Competitive Intelligence System

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Competitive Intelligence System

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Subject: Competitive intelligence system

Title: The development of an optimized competitive intelligence system for TNT Express.

Author: Laurens Liezenberg

Student number: 1169491

Date: 7 February 2007

Institution: University of Groningen

Faculty: Management and Organization First supervisor: Dr. G.H. Kruithof

Second supervisor: Dr. T.W. de Boer Supervisor TNT: K.R. de Witt-Hamer

______________________________________________________________________ Competitive Intelligence System Customer & Market Intelligence

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ABSTRACT

The Competitor Model, a competitive intelligence system used by the Customer and Market department of TNT Express (CMI), has great impact on the organization of TNT. The system supports CMI to monitor revenue and market share development of TNT and its competitors from all over the world. It was originally developed to support TNT Express’ strategic intent of being number 1 Express player in various countries. The acquired information from its analytical process is used for strategic and tactical decisions by TNT management.

There are many opportunities to enhance the functionalities of the Competitor Model. Therefore, CMI wanted the existing Competitor Model to be evaluated. They want to investigate how the model can be enhanced by implementing new functionalities. Eventually the goal is to develop an enhanced version of the Competitor Model, which supports CMI to monitor and analyze the competitors worldwide. The system should also support CMI is the achievement of improving their intelligence processes.

To answer the CMI management question, this following research objective was formulated: The objective of this research is to specify the business and system requirements for an optimized TNT Express competitive intelligence system, which monitors and analyses TNT’s worldwide competition in a standardized way to create a comprehensive understanding of the global competitors so that the internal stakeholders are provided with the required strategic intelligence.

In order to answer the proposed research question, six sub-questions were formulated and covered in the preceding chapters. The intelligence and system needs were analyzed to formulate the TNT Express business requirements of a competitive intelligence system during the diagnostic phase. This phase consisted of the academic view on competitive intelligence, the strategic business objectives of TNT Express, the current system investigation and the TNT Express intelligence needs assessment. The business requirements were then used to derive the functional system requirements to accommodate further system development, but high level out of time constraints.

I conclude that the new system must achieve three objectives. The CI system must support the enhancement of:

1. CMI intelligence processes. 2. CMI intelligence products.

3. Intelligence processes of other TNT Express departments (DHO, IBU & BU) New system functionalities

These above objectives can be achieved by implementing new system functionalities. The analysis of the business requirements shows that the CI system must contain a knowledge centre that supports the sharing of intelligence. The central database will distribute intelligence to the entire organization using an intranet compatible application.

According to the intelligence needs assessment, the CI system should primary focus on competitor intelligence and not so much on market intelligence. The system should be kept simple and focus on a few important features instead of being comprehensive. Flexibility is another important characteristic, as it enables local users to modify the system to their special needs.

Benefits of CI system

I conclude that an enhanced CIS will improve the competitive intelligence processes of both CMI and other TNT departments. By implementing the new functionalities, the competitive intelligence system will:

1. Accelerate the decision-making process

2. Increase awareness of the competitive environment

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3. Increase the quality of intelligence

4. Support the effective use of data & information 5. Provide a wider range of intelligence output

The CI system has also direct benefits for CMI. The system will support CMI to achieving its following long-term objectives:

1. Systemised & Automated

2. Provide tailored intelligence to target audience 3. Comprehensive

4. Accessible 5. Proactive

The functional system requirements can be used for further system developed. It is important that all stakeholders are and will be kept involved during the project. CMI should therefore get management support from other departments and senior management and keep them informed during the process. Before designing and building the system, the most important stakeholders should validate each of the requirements. The next step is to determine an approach to mechanization. I conclude that the Competitor Model is not the best system to implement the new functionalities. Finally, during this research, numerous possible future enhancements or opportunities were mapped, as described in the requirements prioritization. Out of lack of time, only a few vital functionalities are specified in the requirements document. During a new phase of the development process, it would be valuable to evaluate all requirements mentioned. There are still a lot of opportunities for CMI and the rest of TNT Express to improve their competitive intelligence processes. It is now up to TNT to decide the next steps as to what will provide them with the most optimal return of investment, considering my suggestions.

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PREFACE

This thesis embodies the last assignment to finalize my study Technology Management at the University of Groningen. I have experienced the last months as a student as very satisfying and most of all instructive. It was a great experience to work in a business environment and to perform my research project.

I would like to thank various persons, for they made it possible for me to write my thesis and hence to graduate. First of all, I would like to thank my supervisors of the University of Groningen, Mr. Kruithof and Mr. De Boer. They contributed substantially to the completion of my thesis by their support. Their constructive feedback was of great help during this project. Especially my meetings with Mr. Kruithof were of great benefit. He motivated me to keep going on the chosen path but with adjustments when needed.

Furthermore, I want to express thanks to TNT, more specific the CMI department for providing me the opportunity to put my knowledge to the test. I appreciated their confidence to involving me in such an extensive project and providing me with the freedom to find my own way during my research.

My special thanks are directed to Mr. De Witt-Hamer, my supervisor at CMI. His useful advices and support helped me a great deal, for which I am very grateful. Beside that, I enjoyed working in his team.

Laurens Liezenberg

Hoofddorp, 7 February 2007

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9.1 INTRODUCTION... 82 9.8 CONCLUSION... 89 CHAPTER 10: CONCLUSION ...90 10.1 CONCLUSION ... 90 10.2 RECOMMENDATIONS... 92 APPENDICES ...94 REFENRENCES ...168 ______________________________________________________________________ Competitive Intelligence System Customer & Market Intelligence

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"It is pardonable to be defeated, but never to be surprised." - Frederick the Great

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INTRODUCTION

“Multinationals do not have what it takes to compete in the international marketplace.” This is the surprising results of a poll, conducted by management-consulting company Accenture, of more than 900 top executives worldwide. According to the poll, many CEO’s are worried that their companies are not adequately capable of coping with the turbulent business environment, reported by Time magazine in January 2007 (Vol. 5). Numerous business leaders think that their organizations are poorly equipped to succeed as global enterprise.

