Leszek Korzeniowski
Business Intelligence

 

Industrialization, development of trade and the emergence of new markets have resulted in the fact that appropriate information has become a basis for business decisions and by this a condition for effective operations. The requirement for information has brought about the development of a new field in management and modern “information industry”.
In the eighties of the 20th century, this was lectured at business colleges as Organizational Intelligence. Later a term was coined, i.e. Competitive Intelligence which was replaced by the concept of Marketing Intelligence, Economic Intelligence, Competitive-Economic Intelligence .
By recognizing that business intelligence is an appropriate concept to designate knowledge of business significance, it is necessary to note the variety of sources and methods of gaining information and the risk traditionally associated with business operations. When summing up the critical review of applied definitions , the author adopts a definition according to which business intelligence is acquiring, gathering and processing information having economic significance.
The goal of intelligence understood in this way is information constituting the basis for making business decisions. The information allows to become acquainted with and to assess business facts and phenomena, to rationalize the operations of the entrepreneur and to forecast the effects of decisions made. In market economy conditions it is not possible to make correct decisions ensuring the proper choice of targets for carried out business operations as well as allocation of resources, priorities and actions essential to be achieved without decision making information.
The scope of gaining non public industrial information in the United States itself is said to be 1100 documented and 550 possible cases a year in several thousands of the largest companies. American industrial companies are penetrated by companies from the US, China, Japan, France and the UK as well as government agencies of France, Germany, Israel, China and South Korea. Not only documentations connected with the newest inventions and results of the newest research are stolen but the same goes for production and marketing plans as well as customer lists.

 Information – concept and structure
The problem of information is an issue studied for many years by military intelligence and counter-intelligence specialists for whom finding out the secrets of the enemy and keeping own information secret has been a valued factor of victory or loss for a long time. Lucien Gérardin answers the question what is information in the following way: “There are many answers to this question. We get information from the press, radio or through the telephone. There is a number of ways of sending information. But exact sciences require precise and clear definitions. And one more thing, such a definition must have quantitative sense. To be more clear – in order for a philosophical concept of information to become an exact one, it has to receive a quantitative expression, it has to be measurable. The above specified examples may be summed up in such a way: information is transferred by means of written, printed or oral communication. In order to obtain information, it is necessary to receive these communications and further more – to understand them. Understanding includes two subsequent phases: the analysis of the structure of the received communication and next disclosing the sense contained in its structure. For this purpose the communication is compared in the brain with already existing schemes. This process allows to disclose the sense of communication, i.e. to receive the information enclosed in it.”
Particular elements of a communication are called data. These can be object designators, its attributes (features), the values of attribute, time in which the object has an attribute of a defined value, additional vectors of characteristics (e.g. unit of measure, source of origin, method of registration etc.). The data may have various forms: recording of characters, analogue representation, speech, picture, chart, diagram etc.
Particular data does not constitute information yet. For example, the number “2000” has no sense until it receives some content, i.e. until it becomes a definite number of symbol – a year, distance in meters, capacity in litters etc. Just like the caption DETECTIVE may be treated as a datum meaning profession, the title of a magazine or a name of a company.
A system of data and attributes characterised by some value in a certain time is called communication.
Only the sense (meaning) of communication elements and the reality between them constitute information.
Information is a complex concept and belongs to many commonly applied ideas which do not have an unambiguous definition. Philosophers understand information to be a reflection of a variety characterising a considered object, event, process, phenomenon. In cybernetic understanding information is a factor owing to which the object that surrounds it (man, a living organism, organization, automatic appliance) may bring about better understanding of the environment and more efficiently carry out purposeful actions. However, as far as the definition originating from the theory of information approaches information as a measurement of occurrence uncertainty of a certain event from among a finite set of possible events which leads to a conclusion that when there is more information, the less probable is the occurrence of a given event.
That is why for the measurement of information amount, i.e. its unit, such an amount of information was adopted, which would be obtained in the case of choosing two possible answers (0 or 1), when the possibility of both answers occurring is the same. The smallest information unit is called a bit.
Information resources are the most valuable resources which a man can possess.

Quality of information
Amongst different information some will prove to be more useful, correct, giving satisfaction and profitable to the users, while other – will be better as far as quality is concerned. By quality one understands significant features of an item which distinguish it from others and decide on its peculiarity. The quality of information will be the general properties of information connected with the ability to fulfil the stated or predicted requirements of the information user .
The quality of information consists of required information features – the greater quality of information, the greater is the certainty of managers that they can rely on it when making decisions. However, the cost of gaining information usually grows with its quality. If the higher quality of information does not contribute in a significant way to decisions made, it is justified to give up additional costs.
When taking into account the elements of the communication, the desired information may include the following:
The Current character of information – that is sufficient consistency (accuracy) of information with the actual condition of the object. Accuracy – means the closeness level of the attribute level to the real value. Flexibility – is the ability of fulfilling current and future need of various users. Un-ambiguity – means using a language and terms not bringing about any doubts whatsoever, which have a clear-cut meaning. Reliability of information – care, objectivity, correctness of making data and working out communication, the contents of which comprise the information. Value –inverse of a probability for a given event to occur to which the information pertains. If there is certainty (i.e. the probability equals 1) that an event will take place, then the message has no value. Such a message has significance in business intelligence as it makes other data credible. Sufficiency – means such information which allows for rational decision making.

