Description
Obtaining Business Intelligence on the Internet
Obtaining Business Intelligence on
the Internet
Badrinarayan Shankar Pawar and Ramesh Sharda
T HE INTERNET IS A gateway to vast and varied infor-
mation and it could revolutionize the way organ-
izations seek and use information. Firms such as
General Electric, IBM, J. P. Morgan, Merrill Lynch,
Motorola, Schlumberger and Xerox already use it.
However, the Internet is a complex collection of infor-
mation sources and information utilities. It has a vast
potential for meeting a firm’s information require-
ments but it can waste time and cost if used unsys-
tematically. In this article we outline a framework
to guide practitioners in using the Internet for one
specific purpose-the acquisition of external infor-
mation for strategic decisions.
Figure 1 presents our proposed framework for view-
ing the various components of the Internet in the con-
text of a firm’s external information requirements for
strategic decisions.
The choice of specific Internet tools and resources
is influenced by the content of information required.
The choice of the Internet utilities is also influenced
by the modes of information acquisition used by an
organization, The framework further suggests that
there may be firm-specific variations in using the
Internet due to three factors. First, over a period of
time, a firm may use its experience to rate various
sources of information and the Internet utilities to
develop its own optimal pattern for using these util-
ities. Second, the choice of a planning process by a
firm would influence the nature of its information
search ayd the consequent use of the Internet. Third,
different emphasis on environmental scanning due to
different strategic orientations may lead to variations
in the patterns of Internet use. The subsequent parts
of this article expand this framework and present a
set of viable guidelines for organizing an Internet-
based environmental scanning system.
To the best of our knowledge, this article is one of
the first attempts to synthesize the strategic infor-
mation needs with the capabilities of the emerging
information superhighway. The process specified
here can be adopted to evaluate the possible use of
other future technologies for environmental scan-
ning.
This article is organized as follows. First, some of
the issues associated with the existing environmental
scanning systems are highlighted. We then present a
brief profile of the Internet and the various utilities
associated with it. Next, we outline the content of
external information required for strategic decisions
and the modes that are used by firms in collecting this
information. We subsequently point out the suit-
ability of different Internet utilities in meeting these
Pergamon
PII:SOO24-6301(96)00100-8
Long Range Planning, Vol. 30, No. 1, pp. 110 to 121,1997
0 1997 Elsevier Science Ltd
Printed in Great Britain. All rights reserved
0024-6301/97 $17.00+0.00
Environmental domains
Task environment
competitors, suppliers, consumers,
distributors
General environment
Technology, regulatory, economic
Information required on
status, outcomes, actions, intentions
Undirected viewing
Conditioned viewing
informal search
Formal search
information requirements. Finally, we outline some
of the possible factors that might lead to firm-specific
variations in the use of the Internet.
Using Information Technology for
Strategic Information
Strategic Decisions and the Need for External
Information
termed as competitive analysis, business intelli-
gence, competitive intelligence or environmental
scanning.le4 Hambrick’ suggests that “environmental
scanning can be conceived of as a key step in the
process of organizational adaptation”. He notes that
executives can only process and disseminate the
information that comes into the organization. Her-
ring6 concurs by pointing out that “business intel-
ligence is a natural extension of corporate strategy
activities”.
External information is a key input in strategic There is a positive association between environ-
decision making. Organizations collect this infor- mental uncertainty and the intensity of environ-
mation through activities which have come to be mental scanning activity.7.8 With the increasing
Long Range Planning Vol. 30 February 1997
environmental uncertainty, therefore, managers have
sensed the need for intensified environmental scan-
ning.
Researchers have indicated that since its emergence
in the 196Os, environmental scanning has acquired
increasing importance. For instance, Russell and
Prince9 note that “environmental scanning became a
popular term during the 1960s . . . Gradually, the
focus shifted from scanning as a discrete activity to
consideration of scanning as one component of stra-
tegic planning”. In the context of competitive intel-
ligence, Bernhardtl’ points out that “most managers
now recognize that their organizations must become
much better at gaining and using competitive intel-
ligence”. And some researchers suggest that “firms
which cannot effectively scan and react to their busi-
ness environment can expect to decline when faced
by more capable competition”.” Lenz and Engle-
dew” effectively echo the above views by suggesting
that “ . . . there is a growing sense of urgency to
develop more effective ways to provide environ-
mental intelligence to strategic decision makers . . .
If extant research on organizations is correct, firms
that can successfully introduce pertinent information
about their changing environments into strategic
decision processes have the brightest prospects for
long-term survival . . . “.
Corporations have responded to this need by instal-
ling an external intelligence-seeking function.13,‘4
Ghoshal and Westneyl’ provide a positive picture of
the corporate response to the need for external infor-
mation. They report that “a 1985 survey of some of
the Fortune 500 companies revealed that over a third
of the companies sampled were spending over
$1 million a year on competitive analysis . . . “,
Similarly, Simon and Blixtl’ note that the competitive
intelligence function is poised to evolve as a major
supporting contributor to organizational decision
makers.
Thus, the demand for competitive or business intel-
ligence and, therefore, for environmental scanning
activities, is high. Many firms have taken steps to
install systems to carry out these activities. However,
the availability of suitable systems is less than
adequate. Some have noted that “the scanning units
that evolved were only partially successful and many
writers criticized them for being isolated from the real
world of the corporation, unable to incorporate the
information they collected into the planning process
of the organization and likely to vanish without a
trace when the executive who introduced the unit
moved on”.” Similarly, in the context of competitive
intelligence activities, Bernhardt18 notes that “Unfor-
tunately, despite the growing need of companies for
more accurate, more strategically relevant infor-
mation about the future direction, plans, and inten-
tions of emerging and existing competition, my
experience suggests that what headway European
firms are making towards the development of formal
competitive intelligence programmes is, with a hand-
ful of exceptions, largely incremental, and therefore
inadequate”. HerringI also makes a similar obser-
vation by suggesting that on the whole, the external
intelligence activities have not been systematized.
This article’s focus is on environmental scanning
which is predominantly an information acquisition
activity. In a few places we have also made a reference
to competitor intelligence systems or business intel-
ligence systems. These intelligence systems in
general, however, are broader in scope than environ-
mental scanning systems. Such intelligence systems
include activities not only for information acqui-
sition, but also for information processing, analysis
and dissemination.” An environmental scanning
system, thus, can be regarded as a component of a
competitor or business intelligence system.
Management information systems are designed to
apply information technology to facilitate individual
decision making in order to improve organizational
effectiveness.‘l Considering this role of the infor-
mation systems and the criticality of external infor-
mation in strategic planning, it is natural that
organizations expect and hope that information sys-
tems would meet their information requirements for
strategic decisions.
While information systems have not adequately
met the information requirements for strategic
decisions in the past, optimistic predictions have
been made recently about the future possibilities.
Huber” suggested a theory of advanced information
technology’s impact on various organizational
aspects. He argues that organizational intelligence
activities would be significantly altered by the emerg-
ing information technologies. In particular, he sug-
gests that with these technologies, organizations
would be in a position to collect information from a
wider range of sources and be more swift in their
information acquisition activities. A specific form of
this advanced information technology-the Inter-
net-is already helping organizations to access a
wider range of information sources and to improve
the speed of information acquisition.
The Internet as a Force of Business
Intelligence
The Internet: a Brief Profile
The Internet is a set of interconnected networks and
includes several million computers attached to these
networks. Some authorsz3 have been more meta-
phorical in suggesting that it is a “mammoth inter-
woven electronic maze linking millions of computer
users around the world . . . “. In the simplest form,
the Internet could be viewed as consisting of three
parts. First, there is a large number of sites which
Obtaining Business Intelligence on the Internet
hold varied information including government docu-
ments, statistics, news, research reports, books etc.
Second, it consists of a set of tools such as gopher,
WWW, WAIS and search engines which help locate
and retrieve information. Third, there are special util-
ities or services that allow formation of topic-centred
discussion groups, bulletin boards etc.
