Assessing the size and breadth of the GIS market has always been challenging, “because the geographic-, geospatial-, location-based- solutions space is continuously evolving,” says Christine Easterfield, a principal analyst with the market research firm, Cambashi. Easterfield provides more details on how her firm defines the market segments for a more comprehensive view of the GIS and LBS technology sectors.
Developing an achievable strategic business plan (and then reviewing progress) is essential to sustainable company performance over a medium- to long-term horizon. It is the single most important annual task for the executive team. As part of this process, an understanding of the size and nature of the target market is essential – enabling opportunities to be assessed, appropriate resources assigned and realistic sales goals set.
The difficulties of sizing, or even defining, the GIS market have been the basis of discussion for some time, not least because the geographic-, geospatial-, location-based- solutions space is continuously evolving. Pinning down exactly what is being measured varies from commentator to commentator and from analyst to analyst. But reliable and up-to-date information about which industries are investing in GIS, balanced against the fortunes of competitor companies, is a vital input to any organization’s strategic business plan. This article looks at the need for a reliable market taxonomy and market sizing information and the challenges of developing a strategic business plan.
Let’s start with the basics and consider what is a “GIS.” The increased understanding of the value of spatial data has led to a huge increase in “GIS providers.” Companies offering anything from base map data through spatially-enabled database management systems and enterprise solutions, to analytical applications and providers of location-based software and services – all of these can legitimately throw their hat into the GIS ring. But the mere fact of “enablement” is not necessarily enough to include the revenues of a given product line in the mix. Geospatially-enabled enterprise systems may well have the capability to give a lat-long reference to every asset of a business, but if that capability is not used – if the product is acquired for its non-geospatially active features – is it really a GIS? Let’s focus on the tools that really work those geospatial data – the established software products that support capture, creation, visualization, manipulation and analysis. If it can’t handle a co-ordinate system transformation, then it’s really not in the game.
However, defining GIS is not just about the technology either. Just about every software or technology vendor talks about understanding the end users’ business and addressing real-world problems (no pun intended). Typically this is handled through investment in focused applications that address the issue of store location, or flood plain analysis, or tax zone planning, or utility network asset management, or any number of industry-specific tasks. Whether you have an offering that addresses a current business need or are looking for adjacent industries or territories to move into, the users of these applications define the target market. A key feature that your supporting data need to deliver is an understanding of how those industries are investing in technology, providing the basis of a robust segmentation.
Another way to segment the market is to turn the problem around and consider the users. This, too, has its challenges - who uses GIS? Cartographers, surveyors, of course, but also engineering staff, involved in designing infrastructure projects, and facilities management professionals responsible for maintaining large sites and other property portfolios, such as industrial complexes and business parks. Depending on how we have defined GIS, the user community will grow to match – but, if GIS is a tool that supports capture, creation, visualization, manipulation and analysis of spatial data, then a GIS user is someone doing those activities. So, the GIS application in the ambulance driver’s cab, while more than a generic navigation tool, does not necessarily make the paramedic a “GIS user” for the purposes of the exercise.
This leads us to a set of fundamental characteristics for market data required to underpin a robust business plan:
An ability to provide the range of market views necessary to support all of the perspectives required for business planning. For example, product marketing will focus on specific product groups and is likely to need data on the market for those product groups by industry and by geography. Local sales organizations may want a view of the market for all products by industry for their specific territories. All groups are likely to want information on competitor activity, again probably by industry and geography. The ability to derive all of the required views from an integrated, consistent dataset leads to efficient analysis and usable results.
Alignment with the market segmentation. This covers products, industries, even geographies and, of course, terminology used by the company. Mapping the structure of publicly available market information to the company’s (often unique) segmentation and terminology is always a challenge but is vital and, as discussed above, particularly challenging for the GIS market. Mismatches at this stage can result in errors in the market analysis and misleading outcomes. Integration with the company’s own data is extremely helpful here, to give the edge to an otherwise generic view.