The worries of the CEO’s could well have to do with uncertainty. Not implying that CEO’s are uncertain people, but that the world around us creates uncertainty. Even well-established convictions that we take for granted since we were born are no longer indisputable. Before you know it, your world is upside down, like the people living in the Middle Ages when they were told that the world is not flat, but round. And now it seems that even Columbus had it wrong in 1492.

Thomas Friedman realized that the world is, indeed, flat. Not to say that we do not live on a gigantic sphere, but he claims that humanity has been able to level the earth. In his book The World Is Flat: A Brief History of the Twenty-first Century (2005) he analyzes the influence of globalization on the business society. Friedman believes the world is flat in the sense that the competitive landscape of industrial and emerging market countries is leveling through intersecting technologies, above all the Internet. For companies, it is not only the case to deal with these kinds of uncertainties, for example created by globalization, but also to take advantage of new opportunities related to uncertainties.

And there are opportunities enough to take advantage of. Due to the internet, I have been named the Time magazine “Person of the Year”. Oh, and you too, for the record. According to Time, all individuals are transforming the information age by collaborating and sharing knowledge through the internet on a scale never seen before. The sharing of intelligence and collaboration using the internet is what this thesis is all about.

For companies there are innumerable opportunities created by the information age, but these chances must be exploited. Corporations can no longer afford to only hold on to old traditions without challenging the changing environment. Based on their poll, Accenture believes that “the results are an indication of the growing complexity that managements the world over are now having to confront”. Laudon & Laudon (2000, p. 4) identified three powerful worldwide changes that created the growing complexity in the business environment; globalization, the emergence of information-based service economies and the transformation of the business enterprise. They claim that the implementation of information systems supports organizations to survive and prosper:

- Emergence of the global economy: Information systems provide the communication and analytical power that firms need for conducting trade and managing business on a global scale.

- Transformation from industrial to based economies: In information-based service economies, information is a key ingredient in creating wealth. Information, and technology that delivers it, have become critical strategic assets for corporations. Information systems are needed to optimize the flow of information within the organization and to help management maximize the knowledge recourses.

- Transformation of the business enterprise: The third major change in the business environment is the very nature of organizations and management. Traditional, hierarchical, centralized and structured corporations, employing specialists, slowly transform into flattened, decentralized and flexible organizations with generalists. Information systems make the new style of organizations possible.

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Nowadays, companies seem to acknowledge the role of information systems in their business. Information systems have become essential for creating competitive firms, managing global corporations and providing useful products and services to customers. But that is not it; the focus of these systems is the next issue. The competitiveness of organizations is largely dictated by how efficiently they use information in their decision-making. Ideally, decision-makers find the right information at the right time.

A major blind spot exist in the field of the information about the external environment. The Society of Competitive Intelligence Professionals (SCIP), the global union of the competitive intelligence community, studied how competitive intelligence (CI) is currently operated in large companies worldwide. They discovered that competitive intelligence is still a relatively small function in many organizations. Often it is part of the marketing department and conducted as a part-time function. Even more so, the SCIP discovered that many employees are aware of the existence of a competitive intelligence function within their organization, but do not participate in the process. Consequently organizations are not fully accessing the internal competitive knowledge of their employees and CI functions are missing great opportunities to benefit from internally available information about external influences. TNT Express does have a separate competitive intelligence group (CMI), which is part of the Strategic Marketing department. They are entirely focused on providing TNT Express with all relevant information about the environment and they seem to be successful in doing so. There is, however, still many opportunities for improvement. One of them is the need to systemize and automate their current intelligence processes and develop new ones.

Globalization, the information-based economy and the transformation of the organization create the need for a TNT Express competitive intelligence system, beside the internal CMI need to systemize and automate. Although most of TNT revenue is derived from Western Europe, a shift of focus is clearly visible to the rest of the world. During the last year TNT Express has expanded significantly. They bought major express companies in India, China and Brazil, as their competitors have done. The express market is growing rapidly, but TNT has even higher growth ambitions. Their goal is to almost have doubled its revenue in 2010. CMI is expected to do their share of the work.

This thesis covers just a small step of the larger development process for an optimized TNT Express competitive intelligence system. Its focus lies on the analysis phase of the system development process. The objective is to specify the TNT express business requirements for such a system, which describe the services that the system is expected to provide. The functional system requirements with high priority are also within the scope of this research. System requirements are expanded versions of the business requirements. They add detail and explain how user requirements should be provided by the system. These system requirements are however, only specified at high level and can be used for further research. Thesis structure

The thesis is organized into ten chapters. The first chapter introduces the organization of TNT Express and all of its departments that are related to the scope of this thesis. Special attention is given to CMI, the department which initiated the research and is project-owner of the competitive intelligence system development.

The second chapter discusses the background and objective of this research project and it introduces the research design which was used to deliver the desired solutions. The research design consists of two elements. First the research model is reviewed. This is a graphic representation of the different steps taken to obtain the derived conclusions. Secondly, the research methods for each phase are explained.

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Chapter three reviews the subject of system development. It provides a short explanation of the used system development methodology. Particularly the system analysis phase is explained in detail in this chapter.

Chapters four to seven together embody the diagnostic phase. The resulting conclusions of these chapters are used as input for the business requirements specification in chapter eight. Chapter four explores the academic view of competitive intelligence. In this chapter a general description of an intelligence process is given, which is called the intelligence cycle. Furthermore a framework for possible outputs on these intelligence processes is presented. The strategic business objectives of TNT Express and CMI are described in chapter five. The competitive intelligence system should be aligned with these objectives. In chapter six, the current system used by CMI is evaluated. Opportunities for the new system are derived by evaluating the strengths and weaknesses of the existing system. Chapter seven, which is the last of the diagnostic phase, determines the end-users’ intelligence needs in relation to a CI system solution.

In chapter eight the results from the previous chapters are assembled. The identified needs from the preceding chapters are evaluated and prioritized leading to the business requirements specification for a TNT Express competitive intelligence system.