While some have been quick to appreciate its value
as a pool of vast information, others have expressed
caution against unsystematic use of it. Some pro-
fessionals have acknowledged its increasing popu-
larity and in support of it have indicated reasons such
as “there is nothing else like it”24 or have suggested
that it holds a potential for a commercial revolution.25
Some have described it as “a highway of ideas, a
collective brain for the nation’s scientists, and per-
haps the world’s most important computer bulletin
board”.26 Organizations such as General Electric,
IBM, J. P. Morgan, Merrill Lynch, Motorola, Schlum-
berger and Xerox are already using the Internet.27
Others have, however, sounded caution by suggesting
that it can also become a pit into which time and
money sink.Z8
This caution about the unsystematic use of the
Internet is valid because each of the tools or data
retrieval utilities available on the Internet has its own
characteristics and capabilities in leading a user to
the required information. This has implications for
the time taken by the search as well as the quality of
the information produced. In order to appreciate the
cost- and quality-related implications of unsys-
tematic use of the Internet utilities, it is necessary to
grasp some basic distinctive features of some of these
utilities. With a view to facilitate this, a brief profile
of the main features of some of the Internet utilities is
provided below.
Internet utilities can be regarded as consisting of
four broad classes. These are outlined in Figure 2.
One class consists of communication utilities such as
E-mail, Internet relay chat (IRC) or web chat, mailing
lists and newsgroups. E-mail provides a simple mess-
age transfer facility. IRC or web chat enables different
users to interact with each other on a real-time basis.
Newsgroups, a part of a large community of users
termed Usenet, are organized around topical areas.
Each newsgroup receives messages in the form of art-
icles from its subscribers. The users have access to
these articles and can respond to them by posting
response messages. Tracking the response pattern on
a topic in a newsgroup could be a valuable source
of assessing emerging opinions, ideas and views on
topical subject matters. Electronic mailing lists are
also organized by topics. Usually, each Internet user
who subscribes to a list receives every message which
is sent to the list by various subscribers.
The second category of Internet utilities consists of
various resource locator tools. Tools such as Archie,
Veronica and netfind which were popular in 199%
1994 have been replaced by the new resource locator
and information retrieval tools used with the World
Wide Web (WWW). A brief introduction to resource
locator tools, however, is justified in understanding
the evolution of the Internet utilities. Archie is a
search utility which can locate a site where a file or
document of interest may be available. It does not
allow actual retrieval of the document. Veronica is
similar to Archie in that it also locates a site where
the information of interest is available. Veronica,
however, searches menus of various gophers (to be
explained in the subsequent paragraphs) in the
gopherspace and the information can actually be
accessed from the sites located by Veronica. Thus, it
serves as an information source locator as well as
browser utility. Netfind helps locate information on
the Internet users.
The third category of utilities consists of infor-
mation retrieval tools such as file transfer protocol
(FTP) and wide area information server system
(WAIS). The FTP utility allows actual transfer of cop-
ies of documents from one site to another. However,
the user has to know the exact source or a site where
the document is to be extracted from or placed. WAIS
provides two capabilities. It first locates a server site
where the document of interest is available. In locat-
ing the document it takes a user-specified keyword or
string and goes through file texts to find a match. It
further allows browsing and retrieval of the document
so located. The new WWW-based search and retrieval
tools make this process even simpler. Information
available on the WWW may be accessible through a
uniform resource locator (URL) specifying the
location of information, indexes developed by search
engines2’ such as Alta-Vista,30 or through meta-
indexes such as Yahoo.31 Search and retrieval tools
for the WWW allow the use of a set of keywords to
locate the information of interest. Searches some-
times have to be successively refined before the infor-
mation is located.
The fourth category of tools, termed browser tools,
includes telnet, gopher and WWW. Telnet allows a
user to access a remote site of interest. Subsequent to
a successful remote login, the user can access infor-
mation at the remote site as any local user of that
site would do. Although it is necessary to have an
authorized account with the remote sites that a user
wishes to access, there are some sites open for any
Internet user. For instance, the entire US Congress
Library System and hundreds of university library
systems around the world can be accessed through
the WWW. Gophers provide access to various sites
which maintain information in a systematically
organized hierarchy of menus. The gophers in the
gopherspace are linked and allow a seamless move-
ment from one gopher site to another across the world.
While gophers were prominent in 1993, the WWW
has since taken over the Internet browsing tools
Long Range Planning Vol. 30 February 1997
File Transfer Protocol (FTP)
rea Information
Server System (WAIS)
??Uniform resource locators
??Meta indexes
category. The WWW also provides access to other
Internet utilities. The hypertext-based capability of
the WWW allows linking of the various Internet
resources as well as search and retrieval tools so that
the end user can navigate from one Internet infor-
mation site to another even by using different utilities
within the same user environment of the WWW. This
simplicity of navigation has made the WWW almost
synonymous with the Internet.
Thus, each of the above utilities has a distinct set
of capabilities which vary across several dimensions.
First, some utilities require a user to know the source
where the required information is available while
others do not. Second, when a user does not know the
source of information and seeks to locate it, different
utilities provide varying levels of guidance and infor-
mation. Third, some utilities require a user to make
an active search effort (e.g. web search tools) while
others automatically make information available to
him/ her (e.g. electronic mailing lists). Fourth, some
utilities provide access to information that is avail-
able on a regular basis and maintained by someone
systematically (e.g. WWW) whereas others provide
access to information that is generated by several indi-
viduals and is not likely to be permanently available,
nor is its occurrence likely to be predictable (e.g.
newsgroups).
The use of an optimal set of utilities to meet infor-
mation requirements will obviously determine the
efficiency of the information acquisition. In fact, the
lack of confidence in the efficiency of the existing
formal competitive intelligence systems has been one
of the main reasons for their slow adoption.32 Given
this, and the distinctive capabilities of the various
Internet utilities, it is necessary to point out how some
of the individual Internet tools and resources can be
used to maintain efficiency in acquiring external
information. We do this in the following sections. We
briefly highlight the content of information required
for strategic decision making. We also characterize
the typical modes that firms adopt to obtain the
required information. We then map the Internet util-
ities onto the information content and information
acquisition modes identified. In this context the term
‘Internet utilities’ is used to refer to tools, services
and resources. Since new utilities are being added
rapidly to the Internet, our proposal may be con-
sidered ‘dated’. However, the process outlined in our
framework to map the utilities onto information
acquisition modes is also applicable for evaluation of
the new utilities and associated developing tech-
nologies.
Defining your I nformation Requirements
The external environment of a firm consists of two
parts, namely: immediate task environment and
Obtaining Business Intelligence on the Internet
general environment.33 Broad sectoral elements in
each of these two categories have been pointed out by
researchers.34-3” These elements include regulatory,
economic, technological and market in the general
environment category. In the task environment cate-
gory, the focus is mostly on the elements such as
suppliers, competitors, customers etc. Identification
of detailed pieces of information required on each of
these environmental elements may yield a list. Such
a list, however, would be large in size, and industry-
and time-specific in terms of applicability. It may,
therefore, be convenient to consider the generic
aspects of information required which are applicable
to each of these environmental elements.
Each of the above suggested elements in an organ-
ization’s external environment can be viewed as an
entity that acts purposefully and, therefore, its actions
as well as intentions alter a firm’s environment which
in turn warrants a change in the firm’s strategic
response. Environmental scanning, therefore, needs
to focus on the present and likely future actions of
these entities. Consistent with this, Herring37 suggests
that the focus of such scanning has to be on providing
early warnings of opportunities and threats. Infor-
mation on future actions of the environmental enti-
ties, thus, would be of just as much value in strategic
decision making as would be the present actions and
their already manifest outcomes.
While the present actions and their outcomes are
crystallized and in principle observable, future
actions could only be inferred. Porter,38 while focus-
ing mainly on competitors, suggests that firms need
to look for signals that may provide some indication
of intentions, motives and goals of the competitors.
This also applies to other environmental entities such
as regulatory agencies whose actions can alter the
industry structure and create a need for changes in a
firm’s strategic response. Additionally, Porter sug-
gests that general commentaries from competitors are
also valuable. These expressions, although not as
specific as intentions, serve as pointers to other firms’
assumptions about the industry and could, therefore,
be indicative of the likely future actions by them.
Thus, external information on the opinions of the
entities in the environment also forms a valid content
of a firm’s external information requirements for stra-
tegic decisions. From this it could be suggested that a
firm requires information on the status of the environ-
ment, intentions and ongoing actions of the entities in
the environment, manifest outcomes of these actions
and general opinions about the industry held by the
entities in its environment.
Linking these generic aspects of information
requirement to external segments/ entities yields the
matrix of an organization’s external information
requirements presented in Table 1. Each cell in this
matrix is marked with our estimates of the suitability
of the Internet in providing the corresponding type of
information. This table suggests that the Internet
could become a viable source of meeting many of the
external information needs for strategic decisions.
