changes.
In the face of this amalgam, the approach proposed here takes advantage of both quantitative
and qualitative methods. First, it is operationalized by means of the ground statistical properties
provided by portfolio theory; and second, which
in turn turns out to be a superiority of this approach, it is based on reactions rather than mere
perceptions or intuitions; in other words, contrary
to other techniques in which respondents may or
may not be implicated in the firm,1 the analysis
of investors reactions implies observing how
they have put in movement their own money, so,
a priori there should be a higher degree of implication when making decisions about buying or
selling shares. In sum, we are focusing on real
decisions rather than opinions.
Thus, we start by the well-known share pricedividends relationship2:
s =1
Pt = d s (1 + i ) s
s =1
Dividends that shareholders expect to get in

each period are clearly contingent upon the different circumstances or events affecting the firm.
Therefore, we can incorporate into the previous
equality the information s referred to period
s, which might well influence the decision as to
dividends:
Pt = d s ( s )(1 + i ) s
s =1
Considering that s = {hs1 , hs 2 ,..., hsk }where hsk

is the amount of information on specific news k on
which future cash flows are relying, their impact
can be measured as:
Pt
sk ,k K s
s =1
d s (hs1 , hs 2 ,..., hsK )

(1 + i ) s
hsk ,kK s
s =1
Furthermore, in the same period of time, even

within the same day, different kinds of news may
be released, so we take the simultaneity of their
effects into account:
Pt
Ks
h
s =1 k =1
sk ,k K s
=
s =1
d s (hs1 , hs 2 ,..., hsK )

Ks
h
k =1
(1 + i ) s
sk ,kK s

where Ks is the number of different news released

in a specific period s.
Nevertheless, an individual is able to be aware
of the information available up to the present day
only, say day t; so, we add this restriction to the
model in such a way that the impact Kt of a given
group Kt of news items is expressed as:
=
Kt
Pt
Kt
d s (hs1 , hs 2 ,..., hsK )

Kt
s =1
tk ,k K t
k =1
k =1
(1 + i ) s
tk ,k K t
Considering that returns are defined as

P Pt 1 , it can be equalled to the previous
Rt = t
Pt 1
expression if it were expressed in relative terms.
To do this, we just have to take the prices in
logarithms in such a way that the price variation
Kt is arrived at by the expression:
Kt
Kt
Pt 1
ln Pt
tk ,k K t
Kt
k =1
without loss of generality, the unity we obtain

that Rt = Kt.
Notwithstanding, we are interested in determining the specific impacts of each and every
one of the environmental episodes rather than
the joint impact. Thus, assuming separability of
effects we can break the parameter Kt down into
several sub-parameters, representing each of them
those specific events:
t1
t2
+ ... +
tK
Kt
where Kt is the error term that accounts for the

deviation derived from such a breaking. Note that
these parameters are the core of the analysis as
they provide us with the relevant information as
to the existence and importance of an event. The
existence of an effect derived from a news item

n = J +1
k = N +1
K > N > J
Therefore, given that htk ,kKt can equal,
j =2
Kt
k =1
Kt
is viewed by the statistically significance of the

coefficients and the importance can be observed
by the amount of a specific coefficient.
H av i n g d e m o n s t r a t e d b efo r e t h a t
Rt = t1 + t 2 + ... + tK + Kt, in order to represent
the time in which the information is being released
a dummy variable is included, in such a way that
Rt = t1 + t 2 xt 2 + ... + tK xtK + Kt where xtk takes
the value 1 if the k-type news item is occurring
on day t, and 0 otherwise.
Finally, taking the classification of Xu and Kaye
(1995) and re-arranging the effects it is possible
to distinguish a number of J-1 events belonging
to the far-environment, N-J industry-environment-related news and K-N events from the role
environment. In fact, at this point, this proposal
can be seen as an extension of the one proposed
by the author
elsewhere:
J
N
K
Rt = t1 + tj xtj + tn xtn + tk xtk + Kt
where Kt ~ N (0, ), calling t1 = the specific

risk, we can represent the far and industry environment effects by means of the influence on the
return Rt of both, a market portfolios return RMt,
which captures the impact of the general environment events on the economy, and an industrial R It
index which accounts for the global happenings
within the industry itself. Hence, according to
this, it is possible to set:
J
t1 +
j =2
tj xtj +
n = J +1
x =
tn tn
RMt +
RIto
where the RIto is the orthogonalized industrial index which is arrived at by the residuals obtained
from regressing R It on RMt, in such a way that
both effects -market and industrial- are not correlated, and M y I are the parameters that show
these effects.3
Given that this way of making the model
operational falls, indeed, into the framework
of multifactor models where several measures
of systematic risk are used (Martnez & Rubio,

1991), we can arrive at this expression by considering that Rit=ai+biR It+uit and R It=aI+bIRMt+uIt,
in such a way that Rit=ai+biaI+bibIRMt+biuIt+uit.
Therefore, making ai+ biaI =i, bibI=Mi, bi=Ii
and uIt=RIto, we obtain that Rit=i+MiRMt+IiRIto
+uit, where cov(uit,RIto)=0, which is the so-called
diagonal index model or orthogonalized multifactor model. In particular, the proposed formalisation can be seen as a two-factor model where the
K
disturbance ut is equal to
t
Kt
~ N (0,
x + t, being
tk tk
k = J +1
), where
accounts for the
facts that are not observable by the analyst.

Assets returns on a specific day are arrived at
by anticipated and nonanticipated events. The former are incorporated into investors expectations
through systematic factors affecting the economy;
the latter, however, are the ones, which ultimately
form the returns. Contrary to the systematic factors, these are called idiosyncratic elements as
they have an effect on a given firm in particular
and not on the global economy. Evidently, these
nonanticipated events are not known a priori, but
it is possible to appraise the securitys sensitivity
to such news (Roll & Ross, 1984). In this sense,
K
the composite element
k = J +1
x represents an at-
tk tk
tempt to model nonanticipated events impacting

on the chains performance.4
Additionally, so as to stabilize the model we
incorporate the possibility of structural changes,
allowing the parameter to vary along time. Hence,
the expression that allows one to operationalize
the model is:
G
Rt =
g =1
k = N +1
g Dg +
g =1
x +
tk tk
Mg RMt Dg +
g =1
Ig
RIto Dg
where the variable Dg takes the value 1 if day t

belongs to the quarter g=1,,G.5 The convenience
of including this structural effect is examined

by testing the null hypotheses of equality in the
parameters: H0: 1=2 =...=14 (H1: 12...14),
H0: M1=M2=...=M14 (H1: M1M2...M14) and
H0: I1=I2=...=I14 (H1: I1I2...I14). To do so,
the Chow test is employed. If it rejects the null
hypotheses, it means that, depending on the time
period considered, the effects of the independent
variables are different. To include this instability
in parameters, therefore, the relationship between
the dependent and the explanatory variables must
be modelled in a more flexible way. In fact, these
structural changes are sometimes inherent in the
stock-returns series (Cho & Taylor 1987; Gultekin
& Gultekin 1983; Rozeff & Kinney 1976).
EMpIrIcAl ApplIcAtIon
data, sample and operationalization
of the Model
A series of data is gathered from a hotel chain
publicly trading in the Spanish Stock Exchange,
ranging from July 2, 1996 to December 30,
1999. To be precise, this is the leading chain in
Spain, Sol Meli, with an average assets of about
3,051 million and a number of hotels of 29,000
plus. As to the period study, the upper threshold
is determined by the data availability and the
lower by the day the chain started trading in the
stock exchange.6 All analysis and simulations
carried out subsequently will be obtained from
this study period.
These data consist of two types: First, the daily
returns the asset is reaching during this period are
collected, which are adjusted by dividends, capital
increases, and splits, so that they are expressed by
Rit=Ln(PtSFt+rt+dt)LnPt-1, where Pt is the price,
SFt the split factor, rt the suscription right and dt
the dividend paid, all of which refer to day t.
For the second type of data, we look at newspapers to find news related to the chain (This task
has been done by means of the Baratz database,

which provides information on headlines and a

summary of news items published in 28 different
newspapers of national and regional coverage, as
well as those of general and/or specialised content).
We first look for events related to the firm (49 new
items);7 once they were identified, we group those
belonging to the same type; and finally, we coded
them by employing dummy variables. For the sake
of simplicity we will focus on the role environment
items; specifically, those news items detected in
the period of study are the following:
1.

Items from independent organizations

(sometimes called interest groups in the
micro-environment framework), such as
publications of rankings of hotel companies,
both nation- and world-wide, and sundry
awards granted to the chain by private
organizations and public entities. Rankings
of hotel companies are published in order to
show the best chains in a specific feature.
Sometimes it comes to imply that the firm
is standing at the very first position which
help the company gain extra prestige (for
example, Sol Meli has been published to be
the first Spanish chain in terms of number
of both, urban and vacation hotels); on other
occasions, however, it implies that the organization is ranked among the first members
of a group, but not occupying the top. This
is a positioning strategy -exclusive-club
strategy- which is frequently used in promotion campaigns, especially when it includes
firms from all over the world, since it means
that its lodging establishments are part of a
selected best chains. On this account, they
should have a positive impact on the wealth
of investors insofar as it involves gaining an
edge over the rest.
Concerning the awards granted, it refers
to several prizes given to the chain by both
public and private entities regarding sundry
realms such as natural environment management which implies being viewed as
2.
3.
4.
an environmentally-friendly hotel, quality

certificates which assure the fulfilment of
established requirements, or when the chairman of the chain is named as the Worlds best
hotelier, and so forth. Given that these awards
help customers reduce, to some extent, the
uncertainty inherent in all transaction, it
should be expected a positive effect since
they guarantee that is working efficiently
and providing a high-level service.
Competitors events such as breaking deals.
It refers to an alliance that the chain signed
with a public Spanish cruise line to manage
some of their cruise ships. However, this
agreement ran aground when the chain
perceived that the public organization was
benefiting from its management abilities
and did not have intention to renew such
an alliance. This fact should be viewed as
nonfavourable for future expectations.
Natural disasters, such as hurricanes. Regarding news related to natural disasters
(in particular, hurricanes) affecting hotel
properties, it is obvious that they will have
a negative impact on the performance of
the organization. When developing an assessment of these events in a nation-wide
analysis they are generally included into
the macro-environment as it takes all the
national firms into account; however, in this
case, considering the whole big amount of
investments that the chain has in Central
America, they have a specially exclusive
effect on this hotel company (among the
Spanish firms), so that they might well be
viewed as an element of the micro-environment in such a way that their consequences
have to be forestalled and mitigated by the
very chain.
Governmental laws, within which two
interesting kinds of legislation items are
encountered: those groups of news referred
to the Helms-Burton Act and those to the
Ecotax law. As far as the Helms-Burton
5.
Act is concerned, the possible sanctions to

organizations having commercial relations
with the Cuban Isle and the firms sited there,
should have a deterrent influence on investors expectations about future cash flows,
given that they would imply that the chain
has to face extra costs. Another legislation
item affecting directly on the hotel company
is the Ecotax law. This was a law which
taxed on stays in lodging establishments
from the Balearic Isles and whose revenue
was devoted to recover and renovate natural
resources and heritage. The taxpayer was
the tourist lodged in a hotel or the like; in
fact, there was a typology of taxes for each
kind of lodging facilities (for instance, 2 for
five-star hotels and 0.5 for one-star hotels
per day). Its effects were considered to be
contradictory, in the way that it was stated
that it would permit to attain a much more
quality tourism since overcrowding would
be controlled; however, managers of tourism companies used to claiming that this
tax represented an increase in prices and
it would ultimately bring about a decrease
in demand, thereby cutting down their incomes.
A number of news which affect directly to
shareholders that must be explicitly considered, such as announcements of tenders and
public offerings, declaration of profits, dividend publication, splits, increases in capital,
and the well-known Monday and January
effects. These issues are directly related
to the stock exchange itself, and, as such,
they are not considered as external factors
in the framework of this study. However,
they are included to ensure consistency in
the estimation of all the other parameters,
because they can lead shareholders to buy
or sell driven by merely speculative movements. These variables are also introduced
through dummy variables.
Therefore, the operationalization of the model

is arrived at through the expression:
14
Rit =
g =1
+
k =1
14
tg
Dg +
g =1
16
xkt +
k =7
14
Mg
xkt +
RMt Dg +
Ig
g =1
RIto Dg
where xkt k{1,...,6} are the variables of environmental events and xkt k{7,...,16} are the items
related to the stock exchange issues that must
be controlled. The other variables have already
been defined. Finally, an aspect to be taken into
account is the error term. t may be comprised
of two different kinds of effects, t =t+t: on the
one hand, the error term includes the measurement error t in the estimation, and on the other,
it also considers unobserved news items t, which
have been overlooked by the analyst, (e.g., items
not published in the newspapers reviewed, or
items released in other forms of news media).
To mitigate their effects as far as possible, two
dummy variables represent the kinks in the series
of returns that are either too high (x17) or too low
(x18), that appeared in the residual plot outside a
1% threshold on days where unknown information
is supposed to be released. The final expression
is therefore as follows:
14
Rit =
g =1
+
k =1
14
tg
Dg +
g =1
16
xkt +
k =7
14
Mg
RMt Dg +
g =1
18
Ig
xkt +
k =17
xkt +
RIto Dg
results
By applying the Chow test to the global regression
and the individual parameters it was found that
the parameters that present structural change are
those referred to the market and the industry. To
be precise, we get an F equal to 5.38 for the global
parameters, and 1.14, 21.47, 3.13, respectively,
for the specific risk, the market and industry
parameter.

0
0.098***
-0.013
-0.029
-0.028
0.009
-0.073**
H-B Act
Ecotax
Tender
Public Of.
0.003
January
0.033
0.062
0.026
-0.003
-0.004
-0.003
-0.003
0.008**
-0.003
0.003
-0.003
-0.008
-0.040
-0.003
-0.012
1.000
Ranking
Note: * p<0.1; ** p<0.05; *** p<0.01.
0.002
Monday
-0.029
0.010
0.025
0.025
Splits
-0.005
0.023
0.025
-0.012
-0.049
0.025
Capital
Dividends
Profits
-0.007
-0.023
Hurricanes
0.016
-0.011
0.001
-0.006
0.020
1.000
Deal
Ranking
Industry
Awards
0.000
-0.040
Industry
1.000
Market
Market
-0.033
-0.044
-0.006
-0.005
-0.005
0.050
-0.001
-0.001
-0.005
-0.011
-0.005
-0.005
1.000
Awards
-0.009
-0.017
-0.002
-0.001
-0.001
-0.001
-0.001
0.001
0.001
-0.003
-0.001
1.000
Deal
-0.009
-0.017
-0.002
-0.001
-0.001
0.005
-0.001
-0.001
-0.001
-0.003
1.000
Hurricanes
-0.023
-0.007
-0.004
-0.003
-0.003
-0.011
-0.001
-0.001
-0.003
1.000
H-B
Act
-0.009
-0.017
-0.002
-0.001
-0.001
-0.005
-0.001
-0.001
1.000
Ecotax
-0.125***
-0.017
-0.002
-0.001
-0.001
0.005
0.001
1.000
Tender
-0.009
-0.017
-0.002
-0.001
-0.001
0.005
1.000
Public
Offers
0.033
0.044
-0.006
-0.050
-0.005
1.000
Profits
-0.009
-0.017
-0.002
-0.010
1.000
Dividends
-0.009
0.069
0.020
1.000
Splits
0.013
0.037
1.000
Capital
-0.100
1.000
Monday
1.000
January
Table 1. Correlations among explanatory variables
This is done in order to make the model more

flexible. As stated above, these structural changes
are sometimes inherent to the stock return series;
however, in the present case, aside of the usual
explanations related to the quarterly or semi-annually publication of the profit and loss account
(which lead investors to react in the face of the
new information published on this economic
measure regarding the situation of the firms), a
possible reason of these shifts in the sensitivity
of the parameters concerning the market and the
industry is the strong seasonality in the tourism
market: depending upon the time of the year a
tourism firm will be affected in greater or lesser
extent by globally-economic specific events.
The possibility of existing colinearity was also
considered. Assuring that there is no correlation
among the explanatory variables is a critical issue
since otherwise, its effects would conceal an adequate and precise gauge of the parameters. Table
1 presents the correlations among such variables,
observing that their relation is very close to zero
in all cases. The higher is 0.125, magnitude that in
turn is far away to be considered jeopardizing.
However, and to make sure that these small correlations do not have any impact on the estimation,
we tried several alternative orthogonal regressions by dropping the 1%-significant correlated
variables, obtaining very similar results; that is,
we found that the parameters which appeared to
be significant were exactly the same in all cases,
presenting the same sign as well. Also, we test
for colinearity among variables by calculating
the variance inflation factor (VIF) for each of the
regression coefficients. The equation is well below
the cut off figure of 10 recommended by Neter,

Wasserusan, and Kutner (1985).
Table 2 depicts the parameter estimates. The
estimation has been done by means of OLS, and
the significance of the parameters has been obtained by calculating the variance and covariance
matrix of Newey-West which is robust in the face
of the residual correlation which is detected by the
Durbin-Watson and the Breusch-Godfrey tests.
Regarding the parameters of the far-environment
(M1=M2=...=M14) and industry-environment (
=I2=...=I14), it is observed that the effect of the
I1
first is more prominent than the influence of the
second. It is in accordance with the usual findings
that tourists are very sensitive in the face of changes
and trends of the global economy.
From a general perspective, the model seems
to catch every kink appearing in the series, which
in turn are due to the facts expressly considered
here. On this account, except for the Rank (1)
and Ecotax (6) events, the remainder of items are
affecting the returns, that is, they are influencing
the investors expectations on future cash flows.
In particular, the granting of awards (2) and
the breaking of a deal (3) are regarded as good
news, however, the Helms-Burton Act (5) and
hurricanes (4) are viewed as bad ones.
Therefore, in the light of these results, we can
describe the following: The parameter associated
to rankings is not significant; although a priori one
could expect positive reactions, a caveat to bear in
mind is that sometimes this kind of information
could have been previously spread by other means
(e.g., press conferences), thereby disseminating
the stock reaction over several days. However, the
Box 1.
Mg RMt Dg Ig RIto Dg k xtk
Rt
g =1
+ g =1
+ k = J +1
+ t
MVt 1 =
+
xtk
xtk
xtk
xtk
xtk
xtk
MVt 1 =
MVt 1

Table 2. Parameter estimates of the task environment facts

Variable
Parameter
Standard Deviation
-0.001**
0.000
M1
0.063*
0.037
M2
0.623**
0.265
M3
0.917***
0.237
M4
0.778***
0.097
M5
0.715***
0.178
M6
0.835***
0.105
M7
0.945***
0.158
M8
0.995***
0.138
M9
1.125***
0.102
M10
0.900***
0.144
M11
0.600***
0.110
M12
0.830***
0.240
M13
0.888***
0.115
M14
0.891***
0.166
I1
0.342
0.212
I2
-0.007
0.263
I3
-0.064
0.204
I4
0.164*
0.088
I5
0.091
0.144
I6
0.387**
0.183
I7
-0.291**
0.118
I8
-0.474**
0.236
I9
-0.071
0.141
I10
0.102
0.276
I11
0.158
0.124
I12
0.058
0.276
I13
-0.165
0.235
I14
0.120
0.165
1 = rankings
0.005
0.004
2 = awards
0.016***
0.006
3 = deal broken
0.015***
0.000
4 = hurricane
-0.010***
0.003
5 = Helms-Burton Act
-0.012*
0.006
6 = Ecotax law
0.000
0.003
7 = announcement of a tender offer
0.028***
0.003
8 = the day before the tender offer
-0.011***
0.002
9 = the day after the tender offer
-0.172***
0.003
10 = announcement of public offering
0.022***
0.001
continued on following page

Table 2. continued
11 = declaration of profits
0.009**
0.004
12 = publication of dividends
-0.010***
0.002
13 = split
0.034***
0.002
14 = increases in capital
-0.006***
0.002
15 = Monday effect
0.001
0.001
16 = January effect
-0.001
0.001
17 = kinks too high
0.039***
0.002
18 = kinks too low+
-0.035***
0.003
R-squared
0.644
Adjusted R-squared
0.624
F-statistic
32.18
Prob(F-statistic)
0.000
Note: * p<0.1; ** p<0.05; *** p<0.01. +17, 18 account for the kinks too high or too low appeared in the residual plot in days
where unknown information was released.
parameter related to awards is accepted at 1% of

significance, showing that investors rely on this
type of event which shed some light on the way
the chain is serving its customers.
An aspect that deserves special attention is
the economic value of the environmental events,
which appear to significantly explain the returns
of the hotel chain. On this account, the increase in
the market value MV derived exclusively from an
event, can be measured as shown in Box 1.
Where MVt-1 is the number of shares on day t-1
multiplied by the closing price on that day. In order
to illustrate the impact of the significant events,
we take the average market value estimated from
the study period as the benchmark magnitude,
which is 1,985 million. Therefore, the profits
obtained from the award-related newsstand at 32
million. A manager can observe this reaction and
obtain information on how much value investors
give to this award.
With respect to the deal broken, a positive
and significant effect is found. Although this fact
should be viewed as nonfavourable for future
expectations, it is important to point out that this
first foray into the cruise business led chains

managers to announce in the same news item,
their serious interest in this ever-growing market
segment, by taking advantage of their hotels sited
in Mediterranean port calls. So, in this news item,
managers of the hotel are showing to investors
that they are aware of the possibilities of opening
a door to this profitable business. This event is
worth 29.7 million. Hence, this diversification
operation is considered to be a value-creating
strategy. As expected, the parameter of hurricanes is accepted, raising the issue of establishing
measures to counteract the effects of such damaging happenings. Its impact on the market value
of the company is of -19.8 million. Among all
the events, this one seems to be quite obvious in
terms of its sign, impact, and consequences; the
fact that the model is catching its effects indicates
that it is working adequately.
Regarding the legal items, the one related to
the Helms-Burton Act is accepted at 10% only,
maybe due to the fact that until the date analyzed no sue had become a materialized sanction
(however, the change caused in the market value

stands at -23.8 million); and the one referred

to the Ecotax law, it is not significant at all. It is
important to point out that the announcement of
the possibility of establishing such a tax was in
1999, making it clear that, in that moment, it was
nothing but a declaration of intentions; so, there
were uncertainty as to whether this law would
finally be brought in.
Concerning the variables affecting directly
on shareholders wealth, all of them are significant. Some of these items have been examined
elsewhere for the Spanish case (e.g., earnings
announcements due to Arcas and Rees (1999),
publication of dividends by Espitia and Ruiz
(1996), tender offers due to Fernndez and Garca
(1995), splits by Gmez Sala (2001)); the fact that
in the present study are significant as in these
ones, shows some hints about the robustness of
the results. Hence, it is important to represent
explicitly these events in the model, given that
they have a strong impact on daily reactions.
Finally, with respect to the Monday and January
effects, none of them appears to be significant
for the return series of this chain. As indicated
previously, the purpose of introducing these finance-typed variables is not to strictly measure
their effect but to control that they do not affect
the estimation of the remainder environmental
variables. If no control is done, the market and
industry parameters could be overestimated or
underestimated, what would lead the model to
potentially consider normal returns in the face of
nonanticipated events when in reality they were
abnormal. The significant effects are presented
graphically on Graph 1 in order to show visually
their impacts.
The model accounts for a high percentage of
the variance of the dependent variable, which
stands at 64.4% by looking at the R-squared and
62.4% at the adjusted R-squared, being globally
significant at 1% by the F-statistic.

conclusIon
Understanding and quantifying the cause and
effect relationships which exist between environmental events and firm performance is crucial so
as to gain strategic intelligence. Managers should
identify the forces that cause variability in the
firms cash flow, and concentrate on monitoring
them and determining their impact on this performance measure. With this respect, this chapter
proposes an approach which models the impact
that different kinds of elements within the environment have on the present value of future cash
flows per share, in such a way that it is possible
to find a direct link between the environmental
factors and their effects on firm performance. This
approach not only detects the events affecting the
organization but it also quantifies their impacts. It
can be regarded as being both quantitative (as it is
based on the ground statistical properties provided
by portfolio theory) and qualitative (being based
on the investors expectations).
An important issue to be considered here is the
type of response observed from the investors. In
contrast to other techniques, in this method they
do not merely give opinions, but act according
to their perceptions, which, in this case, implies
deciding on how they invest their own money. As
this implies a high involvement for the investor,
it means that the measurements obtained must be
considerably reliable.
An empirical application has been carried
out in one of the most important elements of the
tourism industry, that is, the hospitality market.
The analysis shows that environmental events are
recognized quite well. A limitation to be considered in this procedure is that the analyst may not
always be able to obtain all of the information
that has been released, so that special care must
be taken to assure that no significant data have
been ignored. Bearing this caveat in mind, this
study has shown its effectiveness in analysing
such an environmentally-sensitive industry like

tourism.
Evidently, the core of the methodology is the
market value, which seems to be suitable for examining decisions concerned with the environment.
The most common way of evaluating the impact
of an event is to use accounting data, but considering the frequency with which such data are made
available, and the fact that sundry observations
would also be required, a long time interval would
have to be used to be able to measure the opening
effect. On the other hand, it is well-known that
accounting figures are not always reliable indicators of a firms true economic performance, due
not only to the diversity of accounting procedures
that exists, but also because of the CEOs discretion in choosing such a procedure. An alternative
way of measuring the surplus revenue that
comes from the event that is being analyzed is to
employ capital market data. Assuming a rational
behaviour of the investors, the share price should
reflect the firms real value. In other words, it
shows the present value of future cash flows, and
immediately changes in response to any fact that
could potentially affect them. Consequently, any
excess in returns found on a particular day arises
as a result of positive information. Hence, the
methods fundamental logic lies in the comparison
of real returns to expected returns, that is, to those
not being influenced by new information. Coding
new information by dummy variables allows to
explain the difference, if any, between the real
and expected returns.
The information obtained from this sort of
assessment can be useful to managers, not only
in evaluating how investors regard environmental
cause-effect relationships, but also in quantifying
their impact. As a kind of a future-oriented measure of cash flow, it can be useful, complementing
other environmental scanning procedures, for
managers analysing the future success of their
companies. This information could then be used
to determine which events are the most relevant
and which, therefore, deserve greater attention,

either to protect the company from their negative
effects or to be able to take advantage of their
potential benefits. What is more, as the scanning
process can be done on a daily basis by updating
the data series at the end of each day, CEOs can
clearly appreciate how investors evaluate their
management decisions and how much important
specific events that are outside the control of the
firm are considered to be.
In particular, the use of the market value to
assess environmental events can be carried out by
the following two-step procedure: first, the market
model is estimated up to day t-1 (assuming that
today is day t), and including all of the relevant
news releases during this estimation period. This
estimation provides information on the specific
and systematic risks of the firm. Secondly, on day
t, a re-estimation of the model is done, including
any new information released on that day, via a
dummy variable xk. The parameter k reflects the
impact of the news item, k, on the firms market
value, affording an insight into how the shareholders evaluate such events. By doing this on a
daily basis, the most relevant news items can be
more accurately modelled, thus ensuring that the
regression residuals are kept to zero (Karafiath,
1988).
There are at least, two interesting ways that the
model could be extended in future research: one,
the analysis of the environment from an industrial
standpoint (i.e., with all of the firms in a given
industry being examined over a study period, so
that the firm-specific sensitivities to changes in
the environment are clearly appreciated, which,
in turn, would have important implications for
the analysis of the industrys structure. It implies
estimating a system of simultaneous equations to
permit correlations among the different random
disturbances of each firms model. Two, an intraday study of the market model, since more than
one news item may be released on a given day.

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1
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For example, in a Delphi experiment the

experts give their opinions but they do not
necessarily belong to the firms staff; or even
being members of the firm as the case of the
sales force, their estimation might well be
biased, underestimate to be precise, due to
the fact that their commission thresholds
are calculated by means of the level of sales
expected for the future.
Horsky and Swyngedouw (1987) literally
point out that the price of a security is the
discounted value of future cash flows that are
expected to accrue to the asset. Therefore,
under the efficient markets/rational expectations hypothesis, it implies that the assets
price reflects all the relevant information
available and that there is no opportunity
of making a profit by buying (selling) assets
whose prices are too low (high).
For the market portfolio the IBEX-35 is
used, and for the industrial one it is built up
an index by means of a portfolio including
all the assets trading continuously in the
study period under the name Servicios in the
Stock Exchange, which were weighted by
its daily traded volume. As a matter of fact,
insofar as this group includes other different
service firms which are non-hotel-related
we obtain a pseudo-industry index (Farrell,
1974): as they all tend to share common
service characteristics (namely, intangibility, perishability, or simultaneity between
production and consumption (Wyckham et
al., 1975)), they will response in a similar
way to changes in the environment.
From now on it is assumed that tk=t+L,k
L in order to get a parsimonious
model.
This same frequency has also been used
in other studies so as to pick up structural
changes (Gmez Sala et al.,1993).


In Spain, the hotel market is experiencing

a notable growth in both, number of guests
and hotels opened. In the period comprised
between 1996 and 1999 there was a steady
rise in people who lodged in Spanish hotel
establishments. Additionally, a remarkable
aspect to be stood out is the strong seasonality shown by the fourteen quarters of this
period, the third one of each year reaching
the highest peak. It is well-known how hard
the tourism industry has to work to reduce
its effects, which leads hotels to implement
a vast diversity of strategies to keep occupancy rates at high levels (e.g., changing
the segment sought to be reached in offseason or expanding the territories where
to operate, among others). With respect to
the number of hotels, the average increase
in this period stands at 25.82%, which has
been obtained by calculating such a growth
in a month-to-month comparison between
1996 and 1999. Likewise, it is important to
note the international activity undertaken by
Spanish hotel chains in this period, which

is materialised in an increment of 64.44%
in the volume of foreign investment (The
original data were obtained from the Instituto
de Estudios Tursticos and Secretara de
Estado de Comercio y Turismo). According
to it, Lanquar (2001) expresses that the management and control of a growing number
of distinct external markets, requires greater
attention to establish a continuous system
to generate, store, classify and analyse
information coming from both, inside and
outside the firm to be used as a starting point in the nationally-oriented as well as the
internationally-oriented decision-making.
For example, here it is translated a news
item appeared in the Spanish newspaper
Expansin in August 12, 1999: The HelmsBurton Act, enacted in 1996, is receiving
much atttention nowadays as the American
Government is investigating the hotel chain
Sol Meli due to its business in Cuba.