Chapter nine illustrates the functional system requirements. These requirements are derived from the business requirements and they describe the functionalities with high priority, which should be included in the system. Each functional system requirement is specified in detail in the functional system requirements document and can be found in appendix four. To conclude, the last chapter offers insight into the main results of this project. Beside the conclusions, recommendations are provided for the next phase of the system development. For clarification, in this thesis the term “competitive intelligence system” is used. For this document it is considered to be a distinctive information system that supports specific competitive intelligence processes. Thus the goal is not to develop one system that supports all TNT Express competitive intelligence processes, but to specify the requirements for a system that supports the intelligence processes with the highest need to be supported. The expression “competitive intelligence” can also be misleading, especially if used beside “competitor intelligence”. For this thesis, competitive intelligence is used as an overall term for all intelligence about the external environment, which consists of competitor, market, macro and customer intelligence, among others. Customer intelligence is not within the scope of this research, but included are competitor, macro and market intelligence. Hence competitive intelligence system is employed in stead of competitor intelligence system.

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CHAPTER 1: TNT

1.1 INTRODUCTION

This chapter provides background on TNT. A top-down analysis is used to describe the parts of the organization that are related to the scope of the research. Firstly, the TNT group is introduced, which is the holding under which TNT Express operates. After the introduction of TNT’s present structure and history of the company, TNT’s mission is stated. Subsequently, TNT Express is discussed: the strategy, the provided services and the structure of the organisation. Next, the Customer & Market Intelligence department of TNT Express Head Office is described. This is the department were this research is done. Finally, the focus is on the Competitor Model, the topic of this research project.

1.2 THE TNT GROUP

The TNT Group is a global provider of mail, express and logistics services. It is a Dutch company, which originated in Australia. TNT N.V. is a public company and listed on the stock exchanges of Amsterdam and New York.

TNT currently consists of 2 divisions: Mail and Express (Figure 1.1). The Mail division provides services for collecting, sorting, transporting, and distributing domestic and international mail. TNT Logistics, which was sold earlier this year, designs, implements and operates complex supply chain solutions on a national, regional or global scale for medium to large enterprises. It has been sold to the Apollo Group. The TNT group employs over 124,000 people in 64 countries and operates in more than 200 countries. For 2005, the company reported €10 billion in revenues in its annual report. Without Logistics, TNT’s revenue would have been €9,3 billion.

Figure 1.1: TNT Group structure

1.2.1 History

In 1799, the national Dutch postal service PTT (Staatsbedrijf der Posterijen, Telegrafie en Telefonie) was founded. The company was granted a monopoly on collection and delivery of mail in the Netherlands that lasted for almost 200 years. In 1989, it became a private company called Royal PTT Nederland N.V. (KPN), which consisted of PTT Post (mail services) and PTT Telecom (telecommunications).

______________________________________________________________________ Figure 1.2: Historic overview of the company’s logos

In order to survive, PTT post extended its vision from home ground to the international market. Therefore, in 1996 it bought TNT, an Australian express service company. TNT was founded in 1946 when Australian Ken Thomas started his own express company Thomas Nationwide Transport. Over the years, the company grew into a global enterprise by means of take-overs and interests acquired in other companies. However, its bid to become a

Chapter 1: TNT Customer & Market Intelligence

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worldwide player in transportation through rapid acquisition had led it to diversify too quickly, losing focus and overextending into non-core businesses. It faced financial difficulties and sought new sources of investment through financially strong partners.

The new group of PTT Post separated from PTT Telecom in 1998, which continued to operate under the name of KPN, while PTT Post changed its name to TNT Post Group (TPG). Finally in 2005, TPG adopted the name to TNT because operating under one brand would increase the global recognition of the group (tnt.com). In October 2006, the name of TPG will disappear totally, as TPG Post will be turned into TNT Post.

1.2.2 The mission and standards of TNT TNT’s mission is:

• To exceed customers' expectations in the transfer of their goods and documents around the world.

• To deliver value to their customers by providing the most reliable and efficient solutions in distribution and logistics.

• To lead the industry by instilling pride in their people, creating value for their stakeholders and sharing responsibility for the world (TNT Operating Plan 2006). 1.3 TNT EXPRESS

TNT Express is part of the TNT group. It is the provider of worldwide business-to-business express delivery services for documents, parcels and freight that are on-demand, door-to-door, time-definite and day-certain. The division is active in more than 200 countries. Weekly approximately 3.6 million express parcels, documents and freight units are transported to all over the world. TNT Express employs 45,000 people worldwide, has a fleet of 42 aircraft, and operates over 19,000 road vehicles. The annual revenue in 2005 was almost 6 billion euros, which is almost 60% of the TNT group revenues (tnt.com). 1.3.1 Strategy

TNT’s strategic intent is to be the leader in its own market: day and time certain, door-to-door transport, focusing on business-to-business customers, with the widest geographical coverage. To achieve this goal TNT has specific strategic objectives (Operating plan 2006): Confidential

These objectives are directly related to the Competitor Model, the subject of this thesis, since the system helps to measure and monitor the progress of achieving these goals. The functioning of the Competitor Model will be discussed at the end of this chapter.

1.3.2 Services

The services provided by TNT Express can be classified in two categories: International and Domestic Services and Special Services. The International and Domestic Services have standardized procedures and the goods are processed through TNT’s network services. TNT Express Special Services provide a range of flexible solutions to meet any requirements that cannot be satisfied by TNT's network services. The solutions are tailored to the specific needs of the customers.

International and domestic services:

- 9:00 Express: time guaranteed international express delivery before 9:00 am on the next or earliest possible business day in major cities worldwide.

- 12:00 Express: time guaranteed international express delivery before 12:00 noon on the next or earliest possible business day in major cities worldwide

- Global Express: express delivery before end of local business hours on the next or earliest possible day in more than 200 countries worldwide

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- Economy Express: day definite, economical delivery for less urgent shipments to most destinations worldwide

Special Services

- Time Critical Services: collection outside standard hours, deliveries on Sundays and public holidays.

