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Competitive Intelligence: Researching Potential Partners Room to Grow? Datforge is a medium-sized software company located in Vancouver, Canada. With 38 employees and revenues reaching nearly USD five million a year in sales, the company is always keen to identify areas for potential growth and pinpoint latent markets for its flagship product, InfoSummon. This product enables analysts to sort through large amounts of raw data in powerful ways without the assistance of a programmer. It was created and adapted to serve two industry sectors: telecommunications and financial services. Info-Summon was able to help a large North American credit card agency quickly detect fraud patterns in its millions of daily transactions. As a result, this product rapidly attained popularity with Datforges clients. Datforge believed that Info-Summon could be readily adapted for the chemical, oil and gas, and pharmaceutical industries. Early estimates suggested that demand from those sectors could reach as high as USD 900 million in North America alone, and reach nearly USD 600 million in Europe, the Middle East and Asia. Ryiegal, a Swiss start-up company, experienced early success with a similar product within the European telecommunications market, and has become Datforges primary competition. Recently published reports suggested that Ryiegal was forging a significant deal with a large multinational petroleum company in the United States. By visiting this companys website, it was evident that the Swiss company offered full services in English, French and German, with full customer support, manuals and software interfaces adapted to those languages. Datforge had customer and software support in English and French only. Opportunity or Problem? Datforge was faced with a complex choice. Should it invest development money into adapting its products for the oil and gas and pharmaceutical industries, or should it make a move with its existing product into the European market? The Swiss company already had a foothold in Europe and was moving quickly into North America. If Datforge did not head off its competition in Europe soon, it feared it would lose ground in those markets, especially when more research and development time would need to be spent looking at its products capabilities in Cyrillic and Scandinavian languages. To date, Datforge has virtually no experience in markets outside the U.S. and Canada, with the exception of some North American clients using its products in foreign offices. The company was in early negotiations with a potential German partner, Datenschell, who had a similar product tailored for the pharmaceutical industry.

Datforge identified three courses of action. The first was to raise significant capital from investors to develop the product for new target verticals in North America. The second was to pursue the German partnership, which would offer more resources for adapting Info-Summon into German, and could leverage Datenschells partners and contacts for sales in the telecom and financial industries. Such a partnership would also allow Datforge to resell the German product within the North American pharmaceutical market. The third option would be to attempt both.

Questions Lead to More Questions

To better assess the situation and to choose the most profitable and successful path, Datforge agreed to hire an external research agency to better understand the strengths of the potential German partner. Datforge wanted a clear picture on Datenschells reputation, capabilities, background, customer service and general attitude to the market. The research agencys final report revealed that Datenschells financial situation was troubling. There was evidence of a failed investment as well as a debt judgment. When the board of directors was investigated, an undisclosed husband and wife link and various company connections that had not been declared to Datforge were revealed. Datenschell also used misleading statements about its capabilities and expertise to woo Datforge into a partnership. The research organization spoke with over forty end users and past customers; they gave a lukewarm opinion of this company. In addition, the research agency contacted the German organization firsthand on several occasions, posing as a potential client. It made lots of promises, none of which materialized. Given the troubling picture of this potential partner, Datforge opted not to enter into this partnership. A new strategy needed to be identified as to whether to enter the European market, or focus on new verticals within North America.

Case Study Questions

1. Discuss the ethical integrity of the external researchers investigation into Datenschell.

2. What other forms of competitor intelligence would be useful about Datenschell?

3. In addition to conducting research about Datenschell, what other avenues of competitive intelligence should Datforge pursue?

4. In terms of overall research needed about the European market for its product, is Datforge faced with a problem or an opportunity?