Chapter X
Knowledge Creation and Sharing:

A Role For Complex Methods of Inquiry
and Paraconsistent Logic
Peter Bednar
University of Porstmouth, UK & Lund University, Sweden
Christine Welch
AbstrAct
Strategic intelligence involves examination of internal and external organizational environments. Of
course people inhabited each of these environments. Whether they are customers, allies or employees,
these are not standardized units but real human beings with personal histories, perspectives, and opinions. Recent research and practice have led to the development of relatively complex methods for inquiry
which can be applied by human analysts and which recognize contextual dependencies in a problem
situation. One such method, the strategic systemic thinking framework, is outlined in this chapter. The
purpose of complex analysis in relation to strategic intelligence is not, in our perspective, decisionmakingit is developing an ability to make informed decisions. Until software tools could not support
recently complex methods, since the limitations of traditional mathematical algorithms constrained their
development. We suggest a model, which lays the foundations for the development of software support
and can tolerate the inherent ambiguity in complex analysis, based on paraconsistent (multivalued)
mathematical logic.
IntroductIon
A perfection of means and confusion of aims
seems to be our main problem.
~ Albert Einstein
Unless their firms are fortunate to enjoy an enduring natural monopoly, managers in every business
must concern themselves in a perennial search
for a sustainable competitive position. In this
context, strategic intelligence may be considered
Knowledge Creation and Sharing
as crucial, in both senses in which the term is

commonly used. Intelligence gathering is a vital
process by which managers inform themselves
about opportunities, ideas and environmental
factors. Most writers agree that strategists need to
establish a relationship between their organization
and the outside world (see, for example, De Witt
& Meyer, p. 330). At the same time, they need
the intellectual and practical skills to act upon
the information created through this process,
and lead the organization forward. The exact
form such qualities should take will always be
a subject for debate. One suggestion (Maccoby,
2001) describes foresight; systems thinking; visioning which draws upon them to shape future
ideals; ability to motivate others to realise such
vision, and partnering to bring about strategic
alliances. The authors of this chapter believe that
the two senses of the term intelligence are, in
this context, indivisible. While it is possible for
anyone to trawl for data about a particular market, product or process, such data only become
useful when particular individuals consider it in
the light of their existing knowledge, experience,
and purposes.
Strategically important information is created
throughout the organizational domain. Information resides in peoples heads, and so information
sharing is ultimately dealt with through communication. Communities of practice, created over
time by sustained pursuit of shared endeavours,
influence efforts to create a higher quality of
communication for the purposes of sustaining
knowledge creation and sharing (Wenger, McDermott, & Snyder, 2002). Strategic intelligence
requires managers to engage with messy processes
of informal learning taking place throughout their
organization and its environments (Mintzberg,
1994). Such processes involve consultation with
many different individuals who are also members
of differing stakeholder groups. Any inquiry will
therefore be concerned with individual uniqueness, complexity and issues of power.
0
At one time, many authorities described strategy formulation in terms of rational planning
and goal-setting, whereby a corporate mission
would be translated into objectives and targets
at increasing levels of concrete detail (see, for
example, Johnson & Scholes, 1993). Such a view
has long been criticized as nave and unreflective of
organizational life in practice. Mintzberg (1994),
for example, contrasts a planning model with an
alternative view of strategic thinking, involving
intuition and creativity and coming about through
messy processes of informal learning that must
necessarily be carried out by people at various
levels who are deeply involved with the specific
issues at hand. This view is supported by empirical work carried out by Currie (1995) and by
Walsham (1993), who points to a dynamic, socio-political process within multi-level contexts
underlying strategic thinking. Whichever view is
preferred, there is a broad measure of agreement
that strategic intelligence involves examination
of internal, as well as external, organizational
environments. A difficulty then arises that each
of these environments is inhabited by people, and
whether they are customers, allies, or employees,
these are not standardized units, but real human
beings with personal histories, perspectives, and
opinions. Claudio Ciborra (2002) puts this very
well when he speaks of management meetings,
and decision-making, in the following way:
Something that is beyond technology, management and organization, but that contributes to
put all these things into action: those participants
being there in the session with their personal
histories, problems, projects, visions, and disillusions. What is at stake in those situations is
who they are, where they come from professionally and personally, and towards what they are
projected in relation to the issues raised by the
speaker. (p. 5)
It is essential to recognize power relations as
a part of organizational culture and management
practice. Such power relations are likely to be

asymmetric, privileging particular groups, their
interests and viewpoints at the expense of others
(Levy, Alvesson & Willmott, 1998). In the past,
such power relations may have been expressed
reluctantly way by managers to encourage wide
involvement in strategic thinking, preferring a
one-way communication process whereby goals
and objectives were communicated to a passive
workforce. The authors would argue that, if such
a mindset does persist amongst organizational
managers, it is no longer a relevant or useful
one. Many people have suggested that the only
contemporary source of sustainable advantage
that a business can have is the knowledge, which
resides within it. It may be appreciated that any
business might acquire the latest technologies or
gather the most up-to-date market data. However,
knowing what to do with these assets is what really counts in the long run (for discussion see, for
instance, Davenport & Prusak, 1998; Seely Brown,
1991). The authors of this chapter will argue that
knowledge cannot be seen as a commodity, to
be stored and transmitted freely as data can. The
concept of knowledge relates to an ability to act.
It is embedded in real human beings, who may
not even grasp that they have it, still less record
it or pass it on without great effort.
Recent research and practice have led to the
development of relatively complex methods for
inquiry which can be applied by human analysts
wishing to investigate an organizational problemspace. However, it has appeared until recently that
use of these methods could not be supported by
software tools, since the limitations of traditional
mathematical algorithms constrained their development. In consequence, managers may have
been deterred, through pressure of time, from
utilizing methods which could yield deeper and
richer understandings of the internal and external
contexts of strategic intelligence. In this chapter,
the authors outline one example of a complex
method for inquiry. We discuss foundations for
development of software support, based on a
paraconsistent approach (see Bednar, Anderson,

& Welch, 2005). This could, we believe, be used
to develop a new generation of decision support
system which could make complex methods for
inquiry accessible to managers in situations where
protracted investigations would be ruled out by
pressure of time.
lEArnIng-knoWIng And
sEnsE-MAkIng
When we, as human beings, try to make sense of
the world, it could be argued that we, as human
observers, create our own reality. For example,
Maturana and Varela (1980) discuss this as follows:
Reality as a universe of independent entities about
which we can talk is, necessarily, a fiction of the
purely descriptive domain and ... we in fact should
apply the notion of reality to this very domain of
descriptions in which we, the describing system,
interact with our descriptions as if they were
independent entities. (Ibid, p. 52)
Later on Maturana and Varela (1980) write:
The question: What is the object of knowledge? becomes meaningless. There is no object
of knowledge. To know is to be able to operate
adequately in an individual or cooperative situation (Ibid, p. 53).
Opinions differ about the meaning of the term
knowledge. Before turning attention to the processes of knowledge creation and sharing, it is
useful to consider what we mean in this context.
For example a discussion offered by Davenport
and Prusak (in Gamble & Blackwell, 2001).
Knowledge is a fluid mix of framed experience,
values, contextual information, expert insight and
grounded intuition that provides an environment

and framework for evaluating and incorporating

new experiences and information. It originates
and is applied in the minds of knowers. In organizations, it often becomes embedded not
only in documents or repositories but also in
organizational routines, processes, practices
and norms. (p. 3)
In everyday life, we often speak of the phenomenon of knowledge as if it were objectivethat is
efforts could be made to express and document
knowledge of individuals so that it could be used
to inform others about meanings, and it might
therefore be stored for later retrieval or transmitted
from one person to another through some kind
of conduit. However, the authors prefer to view
knowledge as subjective in the way it is perceived
and experienced. Meaning is constructed and
attributed by individuals themselves through
sense-making processes, related to a multitude
of contextual dependencies (Bednar & Mallalieu,
2001; Seely Brown & Duguid, 2002). Taking a
subjective view, it is necessary to recognize that
knowing is an on-going process of meaning construction. There is no final product which can be
stored or transported, since it is not possible to gain
direct access to what other people know. We can
only explore one anothers individual constructions of meaning indirectly, through dialogue and
inquiries into sense-making. Thus, a suggestion
that knowledge may be embedded in documents
or organizational practices must be treated with
caution. It may be better to consider repositories
to contain descriptions expressed by individuals
in their attempts to record, or convey to others,
what it is that they know.
Knowing as a creative process is inextricably
linked to learning. Bateson (1972) suggests that
information may be defined as a difference that
makes a difference, existing only in relation to a
mental process. It might be argued that this process
is what leads to an individual knowing. Bateson
goes on to describe a hierarchy of different orders
of learning. At level zero, learning represents

no change since the same criteria will be used

and reused without reflection. Such might be the
case in rote learning of dates, code words, and
so forth, which is contextually independent and
in which repeated instances of the same stimuli
will produce the same resulting product. All other
learning, according to Batesons hierarchy, will
involve some element of trial and error and reflection. Orders of learning can then be classified
according to the types of error and the processes
by which correction is achieved. Level I involves
some revision using a set of alternatives within
a repeatable context, level II represents revision
based on revision of context, and so on. Batesons
hierarchy finds an echo in the work of Argyris
and Schon (1996), in which they propose the ideas
of single and double-loop learning. Double loop
learning comes about through reflection on learning processes in which individuals may attempt
to challenge prejudices and assumptions arising
from their experiences. (Argyris, 1990; Argyris
& Schon, 1996).
Individuals may experience different types of
knowing as a result of different types of learning
experience. We may speak of our propositional
knowledge for instance. A child in school might
be asked to memorize the number of days in each
month of the year and might proudly say that the
child knows that September has 30 days. However,
this kind of knowing is very different from knowing how to drive a car, and comes about through
very different mental processes. In the second
instance, knowing is fundamentally contextually
dependent and derived from action and reflection
in practice. Such knowing can also be described
as tacit rather than explicit, since the individual
may realize that he can drive but he cannot easily
express, or pass on to anyone else, the essence
of his knowledge out of context. (Polyani, 1967).
Tacit knowledge has been said to have a number of
cognitive dimensions, incorporating at the same
time aspects of technical skill and mental models, beliefs, and perspectives so ingrained that we
take them for granted and therefore cannot easily

articulate them (Nonaka, 1991 p. 21).
It is suggested that processes through which
people create and recreate their knowing are at
once deeply personal, contextual, and social.
Drawing upon Gregory Batesons (1972) idea of
a difference that makes a difference it may be
suggested that knowing comes about through
perception of change. This theme finds agreement
in the work of Seely Brown and Duguid (2002):
The background has to be in place for the information to register. The forces that shape the
background are, rather, the tectonic social forces,
always at work, within which and against which
individuals configure their identity. These create
not only grounds for reception, but grounds for
interpretation, judgment, and understanding.
(p. 139)
It is common to speak of individual genius
as a creative force. However, in agreement with
Karl Weick (1995), the authors believe that knowledge creation takes place through individual and
collective sense-making activities within the
cultural context of an organization. The supposed
role for individual genius as a creative force is,
in our view, very much overstated. It has been
suggested that organizational culture is formed
over time through shared goals (Schein, 1992),
achieved through a negotiation of differing perspectives (Weltanshauungen) held by individuals
(Checkland, 1999).
Organizations can be seen as comprised of
individuals, interacting within social communicational networks. Individuals knowing within
an organizational context is formed by on-going
construction of meanings through synthesis of
new data with past experience, that is interpretation (Langefors, 1966). As such, it is always
possible for the individual to select from a range
of possible meanings. If individuals are to be
empowered to express their knowing in a process
of creative development, there are barriers to be
overcome. Our individual knowing processes

may be deeply embedded and inaccessible to us.
Nonaka makes use of the concept of ba (which
translates to space in Japanese) in considering
the conditions under which knowledge creation
and sharing may take place (Nonaka & Konno,
1998). Ba may be physical, virtual, or mental.
The space, which, in their view, contributes to
socializationoriginating bais that where
individuals share feelings, emotions, experiences,
and mental models.
Knowledge sharing is essentially a communicative action, which is more than a simple
transmission of messages through an appropriate
conduit. Knowing may be constructed through
teamwork in which individuals make a collaborative exploration of a problem-space. However, the
conditions in which effective collaborative communication can take place may be constrained in
practice. As Habermas (1989) pointed out, differences in power and status which can exist within
social groups may distort the process by which
communication takes place. Habermas went on
to specify an ideal situation for dialogue to take
place in which individuals are equally possessed
of information, equally skilled for debate and have
agreed on common precepts of logic, reason, and
mutual respect (Habermas, 1989). However, such
conditions are unlikely to be a regular feature of
everyday, messy organizational life. Williamson
(2001) points to a need for managers to bring
about a climate of social creativity within which
all individuals can collaborate and contribute.
Knowledge is essentially embedded in people,
who have created it for themselves through learning experiences. Thus, if it is to be harnessed,
people must be empowered and enabled to exercise
autonomy; to draw on their unique experience;
to interact in sharing waysindeed, to act and
render their knowledge useful to an organization.
Managers then have an enabling role, and will
need to be skilled in promoting two-way, symmetrical communication (Grunig, 1992), that is a
knowledge-sharing environment, as a backdrop to

strategic intelligence. Consultation will be needed

among many stakeholder groups. Opinions are
not always expressed freely in organizational
settings, nor do managers readily take them up
(see e.g., Argyris, 1990 for discussion of defensive
strategies which may inhibit change). Complex
methods of inquiry are therefore needed to promote dialogue and lead to a creative organizational
learning spiral for strategic intelligence. Vehicles
are needed in which individual and group sensemaking activities, and the organizational contexts
within which they take place, may be explored.
One possible vehicle might be the strategic systemic thinking framework (Bednar, 2000), which
is discussed next.
coMplEx MEthods oF InQuIry:

IssuEs And problEMs
Problems of complexity arise due to human experience of uncertainty, and discourses about problem
spaces. In the context of this chapter, the authors
wish to highlight knowing processes, rather than
knowledge as a product. Thus, there is a focus on
the quality of knowing processes through individual and collective contextual inquiry. Radnitzky
(1970) discusses approaches to research based in
different philosophical traditions. Logical empiricist models give great attention to the precision
and clarity with which a problem situation may
be expressed. Efforts to achieve precision may
in turn lead to an artificial separation between
observations made and the unique perspectives
of observer and observed (Maturana & Varela,
1980), and between theoretical frameworks and
practice (Bateson, 1972). Research based in hermeneutic dialectics, on the other hand, involves
recognition of the uncertainties and ambiguities
inherent in socially-constructed views of human activity. Transparency rather than clarity is
sought, in order to emphasize the self-awareness
of individuals. The authors of this chapter wish
to place emphasis on the desire for transparency,

while regarding the two perspectives as complementary to one another.

Much attention has been given in recent years
to a concept of knowledge management, although
it is by no means universally agreed that knowledge can be managed independently of those who
know. (see e.g., Wilson, 2002). It is not proposed
in the current text to engage further in this debate,
but to focus instead on the dimensions of knowing creation and sharing within organizational
settings. Ways must be found by managers to
recognize and embrace that fluid mix of framed
experience, values, contextual information,
expert insight and grounded intuition referred
to abovein order that human creative powers
may be nurtured, developed and harnessed within
organizational environments. Problems of this
kind resonate with those which have long been
recognized within the wider field of informatics
research. For instance, Bednar (2001) highlights
the following as problematic issues:
To make relation and acquaintance with different ways in which individual and organizational
identities, structures and cultures emerge and
develop; To develop and evolve conceptual and
empirical understandings of selected issues such
as informational vs. organizational systems, subjectivity and objectivity, and to place these issues
in a multidisciplinary perspective.
Further support can be found in research in
EPSRC cross-disciplinary discussion of Complexity Science (EPSRC, 2005). It is pointed out that
you can break down a complicated system into its
component parts and analyze how they behave.
However there are a wide variety of complex
scientific and engineering problems which defy
this type of analysis. The behavior of a complex
system is an emergent property of interactions
among its components. We would argue that
strategic intelligence also involves this type of
complexity.
Controversies in knowledge management

research have their roots deep in the history of
corporate agendas and overenthusiastic promises
by industrial players. The problems may be related
to overblown, unsolicited promises by manufacturers of technology and consequent unrealistic
expectations by customers. This phenomenon is
recognizable in many projects, ranging all the
way from development of the simplest Internet
Web site to large scale, government-funded
projects in artificial intelligence (AI). It may be
apparent that any corporate support system, no
matter how technologically advanced, does not
by default solve any organizational problems
caused by managerial ineptitude or incompetence
(Garcia-Lorenzo, 2006). If a person has no ability
to gather and harness strategic intelligence, then
providing sophisticated software tools is unlikely
to make a difference. In fact, it is unlikely that this
technology would be experienced as contextually
useful. Only when such tools can become embedded and harnessed within existing competences
are benefits likely to be realised (Carlsson &
Kalling, 2006). Grandiose AI projects have not
so far resulted in creating machine intelligence
capable of emulating complete sets of human intellectual capabilities. Technological developments
have yet to produce systems which can manage
a business for us! What has happened, however,
is that concepts such as intelligence, knowledge,
information, and so forth have become devalued
through labels applied to them by promoters of
technology, which have served to distort their
historical definitions.
We see in everyday life examples of intelligent technology in the marketing of all kinds of
products, from the intelligent microwave oven in
our kitchen, to the intelligent remote control for
our cable TV box in the living room. The authors
reflect here that, while the old nonintelligent
microwave oven was easy for people to manage
without even reading the manual, the use of an
intelligent microwave requires them to make a
careful study of it. Some people may eventually
decide to avoid the so-called intelligent settings

altogether.
Our intention in this chapter is to promote
inquiry into organizational knowledge creation
and sharing that avoids an artificial separation of
theory and practice; and which seeks transparency
as well as clarity. Such inquiry must take into
account the messiness of everyday experience,
and individuals attempts to search for meaning
through sense-making activity. Many researchers
have turned to methodologies intended to simplify
organizational problem spaces, in a desire to
steer a manageable path through rich and diverse
sources. However, the authors of this text propose
instead a structured, systemic complexification in
the form of inquiry into contextual dependencies.
Such an inquiry will focus on unique individual
beliefs, actions and perspectives in specific organizational situations, and upon the living history
of an organizational group from each individuals
point of view.
Claudio Ciborra (2002, 2004), working within
the discipline of informatics, highlights a tendency
to adopt a common, unified paradigm to deal with
very disparate phenomenahuman, social and
technologicalwhich make up the field of study.
In his view, a danger may arise that experiences
of participantsthe messy, situated acting of
every-day practicemay be disregarded. In our
desire to achieve resolutions within challenging
problem spaces, undue privilege may often be
accorded to methodologies and business process
models which appear to offer a stable and less
messy view. He goes on to highlight the real danger
that the key elementhuman existencemay
come to be overlooked in consequence (Ciborra,
2004). Clearly, such warnings as these must be
taken seriously by any researcher into organizational learning and those knowing processes that
underpin strategic intelligence.
Ciborra (2002, 2004) also highlights a problem
which can arise in business researchers unconscious readiness to deploy taken-for-granted
ideas and models. When certain concepts become

buzz words, or certain models become fashionable, they may become an unquestioned context
for grasping aspects of the world under study.
Generalized models of organizational structure
are pointed out as an example of what Heidegger
called illusory appearances. While such models may have a valid role as a means to focus
thinking and stimulate inquiry, researchers may
become over-enthusiastic to seize a generalized
idea in searching for a framework of study for
a contextually-unique situation. Ciborra (2002)
suggests that such an idea may in fact act as a
show stopper, a model that biases, deflects and
ultimately blocks reflection (p. 177).
In the course of their research, the authors
frequently experience use both of the term resolution and solution. These terms tend to be used
interchangeably in discussing decision options in
problematic situations, where interests of different
stakeholders are found to conflict. They are also
used in situations where potential new opportunities are under discussion. In the context of analysis
of complex problem spaces we find the term resolution more adequate than the term solution. The
latter could easily, from old school maths, carry a
connotation of a well-defined problem, which has
one or maybe a few correct solutions. But how
many problem spaces in organizations correspond
to such well-defined problems? There might be
some, which could be described in this way, and
which could become fairly approximated by such
models. However, these, we presume, will belong
to a class of well-known tasks or difficulties. In
cases where problems spaces are assumed to be
complex, and thus a relevant area for exercise of
strategic intelligence, we doubt if there exist any
of this class. As we understand it, categories of
resolutions which fit the pattern of bivalued logic
would be likely to address only those problem
spaces which appear to be well-defined. If we ask
a colleague Are these the latest figures relating
to Project X? then that colleague may be willing
to answer Yes or No (using bivalued logic).
However, ask that same colleague whether these

figures are sufficient to enable us to reach a judgment about the project, and she may hesitate to
give such a response.
It is the authors common experience in everyday life that, when posing a question to someone,
we might receive the answer It depends. An
individual is giving an answer that is conditional
on obtaining further data about the context of the
question. This suggests to us that people may be
comfortable with multivalued logic when dealing with everyday decisions. The problem is not
necessarily assessed on a scale of truth or falsity
(bi-valued logic). If true or false is inadequate,
we might consider a three-valued modelyes,
no, or it depends. However, this still does not
include a possibility that the person questioned
is baffled. A person might say I have no idea.
We believe a four-valued model of reasoning is
therefore preferable (please see Table 1). We are
also aware that any statement of belief a person
makes can reflect a higher or lower degree of
certainty. This is often reflected in survey forms
which ask us to state the strength of our agreement/disagreement with a given statement, according to a Likert scale.
We accept that occasions arise when it is
beneficial to break problems down and simplify
them. However, this is not something we would
wish to advocate as a matter of course. Routine
and systematic attempts to simplify inquiry are, in
our view, by definition reductionist. If we attempt
to identify every aspect of a problem separately, in
isolation from its context, to establish the truth or
falsity of certain key parameters, then we ignore
emergence. We would advocate instead a complexification of inquiry, creating a multivalued
assessment and categorization through elaboration
upon individual expressions of it depends.
However, we must also recognize that complex
analytical work, such as inquiry into contextual
dependency, can easily become overwhelming in
its scope and complexity. Exploring individual
perspectives in seeking resolutions in a complex
problem space requires painstaking work and
recording of large volumes of rich material for

analysis. For this reason suitable analytical support tools would be of great value
Complex methods of inquiry have a long history in both corporate management and information systems development. From an organizational
perspective, it becomes relevant to make efforts to
manage knowledge. Opinions differ on the extent
to which this highly prized but elusive phenomenon can be managed (Wilson, 2002). Some sophisticated techniques are put forward which may
more readily be referred to as facilitation. Some
other suggested approaches treat knowledge as
if it were a commodity. Here we can see parallels
with the field of information systems development,
where complex methods of inquiry range from
philosophically-induced and systematic analyses
of sociotechnical requirements to arguments that
treat information as a commodity.
Some of the methods available to analysts are

drawing upon systems science and cybernetics
influenced by hermeneutics dialectics and phenomenology. Others are based on complexity
theory and chaos theory. An approach which
has become familiar to managers, for instance,
is the soft systems methodology, created by Peter
Checkland (1999). This can help decision-makers
to unravel multiple dimensions of a messy problem situation. Our discussion in this chapter will
refer to another approach, the strategic systemic
thinking (SST) framework. This shares some
of the same traditions as SSM in focusing on
emergent properties in complex systems. The SST
framework also draws on several other traditions
in contextual analysis. Among others, it combines
lessons learnt from research in systems science
with hermeneutics dialectics (Bednar, 2000).
Table 1. Example of four-valued logic in everyday reasoning

Considering a product launch
Could we launch our product in Japan within 12 months?
I believe we could. We have a strategic alliance with a Japanese distributor who has been urging
us to do so for some time.
[value 1: positive belief]
Could we launch our product in Germany within 12 months?
I very much doubt it. At present, our product does not meet the requirements of German quality
legislation. Our design team are working on a way to achieve this cost effectively but, even if they
are successful very soon, necessary modifications to production processes and testing could not be
completed within a year.
[value 2: negative belief]
Could we launch our product in India within 12 months?
This might be possible. We have recently formed an alliance with a firm in Mumbai and are
currently negotiating over mutually beneficial projects. This one might be ideal.
[value 3: conditional positive belief]
Could we launch our product in China within 12 months?
I really cannot say. We currently have no Chinese partner organization and have not yet
undertaken any research about the Chinese market. It cannot be ruled out, however.
[value 4: belief that no opinion is possible]
(NB These values cover one dimension only. Strength of conviction is not reflected here.)

thE strAtEgIc systEMIc

thInkIng FrAMEWork (sst)
One particular complex method for inquiry is the
framework for strategic systemic thinking (see
Table 2 and Figure 1). This framework recognizes
contextual dependencies, and enables analysts
to include, as part of their analytical resolutions,
conclusions which are in themselves contradictory.
The framework represents a systematic attempt
to support systemic inquiry into uncertain and
complex problem spaces. It involves exploring

a problem space from each individuals unique
perspectives, both separately and in a group
context. Clearly one outcome of such an inquiry
is the expression of inherently contradictory
resolutions, (see further discussion below). The
complex process and the amount of data involved
in such an inquiry can make the whole analytical
task a very daunting one for human analysts to
undertake. New software tools giving support
to process would be a great asset, therefore. We
Table 2. The strategic systemic thinking framework

Exploring multiple levels of contextual dependencies:
Intra Analysis
Expanding unique, individual descriptions of a problem-space.

(Puts narratives into context of self and creates possible resolutions)
Inter Analysis
Structuring uncertainty into ambiguity through communication with others.

Expanded individual descriptions are shared with others.
The number (but not the range) of alternatives to be discussed is limited.
(Puts narratives into context of self and others within problem-space)
Value Analysis
Creating a frame of reference with which to assess alternatives.

(Puts narratives into context of paradigmatic environment)
Communication in inter-analysis, and reflection in value analysis together support creation of a learning spiral.
The analysis may be approached in any order.
Figure 1. Overview of the SST framework

Exploration
and creation of individual
perspectives
Intra-analysis
Inter-analysis
Group sharing
communication and
development of individual
perspectives
Learning Spiral
Process
Dynamics
Perspective

Value-analysis
Validation
Prioritization from political
and cultural perspectives
will now elaborate on selected features of the SST

framework (see Table 2).
Figure 1 below shows an overview of the
three main aspects of the framework, which
together support the creation of a (complex)
learning spiral, are intra-analysis, inter-analysis,
value-analysis.
Each aspect of the framework draws upon
three dimensions represented by carriers:
Process: An inquiry and formation of a

systems view regarding a problem world;
this could be expressed as related to the task
performed by an analyst, which is focused
on worlds consisting of processes. Here we
refer to problem redefinition, creativity and
uncertainty.
Dynamics: An inquiry, and formation of a
reflective systems view, regarding thought
processes leading to abovementioned process; generally this dimension is related to
a second order of learning, and thinking
about the process of thinking. Here we refer
to critical reflection, learning and re-evaluation of process of problem redefinition.
Perspective: An inquiry, and formation of
a responsible systems view, regarding the
value processes, leading to boundary setting

to frame the abovementioned inquiries; this
is focused on value ethics and observational
transparency. We refer here to value ethics
related to individual observers and hermeneutics dialectics.
Figure 1 also outlines the carriers relationships
with the three main aspects of the framework and
highlights the learning spiral (i.e., a combination
of the intra-analysis, inter-analysis, and valueanalysis in action).
Let us consider as an example the hypothetical
case of a product launch. Suppose a marketing
manager is asked the question: can we launch
our product in Japan within 12 months? The
manager will undertake a process of inquiry into
the circumstances surrounding this question and
consider what answer to make. Within the process
dimension the manager may answer: I believe
we could. We have a strategic alliance with a
Japanese distributor who has been urging us to
do so for some time.
The dynamics dimension of the answer relates
to the ways in which the marketing manager
formulates the scope of the problem space. The
manager creates the boundaries by, for instance,
Figure 2. Carriers as dimensions

Multidimensional
problem space
Perspective
Process
Dynamics

considering the existence of the distributor to be

a relevant factor. The manager is reflecting upon
influences on the timescale and feasibility of the
proposal.
The perspective dimension of his answer relates to the argument that the marketing manager
makes a point of highlighting a Japanese distributor as urging this action. This is a justification for
the belief, framing the problem description. That
may reflect a value that local knowledge should
be taken into account.
In themselves, none of the three dimensions
shown represents what we are looking for. The
purpose is to explore the created interdimensional
space in order to develop a knowledge base upon
which action can be founded.
Figure 2 visualizes a three dimensional model
of a general aspect with general carriers described
metaphorically as dimensions (e.g., process, dynamics and perspective).
Checkland and Holwell (1998) have suggested
that information systems have a function of providing support to people taking purposeful action
the same way a knowledge system may usefully
be viewed as entailing two linked systems: there
is a system to be served and a serving system.
Development of useful support systems therefore
requires that careful consideration is given both
to the nature of the system served (in this case
relating to organizational agents and stakeholders
needing to harness strategic intelligence) and to
the serving system (here, support for analysts in
their knowledge creation and sharing) (cf. Checkland, 1999). Both systems views mentioned above
would seem to fit within the concept of notional
systems as expressed by Checkland.
A hermeneutic dialectics perspective may
be helpful to us here in our efforts create an
understanding. The carriers shown in Figure 2
frame a problem space in a number of dimensions. Knowledge creation and sharing efforts are
circulating around such a problem space. Each
of the carriers is intended to support a different
order of analysis and learning.
0
In practising complex analysis built on a

model such as the SST framework, there will
be many different intra-analyses from different
perspectives. Not only is the analysis done by
different people, but also each individual analyst
may have several, and sometimes incompatible,
perspectives. As each individual analyst makes
efforts to develop understandings about relevant
problem spaces, messages will be created. These
messages are derived from different perspectives
and therefore, if truthful, will contain contradictions. When applying an analysis based upon the
SST framework, or something similar, a human
analyst does, in practice, take these contradictory
matters into account, and can thus follow through
the whole complex analytical process. To do so
is, however, a challenging task. Software support for this kind of thought process would have
been impossible to achieve in using traditional
mathematical models.
The messages created are later used as a basis
for further elaboration, as part of self-reflection
and sharing (the form of this can be associated
with storytelling). In the inter-analysis there is a
conscious exchange of messages for the purpose
of knowledge sharing, knowledge, creation and
rationalization.
The rationalization aspect comes into place
through a purposeful classification of messages
(stories). Such a classification exercise is based
upon negotiation regarding what characterizes
each story. Examples of four types of stories
are: compatible, incompatible, complementary,
or different. This classification exercise is not
intended to bring about exclusion of alternative
(for example incompatible) perspectives or stories.
The purpose of inter-analysis is rather to widen
understanding of different perspectivesno
single alternative is excluded (no matter how different or crazythey may seem). The result is not
only rationalization, (similar stories are grouped
to limit the number of alternative stories but not
the scopeof them) but also further complexification
and acceptance of contradictions and so forth. In
the value-analysis, the participating analysts are

elaborating and reflecting upon hierarchy and
priority. Here again, it is not intended to create a
consensus or compromise.
While the benefits of attempting a complexification of an organizational problem space can
be demonstrated, it can be seen that analysis of
multiple levels of contextual dependency will
place great demands of time and effort on all
concerned. Such methods for developing strategic intelligence may not have been practical
in the past for this reason. However, software
tools supporting processes of classification and
rationalization described above could change this
in the future.
pArAconsIstEnt logIc
Human beings are, generally speaking, perfectly
capable in everyday life of dealing with paradoxes
and self-contradictory resolutions without becoming unduly perplexed. When people are exercising
their common sense they may resort to a tendency
that, when specific solutions are requested, contradictory resolutions are given. When personal
investment in a solution is experienced as low, we
can afford to give general solutions to others and
ourselves. However, when personal investment in
a solution is experienced as high, the situation is
different. The problem is no longer experienced as
a simple one; it is likely that we no longer feel we
can afford to give a solution, and then we resort
to a resolution. This is because we admit that our
assertions are tentative, and that due to complexity
of problem space there is a limit on the degree of
precision we are prepared to guarantee. Decisionmaking, especially strategic decision-making, is
essentially bound up in assessment of risk and
associated cost factors. What human beings can
do (and seem to do without hesitation in every day
life) is to work with complementary categories of
resolutions. These categories include conditions
of uncertainty which represent more than what

is covered by classical bivalued logic.
Returning to the example of a product launch,
we note that the problem space occupied by such
a project is a complex one, potentially involving
a number of teams of individuals representing
different areas of expertise. Technical experts
from several areas, designers, marketing specialists, logistics and project managers, and others
may all have contributions to make. There will
be financial considerations, as the opportunity
costs of a project will need to be considered. A
question posed to any team member at a given
moment in time may meet with a clear and unequivocal answer. If a marketing specialist is asked
whether the product can be launched on January
1st, in Japan, the specialist may be confident in
answering Yes. However, it is quite likely that
the specialist might give a more tentative answer,
such as Well, yes and no. We can go ahead on
January 1st, but the prelaunch promotion would
not be completed by then, and we may have to be
prepared for sales to be slow at first. The response
yes and no can be comprehensible to a human
inquirer but, if entered into a data support system,
might represent an unacceptable contradiction.
When we consider the differing perspectives of
all the professionals involved in such a project, it
is clear that the scope for ambiguity in possible
resolutions is high.
It is interesting to see that wide generalizations
(i.e., low investment in precision) can easily fit
within categories of bivalued logic. But as soon as
things are required to be more specific, complexity is dealt with through resolutions categorized
outside of the limits of bivalued logic. We need
to bear this in mind if people are to be supported
with techniques and technologies in their complex
activities when making use of strategic intelligence for decision-making. A sense-making
phenomenon of systematic, logical inconsistency
has to be taken into account. Sound understanding
of complex human abilities and practice has to be

incorporated in logical models upon which any

technologies, such as software support, are to be
built. This means that software has to be able to
support human processes of analysis and decisionmaking. If we, as human beings, apply multivalued
logic in our efforts to understand the world, then
any technological support for our efforts has to be
able to cope with that logic. Clearly, two-valued
logical models would be insufficient.
Tools supporting analytical work have, in the
past, fallen into one of three categories: those
which support data manipulation; those which
provide support for process; and those which attempt to support analysis directly. For complex
analytical models such as the SST framework, it
has not been realistically possible until recently
to develop any support systems beyond the first
of these categories. However, it is now possible
to envisage development of tools in the second
categoryprocess supportby making use
of developments in the field of paraconsistent
logic. Paraconsistent logic is the name given to
a mathematical approach developed to provide
a basis for inconsistent but nontrivial theories
(Recher, 1969). It represents an alternative to the
conventional logic of algorithms forming the basis
of traditional software for the digital computer.
A conventional algorithm relies on the existence
of only two valuestrue or false. Logic can then
proceed on the basis of repeated cycles of IF
THEN ELSE. Values other than true and false
cannot be handled within such an algorithm.
However, results of research in paraconsistency
suggest that contradictions, as part of a problem
resolution, need not be regarded as a difficulty
(Lukasiewiez, 1970).
Originating in the early 20th century, many
important applications in computer science,
information theory, and artificial intelligence
have been developed through insights gained
from paraconsistency. These include software

engineering, database theory, model checking,

theorem proving, logic programming, data mining, evolutionary computation, semantic Web, and
model-based reasoning (Marcos, 2005). The field
has now a long-established record. It is recorded
that Charles Sanders Pierce (1839-1914) was responsible for extending the truth table method to
three-valued logic as early as 1909 (Recher, 1969).
Pioneering work in many valued logic was also
done by Scottish logician Hugh MacColl (18371909). In his 1906 book Symbolic Logic and its
Applications, MacColl proposed a logic of three
dimensionsthe modal values of certainty,
impossibility, and variability.
In more recent times this field has flourished
and many developments have been made. Research
has prospered, and academic debate has given rise
to a large volume of publications. It is very much
in the spirit of this well-established tradition that
applications such as that suggested here should
ensue. Forcheri and Gentilini (2005), for example,
present an application of paraconsistent logic to
formal epistemology. A formalism is presented,
expressing conjectures as formal objects. The
deductive apparatus of conjecturing agents is
conflated with some given environment system. In
such an interaction of agents with environment,
inconsistencies might quite reasonably emerge
(Marcos, 2005, p.2).
The authors of this chapter are hopeful that
further work combining the two areas of paraconsistency and complex methods of inquiry may
well result in further important developments.
The application presented here is suggested in
the spirit of this well- established tradition. We
envisage development of a new generation of
software, drawing on paraconsistency, which can
provide process support for complex methods.
This could ameliorate the time-consuming nature
of inquiries conducted using models such as SST,
and could thus render their use in strategic intelligence more practicable.
AnAlytIcAl support For

coMplExIty
The authors believe complex analytical work, such
as inquiry into contextual dependency, to be a
knowledge management task. Such tasks can be
done by human analysts, but can easily become
overwhelming in their scope and complexity.
For this reason suitable analytical support tools
would be of great value. As mentioned above,
IT support for analytical work can be described
using three categories of support system: those
providing data support, those providing support
for analytical processes, and those providing
decision support (Carlsson, 2001). These are illustrated in the Figure 3.
Key aspects and relationships of these three
categories are as follows. Data support software
might provide assistance to structure, describe,
model, and present data.
Process support software might provide support for analysis, administration of modelling,
and analysis practice. Analytical support software
would be capable of imitating human intelligence
in making analyses and be able to draw conclusions (i.e., it would be indistinguishable from
human analysts).
The authors believe that IT tools currently
available to support inherently complex analytical
work fit into the category of data support only. The

reason for this is that a feature of such complex
inquiry is recognition that contradictory perspectives are natural to human understandings. Human
beings have no difficulty in keeping contradictory
understandings in mind while considering resolutionswhether complementary, alternative or
incompatible. Traditional algorithms, upon which
software is built, on the other hand, have difficulties in dealing with the maintenance of underlying
contradictions as valid parts of resolutions.
Software providing only data support is
readily available. However, process support for
complex decision-making continues to elude traditional programming. The authors believe that
paraconsistent logic can be used to help develop
new software tools, which might provide process
support for analysis, because it covers categories
of options in complex problem resolving activity. Software tools offering process support may
assist human analysts in their efforts to apply a
special case of a model such as the strategic systemic thinking framework (see strategic systemic
thinking framework section).
This pattern of human categorization can
be compared to a mathematical model of fourvalued logic. While the exact meanings of the
mathematical categories may not always translate
directly to those human beings use, a pattern of
Figure 3. Typical coverage of support systems

