Working together, both serve an important purpose in today’s ever-changing and increasingly competitive business environment.
In today’s fast-paced business world, the sheer number of terms (and their associated acronyms) is enough to baffle even the most seasoned professional. It doesn’t help that many terms that sound similar are used interchangeably, even when they refer to vastly different concepts.
Case in point? Business intelligence and competitive intelligence. On the surface, it seems like they are the same thing – and in fact, they serve a similar purpose, in that they help guide decision-making – but they actually refer to separate functions and types of data. Failing to understand the difference between them could result in a great deal of wasted time and effort, not to mention embarrassment if you present the wrong information to your boss or a client.
Business intelligence is, largely, analysis of an organization’s internal data. It involves collecting large amounts of raw data regarding all aspects of the business, from productivity to profits and losses, and transforming it into actionable insights. Companies use business intelligence as a means to identify and develop new business opportunities, and make improvements to existing processes, products, and services.
One of the major benefits of business intelligence is that it allows companies to view both historical and current data in context, which allows them to make better predictions. It’s also vital to effective measurement; businesses that use performance metrics or benchmarks as gauges for progress toward business goals rely heavily on business intelligence. Business intelligence has applications across all levels of an organization, from product development and pricing to staffing, strategic planning, and process improvement.
The term business intelligence is often used interchangeably with business analytics. Some make a stronger description between the two, defining business analytics as the use of quantitative and statistical tools, while intelligence focuses more on qualitative analysis, such as asking questions and interpreting reports. However, most argue that business analytics is a key function of business intelligence, and that true BI cannot be achieved without analytics.
While business intelligence focuses on a company’s internal data, competitive intelligence focuses on the external factors that influence the operation. Competitive intelligence means looking at the state of the market in which a company operates, to identify trends, potential threats, and points of differentiation.
Often, competitive intelligence includes looking closely at a company’s competitors, and looking for their strengths and weakness to identify potential opportunities. It involves taking the information that’s been collected and turning it into actionable insights to gain competitive advantage; for example, analyzing a competitor’s poor performance in a particular market can provide a blueprint of what not to do, and some ideas of how to penetrate that market more successfully. CI practitioners are quick to point out that in order for data to be considered true competitive intelligence, it must be actionable. Simply having knowledge of your market is not competitive intelligence; having knowledge that you can use to improve your business’s position is.
It’s also important to make a distinction between competitive intelligence and corporate or competitive espionage. Competitive intelligence is gathered using publicly available information, and is completely legal. Corporate espionage, or gathering information about competitors via questionable means (such as posing as a potential customer, hacking, or poaching employees) is not only unethical, but illegal in many cases.
Two Pieces of the Puzzle
Business intelligence and competitive intelligence may have technically different definitions, but they are very closely related. Some even consider competitive intelligence to be a subset of business intelligence, as the information gathered for competitive analysis is important for decision-making and can add valuable insights to data collected as part of the BI process. For example, a company experiencing a downturn in sales might look to competitive intelligence for answers. If a competitor recently launched a new product or major marketing campaign, it could explain the dip in sales – and the executives have a starting point for developing solutions to increase sales.
That being said, BI and CI actually require different skill sets. Business intelligence is the more technical of the two disciplines; practitioners have extensive knowledge in data management, database design, and quantitative functions. Competitive intelligence, on the other hand, relies more heavily on strategy and analysis, with less emphasis on “crunching numbers.” Still, both functions work closely together, and serve an important purpose in today’s ever-changing and increasingly competitive business environment.
© 2015 Distributed by Troy Media