One of the features of the Internet is that infor-
mation can be extracted from a vast pool which has
been contributed to by a large number of individuals
or organizations. This is, however, also one of the
limitations of it. A user organization cannot decide or
even influence what others should place into this pool
of information from where one could potentially draw
the required information. Information on broader and
more general aspects such as economic and regulatory
policies, and the associated outcomes, is of general
interest and is, therefore, maintained at several Inter-
net sites. Therefore, on the whole, the Internet is
likely to be relatively more suitable for acquiring
information on the general environment than on the
task environment as reflected in Table 1 above.
Also, a considerable part of the information cap-
tured on the Internet is mostly coded from secondary
sources such as newspapers, journals, special pub-
lications and reports. Therefore, information richness
is likely to be less than other competing sources of
information such as face-to-face personal contacts or
addressed communications.3Q Consequently, the
information is likely to be more suitable for the status
and action part of the vertical dimension in Table 1
above than the opinion and intention part.
Choosing the Search Mode
The above assessment is based on the generic content
of a firm’s external information requirements. The
Information content
Task environment General environment entities
Competitors Suppliers Consumers Distributors Technological Regulatory Economic
Status Medium High High High High High High
Outcomes High High Low High High High High
Actions Low Low Low Low High High High
Intentions and opinions Low Low High Low High High High
The term (high, medium, or low) in each cell indicates the relative level of suitability of the Internet utilities forthe acquisition of external
information on the environmental entity and for the information content associated with that cell.
Long Range Planning Vol. 30 February 1997
Scanning Information
mode requirements
Extent of
structure Focus
Nature of
Search
Information
Source
Undirected viewing Not known Unstructured
Conditioned viewing More or less clear Unstructured
Informal search Specific Unstructured
Formal search Clear and specific Structured
No focus Exploratory Not known
Signals to possible Exploratory with Partly known
needs alert receptivity
Information on Active/focused Known and
present needs vigilance selected
Information on Deliberate effort Prespecified
specific recurring
issues
suitability of the Internet for an organization’s acqui-
sition of external information can be further assessed
by considering the process through which organ-
izations scan their external environment. AguilaP’
points out that organizational scanning for infor-
mation takes place in four modes, namely: undirected
viewing, conditioned viewing, informal search and
formal search. Based on and in extension of Agu-
ilar’s4’ description, the characteristics of these four
modes of search are indicated in Table 2.
In Aguilar’s work, undirected viewing is defined as
“general exposure to information where the viewer
has no specific purpose in mind with the possible
exception of exploration”. Awareness of the issues
is low, information sources are several, information
relevance is distant and screening is coarse. Con-
ditioned viewing, according to Aguilar, is “directed
exposure, not involving active search, to a more or
less clearly identified area or type of information”.
Aguilar notes that it differs from undirected viewing
in that here “the viewer is sensitive to particular kinds
of data and is ready to assess their significance as they
are encountered”. Informal search, as specified in
Augilar’s work, is “a relatively limited and unstruc-
tured effort to obtain specific information or infor-
mation for a specific purpose”. Aguilar points out that
it differs from conditioned viewing in that here “the
information wanted is actively sought”. Finally, for-
mal search, according to Aguilar, involves “a delib-
erate effort-usually following a pre-established plan,
procedure, or methodology-to secure specific infor-
mation or information relating to a specific issue”.
From the above description, it could be suggested
that the search for signals is made through undirected
viewing and conditioned viewing whereas the search
for facts and concrete information is made through
the informal or formal search modes. Based on the
features of the Internet utilities, and the charac-
teristics of information search modes described
above, the relative suitability of the Internet utilities
for undertaking the four modes of search is proposed
in the Table 3.
Newsgroups are suited for conditioned viewing
because the information is readily available here and
the user does not have to make an active effort. The
information seeker is merely required to be alert to
spot a particular piece of information which may
occur in some newsgroup article and may serve as a
pointer to possible needs or issue identification. Lists
require even less effort in active search since the infor-
mation automatically comes to the user and may be
viewed without having a specific issue in mind or
without exerting a special search effort. They are,
thus, appropriate for undirected viewing as indicated
in Table 3.
E-mail is better suited for the informal search mode
of scanning where information might be actively
sought from a person or persons expected to be infor-
med or knowledgeable about the issue under con-
sideration. Thus, the information requirements are
Internet utility Undirected viewing Conditioned viewing Informal search Formal search
Newsgroups
Lists
E-mail
Telnet
FTP
Gophers
WWW and Gophers
WAIS
Low
Medium
Low
Low
Low
High
High
Medium
Medium
Medium
Low
Low
Low
High
High
Medium
Low
Low
High
Low
Low
High
High
High
Low
Low
Low
High
High
High
High
High
Obtaining Business Intelligence on the Internet
clear, the issue at hand is concrete, and the source is
tentatively known. However, since it is not certain
who has the required information on a new issue, this
search procedure cannot be routinized. Therefore, for
every issue, there would be a tentative set of people
who might be actively approached. This element of
uncertainty maintains E-mail-based search at the
informal search level and prevents it from being rou-
tinized into a formal search procedure. Also, the E-
mail-based search is not suited for undirected view-
ing or conditioned viewing because it involves active
pursuit of information which is inconsistent with the
characteristics of these two modes of search.
The use of Telnet and FTP presupposes a decision
to seek information from a specific site or source. This
implies that the information requirements are clear
and the source of information is known. These pre-
conditions of Telnet- and FTP-based search match
with the characteristics of the formal search. These
utilities, thus, would be suitable for performing a
formal search.
Gophers and the WWW can be used to perform an
exploratory search of the entire Internet information
space. They can also be used to access a specific site
where both the source and information requirements
are known. They are, thus, suited for all four modes
of external information collection, WAIS requires a
specification of the server site to be searched and
thereafter it allows an exploratory search. It is thus
not very suitable for undirected or conditioned view-
ing and is better suited for the other two modes of
external information collection.
This description of the Internet tools and utilities
they use for accessing the different types of infor-
mation and for different methods of acquiring infor-
mation suggests that it would be beneficial for firms
to use the Internet for environmental scanning. Con-
sistent with this, several firms have already adopted
the Internet to scan their business environment for
gathering information on the relevant markets, com-
petitors, customers or technologies. Hise4’ provides
some examples outlining how firms have been using
the Internet to collect information in various areas. In
one of the examples, Hise indicates that Invitrogen
uses the Internet to provide customer service and has
assigned a customer service representative to scan
the appropriate Usenet groups for messages about the
company and its products. This representative also
reads some of the newsgroups covering molecular
biology research. This use is consistent with the
suggestion in our framework that newsgroups are
appropriate for the conditioned viewing mode of
information acquisition where the information seeker
is required to be alert to spot a particular kind of
information that he/ she is interested in. Another
example by Hise indicates that Art Anderson Associ-
ates, a firm in the engineering and architecture busi-
ness, uses the WWW and newsgroups maintained by
overseas tourism boards to identify possible new mar-
kets. Here, the information search is consistent with
the suggestion in our framework that the WWW is
appropriate for all four modes of information acqui-
sition ranging from the exploratory and passive mode
of undirected viewing to a structured and active mode
of formal search. In this example, the user can struc-
ture the information acquisition process because the
information requirements seem fairly specific.
However, the search may still have an exploratory
aspect because the geographic sites searched are
likely to vary from time to time. Hise also describes
how Mobius Computer Corp. uses the Internet to
access the relevant companies’ 10K reports to identify
the companies that might upgrade their computer sys-
tems or need new systems, and thus may constitute
a potential market for its products. Here, both the
information requirement and source seem to be
reasonably specific and clear. Thus, the information
acquisition is likely to be characterized by the formal
search mode and, therefore, any of the Internet util-
ities with ‘high’ suitability level marked under the
formal search mode in our Table 3 would be appro-
priate. Depending on their information needs, dif-
ferent companies would tend to focus on one or more
Internet tools for their environmental scanning needs.
The framework proposed here could be of help to
information seekers in selecting the Internet tools that
are most appropriate for acquiring the required infor-
mation.
Possible Firm-specific Variations
The above suggested pattern of Internet use is generic
in nature. A firm may use only a subset of the Internet
utilities highlighted in the framework or use them in
a manner that varies to some extent from the one
suggested here. The factors that might induce such
variations include a firm’s experience in using the
Internet, the nature of its strategic planning process
and the type of strategy it pursues. Each of these fac-
tors is discussed below to outline the nature of its
influence on a firm’s pattern of Internet use for meet-
ing external information requirements.