Documentation
Presentation
Processing
Data
Process
Analysis
Expert systems
Intelligent scenarios
Artificial Intelligence
Decision-making

(mathematically oriented) four-valued logic can

be seen to parallel human categorizing practice
of resolutions. Such mathematical patterns may
therefore still be very useful for the support of
complex analytical practice and sense-making.
In a search for tools to provide process support for complex methods of inquiry, we can see
great possibilities in drawing upon the potential
of paraconsistent logic. It is possible to envisage
development of tools which may act as intelligent
agents. Intelligent strategies may include software
which is able to keep up with human abilities to
categorize and create resolutions which are inherently self-contradictory. It may also incorporate
language software tools. For example, software
which can store and interpret grammatical rules,
and could potentially be used to analyze text to
determine logical conclusions from statements
made. Human analysts could then review such
conclusions for meaningfulness in context.
In addition to this, further developments in
voice recognition software can be envisaged.
Systems which could listen to discussion and
transform it into coherent discourse, and then
analyze the results may become possible. Such
systems would not have been considered feasible
at one time due to the huge processing power
that they would demand. However, alongside
developments in application software, progress
is now being made in personal computing. Using
multiprocessor hardware and associated operating
systems capable of multitasking, sophisticated
software tools can be made available, and affordable, for everyday use by managers. We can
therefore foresee a time when software support
may become available to users in systematic and
logical analysis of resolutions. Human analysts
can then be helped either to categorize them and
use them (inclusive of their inconsistencies) or to
isolate unexpected inconsistencies and attempt
to reframe those resolutions. To propose a model
upon which relevant software tools could be built,

we believe that further cross- fertilization between

research in complex analysis and paraconsistent
logic is necessary.
chAllEngEs For strAtEgIc

IntEllIgEncE
At this point in the chapter, we can consider some
practical managerial implications and challenges.
It is possible to point to a number of barriers to
innovation and creativity in organizational life.
Ever present time pressures can lead managers
to fall into a trap of short-termism and a rush
to reach premature consensus on complex issues.
While there are situations where prompt action
is vital, Bohn (2000) points out that a destructive
pattern of fire fighting can become habitual.
Furthermore, as is pointed out by Argyris
(1990), and by Williamson (2001), organizational
cultures can develop which are not conducive
to individual expression of new ideas, or even
identification of complex problem spaces. Indeed, existing decision-support systems providing process support to decision-makers are
often structured around a need to achieve swift
consensus among diverse ideas. Some aspects
of knowledge management thinking have also
focused on a need to identify best practice, that
is a consensus among practitioners about ways
to achieve success. Innovative thinking, however,
which is the essence of knowledge creation, and
thus strategic intelligence, requires us to embrace
the marginal, off-the-wall ideas. These may
contain the seeds of initiatives which help differentiate an organizations offering from those
of competitors. Innovation and creativity can be
supported in decision-making practice by embracing complex methods of inquiry. Methods such
as the SST framework can enable individuals to
explore their own perspectives on the contextual
richness of an organizational problem-space, and
to share these perspectives with others in order to

create a knowledge-base within which to search
for meaningful resolutions. The problems of
premature consensus, and inhibition in exploring
potentially innovative ideas, may then be avoided.
Challenges for managers here are related to a need
for empowerment of all participants, through
creation of an innovation-friendly organizational
culture. Self-discipline may also be needed, in
resisting a desire to reach a premature closure.
Software support for processes in complex inquiry
would clearly be helpful here.
In relation to strategic intelligence, we believe
that empowerment of knowledge creation and
sharing among all organizational stakeholders
is crucial. We also believe that complex methods
for inquiry, enabling multiple levels of contextual
dependencies to be explored, can provide a vehicle
for richer and deeper understandings. The whole
purpose of complex analysis, and knowledge
management, in relation to strategic intelligence
is not, in our perspective, decision-makingit is
developing an ability to make informed decisions.
In conclusion, we believe that further efforts to
develop models upon which useful process support tools could be built, with the assistance of
paraconsistent logic, would be worthwhile to
pursue.
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Section IV
Supporting
Strategic Intelligence
Processing: Technologies

Chapter XI
Using Grid for Data Sharing

to Support Intelligence
in Decision Making
Nik Bessis
Tim French
University of Reading, UK
Marina Burakova-Lorgnier
University of Montesquieu Bordeaux IV, France
Wei Huang
AbstrAct
This chapter is about conceptualizing the applicability of grid related technologies for supporting intelligence in decision-making. It aims to discuss how the open grid service architecturedata, access
integration (OGSA-DAI) can facilitate the discovery of and controlled access to vast data-sets, to assist
intelligence in decision making. Trust is also identified as one of the main challenges for intelligence in
decision-making. On this basis, the implications and challenges of using grid technologies to serve this
purpose are also discussed. To further the explanation of the concepts and practices associated with the
process of intelligence in decision-making using grid technologies, a minicase is employed incorporating a scenario. That is to say, Synergy Financial Solutions Ltd is presented as the minicase, so as to
provide the reader with a central and continuous point of reference.
IntroductIon
This section provides grounding in intelligence
informed decision making technologies, their
application and integration within the modern

organisations.
Scott-Morton first articulated the concepts of
decision support systems (DSS) in the early 1970s
Using Grid for Data Sharing to Support Intelligence in Decision Making
under the general term of management support

systems (MSS). Further works on bounded
rationality from Simon (1977) and classification types of DSS from Keen and Scott-Morton
(1978), Alter (1980), Holsapple and Whinston
(1996) have led us to understand that DSS is a
set of concepts associated with supporting the
decision making process via the use of appropriate resources. These (resources) may include but
are not limited to users, data, models, software,
and hardware.
Computer-based developments over the last
four decades have facilitated decision makers
with numerous tools to support operational,
tactical and/or strategic level of enquiries within
the environment of an organization. In relation
to intelligent decisions, the use of expert systems
(ES) and knowledge management systems (KMS)
have evolved over the years by developments in
computational science including data mining,
data visualization, intelligent agents, artificial
intelligence, and neural networks. One of the
purposes of these technologies is to provide
managers (decision makers) with a holistic view
hence, the ability to analyze data derived from a
collection of multiple dispersed and potentially
heterogeneous sources (Han, 2000).
One of the challenges for such facilitation is
the method of data integration, which aims to
provide seamless and flexible access to information from multiple autonomous, distributed and
heterogeneous data sources through a query interface (Calvanese, Giacomo, & Lenzerini, 1998;
Levy, 2000; Ullman, 1997). In the context of DSS,
there are two broad classes of approaches to
data integration: Data Warehousing and Database
Federation (Reinoso Castillo, Silvescu, Caragea,
Pathak, & Honavar, 2004). Practices in relation to
the data warehouse approach cover the acquisition, extraction, transformation, and loading of
the data into a centralized repository, which can
then be queried using a unified query interface.
The approach further allows interactive analysis
of multidimensional data of variable granularity
0
with multifunctionalities such as summarization,

consolidation, and aggregation (Nguyen, Min
Tjoa, & Mangisengi, 2003), as well as, the ability
to represent data in cube format (Nieto-Santisteban, Gray, Szalay, Annis, Thakar, & OMullane,
2004). The key difference of the data federation
approach is, that decision makers can query directly the dispersed heterogeneous data sources
and hence, users are required to impose their own
ontologies in relation to the data requested.
The informational needs of a decision maker
are not limited to those prementioned and are very
seldom limited to data, but include other type of
resources, which may be required to be accessed
from multiple dispersed sources. The resources
may include but are not limited to databases,
software, hardware, or even instruments such as
satellites, seismographers, detectors and PDAs.
For example think of an emergency situation
caused by an earthquake. The emergency management team will be required to make real-time
intelligent decisions and act accordingly to save
lives, property, and the environment by assessing
multiple dispersed resources (Asimakopoulou,
Anumba, & Bouchlaghem, 2005). This particular
decision making process will require team working and collaboration from a number of dispersed
decision makers whose decisions may be depended
on each others interactions. Resource integration
at that level will support decision makers since
it will allow them to view satellite images of the
affected area, observe seismic activity, forecast,
simulate and run what if scenarios, collaborate
with experts and the authorities. This will assist decision makers to prioritize and ultimately
make decisions, which will be disseminated to
available rescue teams who will take then care
of the operational tasks. This dissemination may
typically involve a server broadcasting decisions
to heterogeneous mobile devices such as personal
digital assistants (PDAs).
The volume of the data-sets is typically measured in terabytes and will soon reach petabytes
(Antonioletti et al., 2005). These data-sets are
variably geographically distributed and their

complexity is ever increasing. That is to say, that
the extraction of meaningful knowledge requires
more and more computing resources. The communities of users that need to access and analyze
this data are often large and geographically distributed. The combination of large data-set size,
geographic distribution of users and resources,
and computationally intensive analysis results
in complex and stringent performance demands
that, until recently, have not been satisfied by any
existing computational and data management
infrastructure.
In tackling these problems, the latest studies
in relation to networking and resource integration have resulted in the new concept of grid
technologies, a term originally coined by Foster
in 1995. Grid computing has been described as
the infrastructure and set of protocols that enable
the integrated, collaborative use of distributed
heterogeneous resources including high-end
computers, networks, databases, and scientific
instruments owned and managed by multiple
organizations, referred to as Virtual Organisations (Foster, 2002). A virtual organization (VO)
is formed when different organizations come
together to share resources and collaborate in
order to achieve a common goal (Foster, Kesselman, Nick, & Tuecke, 2002). Hence, the grid
concept as a paradigm has an increased focus on
the interconnection of resources both within and
across enterprises. In the first phase, scientists
have almost exclusively used grid technologies
for their own research and development purposes.
Now however, the focus is shifting to more general
application domains that are closer to everyday
life, such as medical, business, and engineering
applications (Bessis & Wells, 2005; ERCIM,
2001). It is anticipated that grid technologies will
facilitate intelligence informed decision making
in a way that managers and their teams will be
able to carry out tasks of increased complexity
more effectively and efficiently in the form of
one or many interconnected, separable, or in-
separable VOs (Bessis & Wells, 2005; Brezany,

Hofer, Whrer, & Min Tjoa, 2003). Therefore,
in the context of this chapter, the primary goal
is to demonstrate how grid technologies and the
VO concept can serve as the vehicle to empower
intelligence in decision making.
To operate within a VO requires a decision
maker to interface a service or to act as an agent
of someone else in some capacity. Decision makers will necessarily be involved in delegacy. To
delegate is to entrust a representative to act on a
decision makers behalf. A key delegacy challenge
is the ability to interface with secure, reliable and
scalable VOs, which can operate in an open, dynamic, and competitive environment. To achieve
this, a number of security mechanisms have to
be seamlessly integrated within the grid environment. Previous studies have proposed the use of
public key infrastructure (PKI) and X.509 digital
certificates (Foster, Kesselman & Tuecke, 2001;
Foster et al., 2002) while others have proposed
the use of IBC: Identity-based Cryptography (Lim
& Paterson, 2005).
In terms of social exchange theory, an interaction always contains an element of risk and
uncertainty due to the fact that an interaction
partner might not reciprocate or do so in an insufficient manner (Stewart, 2003). A mediated
interaction as compared to a face-to-face interaction is characterised by a significantly higher
level of uncertainty and risk (Lee & Turban, 2001;
Ratnasingam, 2005), which inevitably brings up
the question of the interrelation between risk and
control essential to an understanding of trust. The
perceived risk of an interaction is based on the
evaluation of its negative consequences, which are
difficult or impossible to control (Koller, 1988).
The more negative are the consequences and the
less an individual can control them, the higher
is the perceived risk. The relationship between
trust and risk has a bilateral causal character that
offers large opportunities for building sustainable and auto-manageable systems. The greater
the risk of interaction, the more trust is desired

and the greater is the motivation to build trust

between oneself and ones interaction partner.
The greater the trust among all members of a
particular group, the greater the risk management abilities of that group (McLain & Hackman, 1999). Tan and Thoen (2003) affirm, in the
context of uncertainty, trust permits one to feel
confident that current action will have a favourable outcome. Seen in this light, trust arises in
spite of high risk and uncertainty conditions as
a compensatory mechanism that permits one
party (e.g., the grid service consumer) to engage
in interaction with another party [either a partner
(individual or collectively) or a system (e.g., the
grid service providers)]. Thus, any analysis of
trust formation between grid entities should ideally take into consideration the specificity of the
grid system, the particular network configurations
and the virtual character of the collaboration. At
the same time, it is important to stress that trust
develops not between organizations as such, but
rather as between the individual human actors
or proxy agents who represent them (Hoecht &
Trott, 1999).
The development of a VO partnership within
a grid community can be viewed generically as
a model of dyadic interaction between trustor
(the grid service consumer) and trustee (the grid
service provider). A trustor (the grid service consumer) inevitably takes a risk while depending on
the performance of a trustee (his/her grid partner).
This step is predicated upon the necessity to rely
upon another party in order to achieve ones own
interests, and hence, the interdependence between
grid partners. Not only trusting behavior, but
trusting intentions as well involve a high level
of risk. In the situation of high insecurity, trust
building is based on cognitive mechanisms, the
wary suspicious side, to assess the situation and
its consequences, thus potentially reducing the
importance of affective regulation (McKnight,
Kacmar, & Choudhury, 2004). However, the
cognitive nature of these mechanisms does not
of itself equate merely to the control of an inter-

action partner by means of security measures

alone. Trust is more likely to develop under insecurity, when an individual does not know how
the partner will behave (Molm et al., 2000). In
negotiated exchange, an outcome is predictable
thanks to agreement terms that minimize risk of
free-riding behavior, except if the agreement is
not completely binding. Negotiation has the reversed effect on trust building: it minimizes risk
and, thus, decreases trust and increases distrust.
Furthermore, there are certain regularities of trust
formation in a computer-mediated interaction that
are different from the situation of the face-to-face
communication.
Within this chapter, our main goal is to
highlight that resource integration within grid
environments in general and for assisting intelligence in decision-making in particular have
been frequently limited to technical merits alone.
We hereby elaborate and articulate our ideas at
greater length and propose ways in which trust
issues as a soft, socially related concept can be
better articulated both with reference to the literature and to a novel semiotic paradigm. Hence,
the chapters main goals are twofold. Firstly, to
discuss how grid technologies, VOs and open
grid service architecturedata access integration (OGSA-DAI) can assist intelligence in decision making. We do this, by discussing Simons
(1977) well-known decision-making phases model
intelligence-design-choice alongside with the
concept of bounded rationality. Secondly, to
stimulate conceptual thinking towards a better
understanding of the novelty of this technology
and the need for a relevant soft trust model to
support its emergence. We do this, by discussing the role of soft trust issues at two distinct
intangible and ambiguous levels of abstraction:
at the VO level of abstraction and the Grid (data)
service level of abstraction through the use of the
semiotic paradigm. To further the explanation of
the concepts and practices associated with using
grid technologies to support intelligence in decision-making, a minicase is employed incorporat-
ing scenarios. We conclude by discussing the

implications of using grid technologies to assist
intelligence in decision-making.
thE grId concEpt And Its

coMMErcIAl ExploItAtIon
The concept of grid computing has emerged as
an important research area differentiated from
open systems, clusters, and distributed computing. That is to say, open systems such as Unix,
Windows, or Linux servers, remove dependencies
on proprietary hardware and operating systems,
but in most instances are used in isolation. Each
deployed application has its own set of servers
purchased for a particular purpose within the
enterprise. Multiple applications rarely share
common servers, resulting in silos of statically
linked applications and servers. This configuration
results in poor server utilization. In contrast, the
grid builds upon open source architectures and
addresses the removal of silos within a connected
enterprise (Xu, Hu, Long, & Liu, 2004). It might
also profit by providing available internal resource
to other internal and/or external customers.
Unlike conventional distributed systems,
which are focused on communication between
devices and resources, grid computing takes
advantage of computers connected to a network
making it possible to compute and to share data
resources. Unlike clusters, which have a single
administration and are generally geographically
localized, grids have multiple administrators and
are usually dispersed over a wide area. But most
importantly, clusters have a static architecture,
while grids are fluid and dynamic with resources
entering and leaving.
The added value that grid computing provides as compared to conventional distributed
systems lies in the inherent ability of the grid to
dynamically orchestrate large scale distributed
computational resources across VOs, so as to leverage maximal computational power towards the
solution of a particular problem. More specifically,

the grid can allocate and reschedule resources
dynamically in real-time according to the availability or nonavailability of optimal solution paths
and computational resources. Should a resource
become compromised, untrustworthy or simply
prove to be unreliable, then dynamic rerouting and
rescheduling capabilities can be used to ensure
that the quality of service is not compromised.
Prior agreements, including service delivery
and recovery aspects can be pre-arranged at the
VO level of abstraction before and during runtime execution at the service level of granularity
across the computational nodes that a particular
VO owns. These advanced features that are
integral to grid computing are rarely to be found
in large scale conventional distributed networks,
particularly those that need to cooperate and coordinate dynamically across organizational and
geographical boundaries. Hence, it is the ability
of grid communities to orchestrate their activities
at the VO level and the service level dynamically
(without the need to consider platform dependant
features) that characterizes grid solutions as distinct from large-scale conventional distributed
computer networks.
The grid is a computational network of tools
and protocols for coordinated resource sharing and
problem solving among pooled assets. These can
be distributed across the globe and are heterogeneous in character. Specifically, grid computing
is widely seen to represent the next wave of
computing and as such has become the subject of
worldwide focus amongst the research community.
It is specifically characterized by ad hoc collaborations (sharing of computing resources) as
between geographically distributed institutions
and organizations. The grid is a type of a parallel
and distributed system that enables the sharing,
selection, and aggregation of resources distributed
across multiple administrative domains based on
their availability, capability, performance, cost,
and users quality of service requirements (Goyal,
2005). Grid computing uses many computers con-

nected via a network simultaneously to solve a

single scientific or business related problem.
Whereas global grid initiatives initially tended
to focus on the needs of the UK scientific community (Fox & Walker, 2003) in an initiative collectively known as E-Science, in the future, the
business community is expected to increasingly
benefit too: grid computing is expected to become
a mainstream business-enterprise topology during the rest of the current decade (Castrol-Leon
& Munter, 2005). The type of application most
likely to benefit from the blurring of the binding
as between application and host is one that usually
requires substantial amounts of computer power
and/or produces or accesses large amounts of
data. That is to say, execution of an application
in parallel across multiple host machines distributed within or between enterprises can increase
performance substantially and also make use of
the spare capacity of existing nodes (PC, servers,
etc.) too. Grid applications are often typically
involved with large volumes of data produced
by data-intensive simulations and experiments
(ERCIM, 2004). In order to guarantee seamless
automation and interoperability of the distributed
data, the need for adequate descriptions such as
semantic-based data descriptions, models, services, and systems becomes crucial.
Perhaps the most important function that has
emerged from the grid concept is the notion of
VOs. Grid computing provides a means by which
an open distributed and large scale network of
computational resources owned by VOs can engage in the cooperative processing of typically
large data-sets, using the spare capacity of existing
computers owned by real organizations. Therefore, a VO is formed when different organizations
come together to share resources and collaborate
in order to achieve a common goal. A VO defines
the resources available for the participants and
the rules for accessing and using the resources.
Resources here are not just computing, storage, or
network resources, but they may also be software,
scientific instruments or business data. Thus, by

engaging in a grid partnership both large and

small organizations can potentially leverage the
vast pooled assets of other partner organizations
without the need to purchase or physically own
these expensive resources. A VO mandates the
existence of a common middleware platform that
provides secure and transparent access to common resources. In practical terms, a VO may
be created using mechanisms such as certificate
authorities (CAs) and trust chains for security,
replica management systems for data organization
and retrieval and centralised scheduling mechanisms for resource management (Venugopal,
Buyya & Ramamohanarao, 2005). Typical initial
application areas have included E-Science datagrids in which Universitys share their resources
across a grid so as to process vast quantities of
data involved in areas such as molecular modeling, climate change modeling, and financial and
economic modeling.
In terms of standards, grids share the same
protocols with Web services (XML, WSDL,
SOAP, UDDI). This often serves to confuse as
to exactly what the differences between the two
actually are. The aim of Web services (WS) is to
provide a service-oriented approach to distributed
computing issues, whereas grid arises from an
object-oriented approach. The idea of serviceorientation is not new. Distributed application
developers have long deployed services as part
of their infrastructure. CORBA is an example
of the efforts to standardise on a number of
services that provide the functionality needed to
support loosely-coupled, distributed object-based
applications. Further developments in the area
led to the emergence of WS (Atkinson et al.,
2005). However, WS typically provide stateless,
persistent services whereas grids provide stateful,
transient instances of objects. In fact, the most
important standard that has emerged recently
is the open grid services architecture (OGSA),
which was developed by the Global Grid Forum
(GGF). OGSA is an informational specification
that aims to define a common, standard, and
open architecture for grid-based applications.

The goal of OGSA is to standardize almost all
the services that a grid application may use, for
example job and resource management services,
communications, and security. OGSA specifies a
service-oriented architecture (SOA) for the grid
that realizes a model of a computing system as
a set of distributed computing patterns realized
using WS as the underlying technology. An important merit of this model is that all components
of the environment can be virtualized. It is the
virtualization of grid services that underpins the
ability to map common service semantic behavior
seamlessly on to native platform facilities. These
particular characteristics extend the functionality offered by WS and other conventional open
systems. In turn, the OGSA standard defines
service interfaces and identifies the protocols
for invoking these services. The potential range
of OGSA services are vast and currently include
data and information services, resource and
service management, and core services such as
name resolution and discovery, service domains,
security, policy, messaging, queuing, logging,
events, metering, and accounting. OGSA-DAI
(data, access and integration) provides a means
for users to grid-enable their data resources.
OGSA-DAI is a middleware that allows data
resources to be accessed via Web services. However, newer developments in the area have led to
more sophisticated data integration capabilities
using distributed query processing (DQP). DQP
works as a layer on top of OGSA-DAI, which allows queries to be applied to various XML and
relational data resources as though they were a
single logical resource. This can be done through
an additional set of grid services that extend the
scope of OGSA-DAI: one of these services acts
as the point of contact for a client and orchestrates
other services behind the scenes, including services that evaluate queries on each data resource.
Data integration scenarios can be managed at
either the client or service end; DQP illustrates
an extension to OGSA-DAI at the service end,

enabling data integration (Antonioletti et al.,
2005).
Early Adoption of the grid by

blue-chip banking Industry
(1999-)
The grid is being utilized internally and externally
by business organizations to aid their financial
decision making and modeling. A number of
major Banks in the UK in the U.S. and Europe
have been early adopters (1999-2006) of internal and external grid computing models so as to
better utilize underused computational nodes in
the context of financial services modeling and
decision making. As the chairman of the influential Landesbank Baden Wurtenburg (LBBW)
has recently concisely expressed, the grid and
financial service industry are a marriage made
in heaven: The banking and finance industry is
predestined from Grid computing solutions. Our
business processes can be parallelized and thus
made faster and more efficient than ever before
(Platform, 2005). That is to say, by seeking to
use underused resources as part of a grid (where
the VOs are typically comprise different internal
departments), these organizations hope to create
and run advanced simulations and otherwise
distribute increasingly data-intensive computational tasks across their existing computational
nodes without the need to purchase additional or
dedicated resources. Many of these grid projects
are of a highly commercially sensitive character and therefore the details are often withheld
from the public domain. The interested reader
is however, refereed to two reports (Davidson,
2002; Carbonnier, 2005) in which grid projects
within JP Morgan and Chase Manhatten Banks
respectively are described in some detail and
which may be viewed as being fairly typical in
illustrating the rationale behind early adoption of
grid applications within international banking. In

essence the commercial rationale behind many of

these projects is to leverage extra value from existing computational resources by using the spare
capacity of a vast network of computational
nodes to support data-intensive operations. The
financial imperative for wider commercial use of
the grid is now undeniable and has recently been
articulated as follows:
Grid computing is not just about an asset change
in enterprise environments; it is about supporting a new business model, since there is no
killer application for grids. The key question for
Finance Directors and CFOs is how to break
out of the cycle of asset acquisition and into a
capacity service provision model in order to
save money against a new budget system. The
benefits of grid computing are about helping to
bring CAPEX (capital expenditurei.e., the cost
of the network, infrastructure and terminals) and
OPEX (operating expenditurei.e., the cost of
keeping the network running) down to acceptable
levels. The grid-based pay-per-use/utility model
is attractive because it can transfer cost from a
CAPEX to an OPEX model, but we dont believe
it will ever be an all or nothing situation for
users. (Fellows, 2005)
grid Adoption by sMEs (small and

Medium Enterprises):
the next Wave?
In the next wave of commercial adoption of
the grid within the financial services industry
(2005-onwards), small and medium enterprises
(SMEs) are also now seeking to engage in external
grid partnerships, so as to gain access to vastly
increased computational power at minimal cost.
In the most common case, the type of application
most likely to benefit from the blurring of the
binding as between application and host is one that
usually requires substantial amounts of computer
power and/or produce or access large amounts of
data. That is to say, execution of an application in

parallel across multiple host machines distributed

within or between enterprises can increase performance substantially and also make use of the
spare capacity of existing nodes (PC, servers, etc.)
too. In order to guarantee seamless automation
and interoperation of distributed data, the need
for adequate descriptions such as semantic-based
data descriptions, models, services and systems
becomes crucial.
EnAblIng IntEllIgEncE In
dEcIsIon MAkIng usIng grId
tEchnologIEs
The objective of this section is to discuss and
exemplify the potential of how grid technologies,
VOs and open grid service architecturedata
access integration (OGSA-DAI) within a dynamically changing environment can assist intelligence
in decision-making. We do this, by discussing
Simons (1977) well known decision making
phases intelligence-design-choice alongside
with the concept of bounded rationality.
With this in mind we go on to describe a typical SME financial services application in which a
fictitious organization (Synergy Ltd) seeks to
engage in a VO partnership with several universities so as to seek to leverage the computational
power of the grid for competitive advantage. The
scenario serves as an integrative element within
this chapter, since the remaining sections make
explicit reference to it.
sME scenario: synergy Finance

solutions ltd
Synergy Finance Solutions Ltd. is a (fictitious)
small and medium enterprise (SME) that develops
and sells advanced computer share trading packages to both private and corporate investors. These
packages are designed to support individual and
corporate investors wishing to track and predict
future equity (share) price movements across
global equity markets. Their current package is

designed to meet the needs of individual investors and is called PrivateInvestor. The license
to use the package is sold to private investors
and the package is typically installed on their
local PC workstation. PrivateInvestor uses
advanced fractal modeling techniques to track
real time Global share price changes on a daily
basis so as to establish patterns. These patterns
are then used together with 12-month historical
price data-sets and advanced fractal modeling
techniques to guide each private investor as to
exactly when best to trade shares, so as to gain
maximum profit at minimal financial risk. The
package adapts itself to the risk profile of each
individual investor as it learns more about their
real-time share-trading activities. Synergy makes
their data-set of historical share price patterns
for each share traded available for downloading
into the PrivateInvestor package, on demand,
to each investors workstation.
The managing director of Synergy is Mark
who is a rational manager (Keen & Scott-Morton,
1978) and very familiar with Simons (1977) threephase systematic decision-making process. He has
applied it successfully many times in the past.
Mark thinks that it is the time to apply it again
for the benefit of Synergy. Mark starts with the
first phase that is the intelligent phase. His goal
is to clearly define the problem by identifying
symptoms and examining the reality. The first
phase begins with the identification of his organizational goal and objective that is to provide an
accurate service to his PrivateInvestor package
customers. Mark thinks that his company does
well in this respect and therefore, he feels that to a
certain extend his organizational goal can be met.
However, Mark feels also dissatisfied. He identifies a difference between what he desires/expects,
and what is occurring. This is due to the fact that
a number of PrivateInvestor package customers
have not invested in the best possible way. Mark
made an attempt to determine whether a problem
exists. During his investigation, the sales depart-
ment informs him that Synergy has lost some

customers in the last year. The sales department
confirmed that the scale of loss is not significant.
For some managers, losing a few customers is not
a major concern but for Mark this is considered
to be a symptom of an underlying problem. Mark
decided to revisit the kind of service that Synergy
offers to PrivateInvestor package customers.
Mark meets with Synergys executive team that
consists of the marketing, financial advisor, political analyst and sales managers. He also meets
with Synergys three data analysts who analyse the
12-month data-set. Outcomes from the meeting
have led them to appreciate that the 12-month dataset limits the accuracy of their advanced fractal
financial models; customers who have left and
gone to competitors who use a 10-year data-set;
competitors use more data analysts; competitors
invest more money in buying additional hardware
resources; and finally, competitors have access to
more modeling tools to choose from; On this basis,
Synergy realizes the need to make an intelligence
informed decision that will keep it abreast of its
competitors. Synergy fully understands that they
need somehow to provide a more accurate service
to its customers. This should be a good enough
solution to retain existing PrivateInvestor package customers and maybe even, to increase the
number of its customers.
With this in mind, Synergy moves to the design
phase that is, the second phase of Simons (1977)
systematic decision-making process. This phase
involves finding or developing and analyzing
possible courses of action towards the identification of possible solutions against the identified
problem space. Synergy operates also under
the process-oriented decision-making thinking
(Keen & Scott-Morton, 1978) and fully appreciates Simons (1977) bounded rationality theory.
Synergy appreciates that despite the attractiveness
of optimization as a decision-making strategy, its
practical application is problematic. This is due to
the fact that it is not feasible to attempt to search
for every possible alternative for a given decision.

