Intelligent Agents for Competitive

Intelligence: Survey of Applications

Kevin C. Desouza
Illinois Institute of Technology

EXECUTIVE SUMMARY
In this article the author discusses a rather recent paradigm to artificial-intelligence-
based computing, namely intelligent agents for generating competitive intelligence.
The explosion in Internet use and private network development can be viewed as
both a blessing and a curse. Companies that can effectively manage available
information without suffering from “information overload” are leaders in their
industry as they generate competitive intelligence. Those who drown in the
information are part of history or will be soon. The article concludes by
highlighting a series of business cases exemplifying the benefits of intelligent agents.
© 2001 John Wiley & Sons, Inc.

Introduction about its customers, products, markets, and competitors,

Businesses operate in a fiercely competitive environment
where the key to survival is strategic management of
knowledge. Once a luxury in the early 1990s, knowl-
edge management is now a prerequisite to compete in
the new economy. The old economy was concerned
with information gathering, whereas the new stresses
creation of intelligence and its utilization. To succeed in
this operating environment, firms must create and sus-
tain a competitive advantage (Porter, 1985). The ability
to develop and launch new successful products has been
identified as a major determinant of sustaining a com-
petitive advantage. The more knowledge a business has
Competitive Intelligence Review, Vol. 12(4) 57– 63 (2001)
© 2001 John Wiley & Sons, Inc.
the better off it will be. Competitive intelligence is one
of many byproducts of overall knowledge management
by an organization.
Knowledge management is one of the hottest
buzzwords today second only to “dotcom.” The field of
knowledge management is still in its evolutionary stage.
Hence there is no universally accepted definition of
what it is. Davenport and Prusak, authors of Working
Knowledge (1998), define it this way: “Knowledge is a
fluid mix of framed experiences, values, contextual in-
formation, and expert insight that provides a framework
for evaluating new experiences and information. It orig-

57
 Desouza
inates and is applied in the minds of knowers. In organi-
zations, it is often embedded not only in documents or
repositories but also in organizational routines, processes,
practices, and norms” (p. 5). Another dimension to dis-
cussing knowledge management is the process-oriented
view. Knowledge management is concerned with the
entire process beginning with its acquisition or creation,
followed by storage, dissemination, and routine mainte-
nance. Knowledge management is all inclusive, con-
cerned with the internal as well as external environment
of a business. Hence competitive intelligence is knowl-
edge management of one’s external environment.
According to a study by Gartner Group (2000), the
amount of data collected by an organization doubles
every year. Knowledge workers analyze only 5% of this
data. Knowledge workers spend 60% of their time
searching for important relationships in the data, 20%
analyzing the discovered relationships, and only 10% on
doing something with the analysis (i.e., making deci-
sions, implementing strategies and plans, etc.). Informa-
tion overload reduces decision-making capability by
50%. To help deal with the information overload vari-
ous techniques have emerged for knowledge gathering
and its management. Some of the better known meth-
ods for knowledge gathering include the use of statistics
such as regression and cluster analysis on data. More
recently, however, the use of artificial-intelligence (AI)-
based techniques on data has become fashionable. This
can be seen through the increasing number of businesses
and academic research centers getting involved in what
is now called “Knowledge Discovery in Databases”
(KDD) or data mining. Popular AI techniques include
artificial neural networks, genetic algorithms, etc. A
rather recent addition to the family of AI techniques is
the concept of intelligent agents.
ACCORDING TO ONE STUDY, KNOWLEDGE
WORKERS SPEND 60% OF THEIR TIME SEARCHING
FOR IMPORTANT RELATIONSHIPS IN THE DATA,
20% ANALYZING THE DISCOVERED
RELATIONSHIPS, AND ONLY 10% DOING
SOMETHING WITH THE ANALYSIS, SUCH AS
IMPLEMENTING STRATEGIES AND PLANS.
The concept of agency is not a new one; we have
agents in practically every aspect of commerce today.
An agent is someone who acts on our behalf to attain a
predefined goal. Financial brokers trade securities on our
behalf; lawyers represent their clients; so on and so
58
forth. Use of agents saves people time and money, as
they perform specialized tasks on behalf of the contract-
ing party. In the realm of information science, agents
are specific applications with predefined goals, which
can run autonomously. Like their human counterparts
they perform specific functions. A prime example of
intelligent agents is in search engines on various Internet
websites. These agents help in retrieval of documents
based on user-defined criterion. Agents help in genera-
tion of competitive intelligence in a multitude of ways,
from basic monitoring of the external environment to
more sophisticated negotiations and contracting with
external parties.
What Are Intelligent Agents?
Agent-based computing is one of the more recent de-
velopments in the field of AI, and because it is in its
infancy stage, there is no universally accepted definition
of what agents are. Here are two well publicized
definitions:
➣ An intelligent agent is software that assists users and
acts on their behalf. Agents perform predefined
task delegated by their users. Agents can automate
repetitive tasks, remember events, summarize com-
plex data, learn, and make recommendations (Gil-
bert, 1997).
➣ Intelligent agents continuously perform three func-
tions: perception of dynamic conditions in the
environment, action to affect conditions in
the environment, and reasoning to interpret
perceptions, solve problems, draw inferences, and
determine actions (Hayes-Roth, 1995).
In the context of competitive intelligence certain
points need to be highlighted. First, agents act on behalf
of their users, thus reducing their workload of sifting
through large amounts of data for knowledge genera-
tion. Second, intelligent agents have the capability to
interact with the external environment and perceive
changes in it. They can then either inform their users of
changes or dynamically react to them. Finally intelligent
agents operate in continuum; they never take vacations
or sick leave.
Although there are multiple definitions of intelligent
agents, there is agreement on what the essential charac-
teristics are (Turban & Aronson, 1998). When describ-
ing the characteristics of an object such as a house or a
person we have the option to state either external fea-