- Freight Services: door-to-door and door-to-airport capabilities for urgent airfreight shipments to global destinations and full load and part load road transportation throughout Europe for shipments over 3000 kilos.

- Special Handling Services: safe and secure service for the shipment of hazardous, fragile or high value goods.

- Storapart & Distribution Services: a global Forward Stock Location (FSL) capability regardless of number of items to be stocked. Goods delivered within two hours with repair and return options.

- Outsourced Services: specialist archiving and mailroom management and a range of transportation services for the financial services and banking institutions, as well as providing customs brokerage services (TNT Operating plan 2006).

1.3.3 Structure of the organization

The Express organisation consists of eight Business Units (BU), each representing a different country (Figure 1.3). From there, the local operations are managed. There are BU in Australia, the Benelux, China, France, Germany, Italy and the UK. These are the countries where TNT is a big player on the express market. The International Business Unit (IBU) is the eighth BU, which controls all other countries with a smaller Express market (more than 150 countries).

Confidential

The Head Office of the TNT Express is in Hoofddorp in the same building where the TNT Group Head Office is. Except of the Board of Directors, a number of staff departments work at the office, such as Communications, Human Resources, Operations, Public Affairs, Special Services and Strategic Marketing. The last department consists of Product & Strategic Pricing, Marketing Communications and Customer & Market Intelligence (CMI), where this research is done.

1.4 THE CUSTOMER & MARKET INTELLIGENCE Confidential

1.5 STRATEGIC MARKETING DATABASE Confidential

1.6 COMPETITOR MODEL Confidential

1.7 CONCLUSION

TNT operates in a fierce competitive market. In order to assess its market position, the provision of competitive intelligence is essential. The SMD and the Competitor Model are two systems that are currently used by CMI to support their competitive intelligence processes. The Competitor Model provides only limited possibilities to support these

processes and therefore need to be enhanced by further developed. This is elaborated in the next section of this thesis, further going into depth about CMI’s management question and the research design used to produce the desired outcome.

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CHAPTER 2: PROBLEM ANALYSIS & RESEARCH DESIGN

In this chapter, the objective of the research is explained. First, the background of this research is given to introduce the current situation and to outline the origin of the management question. This leads to the problem statement of this research. On the one hand, the problem statement forms the connection with the concrete problems in practice. On the other hand, the problem statement has a link to the theory (De Leeuw, 2001; p. 89). Next, the scope of the research is discussed. At the end of this chapter the research design covers the research model and research methods that are used. The research model explains which roadmap is used to come to the desired solutions and the research methods give insight in the used system development methodology.

2.2 RESEARCH BACKGROUND 2.2.1 Situational Model

After the first analysis of the situation at the Customer & Market Intelligence Department, a situational model was designed to give a graphic representation of reality. This was done to clarify the situation in which the research has to be done. The model pictures the different entities that are relevant to the research and illustrates the connections between the elements (figure 2.1).

Confidential

2.2.2 CMI intelligence process Confidential

2.2.3 CMI management question

As stated before, the Competitor Model (CM) has great impact on the organization of TNT, because the acquired information is used for strategic and tactical decisions. Therefore, it is important that the system is reliable and that it supports the creating of opportunities for TNT to obtain competitive advantage.

At present, the system has its limitations. One of them is the fact that it only can calculate the market share of competitors. Except this simple calculation, no further analyses can be done. The CM can also only store competitor revenue data, while more information is available. Another disadvantage is that CMI is depending on the information of the BU about their competitors, while the BU’s are evaluated on the same information by the management. This could be a source of conflicting interests.

There are many opportunities to enhance the functionalities of the CM. The system could for instance support CMI to get a better view on the competition. CMI not only wants the outputs of the Competitor Model to be extended, but also the input possibilities. Therefore, TNT wants the existing Competitor Model to be evaluated. They want to investigate how the model can be enhanced by implementing new functionalities. Eventually the goal is to develop an enhanced version of the Competitor Model, which supports CMI to monitor and analyze the competitors worldwide. The system should also support CMI is the achievement of improving their intelligence processes, as described in above.

2.3 PROBLEM STATEMENT 2.3.1 Introduction

Based on the background information, the problem statement is formulated. The problem statement is subdivided by the research objective, the research question and the research scope (De Leeuw, 2001). The sub-questions are derived from the research question, which ______________________________________________________________________

Chapter 2: Problem analysis Customer & Market Intelligence

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are illustrated in the research model. This is a graphic representation of the different research phases. Each sub-questions is discussed in a separate chapter.

2.3.2 Research objective

The objective of this research is to specify the business and functional system requirements for an optimized TNT Express competitive intelligence system, which monitors and analyses TNT’s worldwide competition in a standardized way to create a comprehensive understanding of the global competitors so that the internal stakeholders are provided with the required strategic intelligence to obtain a competitive advantage.

2.3.3 Research question

“What are the business requirements for a TNT Express competitive intelligence system and what are the related functional system requirements to provide the internal stakeholders with the desired competitive intelligence?”

2.3.4 Sub-questions

In order to achieve the research objective, the research question is divided in six sub-questions. Each of them represents a different phase of the research project, as is illustrated in the research model. The sub-questions are answered in a separate chapter. The questions are based on the used system development methodology, which is described in the next chapter.

1. What is the academic view on competitive intelligence?

2. What are the strategic business objectives of TNT Express, which should be in line with the system objectives?

3. What are the functional and non-functional characteristics of the Competitor Model and what are possible areas of improvement?

4. What are the intelligence needs of TNT Express’ internal stakeholders about the external environment?

5. What are the business requirements for a TNT Express competitive intelligence system? 6. What are the functional system requirements for a TNT Express competitive intelligence

system?

2.3.5 Scope & Limitations

The goal is to specify the business requirements for a TNT Express competitive intelligence system. Only the most important new system functionalities are further described as functional system requirements, out of time constraints.