Organizational Experience
Earlier it was suggested that, in general, the Internet is
more suitable for seeking information on the general
environment than information on specific parts of the
task environment. However, it is likely that the spec-
ific information relevant to an organization and its
task environment appears at a regular frequency at
some site or source accessible through the Internet.
For instance, traded stock prices for a competitor or
percentage stockholding of a competitor in another
firm could be regularly available at some sites because
of some contextual attribute of the competitor such
as size or membership of a particular industry.
Consequently, in addition to the above two generic
Long Range Planning Vol. 30 February 1997
matrices, it is necessary to suggest an organization-
specific matrix where organization-specific utility of
the Internet could be depicted. Here, an organization
could, on the basis of its experience with the use
of the Internet, use two parameters-availability of
information at a site or through a resource and the
predictability of its occurrence-to arrive at an assess-
ment of the usefulness of the various Internet
resources for meeting its external information
requirements. This would be useful considering that
individuals conducting environmental scanning pre-
fer to use the information sources which are perceived
to be accessible rather than the ones which are most
suitable.43 In fact, Huber44 has raised the interesting
possibility that computer-assisted communications
and information acquisition could possibly influence
the user’s tradeoff between the perceived quality and
perceived accessibility of information. An Internet-
based environmental scanning system could encour-
age the use of high quality information sources by
improving and highlighting their accessibility
through the development of organization-specific
matrices as suggested above.
The Strategic Planning Process
Different strategic planning processes seem to have
different modes of information acquisition associated
with them. In particular, the work of Camillus and
Datta45 indicates that the two processes associated
with two systems of strategic planning-strategic
planning systems (SPS) and strategic issues man-
agement systems (SIMS)-use different patterns of
information acquisition. SPS relies on directed
environmental scanning involving a focus on issues
which are directly relevant to the organization. Also,
the scanning is done periodically before every plan-
ning cycle. Camillus and Datta note that SIMS, in
contrast, involves continuous monitoring even for the
weak signals. It is, therefore, likely to involve undi-
rected or semi-directed but continuous search
processes. Their work further suggests that an inte-
gration of the above two systems requires semi-
directed continuous scanning.
The strategic planning process in an organization
may be based on either one of the two systems indi-
cated above or may use a blend of them. Conse-
quently, the modes of external information collection
would also vary. Since the different Internet utilities
are associated with different modes of information
collection, the pattern of Internet use would also vary.
The Organizational Strategy
External information is required to help an organ-
ization formulate adaptive responses. Different firms,
however, adopt different adaptation strategies. One of
the most extensively used schemes of strategic types46
outlines four different adaptation forms termed as
prospectors, defenders, analysers and reactors. Pros-
pectors are the firms which seek growth through
exploration and utilization of external opportunities.
Defenders, in contrast, focus more on improving
internal efficiency than on spotting and utilizing
external opportunities. Analysers strike a balance
between the external and internal focus, while reac-
tors do not have a predetermined consistent pattern
of strategic responses. Thus, these four types are
likely to differ in terms of the extent and kind of
environmental scanning they carry out.
It seems likely that the prospectors would exten-
sively use all four modes of scanning while emphas-
izing undirected and conditioned viewing. The
defenders, on the other hand, would scan narrow
parts of their environment efficiently using the formal
search mode. The analysers strike a balance and avoid
approaching any of these two types. They would,
therefore, emphasize conditioned viewing and infor-
mal searches. The reactors are unlikely to use the
formal search mode because it implies the existence
of predetermined procedures for making strategic
responses. They are also unlikely to make proactive
issue-centred searches and therefore would not per-
form conditioned viewing. They would, thus, receive
external information through the undirected viewing
mode and perform informal searches if some specific
information is required before making reactive stra-
tegic responses to the signals brought in by undirected
viewing. This variation in the relative emphasis on
the different modes of scanning would in turn be
reflected in the different patterns of usage of the Inter-
net utilities depicted in Table 3. Thus, different stra-
tegies of firms would lead to the use of distinct sets of
Internet utilities. The linkages above outlined
between the different types of adaptation strategies,
the associated modes of information collection and
the resulting use of the Internet utilities is presented
in Figure 3.
Conclusion
The increasing environmental complexity and conse-
quent greater need for external information has cre-
ated a need for efficient and effective environmental
scanning. The promise held by the advanced infor-
mation technologies in facilitating this can be partly
realized by using the Internet utilities in locating and
retrieving external information. However, the infor-
mation available on the Internet is vast, the sources
are varied and the access tools have peculiarities. The
framework outlined in this article presents one way
of understanding the role of the Internet for meeting
external information requirements.
The proposed framework, however, is not the only
one that is feasible and there are two reasons for it.
First, the framework suggested here is generic. Firm-
Obtaining Business Intelligence on the Internet
specific aspects such as the nature of business,
strategy and other available scanning infrastructure
would warrant modifications to it. Second, the Inter-
net is evolving. The range of available utilities is
increasing rapidly. Emergence of these additional
utilities with their information search and retrieval
features would certainly suggest a different picture.
These aspects, however, would alter the contents of
the suggested framework but not necessarily its out-
line structure.
The framework specified here has mostly focused
on the compatibility between the capabilities of the
Internet tools and utilities, and environmental scan-
ning modes. The use of the Internet for environmental
scanning, however, also has a positive aspect in terms
of being economical. While describing the possible
ways in which organizations have been using the
Internet for information acquisition activities, Hise47
outlines the experience of a user who remarked that
the Internet is appealing because it cuts his costs. In
particular, this user indicated that “it allows us to do
more preliminary research without the travel
expenses we had before”. Hise further notes that
“most companies can justify a $99 software package
for getting around on the Net [starter kits usually con-
tain E-mail programming, a browser and a few other
on-line networking tools) and about $20 a month for
an Internet dial-up account for one computer. Com-
pared to what a market research analyst charges for
a single report, the Internet looks downright cheap,
provided you have the time to hunt down what you’re
looking for”. Sprague and Watson4’ note that in the
process of competitive intelligence acquisition, the
Internet offers economical, timely, direct and broad
Long Range Planning Vol. 30 February 1997
access to data sources. These benefits offered by the
Internet are particularly relevant because, as Pres2”
indicates, external data acquisition is one of the steps
in the business intelligence process; and value
addition in this step comes mainly from lowering the
cost and enhancing the data quality.
Thus, an Internet-based environmental scanning
system can offer several benefits. However, it also has
some potential costs associated with it. The Internet
contains numerous data sites and vast amounts of
data. With this, an information seeker may, at times,
get drawn into a search process that could extend
unreasonably. This will affect the efficiency of the
information acquisition process due to the extra time
consumed and costs incurred in an inappropriately
extended search. Also, there is a likelihood that the
information seeker may obtain excessive information
and thus may increase the cost of organizational infor-
mation processing.
We also recognize that the framework presented
here needs to be empirically tested. It is based on
the current understanding of the Internet capabilities
(supply side) and environmental scanning needs
(demand side). Field research is needed to validate
the prescriptive model proposed in this article. How-
ever, the Internet technology is evolving so fast that
an organization stands to lose significant competitive
advantage by staying on the sidelines until the
research has crystallized all of the related issues. Ano-
ther aspect of this is that the cost of gaining experience
with the Internet is small. Lucky,” a vice president at
Bellcore, says “for the paltry sum of $80,000 I get all
the communication 3000 people need . . . “. He calls
this an ‘incredible’ bargain. The framework proposed
here is aimed at making this bargain an efficient
experience in the context of external information
acquisition.
In conclusion, the emergence of the Internet holds
a significant potential to alter certain aspects of infor-
mation acquisition and use in organizations. In the
framework proposed here, we have outlined one of
the ways in which an organization can systematically
use the Internet to seek a part of the external infor-
mation required for strategic decision making. We
hope that this framework would help organizations
both to enhance the efficiency of their environmental
scanning activities, and to provide a starting point
from where they can develop other ways of dealing
with and utilizing the new realities that the Internet
offers.
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Obtaining Business Intelligence on the Internet
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P. Herring, op. tit
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Dr Badrlnerayan Shan-
kar Pawar works in the
Department of Man-
agement, College of
Business Adminiatra-
tion, Oklahoma State
University, USA.
Ramash Sharda is
ConocolDu Pont Pro-
fessor of Management
of Tachnology in tha
College, of Business
Administration, Okla-
homa State University,
USA.