Figure 1.
Characteristics of Intelligent Agents.
tures, such as outside color of the house; height or
weight of the person, or we can describe the internal
peculiarities, such as whether we consider the house
cozy or the attitude of the person. As intelligent agents
are electronic representations of people for whom they
perform specific tasks, we can characterize them using
both internal and external features (see Figure 1 and
Table 1 for a summary).
Internal Characteristics
Autonomy
Being able to carry out tasks independently is the most
important feature of an agent; this differentiates an agent
from any other computing technique. Traditional com-
puter applications only respond to direct manipulation
via user instructions. Intelligent agents, on the other
hand, can perform actions without user intervention
(Maes, 1994). To be autonomous, an agent must have
control over its behavior and also the necessary re-
sources (Woolridge & Jennings, 1995). When using a
search engine a user only inputs what needs to be re-
trieved. The search agent will take the input and per-
form the search independently without user
intervention. This feature makes an application highly
user friendly as the user does not have to care for the
intricate workings of the agent.
Reactivity
Agents should be able to perceive events in the environ-
ment and react to them in a necessary fashion. Agents
Intelligent Agents for CI
almost never operate in isolation; they work within a
system or on a network. An agent’s environment in-
cludes other agents, systems, human users, and in certain
cases external objects such as sensory devices on factory
floors or robots. Agents receive inputs or requests from
their environments and sends information back to them.
Goal Driven
Agents essentially need to be their own boss and have
clearly defined goals that they seek to accomplish. Goals
of agents need to be well defined, as the essence of be-
ing an agent is concentrating on a specific task and do-
ing it better than anyone else can. Being goal driven
also entails that an agent be proactive rather than merely
react to an environment. A classic example is Mi-
crosoft’s intelligent wizard included in the Office 2000
suite, the purpose of which is to make the interface easy
to use. The agent monitors user activity and proactively
suggests better ways of accomplishing a task. It also can
react to user help queries.
Intelligence
Agents need to possess intelligence in order to perceive
the environment and be autonomous when performing
tasks. The level of intelligence exhibited by an agent
will depend on its function. We can incorporate expert
systems, neural networks, and genetic algorithms into
agents, which then make them intelligent.
59
 Desouza

Table 1. Intelligent Agent Characteristics

Characteristics

Internal Autonomy Being able to carry out tasks independently

Reactivity Perceive events in the environment and react to them
Goal Driven Seek to accomplish clearly defined goals
Intelligence Some level of intelligence is needed for perception of
environment changes and accomplishment of goals
Mobility Navigate through electronic networks or send scripts and receive
data via networks
Continuity Run in continuum, never supposed to terminate
External Personality Determines internal and external behavior
Cooperation Collaboration on complex tasks for optimal goal attainment
Communication Medium of interaction with humans and other agents

