Spying on rivals is an underhand and often illegal practice. But many firms are happy to collect 'intelligence' on the competition.

Last year, the dark underbelly of business was revealed when software giant Oracle admitted hiring detectives to rifle through rubbish for information on rival Microsoft. Oracle's spooks, headed by a former Watergate investigator, offered £800 to cleaners emptying bins at a trade association that supported Microsoft during its anti-monopoly trial.

The case, which became known as Garbagegate, gave a rare glimpse of the cloak-and-dagger world of corporate espionage.

While Oracle-Microsoft is an unusually high-profile and extreme example, companies of all sizes routinely keep tabs on each other -- a practice some would say is spying, but others call competitive intelligence.

Strictly speaking, industrial espionage and competitive intelligence are not the same thing. Spying is the grubby business of bin-sifting and office-bugging -- often illegal and always unethical; competitive intelligence is gathering information on rivals through legitimate means, such as published data and interviews.

CI, as the latter is known, even has its own representative body, the Society of Competitive Intelligence Professionals (SCIP), and is taught as a key business skill. Henley Management College, for one, includes CI on its MBA course.

The SCIP, which was founded in the US in the 80s, is seeing 40% annual growth in its membership. It currently has 7000 individuals on its books, 220 of whom are from the UK. Well-known member businesses include global giants Unilever, Motorola, BT, BP Amoco, Visa, GlaxoSmithKline and British Aerospace.

Motivating actors

Robin Kirkby, director of European consulting for CI specialist Fuld & Company, and also the London and Thames Valley co-ordinator for SCIP, says there are three principal factors driving investment in CI.

"The internet, globalisation and higher expectations from customers are all putting companies under more pressure to differentiate themselves from the competition," he says.

"It's frustrating that CI gets associated with spying; it's actually a highly ethical activity, focused on understanding competitive dynamics and planning future change."

Fuld is one of 12 consultancies across the world that specialise in competitive intelligence. These agencies are masters in gathering details on companies--or on key executives--which could prove crucial to a competitor's strategy.

Information could range from a tip-off on an imminent product launch to the background of a new chief executive, which could suggest a shift in focus. In the UK, CI consultancies earn about £7m a year.

Chris West, managing director of another CI specialist, Competitive Intelligence Services, says the spying tag does his profession a disservice.

"People assume CI is all about hacking into computers and rummaging around in bins, but it's actually much more insidious," he says.

"We look at everything a company says and publishes about itself and talk to everyone -- clients, suppliers, distributors, staff -- who knows about the company. We'll subject their advertising to linguistic analysis to uncover hidden messages. We can even learn a lot by getting hold of the chief executive's signature and sending it to a graphologist...