Simon exemplified this by defining the term of

problem space. A problem space represents a
boundary of an identified problem and contains
all possible solutions to that problem: optimal,
excellent, very good, acceptable, bad solutions,
and so on. The rational model of decision-making
suggests that the decision maker would seek out
and test each of the solutions found in the domain
of the problem space until all solutions are tested
and compared. At that point, the best solution will
be known and identified. However, what really
happens is that the decision maker actually simplifies reality since reality is too large to be handled
by human cognitive limitations. This narrows the
problem space and clearly leads decision-maker
to attempt to search within the actual problem
space that is far smaller than the reality.
In the context of this chapter, the attempted
problem space is incomplete and refers to the
actual problem search space. Thus, the decision
maker will most likely not choose the optimal
solution because the narrowed search makes it
improbable that the best solution will ever be
encountered. The approach will lead the decision
maker to settle for a satisfactory solution rather

than searching for the best possible solution.
Similarly, Synergys 12-month data-set make
it impossible for data analysts to identify and
produce the most accurate packages for PrivateInvestor customers. On the same basis, data
analysts use a limited number of advanced fractal
financial models as compared all those that are
theoretically possible available.
At this stage, Synergy has decided to identify
the course of action, which will lead in improving their existing solution without seeking the
optimum solution. Using this rationale, Synergy
feels that providing access to its own vast 50-year
data collection of historic share-prices that is
currently unusable can be used to produce more
accurate packages for PrivateInvestor customers. It is believed that this will increase the actual
problem search space. Thus, the data analysts,
PrivateInvestor package customers and the
decision makers will most likely choose a better
solution because the extended search of the actual
problem search space increases the possibility
Figure 1. VO Grid partners extended search space (Extended version of Simons bounded rationality
theory, 1977)

that a better solution will be encountered. Figure

1 (reproduced over-page) illustrates Synergys
intelligence and choice decisions.
However, because of the capacity and processing power limitations of the servers at Synergy,
only the last 12 months share-price patterns
have been available for download. Admittedly,
the move to allow access to this 50-year historic
data-sets, adds some complications. For example,
the amount of data required to be analyzed and
charted is potentially vast: patterns relating to
each share are analyzed in real time, daily, weekly,
monthly, yearly, and so forth. Synergys managing
director invites his IT manager to the meeting.
He confirms that buying additional hardware
resources required for these modeling processes
would be a very expensive and risky business.
Synergy decides that it might be a good idea to
extend its search space to look for more alternative solutions to choose from. Synergy invites
its IT manager to collaborate with two external
academics that are highly regarded in the area of
data management and decision-making modeling.
The outcome of this discussion leads Synergy to
believe that grid technologies may prove viable
as an alternative solution.
Synergy moves to the choice that is the third
and last phase of Simons (1977) systematic decision-making process. At this stage, Synergy
needs to make a decision based on the alternatives derived from the previous phase. Synergy
has three options to choose from:

Take the risk and do nothing

Buy additional hardware resources, even
consider to invest in more data analysts and
in the deployment of additional cutting-edge
fractal financial models
Enter into a grid partnership
Synergy decides that it is better to enter into

a grid partnership with several universities by
purchasing the computing spare time of their
computational nodes. This is because this will
allow data analysts and PrivateInvestor package

customers to apply their advanced fractal financial
models to a wider search area (a 50-year data-set
as compared to 12 months). It might then still be
possible not identify the best possible solution
but it is more likely that a better solution will
be identified because the extended search of the
actual problem search space will increase the opportunities for a better solution to be encountered.
This in turn, will provide more opportunities to
allow investors to consider where to invest, what
are the possible advantages, disadvantages, risks
and ultimately, decide when to invest.
The idea is to utilize the spare-capacity of university computers in real-time, on an on-demand
basis. Their grid partners will then orchestrate the
optimal workflow (scalability) needed between
themselves, making best use of any spare capacity
available, so as to process and analyse this 50-year
historic data-set for each individual share. There
are a number of middleware solutions supporting
the coordination and allocation of jobs to be done
in a dispersed environment including Condor-G,
Globus Toolkit, and Unicore. These historic patterns are then to be fully integrated with real-time
minute-by-minute share trading patterns so as
to generate a prediction (typically buy, sell, hold,
etc.) back to Synergy. Thus, it is more likely for
their data analysts to select and produce a more
accurate prediction that is clearly caused by intelligence data sharing. Synergy intends to make these
(more accurate) predictions available to existing
private investors who have previously purchased
the PrivateInvestor package at additional cost
that is as an optional premium Gold service
option on an on-demand basis. Historical data is
initially held centrally at Synergy but it can be
distributed via the grid partnership agreement
across any virtual organisation (VO) partners
as necessary that is made available to any grid
partner or partners on demand. Each University
partner may choose to delegate the data-analysis
and processing of this data to another partner in
real-time, depending on the availability of their

real-time processing capacity. If required, a university partner may decide to move data to the
distributed environment as required to meet time
related constraints. The concept is rather similar
in principle to the UK National Grid, whereby
electricity is generated and distributed across
many providers and consumers according to realtime demand. In this case, Synergy is deemed to
be the consumer and their university partners are
deemed to be their suppliers. Not electricity of
course, but of share pattern analytics derived from
both historical and real timeshare data.
By entering into a grid partnership, Synergy
will be provided with even more opportunities to
make intelligence informed decisions and produce
more accurate predictions. Using Simons (1977)
three-phase systematic decision-making theory
(intelligence-design-choice), Synergys data
analysts will have access to a wider selection of
available financial strategies including more data
mining tools and models available through the grid
partnership. For example, university academic,
research, and technical members of staff will
provide such support and share their expertise
with Synergy. On the other hand, Synergy could
Figure 2. The climate between the VO partners
0
make available a number of incomplete and obsolete data-sets that can be used by the university
partners for educational and research purposes.
That is to say, tutors could demonstrate to students
how to apply advanced fractal financial modeling
using real world data-sets. Similarly, researchers
could undertake experimental research to further
advance financial models for the benefit of Synergy
and the wider community.
Overall, the VO approach will extend the opportunities to see things from a multiperspective
point of view that will ultimately advance the involved partners. It is anticipated that the intended
approach will expand available opportunities by
extending the actual search space and by facilitating methods required to deliver a better quality
of service. The ability to share and compute a
vast data-set alongside with the incorporation
of advanced modelling tools and utilisation of
expertise across the grid application environment will support Synergys managers and data
analysts. PrivateInvestor package customers
and grid partners will make intelligence informed
decisions. For Synergy, this will result in a no
cost solution that will provide a higher quality
of service as compared to their competitors. The

move to make historical data available to distributed partners can be a risky and challenging one.
In particular, data access, integration, analysis,
and charting using a variety of dispersed sources
including legacy systems can cause resource allocation and recovery complications. However, there
are a number of paradigms whereby data access
and integration (DAI) can be implemented within
a grid environment. The concept is rather similar
in principle to E-Science, whereby dispersed data
owners make their heterogeneous data sources
available to other researchers in a VO via the use
of OGSA-DAI (a method for data replication and
virtualization). In addition, sophisticated data
integration capabilities using DQP, as a layer
on top of OGSA-DAI will allow grid partners
to query, data and/or text mine to the dispersed
resources as though they were a single logical
resource. Figure 2 illustrates the potential of the
grid within a dynamically changing environment
via the use of a rich picture.
Finally, another issue of concern is quality of
service (QoS) including the aspects of multilevel
access, user-friendly interface, security, and reliability. Synergy clearly needs to select and form
effective and evolving partnerships with trusted
university grid service providers. Within these
providers, Synergy seeks to orchestrate the provision of services in an optimally trustworthy
manner. To achieve this Synergy may need to
check not only that their VO partner local security
and access controls are adequate but also seek to
check and examine wider QoS, and reliability issues too. Indeed, Synergy needs to check on the
organizational reputation of their VO providers
before entering into a grid partnership with any
particular University potential partner.
The following section seeks to exemplify how
the OGSA-DAI can facilitate the discovery of and
controlled access to distributed sources in general
and Synergys 50-year vast data-set in particular,
to assist intelligence in decision making amongst
the VO partners.
using ogsA-dAI to Facilitate Access

to synergys vast data-set
Analysis of the 50-year data-sets requires a
complex series of processing steps in which each
generates intermediate data products of a size comparable to the input data-sets. These intermediate
data products need to be stored, either temporarily
or permanently, and made available for discovery
and use by other analysis processes. OGSA-DAI
is the standard infrastructure to support effective
manipulation, processing and use of this vast,
distributed data resource. This will allow shared
data, networking, advanced fractal financial
models, and compute resources to be delivered to
Synergys data analysts in an integrated, flexible
manner. The method will enable Synergys data
analysts to make intelligence informed decisions
and to produce more accurate predictions for the
benefit of Synergys customers.
The aim of the OGSA-DAI middleware is to
assist with the access and integration of dispersed
data sources available on the grid. OGSA-DAI
is compliant with Web services inter-operability
(WS-I) and the Web services resource framework
(WSRF). OGSA-DAI is a middleware, which
supports the integration and virtualization of data
resources, such as relational, XML databases, file
systems or indexed files. Various interfaces are
provided and many popular database management
systems are supported including MySQL, Oracle,
DB2, XML. Data within each of these resource
types can be queried, updated, transformed,
compressed, and/or decompressed. Data can be
also delivered to clients or other OGSA-DAI Web
services, URLs, FTP servers, GridFTP servers, or
files. On the OGSA-DAIs Web site there are full
instructions of how to download and install the
middleware. Set-up prerequisite software includes
JDK 1.4, Tomcat, Apache Ant and some additional
libraries such as JDBC drivers, etc.
According to the latest specifications, OGSADAI provides the following types of services:

Data access and integration service group

registry (DAISGR): The service allows
data resources that are represented by services to be registered and discovered.
Grid data service factory (GDSF): The
service acts as a persistent access point
to a data resource and contains additional
related metadata that may not be available
in the DAISGR.
Grid data service (GDS): The service
acts as a transient access point to a data
resource.
On this basis, we can now proceed to describe

a scenario to introduce various issues of relevance
to Synergys data-sets access and integration
services. These include data collection, advanced
fractal financial modelling, data generation, and
data analysis. Figure 3 demonstrates these OGSADAI related service interactions between the
different VO grid partners. Figure 3 also notates
these services so as to provide the reader with a
central and continuous point of reference.
Let us assume that the environment comprises
five simple hosting environments: one that runs
the Synergys data analyst user application (A1);
three that encapsulates computing and storage
resources (B, C, D); all three also encapsulate
data-set services; in which one of them (B)
encapsulate Synergys fractal financial models
and other partners data mining tools; and finally,
a different one (E) that remains idle but could
take over compute related tasks and/or host data
moved from another partner environment. To
complicate the scenario, we assume also that the
latter hosting environment (E) runs a partners
user application (A2) to assist in applying advanced
financial modelling tools on a demand basis. It
also encapsulates advanced financial models.
Firstly, we expect that each data-set is stored in
a different VO grid partner (service provider) and
it is registered with the Grid Data Services Factory (GDSF) so that they can be found. Similarly,
it is anticipated that Synergys advanced fractal

financial models and any other data mining tools

have been registered as a service so they can be
found too. Let us assume that Synergys data
analyst as a service requestor needs to obtain
X information on share prices of a particular
stock over the period of ten years. At this stage,
it is important to note that Synergys data analyst
does not need to know which data-set(s) are able
to provide this information and where these are
located. It might be the case that information is
stored in more that one data-set (DS).
The following lists the steps required for a
service requestor to interact with appropriate
data services:
Action 1: Synergys data analyst as a service requestor will need to request the data
access and integration service grid register
(DAISGR) for source of data about X.
Action 2: Register will return a handle to
the service requestor.
Action 3: Register will send a request to
the factory (GDSF) to access the relevant
data-sets that are registered with it.
Action 4: Factory will create a grid data
service (GDS) to manage access to relevant
data-sets.
Action 5: Factory will return a handle of
the GDS to Synergys data analyst.
Action 6a: Synergys data analyst as a service requestor will perform the query to the
respective GDS using a database language
such as SQL.
Action 7: The GDS will interact with the
data-set(s).
Action 8a: The GDS will return querys
results in a XML format to the service
requestor.
In the event that GDSF has identified more than

one of the data-sets (DS1, DS2, DS3) that contain
the relevant information, Synergys data analyst
will either select a particular GDS (for example,
GDS1) based on the analysts preference(s) or
request for data to be integrated into a sink GDS

(6b). That is to say, a sink GDS will handle the
communications (6c) between data analyst and the
multiple GDSs (GDS1, GDS2, GDS3), which will
further interact (7) with their respective data-sets
(DS1, DS2, DS3) so as to return querys results in
a XML format (8b) to Synergys data analyst.
Similarly, a service requestor can submit a
request for a particular finance model that is either
a service of Synergy or registered with another
VO grid partner. A service requestor can be either
a Synergy data analyst (A1) or a partners advisor
(A2) who is available to offer advice or to assist
Synergys data analyst in applying a special type
of financial modeling tool on an on-demand basis.
Once data and models have been collected via the
GDS, Synergys data analyst or a partners advisor
could then for example run their simulation tests.
In the event that a service will or communication
fails another registered resource (service provider)
will take over of the outstanding task(s). For example, if during compute perform, one resource
(D) from the grid partners becomes unavailable,
another idle registered resource (E) from the same
or different partner will carry on the computation.
This is due to the fault tolerance grid service that
allows a task to carry over to a different registered

and available resource.
The approach as a whole allows the discovery
of resources and allocation of tasks on a reliable
and flexible manner. Using available computing
power, grid partners will minimize time related
constraints when Synergys data analysts run
their prediction tests, which ultimately will enable them to make more informed decisions.
The availability of equity enhances computing
power alongside accessing a larger selection of
data-sets, that can be data-mined using additional
data mining tools and advice from experts on an
on-demand basis will likely assist Synergy to
produce more accurate predictions. It is also a
method for the other participated VO grid partners.
Thus, Synergy could make available a number
of incomplete and obsolete data-sets that can be
used by the university partners for educational
and research purposes. That is to say, researchers
(A3) could undertake experimental research to
further advance financial models for the benefit
of Synergy and the wider community. Similarly,
tutors could demonstrate to students how to apply advanced fractal financial modeling in real
world data-sets (A4).
Figure 3. OGSA-DAI interactions between VO grid partners

However, despite the fact that the primary aim

of OGSA-DAI is to make data more accessible,
it must also provide controls over data access
to ensure that the confidentiality of the data is
maintained, and to prevent users who do not
have the necessary privileges to change or even
to view data content. Some related trust issues
are discussed next.
the role of soft trust Issues

in Intelligence Informed
decision Making
Trust is a very complex and nonhomogenous phenomenon that covers many fields of social knowledge and enquiry. The concept has previously
been variously been identified with: a general
disposition; a rational decision about cooperative
behaviour; an affect-based evaluation about another person; a characteristic of social systems
(Rousseau, Sitkin, Burt, & Camerer, 1998), and as
a clan organising principle (McEvily, Perrone,
& Zaheer, 2003). Trust relates to a willingness to
rely on others, and to the confident and positive
expectations about the intentions or behaviour of
another, also, to the willingness to be vulnerable
and to acquire risk (Mayer, Davis, & Schoorman,
1995; Rousseau et al., 1998). In spite of the fact
that trust can be analyzed in relation to risk-taking
intentions and/or behaviours, the theoretical link
between trust and risk often remains somewhat ill
defined. The interdependence between trust and
risk is interpreted in many different ways. First,
risk is considered to be an essential condition of
trust emergence (Coleman, 1990), when none or
almost none of the assurance mechanisms are
available to build an interaction between partners.
Secondly, trust entails a willingness to take risks
based on the sense of confidence that others will
respond as expected and will act in mutually supportive ways, or at least, that others do not actually
intend to do harm (McKnight et al., 2004). The
assumption that trust and risk are closely related
phenomena is not solely a theoretical model, but

has been supported through empirical evidence.

Thus, Koller (1988) found that the degree of risk
affects the degree of trust toward an interaction
partner and stressed that both phenomena relate
to the domain of social perception. An individual
concludes that the individual trusts the interaction
partner, if the individual finds that interaction
with the partner in a risky situation. Indeed, trust
appears to be situated somewhere between complete control and uncertainty. Indeed, trust may
well begin only when mere confidence ends. In
many ways trust is seen as being intimately dependant on an information gap as between trustor
and trustee. An individual aware of all relevant
facts does not need to trust, while an individual
not knowing anything about the issue in question
is unable to trust, but only to hope or believe
(Clapses, Bachman, & Wehner, 2003). It has also
been demonstrated (McLain & Hackman, 1999)
that in the context of a lack of information about
the interaction partner, trust emerges in a highrisk insecure environment, and at the same time,
plays the role of a risk-reducing mechanism.
On this basis, an important element of this
chapter is to highlight that a VO within a grid
environment in general and decision making in
particular is frequently not limited by technical
consideration only. We prementioned that to operate within a VO, a decision maker is involved in
delegacy. To delegate is to entrust a representative
to act on decision makers behalf. The interaction between individual delegates (as members
of the grid community) to build mutual trust is
central to the analysis itself. We share the view
that, individual elements may offer solutions to
problems but are at best limited as a whole. In
other words, a VO includes, but does not equate
to the level of interactions (people-to-people)
and the level of grid services alone. It is also
enriched by a number of phenomena related to
organizational behavior. It might inherit concerns
related to risk and (in)security and might require
further the exploration of trust into the domain
of human cognition and behavior. Hence, a VO
can be viewed analyzed as a special kind of a

social network and in this respect, with particular references to its structure, cognitive aspects,
and relations. Thus, it seems important to revisit
trust related issues within the application of grid
environments.
There is little previous research that comprehensively accounts for and models the holistic
nature of trust-building processes and regularities
within a grid application environment. Hence, to
safeguard interests and alleviate inconsistencies
caused within a VO as a distributed environment,
we hereby propose a two-level model of abstraction, a kind of multidisciplinary deconstruction,
that seeks to identify the grid community and
singles out the technological and social mechanisms of trust formation with grid services.
soFt trust At tWo lEvEls oF

AbstrActIon
The purpose of this section is to stimulate conceptual thinking towards a better understanding
of the novelty of this technology and the need for
a relevant soft trust model to support its emergence. We do this, by elaborating and articulating
our ideas in relation to the role of soft trust issues
at two distinct intangible and ambiguous levels
of abstraction: at the VO level of abstraction and
the grid (data) service level of abstraction through
the use of the semiotic paradigm.
Emergence of virtual organizations

(vos) level of Abstraction
A grid service provider needs to ensure that unauthorized access to services and data does not
take place. Additionally, a providers reputation
is clearly at stake and there is a need to maintain
quality, timeliness, reliability, and integrity of the
service according to whatever kind of agreement
has been entered into with consumers and other
providers in an orchestrated manner. There is an
obligation for a service provider to ensure quality

and continuity of service under a wide variety of
conditions. Legal and economic factors may be
relevant too. Intrusion detection is an important
area of responsibility, particularly so in grid
contexts where an unauthorized user may be
potentially able to gain access not only to services
but also to the underlying data-sets themselves.
Corporate governance policies and orientation,
trusted accountancy practices, all serve to define
a providers relationships to its suppliers, customers, and business partners (Will, 2003). Trust or
mistrust of a VO at an organizational, departmental and workgroup level may well influence
whether or not a VO is suitable as a grid partner.
Furthermore, a VO is clearly embedded within a
society and culture. A provider needs to consider
how their virtual identity may be verified, and
trusted by potential consumers of grid services.
In particular managing user expectations and
soft requirements poorly can lead to consumer
frustration and indeed even result in frustration
and a degree of mistrust (Tiong, 2005).
In order for Synergy to select and form an
effective and evolving partnership with trusted
providers and orchestrate the provision of services
in an optimally trustworthy manner it is necessary
to look beyond mere agent-to-agent level of trust
formation and technological mediators to wider
concerns. The value of this approach is intended
to help Synergy to select and verify a suitable
university partner or set of partners to orchestrate their activities (grid workflows) in such a
manner to maximize trust while minimizing risk
of various that is to optimally match candidate
partners against sets of relevant trust, reputation
and reliability criteria.
For example Synergy might wish to check the
status (VO reputation) of their potential university grid service partners in terms of any of the
above mentioned dimensions: financial viability,
research reputation, ranking in university league
tables, implementation of local security policies,
and so forth. Equally, a university might wish to

check whether Synergy meets their own internal

ethical and corporate governance standards by
referring to suitable public domain sources. By
using a semiotic trust ladder, it should be possible
for both Synergy and candidate or actual university
partners to more systematically check and verify
trust dimensions at the social, pragmatic, and
syntactic levels of abstraction. For example it will
be possible for both Synergy and their partners
to look beyond the fine-grained issued of which
XML based standard to select and to address more
fundamental issues that encompass risk, quality
of service and trust issues. Essentially the idea
is for the grid partners to quantify and manage
hidden or implicit trust expectations, to assess
the potential commercial and reputational risks
of their engagement as well as of course selecting
the most appropriate technological trust mediators
to support grid workflow activities.
It should also be possible for both Synergy (the
grid service consumer) and University partners
(grid service providers) to dynamically assess and
re-assess their relationships in the light of new and
changing evidence or wider trust domains so as
to generate for example a crude trust/risk rating
for a grid service before, during invocation and
after service invocation. However, to really add
value to existing trust management in the context
of agent to agent (autonomous) trust brokerage
and negotiation a much more fine-grained means
of enabling an agent with these wider contexts
is needed. Organizational reputation and organizational cultures change and evolve over time.
Local contexts, methods and ways of working
also evolve continually. Ideally therefore, as a
grid service is invoked an agent should be able
to reverify at least some elements of an e-service
providers wider trust domain (or just in time)
during run time execution.

grid (data) service level of

Abstraction viewed through
the semiotic lens
Human trust is a far more elusive and subtle
concept than is articulated in frameworks such
as Web services-trust, as it generally involves
the reference not merely to local contexts but
also wider organizational and social settings
within which e-service transactions of all kinds
typically take place. Existing approaches to the
trusted grid services, which emphasise the value
of establishing secure communications between
autonomic entities do not appear to attempt to
explicitly seek to verify local events, credentials
against wider social, cultural, and organizational
dimensions. Indeed, Liu (2003, 2006) has called
for a wider examination of so-called soft issues
of grid computing and more specifically identifies the semiotic paradigm as being a potentially
useful conceptual probe within which to address
these wider concerns. Without seeking to enable
agents with wider organizational trust contexts
(what we herein choose to call a trust domains)
we cannot say that these agent based approaches
truly simulate real human trust, but rather, only a
limited subset of the characteristics of human trust
that are necessary but not sufficient to claim that
a particular grid service is in fact trustworthy.
Based on Lius (2003, 2006) more general
approach to soft issues of the grid, this work
maps these concerns to the well known classic
semiotic ladder (Stamper, 1973) so as to instantiate a new variant, namely the semiotic trust
ladder shown within Table 1 below, to illustrate
the value of the semiotic paradigm in helping
stakeholders to better conceptualise trust issues
within virtual organizational settings. Essentially
the novel semiotic trust ladder offers a way of
conceptualizing and modelling trust meaning
making at a variety of levels of abstraction by

identifying actors, signs, and articulating ways
in which norms and metanorms mediate all acts
of communication.
In Table 1, for each layer of the trust ladder,
some exemplar trust issues are identified and
aligned to the grid service lifecycle. By extending this approach it is possible to develop a fully
comprehensive account of trust issues during the
entire grid service lifecycle. Indeed, by attempting
to identify and map trust issues to the trust ladder, it is hoped that previously implicit or poorly
understood or articulated trust issues may be more
clearly revealed to VO partners at an earlier stage
in the grid service lifecycle than hitherto.
IMplIcAtIons And chAllEngEs

oF usIng grId tEchnologIEs
to support IntEllIgEncE In
dEcIsIon MAkIng
One of the major implications in using grid
technologies as a vehicle to assist intelligence
in decision-making is the ability to enlarge the
actual search space boundaries within the term

of problem space as described by Simon (1977).
Problem space represents a boundary of an identified problem and contains all possible solutions
to that problem: optimal, excellent, very good,
acceptable, bad solutions, and so on. By searching
in a narrow space, the decision maker will most
likely not choose an optimal solution because the
narrowed search of the actual problem search
space makes it improbable that the best solution
will ever be encountered.
Clearly the grid potentially vastly increases the
size and complexity of the problem spaces that can
realistically be addressed not only by SMEs, but
by all types of organization. Problems that have
hitherto been regarded as being intractable either
because of the size of the data-sets needed, their
distributed nature or the sheer complexity of the
multidimensional analysis required can now be
re-examined. Within E-Science these problem
spaces encompass traditional scientific domains
such as nuclear physics but now also typically
include areas such as climate change, where
vast quantities of data and simulations requiring
multidimensional analysis are needed.
Table 1. Macro-dimensions of VOs via a semiotic trust ladder

Exemplar Grid Service
Trust Issues
Semiotic
Trust Ladder
Applicability
(VO Grid Lifecycle)
To what extent does the Service

conform to the desired VO
cultural/cross-cultural norms?
Are there any legal safeguards?
Social world trust: Beliefs and

expectations
Planning stage
Cultural/Social trust
Policy signs
Reputation of Grid service

provider/consumer?
Any ethical conflicts?
Pragmatics: Goals, intentions,

trusted negotiations, trusted
communications
Planning, build, run time
Reputation signs
How reliable, valid are the

services and will they meet
quality norms?
Semantics: Meanings, truth/

falsehood, validity
Build and run time
Authentication/validity signs
Secure agents: How trusted are

they?
Syntactics: Formalisms, trusted

access to data, files, software
Build and run time
Trusted access signs
Intrusion detection/prevention
adequate?
Empirics: Entropy, channel

capacity
Run time
Messaging/traffic management
signs
Signs

Within the business community large Banks

have been amongst the first to exploit the enhanced
power of the grid to leverage extra value from
vast legacy systems. Now as has been shown
through our illustrative case study, SMEs are
able to address previously intractable problems
and to leverage competitive advantage from grid
computing. This is only the beginningdecision
makers will soon be able to address or re-address
complex multidimensional problems within their
businesses using grid solutions as their standard
or normative preferred tool. Thus, the grid should
not be seen as being merely a tool of scientists or
academicians but rather as a new and powerful
business decision support tool, having real cutting edge potential to solve business problems
and enhance competitive advantage. However,
for the power of the grid to be fully realized by
business decision makers, a risk assessment is
needed. For as has been shown in this chapter,
trust issues remain one of many risk factors that
need to be considered before grid computing is
adopted. Since the grid by definition involves the
creation of virtual partnerships between VOs, like
any partnership there are risks as well as rewards.
In the future, grid computing will only be seen to
serve and support decision makers if these risks
are properly assessed and accommodated. Like
all enabling technologies, investment needs to
be made in properly harnessing the power of the
grid without exposing the business to undue risk.
This is one of the challenges that still remain to
be solved if grid computing is indeed to become
a normative tool of the business community, not
just a play-thing of academia and scientific stakeholders. Indeed, there is a greater need now for
the business community to assume a more active
role in the development and commercialization of
the grid. While scientists have hitherto dominated
the grid community, this dominance may soon
increasingly be challenged.

conclusIon
This chapter has endorsed the logic that the concepts and practices associated with grid related
technologies can assist managers in making
intelligence informed decisions within a virtual
organisation (VO). This approach will extend the
opportunities to see things from a multi-perspective point of view that will ultimately challenge,
mature and advance the involved partners. It is anticipated that the decision to use grid technologies
will unfold new opportunities as it will enlarge the
actual search space boundaries within the term of
problem space as described by Simon (1977). By
default, a problem space represents the boundary
of an identified problem and contains all possible
solutions to that problem. It might then still be
possible not identify the optimal solution but it
is more likely to increase the opportunities for a
better solution to be encountered. Overall, it will
facilitate methods towards normative thinking as
required for a better quality of service.
In the context of this chapter, we have referred
to a VO as the ability to share and exploit commodities within a dynamic distributed environment via networks. Commodities as services are
shared and exploited via the use of policies and
may include but are not limited to computational
nodes, stored data, expertise, and other resources.
We have referred to them as transient, fluid services since they enter and leave based on their
availability and a number of policies.
A core element of this chapter has been to
highlight those VOs within grid environments
that are frequently not limited by technical consideration alone. We took the holistic view that
VOs are also a kind of a social network. Therefore,
trust was examined as a soft issue with respect to
its structure, cognitive aspects, and relations. In
particular, we discussed the role of soft trust issues
at two distinct intangible and ambiguous levels of
abstraction: at the VO level of abstraction and the
grid (data) service level of abstraction through the

use of the semiotic paradigm. We concluded that
trust remains a subtle and elusive concept, yet it
is vital that decision makers attempt to conceptualize trust issues explicitly, particularly when
considering implementing complex distributed
systems, such as the grid. Furthermore, semiotics
may well provide a useful paradigmatic vantage
point within which to conceptualize about these
vital trust issues at the empiric, pragmatic, and
organizational levels.
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0
0
Chapter XII
Intelligent Supply Chain

Management with Automatic
Identification Technology
Dong Li
University of Liverpool, UK
Xiaojun Wang
Kinchung Liu
Dennis Kehoe
AbstrAct
RFID-enabled business models are proposed in this chapter to innovate supply chain management.
The models demonstrated benefits from automatically captured real-time information in supply chain
operations. The resulting visibility creates chances to operate businesses in more responsive, dynamic,
and efficient scenarios. The actual initiative of such novel RFID enabled applications is therefore to
encourage intelligent supply chain management to dynamically respond changes and events in real-time.
As the RFID implementation costs are continuously decreasing, it is expected that more novel business
models would be inspired by the technological advancement to foster more intelligent supply chains in
the near future.
IntroductIon
Enterprises have been experiencing significant
changes in the realms of technology, organization
and management, due to increasing demands on

the agility, flexibility, customization, and collaboration in supply chains. There is a pressing need
to improve the process visibility and to facilitate
Intelligent Supply Chain Management with Automatic Identification Technology
supply chain wide decision-making through strategic business intelligence to sustain enterprise
competitiveness (Krishnamurthy, 2002; Srinivasa
& Swarup, 2002). One of the important enabling
technologies to build up business intelligence is
the identification and tracking technology, with
which the product-centric information resources
and associated decision-making systems can be
established within and beyond enterprises (Davie,
2002). The information about product movements
is crucial to the supply chain efficiency, agility, and
product safety (Jakobs, Pils, & Wallbaum, 2001).
Product identification and tracking technologies
have been developed over timefrom paper based
manual recording systems to the semi-automatic
barcode technology associated with optical-digital
data processing systems. In recent years, a wireless identification technology, radio frequency
identification (RFID), has attracted increasing
attentions in supply chain management. Many
trials have been implemented with recognized
benefits including improved traceability, reduced
labor costs, increased speed, greater responsiveness, and better product quality.
A networked RFID system integrates local
identification and tracking data with a networked
supply chain system through Internet. Unlike
barcode systems, the RFID technology can remotely identify physical objects instead of visual
alignment of each product with a scanner. It can
communicate with multiple products simultaneously and dynamically update the data on RFID
tags. The technology provides opportunities in
automation of the data capture, item-level product
visibility, and particularly in the business process
transparency, integration and collaboratively
decision making. Therefore, integrated RFID
systems are of greater potential to enhance the
intelligence of supply chain management than
traditional identification technologies.
This chapter will focus on the RFID-enabled
intelligence for innovation of the enterprise operations and supply chain management. The barcode
and RFID based identification technologies are
reviewed in the second section. The models

which gain benefits from RFID applications are
described in the third section. The conclusion is
given at the end of this chapter.
IdEntIFIcAtIon tEchnologIEs
And AssocIAtEd systEMs
The RFID technology is one of the efficient
identification technologies. Other technologies
include one-dimension barcodes, two-dimension
barcodes, DNA based bio-barcodes, and global
positioning systems (GPS). Although advantages
of the RFID technology have been broadly recognized in the past few years, the (one dimension
or linear) barcode system has been a dominant
identification technology for the last two decades.
In this section, we will review technical details
of the RFID and linear barcode systems.
the barcode technology and

Associated systems
A barcode is a data carrier which stores data as
a series of stripes with different widths and with
different spaces between them as seen in Figure
1. The data can be captured by a scanner or
reader which requires positioning closely in line
with the printed stripes. The scanner uses a laser
beam that is sensitive to the reflections from the
image pattern on a barcode label. The scanner
translates the light signal into digital data that
Figure 1. An example of the barcode prints

(Source: EAN International, 2003)
0
is transferred to an associated computer system

(Mallah, 2005). The barcode technology has been
applied to industries for a variety of purposes, including consumer product identification at various
packaging levels, tracking operational processes,
traceability for safety and quality assurance, and
so forth. (Osman & Furness, 2000).
There are several different barcode standards
or symbology for various applications and used in
different regions in the world. The widely accepted
standards include Universal Product Code (UPC)
from the Uniform Code Council in the U.S., and
the European Article Numbering system (EAN)
which is a UPS compatible system created by EAN
International. The standard allows for a pair of
extra digits along with the unique identification
of a physical object to support customized coding
for various internal uses in industrial operations
(EAN International, 2003). On a barcode label,
the relevant information can be printed for both
scanning and human reading purposes. The human readable interpretations of a barcode provide
flexibilities in the operations management when
a human intervention is necessary.
The major contribution of the barcode technology is facilitating automatic or semiautomatic, fast
and accurate acquisition of data. It dramatically
improves the efficiency of information processing and avoids the error-prone manual data input
into information systems. Previous studies have
demonstrated that, while human data entry has
an error rate around 1 in 300, the use of barcodes
can reduce this to less than one in 2,000,000
(Osman & Furness, 2000). The standardized
coding and machine-reading technology facilitates information processing across industry and
company boundaries in supply chains.
The limitations of the barcode technology
are mainly in its data acquisition method and
data carrier capacity. Firstly, to capture data on a
barcode label, a reader must be closely positioned
to the label. The reading has to be made for labels on each product or facility one by one. This
procedure will apparently slow down operational
0
processes with a large volume of product flows

