Measuring the Value of Competitive Intelligence: The Inadequacies of Return-On-Investment Calculations. A Fuld & Company Special Report. F ULD & C OMPANY I NC. http://www.fuld.com ♦ http://www.fuldltd.co.uk
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Measuring the Value of Competitive Intelligence: The Inadequacies of Return-On-Investment Calculations
A Fuld & Company Special Report
FULD & COMPANY INC.
http://www.fuld.com ♦ http://www.fuldltd.co.uk
126 Charles St 20 Conduit St. World Trade Center 1
Cambridge, MA 02141 London W1S 2BQ CH-1215 Geneva 15
USA United Kingdom Switzerland
+1 617.492-5900 +44 (0) 207 659-6999 +41 (0) 22 929-1900
All eight companies we benchmarked could be considered “measurement-intense” organizations
What is “return-on-investment?”
Return-on-investment, or ROI, is the percentage yield on dollars invested. In other words, it is a realized outcome (gains and/or savings expressed in dollars) divided by the cost incurred to obtain the realized outcome.
ROI can only be measured when inputs (expressed in dollars) and outputs (expressed In dollars) are clearly defined. Moreover, the causality between the investment and the outcome must be equally clear.
CI staffing and budgets at world-class CI companies vary widely, and have little or no revenue correlation
--Source: Fuld & Company
“After one highly successful CI project, management gave us another $250,000. We didn’t ask for it; they were just pleased with our work.”
Only three companies we surveyed regularly provide recom-mendations to their CI users. The lack of recommendations makes it difficult to link CI to a specific outcome
Furthermore, CI practitioners in the companies we surveyed do not systematically track or record how the intelligence they provide is used, nor do they seek user feedback
“We don’t want to tell the pilot how to fly the plane.”
For CI practitioners to demonstrate their effectiveness and value, they must regularly engage their internal CI users and track how their products and services are being applied
Many CI departments do not have the resources, organizational standing, or credibility required to track and record outcomes
These measures can be – and are more meaningful if they are – qualitative, tied to specific company actions, decisions, and outcomes
To be effective, these measures must be tracked and communicated to management regularly
What does management expect from CI?
Objective, synthesized, clear and concise reports about competitive developments
An explanation of the forces responsible for competitive conditions
An analysis of the implications of competitive situations
In most cases, recommended courses of action
How does management know when CI is valuable?
Able to put competitor actions in context
Less frustration trying to interpret overwhelming or contradictory information
We advocate including in every CI process an effectiveness tracking and user feedback mechanism
We believe CI organizations can measure their efficacy in three ways:
CI utilization tracking
Introducing the Fuld Intelligence Effectiveness Index
The abilityof CI practitioners to, over time, demonstrate the efficacy of their CI program leads to sustained or increased CI resources, and a broader acceptance of CI as a necessary business practice
We proposeworking with an elite set of organizations to routinely help them track, analyze, and report on the contribution and benefit of their CI programs. We will aggregate the results across this set of companies and issue an annual CI effectiveness index to fuel the growth of the CI discipline
The NEW CI Cycle
Dissemination & Evaluation
Primary Source Collection
For more information, contact:
Karen E. Rothwell
Consulting Director Fuld & Company
+1 (617) 492-5900