Consistency. The data must be consistent from highest to lowest granularity and across all market perspectives. All areas of the business can then use the data for market analyses in full confidence that the results will align with higher level views and will dovetail with peer group analyses.
Accuracy. The topic of accuracy evokes fierce debate. As many datasets present a “single view” of a market, especially those that are publicly available from government bodies, financial institutions and so on, there is no way to validate their accuracy. It is simply taken on trust that such an august body would play fair. Having said that, to develop a highly accurate breakdown of the geospatial applications spending by each industry in a country would require a massive research effort and even then, the level of accuracy would be limited. The key point for marketing planning is that the market data must be sufficiently accurate to support robust relative assessment of alternative options. Here again, datasets that draw from multiple sources and provide multiple market views have a distinct advantage as they can be compared to ensure that different perspectives on the same market produce the consistent results.
Up to date. As well as drawing on as many data sources as possible in building the datasets used for marketing planning, the data should be based on the most current versions of each source possible. That said, different sources are updated at very different frequencies and there must therefore be a reliable and efficient means of integrating new versions of source data. Planning is about the future; the data should also provide a sufficient forecast horizon to support longer-term plans.
So, crucial to the understanding of this market is an awareness of the different perspectives that can be applied to the problem and confidence that any data used to support that understanding are consistent and robust across all views.
we maintain comprehensive datasets relating to software products to assist creative, engineering, design and scientific functions. These applications typically handle creation, manipulation and management of non-textual product, process and project information. We term these Technical Applications and examples include architectural design, 3D modeling, engineering drawing, medical imaging, technical illustration and geospatial applications.
To produce market datasets that meet the above characteristics, we approach the research from a number of perspectives in order to provide the full range of market views required, as well as to improve the integrity of the overall data through cross-perspective analysis and checking. The first of these perspectives is that of the software providers. By splitting the technical applications market into architectural, engineering and construction (AEC) applications, manufacturing applications, geospatial applications and “other” applications - which include such growing areas as media, entertainment and games development – we can ensure that the revenues of companies with diverse product lines are split appropriately. Some geospatial applications have evolved from computer-aided design (CAD) engineering applications; others have been purpose-built from scratch and are the sole offering of the provider. There are some caveats, of course. For example, a technology vendor that supports a thriving partner network may focus on selling base technology licenses alone, and leave the specialist applications to its partners. A provider that ships both technology and industry specific applications may appear at an advantage by retaining both technology and application revenues. However, we are confident that the relative sizes of such disparate providers are sufficiently accurate to support planning.
A second perspective is what user organizations spend on technical applications across different industries. Considerable data are published, both by commercial organizations and national statistics offices, on just such spending patterns. However, drawing together these multiple sources requires a merging of data into a single set of dimensions – industry, territory, time period and currency – to support like-for-like comparisons.
Yet another perspective is what can be termed demand. By maintaining a dataset covering employment figures around the world, which is built up by gathering national statistics on employment and industrial activity, we can combine them into a single model with a consistent set of industry and occupation classes based on international standards. Using this we can see that there are over 200,000 surveyors and cartographers in the U.S. alone – is that our user base? They might cover much of the data creation of GIS but to assess the full user base we need to add in the engineering and other professionals working with and analyzing the data to support wider business activities that fall under planning and design. This gives another perspective on the GIS market which, combined with a simple spend per-user figure, can provide an estimate of size.
Companies that are in the business of providing market data need to offer a range of datasets that address this complexity and also support the uses of the market data throughout the organization. In this way, a comprehensive, appropriately granular and multi-perspective set of market data becomes a key element in the process of ensuring that individual local activities and overall corporate strategy remain aligned.
Google Earth view of end user spending on GIS applications in Europe in 2011. The darker the color, the greater the spending. Taken from the Cambashi Country Observatory for Q3 2012
Copyright 2013, Cambashi