J
Long Range Planning Vol. 30 February 1997
doc_529741284.pdf
Obtaining Business Intelligence on the Internet
Obtaining Business Intelligence on
the Internet
Badrinarayan Shankar Pawar and Ramesh Sharda
T HE INTERNET IS A gateway to vast and varied infor-
mation and it could revolutionize the way organ-
izations seek and use information. Firms such as
General Electric, IBM, J. P. Morgan, Merrill Lynch,
Motorola, Schlumberger and Xerox already use it.
However, the Internet is a complex collection of infor-
mation sources and information utilities. It has a vast
potential for meeting a firm’s information require-
ments but it can waste time and cost if used unsys-
tematically. In this article we outline a framework
to guide practitioners in using the Internet for one
specific purpose-the acquisition of external infor-
mation for strategic decisions.
Figure 1 presents our proposed framework for view-
ing the various components of the Internet in the con-
text of a firm’s external information requirements for
strategic decisions.
The choice of specific Internet tools and resources
is influenced by the content of information required.
The choice of the Internet utilities is also influenced
by the modes of information acquisition used by an
organization, The framework further suggests that
there may be firm-specific variations in using the
Internet due to three factors. First, over a period of
time, a firm may use its experience to rate various
sources of information and the Internet utilities to
develop its own optimal pattern for using these util-
ities. Second, the choice of a planning process by a
firm would influence the nature of its information
search ayd the consequent use of the Internet. Third,
different emphasis on environmental scanning due to
different strategic orientations may lead to variations
in the patterns of Internet use. The subsequent parts
of this article expand this framework and present a
set of viable guidelines for organizing an Internet-
based environmental scanning system.
To the best of our knowledge, this article is one of
the first attempts to synthesize the strategic infor-
mation needs with the capabilities of the emerging
information superhighway. The process specified
here can be adopted to evaluate the possible use of
other future technologies for environmental scan-
ning.
This article is organized as follows. First, some of
the issues associated with the existing environmental
scanning systems are highlighted. We then present a
brief profile of the Internet and the various utilities
associated with it. Next, we outline the content of
external information required for strategic decisions
and the modes that are used by firms in collecting this
information. We subsequently point out the suit-
ability of different Internet utilities in meeting these
Pergamon
PII:SOO24-6301(96)00100-8
Long Range Planning, Vol. 30, No. 1, pp. 110 to 121,1997
0 1997 Elsevier Science Ltd
Printed in Great Britain. All rights reserved
0024-6301/97 $17.00+0.00
Environmental domains
Task environment
competitors, suppliers, consumers,
distributors
General environment
Technology, regulatory, economic
Information required on
status, outcomes, actions, intentions
Undirected viewing
Conditioned viewing
informal search
Formal search
information requirements. Finally, we outline some
of the possible factors that might lead to firm-specific
variations in the use of the Internet.
Using Information Technology for
Strategic Information
Strategic Decisions and the Need for External
Information
termed as competitive analysis, business intelli-
gence, competitive intelligence or environmental
scanning.le4 Hambrick’ suggests that “environmental
scanning can be conceived of as a key step in the
process of organizational adaptation”. He notes that
executives can only process and disseminate the
information that comes into the organization. Her-
ring6 concurs by pointing out that “business intel-
ligence is a natural extension of corporate strategy
activities”.
External information is a key input in strategic There is a positive association between environ-
decision making. Organizations collect this infor- mental uncertainty and the intensity of environ-
mation through activities which have come to be mental scanning activity.7.8 With the increasing
Long Range Planning Vol. 30 February 1997
environmental uncertainty, therefore, managers have
sensed the need for intensified environmental scan-
ning.
Researchers have indicated that since its emergence
in the 196Os, environmental scanning has acquired
increasing importance. For instance, Russell and
Prince9 note that “environmental scanning became a
popular term during the 1960s . . . Gradually, the
focus shifted from scanning as a discrete activity to
consideration of scanning as one component of stra-
tegic planning”. In the context of competitive intel-
ligence, Bernhardtl’ points out that “most managers
now recognize that their organizations must become
much better at gaining and using competitive intel-
ligence”. And some researchers suggest that “firms
which cannot effectively scan and react to their busi-
ness environment can expect to decline when faced
by more capable competition”.” Lenz and Engle-
dew” effectively echo the above views by suggesting
that “ . . . there is a growing sense of urgency to
develop more effective ways to provide environ-
mental intelligence to strategic decision makers . . .
If extant research on organizations is correct, firms
that can successfully introduce pertinent information
about their changing environments into strategic
decision processes have the brightest prospects for
long-term survival . . . “.
Corporations have responded to this need by instal-
ling an external intelligence-seeking function.13,‘4
Ghoshal and Westneyl’ provide a positive picture of
the corporate response to the need for external infor-
mation. They report that “a 1985 survey of some of
the Fortune 500 companies revealed that over a third
of the companies sampled were spending over
$1 million a year on competitive analysis . . . “,
Similarly, Simon and Blixtl’ note that the competitive
intelligence function is poised to evolve as a major
supporting contributor to organizational decision
makers.
Thus, the demand for competitive or business intel-
ligence and, therefore, for environmental scanning
activities, is high. Many firms have taken steps to
install systems to carry out these activities. However,
the availability of suitable systems is less than
adequate. Some have noted that “the scanning units
that evolved were only partially successful and many
writers criticized them for being isolated from the real
world of the corporation, unable to incorporate the
information they collected into the planning process
of the organization and likely to vanish without a
trace when the executive who introduced the unit
moved on”.” Similarly, in the context of competitive
intelligence activities, Bernhardt18 notes that “Unfor-
tunately, despite the growing need of companies for
more accurate, more strategically relevant infor-
mation about the future direction, plans, and inten-
tions of emerging and existing competition, my
experience suggests that what headway European
firms are making towards the development of formal
competitive intelligence programmes is, with a hand-
ful of exceptions, largely incremental, and therefore
inadequate”. HerringI also makes a similar obser-
vation by suggesting that on the whole, the external
intelligence activities have not been systematized.
This article’s focus is on environmental scanning
which is predominantly an information acquisition
activity. In a few places we have also made a reference
to competitor intelligence systems or business intel-
ligence systems. These intelligence systems in
general, however, are broader in scope than environ-
mental scanning systems. Such intelligence systems
include activities not only for information acqui-
sition, but also for information processing, analysis
and dissemination.” An environmental scanning
system, thus, can be regarded as a component of a
competitor or business intelligence system.
Management information systems are designed to
apply information technology to facilitate individual
decision making in order to improve organizational
effectiveness.‘l Considering this role of the infor-
mation systems and the criticality of external infor-
mation in strategic planning, it is natural that
organizations expect and hope that information sys-
tems would meet their information requirements for
strategic decisions.
While information systems have not adequately
met the information requirements for strategic
decisions in the past, optimistic predictions have
been made recently about the future possibilities.
Huber” suggested a theory of advanced information
technology’s impact on various organizational
aspects. He argues that organizational intelligence
activities would be significantly altered by the emerg-
ing information technologies. In particular, he sug-
gests that with these technologies, organizations
would be in a position to collect information from a
wider range of sources and be more swift in their
information acquisition activities. A specific form of
this advanced information technology-the Inter-
net-is already helping organizations to access a
wider range of information sources and to improve
the speed of information acquisition.
The Internet as a Force of Business
Intelligence
The Internet: a Brief Profile
The Internet is a set of interconnected networks and
includes several million computers attached to these
networks. Some authorsz3 have been more meta-
phorical in suggesting that it is a “mammoth inter-
woven electronic maze linking millions of computer
users around the world . . . “. In the simplest form,
the Internet could be viewed as consisting of three
parts. First, there is a large number of sites which
Obtaining Business Intelligence on the Internet
hold varied information including government docu-
ments, statistics, news, research reports, books etc.
Second, it consists of a set of tools such as gopher,
WWW, WAIS and search engines which help locate
and retrieve information. Third, there are special util-
ities or services that allow formation of topic-centred
discussion groups, bulletin boards etc.