Mobility External Characteristics

With the widespread use of the Internet and other elec-
tronic networks mobile agents are becoming very popu-
lar. Mobile agents have the capacity to navigate through
electronic networked architectures and perform their
task. While all agents are not mobile, there have been
significant trends toward developing mobile agents.
Nonmobile agents can send scripts and receive data via
networks but cannot move themselves.
Continuity
Agents operate in continuum; upon achievement of
their goals they continue to run in the background and
monitor the environment. An agent-based application is
never supposed to terminate.
Personality
Personality is both an internal and an external character-
istic and is considered by many to be a gray area. As
intelligent agents represent humans it is often desirable
that they exhibit human-like traits (Brenner, Zarnekoq,
& Wittig, 1998). Just as people’s personalities tell a lot
about how they deal with the environment, similar rules
apply to intelligent agents. Agents with extrovert charac-
teristics such as cooperation and communication will
interact in a team environment. Trustworthiness is an
important personality trait. Similarly users must be able
to trust the workings of intelligent agents before they
fully interact with them. The amount of explanation an
agent can provide as to why it is performing certain task
will lead users to delegate more as they have a sense of
security (Maes, 1994).
Cooperation
A collection of agents that work together toward attain-
ment of a goal is called a multi-agent system. Such sys-
tems allow for scalability, permit software reuse, handle
software evolution, and promote open systems. The
future of agent-based computing with developments in
Internet networking will be in multi-agent systems
(Joshi & Munindar, 1999). For an agent to work in this
environment, it must be able to cooperate with its peers
and also coordinate efforts.
Communication
Agents need to be able to communicate with other
agents and humans. Agent– human communication can
be via terminal input such as keyboards, or more sophis-
ticated technologies such as natural language processing
and speech recognition. Multi-agent communication can
take place using standard or defined protocols.
Intelligent Agents at Work
This section highlights business cases that demonstrate
the use of intelligent agents for various aspects of com-
petitive intelligence from its generation to dissemination
for attainment of organizational goals.
Intelligence Gathering
Probably the biggest and most well-known use of agents
is in search engines. These help users locate documents
per a predefined criterion. Lycos, a premier search en-
gine, is a multi-agent system that can visit 10 million

