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The Five Major Roadblocks to GIS Gaining Corporate Market Share

Wednesday, March 19th 2003
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Summary:

This is the second of a three-part series on GIS addressing the complex issue of why the business world has not embraced this powerful software’s functionality and what needs to be
done to maintain and ultimately increase its market share.Part one of “Why has not Business Adopted GIS” focused on the frustrations of GIS fans in regard to cost versus intangible
value, awareness, and operational appropriateness.

This is the second of a three-part series on GIS addressing the complex issue of why the business world has not embraced this powerful software's functionality and what needs to be done to maintain and ultimately increase its market share.Part one of "Why has not Business Adopted GIS" focused on the frustrations of GIS fans in regard to cost versus intangible value, awareness, and operational appropriateness.Part 1 can be found here.

Author David Goldstein is president of CMC International, a Dallas, Texas consulting organization which has been helping businesses address their fundamental obstacles to growth, finding better value for their money and cutting costs to maximize return.Specialists in business intelligence, strategy, growth and planning, CMC International has implemented GIS into their winning programs since 1988.

Part Two
The Five Major Roadblocks to GIS Gaining Corporate Market Share

In our last article, we discussed the prevailing reason the GIS has yet to be embraced by the corporate business world - lack of awareness. As a whole, business simply is not educated on the uses and benefits of the software.But that is not the only obstacle to widespread acceptance. In this article, we will address a few of the other obstacles to GIS growth in the corporate marketplace.

1.Expense.
It is been the CMC experience that nearly all mid- to large size corporations would benefit from implementing GIS software applications in one manner or another.However, many do not ever learn the immense number of ways that it can be applied because the prohibitive expense for even the simplest of tasks.

Think about it.The GIS industry is asking companies to spend hundreds of thousands of dollars on GIS with a promise that if you implement this technology and people and software, GIS can help you sell more stuff.Without proof, companies cannot appreciate the software's functionality therefore making the cost justification insurmountable.Quite simply, senior executives (the decision makers) are uneducated when it comes to the benefits of a GIS system so they are not willing to allocate funds to adopt it within their organizational structure.It is a tough argument for the VP's to justify the expense when you consider that to put together a small 2 person GIS department costs more than $150,000 - and that is for just the basics in software and equipment only (see attached graph).That does not include salary at $50,000 - $100,000 per person, benefits, office space, servers, etc....

Cost to set up a 2-person GIS Department in a Corporation

Low Estimate Mid to High Estimate
Software with annual maintenance and programming $3,000.00 $5,972.00
Street Data with quarterly updates for the US $75,000.00 $75,000.00
Demographic Data $34,375.00 $82,750.00
Geocoder (stand alone) $15,000.00 $19,493.50
Zip + 4 Data with quarterly updates $12,500.00 $12,500.00
Desktop Workstations $4,000.00 $6,000.00
Plotter $6,000.00 $15,000.00
Color Workgroup Printer $500.00 $500.00
Annual Training $4,000.00 $10,000.00
TOTAL $154,375.00 $227,215.50

2.What business applications???
One can also attribute a low GIS adoption rate in the business world to the obvious lack of useful business applications.Ideally, GIS should take lots of data and easily create useful information in business.Yet most of the time, GIS takes data and just creates more data or "interesting" information.The results are not actionable - and no information is produced which would allow an executive to answer a basic business question, 'What do I do?'" The output needs to shown an attainable result and the process needs to be repeatable to allow businesses to grow in size, sales, or profits.

For example, if a GIS vendor could design and promote a simple and affordable solution whereby a company can import their customer database and- boom, here's a profile report that shows you where your profits are and how to get more, then you'd have a value proposition and the product would fly off the shelves.Or what if in retail, the program could be overlaid on sales reports to where a national sales manager can see at any time which territory is meeting quota by a simple color visualization? Then the product becomes part of an EIS (Executive Information System), one that they quickly become reliant upon and cannot conduct business without.Unfortunately as the product is developed now, that type of analysis can be performed with the aid of GIS, but it would take days and if the right people are not involved with the GIS application, it will not be useful.It takes what seems like an eternity in fast-paced business world of today to provide basic answers to simple business problems.GIS has to be customized per client to fit into the business world of 2003.

3.Complexity.
GIS software is far from user-friendly and to manipulate it to produce what should be a simple business analysis can be likened to learning a foreign language.GIS is exponentially more difficult than say creating a PowerPoint presentation, which for most people is an immense challenge in and of itself.No one has turn-keyed or created any simple to use applications around GIS where you could say, "Okay, here are all my customers, give me a customer profile report." Fact is, we still have to do all the work on a case-by-case basis and it is very complex and complicated.Even with an experienced staff like ours, our employees devote half the project hours to creating the database for it.An experienced person needs days to weeks to create answers to simple business questions.

In sum, because there are no readily available canned solutions for commonly requested business applications built on GIS, the mainstream business world has no incentive to even try to demystify the cumbersome software.

4.Manpower
GIS has created yet another obstacle to its widespread adaptation. GIS requires experienced and costly people in order to use it.To effectively deploy GIS, companies need to hire an expert in programming, web development, database management, and GIS.That individual also need to understand the industry, the business it operates within, internal functions of the marketing department, have web development expertise and a complete knowledge of the company.These "uberemployees" are very rare and require an extreme investment to create or train, but in order to accomplish the reports that business wants to make the GIS marriage work, you need all those skills.

5.Competition
GIS will have to turn to its Darwinian instincts in order to survive because behemoth Microsoft will change its business model in a heartbeat. The comfortable target market of the "doers" rather than the "deciders" will no longer be effective as Microsoft moves in to the competitive mix.

The writing is on the wall.Microsoft has already purchased Vicinity and developed MapPoint, both widely adopted, or soon to be adopted corporate internet mapping applications.These strategic acquisitions indicate they are cognizant of the demand for simple business applications using geographical information to achieve major business intelligence.

It would behoove the GIS world to recognize that Microsoft does a few things very well.First, as with most software arenas which Microsoft turns its attention to, the future of marketing this type of software will be targeted to the executive level and you can count on it that prices will drop.Second, Microsoft is terribly adept at knowing how to make products affordable for business and they know how to price products affordably. Third, they make products easy to use and easy to learn.Fourth and perhaps most importantly, Microsoft understands and practices "Goldstein's Law of Market Dominance" which is simply that the best technology is never the market leader.Microsoft understands the market leader just has to be "good enough."

Furthermore, once Microsoft drives the software price down, they will put pressure on the data vendors who currently enjoy widespread pricing irrationality.Software costs are not the only item on the bill to maintain GIS within a corporate environment.The prices for street & boundary data, census data, geocoders, etc.are through the roof.Consider that a business customer currently can spend upwards of $75,000 for quarterly updated street data to use on one of its GIS platforms - but if they purchase Mappoint from Microsoft, granted a dramatically limited application in comparison to GIS standards, for $249 they receive street and demographic data.Business does not understand why in their mind, they receive the same end result, but with a price differential wider than the Grand Canyon is deep. Microsoft will no doubt continue to use its influence to bundle data with software to make business applications affordable.

So where does that leave us?

Be sure to catch next issues continuation of Why Has not the Business World Adopted GIS where we will address the ways and means for GIS to grow in the corporate marketplace.

If you have comments or questions for author David Goldstein, please direct them to .(JavaScript must be enabled to view this email address) or 972.960.0800.


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