The competitive intelligence system, for which the requirements are specified, is only applicable for TNT Express. The goal of this research is to look for opportunities to enhance the current version of the current web-tool, adding new functionalities to the existing system. However, the design phase of the competitive intelligence system is not included in this research. The goal of this research is to formulate the business and system requirements of a competitive intelligence system, which are part of the analysis phase of a system development process. Therefore, the design and implementations of the new functionalities and changes are done after this project. CMI has to decide how the requirements are used for further development, for example is a new system is developed or the CM is adjusted. In addition, the focus of this project is on express market and competitor intelligence, customer intelligence is therefore not included, just as the SMD. ______________________________________________________________________

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2.4 GLOSSARY

In the literature about intelligence, definitions of relevant concepts are ambiguously. To make the reading of this thesis more understandable, a list of definitions is presented. The definitions are based on the literature study, covered in chapter four.

Data: Uncollated, unorganized and unevaluated pieces of knowledge. Information: Collated, organized and evaluated data.

Intelligence: Information that has been analyzed so that it is meaningful to a decision-maker and actionable to make for a particular decision.

Intelligence Cycle: The process of turning data into intelligence. Data is acquired, gathered, transmitted, evaluated, analyzed and made available as finished intelligence for policymakers to use in decision-making and action.

Competitive intelligence: Intelligence about the external environment. It is the systematic process that transforms competitor, customer, and industry data into actionable intelligence.

Industry intelligence: Competitive intelligence, which is focusses on (express) market level intelliegnce. It is the intelligence process to determine the opportunities and threats created by the market in which it operates.

Competitor intelligence: Competitive intelligence, which is focusses on company level intelligence. It is the intelligence process to determine the strengths and weaknesses of individual competitors and to derive their expected behaviour.

Intelligence system: A formalized computer system that collects, stores, processes and disseminates intelligence to support decision-making.

Competitor Model (CM): Name of the competitive intelligence system that supports the monitoring of TNT’s revenue development and of its competitors. This system is currently used by CMI and is the subject of this thesis.

2.5 RESEARCH DESIGN

2.5.1 Research model

This paragraph introduces the methodology used for this research. The structure of this thesis is based on the system development lifecycle, a system development methodology. It is a structured, step-by-step approach to develop an intelligence system. This methodology is described completely in chapter 3.

Since the goal of this research is to propose a model for an enhanced Competitor Model and the design and building of the new system are not within the scope of this project, only the analysis phase of the system development process is covered in this research. Normally, the system development cycle starts with an initiation phase and a feasibility study. Both are incorporated in the analysis phase for this research and therefore not done separately at the beginning of this research.

This thesis can be divided in two phases. During the first phase, the TNT Express business requirements are determined. In the second phase, the business requirements are used to specify the most important functional system requirements. In short, business requirements describe what a system is expected to do, while system requirements explain how the system should do it, which is further explained in the next chapter.

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The first phase consists of diagnostic and a design segment. During the diagnostic phase, opportunities and needs for the new system are determined, which are then collected and analyzed in for formulation of the business requirements. The diagnostic segment is covered by four chapters, each representing a different method to identify possible requirements. According to Bocij et al (2003) business requirements of the new system are captured by investigating the intelligence needs of the end-users and the existing systems. But before this is done, the academic view on competitive intelligence is described. A framework is presented, which specifies the possible outputs of an intelligence process. The different steps of an intelligence process are also illustrated by the intelligence cycle. In the next chapter, the strategic business objectives of TNT Express and CMI are determined. The new competitive intelligence system should be in line with these objectives. The knowledge of these two chapters is then used to evaluate the Competitor Model. Both its functioning and the processes to operate the system are evaluated to identify opportunities for enhancement.

The last element of the diagnostic phase is the user needs assessment. Both the needs for competitive intelligence products and the needs for a competitive intelligence system that supports the intelligence process are investigated. Some users only need the output of the system and are not interested how the system operates, while others have to work with the system. Of both groups, the needs are identified.

After the diagnostic phase, all information of the previous chapters is combined and then analyzed. A ranking of requirements is made by prioritization, based on the information of the four diagnostic chapters. The prioritization is used to specify the TNT Express business requirements for a competitive intelligence system, which concludes the business requirements phase of this research.

The business requirements are then used to specify the functional system requirements for the TNT Express competitive intelligence system. The most important functional business requirements are worked out to illustrate the functioning of the new system. Since the design of the system is not within the scope of this project, the system specification is done on a high level, but could eventually be used during the design phase.

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Strategic business objectives

(Chapter 5)

Business

requirements

Intelligence needs of end-users (Chapter 7) Current system investigation (Chapter 6) Competitive intelligence Academic view (Chapter 4) ______________________________________________________________________ 2.5.2 Research methods

In the previous paragraph, the different steps of the research project are described. As mentioned, each sub-question is covered in a separate chapter. In this section, the methods used to answer the sub-questions are explained.

The theoretical background on system development methodology is further deepened by means of a literature study (chapter 3), just as the academic view on competitive intelligence (chapter 4). The possible competitive analysis methods are evaluated and are be combined into a framework which suits TNT in the best way.

The identification of the TNT Express business requirements is then split in three steps: the strategic business objections analysis, the current system investigation and the mapping of the TNT Express intelligence needs. During all three steps, the knowledge of the literature study is used to identify needs and opportunities related the new system.

An intelligence audit of the company is performed. Hereby, the used intelligence process and the related intelligence system are studied to map the current situation. With this knowledge, gaps between the ideal and current situation can be identified. The top-down approach to monitor the user requirements is compared with the current systems via the bottom-up approach of current system analysis (Tudor & Tudor, 1995).

The strategic business objectives of TNT and CMI are investigated by reviewing internal CMI documentation and by interviews with CMI members. To evaluate to Competitor Model, information is obtained by reviewing documentation and observation, as suggested by Bocij et all (2003). The user guide, documents from the development process of the CM and the CM output are examples of available documentation. Finally, the functioning of the system is observed by working with the system for several months. From this analysis, the problems or limitations of the existing systems are gathered. By examining the system and procedures, and interviewing the internal stakeholders, the problem areas are identified.