Sources of information and methods of it being obtained
The division into person and non-person (item) sources is stressed. The person sources of information include experts, informers in enemy organizations, exterior informers as well as “prattlers” and “chatter-boxes” telling interesting facts during private meetings. The non-person group includes documents as they are the evidence of what has been officially written in them. These can be extracts from court registers of companies, identity cards of a natural person, official registers, statute documents, accounting documents, tax, technical, technological documents etc. as well as certificates of all sort.
Notes and publications do not belong to the evidence group but in a given situation may be considered to be such. Publications (books and magazines) and the so called mass media (the press, radio, television) are a very strong source of information dominating in many types of business intelligence. The use of press sources is called “white espionage”. One cannot pass over statistical studies, the results of scientific work, market research reports, data bases and in-house bulletins as well as personal notes and even a rubbish bin. Electronic data bases and systems of data processing as well as communication means with internet are growing and becoming more and more significant.
Information is obtained by means of specific methods: documentation analysis, observation, intelligence, surveying and (only authorized by appropriate regulations) by operating and reconnaissance services .

Organizations of business intelligence
Since time immemorial man has tried to discover the goals, plans and methods of other people. Already in ancient Rome, in the life of Persians, Greeks and Romans we will find traces of intelligence activity. It was and continues to be the basis for the power-struggle which takes place all round the world in the sphere of politics, the military and economy.
Probably the oldest surviving intelligence report is the denunciation found in Mari by Euphrates which had been written approximately 4000 years ago by a commander of a post to his ruler . The Bible mentions spies several times. Living in many parts of the world, the Phoenicians, the Hittites, the Babylonians, Greeks and Romans, the Chinese and many other superpowers of the ancient world have left numerous traces of using intelligence. This was chiefly military intelligence aimed at winning and holding territories by means of military forces. Less is known about gaining secrets which had economic significance, although descriptions of efforts to gain well kept secrets of silk production, porcelain, steam engine, rubber and others are equally fascinating. Revolutionary Paris became famous for a law encouraging the development of business intelligence. On 7th January 1791 a law was passed granting that “each persons who as the first brings a foreign product to France will have the same legal protection as its inventor” .
The first and biggest intelligence organizations of the 19th century may include a private company belonging to the Rothschild bank. The information obtained was used for appropriate preparation and execution of investment operations. In 1815 Europe was expecting news from Waterloo in Brabant (today Belgium) on the results of the battle of Napoleon’s army with the British-Prussian one. Possibly Nathan Rothschild knew that Napoleon had lost and despite this he flooded the London market with government bonds. Those who observed his actions did the same thing thinking that England had lost . Nathan bought the bonds back in the right moment before information on Napoleon arrived, while the bonds were of a significantly higher value by then.
The first classical enterprise of business intelligence offering information for sale was the company “The Mercantile Agency” established in 1841 by a merchant from New York called Lewis Tappan . The main target was assessing whether merchants were capable of fulfilling their financial obligations as this was connected with a financial crises which started in 1837. Also at this time Robert Dun established an agency which in 1859 changed its name to “R.G.Dun & Company” and published his book with his assessment . In 1849 John Bradstreet’s agency was formed which published its classification in 1857. In 1933 the competitors merged to form “Dun & Bradstreet”. The company boasts that for some time four presidents were its reporters, namely these being Abraham Lincoln, Ulysses Grant, Grover Cleveland and William McKinley. The idea of bond classification was expanded by John Moody to cover other debt instruments. In 1909 he published the first bond rating as the first part of his book on financial analysis of railroads. In order to give his readers an easy comparison of investments, Moody created a universal letter code ranging from “Aaa” to “C” which is a world standard to this day. At present leading world financing institutions undergo assessment carried out by Moody’s Investors Services rating agency in New York.
In Germany the first office of this type was established in 1862 as Lesser&Liman, known under the name of W.Schimmelpfenig since 1872 or under Creditreform since 1879. In 1885 another company was formed, namely Bürgel Co&KG. In 1990 the head office of Bürgel carried out a capital merger with the renown Hermes AG from Hamburg to create a computer business information base.
The set of entities specialising in supplying data and granting information in a professional way is enormous worldwide. Today, one may speak of a broad market of business information.
This market is filled with numerous information agencies, business information offices, market research institutes and companies dealing with market analysis, Datenbanken, Patentdatenbanken, information services. One may encounter specialist entities and information services as well as private business intelligence offices as well as Public Relations Agencies.
For many years in centrally planned economies business intelligence was only one of the ways of implementing the state’s economic policy – there was no place to realize tasks other than that of state and co-operative companies. Private entities effectively strengthened their position by “fixing” beneficial decisions with clerks, civil servants and officials. But there was no information market as all possible information was reserved to belong the state – and this was looked after by censors.
Commencing with 1999 private detectives have been legally carrying out business activities. The legal basis for their operations in Poland is a business license while a professional license is expected to follow.
With opening business operations to market principles, the market of business information was taken over by the largest – possessing capital and information – world companies of business intelligence. Agencies of business intelligence offer information on companies and their owners, history and location, creditworthiness and financial standing, transaction risk, information on debtors, company payment. They offer services of claiming amounts due from unreliable business partners both in the country and abroad as well as publish guides on the economic situation of particular countries in the world. The same goes for political analyses as well as economic and commercial ones and many many others.
Intelligence companies usually offer information in the form of various reports: identification, preliminary, standard, special and supplementary. The most important product of an intelligence company is the report. It usually states that the report has to be treated by the orderer as strictly confidential and may be used exclusively for the own purposes of the orderer.
Rating agencies offer opinions in the form of assigning financial standing pertaining to an analysed entity – this being an assessment of the entity’s credibility presented in a standard form.
One must also draw attention to large business intelligence agencies working for governments. In Poland this includes Generalny Inspektor Infomacji Finansowej (General Inspectorate of Financial Information) - an organ of state administration, which is to acquire, gather and process information on each transaction exceeding 10 thousand EURO.

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dr inż. Leszek Korzeniowski
president
European Association for Security
Śniadeckich 12 B (AWF)
31-531 Cracow
POLAND

 
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