(Krkkinen & Holmstrm 2002). Data may also
be missed due to human errors or misread due
to unclean barcode labels. The second limitation
of the barcode is its low data density which only
allows a data capacity about 20 characters (Osman & Furness, 2000). The small data volume
carried on the barcode label limits the flexibility
of data transfers through supply chains, that is,
a product or a logistic unit itself cannot provide
enough details of themselves in many cases, and
the information has to be accessed through centralized databases. Furthermore, data on a barcode
label are static and cannot be changed. Therefore,
the barcode cannot identify dynamic changes associated with a product and logistic unit.
the rFId technology and the

Associated systems
Applications of the RFID technology in industries
started more than two decades ago. However, the
technology has not been widely adopted until
late 1990s due to significantly decreased costs
of the RFID hardware and software, although
the development of barcode systems has significantly improved the efficiency and accuracy of
data capture in supply chain operations against
manual data recoding systems in 1980s. Researchers and practitioners in supply chain management
are currently investigating the role of the RFID
technology in another possible wave of revolutions in supply chain management technologies
(Schwartz, 1997). In this section, we introduce
the RFID technology, and compare it with the
traditional barcode technology.
The Infrastructure of RFID Systems

A RFID system identifies products/assets or
other objects via radio transmissions between
data carrying devices (tags) and devices (readers)
that are capable of receiving the radio transmission. It consists of three basic components, tags,
readers, and the middleware which transfers the

captured data into enterprise data sources with
appropriate formats.
A RFID tag consists of a microchip as the
memory-based data carrier and antenna to
transmit encoded information through wireless
interrogation with different radio frequencies.
The encoded data is used to uniquely identify
items (e.g., pallets, cases, or individual products)
to which the tags are attached. The capacity of
a tag can be 512 bytes for passive tags and up to
32Kb for active tags (Furness, 2005).
The reader as an interrogator of a RFID system
automatically communicates with the tags when
they enter a readers reading field. The reader
converts the radio wave into digital data and
transmits the data to RFID middleware, which
is a bridge of the communication between RFID
systems and enterprise applications. Communica-
tions between RFID readers and tags may cause

interference or collision when multiple readers or
tags send signals simultaneously. Anticollision
methods have been designed in RFID communication standards or protocols to solve such problems
(Sarma Weis, & Engels, 2003). When a RFID tag
receives overlapped signals from multiple readers,
the problem is known as reader collision. On the
other hand, when multiple tags send signals to
a RFID reader at the same time, the problem of
tag collisions will arise (de Jonge, 2004). While
RFID communication protocols offer different
solutions to these problems, additional software
functions may also be required in associated
applications to enable unique identifications and
support relevant business operations.
According to communication powering
features, RFID tags can be classified as active
tags and passive tags. An active tag is powered
Figure 2. RFID plastic tag, paper tags, and reader systems (Source: Microlise, 2003)
Tags
Readers
Figure 3. Structure of a RFID system (Adapted from Chartier, 2005)
0
by an internal battery. The power is continuous

available within the battery lifetime. Active tags
transmit the stored data at regular intervals. Active tags have a greater communication range
than passive tags; better noise immunity and
higher data transmission transfer rates as they
have the greater response strength then passive
tags (Furness, 2005). A passive tag is powered
by an electromagnetic field generated by a reader
signal and is without the internal battery. It therefore has virtually unlimited operational lifetime.
However, passive tags have weaker response and
shorter communication ranges compared with
active tags. Passive tags cost less and may have
smaller sizes (Furness, 2005).
According to the data adaptability, the tags
can also be classified as read-only or read/write
types. The data carried on read-write tags can be
adapted through the air interface commands from
readers as seen in Figure 3. On the other hand,
the data on read-only tags cannot be changed
(Furness, 2005).
According to the frequencies used for the
communication between RFID tags and readers,
RFID tags can be classified as low frequency (LF),
high frequency (HF), ultra high frequency tags
(UHF). In Table 1, the communication features
with different frequencies are described.
The middleware of a RFID system associates the unique identifier stored on a specific tag
with the information about the product. After the
middleware processes the information received
from readers, it filters the data to the companys
supply chain execution software, which updates
its inventory data accordingly.
networked rFId systems and

supply chains
Figure 4 shows a networked RFID system which
includes a local RFID system and the service to
integrate the local product identification information with the networked supply chain system
through Internet.
To globally share the product identification
information, the output from the RFID middleware is described in a subset of XML language,
physical mark-up language (PML) which enables
standard data communication with Web services.
The data about a product in a standard format,
electronic product code (EPC), can be captured
through the particularly designed on-line directory, object name services (ONS), on the Internet.
This Internet-enabled object name registration and
discovery service facilitates the real-time location
of individual products or logistic units with their
relevant information throughout supply chains.
The EPC, as a RFID coding standard which
is not based on the existing ISO standard, was
originally developed by the AutoID Centre at MIT
(de Jonge, 2004). It has been further developed
towards a worldwide standard by EPCglobal which
is a nonprofit organization and was set up by the
Uniform Code Council and EAN International
(UCC.EAN) (EAN International, 2003). The EPC
stored in a RFID tag is a number with a header
and three sets of data as depicted in Figure 5. The
header of the code represents the version number.
The three sets of data represent the manufacturer
of the product (the EPC manager), the type of the
Table 1. Communication features of RFID systems with different frequencies (Source: de Jonge, 2004)
Frequency
Shot Description
Read range (meter)
Data speed (tag/sec)
125-134 kHz
LF
0.45
1-10
13.56 MHz
HF
<1
10-40
868-870
UHF
2-5
10-50
902-928 MHz
0
Figure 4. Internet-enabled RFID systems
Figure 5. The electronic product code (Source: RFID Gazette, 2005)
product (object class), and the item unique serial

number respectively.
With the networked RFID systems and the
standard product code, all relevant supply chain
members can share the information of physical product movements and associated status
(quality, processing stage, and contamination
risk, etc.) in real time. This enables automatic
tracking and tracing of products without human
intervention.
Limitations of RFID Systems

The current limitations of the RFID technology
are mainly in several aspectshigh costs, barriers
in standardization, concerns in data security and
privacy, immaturity of necessary technologies,
and technical shortcomings of the RFID technology (de Jonge, 2004; Microlise, 2003; Sarma et al.,
2003; Smart Manufacturing Forum, 2003).
The investment of a RFID application depends

on the scale of an application and the nature of
a business. A RFID application is usually much
more expensive than a barcode application due
to the technical complexity of electronic tags and
readers. Although RFID applications may bring
significant benefits to businesses, in general the
investment cannot be covered by potential profit
increases in a very short term (Chadbourne, 2005).
Relevant case studies for cost benefit analysis will
be reviewed in the next section.
Different standards for the RFID technology
have been developed such as EPC and ISO, and
so forth. (de Jonge, 2004; Microlise, 2003). To
apply the technology in supply chain operations,
it is important to employ open standards in all
business processes so that the RFID tags can
communicate with all systems in the supply chain.
The RFID systems with different standards are
0
difficult to share the critical information in real

time. This poor interoperability would also lead to
high costs in manufacturing and operations of the
incompatible RFID equipments. As the technology becomes more mature, it is expected that the
RFID technology would be more standardized.
As a RFID system does not need contact or
line-of-sight reading for data capture, it is difficult
to prevent unauthorized users from accessing the
data on a RFID tag. This exposes security and
privacy threats (Sarma, et al., 2003). For instance,
unauthorised RFID readers may read RFID tags
on a container. As the information on a RFID tag
may store valuable information for products or
users, it is important to protect the data on RFID
tags. For this purpose, various approaches are under development such as encryptions, data locks,
and authentication keys, and so forth. (Sarma et
al., 2003). However, such solutions may increase
the costs of RFID technologies.
A RFID reader communicates with RFID tags
through different radio frequencies as seen in
Table 1. The communication will be significantly
affected when the tags are placed with metal
and liquid. Radio signals in high frequencies
are easily absorbed by liquid and low frequency
signals are strongly affected by metal (de Jonge,
2004). Therefore, in RFID applications with such
environment, solutions need to be particularly
designed to reduce impacts on the RFID system
performance from the environment.
Benefits of RFID Over Barcode

systems
As a summary, advantages of the RFID technology
over the barcode technology mainly include:
0
Automatic data capture without visual

alignment with a scanner: This reduces
labor costs, improves accuracy and speed
of data acquisition. More importantly, the
real time information can be captured to
support in-depth management functions,
for example agile logistic operations control.

Such information is too costly to be obtained
through manual scans (Microlise, 2003).
Greater data storage capacity: The enriched information from RFID tags facilitate
agile and flexible supply chain operations
due to reduced reliance on centralised
data sources. This portable data source is
particularly beneficial to distributed operations, for example construction projects and
distributed manufacturing, when centralized
databases are not easy to access (Marsh &
Finch, 1999).
Durable tags which can work in harsh
environments: Barcode labels are easy to
be contaminated and damaged in harsh environments (e.g., dust and high temperature).
The RFID tags are much more durable to
such conditions (de Jonge, 2004)
Rewritable tags for dynamic data modification: This capability facilitates dynamic
operational control based on the variance
of product or environmental attributes, for
example, temperature, pressure, and so forth.
With integration of various sensing technologies with the RFID systems, product safety,
and quality can be improved (Li, Tang &
OBrien, 2005).
Simultaneous communication with multiple tags and data reading with longer
distance: Together with the first feature, the
data capture power enables efficient monitoring a large volume of physical objects in
a large area without human intervention.
With these advantages, the RFID technology is

generally more efficient than traditional barcode
systems for supply chain management. Benefits
of the RFID technology has been extensively
reported from industrial trials. However, costs in
the implementation of RFID projects have been
a major concern and barrier in adoption of the
technology. In this section, we review some cases
of RFID trials which reveal major cost/benefit

features of RFID applications.
Reported case studies have shown that investment returns on appropriately implemented
RFID applications would cover the costs in a
limited period (Chadbourne, 2005; de Jonge,
2004). A RFID solution provider, Intellident,
reported the RFID application case of Marks
and Spenser (M&S Foods) with a cost benefit
analysis (Chadbourne, 2005). M&S Foods uses
300 million labels per year. Cost of the barcode
system, including labels, scanners, labor, and
data management, is estimated at 3 million per
annum. Comparing the barcode system solution,
the RFID system at the company had an initial
investment of 50,000. The cost of reusable tags
(on crates, boxes, pallets) is 1 each and at the
total of 3 million. With the estimated RFID life
as ten years, the depreciation cost of RFID tags
will be one-tenth of the barcode label cost per annum. With the supply chain of 200 suppliers, six
distribution centers and 350 stores, the payback
period of the initial investment (50,000) on the
RFID system is estimated less than 12 months
based on savings (estimated as 600,000 per
annum) from reduced goods intake speed (from
22 minutes to 3.6 minutes), savings (estimated as
22 million per annum) from improved delivery
accuracy, improved shelf availability, and reduced
store administration, and savings (3 million
labels to 300,0000 tag depreciation per annum)
from removing tray labels.
In a RFID benchmark study reported by LogicaCMG (de Jonge, 2004), a detailed cost/benefit
calculation framework was proposed. A RFID
tag is estimated at 0.50. Its life is estimated as
7 years. The system installation cost is 30,000
per reader. The investigated supply chain has 15
stores, 25 dock doors with one reader each door,
10,000 returnable transport items (RTI) per day.
The payback period for the investments in RFID
technology is between two and three years in the
case. In year one, the net cost is 3.71 million.
Then, from year two to year five, the net benefits
will be 3.56 million, 2.91 million, 2.91 million,

and 2.91 million respectively. The benefits are
derived from savings mainly in the RTI handling
cost reduction (0.52 each), efficiency increase
(8.5%), and stock level decrease (10%).
The evidence reported above shows that RFIDenabled supply chain systems are more efficient
than those with the barcode technology. More
cost benefit analyses of RFID applications can be
found in various technical reports (BT Auto-ID
Services, 2005; Fitzek, 2003;). While industrial
RFID applications are exploring the potential of
the technology as a new identification technology
to improve existing operations performance, we
focus on the investigation on the value adding
potential of the RFID technology to innovate supply chain operations with new business scenarios.
In the following sections, we will present some
inspiring thinking on the supply chain innovation based on RFID enabled systems. It should
be noticed that technical and economic details of
the RFID system implementation are beyond the
scope of this chapter.
rFId EnAblEd IntEllIgEnt

busInEss ModEls
With the recognised benefits and decreasing
hardware costs of the RFID enabled automatic
tracking technology, numerous industrial trials
and technical developments on the RFID systems
have been reported such as cases at WalMart,
Sainsbury, Marks and Spencer, Finnair, Ford
Motor Co., BT and many others. The applications
have mainly focused on improvement of the business efficiency by replacing barcode or manual
tracking systems with the RFID technology.
Although promising outcomes have been obtained as evidence, using the enriched automatic
tracking information as a source of strategic
intelligence for business innovation still remains
a challenge. Some research has reported in the
literature for investigating such opportunities
0
in different industries (Karkkainen Holmstrom,

Framling, & Artto, 2003; Li, Kehoe, & Drake,
2006; Liu, Zhang, Ni, & Tseng, 2004; McFarlane, Sarmab, Chirna, Wonga, & Ashton, 2003).
The RFID related research has proposed novel
concepts, business processes, and information
systems, which improve the efficiency, agility and
flexibility of business processes through restructured business scenarios. McFarlane et al. (2003)
proposed an intelligent product concept which
integrates the product information content permanently with its material content. With intelligent
products, the RFID technology are integrated
with agent based systems to enable individual
products to participate in decision making processes intelligently according to the information
embedded with themselves. Karkkainen et al.
(2003) developed a prototype system which controls a large number of individualized deliveries
in international projects to arrive at destinations
just in time. They proposed a product-centric,
so called inside-out, delivery control approach
with which products themselves provide delivery
requirements to the control systems through RFID
tags attached to the products. The planning and
control of the deliveries are relatively independent
from the centralized information storage, and are
flexible to uncertain supply routes and partners.
The supply chain network is highly responsive to
dynamic changes in the delivery processes. Liu,
et al. (2004) proposed a decentralized production control system with the RFID technology
applied to a manufacturing shop floor context.
Intelligent agents are integrated with the system
to communicate with the products that carry the
information about their own destiny on RFID tags.
Through a simulation of different control rules,
the research concluded that, with the real-time
information linked to products the agent-based
model outperforms traditional control rules. Such
efforts on the opportunities from the technology
driven innovation of the operations management
are still at the concept-proving stage (McCartney,
2006; Sullivan, 2006).
0
The following sections of this chapter will

introduce three research cases on intelligent operations and supply chain management through
utilising the RFID enabled automatic tracking
technology for innovative business models.
dynamic product Quality tracing of

perishable Foods
It is important to maintain suitable environment to
protect the quality of perishable foods. Therefore,
the accuracy of the dynamic product tracking
information and the technology to capture such
information in food manufacturing and supply
processes are crucial to the food quality control.
In the industry, the RFID-sensor technology is
now under investigations for the accurate estimation of product quality characteristics thorough
continuously detecting changes of key environment parameters (Sullivan, 2006). In this section,
a dynamic product quality tracing model which
utilizes the automatically captured product data
through RFID sensor systems is proposed. The
quality in this model is represented by the product
value which intends to indicate the consumers
perception of the product quality in the form of
usefulness (in this case, edibleness). The concept
of product value is derived from the research of
Blackburn and Scudder (2003) in which the concept is used to abstract the consumer perceived
product quality and its impact of the product value
on demands. The model in this section is based
on a perishable food retail supply chain context
as shown in Figure 6. With the integrated RFID
sensor network, the product movements and the
environment changes in a supply chain can be
continuously monitored or tracked with a greater
accuracy comparing with traditional manual or
barcode enabled control systems (Sullivan, 2006).
This provides the possibility of qualitatively
modelling the continuous food value or shelf life
variations.
Figure 6. A case of dynamic product value tracing in a food supply chain (Adapted from Li et al., 2005)
The Value: Tracing Model for

Perishable Foods
To quantitatively measure the food quality deterioration, we adopt the model in Blackburn and
Scudders research (2003) which evaluates the
fresh food value by an exponential function of the
time period T and an environment parameter (see
equation (1)). The exponential function indicates
the fact that the consumer perceived product value
decrease quickly over time in a nonlinear form
given the environment condition. The parameter
in our research represents the influence of the
temperature on the product quality. The maximum value of a product is 100 (%) at the time of
delivering from a farmer.
To describe the product quality (value) tracking

process with the RFID sensor networks, a value
tracking model is developed in equations (2).
Vm , k *g = b k *g V f m , g e
Vm d , k = b k *g Vm , k *g e
Vd , j*k = b j*k Vm d , k e
Vd r , j = b j*k Vd , j*k e
Vr , i* j = b i* j Vd r , j e
f m , k *g
m, k
tm , k )
m d , j*k
d, j
t f m , k *g )
tm d ,
j*k
td , j )
d r , i* j
td r , i* j )
i = 1, 2,3, 4; j = 1, 2; k = 1, 2; g = 1, 2.
b k * g , b j *k , b i * j
1, Delivery was paased throug the route
=
Otherwise
0,
(2)
Present product value = Original Value EXP(T)
(1)
The model is derived from the concept of

product value (Blackburn & Scudder, 2003). The

concept is based on the assumption that a value

function can be properly structured with the key
parameter , through quantitative approaches such
as experiments and statistical analyses to represent the impacts of the production and delivery
processes on the product deterioration feature and
the consumers perception of the product quality.
However, such research is beyond the scope of
this chapter.
In equation (2), the value deterioration parameter reflects the magnitude of the environmental
impacts on the product quality/value per unit time.
An exponential value deterioration rule (Blackburn & Scudder, 2003) is adopted, that is, with a
given impact from the environment, the product
quality deteriorate exponentially over time. In
equation (2), i, j, k and g denote the supply chain
tiers, that is, the retailer (r), distributor (d), manufacturer (m) and grower ( f ) respectively as seen
in figure 6. i*j, j*k and k*g denote the immediate
preceding transit routes of a supply chain node at
a tier. Vr, Vd, and Vm are the product value at a supply chain node at the time of entering tiers of the
retailers, distributors, and growers respectively.
Vf-m, Vm-d, and Vd-r are the initial product value in
a transit process between tiers. With this model,
given the initial product quality/value, the status
of the product quality at any place and at any
time can be quantitatively identified dynamically
through RFID sensor network.
To trace the product quality changes, data
dynamically stored in the RFID system would
include product identifications, the manufacturer,
packaging codes of the processes (manufacturing, packaging, delivery, storing, etc.), codes
for preceding and succeeding processes, dates
and the time of entering and leaving a process,
the temperature (and other necessary quality
parameters) in a time period. Readers of a RFID
system is installed at key control points of each
supply chain process to capture both the product
and process details. The sensors in an integrated
RFID sensor network should be connected to the
readers to synchronize the product data reading

and the environment parameter reading. This will

enable the system to capture the accurate impact
of the environment on the product quality while
the products are moving through a supply chain.
The EPC service and object naming service of a
RFID system enable the supply chain partners to
access the accurate information of an individual
product unit (e.g., palette, case, box, etc.) or even
an individual product (e.g., a bottle of milk) in a
supply chain through Internet. Without the automatic product identification technology and the
integration of the sensor systems with RFID systems, the accurate quality status of an individual
product/product unit in bulky and fast product
flows would be very difficult to capture through
current Internet based information sharing applications (Li, Kehoe, & Drake, 2006).
Applications of the Dynamic Product

Tracking
One potential application of the above product
tracking approach is dynamic planning and
pricing in perishable food supply chain operations. With the context given in last section, we
assume that distribution centres in the retail
supply chain dynamically plan their perishable
food deliveries to retail stores according to the
decision on differentiated food pricing policies
and estimated demands at the retailers. These
dynamic planning and pricing decisions require
the accurate product quality information which
enables effective estimation on product demands
and consequently pricing based on the potential
demands. A centralized pricing decision structure
is proposed in Figure 7.
Before a planning period, retailers place orders
based on estimated demands and the agreed product quality. The actual demand delivered to each
retail store is determined dynamically based on
the product tracing information during the selling
period. Variations of the actual delivery against
the orders placed in agreements will incur supply
rearrangements and excess stocks. It therefore
leads to penalties. The objective of such an application would be maximizing the aggregated
profits of the retail stores in the supply chain.
The relationship between a product sales
price and demands can be represented by widely
adopted price-dependent demand descriptions in
the economic research literature. The form of the
demand description can be either determinative
in a linear or nonlinear form, or with a stochastic function. As the perishable foods deteriorate
over time, given accurately captured data for
the product value variations through the RFID
sensor network, a dynamic pricing decision can
be made against potential consumer responses to
the value variation. A price marking down policy
can be consequently developed to dynamically
match demand changes with proper price levels.
The benefits identified from the product tracing
approach are likely to vary with the consumer
buying behavior. The more important the product
quality or value that is perceived by consumers, the
more benefits the dynamic product value tracing
approach would generate.
Dynamic pricing models have been intensively

studied in the literature. Many RFID applications
have been reported. The above RFID enabled
application has proposed an innovative product
value tracing and dynamic pricing scenario by
utilising real-time product quality information
from RFID enabled sensor networks. The RFID
technology underlies the implementation of
such a dynamic pricing approach, because the
real-time and traceable product information is a
prerequisite for accurately evaluating the product
value or quality. With the large volume and variety of product flows, this is very difficult, if not
impossible, to be achieved by traditional product
identification technologies. When consumers are
able to dynamically perceive the quantitative
product quality evaluation, it is particularly crucial
to dynamically plan the deliveries and price the
perishable food, so that better services to consumers and good profits can be achieved.
The proposed product tracing application in
this section has only focused on the optimisation
Figure 7. Procedure of the dynamic pricing approach

of retailers profits. A supply chain wide dynamic

planning and pricing scenario based on such a
technology driven approach may be analysed for a
wider view of the benefits. More insights into the
relationships between the perceived product value
and the demand in the demand function would
be also beneficial to improve the applicability of
the model.
product centric Manufacturing

scheduling
Based on the RFID and agent technologies, the
concept of the Intelligent Product (IP) has been
proposed (McFarlane et al., 2003). The products,
with RFID tags and presented by intelligent
agents, have unique identities and are capable of
communicating effectively with its environment.
An intelligent product can describe itself with
self-retained data, and can make decisions for its
own activities (McFarlane et al., 2003).
With the IP approach, the information system
becomes product centric and the decision- making
tends to be driven by the products themselves.
This approach enables the manufacturing to be
more flexible and agile when dealing with a large
number of product varieties, and more efficient
with given manufacturing constraints. An IPdriven agile manufacturing approach is proposed
in this section to demonstrate the benefits of the
IP approach in the manufacturing operations with
a mass customisation context.
The Concept of Intelligent Product

The Intelligent Product has been defined as a
commercial product that works with a RFID
system and has part or all of the following five
characteristics (Zaharudin et al., 2002):

Possesses a unique identity

Is capable of communicating effectively
with its environment
Can retain or store data about itself
Deploys a language to display its features,

production requirements, and so forth.
Is capable of participating in or making
decisions relevant to its own destiny.
Every IP has two componentsa physical entity and informational presentation. The physical
entity is the physical product which is equipped
with RFID technology. The informational presentation of an IP can be an individual software
agent that owns some product-related data (e.g.,
unique ID) and acts (e.g., negotiate with other
agents, make decisions) on behalf of the products
interest (e.g., short lead-time and low costs, etc.).
An IP retains data about itself. The informational
part of the IP retrieves the data through the RFID
technology. The IP may also keep dynamic data
regarding products movements and processing
requirements, and so forth. The IP system can
access networked data sources (local databases
or ONS registered network sources) that stores
product data such as production requirements,
historical records, and so forth. The local manufacturing unit, IP systems and enterprise systems,
can be integrated with such networked sources so
that the data are visible and updatable by different
cooperative parties. This allows manufacturing
activities to be responsive to the dynamic environment.
The Intelligent Product Driven Control

Approach
The use of autonomous product agent to represent the informational part of products has been
reported in some recent research (Kim, Song, &
Wang, 1997; Krothapalli & Deshmukh, 1999;
Lim & Zhang, 2004; Reaidy, Massotte, & Diep,
2006). The research has proposed approaches with
product agents to provide product information,
negotiate for production control, and communicate ERP systems. The research articles did not
provide details of the linkage between physical
items and agents. The proposed system in this
section will describe the architecture which links

the physical product with the agent systems.
The proposed system aims to copes with a large
number of product varieties and late changes
of production requirements more efficiently in
manufacturing processes through the IP enabled
intelligent scheduling system.
In the mass customization context, with an
extreme case, every production order may be one
batch itself. The traditional centralized decisionmaking approaches are not so scalable when dealing with such complexity in scheduling. With the
IP approach, a product can make decisions about
its destiny with less or without centralized management. Since each product has a duty of making
decisions about itself, and the RFID technology
is applied to enable agents to quickly respond to
physical products, the system is potentially more
scalable to the number of product varieties. In other
words, the manufacturing performance becomes
less affected by the complexity originating from
the product variety issues.
In addition to the product variety issues, customers may request to change the requirements
of an ordered product before it is produced. The
requests lead to changes of a production process.
Consequently, manufacturers need increased visibility to the latest updates in order to conform to
the customer needs. To cope with this, the IP approach may be adopted to track individual product
items in real time and responsively make decisions
for updating a manufacturing process.
The IP Enabled Scheduling System

We firstly introduce a proposed MAS architecture which enables the communications between
physical products and the production systems as
seen in Figure 8.
The architecture includes a job manager agent
(JMA), a data agent (DA), intelligent product
agents (IPA), resource agents (RA), and an RFID
middleware agent (MWA). The DA is in charge
of receiving data transaction requests from
Figure 8. Proposed IP-driven scheduling system architecture (Adapted from Liu, Li, & Kehoe, 2006)

other agents and fulfilling the data transactions

to a database before giving feedback to agents
about their requests. An IPA is the information
presentation of the intelligent product. It actively drives the scheduling process and makes
decisions within a negotiation process. A JMA
receives new production orders and requests for
changing production orders from other parties. It
creates and removes IPA from MAS when a job is
created and completed respectively. A RA is the
informational presentation of resources. Based on
the generalized case in the last section, a RA can
represent a workstation. The MWA manages the
sensor devices, receives raw data from sensors,
filters and interprets the data, and finally informs
the corresponding IPA about the status of the
physical part. In other words, MWA and sensors
are the communicational link between the physical
part and informational part of an IP.
Detailed workflows of the approach can be
described by the life cycle of jobs and negotiation
protocols. A job life cycle is described below:
Production orders are received randomly.

After a new production order is received by
the JMA, it will create a new IPA and submit
the product data to a DA which stores the
data in a database. The physical product
equipped with a RFID tag carries unique
ID and necessary static data.
When production requirements need to be
altered during a manufacturing process,
the changes are received by the JMA which
checks if the process needs update.
At checkpoints, the products with RFID
tags are physically allocated to the routes
of processing stations. When a process is
completed and the product is leaving the station, the MWA retrieves the unique product
ID and other relevant data from the RFID
tag and informs of the IPA that the product
has completed. Then the IPA will trigger
the negotiation process with the RA for a
scheduling decision of the next route.
The RA will consequently add the new jobs
to its schedule according to the agreement.
Figure 9. The workflows of the proposed IP-driven scheduling system (Adapted from Liu et al., 2006)

It downloads the production requirements

from centralized database through the DA.
Finally, the workstation finishes the whole
process.
The negotiation process takes the interests
of both the IPA and RA into account. The IPA
and the RA work cooperatively to address the
production lead-time and workstation resource
optimization issues respectively. Figure 9 explains
the negotiation protocols. With the negotiation
protocols, IPA initializes the negotiation process,
and has the power to evaluate, accept and reject
RAs proposals.
Through the proposed approach, the problem
of the product variety and dynamic requirement
changes would be dealt in a more scalable and responsive manner. A MAS architecture is proposed
to support the IP enabled scheduling approach.
The architecture integrates the IPs physical and
informational attributes, as well as the links
between them. In order to illustrate the idea,
prototype negotiation protocols are developed to
implement the architecture. Further research is
being performed to simulate the approach with
some manufacturing cases.
Intelligent traceability systems

The traceability of product data, globalized data
sharing, and risk analysis within and beyond
business networks is a key capability to maintain food quality and safety. The research on
traceability systems has been reported in the
literature, including RFID tagging and DNA
profile auditing solutions Caja (2002). A number
of traceability systems and approaches (Bertolini,
Bevilacqua, & Massini, 2006; EU FoodTrace
2004; Mouseavi, Bevilacqua & Massini, 2002;
Sasazaki et al., 2004; Wilson & Clarke, 1998)
have been developed to deliver the supply chain
traceability and internal traceability for achieving different business objectives. These systems
vary in complexity from simple paper recording

systems, complex computer-based information
technology methods, to the most sophisticated
systems including biological technologies.
The traceability is defined as: the possibility
to find and follow the trace, throughout all the
stages of production, processing and distribution
of a foodstuff, feedstuff, and an animal destined
for food production or a substance destined to be
incorporated in foodstuff or feedstuff or with a
probability of being used as such (The European
Parliament and the Council, 2002). According to
TRACE-I Guideline (EAN International, 2003),
both tracking and tracing must be in place for the
effective traceability. The tracking and tracing
capability of a traceability system has been used
as tools for achieving a number of different objectives. Golan, Krissoff, Kuchler, Calvin, Nelson,
& Price (2004) indicated that firms have three
primary objectives in using traceability systems:
facilitate trace-back for food safety and quality;
differentiate and market foods with subtle or undetectable quality attributes; and improve supply
chain management.
Although, food traceability becomes an essential issue for the food industry, companies are
reluctant to invest on these systems as many food
organizations acknowledge their main motivation
of adopting traceability is complying with the
regulations. For many businesses, implementations of traceability are still seen as a daunting
task without any obvious benefits to a business in
financial terms. Traceability is frequently mentally separated from other supply chain activities
(EU FoodTrace, 2004). Therefore, enhancing and
understanding the value of the food traceability
becomes increasingly crucial for the food industry. In this section, we particularly demonstrate
the potential benefits of the RFID technology for
the integrated traceability-supply chain managementnot only for tracing product origins, but
also support the strategic and operational supply
chain decision-making.

RFID Based Traceability System
Traceability System Integration
A traceability system requires capabilities of

identifying any items deemed necessary for
traceability, and facilitating data capture, storage, management, and communication. RFID
based traceability systems have the potential to
improve such capabilities. Although paper based
and barcode based traceability systems can deliver
both internal and chain traceability with basic
traceability functions, the RFID traceability system changes the way in which data are recorded,
processed and transmitted across a supply chain,
to manage the traceability processes innovatively
and more efficiently. Wilson and Clarke (1998) indicated that the data structure used in traceability
system must meet two conflicting criteria: firstly,
it should be as small as possible to enhance speed
and efficiency; secondly, it must be of sufficient
capacity to meet the needs of large data volumes.
RFID technology itself offers the speed, automation, and data capacity with a distributed data
management scenario (every individual product
attends the data storage and processing),which
limits the complexity of the centralized traceability data management. Table 2 shows the
advantages of RFID enabled traceability systems
over barcode based traceability systems.
With RFID based traceability systems, a product

can be tracked and traced in a more efficient way
to provide accurate real time data of food and
ingredients as they move through supply chains.
To maximize the benefits from such systems,
traceability systems need to be integrated with
enterprise systems and supply chain management processes so that the traceability systems
can contribute to the operations and supply chain
management with the benefits beyond the contingency management. A framework of integrating
the traceability system with operations management processes is proposed as seen in Figure 10
in a food manufacturing context. The investigated
case is based on a British meat manufacturer. The
current paper based traceability system records
batch numbers and time of processing for all
products. The business is experiencing problems
such as low production efficiency due to long
production lead time, high inventory and large
batch size, high quality maintenance costs due
to long storage time; and lack of real time tracking/tracing capability for production and quality
control, and so forth.
With the proposed traceability-operations integration, the RFID enabled system is expected to
Table 2. Advantages of RFID based traceability system over barcode system

Advantages of RFID Based Traceability System Over Barcode System
Capacity: More data (6bit~64kbit) can be stored in tags.
Data Feature
Unique identifier: A serial number or unique identity can be assigned to specific item
Efficiency: Many tags can be read simultaneously
Data Capture
Convenience: Data can be captured within certain range

Location: Readers can provide location information when products being scanned
Up-to-date data: Data can be obtained continuously
Automation
Accuracy and cost-effectiveness: Without human involvement in data scanning

Figure 10. A framework of the integrated traceability-operations management solution. (PCMS: package coding management system)
provide the real time traceability data of production process and raw materials, such as production
facility, processing history, supplier information
of raw materials, and its storage period and quality status for production planning and inventory
control processes. On one hand, the integrated
solution provides the real time information that
enables to optimize production plan and a better
quality control for lower costs and better product
quality. On the other hand, the optimised pro-
duction decision as an input of the traceability

system would improve both tracking and tracing
capabilities through reduced unnecessary batch
mix and reduced numbers of products that may
be potentially recalled.
With a RFID enabled solution, enriched
traceability data can be retrieved such as process
environmental parameters, real time positions,
product composition, packaging, and storage conditions. The information would improve customer
Table 3. Potential benefits of integrating traceability system with operations and supply chain management
Processes
Impact of integrated RFID based traceability systems
Production Planning & Scheduling
Optimal production planning; avoid uneconomic raw material mixture, reduce the production
lead time.
Inventory Control
Inventory visibility; efficient and accurate picking and packing operations.
Quality Control
Better quality and process control; efficient and accurate risk assessment, dynamic product
quality and safety evaluation.
Package Coding Management
Coding automation; accurate and efficient coding process; additional traceability data on the
package.
Shelf Management
Reverse Supply Chain management
Supply and Logistic/Distribution
Management
Improve on-shelf availability; effective shelf replenishment; dynamic pricing.