TIME Business requirements specification (Chapter 8) System requirements specification (Chapter 9) System requirements models (Appendix 3)

System

requirements

Figure 2.1: Research methodology

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To assess the intelligence needs within TNT Express, a survey is used to target a wide range of employees. The competitive intelligence survey is used to obtain the key users’ perception of intelligence needs and system requirements. Key customers were asked about their current competitive intelligence activities, their intelligence needs and what they expect from the CI system. This was done by means of a survey since most internal customers of CMI work abroad. It also helped to contact a large amount of people, who could not all be interviewed, out of time constraints. The method also helped to standardize the findings for further analysis.

The results of BU’s and DHO are considered as a population, since from almost all BU/ DHO an internal customer completed the survey. The response rate from the IBU was to low to draw direct conclusions, the results can therefore only be used as an indication of their opinion. Their responses were looked at when there was a major dissimilarity between the results of BU and IBU. The survey and all results can be found in appendices 1 and 2. The findings of the four diagnostic chapters are organized in coherent groups to create a clear overview of all business requirements, which are then ranked. The prioritization of the requirements is based on a combination of factors. Requirement is evaluated by assessing whether or not they are in line with the strategic business objectives of TNT Express and in line with the academic view on competitive intelligence. Two other factors taken into account are the intelligence needs of future users and needs to improve the current system. Requirements which are in line with all four factors have top priority, while requirements which cover only one factor have a low priority.

The system requirements are specified using the business requirements and the framework from the competitive intelligence literature study. These are modelled using prototypes. For validation, the system requirements are used to develop a prototype for each functionality. If possible, an executable model of the system is developed to demonstrate it to the end-users. They can experiment with this model to see if it meets their needs.

2.6 CONCLUSION

In this chapter, the central research question of this research is presented. The background on the management question of CMI, which triggered the project, introduced the reasons why CMI wants to enhance its competitive intelligence system. The remainder of the chapter explains the steps and methods used to come to a feasible solution. The research model that was illustrated, is based on the system development lifecycle, which is further explained in the next chapter.

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CHAPTER 3: SYSTEM DEVELOPMENT

In this chapter, the methodology for system development, which is used for the research model, is introduced. First is explained what the definition of an intelligence system is. Next, different kinds of system development are shortly discussed. The system development lifecycle is worked out in detail in the next paragraph, since it is the used methodology for this research.

3.2 INTELLIGENCE SYSTEM

An intelligence system (IS) is as a set of interrelated components that collect (or retrieve), process, store and distribute intelligence to support decision-making, coordination, control, analysis and visualization in an organization (Laudon & Laudon, 2000). Intelligence is data that have been shaped into a form that is meaningful and useful for human beings. Data, in contrast, are streams of raw facts representing events occurring in organizations or the physical environment before they have been organized and arranged into a form that people can understand and use.

An intelligence system is a system that accepts data as input and produces intelligence as output. In producing this, the intermediate products of this process can be stored. Intelligence systems fit the common systems model as illustrated in Figure 3. (Curtis & Cobham, 2002; p. 15, 81). Input captures or collects raw data from within the organization or from its external environment. Processing converts this data into a more meaningful form, the output. Finally, output transfers the processed information to the users or activities for which it will be used. It is the finished product created by the system. If alternations are needed to the system, adjustments are made by some form of control mechanism. The storage is used to save programs, data awaiting processing and the intelligence resulting from processing (Bocij et all, 2003; Curtis & Cobham, 2002).

Storage Control

Process

Inputs Outputs

Figure 3.1: A general model of a system

According to Laudon & Laudon (2000), most organizations need intelligence systems to survive and prosper, influenced by three changes in the business environment. Globalization created the need for businesses to operate globally to be successful. Intelligence systems provide the communication and analytical power that firms need for conducting trade and managing business on a global scale. Secondly, industrial economies are transformed into information-based economy, where knowledge is the key ingredient in creating health. Intelligence systems are needed to optimize the flow of knowledge within an organization and to help management maximize the firm’s knowledge resources. Finally, the transformation of business enterprises themselves was the third major change in the business environment. Traditional firms were hierarchical, centralized and structured, which relied on a fixed set of standard operating procedures to deliver mass-produced product or services. The new style organizations are flattered, decentralized, flexible and customer-oriented. Information technology makes these changes possible.

______________________________________________________________________ Chapter 3: System development Customer & Market Intelligence

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3.3 SYSTEM DEVELOPMENT

3.3.1 Approaches to system development

Hicks Jr. (1993) notes that there are four basic approaches to develop intelligence systems. The difference is based on the way that the information systems are designed with an overall planning or lack of a long-term vision. It is important to note that these approaches are not mutually exclusive.

- Ad hoc: directed towards solving a particular problem without considering other problems or the potential for integrating applications.

- Data modelling approach: attempts to develop a common database model that contains all the information necessary to support the operations of a firm and removes any data redundancies. Emphasis is on linkages within database that allow common updates, retrieval and manipulation of data.

- Bottom-up approach: focuses on the basic transaction processing requirements of the firm and implements systems to meet these needs. At first, there is no overall model, which connects the separate information systems, but the systems are build simulations. A connecting framework could be build on top of existing systems at a later stage of the developing process.

- Top-down approach: attempts to align information systems with business strategies and involve top management in the information strategy planning process. This approach focuses on the strategies of the firm and the activities necessary to implement those strategies along with the data that the firm needs and the information technology available to implement an information system.

In an ideal situation only the last approach is used, as it is the best way to fit the intelligence system with the strategic intent of the organization.

