In this article, we focus on CI solution design and implementation. Specifically, we describe core elements that comprise successful CI solutions and describe outsourcing and offshoring options for solution implementation.

CI Solution Design – Six Core Elements

From our work across a variety of industries, we have found that truly successful market research and competitive intelligence solutions require a holistic design approach that involves six core elements. In this section, we define the core elements and provide examples of key design considerations.

Process Architecture

Process architecture provides a systematic approach for designing the CI business processes and embedding them into the organization’s core business processes. The design of CI processes typically involves content authoring, submission, quality control, approval, publishing, expiration/removal, and localization/globalization activities, as well as the supporting business processes to handle end-user support, content security and control, and governance and compliance exceptions.

Functional Architecture

Functional architecture specifies the capabilities and requirements needed in the new solution. It includes both high-level components, such as content management, search and navigation, presentation and delivery, and collaboration functionality, and low-level design requirements, such as keyword and filtered search, facilitated query refinement, categorical browsing, and using a customized thesaurus within the search domain.

Content Architecture

Content architecture provides the structure for storing and classifying the CI content. A comprehensive and well designed classification structure enables effective capture, search, retrieval, and delivery of content to end users. Examples of content architecture design considerations include specifying the content types, establishing taxonomies, defining content metadata, and specifying an optimal content storage model. An organization may decide to use a consistent content architecture across all of its content, or establish a separate content classification structure solely for CI assets.

Governance

Governance ensures that consistent policies, practices, and resource allocation decisions are established for the market research and CI functions. Examples of governance design considerations include policies and procedures for content ownership, content usage, content QA/QC standards and processes, content expiration and deletion, content security, measurement (both operations-based and results-based), results tracking, service level agreements, policy compliance and exception handling, funding, allocation and chargeback models, and staffing/personnel resource allocation decisions.

Workforce Enablement

Workforce enablement elements provide the human capital-related organization structures and incentives for acceptance and institutionalization of the new CI solution. Three important categories of workforce enablement design considerations include organizational design, human performance management, and change management planning. Organization design defines the roles and responsibilities of individuals, teams, committees, and other organizational structures and establishes a set of systematic and planned activities to provide the organization with the necessary skills to meet current and future market research and CI job demands. Human performance management provides the processes and systems to monitor and evaluate current performance, establish development goals and plans, and reward and recognize results. Change management planning involves a set of activities designed to increase the probability of success of the CI initiative. Key elements include understanding the organizational context and applying leading practices in areas such as project management and communications.

Technology Enablement

Technology enablement involves the design and selection of the software applications, content repositories, and databases for the new CI system. In our earlier paper on competitive intelligence, published in the November/December 2004 edition of EuropeanCEO, we described content management, search, text mining, taxonomies, and metadata technologies in detail and provided the names of several leading software product vendors. To view the complete article, please visit http://www.iknow.us.com/Pages/EuropeanCEO.asp.

CI Solution Implementation - Outsourcing and Offshoring Options

Many CEOs are frustrated at the lack of actionable intelligence that is produced by their internal market research and competitive intelligence departments. Worse yet, we find that key decision makers are unaware of what can be done with today’s new sources of information and new information and decision support technologies.

Outsourcing market research and competitive intelligence solutions is a viable option for many organizations. The benefits of using external consultants are well known—they bring a wealth of relevant market research, competitive intelligence, and knowledge management experience, provide project-based staff augmentation, have a solid understanding and access to leading technologies, and provide faster “time-to-solution.” Additionally, outsourcing solution design, software development, and data analysis can significantly reduce one-time and on-going costs versus doing the work internally. In this section, we describe outsourcing and offshore outsourcing (offshoring) options for the design, development, and on-going operations of market research and competitive intelligence functions.

Onsite versus Outsourced Activities

Design and development activities are typically split between onsite (local) and outsourced locations. Usually, the strategy, business needs, requirements capture, solutions architecture, prototyping, and design work are performed by a project team located onsite, while the detailed design, software coding, and unit and system testing tasks are carried out at the consultant’s location and/or at an offshore development center. User acceptance testing, implementation, and training are conducted primarily at the customer’s location. The split of tasks between onshore and offshore activities varies and depends on the specific type of project, size of project, project methodology employed, and other customer and vendor preferences. The ratio may also be adjusted based on complexity of the work and relevant risk factors.

For on-going operations, process owners usually want to retain their internal customer relationships, management and oversight of operations, and high-value-added activities. Outsourced activities typically include any of the following: data research, data selection, data analysis, data synthesis and findings/conclusion generation, and report writing. Historically, most companies have selected activities for outsourcing that are highly structured and non proprietary.

Offshoring Benefits and Challenges

While the practice of using consultants is well understood, the use of offshoring for software development and data analysis is less common. While there are benefits and risks in incorporating offshoring into a sourcing strategy, in most cases, companies find that the advantages outweigh the risks.

Benefits

The primary business rationale for offshoring has been to reduce IT operating and infrastructure costs. The cost savings from offshore outsourcing increase with the percentage of total development effort outsourced and the percentage of work performed offshore. They are maximized when the entire development is outsourced and all the work is performed overseas.