Quick response; efficient product recalls and returns.
Efficient and effective information flow; instantaneous decision-making responses to supply
chain variations.

satisfaction and more accurate and responsive

risk assessment. The dynamic evaluation results
in food safety risk consequently support dynamic
planning for production and supply chain operations (e.g., dynamic pricing and supplier selection)
and critical control points (e.g., control actions
at required points according to risk alert level).
With an extension to the supply chain management, Table 3 summarizes potential benefits of
the integration in different domains within and
beyond a food manufacturing enterprise.
To achieve these benefits, the RFID enabled
traceability system must be properly designed to
ensure that the right data is collected and managed effectively. The business process needs to
be re-engineered to integrate the RFID based
traceability system with enterprise systems.
The above research concludes that, when a
traceability system is integrated with operations
and supply chain management, more competitive
advantages can be potentially obtained. The RFID
enabled traceability system is promising in facilitating such integration. A key issue to achieve the
maximum potential value of integrated traceability systems is how to utilize the traceability data
for business innovation. Future research would
be beneficial to such applications by identifying
the benefits of the integrated traceability solution
through quantitative analyses.
concludIng rEMArks
The proposed business models in the third section, utilize the RFID technology to improve the
visibility of products and their relevant attributes
in logistic or manufacturing operations. The
visibility consequently creates chances to operate the businesses in more responsive, dynamic,
and efficient scenarios. In such proposed RFID
applications, the technology is not only used as
a replacement for barcode systems. The actual
initiative is to encourage the sense and respond
management strategy which enables more agile
0
and intelligent supply chains to respond changes

and events dynamically (Ferrari, 2006). The
development of advanced identification and
tracking technologies, including RFID, GPS and
other sensing technologies (e.g., for temperature,
pressure, humidity, shock, and weight, etc.) are
key enablers of the intelligent supply chains as
they provide the sense to management systems
throughout a supply chain. Therefore, integrations
of the identification and tracking technologies into
a business intelligence platform are required, so
that the real time information at different levels
(e.g., product attributes, product items, stock
units, containers, vehicles, etc.) can be available
for various decision-making purposes.
To achieve the potentials of the technology
driven innovation, supply chain partners must be
cooperative in investments of the technologies,
information sharing, risk and profit sharing, and
standardisation of the technologies, and so forth.
Without the cooperation, the sensing information
would be restrained within organization boundaries, and would not add values to supply chain
operations. Lack of cooperation may simply stop
supply chain partners to join in RFID applications
projects (e.g., manufacturers may refuse to pay for
RFID tags, when increased profits are only related
to retailers). Furthermore, associated technologies
also need to be mature so that the sensing data
can be processed into valuable information for
decision support. For instance, the software which
integrates RFID systems with various enterprise
applications is still under development. This has
limited the potential benefits of RFID applications, and also affected the technology adoption
(Microlise, 2003). Therefore, both organizational
and technical supports are essential for the success
of RFID technology applications.
In summary, the RFID-enabled business intelligence which improves the process visibility
and facilitates decision making are increasingly
important to sustain competitiveness. As the
implementation costs of the RFID technology
are continuously decreasing, the technology is
expected to play more important roles in the innovation of supply chain management. Although this
chapter focuses on the RFID enabled intelligence
for innovative enterprise operations and supply
chain management, it is apparently that the RFID
technology is not the only player in the technology
driven business innovation. Applications of the
grid computing technology, agent based systems,
global positioning system, wireless mobile networks, personal data assistant, and many others in
the industry have generated promising outcomes
in providing strategically important information sources. Such information sources would
be increasingly used as business intelligence to
improve business performance. We are expecting
that novel business models would be inspired by
such technological advancement to foster more
intelligent supply chains in the near future. This,
we believe, would demonstrate both the benefits
and challenges of the visibility, not only in the
industry, but also in everyones daily life.
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Chapter XIII
An Ontology-Based Intelligent
System Model for Semantic
Information Processing
Mark Xu
University of Porstmouth, UK
Vincent Ong
Yanqing Duan
AbstrAct
In the context of increasing usage of intelligent agent and ontology technologies in business, this study
explores the ways of adopting these technologies to revitalize current executive information systems (EIS)
with a focus on semantic information scanning, filtering, and reporting/alerting. Executives perceptions
on an agent-based EIS are investigated through a focus group study in the UK, and the results are used
to inform the design of such a system. A visualization prototype has been developed to demonstrate the
main features of the system. This study presents a specific business domain for which ontology and intelligent agent technology could be applied to advance information processing for executives.
IntroductIon
Many executive information systems (EIS) failed
to provide strategic significant and meaningful
information to executives (Bussen & Myres,
1997; Rainer & Watson, 1995; Xu, Kaye, &
Duan, 2003) despite enormous efforts to make

EIS easy to use for executives. This is due to the
nature of strategic information for executives and
technological weakness in semantically scanning
and processing information. On the one hand,
information needed by executives is primarily
An Ontology-Based Intelligent System Model for Semantic Information Processing
about the external environmental changes, which

is often diverse, dynamic, and usually scattered in
locations and not readily available (Xu & Kaye,
1995); in addition, making sense of emerging
events and signals from the environment relies on
executives interpretation and knowledge, which
is subtle and tacit in nature (Choo, 1998). Moreover, an individual manager has limited capacity
to notice and process all the information needed
from the external environments, which results
in limiting the scope of input coverage and the
stretch of the output delivery (Martinsons, 1994;
Xu & Kaye, 2002). On the other hand, semantic
information processing technology, for example
semantic indexing, ontology have the potential to
advance future EIS design, however, they have not
been applied to the domain of EIS. As suggested
by Fensel, Harmelen, Klein, and Akkermans
(2002), the main burden in information access,
extraction, and interpretation, still rests with the
human users. Current document management system on market exhibits the main weaknesses: (a)
existing key-words-based search for information
cannot avoid retrieving irrelevant information if a
word has different meanings, or missing retrieving relevant information if different words have
the same meaning; (b) current automatic agents
do not possess the commonsense knowledge
required to extract information from textual
representations. Human browsing and reading
are required to extract relevant information from
various sources.
There are specific challenges to the domain of
executive information processing. Data extraction
from current EIS is usually based on key performance indicators (KPIs), which are drawn from
existing databases or data warehouse. Information provided to executives is often internal and
historical orientated (Xu et al., 2003a). Besides,
information provided from EIS is often already
existed in other forms (Koh & Watson, 1998).
Moreover, information provision is reactive not
proactive, that is executives need to initiate their
information search. Automatic, systematic and
proactive information scanning and provision

for executives has yet been realized in practice.
As a result, information can easily become stale
in most current EIS due to static presentation of
data and incapability of handling soft information
semantically (Watson et al., 1997). Despite the
over emphasis on easy of use, friendly interface
and wireless access features, the usefulness of
the information contents of EIS is often neglected
(Xu et al., 2003). Although EIS has been enhanced
with data manipulation and decision support
tools, the key deficiency still remains, that is the
lack of intelligent functionality (Liu, 1998a, b;
Montgomery & Weinberg, 1998). For instance,
very few EIS can systematically scan business
environment, automatically and semantically
filter information, and proactively report/alert
significant information to executives.
With the emerging semantic Web and domain
specific ontology, it is imperative to explore the
possibilities and the potential of applying latest
technologies in the domain of executive information systems. Within this context, a project was
initiated to examine how intelligent agent and
ontology-based semantic information processing could be applied to revitalize information
processing for executives. This study reports
the perceptions of executives towards an agentbased EIS, based on which an ontology driven
EIS visualization prototype has been developed.
The following sections will present a review of
the intelligent and ontology technology, a brief
introduction to the methodology, the main findings
of executives perception on agent-based EIS and
the main features of an ontology driven intelligent
EIS through the visualisation prototype.
lItErAturE rEvIEW
Intelligent Agent technology
Agent technology has contributed to intelligent
systems development (Klusch, 2001). Intelligent

agents are software entities that carry out some

set of operations on behalf of a user or another
program with some degree of independence or autonomy, and in doing so, employ some knowledge
or representation of the users goals or desires
(Maes, 1994). Demazeau and Muller (1990) elaborate that the word agent is used in a broad sense
to describe an intelligent entity, acting rationally
and intentionally with respect to its own goals.
By autonomous agent, it means that each agent
has its own existence, which is not justified by
the existence of other agents. Several autonomous
intelligent agents can coexist and can collaborate
with other agents in a common world. Each agent
may accomplish its own tasks, or cooperate with
other agents to perform a personal or a global task.
Research in artificial intelligence (AI) suggests
that to design an agent which has full capability
to control its environment appears a difficult
task. Because the agent has to deal with multiple,
uncertain, contradictory sources of information,
and to deal with multiple, contextual, conflicting
goals. Therefore, multi-agents are necessary. This
requires cooperation between agents. Each agent is
assigned a particular task, it accomplishes its own
task and submits a solution to other agents, for example, a data collecting agent forwards collected
data to an interpreting agent who interprets and
transfers the information to the decision makers.
If the problem can be decomposed into several
subproblems, several agents may synchronously
perform its own functions and submit a solution
synchronously with other agents to an electronic
co-ordinator. Each agent has an associated work
pattern; this can be either:
Agents are triggered by a combination of

certain times dependent on certain conditions.
Agents are controlled by time events, executing at time intervals.

Agents are triggered by system events (e.g.,
system start up, system close sown).
Agents are triggered by other agents (e.g.,
information arrival).

An agent is empowered to act on behalf of a

user. It works according to encapsulated knowledge of rules, assumptions, and samples which
either are predefined by systems developers,
users, or learnt by the agent themselves. Maes
(1994) describes how an agent learns from three
different sources:
By continuously looking over the shoulder of the user as the user is performing
actions
From direct and indirect user feedback,
coaching
From examples given explicitly by the
user
Information Agent
Research on software agents are looking into
ways to improve current information acquisition
and processing activities from distributed information sources. Information agents are emerged
as a major domain in intelligent software agent
technology. The goal of an information agent is
to perform the role of managing, manipulating,
or collating information from one or many different information sources through advanced
information acquisition and retrieval (Klusch
2001; Nwana 1996). Klusch (2001) defines an
information agent as one that can satisfy one or
more of the following requirements:
Information acquisition and management: The agent is capable of providing
transparent access to one or many heterogeneous information sources. It extracts,
monitors, filters, analyzes and updates
relevant information on behalf of its users
or other agents. The acquisition of information includes advanced information retrieval

from both internal and external distributed
information.
Information synthesis and presentation:
The agent is able to filter and refine heterogeneous data and to provide unified, multidimensional views on relevant information
to the user.
Intelligent user assistance: The agent
can dynamically adapt to changes in user
preferences, the information and network
environment.
It is envisaged that information agents can

assist users in information scanning and monitoring, extracting and filtering, manipulating
and interpreting, recommendation and notification. However, not many information agents
have been developed and deployed to support
executive information processing (Nwana, 1996;
Wooldridge & Jennings, 1995; Wooldridge &
Ciancarini, 2001). Most of information agents
are currently under development in research
labs (Liebermann, 1995, 1997; Liebermann, Fry
& Weitzman, 2001; Moukas & Maes, 1998), or
remain as conceptual models (Liu, 1998a, b).
One exception is Comsharean intelligent agent

software for information detecting and alerting,
which is named as Comshare Detect and Alert.
The core component of the agent is a robot that is
trained to watch targeted databases for changes,
trends, and other patterns that are known to be
of potential interest to a user. Like an electronic
personal assistant, the robot continually watches
the data sources, and re-evaluates the rules every
time the data changes. The system comprises of
a set of products, these include:
Robot for Dow Jones: Monitors NewsFeeds

and stock quotes from Dow Jones News/Retrieval
Robot for Reuters: Monitors news and
stock quotes provided by Reuters Business
Alert server.
Robot for Lotus Notes: Monitors Lotus
Notes databases for keywords and phrases.
Robot for OLAP: Monitors Commander
OLAP Server data sets for complex numerical patterns or trends.
Comshares News Alert: Works as a personalized electronic newspaper as shown in
Figure 1.
Figure 1. Comshares news alert: Electronic newspaper
Information can be textual & is presented in an easy to view

Newspaper style format, with headlines for fast access

The agent sends out alert to the desktops of

interested users. The alert is displayed in a personalized electronic newspaper, along with the
background information and tools needed for
detailed analysis. Many alerts are created, each
with a different set of recipients. E-mail system
provides a capable backbone for the delivery of
alerts. Alerts can be deposited into the e-mail
system by the software robot. A software agent,
running on the desktop of each user, can be
programmed to look for incoming alerts, pull
them out of the e-mail system, and insert them
into the electronic newspapers. Each edition of
the newspaper is personalised for the individual
reader and consists of a front page for the most
important news stories followed by a series of
individual news sections. Each user determines
which sections appear in their personal newspaper
and which types of alerts will appear. NewsAlert
can also be used to broadcast news, where every
user sees the same news, regardless of their individual interests. With the NewsAlert, there is
a ClipPad which is a standard application serves
as the electronic equivalent of a pair of scissors
and a file box, which the newspaper reader uses
to snip, save, and add commentary to articles or
segments of articles from the news paper. The
ClipPad also provides ready access to e-mail
and Fax. Exploratory tools are available, so that
readers can investigate any story and drill-down
to the source data.
Although most information agents have been
conceptualized to support automatic information
scanning, processing, and reporting, a bottleneck
for realizing their full potential is the lack of
semantic data processing capability, which make
current agent-based EIS attempts less appearing
to executives.
the challenge: semantic data

processing and ontology
Heterogeneous sources and types of external information pose challenges to effective information

scanning and processing, mainly because most

of the information is textual and disseminated in
various formats. Human knowledge is needed to
browse and identify the most relevant information
contained in the text file. Most of the current text
retrieval systems are keywords matching based
application programs that discover word or phrases
encountered in the text. Keywords-based scanning
could lead to information irrelevant, as indicated
earlier, one word could have several different
meanings in different context, or several terms
may designate to the same concept. As a result,
keywords based information retrieval system
can hardly determine the correct meaning of the
word encountered in different context, which can
significantly degrade a querys precision and recall
(Lu, Dong, & Fotouhi, 2003).
Another approach to retrieve text data is syntactic analysis. Syntactic based text retrieval system attempts to overcome the problem of keywords
based scanning (Silverster, Genuardi, & Klingbiel,
1994). This system uses a recognition dictionary
to assign syntax to each word encountered in the
text, and to use Machine Phrase Selection program
to string words together according to specified
grammar rules. However, such a system requires
large rules to handle different meanings of context
sensitive words, and also needs enormous amount
of information to disambiguate words. This makes
the systems use impracticable. Problem also exists
in understanding the meaning of the text, as the
attention of the syntactic system is to form rather
than content (Dorr, 1988). Only limited semantics
can be derived from syntactic content of the Web
pages (Lu, Dong, & Fotouhi, 2003).
The above approaches pose challenge to transform distributed information into a semantically
enriched information. Semantic data processing
may offer a better solution to assign meaning to
information and thus retrieve potentially relevant
information. Several systems have been built
to overcome the problems based on the idea of
annotating Web pages with special HTML tags
to represent semantics, including simple HTML
ontology extensions system (SHOE) (Luke, Spector, Rager, & Hendler, 1997). The limitation is that
they can only process Web pages that are annotated
with these HTML tags, and there is no agreement
upon a universally acceptable set of HTML tags.
XML is another mark-up language that provides
a text-based means to describe many different
kinds of data. XML is a much more adequate
means for knowledge representation, however,
it can represent only some semantic properties
through its syntactic structure.
Semantic-based text retrieval system has
advantages over keywords based, and syntacticbased text scanning system. Silvester et al. (1994)
introduced a machine aided indexing (MAI)
system used by National Aeronautics and Space
Administration (NASA) Centre for AeroSpace
Information, which is a semantic-based indexing
system. The MAI system is based on the use of
domain-specific terminology as suggested by
Melby (1990). This refers to words and phrases
that are not broad in their meanings but that have
domain-specific, semantically unambiguous, indexable concepts. These text words and phrases
are matched against a list of text words and phrases

that are generally synonymous to NASAs thesaurus terms. This system automatically suggests a
set of candidate terms from NASAs controlled
vocabulary for any designated natural language
text input. Figure 2 depicts the procedure of the
system.
The system consists of: (a) a text processor,
the main function of this program is to identify
the source of the text to be processed, to break the
text into word strings, to delineate word strings
found in natural language text; (b) a knowledge
base (KB) which contains the Key field (Phrase
Matching File) with more than 115,000 entries,
and the Posting term field (NASAs thesaurus
terms)this is the dataset that provides the
translations from natural language to NASAs
thesaurus terms; (c) modular programs, this is
to construct the search key in the string, look up
the search key in the knowledge base, and return
the output of the search to the index viewer or to
the text processor. Although the system is mainly
used for text indexing purpose, it allows limited
semantics to be described by the controlled the-
Figure 2. Overview of NASAs online machine aided indexing system (MAI)

T ext
input
S ugges ted
terms
W ords
not found
S orting
W ords
not found
B roken into
s trings
F orm s earch key

from s trings
P os ting =
S earch key matched

aganis t K B entries
re-s earching
P os ting =
F ound ?
Y es
no meaning
P os ting =
thes aurus terms
No

saurus terms. Using domain specific terminologies to automate machine indexing is akin to the
ontology approach.
Ontology is key technology used to describe
the semantics of information exchange. Berners-Lee (2001) suggests that an ontology is a
document that describes a vocabulary of terms
for communication between humans and automated agents. The most often cited definition for
ontology is an explicit specification of a conceptualisation (Gruber, 1993). Nelson and Nelson
(2005) suggest that an ontology can be thought
of as a vocabulary (a set of words), a grammar
(the set of rules or combining words into larger
structures), and semantics (the meanings of the
words and the large structure) all defined within
a specific domain. Ontologies are useful because
they encourage the standardization of the terms
used to represent knowledge about a domain. In
the context of business information, it is possible
to have an executive ontology by which standard
terms and specific meaning are defined to guide
machine scanning and filtering. In addition,
source documents provided to executives can be
annotated by using ontology-annotation tools.
In this way, machines are able to understand the
meaningssemantics of the documents. Various
ontology tools have been developed for building
semantic data on the Web (Barros, Goncalves &
Santos, 1998; Erdmann & Studer, 2001), and for
digital library (Shum, Motta, & Domingue, 2000),
but ontology specific to the domain of executive
information processing have yet been developed,
except a recent proposal (Camponovo, Ondrus
& Pigneur, 2005) of an ontology for environment scanning that sheds some lights on this yet
exploited area.
In summary, it appears that intelligent agents
and ontology have the potential to advance executive information processing through automatic,
semantic information scanning, refining, and
sense making of data. The methodological set-
0
ting described in the Methodology section aims

to empirically examine executives perception
towards an agent-based executive support system. The findings will inform the development
of an agent-based ontology driven EIS system
or prototype.
MEthodology
The methodological design consists two phases:
the first phase is to examine executives perceptions on using agent based EIS through a focus
group study. The second phase is to develop an
agent-base EIS visualization prototype on the Web
in order to demonstrate the main features of such
a system. The first phase involves a focus group
study with 41 middle towards top-level managers
in the U.K. The size of the focus group is about
10 persons per group. Each session begins with a
brief statement on the purpose of the focus group,
the confidentiality and ground rules for the discussion, that is, one participant talks at a time. The
discussion questions, the related concepts and the
use of software agents are also introduced prior
to the discussion. Each focus group session took
between 45 minutes to 1 hour to complete. Data
is initially organized into meaningful themes according to predefined or newly emerging themes
and categories. Thematic qualitative analysis
(TQA) (Nicholas & Anderson, 2003) is used to
conduct a detailed interpretive conceptual analysis and mapping. Meanings were sought from
the transcripts to identify consensus, dilemmas,
and contradictions. Selected quotes are directly
presented as evidence.
In the second phase, an ontology driven intelligent system model and a visualisation prototype
is designed to demonstrate the main features of the
system for semantic information processing. The
visualization prototype serves as a demonstration
tool, rather than a tool for technological testing
or implementation.
can be improved through better processing

of natural language, in which the system is
capable of categorizing natural language
texts into predefined content categories. For
example:
Findings
1.
Agent-based EIS scenarios: Managers

seem well perceived the importance of
agent based EIS, and expect such a system
to work for them by giving the following
scenarios:
If I am looking for something in my business, they might be in my head ten or eleven

different words, which mean the same thing.
But in various filter to get them, I have to
put all those in. And then I might be missing
something, because somebody else might
call it something else.
Scenario 1: you set up to run (the

agent-based EIS) overnight, or whatever,
and when I come in the morning, there will
be something to look at If the agent
hasnt searched for a while, it could actually
suggest to the user.
is the frustration with natural language,

like searching through the Internet. Conventional searching is giving you too much
information, not the right information or
whatever.
Scenario 2: You want to actually have

the agent to be aware of that daily change.
Today, priority for me is one thing. Tomorrow, its something completely different.
Now if I define within the agent, this is what
I need now, tomorrow could be something
completely different.
Scenario 3: you could say to the system,
get me half of page of view, it will then
search all sources and present them in half
a page.
Some issues emerged from the focus group
discussions that may shape the development of
an agent based EIS. These issues are described
below:
2.
Semantic information processing: Participants recognize the importance of obtaining

semantically enriched information due to the
different meanings that can be applied to the
same word. As a result, they are concerned
with the incomplete information processing
caused by the lack of semantic information.
Participants also express their frustration
over the limitation of current search engine in natural language processing. Some
managers perceive semantic information
I think the challenge is to make sure that it

conveys your meaning that (the EIS) provides
needed information, and the way to improve
is to understand the natural language.
3.
An executive controlled, personalized,

adaptable learning system: Participants
raise the importance of adaptability and the
learning capability of the agents, that is, the
system should be flexible to adapt to changing situation and individual executives
managerial behavior through some kind of
learning and user feedback. One manager
suggests that the system must have a sort
of flexibility within itself to retain (some
of your interests and thoughts) as well as
to develop. They further argue that the big
mistake made is one usually driven by the
software developer to drive what the rules
are, for example, what we want to search,
how you want to search, how you use it,
and this has to be tailored into the context
of the organization. The key to ensure EIS
flexibility and adaptability is that the agent

knows very clearly what the executive is

looking for and what structure or format the
executive would like to receive. Most managers suggest that great efforts are needed in
order to coach the agent in order to enhance
its learning capability, for example:
I think the fact is that both systems would
have learning curve. One is actually the
programme itself, you wouldnt actually
know what its working on. And the people
who are using it would actually go and say,
oh, I did that last week and get the information or whatsoever. From there, the system
learns and how to turn and change. its
the effort of coaching your agent; more
effort needed to train the agent.
4.
the ability to filter and rank the importance

of information categorise the search results
according to meaningful topics; it should
have different ways of organising information,
for example, information of the day before, information of the day after.
The finding suggests that the agent should

understand the relevant characteristics of
end-users. Hence, the setting of user profile
and preferences, and domain specific ontology need to be established.
Once the information comes in, the executive can

get a rule of thumb, so the agent probably can
give a flash, for example, about new information.
it will actually suggest things to you on what
you are trying to look for.
Functionalities: Semantic scanning-filtering; categorizing-ranking-alerting, and

analytical support: Most managers tend
to agree that data overload is a problem
facing executives, thus filtering function is
needed. One manager suggests that there is
an immediate need for a filtering mechanism
because of the volume of workload. For
example:
Some managers expect an agent-based EIS to

support decision analysis and decision-making in
addition to strategic information provision. The
key functions will include analytical tools such as
data analysis, modeling, forecasting, comparison,
drilling down, strategic mapping, and so forth. As
generated from the group discussion, managers
want the EIS:
Conventional searching gives you too

much information, but not the right information.
I agree with the information overload, the
quantity of information pouring into my
consciousness; Theres plenty of super
fluid material that is going to me that there
is no filter in between

In addition to semantic scanning and filtering

function that enables systematically scan and
retain relevant information, participants suggest a number of additional features of an agent
based EIS. These features include information
categorizing, ranking, alerting function, which
will enable executives to manipulate information and to be informed proactively with new
information. Managers comment that the system
should have:
to predict and forecast as well, but that will be

the next level; to provide recommendation
based on the information provided;
However, not all executives agree on the
filtering function of an EIS. The main concerns
are the risk of filtering out potentially useful and
important information, as expressed by a manager
as follows:
Although one participant expressed that the

raw data needs to be processed in a meaningful way, most executives are sceptical to the
interpreting function of the EIS. Most executives
tend to agree that interpretation should be done
by the manager.
Executives are concerned with the impact

of using an agent based system: Executives
are concerned with the possible impact of
the agent-based EIS on their information
processing behavior. Some participants
feared that their managerial roles could be
changed or replaced by the system. The
concerns are the system could actually
force me to look at thing I dont want to look
at ; Would it replace executive when it
learns too much? and could it lead to the
redundancy of managers?
I have extreme concern about that interpretation function; I believe interpretation should
be done by executive I think it has to be a low
level interpretation first; certainly for me, I
interpret the data myself.
The main impact perceived by executives is

over-dependent on the system, which will
limit executives personal development, as
well as creativity as a senior manager. They
express that:
5.
this system would actually limit the development of senior executives.; the concern
is this limiting development kept coming
back to me.; becoming more and more
dependent on the software and not thinking
for themselves, reducing creativity.; My
another concern is probably people would
completely start depending on the system
rather than using their own brain.;sitting in front of computer, limit the creativity,
losing the skills
Theres a great possibility, very high risk, you

are actually filtering out fringe of information
that could be probably more beneficial to you
than the initial information that you are looking
for in the first place.
Executives need a small amount of information that is manageable: Participants

were very concerned with the time needed in
processing information. Managers express
that the key issue is to have the right balance
of the amount of information. It is evident
from the following statements:
Its about time constraints. We are talking about using executive time effectively
and efficiently; Due to the lack of time, it
should be manageable, with a small amount
of information; The key driver is time,
because the time you need to spend on the
system. You only spend that time if its key
information that you need firstly according
to your role.
It suggests that the amount of information

provided must be manageable and the time spent
on processing the information must be kept to a
minimum.
6.
An agent-based EIS may play limited role

in directly support managerial decision
making. Executives treated EIS as a complimentary tool that supports executive
information processing activities rather than
in any way to replace it. The main reason
explained by the participants is intuitive
nature of management decisions that require
human intelligent instinct. However, the
system has been perceived useful in the way
that senior executives would use it more as

gaining background knowledge and keeping

up-to-date, and It could be a useful source
to back up some of your tacit knowledge.
7. Other Issues:
Ease of Use: It is believed that executive
information system (EIS) should be easy
to use, incorporate standards for good user
interfaces, and allow quick access to vast
amount of data by combining graphic,
tabular and textual information on a single
screen. Participants in this study suggest
that the intelligent agent based EIS should
be accessible, manageable and simple for
users to use. A manager states, I think it
should be simple for recipient to utilise the
information.
Security: Information and system security
have been highlighted as another concern
for developing an agent-based EIS, particularly the confidentiality in the process of
analyzing and interpreting information. As
expressed by the manager that the software
agent needs to have the real confidence in
analyzing information, and be confidential
if we ask software agents to interpret.
Cost Saving and Culture Change: One
manager comments that his concern is the
cost, and it has to be a cost-effective way particularly for information filtering. Change is
inevitable for implementing agent based EIS,
this may include not only the system itself,
but also the vision, process, and culture. A
manager comments that it might be more
of a cultural challenge to get the system to
work for them.
In summary, the criteria for an agent-based
EIS from executives perspective is self evident as
disclosed above. Although some of the concerns
are not subject to technological solutions, for
example the concerns of the impact, the cost, and

culture issues, their views on how an agent-based

EIS will work for them shed light on how such
a system shall be developed. The section titled
An Ontology Driven Intelligent EIS Model and
Prototype presents our initial efforts to turn executives views into a system model and a visible
prototype, which demonstrates the key features of
the functionality of an ontology driven intelligent
system for semantic information processing.
An ontology drIvEn
IntEllIgEnt EIs ModEl
And prototypE
The key features of an ontology driven intelligent
EIS can be summarised as below:
Systematic scanning of information from
multiple internal and external sources.
The scanning engine incorporates executive ontology, and/or semantic indexing to
ensure relevant information being widely
scanned.
Semantically filtering information to the
level that the executives like to receive. The
filter shall be driven by learning agents that
filter out irrelevant information according
to user profile, criteria defined by the user,
user feedback, case based reasoning, and
knowledge base.
Automatic categorizing, ranking, prioritizing items according to its significance,
and alerting significant news/unsolicited/
unexpected information to the executives.
Limited interpretation and recommendation
can be offered as an advanced function.
Intelligent agents perform these tasks according to user profile, user feedback and
coaching, and agents learn from cases and
examples.
The system will integrate tools that support
intelligence disseminating and sharing, allowing executives to manipulate informa-
Figure 3. Model of an ontology driven intelligent system

Analytical Tools: disseminating/
manipulating/ decision analysis
knowledge base
Sense making Agent
cases-based reasoning
user profile
Alerting Agent
user defined criteria

Ranking Prioritising Agent
Executive ontology
user given examples

user feedback
Semantic filtering Agent
ontology annotation
semantic indexing
thesaurus
Semantic Scanning Agent
tiondrill down, track original information

sources, and to support decision analysis.
The main agents and the bases underpinning
agents activity are depicted in Figure 3.
A visualization prototype of this model has
been developed on the Web using Active Server
Pages (ASP) and MySQL database. It is beyond
the scope of this study to use the prototype in an

online setting with live data stream. Hence, the
prototype is not built for technological testing or
as a technological solution. Figure 4 shows one
of the interface windows of an ontology driven
intelligent system for executives.
The left-hand window is an environment for
executives to browse or search for both internal
Figure 4. Strategic intelligence browsing, searching, and alerting
External info
Executives Browsing &

Searching Window
Internal info

and external information. This window also serves

as a personalized electronic newspaper and has
a function to alert executives when unexpected
(unsolicited) information has been detected. This
is a workspace that integrates, aggregates, and
presents strategic significant information from
multiple sources, including the Internet, newsfeeds (press, subordinate, employee, customers,
etc.), internal systems (ERP, CRM), internal
reports, data warehouses, images, and file server.
This is different from an enterprise information
portal (EIP) in that the process behind the window
is driven by intelligent agent and ontology that
is specific to the individual executive. Hence,
the information reported/alerted here has been
semantically processed for relevancy and significance, and has been personalized for individual
executives managerial role and preferences.
The agent set-up window is shown in Figure
5. The agents could comprise past information
search activities and predefined information needs
in user profiles, which is generated by a learning
agent, or defined by the user. The user profile can
consist of executives personal profile, executives
information needs and interests, executive roles,
and organizational environment profile, which
enable software agents to perform domain-spe-
cific acquisition and filtering of information. As

a result, information processing becomes more
personalized to the executive.
The agent setup function allows executives
to coach the agents by using natural language to
define information needs and changes. In order
for the agents to understand semantic meaning
of executives requests and enquiry, executive
ontology shall be configured to the search engines for semantic scanning and refining. Different ontologies may be needed, for example,
an environmental scanning ontology, and an
information refining ontology. For example, the
term Business, Travel news, Leisure News
displayed on the right-hand window shall be
the concepts defined with agreed meaning for a
specific industry or an individual executive. The
semantic meaning and coverage of word business in travel industry will be different from that
of chemical industry. Thus, even using the same
word, different ontologies will result in different
information being scanned and processed. The
ontology will define its domain specific concepts
and a scheme showing relationship with other related concepts. The ontology-driven configuration
will ensure only relevant information is scanned
and filtered. Semantic indexing system using
Figure 5. Agent set up for semantic information processing using ontology
Scan agents
Filter agents

Figure 6. Agent supported interpretation and alerting
Alert
recommendation
Feedback
domain specific thesaurus may be an alternative

solution. For example, synonymous terms related
to business that is specific to the industry are
defined in a controlled thesaurus. It is expected
that executives can also use ontology-annotation
tools to annotate items/signals to assist agents
learning and knowledge sharing.
In addition to the information provided by

the alert agents, an interpretation agent may
analyze the information using AI techniques,
such as case base reasoning, production rules,
and machine learning. Figure 6 shows a sample
of agent interpretation.
Figure 7. Users explicit feedback to agent
Feedback

It is essential that executives give explicit

feedback to the information agents through a
rating system or using ontology annotation tools.
Whenever the executive finds that the agents fail
to provide relevant and less significant information, the executive can always give comments to
the agents in order to improve his user profiles.
Figure 7 shows an example of user giving feedback to agents.
IMplIcAtIon
The applications of software agents and ontology
for semantic information processing are still in
its infantry, particularly in the domain of executive information processing. The implications of
this study are: firstly, the domain specific issues
concerning executive information processing are
revealed, which shed light on future development
of agent-based EIS and other systems related to
executives information acquisition and processing. Secondly, this study takes an innovative step
to explore the possibility of applying ontologies
to agent-based EIS for the purpose of semantic
information scanning and processing. Although
such an executive ontology has not yet been
developed within this study, the novelty of this
exploration is expected to generate more interests
and efforts in developing and applying ontology in
the domain of executive support system. Thirdly,
the Web-based interface prototype sets an example
that could stimulate ontology and intelligent
system developers to develop system solutions
related to the work of executive information
processing. Lastly, developing and implementing
an agent-based EIS and executive ontology need
executives participation and support, for example
executives annotate information received and give
feedback. Considerations also need to be given
to nontechnical issues such as cost, impact on
managerial work, culture changes, and security
of information.

conclusIon
Our study explored the opportunities of applying
agent and ontology technologies in the domain of
executive information processing, and revealed
executives perceptions towards developing an
ontology-driven intelligent executive information
system. Many executives perceive such a system
useful by particularly using the system for semantic information scanning, filtering, and alerting as
well as advanced executive decision analysis and
support. However, the capability of this type of
system shall not be exaggerated, as executives see
it as only a useful supplementary tool. Executives
tend to make sense of data (interpretation) and
make intuitive decisions themselves. Executives
also need a manageable amount of significant
information from EIS. This implies that an agentbased EIS shall be able to selectively and semantically scan and filter information and report only
significant information to executives.
The technological challenges rest on machine
learning for semantic information scanning and
processing. A range of tools for semantic information processing are available, but these tools are
not yet used for executive information processing. In particular, executive ontology has not yet
been considered as a potential tool to advance
EIS design. The integration of intelligent and
ontology offers great potential to revitalize EIS.
Its realization however, relies on the development
of functionality of the information agents, the
executive ontology, and an environment that can
facilitate agent learning.
Future studies can be carried out to address
some of the limitations of this study in three
directions, firstly, to develop executive ontology
that is specific to industry sector and individual
executive. Secondly, to continue developing a
fully functional Web-based prototype/system that
incorporates intelligent information agent and
executive ontology with an emphasis on semantic strategic information scanning, filtering, and
alerting and thirdly, to explore suitable ways of

the interaction between executives and the agents
through coaching and learning. It is hoped that
this study will attract more research into this yet
being exploited, but significant arena.
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241
Chapter XIV
Bibliometry Technique
and Software for Patent
Intelligence Mining
Henri Dou
ESCEM Tours Poities and University Paul Czanne, France
Jean-Marie Dou
Chamber of Commerce and Industry of Marseille Provence CCIMP, France
Abstract
This chapter introduces the bibliometry treatment techniques as a way to obtain elaborated information
for competitive intelligence experts. It presents various bibliometry treatments using software able to
analyze patent databases as well as commercial database extracts or Web information. With the growing complexity of science, technology, and economy it is of a prime importance for decision makers and
strategists to have the best possible view of their environment. The bibliometry analysis provides different ways to cross information, build lists, charts, matrices, and networks. In the process of knowledge
creation the bibliometry analysis can be used to provide new set of information from large mount of data.
This information can be used for brain storming, SWOT analysis, and expert evaluation.
Introduction
The amount of technical and scientific information is growing exponentially in the information
and knowledge age. The very rapid growth of the
information available has been seen in almost all
the fields of business, science, and technology.