Beside the subsequently described systems development lifecycle approach, other methods exist to build an intelligence system. Prototyping consists of building an experimental system rapidly and inexpensively for end users to evaluate. By interacting with the prototype, users can get a better idea of their intelligence requirements. Another method for building an intelligence system is to purchase an application software package, which is a set of prewritten, precoded application programs that are commercially available for sale or lease. These applications are developed because they common to all business organizations. They only have to be fine-tuned to meet the company-specific needs. This method is relatively cheap and takes less time then the other methods. When a package has to be modified to meet the organization’s unique requirements, this need for customization can become a disadvantage of the package buying method. When end-users are developing an intelligence system without or little formal assistance from technical specialist, it is called end-user development. Non-specialists can use software tools to develop there own system, while not being an expert on system development. This method can only be used if the new system is relatively easy to build. The last method is outsourcing, which is the hiring of an external organization that is specialized in providing. For this research the systems development lifecycle approach is chosen, since it is a common-used and straightforward approach. This research will only include the analysis phase and not the design and building of the system, so it is still possible to outsource these phases or buy an application software package.

3.4 SYSTEMS DEVELOPMENT LIFECYCLE

As described above, there are many different approaches for developing and optimizing an intelligence system, some specific for CI systems, and other more general. About the chosen system development lifecycle (SDLC) approach are many different methodologies available. A combination of both general roadmaps for developing information systems and specific roadmaps for a competitive intelligence system will be used for this research. ______________________________________________________________________ Chapter 3: System development Customer & Market Intelligence

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System development refers to all activities that go into producing an intelligence system solution to an organizational problem or opportunity. It is a structured kind of problem solving with distinct activities, according to Laudon & Laudon (2000; p. 347). For their SDLC methodology, Laudon & Laudon make distinction between six activities: system analysis, system design, developing, testing, conversion and last, production and maintenance. Bocij et al (2003) split the first phase in three steps: initiation, feasibility study and requirements analysis. Curtis and Cobham (2002) add a separate current systems investigation before the feasibility study, which is part of the requirements analysis of Bocij. The first two steps combined is the development-planning phase, according to Haag et al (2004). As Bocij et al (2003) state, there are numerous ways of describing the phases and naming of the elements of the SDLC. To be clear and consistent, the phases and elements will be described next, using the SDLC phases as illustrated in Figure 3..

System analysis Feasibility study Initiation Production and maintenance Implementation Testing Development System design Focus of thesis

Figure 3.2: Systems development Lifecycle

Since the goal of this research is to formulate the requirements for an optimized Competitor Model, only the two stages of the systems developments lifecycle, the planning and analysis phases will be discussed in detail. The design and all following phases are probably outsourced to a software production company, which also developed the Competitor Model. 3.5 INITIATION

The initiation phase is the startup phase of an intelligence systems development project. During this phase the stimulus from which the need to develop a new intelligence system (CIS) is determined. It may arise from a desire internally to develop an IS that better supports the business needs of the organization (Bocij et al, 2003), as is the case at TNT. There must be a strong alignment between the benefits that the new IS will provide and the overall business strategy. The CIS must be consistent with and supportive of the mission and objectives of the company (Bocij et al, 2003; p. 323). To ensure this alignment, organizations need to develop an intelligence systems plan that supports their overall business plan and incorporates strategic systems into top-level planning (Laudon & Laudon, 2000; p. 333). This CIS plan serves as a roadmap indicating the direction of the system development, the current system, the management strategy, the implementation plan and the budget. The plan contains a statement of corporate goals and specifies how intelligence technology supports the attainment of those goals. The plan specifies how general goals will be achieved by specific system projects (Laudon & Laudon, 2000).

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3.6 FEASIBILITY STUDY

Feasibility assessment is the activity that ensures that the project is a viable business proposition (Bocij et al, 2003). The feasibility study determines whether the desired IS is achievable, given the organization’s resources and constraints. Major areas of feasibility that must be addressed are technical, economic and operational feasibility (Laudon & Laudon, 2000). The resulting report will describe the outline requirements of the new IS and will describe the costs, and benefits and advantages and disadvantages of the desired IS functionalities. It is then up to the management to determine which of the functionalities are the most desired for the new system.

The major areas of feasibility that must be address, according to Laudon & Laudon (2000), are:

Technical feasible: whether the proposed solution can be implemented with the available hardware, software and technical recourses.

Economic feasible: whether the benefits of the proposed system outweigh the costs. Operational feasible: whether the proposed solution will affect the organizational

processes.

Organizational feasible: whether the proposed solution is desirable within the existing managerial and organizational framework. The question is whether the IS is consistent with and supportive of the mission and objectives of the company.

3.7 SYSTEM ANALYSIS PHASE

System analysis is a method for modeling and understanding complex systems. It is aimed at determining precisely what a new system must accomplish and how to accomplish it (Hicks Jr., 1993; p. 424). The goal of the analysis phase is to create a system requirements document. To come to this document, the requirements engineering process is used, as described by Sommerville (2004). The analysis phase for a TNT Express competitive intelligence system is the main focus of this project.

The objectives of the new or modified system must be specified just as the functions that the system must perform. Requirements consider economic, technical and time constraints as well as goals, procedures and decision processes of the organization. Faulty requirements are leading to system failure and high development costs. It is essential that the system analysis phase is done very accurate and thoroughly. If the requirements specified during this phase are not in line with the actual needs of the future system users, the system will not function as it is supposed to do, although it lives up to all requirements (figure 3.3). Therefore, it is important that all stakeholders are continuously kept informed and are involved during the development project. Consequently, all findings should be

The business requirements The system requirements The design

The first delivery Final delivery after “fixing” The original need

Figure 3.3: System developement

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communicated and signed off by all stakeholders, before they are used in the next phase of the system development. The costs of fixing a problem in a system increase exponential during the development life cycle. The sooner they are uncovered, they better.

3.7.1 Requirements engineering process

The requirements engineering process consists out of four phases: requirements discovery, organization, prioritization and documentation (figure 3.4). After the feasibility study, the elicitation and analysis of requirements is done to discovery the requirements for the system in development. The requirements are then converted into a standard form. When all requirements are formally specified in the requirements document, they have to be checked by the end-users to make sure that the requirements actually define the system that the end-users desire. The different phases within the system analysis are described shortly, since they are specified thoroughly in the following chapters.