Since the predominant component of IT costs is direct and indirect labor, sizable cost reductions can be achieved by moving these functions to lower wage rate locations. Based on recent average wage rates for IT professionals, net savings from offshore outsourcing generally range between 25 to 40 percent for U.S. and European companies. Cost savings has been the primary business rationale for offshoring across all industry sectors.

After wage rate differentials, the level of cost savings also depends on the amount of work that is moved offshore. While an analysis of offshore projects shows that the optimal ratio of offshore to onshore work ranges between 70:30 to 80:20, some companies only reach a 50:50 split because they desire to have a greater number of people onsite, which reduces the overall savings.

Offshore outsourcing has been used to achieve a variety of other financial and non-financial benefits, including faster time-to-market for new products and services, increased focus on core competencies, staff augmentation for work load balancing and/or access to skilled IT labor on an as-needed basis, access to skilled IT labor to augment existing (internal) skill sets, access to leading technologies, and the ability to have work performed nearly 24/7 by augmenting local activities with development centers on other continents. Other reasons for offshore outsourcing include a scaleable business model that can be ramped up or down very quickly without incurring long-term costs such as unemployment insurance and employee benefits, and implementing the software development and quality assurance processes and practices of the offshore suppliers as a way to quickly improve the customer’s own internal processes.

While labor cost savings have been the primary rationale, additional value can be achieved over time from enhanced and streamlined business processes. For example, creating a single shared services environment can generate sizable efficiencies if the current processes are done in different locations or done by different business units. Business process reengineering, i.e., removing inefficiencies and bottlenecks and enhancing workflow using automation and other information technologies, can add additional cost savings as well as faster cycle times and other business benefits.

Challenges

Before launching an offshore initiative, senior management needs to thoroughly understand the challenges to successful offshoring. Major risks and issues include differences in language, culture, politics, regulations, and work practices—all of which can disrupt a collaborative customer-supplier relationship. Specifically, some of the key challenges include:

Internal Organizational Issues

– “Loss of control” of projects and processes
– Increased management attention
– Concerns over retaining intellectual property and other proprietary information
– Concerns over potential legal issues with foreign companies
– Uncertainty about achieving the financial and nonfinancial objectives
– Sensitivity around moving certain types of applications overseas
– Security risks
– Customer preference for suppliers in close physical proximity
– Internal IT departments may not welcome outsourcing due to concerns about job security.

Offshore Market and Supplier Issues

– Formative offshore market
– Dependence on supplier-provided information
– Limited understanding of suppliers’ true reputation and track record
– Socio-cultural barriers and business compatibility
– Infrastructure issues
– Supplier may have little or no experience in the industry or business function/process
– Uncertain political climate.

Project and Process Management Issues

– Communication, language, and cultural issues
– Time zone and holiday schedule issues
– Increased travel costs.

The importance of the risks listed above varies widely from company to company. Some of the risks presented could be quite costly and damaging to the business, and therefore, mitigation strategies should be developed before getting underway.

Getting Started

The first step in upgrading your market research and CI functions is to design a comprehensive solution that encompasses the six core elements described above. Iknow has developed and perfected a number of proprietary tools, methodologies, and frameworks to help companies design new market research and CI solutions. Three of these methodologies are Business Decision Analysis, Knowledge Audit, and Content Source Analysis.

Business Decision Analysis

One of the most important projects that Iknow undertakes is an analysis of the critical business decisions made within an organization. Iknow’s consultants work with the decision makers (i.e., the consumers of information) to capture and document their critical business decisions. For each decision, the types of information necessary to make the decision, as well as the source, frequency, and organizational owner of the information is also captured. When the decision logic or methodology is not clear, Iknow will assist in establishing an explicit decision framework, including new quantitative and qualitative models, new sources of information, and redesigned information flows. Iknow has experience in designing and implementing numerous types of decision-making techniques and tools, which enable individuals and organizations to make better decisions and transform employees into a true “knowledge enabled” workforce.

Knowledge Audit

Organizing the knowledge available within an organization can be a daunting task. To manage knowledge effectively, you must know what you have, where it is, where it comes from, who controls it, and how it is transformed as it moves throughout the company. Iknow’s Knowledge Audit identifies and catalogs the knowledge that employees need to do their jobs. Specifically, the audit process identifies the precise information that is necessary for decision-making, determines what information is and is not available, and for the information that is available, denotes what information is actually being used.

Content Source Analysis

Iknow performs a Content Source Analysis to identify the primary sources of knowledge that go into key management decisions. A Source Analysis is important because it helps the users of the information understand where critical business information is coming from, evaluate the credibility of the source, understand the assumptions and methodology that underlie synthesized content and summarized analyses, determine additional research requirements for the validation/ verification of the information, and understand and assign probability estimates to the validity of forward looking statements and forecasts.

Iknow helps organizations understand the breadth of their expenditures on purchased reports, subscriptions, databases, market research, and other content. We also analyze how and where this information is used within the organization. Deliverables from the Content Source Analysis include a source inventory or catalog of internally generated and purchased content, knowledge maps that link the information necessary for decisions to their source documents, and recommendations to eliminate purchased content that is not being used in decision making.