While some have been quick to appreciate its value
as a pool of vast information, others have expressed
caution against unsystematic use of it. Some pro-
fessionals have acknowledged its increasing popu-
larity and in support of it have indicated reasons such
as “there is nothing else like it”24 or have suggested
that it holds a potential for a commercial revolution.25
Some have described it as “a highway of ideas, a
collective brain for the nation’s scientists, and per-
haps the world’s most important computer bulletin
board”.26 Organizations such as General Electric,
IBM, J. P. Morgan, Merrill Lynch, Motorola, Schlum-
berger and Xerox are already using the Internet.27
Others have, however, sounded caution by suggesting
that it can also become a pit into which time and
money sink.Z8
This caution about the unsystematic use of the
Internet is valid because each of the tools or data
retrieval utilities available on the Internet has its own
characteristics and capabilities in leading a user to
the required information. This has implications for
the time taken by the search as well as the quality of
the information produced. In order to appreciate the
cost- and quality-related implications of unsys-
tematic use of the Internet utilities, it is necessary to
grasp some basic distinctive features of some of these
utilities. With a view to facilitate this, a brief profile
of the main features of some of the Internet utilities is
provided below.
Internet utilities can be regarded as consisting of
four broad classes. These are outlined in Figure 2.
One class consists of communication utilities such as
E-mail, Internet relay chat (IRC) or web chat, mailing
lists and newsgroups. E-mail provides a simple mess-
age transfer facility. IRC or web chat enables different
users to interact with each other on a real-time basis.
Newsgroups, a part of a large community of users
termed Usenet, are organized around topical areas.
Each newsgroup receives messages in the form of art-
icles from its subscribers. The users have access to
these articles and can respond to them by posting
response messages. Tracking the response pattern on
a topic in a newsgroup could be a valuable source
of assessing emerging opinions, ideas and views on
topical subject matters. Electronic mailing lists are
also organized by topics. Usually, each Internet user
who subscribes to a list receives every message which
is sent to the list by various subscribers.
The second category of Internet utilities consists of
various resource locator tools. Tools such as Archie,
Veronica and netfind which were popular in 199%
1994 have been replaced by the new resource locator
and information retrieval tools used with the World
Wide Web (WWW). A brief introduction to resource
locator tools, however, is justified in understanding
the evolution of the Internet utilities. Archie is a
search utility which can locate a site where a file or
document of interest may be available. It does not
allow actual retrieval of the document. Veronica is
similar to Archie in that it also locates a site where
the information of interest is available. Veronica,
however, searches menus of various gophers (to be
explained in the subsequent paragraphs) in the
gopherspace and the information can actually be
accessed from the sites located by Veronica. Thus, it
serves as an information source locator as well as
browser utility. Netfind helps locate information on
the Internet users.
The third category of utilities consists of infor-
mation retrieval tools such as file transfer protocol
(FTP) and wide area information server system
(WAIS). The FTP utility allows actual transfer of cop-
ies of documents from one site to another. However,
the user has to know the exact source or a site where
the document is to be extracted from or placed. WAIS
provides two capabilities. It first locates a server site
where the document of interest is available. In locat-
ing the document it takes a user-specified keyword or
string and goes through file texts to find a match. It
further allows browsing and retrieval of the document
so located. The new WWW-based search and retrieval
tools make this process even simpler. Information
available on the WWW may be accessible through a
uniform resource locator (URL) specifying the
location of information, indexes developed by search
engines2’ such as Alta-Vista,30 or through meta-
indexes such as Yahoo.31 Search and retrieval tools
for the WWW allow the use of a set of keywords to
locate the information of interest. Searches some-
times have to be successively refined before the infor-
mation is located.
The fourth category of tools, termed browser tools,
includes telnet, gopher and WWW. Telnet allows a
user to access a remote site of interest. Subsequent to
a successful remote login, the user can access infor-
mation at the remote site as any local user of that
site would do. Although it is necessary to have an
authorized account with the remote sites that a user
wishes to access, there are some sites open for any
Internet user. For instance, the entire US Congress
Library System and hundreds of university library
systems around the world can be accessed through
the WWW. Gophers provide access to various sites
which maintain information in a systematically
organized hierarchy of menus. The gophers in the
gopherspace are linked and allow a seamless move-
ment from one gopher site to another across the world.
While gophers were prominent in 1993, the WWW
has since taken over the Internet browsing tools
Long Range Planning Vol. 30 February 1997
File Transfer Protocol (FTP)
rea Information
Server System (WAIS)
??Uniform resource locators
??Meta indexes
category. The WWW also provides access to other
Internet utilities. The hypertext-based capability of
the WWW allows linking of the various Internet
resources as well as search and retrieval tools so that
the end user can navigate from one Internet infor-
mation site to another even by using different utilities
within the same user environment of the WWW. This
simplicity of navigation has made the WWW almost
synonymous with the Internet.
Thus, each of the above utilities has a distinct set
of capabilities which vary across several dimensions.
First, some utilities require a user to know the source
where the required information is available while
others do not. Second, when a user does not know the
source of information and seeks to locate it, different
utilities provide varying levels of guidance and infor-
mation. Third, some utilities require a user to make
an active search effort (e.g. web search tools) while
others automatically make information available to
him/ her (e.g. electronic mailing lists). Fourth, some
utilities provide access to information that is avail-
able on a regular basis and maintained by someone
systematically (e.g. WWW) whereas others provide
access to information that is generated by several indi-
viduals and is not likely to be permanently available,
nor is its occurrence likely to be predictable (e.g.
newsgroups).
The use of an optimal set of utilities to meet infor-
mation requirements will obviously determine the
efficiency of the information acquisition. In fact, the
lack of confidence in the efficiency of the existing
formal competitive intelligence systems has been one
of the main reasons for their slow adoption.32 Given
this, and the distinctive capabilities of the various
Internet utilities, it is necessary to point out how some
of the individual Internet tools and resources can be
used to maintain efficiency in acquiring external
information. We do this in the following sections. We
briefly highlight the content of information required
for strategic decision making. We also characterize
the typical modes that firms adopt to obtain the
required information. We then map the Internet util-
ities onto the information content and information
acquisition modes identified. In this context the term
‘Internet utilities’ is used to refer to tools, services
and resources. Since new utilities are being added
rapidly to the Internet, our proposal may be con-
sidered ‘dated’. However, the process outlined in our
framework to map the utilities onto information
acquisition modes is also applicable for evaluation of
the new utilities and associated developing tech-
nologies.
Defining your I nformation Requirements
The external environment of a firm consists of two
parts, namely: immediate task environment and
Obtaining Business Intelligence on the Internet
general environment.33 Broad sectoral elements in
each of these two categories have been pointed out by
researchers.34-3” These elements include regulatory,
economic, technological and market in the general
environment category. In the task environment cate-
gory, the focus is mostly on the elements such as
suppliers, competitors, customers etc. Identification
of detailed pieces of information required on each of
these environmental elements may yield a list. Such
a list, however, would be large in size, and industry-
and time-specific in terms of applicability. It may,
therefore, be convenient to consider the generic
aspects of information required which are applicable
to each of these environmental elements.
Each of the above suggested elements in an organ-
ization’s external environment can be viewed as an
entity that acts purposefully and, therefore, its actions
as well as intentions alter a firm’s environment which
in turn warrants a change in the firm’s strategic
response. Environmental scanning, therefore, needs
to focus on the present and likely future actions of
these entities. Consistent with this, Herring37 suggests
that the focus of such scanning has to be on providing
early warnings of opportunities and threats. Infor-
mation on future actions of the environmental enti-
ties, thus, would be of just as much value in strategic
decision making as would be the present actions and
their already manifest outcomes.
While the present actions and their outcomes are
crystallized and in principle observable, future
actions could only be inferred. Porter,38 while focus-
ing mainly on competitors, suggests that firms need
to look for signals that may provide some indication
of intentions, motives and goals of the competitors.
This also applies to other environmental entities such
as regulatory agencies whose actions can alter the
industry structure and create a need for changes in a
firm’s strategic response. Additionally, Porter sug-
gests that general commentaries from competitors are
also valuable. These expressions, although not as
specific as intentions, serve as pointers to other firms’
assumptions about the industry and could, therefore,
be indicative of the likely future actions by them.
Thus, external information on the opinions of the
entities in the environment also forms a valid content
of a firm’s external information requirements for stra-
tegic decisions. From this it could be suggested that a
firm requires information on the status of the environ-
ment, intentions and ongoing actions of the entities in
the environment, manifest outcomes of these actions
and general opinions about the industry held by the
entities in its environment.
Linking these generic aspects of information
requirement to external segments/ entities yields the
matrix of an organization’s external information
requirements presented in Table 1. Each cell in this
matrix is marked with our estimates of the suitability
of the Internet in providing the corresponding type of
information. This table suggests that the Internet
could become a viable source of meeting many of the
external information needs for strategic decisions.