For instance the Biological Abstracts increase
approximately of 350,000 references of original research annually; CA Search (Chemical Abstracts)
references for 20,414,117 of original research for
the period of 1967 to 2006; the Economist issued
Bibliometry Technique and Software for Patent Intelligence Mining
79,274 original articles from 2002 to March 2006

(Dialog, 2006). There is also an exponential
increase of scientific information available from
the Internet (Brander, 2006).
How can we effectively identify the trends
of technology innovation and scientific research
and disseminate the work of the experts, for example, various technical, and science information
becomes a challenge.
The increasing power of microcomputers,
Moores law (Moore, 1965), and software in data
mining provide the facilities to make automatic
information analysis, for example, Bibliometry
Analysis (Rostaing, 1996) possible. The analysis is also known as text mining, idea mining,
knowledge recovery, or information mapping.
Many software tools for such analyses have been
developed and have the functionality to provide
users with the best possible picture of large amount
of information in various formats, for example,
lists, matrix, maps, and networks.
The aim of this chapter is to provide an insight
on the techniques of using bibliometry software
to mine intelligence from both formatted and
unformatted data sources. The examples used will
be patent information analysis based on formatted
bibliographic patent data source, which is available in the public domain, commercial database
references analysis, and Internet data analysis.
This chapter demonstrates how bibliometry
information can add value to the intelligence
process. It also provides for the readers an overview of the bibliometry software, as well as the
treatments and the results, which would be useful
to competitive intelligence practioners.
The chapter is organized as follows: the second
section will present the data sources that can be
used for bibliometry analysis, with the differences
between formatted and unformatted (full text)
data. The third section describes the technique of
bibliometry and the treatments available through
bibliometry processing. This is followed by three
examples of using bibliometry software to conduct
bibliometry analysis. The implementation issues
242
of using bibliometry software, such as cost are

discussed in the fourth section. The chapter is
concluded with a summary of the key features of
biblometry technique for technical and scientific
intelligence mining. A review of relevant software
and their use are available in the appendix.
Functionalities of
Bibliometry Technology
An overview of bibliometry techniques is available
from the work presented by the CRPHT (Public
Center of Research Henri Tudor) (Dubois, 2004):
Bibliometry is the application of mathematics
and statistical methods to bibliographic references (White, 1989). The bibliometry is different of bibliometrics which is strongly related to
library and documentation studies as well as to
citation analysis. In this chapter the bibliometry
technique provide a way to see the hidden information present in large amounts of data (e.g.,
formatted references) by using statistical methods.
Questions such as, Who is doing what?, Where?,
With whom? What are the main research trends?,
What are the key institutions and their research
potential?, What are the institutions which collaborate together?, What are the new actors in one
field?, What is or are the network(s) of competencies involved in one subject?, and so forth can
be answered promptly.
Bibliometrics are mainly used to measure
the science level of publications or to rank some
scientific journals with the determination of their
impact factors, and so forth. One database the
Science Citation Index is widely used to measure
the impact and trend of science research (Moed,
2005). The field of bibliometry applications is
different and can be apply to almost all subjects
if there are formatted data available in this field.
This is the reason why people use sometimes the
general term: data mining (which is applied to
full text data most of the time) when they speak
of bibliometry.
the Format of source Material

required for bibliometry Analysis
Bibliometry analysis requires data to be structured in a certain number of fields, which are the
format used to describe the source information.
The following is an example of the bibliographic
fields of a journal:
TI: Title (generally as present in the journal

which publishes the work)
AU: H, K (generally as spelled in the journal)
SO: name of the journal, pages, year
PY: publication year
DT: Document type (full article, bibliography, report, patent, etc.)
OS: organizational source (address of the
authors. Addresses of all the authors must
be provided or only the address of the first
author)
CC: country or countries (if all addresses
are present and different)
IS: institution name(s) (names if several
institutions are concerned)
DE: words from a thesaurus (bulk position
of the work among various categories)
KW: key-words (which described the work
indexed)
CD: codes (sometimes the area cover by
the database is divided and sub-divided
by various code for instance in Patent the
IC (International Classification), in the CA
(Chemical Abstracts Database) the Section
and Sub-section codes, etc.)
Here TI (space)(space)-(space) if the field

header it should be the same in all references and
should be univocal. In AU - H,K the coma is a
separator between two author names. The separators must remain the same within the same field.
Subseparators may also be used to separate the
Name from the Given Name for instance, or in
the section codes the subcodes, and so forth.
Many other descriptive fields can be generated according to the depth of indexation of the
article. It is important to note that the good quality
of indexation will benefit bibliometry analysis,
however, this is often related to time and cost of
creating the indexation.
the Function and the presentation

of the result
Bibliometry analysis enable data that is present
within a field can be selected and listed in various
result formats. Fields can also be combined either
intra field, or inter fields to show the correlations
between the selected fields. Different combinations will lead to different views of the data, which
means meaningful intelligence could be derived
from this type of analysis. Most bibliometry software offers the following functionalities:
Lists: This is to list all the data in a field

according to the search criteria. Frequency
can be identified from this analysis. The list
of key-words according to their frequency
will show the main areas covered by the
subject as well as the dispersion (it depends
upon the profile of the list (numbers of
items per frequency). For example, the list
of the authors or institutions, and so forth.
will show the name of the most productive
researchers (experts) as well as the names
of the main institutions.
Matrix: Allows the selection of two fields in
order to cross-tabulate data. Correlations can
be seen from the matrix. For example, you
have the name of one institution, but you do
not have its address. Bibliometry software
can create a matrix where for instance the
institution names will be in columns and
the addresses in row. This technique can be
used to build up competency matrix where
the question who is doing what, where, when
can be answered.

Networks: Represent almost the same results as the matrix, but their visual impact
is very different. Many people prefer this
presentation to the matrix presentation. The
networks are useful to represent the intra
field correlations. For instance if you want
to see the network of people who collaborate
inside one area, you will build the authors
networks. This means that when several
authors/inventors are present in one reference (in the author/inventors field), they have
an implicit link because they appear in the
same data. Here for instance H and K have
a link. But, if author H publishes in another
paper with author F, the links created will
be H-K, H-F and also K-F since H and K
have a link. This is called the propagation
networks. The same is true to determine the
core technologies or to direct the potential
innovations. In this case inter-field networks
between code fields of key-words fields will
be done.
Time series: This enable the combination
between the publication year (here the
field PY) with the data from the code field
selected, it will produce a time series or the
frequency of each code according to the year
of publication/invention.
the bibliometry software

The bibliometry software has an ergonomic interface to integrate easily the formatted data and
to update them if necessary. Integrating means
extracting the data from each field and coding the
data (in the same time that the data are extracted
they are hash coded and put in various tables which
will be used to build up all the correlations, lists,
and matrix). Results could be printed, saved, and
even exported as an automatic report.
In addition, the software could be able to:

Limit certain words, names, to a set of

characters or digits: Because the data are
extracted and coded, the process to extract

a certain amounts of characters or digits
from the data present within the separators
in a given field will be necessary. This is the
case to use only the author names without
the given name, or to limit the extraction to
certain punctuation characters, for instance
when extracting the name of a town in the
Organization Source (here the OS field).
Make some changes in the list of terms
extracted and coded for instance in the
list of key-words, authors, institutions,
countries ...): For instance it is often useful to change plural to singular, to have
the same type of printing (small capital for
instance), to change some descriptors to a
unique term, to set up the same writing for
countries or institutions names, and so forth.
In this case the new words introduced by
the user will automatically replace all the
old ones. The frequencies will be modified
accordingly and the new words introduced
in the tables. For example, modifying the
title words get rid of the plural, replace
some words by synonyms, or get rid of nonsignificant words such as the stop words
this is a term used in database building: the
words which alone have no meaning are not
indexed. If generally a list of stop words
is used, this list is general and in some case
must be completed by the user.
Regroup data that have specific relevance
to a unique group of references: For
instance if you perform a general search
on patents dealing with avian influenza,
you will have a list of patent from various
countries. (USA, China, Italy, etc.). Now
you can perform various analyses using
individual patent. But, if you look for the
differences in the research approach of
China, USA, Japan, Italy, and so on. You
could not do it by analyzing all the patents
individually. It will be necessary to regroup
all the US patents, Chinese patents, in one
unique group for US, China, Italy, and so

forth (we will regroup together the applicants
of the same country). This will constitute a
set of metadata and these metadata will be
used to build up new correlations (Dou, in
press). This is the same for an institution or
for one or several authors. The metadata (we
call these groups US, Italy, Japan, etc.) are
considered by the software as a new reference and all the type of correlations can also
be performed on these new items.
Select the frequency threshold to draw
histograms or networks: In addition, to
be able to comments the references to give
a relevant index of pertinence to the reference.
Automatic reports and facility to update the

bibliographic data are also interesting features of
bibliometry software for the users.
InForMAtIon sourcEs And

ForMAts For bIblIoMEtry
trEAtMEnts
Competitive intelligence can be derived from different types of information, such as reports from
press agencies, competitor advertisements, or
press releases, databases in sciences or technology
research publications, patent database.
To get the best possible bibliometry treatments,
data used as a bibliometry material should be
formatted. If formatted data with bibliographic
indexation is available from a database service
(such as Dialog for instance), the format is normally constant within that database, but the format
may vary from one database to other. Full text
data normally cannot be used for bibliometry treatments unless if they are reformatted. However,
some software provides the facilities to reformat
texts and references. One of the most useful is
Infotrans (Tarapanoff, 2001). This software allows
extracting data, replacing data by other terms,
changes the separators, headers, and so forth, by

using different sets of commands. Bibliometry
software support reformatting of text data, for
example, Matheo Analyzer (2006), or Matheo
Patent (2006) and (Dou, Leveill, Manullang, &
Dou, 2005). This will be discussed later.
Searching the Internet will result in mostly
unformatted text data, even using the Advance
Search or Expert mode facilities provided
by the Web site. Formatted results are generally
limited on date, time, address of the hosts, and so
forth, which are offered by the Web master when
the Web master introduces the information into
is Web site. Therefore, most of the data searched
from the Internet cannot be directly used for
bibliometry treatment before they are reformatted
for this purpose.
ExAMplEs oF bIblIoMEtry
tEchnIQuE ApplIcAtIons
As indicated the best bibliometry treatments shall
be done on formatted information. This has different implications to the institutions and companies
because using commercial and formatted data
source often has a cost. However, it is possible
to carry out bibliometry studies with free access
formatted databases or free accessible data sources
(for instance from the Internet).
The free access databases are generally scarce
because of the cost. In the fields of science and
technology, the EPO database (2006) (European
Patent Office Database) and the USPO database
(2006) (U.S. Patent Organization) Database are
free and are appropriate for Competitive Intelligence mining. Other free access databases include for instance The Medline (2006), PASCAL
(2006) Database from the CNRS (French National
Research Centre). Some databases provided by
laboratories or research centers as well as from
international organizations are also available
mainly through the Internet. We advise the users
interested in bibliometry analysis to do a careful

search for all the sources available in its field and

available for bibliometry analysis.
In the case of a commercial database or host
such as Dialog (2006), more than 900 different
databases are available. They cover all aspect
of sciences, technology, press, economic, humanities, and so forth. When downloading data
to perform a bibliometry study, the host offers
a special computer readable format for most of
the databases.
In the next sections, three examples are provided to illustrate biblometry analysis and the
results, (a) a free access to databases and the
software dedicated to themMedline and Patent
data; (b) a software that integrates various formats
from unformatted data sources; (c) mining intelligence from the Internet data.
1: This set of patent references will be analyzed

to provide the following information:

Mining a patent database with

Matheo-patent
In this example, the software Matheo-Patent
(2006) was used, simply because it provides a
good quality/price ratio and it can be downloaded
for a free trial. The databases are the European
and U.S. patent databases.
The software automatically collects the patents
according to your request criteria, constitutes, and
updates the local database. It analyzes statistically the recovered patents, constitutes the patent
families and generates graphic visualisations (IPC
codes, inventors, patent assignees, and their links
within the recovered patents: matrix, networks)
and personal reports.
Example: In competitive intelligence it is of
prior importance to know the environment of your
business, the main players, their cooperations, the
type of specific knowledge that they cover, and so
forth. For more information about this mapping
see the book Co-opetition (Brandenburger, 1996).
In the following example, we are analyzing the
patent retrieved using the term ADIDAS in the
patent applicant field, using the EPO Database. We
found 103 patents which are presented in Figure

List of references with patent data and abstract (Figure1)

Direct access to applicants, inventors, technologies (using IPC, EPC), publication year,
(Figure 4), this give to user an instant view
of the applicants, technologies, inventors,
and trends with in the same time the patent
related and their bibliography reference and
abstract (you will not need to read all the
patents one by one)
Histograms of key items necessary for an
expert to formulate new questions or to see
the global map of the interaction of these
items in the Adidas environment.
Network of the applicants (Figure 2). What
are the applicants which have a link together because they appear with an Adidas
applicant in the same patent. This is one
of the most important data when you are
entering a business field or when you are
benchmarking a company. Companies such
as Molten Corp, or Shishido for instance can
be the object of a new search in the patent
database to see to whom they are related.
This map provides to the user an idea of
the possible synergy of the knowledge of
these companies and then providing ideas
of threats or opportunities.
The technologies used by the applicants and
the differences of knowledge between the
applicants (Figure 5). The comparison for
instance with the knowledge and technologies available in your company may provide
clues to seek for opportunities or to pretempt
some threats.
When the title of one patent is underline (deep

blue) the reference is available in the second part
of the screen. If the abstract tab is selected the abstract is displayed. To provide the first bibliometry
Figure 1. Main screen of the search performed with the name ADIDAS as applicant
Figure 2. Patent analysis (lists) of the ADIDAS selection: The applicants

Figure 3. Histogram of the applicants which appear during the search with the term ADIDAS in the
applicant field (threshold frequencies may be selected if necessary
Figure 4. Network of the applicants (the potentiometers in the bottom part of the screen allow to select
the frequency of the applicants or of the links between applicants)

Figure 5. Automatic benchmarking (technology and application) of applicants
treatment (lists) the option Patent Analysis must

be selected. The result is indicated in Figure 2.
The selection can be made according to the
main fields provided by the patent database
(Applicants, Inventors, IPC(4), IPC(full), EC,
PR, PYear, Family - upper left of the screen). In
Figure 2,the selection of applicants shows the
list of applicants on the left, the selection of one
applicant (deep blue), gives on the right part of
the screen the patents of this applicant (here 23
patents), and the selection of one of the title (deep
blue), provides the patent detailed information in
the lower part of the screen.
Another way to see the applicant list is to draw
the histogram of the applicants by selecting the
graphic tag and after the histogram option. The
result is shown in Figure 3.
If the histograms give some indications on the
global content of the database the correlations
between the applicants are not indicated. To provide a full view of the applicants linked together,
we draw the network between applicants, by the
selection of the intra field networks (propagation,
please see in one of the sections above). The result
is shown in Figure 4.
When two or more applicants appear simultaneously in the same patent, this means that they
have a link between each other. An applicant can
appear alone in a patent or can also appear in another patent with other applicants. The frequency
of the applicants (alone or with other applicants
in various patents) is given in the square box,
and the frequency of the links is given in the
circle (when this applicant appears in a patent
with another applicant). The number in the circle
shows the number of patents two applicants have
in common.
In the example below we made a matrix between applicants and IPC (4 digits). The full IPC
may also be used if more precision is necessary.
The result is a rapid benchmarking of the various companies involved. It is presented below.
With this type of matrix you can get at a glance
the complementarities. This matrix is a map of
patent portfolio. The matrix can be compared to
other matrix involving other companies. This
will provide a fast and automatic benchmarking
of these companies This approach can be also
combined with the creation of metagroups, for
instance the Adidas group, the Z group, and so
forth, as we saw in the former paragraph.

bibliometry treatments on any

Formatted databases
Most of the commercial and free access databases
are formatted. The use of formatted databases is
more efficient with bibliometry software which
provides all facilities to index and analyze the
data downloaded from these databases.
The next example uses such a software
Matheo-Analyzer (2006) (free trials download is
available). The following steps are available:
Cross Table Sometimes you have several

forms which represent the same information, like a name of an inventor (Durant
B., Durant Bernard, etc.) and you want to
translate all these forms in unique one. It
is possible to do it automatically with this
formatting tool.
Reference Table Extracting a text field often
provides stop-words or undesirable form;
MA allows the user to create its own table
to erase automatically these forms.
Setting Up the Data
1st Step: File source selection (the file must

be in text format)
2nd Step: Bibliographic format selection

(can be made through various tables already
made)
3rd Step: Fields Selection After the import,
a list of available field is provided. You can

select the appropriate fields necessary for
your analysis.
Access to Whole Documents

The most important for the user is to have the
possibility to see the original document. The
software also provides in every function an option See References.
Preset Importation Rules

Often, you have the same data sources to be imported in your analysis software; for this reason
we have created the Rules File option has been
created. Rules can be saved and re-used to save
the user time.
Multicriteria Matrices
Visualize a Complete Set of References

on One Screen: Showing information by
matrices allows the user to see quickly he
main intersection between two fields.
Asymmetrical Matrices: You can analyze

two information types together: Companies
and Technologies, Technologies and Dates,
Dates and Companies.
Symmetrical Matrices Analysis of same

information type is also possible, but we
advice users to proceed with Networks.
Selection of Information in a Field

When the user arrives to the last step of importation process, Matheo-Analyzer proposes the
list fields. At this moment the user must choose
which fields the user desires to import and exactly
which part of them.
Fast Formatting Tools
Often, database information must be processed
before being used (see the different names used
for ADIDAS in the previous paragraphs). MatheoAnalyzer and Matheo-Patent are providing specialized tools. For Matheo Analyzer:
0
Graphs and Charts

This is the best way to analyse rapidly a set of
information. Various types of charts are available.
Networks (Mapping)
Analyze the structure of information in

a references set: Showing information by
networks allows user to see graphically links
between information.
Symmetrical Networks These networks

represent the presence of information in a
reference and its links with other information taken in the same fields
Asymmetrical Networks These networks
represent co-occurrences with two different
fields. See also matrix
clustering
Definition: An approximate definition of the

clustering could be: the process of classification of objects in groups or cluster whose
members are in a certain manner similar.
Consequently, a cluster, or groups, is a whole
of objects which are similar between them
and different from the objects belonging
to the other groups.
Making Clustering: User has just to choose
the field that he wants to use for clustering.
Exporting Data
Lists Report With this kind of export, you

can have just the list (and the frequency) of
every information of a selected field.
Sub-Database Export With this export, you

can choose to have only references (notices)
which are result of a boolean request.
Export all Fields Sometimes you want to

export only fields and set which are presents
in your working area
Example. To illustrate the above function,
the economic information database ABI Inform
is used. The selection from the database is made
on the subject predatory pricing. The search has
been made with the two word predatory pricing
adjacent either in the titles or the abstracts. The
data have been downloaded and the data have been
imported into the software by creating a table of
import (you select or answer to a certain number
of questions about reference separators, field headings, and separator, etc.) This table can be saved
and re-used if necessary. Once the importation
made, you select the fields with which you want

to work to perform various analysis.
The following example shows the format with
the key fields:
-30: (ABI/INFORM) Reference separator with
the variable part (here the figures between
the dash
AN: 670383 Field separator the dash and field
heading AN (all field headers must be indicated)
SN: 93-19604
TI: Canada probing Air Canada, CAI price policies against upstart. The separator between
the title words is the blank space
AU: Anonymous. When several authors are
present the separator between the authors
is the semi column.
CO: Air Canada (DUNS: 20-209-5022); Canadian Airlines International Ltd; Nationair
Canada
SO: Aviation Week & Space Technology, v138n7,
pp. 34, Feb 15, 1993, 1 page.
CODEN: AWSTAV, ISSN 0005-2175, JOURNAL
CODE: AWS
AV: Photocopy available from ABI/INFORM
364.00
DT: J (Journal Article)
LA: English
GN: Canada. When several countries are present
the separator between the countries is the
semi column.
IT: Airline industry; Predatory pricing; Investigations The separator between IT is the
semi column.
CC: 8350 (Transportation industry (not equipment)). Here this is most complicated, the
separator between two CC is the semi column, but it is easier to work on the meaning
of the CC, in this case this is the expression
in brackets. The software must be able to
index and select these expressions.

AB: The Canadian Bureau of Competition is

investigating charges by Nationair of Montreal that Air Canada and Canadian Airlines
International (CAI) are using predatory
pricing practices against it on the Toronto
to Montreal corridor. A Nationair official

charges that Air Canada and CAI are offering
fares at a substantial loss to put Nationair
out of business.
Figure 6. The field selected, the selection of a group of authors and the constitution of a group
Figure 7. Main area analyzed according the countries

The results of using Matheo-Analyzer are

shown below. The fields selected have been
extracted and indexed. The number of items
(e.g., author names, countries, index-terms) are
indicated after the field header. In Figure 6, the
user has selected some key authors relevant for
the user. The number of the papers published by
these authors is indicated on the histogram which
is built automatically according your selection.
The selected authors are then stored in a group
called key-authors.
Figure 7 will show how to answer to the
question: what are the main subjects concerning
the countries involved in this query? To answer
this question, we will build a network between
countries (GN) and the domains represented by
the code CC. Note that the data in brackets have
been correctly extracted and indexed.
The uses of groups are very convenient if we

want for instance to known the global competency of the key-authors selected, we will make a
matrix with the author group and the index-terms
for instance. The frequency of the group (being
a metadata) of the index-terms is not indicated.
Only the presence-absence are quoted (absence
no sign), presence indicated by the letter o.
All combinations which are described in the
presentation of the software are available. And the
analysis which can be performed by the user are
only limited by the number of fields or subfields
present into the references. The purpose of these
examples is only to show part of the bibliometry
treatments which can be done. Do not forget
also that other functionalities are available as for
instance to export all the fields or part of them
in another database, to build up automatically a
Figure 8. Competencies of the key-author group

report, to select various intervals of frequencies

to work, and so forth.
rEtrIEvIng dAtA FroM thE WEb

And bIblIoMEtry trEAtMEnts
The Internet is an important source of information. Some data are very valuable, others have
almost no meaning. But one of the problems of
the data obtained from the Internet are that they
are not formatted and cannot be used directly for
bibliometry analysis. There are a large variety of

programs, search engines, and so forth to mine
the Web, but the number of tools available to
perform bibliometry treatments is rather limited.
This section presents an example of bibliometry
analysis of Internet data. Other tools/software
related to analyse Internet data are given in the
Appendix. The software used is Matheo-Web
(further information about this software can be
obtained from IMCS (2006). Based on the same
principle as Matheo-Patent, it allows to extract
various pages from the Internet according the
Figure 9. Searching with Matheo Web

Matheo Web allows to search in
Newsgroups, Mailing list, Google, Blog
WebSite/URL, URL from files, RSS flux
Once the search terms have been indicated,
the software performs the search on Internet
and indicates the number of results. The
user determines how many results, the
software to download the requested
information and create a local database.
Figure 10. Result of the search: 137 URL

Figure 11. Access to the file in html format (drawing and photographs are not downloaded to save
time and space. But if the user wants to consult the data a direct link to the original URL on the Web
is provided)
Figure 12. Histogram of the Internet domains available from the addresses of the pages
user query, and to format the search results before

performing bibliometriy analysis.
Figure 9 shows the interface of Matheo-Web
and its key functions.
In the following example, a search on biofuel and palm oil was made using Google. The
downloaded data are presented in Figure 10.
The bibliographic data will be used to perform automatic analysis, and the content of the
file can be seen by using the Html tag as shown

in Figure 11.
From this set of data, a certain number of automatic bibliometry analyses can be performed.
Three examples are given in Figures 12, 13, and
14.
This type of software like Matheo-Web is
useful for intelligence mining in several ways:
downloading and building local databases with

Figure 13. Network of the above domains with the e-mail extracted from the various downloaded
pages
Figure 14. Matrix of downloaded hosts (line) vs. external hosts (columns)

the description of the host (the bibliographic data),

viewing its content (HTML) data, formatting the
URL, the bibliographic data can allow to build
correlations even if the languages are different.
It is obvious that one of the limitations is the indexation of the URL, for instance date, keywords
and abstract are not always available.
data shall be lawful and the storage and usage

should be in line with relevant law. But, often extra
details may provide valuable information. For
instance when inviting customers to participate to
a workshop, it is important to have a group which
is homogeneous and where the people involved
will have pleasant common points.
Vocabulary: It is important to use a common vocabulary that can be understood by

most of the people of the company. Building up a thesaurus and developing a full
documentation center is costly and time
consuming. Best relevant index terms and
carefully selected key words will facilitate
a global reformatting task when analyze
bibliographic data.
E-mail: E-mails can be also worked within
the bibliometry framework. It is good practice to give a subject title for each e-mail,
and make clear to whom it may concern,
and so forth. This is the same when creating
Web pages. A set of fields needs to be used
to have well-informed pages.
IMplIcAtIon oF thE bIbloMEtry

AnAlysIs For A coMpAnys
InForMAtIon systEM
There are several implications of bibliometry techniques to an organizations information system.
Developing database with bibliometry analysis. Because bibliometry correlations are made by
building up lists, matrix, and networks from various fields, it is important to consider the indexation
fields when developing an home made database.
Taking customers database as an example, the
attributes about a customer must go well beyond
the simple notion of customer to extend to their
academic background, their age, position and
habits, and so forth. Of course collection of the
Figure 15. Example of value chains for bibliometry treatments
Free databases
from Internet
Matheo-Patent
Matheo-Pharma
Local
Databases
Bibliometric
Analysis
Export
Selection from
Internet by a software
such as Temis
Internet data
Reformatting
steps
Matheo-Analyzer

A challenge of maximizing the benefits of

bibliometry analysis is reformatting of source
data. Most of the data collected from commercial,
free databases or from the internet will not have
the same format, some of them will not even
be formatted. In order to conduct bibliometry
analysis, it is important to determine the most
appropriate format and to the facility (a piece
of software) of bibliometry analysis. Another
challenge is the language. Most of the data are in
English. However, information from the Internet
could be in various languages, which may limit
the usefulness of bibliometry analysis.
It is a good practice to feed data into one information system through a chain process. Figure
15 presents a possible value chain to perform
bibliometry analysis.
thE cost oF bIblIoMEtry

AnAlysIs
The cost of bibliometry analysis is related to the
cost of the information that to be analysed and the
bibliometry software. If commercial databases are
used, the cost per reference downloaded could be
as much as 4 U.S. dollars. The cost of the database could be obtained from the Dialog database
BlueSheets. This is the reason why free databases
could be preferred when this is possible.
The cost of the bibliometry software varies from a few hundred U.S. dollars to several
thousand. For instance most of the Patent software cost several thousand dollars. The cost of
Matheo Patent is moderate: annual subscription
fee is 600 (or $768) for one user license. For
multi-users, the cost per subscription decreases
dramatically. Software such as the Temis one, the
average cost is roughly from 10,000 ($12,800) to
15,000 ($19,200) or more. Generic software such
as Matheo Analyzer, can be bought once for all
for 3,450 ($4,416) for a single user licence.

conclusIon
In the presentation of the book The Secret Language of Competitive Intelligence (Fuld, 2006),
two chapters Seeing the Threes to understand
the Forest and Seeing Through the Confusion
to Gather Intelligence Gems underline that
understanding the links between information is
one of the most important aspect of intelligence.
Speaking of the same book, Robert Crandall
(2006) retired CEO of American Airlines says
One of the most importantand toughestjobs
of a manager is seeing through the competition:
understanding the strategy, cost structure and
pricing models of the companies that you bump
up against in the marketplace. Leonard Fulds
new book offers approaches and insights into
solving a problem which bedevils managers at
every level.
This shows clearly that understanding our
environment is among the most important step of
intelligence. But, to understand this environment
it is necessary to gather the right information and
also to get and understand the hidden information that bibliometry analysis can provide.
The analytical tools and the databases available
(academics or patents or home made), provide
the facilities necessary to place a subject in a
global arena. Intelligence means the knowledge
of the environment of all the items necessary to
provide the facility to create or expand human
activities. Then to be able to have rapidly the
knowledge of the environment of people, ideas,
companies, institutions, is a key step in competitive Intelligence.
Most of the people engaged in intelligence
units need to be permanently informed upon all
the activities which will help the decision makers
to take the best decision. If years ago, the storage of information and their retrieval were the
ultimate tools, today the amount of information
available prompt various researchers, companies,
and institutions to develop new tools enabling

the mining of large amount of data. Then, if the
storage and information handling are necessary,
they must be completed by various complementary
operations such as the bibliometry treatments.
These treatments will provide a global view of
almost any type of subject and very often will
provide the data necessary for innovative groups
to perform brain-storming or to fill all the SWOT
analysis parameters.
In our opinion, all institutions and people,
because of the quality of the information available
and of the low cost and facility of the mining software can benefit from these treatments. Knowledge is not any more coming from the storage of
report, books, scientific papers, and so forth. The
knowledge should be created and among all the
ways to create knowledge the bibliometry analysis
is a good method because it allows the experts to
have various views in context of many questions
asked by decision makers and strategists.
In this chapter, we presented various bibliometry treatments on free access or commercial
databases. If the bibliometry treatments have a
cost, which can be high when you use commercial
databases, it must be underlined that various free
access databases are available. Among them patent
databases which are a unique source of technology, applications and economic actors have a very
important place. This is why we presented various
examples dealing with these resources.
Using patents and automatic patent analysis
(APA) will provide for academic institutions a
link between science and technology, and for
companies a way to benchmark competitors and
technologies to innovate by:

Getting and sorting information by mining

large amount of data
Performing on formatted databases (local or commercial) automatic bibliometry
analysis
It must be also pointed out that most of institutions and companies develop their own homemade
databases. Very often the databases are developed
to provide direct answer to the direct functions
of the institutions and companies (customers,
competitors, etc.), but if you think to all the type
of correlations which can be done by the bibliometric treatments, you will be able to implement
the coverage of the databases in such a way that
useful hidden correlations will be available bit
by bit as the amount of data will increase into
the database.
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AppEndIx A: othEr bIblIoMEtry

soFtWArE AvAIlAblE on thE MArkEt
smartpatent and Aurigin
SmartPatent (2006) Electronic Patents are fully indexed versions of patents issued by the U.S. Patent
and Trademark Office that include hyperlinks to section headings and patented linking between the
ASCII text and the image file of the document.
These electronic patents are designed for use with the SmartPatent WorkBench, an interactive application for Windows 95 and Windows NT users. Users can search for patents on the IBM Web site
and download the selected documents in the SmartPatent Electronic Patent format to the SmartPatent
WorkBench to create, maintain and navigate a customized local patent library.
The SmartPatent WorkBench integrates organizational and document level analytical capabilities
that allow users to conduct broad or narrow searches of their patents. An advanced, patented hyperannotation feature permits users to institutionalize their thought process by automatically linking their
annotations to user-highlighted text in multiple documents.
Micro patent
MicroPatent (2006) is the worlds leading source for online patent and trademark information. Combining advanced technology with the most comprehensive, up-to-date IP information, MicroPatent delivers
a complete intellectual property solutionwhether it is online searching, document delivery, patent
analysis, file histories, or professional search assistance.
MicroPatent is the first company to provide patent information on CD-ROM and over the Internet,
houses the worlds largest commercial collection of searchable full-text patent data, including data from
Figure A.1. Patent citation networks from U.S. patents

the United States, Europe, Germany, Great Britain, the World Intellectual Property Organization, and
Japan. MicroPatent also has AOS, a highly regarded patent analysis and collaboration service in the
intellectual property industry, featuring ThemeScape concept maps, text clustering, citation trees,
and citation reporting.
ClearForests ClearResearch product (ClearResearch, 2006) complements MicroPatents data and the
functionality available within AOS. ClearResearch automates the initial analysis of a document set by
crunching patent information into a database repository file (DRF), creating a taxonomy of terms and
thesaurus of synonyms so it can be viewed various ways, shedding immediate light on the competitive
landscape. Category, context, trend, and star maps, in addition to trend graphs, taxonomy and synonym
editors, and special filters, further enhance the analysis, refining the document set before the option to
round-trip back into AOS to complete the review.
Patent LabII
There are various types of analysis can be engaged by the Patent-Lab II for patent analysis. After
completion of the required analysis, the Patent-Lab II software allows users to select numerous types of
output formats, such as Matrix Chart, Report, and so forth. If Matrix Chart is selected, user then needs
to choose the field contents for the row and column following the options (Khong Poh, 2003):
a.
b.
c.
d.
e.
Overall Summary
Assignee Summary
Assignee Detail
Patent Classification
Country Summary (see Figure A.2)
A.4 Ttralogie
Tetralogie (2006) provides a method which helps to find out a list of items used to sort out a set of
strategic indicators. The items are extracted from the first data according to certain rules. These rules
Figure A.2. Output chart generated by Patent-Lab II
263
take into account the nature of the data base which the information came from, by using the data base
specification. To preprocess the first data, Tetralogie uses its own techniques to count items and to cross
them in order to obtain contingency tables, disjunctive tables and multiway tables. Then Tetralogie uses
methods of treatment to handle those tables, especially methods from Factorial data analysis, cluster
analysis and multiway data analysis. Tetralogie also uses common statistics methods. A supervisor
tool collects all the results of the pre-treatments and the treatments. This tool can give at any moment
a commented abstract of the results of all the analyses and pretreatments performed since the beginning of the study. This report can be used to generate conclusions and to make decisions. In Tetralogie,
the interpretation phase is based on the report we talked about, on graphics visualization, on artificial
intelligence, especially knowledge acquisition and on intermethod communication. First full-text data
related to any specific item are always accessible from any Tetralogie tool, which provides an easy
way to have a kind of feed back helpful to correct wrong or weak conclusions. Of course the last phase
needs no tool, for every one has to generate its own conclusions and decisions by their own means. The
interpretation phase tools help to do this.
The visualization methods (IRIT, 2006) are used to ease the interpretation of treatment and pretreatment results. It constitutes a kind of interface between mathematical results and the user. In addition to classical histograms and full text visualization, (Mothe, Dkaki & Dousset, 1998) Tetralogie
proposes a new method for factorial space visualization. So, instead of producing the traditional and
static two-dimensional factorial spaces, Tetralogie provides an interactive visualization system of fourdimensional spaces.
dataview
Dataview (more information can be obtained from Rostaing (2006), was about 20 years ago, a precursor in automatic formatted data treatments. The possibilities offered by Dataview is interesting to
note because they list most of the bibliometry treatments. Most of them have now be introduced in the
Matheo-Analyzer software.
When the user introduced into the software the necessary descriptive parameters, it executes the
encoding process. This step makes an inventory of the whole forms existing in the references set
(Faucompr, 1997). This encoding process also draws up the bibliometric data for these forms:

Their locations within the references

Their occurrence frequencies
Their interrelationship strengths according to co-occurrence frequencies and according to statistical association measures. Then, the Dataviews user can exploit this bibliometry database to
build the users own edition of issues. Dataview provides the main necessary issues and the main
necessary edition formats used for bibliometry analysis.
Bibliometric distributions
Size-frequency distribution for forms (data used for Lotka (Lotka, 1926) and Bradford (Bradford,
1934) laws.
Size-frequency distribution for pairs of forms
Distribution of forms number per field (indexation distribution)
Frequency-rank distribution for forms (data used for Zipf (Zipf & Bassecoulard, 1946) law, logistic
curve, bar chart, pie charts, etc.)
Frequency-rank distribution or statistical measure-rank distribution for pairs of forms (network

mapping)
Bibliometric matrices
Occurrence matrices
Presence/absence matrix (block seriation, clustering)
Co-occurrence matrices
Symmetrical matrix (network analysis, multidimensional scaling)
Asymmetrical matrix (principal components analysis, correspondances analysis, clustering)
Cross-multifields matrix (Burt matrix, multiple correspondances analysis)
Statistical association measures matrix
Symmetrical matrix (similarity, asymilarity, or distance matrix)
Asymmetrical matrix (network analysis, MDS)
Crossmultifields matrix
References x references matrices
Condorcet matrix (number of common forms belonging to two references)
Association matrix (similarity, asymilarity, or distance matrix)
The user can select the set of forms which will be concerned during the distributions edition. This
set is chosen according to rank frequency intervals, according to field belonging, and according to mask
retrieval. In the same way, column and raw headers are chosen by the user. Therefore, the user can
allocate the forms, which seems to th user to contain relevant interactions, to the two dimensions of the
matrix. This facility to select and allocate forms allows the user to built up as well classical bibliometric
matrices as the users customized bibliometric matrices.
vantagepoint
VantagePoint (2006). Developed through a strategic alliance between Georgia Tech and Atlanta-based
Search Technology Inc., VantagePoint allows technical-intelligence managers to quickly analyze search
results from bibliographic databases and R&D literature. The text-mining tool produces summaries,
charts and graphs that help people spot patterns and relationships in massive amounts of data, enabling
them to extract relevant information and make better decisions.
Competitive technical intelligence is the name of the game, says Alan Porter (2005), a Georgia Tech
professor of industrial and systems engineering and public policy. He developed the technology that
resulted in VantagePoint.
Today its critical to have the right technology at the right time, Porter explains. Companies want
to keep an eye on competitors so they dont drop the ball by introducing a new product or technology
too late. For example, Ford looks to see what is published by and about Toyotaand more important,
what its patenting, because that shows what Toyota is really interested in.
In addition to staying a step ahead of rivals, VantagePoint also assists with technology management
and R&D efforts by helping:
Identify what inventors are up to, along with the organizations sponsoring their researchinformation that can lead to potential mergers or acquisitions

Figure A.3. Example of results obtained with VantagePoint

VantagePoint software a llows technicalintelligence managers to quickly analyze
search r esults f rom
bibliographic
databases and R&D literature. The textmining t ool produces s ummaries, charts
and graphs, such a s these, t o help
people spot patterns and relationships in
massive amounts of data.
Uncover licensing opportunities

Pinpoint patent infringement
Track and forecast trends in specific technology areas
Identify new technologies or new venues to apply existing technologies
AppEndIx b: MInIng thE WEb WIth othEr soFtWArE

This presentation is not exhaustive but is made to inform the reader on other software and ways to mine
the Internet for intelligence.
Figure B.1. The global process of Digimind

Digimind (2006) The 2nd generation surveillance technologies developed by Digimind mean that
unstructured data can be scanned automatically, no matter the type of electronic source (Web, invisible
Web, discussion forums, newsletters, Weblogs.), and whatever the format (html, pdf, doc, ppt, xls, ps.),
or language (even those using other characters such as Chinese, Japanese, Arab, or Russian).Result: a
single query can be used to monitor all types of heterogeneous sourcesno specific technical knowledge
requiredand the identified news items are presented in a standardized newsthread (title, automatic
summary, extracted news, link towards the original document): a user-friendly report for further work
by analysts and experts.
kb crawl
KB Crawl (2006) has an intermediate positioning vis--vis the large platforms and vis--vis of more
economic, but more limited or less robust tolls. Its functionalities place it in the top-of-the-range
one for the monitoring of Web sources. It makes it possible to supervise the changes on pages or Web
sites, by announcing these changes to the level of the software (very good visualization of the type of
changes), or by e-mail, with filters by key words. The frequency of monitoring of a catalog (according to the terminology of the editor) is configurable, knowing that the tool repatriates on average 50
pages per minute. All in all, the functionalities suggested make it possible to answer a very demanding
parameter setting (black-lists, all types of forms, login, parameters of transfer, URL exclusive, etc.). The
repatriated contents are stored in a database (Interbase). KB Crawl can function according to two types
of configurations: into single-user (the software is then installed with its database on the same station;
into multipost (the bdd is installed on a server, allowing an operation in network and the division of the
watches and data). A robust search engine is integrated into KB Crawl and makes it possible to find
the pages answering requests by key words. As for export, it is done from now on a function ad hoc,
which allows the possible interfacing with possible applications of machine analysis of data (textmining, cartographies).
skill cartridge: temis solutions

A Skill Cartridge (Temis, 2006) is a hierarchy of components sets of themes combined to extract
relevant information. The two principal components of knowledge of the Skill Cartridge are: multilingual dictionaries and the contextual rules of extraction which establish the relations between the
extracted concepts.
Specific treatments can be integrated to standardize the documents upstream or to filter, rename, and
reorganize the tree structure of the downstream extracted concepts. Skill Cartridges use the linguistic
technology of analysis of the host of extraction.
Skill Cartridges generics
Analytics
Text Mining 360
Competitive Intelligence
Human Resources Management

Figure B.2. The Temis chain of value
Skill Cartridges specific to the Life sciences

Biological Entity Relationships
Medical Entity Relationships
Chemical Entity Relatioships
Competitive Intelligence Life Sciences Edition
Temis system
rEFErEncEs
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Faucompr, P., Quoniam, L., & Rostaing., H. (1997). Un lien automatique entre recherche scientifique
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fr/petitexemple.html
KBCrawl. (2006). The KBCrawl platform. Retrieved January 6, 2007, from http://fichiers.aidel.com/
partenaires/BEAConseil/Fiche_KBCRAWL2.5.pdf and http://www.kbcrawl.net
Khong Poh, W. (2003). Patent technology for competitive intelligence. International Journal of The
Computer, The Internet and Management, 11, 52-64
Micropatent. (2006). Description of Micropatent. Retrieved, January 6, 2007, from http://www.micropat.
com
Rostaing, H. (2006). Dataview description. Retrieved January 6, 2007 from http://www.crrm.u-3mrs.
fr

Smartpatent. (2006). Description of Smartpatent. Retrieved January 6, 2007, from http://www.europeanpatent-office.org/epidos/conf/eac98/proceedings/ibm.pdf

Temis. (2006). Temis solutions. Retireved January 6, 2007 from http://www.temis-group.com/index.
php?id=60&selt=1
Tetralogie. (2006). Description of Tetralogie. Retrieved July 8, 2006 from http://atlas.irit.fr/TETRALOGIE/tetrajeu.htm
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About the Contributors
Mark Xu, PhD, is a principal lecturer at University of Portsmouth (UK). He is course leader for ebusiness and research group leader for business information systems. His research interests are executive
information systems with a focus on strategic information scanning, information support and executives information behavior, and e-commerce strategy and implementation. He is a pooled researcher of
AIM (Advanced Institute of Management Research) at London Business School. He is the co-author of
CIMA study books, and has published over 40 papers including some in leading international journals
such as Information & Management, International Journal of Information Management, and Information Systems Management. He serves on the editorial board of the International Journal of E-Business
Research and as referee for other five international journals.
* * *
Udo Richard Averweg is employed as an information analyst at eThekwini Municipality, Durban
(South Africa). He entered the information technology industry during 1979 and holds a masters degree
in information technology (cum laude) and a masters degree in science. He is a professional member of
the Computer Society of South Africa and has delivered IT research papers locally and internationally
(USA, Australia, Egypt, Switzerland, Germany, and Mauritius). He has published peer-reviewed articles
in local and international journals. In January 2000, Averweg climbed to the summit of Africas highest
peak, Mount Kilimanjaro (5,895 meters), in Tanzania.
Peter Bednar is originally from an engineering background and has several years of experience
from industry in systems analysis and development. Bednar has been working as an academic from
1997 to the present. His research covers contextual analysis, organizational change, and information
systems development, and he has published several book chapters and many articles in these fields. He
is currently a senior lecturer in the School of Computing at the University of Portsmouth (UK) and is
also affiliated to the Department of Informatics at Lund University (Sweden).
Nik Bessis obtained a BA from the TEI of Athens (Greece) and completed his MA and PhD at De
Montfort University (UK). He lectures full-time at the University of Bedforshire (UK) and he is the
postgraduate course manager. His research interests encompass DSS and decision making theory, Grid
services, VOs, OGSA-DAI, WWW/online systems, IS, and SSM. He has a number of publications in
these areas and he has served as a reviewer in conferences and textbooks. Dr. Bessis is engaged in a
number of research and commercial projects in the areas of development and evaluation of collaborative
and decision-making services.
Franois Brouard is a bilingual chartered accountant with a BAA in business administration from
cole des Hautes tudes Commerciales de Montral (HEC), an MSc in accounting from Universit du
Qubec Montral (UQAM) and a DBA in business administration (DBA) from Universit du Qubec Trois-Rivires (UQTR). He is currently a faculty member in the accounting group at Eric Sprott
School of Business, Carleton University (Canada). He previously worked as a consultant in training
and strategic scanning, a professor at Universit du Qubec Hull (UQAH), a project manager for the
Professional Education Program of the Quebec Chartered Accountants Order and a lecturer in several
universities. He also worked in auditing and tax for an international CA firm (Samson Blair / Deloitte
& Touche). His research interests include environmental scanning and strategy, business intelligence,
accounting, information systems, professional education, taxation, and financial planning. He is presently working on the development of an expert system to serve as a diagnostic tool of environmental
scanning practices of SMEs.
Marina Burakova-Lorgnier obtained her MA and PhD in social psychology from Rostov State
University (Russia), and further held a position of assistant professor. Her research covers areas of gender identity, nonverbal behavior, social network, and knowledge sharing, where she has a number of
publications. She has served as a conference and textbook reviewer and an expert for local government
councils and NGOs. She is engaged with research projects in gender attitudes and social capital and
combines a PhD research in knowledge management with a part-time lecturing at the European School
of Business and at the University of Bordeaux (France).
Henri Dou, professor at the University of Aix Marseille III (France), University Paul Czanne, is
also associated with the ESCEM (Ecole Suprieure de Commerce et de Management, France) and with
the University UNIMA (Indonesia). Dou is a petrochemical engineer and obtained his PhD in organic
chemistry at the University of Aix-Marseille but he earned part of it in Canada, Nova Scottia. He
joined the University of Aix-Marseille III (1985) as professor in information science. His specialities
are technology watch, competitive intelligence, and regional development. Most of his recent activities
are centred on Indonesia, China, and South America. Dou is president of the French Society of Applied Bibliometry and a member of various advisory boards (France, Europe, and Asia). He holds other
positions as charg de mission near the direction of the CNRS (French National Research Center),
general secretary of Chemical Information Network of Unesco (ChIN) and French representative at the
Oceanographic International Commission.
Jean-Marie Dou obtained his PhD in information science at the University of Aix-Marseille III
(France) after a specialization in mechanic and technology watch. He holds various positions including Matre de Confrences associ at the University of Provence, technical director of the company
Medical Process, coordinator of European projects, manager and fonder of the IMCS Company and
recently he joined the Chamber of Commerce and Industry of Marseille. He is a specialist of economic

intelligence management at the CIME Department (Center of Innovation and Mediterranean Management). He develops his research interest to the development of small and middle size companies and
intellectual property.
Yanqing Duan, PhD, is a professor in information systems at The Business School of University of
Bedfordshire (UK). Her principal research interest is the development and use of advanced information
and communication systems (ICTs) in, and their impact on, business and management, especially for
improving individual and organizational decision-making and performance. She is particularly interested
in knowledge management, especially the ICT based knowledge transfer, and the use of e-learning in
enhancing knowledge and skills in SMEs. She has coordinated many European Commission-funded
research projects and published over 80 papers in journals, books and international conference proceedings.
Tim French obtained a BA from the Open University (UK) and an MA from the Nottingham University (UK) while working full-time in commerce. French has supported a variety of SMEs and large
blue-chip organizations in the optimisation of their online services. His current research interests
encompass usability and trust aspects of e-services. He is a member of the BCS and a fellow of the
CollP. French is a member of the Applied Semiotics with Informatics Research Laboratory based at
Reading University (UK) where he is engaged on a part-time PhD research. He lectures full-time at
the University of Bedforshire (UK).
Wei Huang obtained his BSc and MSc from South China University of Technology and completed
his PhD at Loughborough University (UK). He also conducted three years postdoctoral research at the
University of Nottingham before he joined the University of Bedfordshire. Dr. Huangs current research
encompasses AI and OR optimization, wireless network planning, Web services, and Grid computing.
He has a number of publications and he has served as a journal and conference reviewer. He is currently
engaged with a number of research and commercial projects in graphical web services development
and wireless network planning.
Amy Hykes is a research associate at IMD in Lausanne (Switzerland). Prior to joining IMD, Hykes
worked as a senior product marketing manager at Stellent, a content management software provider
located in Minneapolis, MN. Prior to Stellent, she was an equity research associate at William Blair
& Company in Chicago where she covered the computer software sector. Hykes began her career as a
business consultant at Accenture, first in Washington, DC and later in Chicago. Hykes has a BA in economics from Georgetown University and holds a Master in Business Administration from the University
of Chicago Graduate School of Business with concentrations in strategy and marketing.
Roland Kaye is a professor of management accounting at the Norwich Business School, University
of East Anglia (UK). He previously held a chair in information management at the Open University
Business School where latterly he was dean. He left the Open University to become president of the
Chartered Institute of Management Accountants before taking up his current post. He is a governor
of Ashridge Management College and recently stepped down from the executive and treasurer role in
the Association of Business Schools. Previously, he has worked as a management accountant in vari-

ous industrial companies before a move into academic life and consultancy. He has led many research
projects in management accounting and information systems, and published a number of books and
articles on financial planning, strategic management of information, and innovation.
Dennis Kehoe is royal academy of engineering research professor in e-business at the University
of Liverpool (UK). He is the leader of the Liverpool Innovative Manufacturing Research Centre in eBusiness and Centre in Advanced Internet Methods and Emergent Systems. He has been the principal
grant holder for a series of research projects funded by UK and EU. His research interests include
management of enterprises and e-business modelling and prototyping supply chain management. Most
of his research has appeared in international journals such as Logistics (Research and Applications),
Operations & Production Management, Advanced Manufacturing Technologies, among others.
Yang-Im Lee, PhD, has studied and worked in South Korea, Japan, and the UK. She is at present a
lecturer in marketing at Royal Holloway, University of London (UK). Dr. Lee is a strategic marketing
specialist who has provided a number of guest lectures and presented papers at various international
conferences. She has undertaken research in the areas of international marketing, strategic marketing,
and international management and culture. At present she is focusing her research effort in the areas of
comparative management and international marketing.
Dong Li joined the Management School of The University of Liverpool (UK) (2002). He received
his PhD (1999) from University of Nottingham. He worked as a research fellow afterwards and then
became a senior lecturer. His research includes supply chain optimization, RFID enabled business
modelling, intelligent supply chain systems, and e-business modelling. Most of his research has appeared in international journals such as Production Economics, Advanced Manufacturing Technology,
Intelligent Manufacturing, Services Operations and Informatics, and book chapter on intelligent supply
chain management. Dr. Li is a member of Production and Operations Management Society and UK
Association of Information Systems.
Kinchung Liu received his BSc in e-business from University of Liverpool (UK) (2003). He joined
the AiMes Centre at University of Liverpool in the same year as a PhD research student. His research
is on framework of supply chain tracking application development. He has published his research in a
peer reviewed conference proceeding. At the research centre, he has involved in more than ten projects
on applications of tracking technologies such as GPS and RFID for manufacturing and supply chain
management.
Stuart Maguire, PhD, is a lecturer in information systems within the Management School, Sheffield
University (UK). Maguire has worked in several private and public sector organisations as a systems
analyst and systems consultant. He has undertaken research and consultancy in over 150 organizations.
He has also developed and delivered executive development programmes for middle and senior managers
in areas such as consultancy and project management. Recently he has provided professional assistance
on several national and international projects. Maguire has formulated his own methodology (OASES)
for introducing information systems into organisations. He has recently focused on how organisations
attempt to manage business intelligence at times of major change.
00
Donald Marchand is a professor of strategy and information management at the International Institute
for Management Development (IMD) in Lausanne (Switzerland). His special interests include managing
information and knowledge to drive superior business performance, internet strategies, demand/supply chain management, and the strategic use and deployment of information systems and technology
in companies operating in local, regional and global markets. He has directed several major research
projects and has authored/co-authored eight successful books and over 140 articles, book chapters,
cases, and reports. Professor Marchand earned a PhD and MA at UCLA and a BA at the University of
California, Berkeley (Phi Beta Kappa), after which he held academic posts at Syracuse University and
the University of South Carolina.
Brian Mathews is a professor of marketing at The Business School, University of Bedfordshire
(UK). He received his bachelors degree from the University of Bradford and his MBA and PhD from
the University of Strathclyde. The majority of his research is interdisciplinary in nature and he has
published widely in leading journals including the International Journal of Research in Marketing, the
Journal of Organizational and Occupational Psychology, the Human Resource Management Journal,
and the Services Industries Journal.
Juan Luis Nicolau, PhD (economics) is an assistant professor at the University of Alicante (Spain).
His main research interests are the analysis of the individual decision-making through probabilistic
choice models and of firms market value. He has published in the following journals: Strategic Management Journal, European Journal of Operational Research, International Journal of Service Industry
Management, International Marketing Review, International Journal of Market Research, Annals of
Tourism Research, Tourism Management, Revista de Economa Aplicada, and Moneda y Crdito.
Vincent Ong, PhD, is a senior lecturer at The Business School of University of Bedfordshire (UK).
His principal research interest includes executive information systems, strategic intelligence processing,
information processing, and information agent applications. He is particularly interested in the development and use of advanced software agent and Internet technologies for strategic intelligence processing.
He is actively involved in European Commission funded research projects.
Jos L. Roldn, PhD, is an assistant professor of business administration at the University of Seville
(Spain). He has published three books and several articles in the fields of management and information
systems. His recent contributions have been published in Industrial Marketing Management, International Journal of Technology Management, Total Quality Management & Business Excellence, Internet
Research: Electronic Networking Applications and Policy, Quality Assurance in Education, and OR
Insight. Furthermore, he has published four book chapters for IGI Global. His current research interests
include business intelligence, knowledge management, and partial least squares.
Habibu Suluo is a senior principal accountant, specialising in financial systems, and working for
the Tanzanian Revenue Authority. For the previous 10 years, he had been a systems analyst and senior
business analyst. Four of those years were spent working for the Tanzania Electric Supply Company
Limited. Mr. Suluo was awarded a BCom degree (1994) and became a certified public accountant in
Tanzania (2003). Suluo was awarded a Chevening scholarship, funded by the Foreign & Commonwealth
0
Office, to study at Sheffield University (2004). Suluo was awarded the degree of MBA with distinction
from the Management School, Sheffield University (UK) (2005).
Adeline du Toit is a professor and head of the Department of Information and Knowledge Management at the University of Johannesburg (South Africa). She has extensive corporate consulting, research,
and teaching experience in strategic competitive intelligence. Her research focuses on information
management and competitive intelligence in the manufacturing industry. Adeline is an active author
who has published over 50 peer-reviewed articles in local and international journals including International Journal of Information Management, Aslib Proceedings, South African Journal of Economic
and Management Sciences, and Management Dynamics. She is a regular presenter at conferences and
workshops and is active in information management training and consulting at several South African
companies.
Peter Trim, PhD, is a senior lecturer in management and director of the Centre for Advanced
Management and Interdisciplinary Studies (CAMIS) at Birkbeck College, University of London (UK).
During his academic career, he has taught a range of marketing and purchasing courses in France,
The Netherlands, and the UK. He has also taught in Hong Kong and has published widely in a number
of areas including strategic marketing, industrial marketing, management education, corporate intelligence, corporate security and national security. Dr. Trim has worked in several industries and has
participated in a number of academic, government and industry workshops, both in the UK and abroad.
He is a member of a number of professional institutions, is a member of several editorial boards and is
the current Chairman of the Society for the Advancement of Games and Simulations in Education and
Training (SAGSET).
Xiaojun Wang received his first degree in computer science (2001) at Zhejiang University (China).
He obtained his MSc in e-business management from the University of Warwick (2002). Before he
started his PhD study in the University of Liverpool (UK) (2004), he worked as an IT manager in Dadong Electronic Ltd. (China). Wangs PhD research is on optimization modelling of food traceability
and operations management in food supply chains. He has published scientific articles in peer-reviewed
conference proceedings and the International Journal of Services Operations and Informatics.
Christine Welch is a principal lecturer in the Department of Strategy and Business Systems, part
of the Business School at the University of Portsmouth (UK). She is course leader designate of the new
MSc in knowledge management at Portsmouth. Her research interests include critical systemic thinking, contextual analysis and organizational change, and she has published several papers in these fields.
She is currently convenor of the Southern Regional Centre of the UK Systems Society, and a member
of the UKSS Board.
0
0
Index
A
accommodation information 89
activity-based costing (ABC) 19
ad-hoc location 42
agent-based EIS 79
design model 69, 78
support 77
artificial intelligence (AI) 75, 165, 226
assimilation information 89
Association of British Insurers (ABI) 45
automatic patent analysis (APA) 259
B
Bata Insurance Group Plc 44
benchmarking approach 59
business intelligence (BI) 14, 15, 29, 38
C
Canadian Airlines International (CAI) 251
certificate authorities (CAs) 184
Chartered Insurance Institute (CII) 45
CI cycle 112
code scheme 78
commercial scanning 123
competitive
intelligence (CI) 111
scanning 123
competitors information (CI) 37
Corporate
Intelligence
Steering Committee 60
corporate
intelligence 60
performance
management (CPM) 19
radar
system (CRS) 36
counterintelligence operations 60
critical success factor (CSF) 74
customer relationship management (CRM) 19, 20
D
data
-set (DS) 192
access and integration (DAI) 191
service group registry (DAISGR) 192
agent (DA) 215
Data Protection Act 30
decision support system (DSS) 37, 74, 92, 179
distributed
artificial intelligence (DAI) 75
query processing (DQP) 185
Copyright 2007, Idea Group Inc., distributing in print or electronic forms without written permission of IGI is prohibited.
Index
E
Economic Espionage Act 57
electronic product code (EPC) 206
enterprise
information portal (EIP) 75, 236
resource planning (ERP) 15, 92
European Article Numbering system (EAN) 204
executive
-agent
interaction (EAI) 81
learning (EAL) 81
information system (EIS) 37, 69, 70, 74, 87, 89, 224
support system (ESS) 37, 74
Executive Intelligence Alliance Policy Strategy Monitoring Group 60
expert systems (ES) 75, 180
G
Global Grid Forum (GGF) 184
global positioning systems (GPS) 203
Grid data service (GDS) 192
factory (GDSF) 192
H
Helms-Burton Act 153
high frequency (HF) 206
I
information
filtering (IF) 73
orientation (IO) 1
retrieval (IR) 72
systems (IS) 88
technology (IT) 15, 88, 92
intelligence (IS) 92
intelligent
product (IP) 214
agents (IPA) 215
IO framework 7
performance
indicators (KPIs) 74, 225
knowledge
-based systems (KBS) 75
base (KB) 229
management systems (KMS) 180
L
Landesbank Baden Wurtenburg (LBBW) 185
low frequency (LF) 206
M
machine aided indexing (MAI) 229
management
information systems (MIS)
71, 74, 92
support systems (MSS) 180
market
leader 59
situation 57
marketing intelligence officers 65
Matheo-Analyzer 250
medium-sized enterprise (SME) 17, 123, 126
middleware agent (MWA) 215
N
National Aeronautics and Space Administration (NASA)
229
O
object name services (ONS) 206
open Grid services architecture (OGSA) 184
data access integration (OGSA-DAI) 179, 186
P
personal digital assistant (PDA) 180
physical mark-up language (PML) 206
public key infrastructure (PKI) 181
job manager agent (JMA) 215
qualitative method 145

quality of service (QoS) 191
key
intelligence
needs (KINs) 111
questions (KIQ) 114
radio frequency identification (RFID) 203

resource agents (RA) 215
returnable transport items (RTI) 209
0
Index
semi
-autonomous function 80
-reactive function 80
service-oriented architecture (SOA) 185
small and medium enterprises (SMEs) 186
socio scanning 123
SST framework 170
strategic
intelligence
system (SIS) 89, 123
intelligence (SQ) 87, 126
marketing 60
intelligence framework 56
systemic thinking (SST) framework 167
supply chain management (SCM) 19
ultra high frequency tags (UHF) 206

universal product code (UPC) 204
V
variance inflation factor (VIF) 151
viable system model (VSM) 71
virtual organizations (VO) 181, 189, 195, 198
W
Web
-based technology 69, 100
services
inter-operability (WS-I) 191
resource framework (WSRF) 191
T
technological scanning 123
thematic qualitative analysis (TQA) 230
0

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Techniques and Technologies

Information science reference

Published in the United States of America by

British Cataloguing in Publication Data

Compiled References ........................................................................................................................ 270

Detailed Table of Contents

Compiled References ........................................................................................................................ 270

Professor G. Roland Kaye

Leveraging What Your

A Process View of Strategic Intelligence

informed business decisions about the future of

Leveraging What Your Company Really Knows

market leadership. Companies with effective

intelligence. Some questions that should be asked

Developing information processes that enable and encourage people to effectively

It is critical that executives not only understand

Competitor intelligence, which is focused on understanding a companys existing competition.

Figure 1. Sigmoid curves

Leveraging What Your Company Really Knows

them make key decisions such as whether

thE trAdItIonAl ApproAch to

the officers in the command center. Most often,

Leveraging What Your Company Really Knows

research companies or market forecasters on

or information gatekeepers. Rather than hoarding

thE tWo Most coMMon

Leveraging What Your Company Really Knows

technical developments; and the human resource

interpretations and views about the future. This

orgAnIzIng thE strAtEgIc

Sensing: Involves identifying appropriate

Leveraging What Your Company Really Knows

Using: Concentrates on applying information in decisions and actions.

Once a process is in place, companies often

Encouraged to sense changes/trends and

Management must also provide employees

companies only provide advanced technology to

Leveraging What Your Company Really Knows

Information behaviors and values: The

who focus on people behaviors and values at the

InForMAtIon orIEntAtIon (Io)

Measures the capabilities of a company to

An organization is called information proactive when its members

is the free exchange of non-sensitive and sensitive information. Sharing

An organization is information transparent when its members trust

is the disclosure of information about business performance to all

refers to the degree to which members of an organization use and

is an organizational value manifested through individual behavior that is

involves how information is detected and identified concerning:

into useful knowledge consists of accessing and analyzing

consists of the systematic process of

IT for Management Support

includes the software, hardware, telecommunication networks and

IT for Innovation Support

includes the software, hardware, telecommunication networks and

IT for Business Process Support

focuses on the deployment of software, hardware, networks, and technical

IT for Operational Support

includes the software, hardware, telecommunication networks and technical

Leveraging What Your Company Really Knows

fective information use within their company. It

strategy is linked to the IT strategy, it makes it

Figure 3. (Source: Used with permission from enterpriseIQ)

Copyright "00" by enterpriseIQ. All rights reserved.