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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A Fuld & Company Special Report
FULD & COMPANY INC.
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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.”
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 feedbackA Major Obstacle to ROI, and a Serious Departure From CI Best Practices, Is the Failure to Provide and Track Recommendations
“We don’t want to tell the pilot how to fly the plane.”
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 informationSo, If ROI Has Little Meaning, How Can CI Groups Measure Their Effectiveness?
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 disciplineFuld & Company Helps Companies Regularly Measure The Effectiveness of Their CI Efforts And Stay True To Best Practices
The NEW CI Cycle
Dissemination & Evaluation
Primary Source Collection
For more information, contact:
Karen E. Rothwell
Consulting Director Fuld & Company
+1 (617) 492-5900