60

Web pages per day. The basis of this system is a special
kind of agent called a Spider. Spiders are independent
software agents that crawl the Web to gather informa-
tion. The spiders communicate directly with a compo-
nent called the Update Server and relay new pages
while also reporting dead links. The URL Server man-
ages the pages to be visited by the spiders. Its job is to
give each spider a list of URLs and to receive from each
spider the data it collects about links it may discover.
The catalogue update server receives data from spiders,
indexes it, and stores it in a repository.
Computer Associates is at the forefront of develop-
ment with its Neugent (Neural agent) Technology for
use with the Unicenter TNG System. These agents can
predict the probability of various network states within
90% accuracy. The backbone of this agent is a neural
network that takes in data about system information and
looks for patterns. The system is built and trained to
know which are good and bad states. Neugent can pre-
dict within 45 minutes when a system is going to crash.
Other organizations that are developing smarter network
monitoring systems include Tivoli, Hewlett-Packard,
and Novell (Pendery, 1999).
Intelligence Creation
Analysts can use agents to routinely search for relation-
ships between new data, update old data, perform spe-
cific calculations, etc. Bose and Sugumaran (1999) have
designed an agent-based system for data mining ,using
IBM’s Intelligent Data Miner. The system consists of
five agents:
1. User interface agent—provides a Web interface for
users to interact with the data miner and help him
or her perform data analysis and display results.
2. Coordinator agent—responsible for delegation and
managing various tasks that need to be performed
for problem solving.
3. Data-set agent—responsible for keeping track of
what data is stored in which data mark or data
warehouse and actively maintaining meta-data
information.
4. Mining agent— executes the user defined algo-
rithms, performs OLAP analysis, and communi-
cates the results to user or other agents.
5. Visualization agent—allows for ad hoc and pre-
defined reporting capabilities and a wide array of
visualization methods. The system is implemented
using “ JATLite” (Java Agent Template Lite from
Intelligent Agents for CI
Stanford University), which allows users to create
software agents in Java.
Another application of intelligent agents is in the
form of shopbots. Residing on various websites, shop-
bots provide an efficient and hassle-free way of shopping
online. Shopping agents provide extra information such
as product reviews, author bibliographies or biographies,
samples of book chapters, or album tracks that can help
in a purchasing decision—all through the click of a but-
ton. The customer is in control; use of shopping agents
can help them search through multiple vendors in a
cost-efficient manner thus leading to greater savings.
Customers that use shopbots can be both private indi-
viduals and businesses. Businesses can use them to check
out their competitor’s pricing deals and other marketing
promotions in an effort to gain insights. BargainFinder,
built at Accenture (formerly Anderson Consulting), pro-
vides valuable information to buyers through price com-
parisons of online retailers (see http://bf.cstar.ac.com/
bf/ for more information).
Intelligence Dissemination
Agents are also used to study online consumer buying
patterns and recommend suitable products. This makes
for personalization of services and higher results than
achieved with mail or other forms of target marketing.
Say that you like rock music and are viewing listings of
music CDs; if an agent knows your preference and finds
your favorite band’s album on sale, recommending that
product to you will most likely generate an instanta-
neous sale. Moreover, being happy with the service you
may become a repeat customer.
According to Forrester Research, a customer call
handled by a live agent costs $33. The similar call han-
dled in a chat room costs $7.80. Developing an intelli-
gent agent to handle the same request by searching
through the knowledge base costs $1.70 (Schwartz,
2000). MySimon.com uses shopbots called Simon Prod-
uct Intelligent (SPI) agents, which are equipped by the
Virtual-Learning-Agent System that mimics the shop-
per’s behavior and learns user preferences. If a shopper is
searching for shoes, the agent will not only retrieve
prices of various vendors, but also color, type, and other
user preferences. While this is not directly competitive
intelligence, it is a competitive advantage over organiza-
tions that are not sensitive to customer needs.
61
 Desouza
Intelligence Utilization
Electronic commerce transactions can be broken down
into three types: auctions, biddings, and one-to-one
selling. Negotiation is a key component of all types of
dealings and agent have been deployed to help automate
this process. Agents help in the negotiation process
through automated requirements gathering, bidding, and
sealing a contract deal. This saves human negotiation
time and agents are often far better at finding deals in
complex settings as they can search through a larger
space in time constraints. Andersen Consulting’s Kasbah
is a multi-agent system that facilitates online negotiating
in a one-to-one environment and finds the best combi-
nation of deals for both buyers and sellers. In this way
agents utilize competitive intelligence and attain business
goals automatically.
FinCEN is an agency of the U.S. Treasury depart-
ment that overlooks policies and implementations and
detects money laundering in an effort to support federal,
state, local, and international law authorities. All cash
transactions involving dollar amounts above $10,000
must be reported and analyzed. This amounts to ap-
proximately 10 million transactions a year, which cannot
be manually monitored. The FinCEN Artificial Intelli-
gence System (FAIS) uses a multi-agent cooperative sys-
tem to weed through this large data space and search for
fraud and abnormalities by using neural network and
other pattern matching techniques (Goldberg & Senator,
1998).
In Sydney, Australia, tests are being carried out with
an agent-based air traffic control system. Each plane
landing at the airport is assigned an agent that monitors
and facilitates all necessary operations such as gate alloca-
tion and runway choice.
Conclusions and Outlook
Intelligent agents are very specific applications that run
autonomously and continuously in pursuit of a goal.
Agents are here to stay. With the exponential growth of
data on the Internet and other digital networks, agents
are going to be widely used to help in searching and
weeding through data. Agents will become common-
place within the next year or two, providing significant
benefits for managing competitive intelligence.
Appendix: Getting Started with Agents
As illustrated in this article, intelligent agents offer sig-
nificant benefits for acquiring and managing competitive
62
intelligence. The following are some resources to begin
exploring agent-based computing. For a general intro-
duction to agents, the books mentioned are highly rec-
ommended. For more specific areas of agent application,
please see journal or conference proceeding articles. Also
included is a list of various prominent academic institu-
tions that have dedicated research centers for agent-
based computing.
Books
Bradshaw, J. (Ed.). (1997). Software Agents. Boston:
MIT Press.
Brenner W., Zarnekoq, R., & Wittig, H. (1998).
Intelligent Agents: Foundations and Applications. Berlin:
Springer-Verlag.
Guilfoyle, C., Jeffcoate, J., & Stark, H. (1997). Agents
on the Web: Catalyst for E-commerce. London: Ovum Ltd.
Jennings, N.R., & Woolridge, J.M. (Eds.). (1998).
Agent Technology: Foundations Applications, and Markets.
Berlin: Springer-Verlag.
Journal Articles
Conway, D.G., & Koehler, G.J. (2000, January). In-
terface agents: Caveat mercator in electronic commerce.
Decision Support Systems, 27(4), 355–366.
Liang, T.-P., & Jin-Shiang, H. (2000, June). A
framework for applying intelligent agents to support
electronic trading. Decision Support Systems, 28(4), 305–
317.
Woolridge, M., & Jennings, N.R. (1995). Intelligent
agents: Theory and practice. Knowledge Engineering Re-
view, 10(2), 115–152.
Conference Proceedings
Desouza, K. (2001, April). Artificial intelligence for
healthcare management. In Proceedings of the First Interna-
tional Conference on Management of Healthcare and Medical
Technology. Enschede, The Netherlands: Institute for
Healthcare Technology Management.
Maes, P. (1994, July). Agents that reduce work and
information overload. Communication of the ACM, 37(7),
19 –35.
Guttman, R., & Maes, P. (1998, July). Cooperative
vs. competitive multi-agent negotiations in retail elec-
tronic commerce. In Proceedings of the Second International
Workshop on Cooperative Information Agents. Paris, France.
Academic Research
Massachusetts Institute of Technology
Carnegie Mellon University

