Disruptive Changes Will Force Energy, Resources and Environment Industry Players to Review Their Market Intelligence Functions

September 27, 2011. With the uncertainty in financial markets, investors are looking for safer havens for their capital. In Western markets, energy efficient technologies are seen as good investments and among the few industrial sectors that are likely to continue to grow in the near term. In the last decade, new energy regulations have been introduced and constantly reviewed. These and other disruptive changes, together with the increasing global demand for energy, have led to fluctuations in energy and raw material prices. How is this likely to impact the way Energy, Resources and Environment industry players invest in market intelligence over 2011 and 2012?

The majority of respondents (73%) in the 2011 Global Market Intelligence Survey by M-Brain (formerly GIA), that were from the Energy, Resources & Environment sectors (N:44), said that they plan to increase investments in market intelligence ““ with 21% saying that they would increase them significantly. Of those have no market intelligence operation yet, 14% intended to launch one within the next 12 months.

What other changes can we expect? We ask Timo Maisila, a consultant from M-Brain (formerly GIA)’s Energy, Resources & Environment practice for some comments.

Based on your observations from the 2011 Global Market Intelligence Survey, what changes do you foresee?

“Industry players in the Energy, Resources and Environment sectors already have systematic market intelligence operations in place and internal customer satisfaction is high, outpacing the satisfaction levels in the Financial Services, Technology, Telecommunications and Media or even Logistics and Transportation sectors.

But in reality, the majority lag behind other companies with world class market intelligence, even as the biggest changes in the history of the energy business lie ahead.

Companies with world class market intelligence functions have them work closely with decision-makers, use their budgets and their teams more effectively and use more extensive internal networks.

Here are a few points for consideration. Most Energy, Resources and Environment sector companies have their market intelligence functions tied to Strategic Planning and Business Development. Yet 65% of the respondents say that there are at least two to five layers between their market intelligence functions and their CEOs, which will impact their immediate contributions and response times to strategic decisions and issues.

Number of layers between head of MI and CEO_Market Intelligence_web

Source: 2011 Global Market Intelligence Survey by M-Brain (formerly GIA)
*Click on image to enlarge

Another observation is that most tend to have mid-sized teams of five or less people (75%) to support strategic decision making or supply chain management. With human resources at about three times that of the actual budget for market intelligence on average, it would seem that companies in these sectors can perhaps outsource more of their intelligence work, such as day-to-day market monitoring, for greater efficiencies. News monitoring from new and improvised information sources is becoming more important. This is time consuming and having an internal expert for every need is perhaps not the best solution. With market shifts, it is also useful to be flexible enough to hire the services of external experts and consultants rather than bringing on people in-house.”

Function which MI is set up under_Market Intelligence_web

Source: 2011 Global Market Intelligence Survey by M-Brain (formerly GIA)
*Click on image to enlarge

What are some obstacles to companies outsourcing more of their market intelligence?

“It can be hard to fix something that internal stakeholders do not see as broken. The reasons behind this may be because energy companies have traditionally enjoyed limited competition due to favorable legislations and short-term benefits from high energy prices.

In addition, energy companies have not traditionally focused their intelligence on sales and marketing as much as say, companies in the Technology, Telecommunications and Media or even the Logistics and Transportation sectors. This is changing with the convergence of new competitors in the clean technology sector. Developers in the area of renewables do not necessarily need to have a background in the energy business specifically. Bioenergy, wind or solar power may be produced by virtually anyone. On a larger scale, electricity in Europe is even being traded across borders. Globally, the smart grid business has opened the development of the power infrastructure to a number of new players. All this means that companies in the Energy, Resources and Environment sectors need to focus on competitive and customer intelligence a great deal more.

Efficiency of decision making with world class MI_Market Intelligence_web

Source: 2011 Global Market Intelligence Survey by M-Brain (formerly GIA)
*Click on image to enlarge

While most companies are capable of delivering world class market intelligence, they must be careful not to suffer from inflexibility. The first step is to rethink the structures of their entire market intelligence functions; what are the criteria for success in the future, who are the internal clients, what are our current and new competitors doing, and who should do the intelligence work? Then they could consider benchmarking their capabilities against their industry peers ““ which is something we can help advise on through the industry level results from our 2011 Global Market Intelligence Survey. Having such information can be very useful in critically reviewing one’s intelligence program and to justify the budgets needed for greater efficiencies and ROI.”

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