One of the features of the Internet is that infor-
mation can be extracted from a vast pool which has
been contributed to by a large number of individuals
or organizations. This is, however, also one of the
limitations of it. A user organization cannot decide or
even influence what others should place into this pool
of information from where one could potentially draw
the required information. Information on broader and
more general aspects such as economic and regulatory
policies, and the associated outcomes, is of general
interest and is, therefore, maintained at several Inter-
net sites. Therefore, on the whole, the Internet is
likely to be relatively more suitable for acquiring
information on the general environment than on the
task environment as reflected in Table 1 above.
Also, a considerable part of the information cap-
tured on the Internet is mostly coded from secondary
sources such as newspapers, journals, special pub-
lications and reports. Therefore, information richness
is likely to be less than other competing sources of
information such as face-to-face personal contacts or
addressed communications.3Q Consequently, the
information is likely to be more suitable for the status
and action part of the vertical dimension in Table 1
above than the opinion and intention part.
Choosing the Search Mode
The above assessment is based on the generic content
of a firm’s external information requirements. The
Information content
Task environment General environment entities
Competitors Suppliers Consumers Distributors Technological Regulatory Economic
Status Medium High High High High High High
Outcomes High High Low High High High High
Actions Low Low Low Low High High High
Intentions and opinions Low Low High Low High High High
The term (high, medium, or low) in each cell indicates the relative level of suitability of the Internet utilities forthe acquisition of external
information on the environmental entity and for the information content associated with that cell.
Long Range Planning Vol. 30 February 1997
Scanning Information
mode requirements
Extent of
structure Focus
Nature of
Search
Information
Source
Undirected viewing Not known Unstructured
Conditioned viewing More or less clear Unstructured
Informal search Specific Unstructured
Formal search Clear and specific Structured
No focus Exploratory Not known
Signals to possible Exploratory with Partly known
needs alert receptivity
Information on Active/focused Known and
present needs vigilance selected
Information on Deliberate effort Prespecified
specific recurring
issues
suitability of the Internet for an organization’s acqui-
sition of external information can be further assessed
by considering the process through which organ-
izations scan their external environment. AguilaP’
points out that organizational scanning for infor-
mation takes place in four modes, namely: undirected
viewing, conditioned viewing, informal search and
formal search. Based on and in extension of Agu-
ilar’s4’ description, the characteristics of these four
modes of search are indicated in Table 2.
In Aguilar’s work, undirected viewing is defined as
“general exposure to information where the viewer
has no specific purpose in mind with the possible
exception of exploration”. Awareness of the issues
is low, information sources are several, information
relevance is distant and screening is coarse. Con-
ditioned viewing, according to Aguilar, is “directed
exposure, not involving active search, to a more or
less clearly identified area or type of information”.
Aguilar notes that it differs from undirected viewing
in that here “the viewer is sensitive to particular kinds
of data and is ready to assess their significance as they
are encountered”. Informal search, as specified in
Augilar’s work, is “a relatively limited and unstruc-
tured effort to obtain specific information or infor-
mation for a specific purpose”. Aguilar points out that
it differs from conditioned viewing in that here “the
information wanted is actively sought”. Finally, for-
mal search, according to Aguilar, involves “a delib-
erate effort-usually following a pre-established plan,
procedure, or methodology-to secure specific infor-
mation or information relating to a specific issue”.
From the above description, it could be suggested
that the search for signals is made through undirected
viewing and conditioned viewing whereas the search
for facts and concrete information is made through
the informal or formal search modes. Based on the
features of the Internet utilities, and the charac-
teristics of information search modes described
above, the relative suitability of the Internet utilities
for undertaking the four modes of search is proposed
in the Table 3.
Newsgroups are suited for conditioned viewing
because the information is readily available here and
the user does not have to make an active effort. The
information seeker is merely required to be alert to
spot a particular piece of information which may
occur in some newsgroup article and may serve as a
pointer to possible needs or issue identification. Lists
require even less effort in active search since the infor-
mation automatically comes to the user and may be
viewed without having a specific issue in mind or
without exerting a special search effort. They are,
thus, appropriate for undirected viewing as indicated
in Table 3.
E-mail is better suited for the informal search mode
of scanning where information might be actively
sought from a person or persons expected to be infor-
med or knowledgeable about the issue under con-
sideration. Thus, the information requirements are
Internet utility Undirected viewing Conditioned viewing Informal search Formal search
Newsgroups
Lists
Telnet
FTP
Gophers
WWW and Gophers
WAIS
Low
Medium
Low
Low
Low
High
High
Medium
Medium
Medium
Low
Low
Low
High
High
Medium
Low
Low
High
Low
Low
High
High
High
Low
Low
Low
High
High
High
High
High
Obtaining Business Intelligence on the Internet
clear, the issue at hand is concrete, and the source is
tentatively known. However, since it is not certain
who has the required information on a new issue, this
search procedure cannot be routinized. Therefore, for
every issue, there would be a tentative set of people
who might be actively approached. This element of
uncertainty maintains E-mail-based search at the
informal search level and prevents it from being rou-
tinized into a formal search procedure. Also, the E-
mail-based search is not suited for undirected view-
ing or conditioned viewing because it involves active
pursuit of information which is inconsistent with the
characteristics of these two modes of search.
The use of Telnet and FTP presupposes a decision
to seek information from a specific site or source. This
implies that the information requirements are clear
and the source of information is known. These pre-
conditions of Telnet- and FTP-based search match
with the characteristics of the formal search. These
utilities, thus, would be suitable for performing a
formal search.
Gophers and the WWW can be used to perform an
exploratory search of the entire Internet information
space. They can also be used to access a specific site
where both the source and information requirements
are known. They are, thus, suited for all four modes
of external information collection, WAIS requires a
specification of the server site to be searched and
thereafter it allows an exploratory search. It is thus
not very suitable for undirected or conditioned view-
ing and is better suited for the other two modes of
external information collection.
This description of the Internet tools and utilities
they use for accessing the different types of infor-
mation and for different methods of acquiring infor-
mation suggests that it would be beneficial for firms
to use the Internet for environmental scanning. Con-
sistent with this, several firms have already adopted
the Internet to scan their business environment for
gathering information on the relevant markets, com-
petitors, customers or technologies. Hise4’ provides
some examples outlining how firms have been using
the Internet to collect information in various areas. In
one of the examples, Hise indicates that Invitrogen
uses the Internet to provide customer service and has
assigned a customer service representative to scan
the appropriate Usenet groups for messages about the
company and its products. This representative also
reads some of the newsgroups covering molecular
biology research. This use is consistent with the
suggestion in our framework that newsgroups are
appropriate for the conditioned viewing mode of
information acquisition where the information seeker
is required to be alert to spot a particular kind of
information that he/ she is interested in. Another
example by Hise indicates that Art Anderson Associ-
ates, a firm in the engineering and architecture busi-
ness, uses the WWW and newsgroups maintained by
overseas tourism boards to identify possible new mar-
kets. Here, the information search is consistent with
the suggestion in our framework that the WWW is
appropriate for all four modes of information acqui-
sition ranging from the exploratory and passive mode
of undirected viewing to a structured and active mode
of formal search. In this example, the user can struc-
ture the information acquisition process because the
information requirements seem fairly specific.
However, the search may still have an exploratory
aspect because the geographic sites searched are
likely to vary from time to time. Hise also describes
how Mobius Computer Corp. uses the Internet to
access the relevant companies’ 10K reports to identify
the companies that might upgrade their computer sys-
tems or need new systems, and thus may constitute
a potential market for its products. Here, both the
information requirement and source seem to be
reasonably specific and clear. Thus, the information
acquisition is likely to be characterized by the formal
search mode and, therefore, any of the Internet util-
ities with ‘high’ suitability level marked under the
formal search mode in our Table 3 would be appro-
priate. Depending on their information needs, dif-
ferent companies would tend to focus on one or more
Internet tools for their environmental scanning needs.
The framework proposed here could be of help to
information seekers in selecting the Internet tools that
are most appropriate for acquiring the required infor-
mation.
Possible Firm-specific Variations
The above suggested pattern of Internet use is generic
in nature. A firm may use only a subset of the Internet
utilities highlighted in the framework or use them in
a manner that varies to some extent from the one
suggested here. The factors that might induce such
variations include a firm’s experience in using the
Internet, the nature of its strategic planning process
and the type of strategy it pursues. Each of these fac-
tors is discussed below to outline the nature of its
influence on a firm’s pattern of Internet use for meet-
ing external information requirements.