Stanford University
University of Illinois at Urbana-Champaign
University of California (Berkeley and Los Angeles)
University of Texas at Austin
University of Florida
Georgia Institute of Technology
References
Bose, R., & Sugumaran, V. (1999). Application of intelligent
agent technology for managerial data analysis and mining. Da-
tabase for Advances in Information Systems. 30(1), 77–94.
Brenner, W., Zarnekoq, R., & Wittig, H. (1998). Intelligent
software agents: Foundation and applications. Berlin:
Springer-Verlag.
Davenport, T., & Prusak, L. (1998). Working knowledge.
Boston: Harvard Business School Press.
Gartner Group. (2000). [Online]. Available at http://www.
gartner.com.
Gilbert, D. (1997). Intelligent agents: The right information at
the right time. White paper, IBM Corporation. [On-line].
Available: http://www.networking.ibm.com/iag/iagwp1.html.
Goldberg, H.G., & Senator, T.E. (1998). The FinCEN AI
system: Finding financial crimes in a large database of cash
rransactions. In N.R. Jennings & M.J. Woolridge (Eds.),
Agent technology: Foundations, applications, and markets
(pp. 189 –215). Berlin: Springer.
Hayes-Roth, B. (1995). An architecture for adaptive intelli-
gent systems. Artificial Intelligence: Special Issue on Agents
and Interactivity, 72(1–2), 10 –18.
Intelligent Agents for CI
Joshi, A., & Munindar, P.S. (1999). Multi-agent systems on
the net. Communications of the ACM, 42(3), 38 – 40.
Maes, P. (1994). Agents that reduce work and information
overload. Communications of the ACM 37(7), 19 –35.
Pendery, D. (1999, February). Management agents get
smarter. InfoWorld, 1, 29 –31.
Porter, M.E. (1985). Competitive advantage: Creating and
sustaining superior performance. New York: The Free Press.
Schwartz, E. (2000, February). Web “Bots” enhance self-serve
experience. InfoWorld, 7,.
Turban, E., & Aronson, J. (1998). Decision support systems and
intelligent systems. Upper Saddle River, NJ: Prentice Hall.
Woolridge, M., & Jennings, N.R. (1995). Intelligent agents:
Theory and practice. Knowledge Engineering Review, 10(2),
115–152.
About the Author
Kevin C. Desouza received his MBA (Honors) from the Stu-
art Graduate School of Business, Illinois Institute of Technol-
ogy, with a concentration in information management and his
B.Sc. with distinction from the University of Illinois at Chi-
cago in Accounting and Information & Decision Sciences. He
currently works as a software engineer for CCC Information
Services, Inc. His research interests are in the fields of data
mining, artificial intelligence, economics of information systems,
and medical technology. His papers, including those forthcom-
ing, have appeared in conference proceedings and journals. He
is currently working on a book on artificial intelligence tech-
niques for knowledge management. He may be contacted by
e-mail at kevind@stuart.iit.edu.
63