Feasibility study

Requirements discovery

Requirements

documentation Requirements organization

Requirements specification Requirements

elicitation and analysis Requirements validation

Requirements prioritization Business & System requirements Requirements document System models

Figure 3.4: The requirements engineering process

During the requirements elicitation and analysis, system developers cooperate with end-users to define the CI system that should be built. There are four activities during this step, which can be presented circular, since it is a continuous and repetitive process.

Requirements discovery is the process of finding and collecting all requirements. This is done by observation of existing systems and discussions with potential users (Sommerville, 2004). To develop an effective intelligence system, the organization must have a clear understanding of both its long- and short-term strategic business intelligence objectives (Laudon and Laudon, 2000). The new system should be in line with these objectives. Together with the investigation of the current systems and the intelligence needs of end-users, this input is used to formulate the requirements for a competitive intelligence system.

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The unstructured collection of requirements is then organized in coherent groups to create a clear overview of all requirements uncovered during the previous step. Once all requirements are defined, they have to be prioritized in order of business importance (Haag et al, 2004). Only the most important requirements are further specified, since it would not be possible to cover them all out of time constraints or conflicting requirements. The requirements specification shapes the requirements competitive intelligence system in detail.

The last step in the requirements engineering process is the requirements validation. It is concerned with finding possible problems with the specified requirements. It is an important step, since it can prevent additional costs to change the system when it is already build. It is more expensive to modify a system when it is build then when it is still in development. Next, the requirements specification is used in the design phase to create a framework for the system, which is the next phase and not within the scope of this project.

3.7.2 Business and system requirements

For this research two different kinds of requirements are described: business requirements and system requirements. Business requirements are high-abstract requirements and system requirements are detailed descriptions of what the system should do. The business requirements are statements, in natural language plus diagrams of what services the system is expected to provide and constraints under which it must operate, while system requirements set out the system’s functions, services and operational constraints in detail (Sommerville, 2004; p. 118). System requirements are expanded versions of the business requirements that are used by software engineers as the starting point for the system design. They add detail and explain how user requirements should be provided by the system (Sommerville, 2004; p. 129).

The system’s functions, constraints and goals are established by deriving the system requirements through formulating the business requirements. During this phase the business requirements will be translated into the functional and non-functional system requirements of the CI system. The output of the system analysis phase is a detailed requirements specification summarizing system functions, supported by diagrams showing the information flow and processes that are required (Bocij et al, 2003; p. 294).

The purpose of defining the process model is to create a pictorial representation of the functions and operations that will eventually be performed by the system being developed. During the definition of logical data model all uniquely distinguishable objects are identified either used or produced by the system (the data entities), to capture all of the characteristics that help define those objects (the data attributes), and to describe the relationships between the entities (NYS Project Management Guidebook, 2006).

The system requirements specification is the main output from the systems analysis phase. Its focus is a description of what all the functions of the system will be. These must be defined in great detail to ensure that when the specification is past on to the designers, the system is what the users required (Bocij et al, 2003). It is an integrated and detailed system requirements list with the design specification, which can be used during the system design phase. The system requirements define the functional, technical, operational, and transitional capabilities, restrictions, and features that must be provided by the new system (NYS Project Management Guidebook, 2006).

Requirements must be defined in functional and non-functional terms. Functional requirements describe what operations the system must be able to perform. These are the features of the system. The non-functional requirements define aspects of the system other than the specific functions it performs. Some non-functional requirements, particularly those ______________________________________________________________________ Chapter 3: System development Customer & Market Intelligence

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concerning security and reliability may be system-wide (Tudor & Tudor, 1995; p. 107). Examples of non-functional requirements are availability, usability, security and flexibility. Bocij et al (2003) add the quantification of requirements, which refers to the need for measure of quality if the benefits are to be properly evaluated. The requirements should be analyzed in terms of the needed information to turn them into quantifiable variables. The variables should satisfy several specifications (Hussey & Jenster, 1999). They should be operational, reliable, timely and simple. Only then is it possible to control the intelligence process. When the analytical focus shifts to detailed evaluation of the business factors, the CI task becomes extremely difficult (Sammon, 1984, p. 82). Only if the information needs are split in manageable elements, it is possible to create the required intelligence.

3.8 SYSTEM DESIGN

Whereas during the system analysis phase is described what a system should do to meet intelligence requirements, system design shows how the system will fulfill this objectives. It consists of the overall plan or model for the system with all specifications that give the system its form and structure. These specifications should address all the managerial, organizational and technological components of the system solution (Laudon & Laudon, 2000; p. 348). The design for an intelligence system can be broken down into logical and physical design. Logical design lays out the components of the system and their relationship to each other, as they would appear to users. It shows what the system solution will do as opposed to how it is actually implemented physically. Physical design is the process of translating the abstract logical model into the specific technical design for the new system. It produces the actual specifications for hardware, software, physical databases, input/ output media etc (Laudon & Laudon, 2000; p. 349).

3.9 COMPLETING THE SYSTEM DEVELOPMENT PROCESS

The remaining steps in the system development process translate the solution specifications established during systems analysis and design into a fully operational intelligence system (Laudon & Laudon, 2000; p. 251). During the programming phase, system specifications are translated into program code. Next, the system is tested to make sure that it functions the right way and produces the right results. The conversion of the old system into the new one is done after the system is tested appropriate. Then it is ready to operate. Beside standard maintenance, a new system development cycle begins with the evaluation of the newly implemented system. Operating errors and new intelligence needs can lead to new system requirements, which are the starting point for a new cycle.

3.10 CONCLUSION

This chapter introduced the lifecycle methodology for system development, which is used for the research model (figure 3.5). All phases of a system development project are discussed, with the emphasis of the analysis phase, which is used to design the research model for this thesis. The next chapter describes the first step of the analysis phase for a TNT Express competitive intelligence system, the academic view on competitive intelligence.

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TNT Express

Competitive Intelligence System