A Road Map for Spatial Information Systems within the Enterprise - Part 2

By David Sonnen

Editor's Note: In leading up to the Location Technology and Business Intelligence Conference on May 10 & 11, we've asked industry analyst and contributing organizer of the event, David Sonnen, to provide a synopsis of the "Road Map" for corporations who are looking to more capably utilize spatial information and location technology. In part two this editorial, Mr.Sonnen looks forward to where location will be used and the industry segments that will comprise the marketplace. The complete "Road Map" document, a 30-page IDC Report, "Spatial Information Technology: The Road to Enterprise Systems" will be distributed to all conference participants.Registration for the conference is still open; Click Here to Register.If you missed part one of this series, click here.

Market Segments
As shown in Figure 1, IDC identifies four SIM technology segments: Geographic Information Systems (GIS), Enterprise Location Services and Software (ELSS), Location-Aware Transaction Services (LATS), and Spatially-enabled IT Infrastructure (SITI).

Each segment represents a set of capabilities that can complement the others. However, each segment is also a unique market possessing its own applications, data, and distribution channels.Vendors that are highly successful in one segment generally have a tough time moving to another because the success factors in each segment are fundamentally different.

SIM Technology Segments

Figure 1.Source: ISSI/IDC, 2004

Geographic Information Systems (GIS) comprises the technologies that founded the SIM industry. A GIS primarily supports geospatial workflows like facilities management, land information management, environmental management, or military intelligence. For GIS users, geography is the most valuable information they manage, and that is what sets GIS apart from other information systems. GIS is also a recognized market segment with established vendors, channels and university curricula.

GIS systems are designed for the heavy lifting involved in spatial data conversion, analysis, modeling, and cartographic display.GIS companies deliver these specialized solutions, and they are accustomed to controlling their accounts and most of their customer's attention.They control access to their applications and data generally through application programming interfaces (APIs).

Enterprise Location Software and Services
Enterprise Location Services and Software (ELSS) is about using SIM technology to support corporate business processes.From a spatial technology perspective, the critical purpose of ELSS is to augment business systems with location-specific information. For businesses, the value of ELSS is improved spatial resolution of their data and the consequent improvement in decisions and operations.

ELSS touches a number of IT industry markets, including enterprise resource planning (ERP), customer relationship management (CRM), supply chain management (SCM), and business intelligence.

Some major IT players are incorporating some spatial capabilities into their products. We are seeing increasingly sophisticated spatial capabilities from companies like SAP, SAS Institute, Information Builders, Business Objects, Siebel, IBM, Oracle, and Microsoft. Most of these companies have moved from custom geospatial projects to fully supported geospatial capabilities in their mainline products.

In the ELSS space, strategic partnerships are common. For example, SAP has incorporated ESRI technology into their Business Warehouse. Siebel uses MapInfo technology within the Siebel Business Object development language.

Revenue potential in ELSS is better than other SIM segments because of a large addressable market and because ELSS applications can support high-value business processes.

Location-aware Transaction Services (LATS)
The LATS segment is made up of the technologies that sense location GPS, Wireless LAN, RFID, cellular networks, intelligent networked sensors, and radar, for example. These technologies are being mixed and matched to monitor and track everything from ships to jellybeans to chemical warheads to pets.

These diverse technologies have many wide-ranging purposes, but share one common characteristic: the ability to determine location of something. And, they record a transaction every time they sense a change in what ever it is they track. So collectively, they will generate enormous volumes of location-specific data.
These data volumes will be mainly handled by IT infrastructure and business intelligence (BI) technologies. The SIM business opportunity centers around helping databases and BI capture, filter, and analyze the spatial components of these dynamic data sets.

This segment is immature and non-polarized with interesting downstream opportunities. We expect LATS to drive significant growth in geospatial technologies by 2005-2006. However, to exploit this opportunity, SIM vendors will have to build partnerships with others like IT infrastructure and business intelligence companies.
Spatially-enabled IT Infrastructure (SITI) - Data access and database management vendors are rapidly adding spatially capabilities to their platforms. Also, standard Web services let developers extend geospatial capabilities from IT infrastructure into business applications with relative ease.

Over the last 18 months, we have seen a sharp increase in the number of applications that take advantage of spatially-enabled IT infrastructure, particularly in business analytics. We expect that, within 24 to 36 months, spatial capabilities in infrastructure-based applications will be a common-place commodity.

The examples of spatially-enabled IT infrastructure are diverse. Oracle has extended their spatial capabilities to their application suites and have become a preferred vendor for some traditional GIS implementations. IBM is adding spatial capabilities to Websphere and DB2. Microsoft offers spatial capabilities within .NET and has established a thriving locator Web service. Pitney Bowes has acquired Group 1 and will be leveraging Group 1's Centrus technologies into Pitney's $4.8 billion dollar market.

The main point here is that the IT infrastructure increasingly provides spatial capabilities to enterprise applications at a lower cost than similar capabilities provided by established geospatial vendors.

This phenomenon is disruptive to established geospatial players, but sustaining to IT infrastructure players. That means that in the enterprise space geospatial players will see decreased control of sales and margins, sharply downward pricing pressures, and competition from much larger vendors. In contrast, IT infrastructure players are simply selling better products to existing customers.

The good news is that spatially-enabled IT infrastructure opens significant new revenue opportunities across many new markets. Traditional geospatial vendors will have to adapt their business models and technologies, but those who can will find significant new opportunities.

Published Friday, May 7th, 2004

Written by David Sonnen

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