Organizational Experience
Earlier it was suggested that, in general, the Internet is
more suitable for seeking information on the general
environment than information on specific parts of the
task environment. However, it is likely that the spec-
ific information relevant to an organization and its
task environment appears at a regular frequency at
some site or source accessible through the Internet.
For instance, traded stock prices for a competitor or
percentage stockholding of a competitor in another
firm could be regularly available at some sites because
of some contextual attribute of the competitor such
as size or membership of a particular industry.
Consequently, in addition to the above two generic
Long Range Planning Vol. 30 February 1997
matrices, it is necessary to suggest an organization-
specific matrix where organization-specific utility of
the Internet could be depicted. Here, an organization
could, on the basis of its experience with the use
of the Internet, use two parameters-availability of
information at a site or through a resource and the
predictability of its occurrence-to arrive at an assess-
ment of the usefulness of the various Internet
resources for meeting its external information
requirements. This would be useful considering that
individuals conducting environmental scanning pre-
fer to use the information sources which are perceived
to be accessible rather than the ones which are most
suitable.43 In fact, Huber44 has raised the interesting
possibility that computer-assisted communications
and information acquisition could possibly influence
the user’s tradeoff between the perceived quality and
perceived accessibility of information. An Internet-
based environmental scanning system could encour-
age the use of high quality information sources by
improving and highlighting their accessibility
through the development of organization-specific
matrices as suggested above.
The Strategic Planning Process
Different strategic planning processes seem to have
different modes of information acquisition associated
with them. In particular, the work of Camillus and
Datta45 indicates that the two processes associated
with two systems of strategic planning-strategic
planning systems (SPS) and strategic issues man-
agement systems (SIMS)-use different patterns of
information acquisition. SPS relies on directed
environmental scanning involving a focus on issues
which are directly relevant to the organization. Also,
the scanning is done periodically before every plan-
ning cycle. Camillus and Datta note that SIMS, in
contrast, involves continuous monitoring even for the
weak signals. It is, therefore, likely to involve undi-
rected or semi-directed but continuous search
processes. Their work further suggests that an inte-
gration of the above two systems requires semi-
directed continuous scanning.
The strategic planning process in an organization
may be based on either one of the two systems indi-
cated above or may use a blend of them. Conse-
quently, the modes of external information collection
would also vary. Since the different Internet utilities
are associated with different modes of information
collection, the pattern of Internet use would also vary.
The Organizational Strategy
External information is required to help an organ-
ization formulate adaptive responses. Different firms,
however, adopt different adaptation strategies. One of
the most extensively used schemes of strategic types46
outlines four different adaptation forms termed as
prospectors, defenders, analysers and reactors. Pros-
pectors are the firms which seek growth through
exploration and utilization of external opportunities.
Defenders, in contrast, focus more on improving
internal efficiency than on spotting and utilizing
external opportunities. Analysers strike a balance
between the external and internal focus, while reac-
tors do not have a predetermined consistent pattern
of strategic responses. Thus, these four types are
likely to differ in terms of the extent and kind of
environmental scanning they carry out.
It seems likely that the prospectors would exten-
sively use all four modes of scanning while emphas-
izing undirected and conditioned viewing. The
defenders, on the other hand, would scan narrow
parts of their environment efficiently using the formal
search mode. The analysers strike a balance and avoid
approaching any of these two types. They would,
therefore, emphasize conditioned viewing and infor-
mal searches. The reactors are unlikely to use the
formal search mode because it implies the existence
of predetermined procedures for making strategic
responses. They are also unlikely to make proactive
issue-centred searches and therefore would not per-
form conditioned viewing. They would, thus, receive
external information through the undirected viewing
mode and perform informal searches if some specific
information is required before making reactive stra-
tegic responses to the signals brought in by undirected
viewing. This variation in the relative emphasis on
the different modes of scanning would in turn be
reflected in the different patterns of usage of the Inter-
net utilities depicted in Table 3. Thus, different stra-
tegies of firms would lead to the use of distinct sets of
Internet utilities. The linkages above outlined
between the different types of adaptation strategies,
the associated modes of information collection and
the resulting use of the Internet utilities is presented
in Figure 3.
Conclusion
The increasing environmental complexity and conse-
quent greater need for external information has cre-
ated a need for efficient and effective environmental
scanning. The promise held by the advanced infor-
mation technologies in facilitating this can be partly
realized by using the Internet utilities in locating and
retrieving external information. However, the infor-
mation available on the Internet is vast, the sources
are varied and the access tools have peculiarities. The
framework outlined in this article presents one way
of understanding the role of the Internet for meeting
external information requirements.
The proposed framework, however, is not the only
one that is feasible and there are two reasons for it.
First, the framework suggested here is generic. Firm-
Obtaining Business Intelligence on the Internet
specific aspects such as the nature of business,
strategy and other available scanning infrastructure
would warrant modifications to it. Second, the Inter-
net is evolving. The range of available utilities is
increasing rapidly. Emergence of these additional
utilities with their information search and retrieval
features would certainly suggest a different picture.
These aspects, however, would alter the contents of
the suggested framework but not necessarily its out-
line structure.
The framework specified here has mostly focused
on the compatibility between the capabilities of the
Internet tools and utilities, and environmental scan-
ning modes. The use of the Internet for environmental
scanning, however, also has a positive aspect in terms
of being economical. While describing the possible
ways in which organizations have been using the
Internet for information acquisition activities, Hise47
outlines the experience of a user who remarked that
the Internet is appealing because it cuts his costs. In
particular, this user indicated that “it allows us to do
more preliminary research without the travel
expenses we had before”. Hise further notes that
“most companies can justify a $99 software package
for getting around on the Net [starter kits usually con-
tain E-mail programming, a browser and a few other
on-line networking tools) and about $20 a month for
an Internet dial-up account for one computer. Com-
pared to what a market research analyst charges for
a single report, the Internet looks downright cheap,
provided you have the time to hunt down what you’re
looking for”. Sprague and Watson4’ note that in the
process of competitive intelligence acquisition, the
Internet offers economical, timely, direct and broad
Long Range Planning Vol. 30 February 1997
access to data sources. These benefits offered by the
Internet are particularly relevant because, as Pres2”
indicates, external data acquisition is one of the steps
in the business intelligence process; and value
addition in this step comes mainly from lowering the
cost and enhancing the data quality.
Thus, an Internet-based environmental scanning
system can offer several benefits. However, it also has
some potential costs associated with it. The Internet
contains numerous data sites and vast amounts of
data. With this, an information seeker may, at times,
get drawn into a search process that could extend
unreasonably. This will affect the efficiency of the
information acquisition process due to the extra time
consumed and costs incurred in an inappropriately
extended search. Also, there is a likelihood that the
information seeker may obtain excessive information
and thus may increase the cost of organizational infor-
mation processing.
We also recognize that the framework presented
here needs to be empirically tested. It is based on
the current understanding of the Internet capabilities
(supply side) and environmental scanning needs
(demand side). Field research is needed to validate
the prescriptive model proposed in this article. How-
ever, the Internet technology is evolving so fast that
an organization stands to lose significant competitive
advantage by staying on the sidelines until the
research has crystallized all of the related issues. Ano-
ther aspect of this is that the cost of gaining experience
with the Internet is small. Lucky,” a vice president at
Bellcore, says “for the paltry sum of $80,000 I get all
the communication 3000 people need . . . “. He calls
this an ‘incredible’ bargain. The framework proposed
here is aimed at making this bargain an efficient
experience in the context of external information
acquisition.
In conclusion, the emergence of the Internet holds
a significant potential to alter certain aspects of infor-
mation acquisition and use in organizations. In the
framework proposed here, we have outlined one of
the ways in which an organization can systematically
use the Internet to seek a part of the external infor-
mation required for strategic decision making. We
hope that this framework would help organizations
both to enhance the efficiency of their environmental
scanning activities, and to provide a starting point
from where they can develop other ways of dealing
with and utilizing the new realities that the Internet
offers.
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Dr Badrlnerayan Shan-
kar Pawar works in the
Department of Man-
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Business Adminiatra-
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University, USA.
Ramash Sharda is
ConocolDu Pont Pro-
fessor of Management
of Tachnology in tha
College, of Business
Administration, Okla-
homa State University,
USA.
J
Long Range Planning Vol. 30 February 1997
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