CH2M HILL Looks to Gain Upper Hand as the Dominant Geospatial Systems Integrator

By Joe Francica

_CH2M HILL is drawing a "line in the sand" for systems integration dominance. The company sees opportunity to capitalize on the need for geospatial expertise in the market. "We believe that CH2M HILL is going to stake a leadership position in the global SIM [spatial information management] business," said Mike Underwood, senior vice president and managing director for CH2M HILL’s Communications and Information Solutions Division. "Our sustaining differentiation is centered around spatial capabilities."

CH2M HILL is a $3.5 billion privately held engineering design and build business. It has 13 global business units that comprise its organization and is one of the largest employee-owned companies in the U.S. No single employee can own more than 1.5% of the stock. This business paradigm results in a different approach to fiscal conservatism. "We try not to make silly, non-customer driven decisions," says Underwood.

Mike Underwood, senior vice president and managing director for CH2M HILL’s Communications and Information Solutions Division
An early adopter of GIS, and now an integrator of the technology for more than 30 years, the company is the largest consumer [as buyer, user, and integrator] of ESRI software products; in addition, it uses many other software solutions such as those from Intergraph, Bentley and Autodesk. At the start of 2004, CH2M HILL starting looking at its geospatial business model and over the course of the following 18 months began the process of standing up a new business unit called Enterprise Spatial Solutions (ESS). "We want to be out in front of the 'big 5' [systems integrators] with the strategic intent to be a leader in this business," said Underwood. Accenture, SAIC, Booz Allen, Bearing Point, KPMG also recognize the growth. Underwood believes that the market won't be monopolized by any single large player but instead will be broken up into 5-15% shares. "This is [like] ERP [enterprise resource planning] [in] 1992," said Underwood, "and we have a chance to play in the same type of growth."

Market Positioning

Underwood is clearly positioned his company to leverage CH2M HILL's vast connections in the engineering world. He looks at his ESS unit as nothing more than classic brand extension – to use the enormous good will and credibility of CH2M HILL in building an organization where the knowledge base had been scattered but is now focused on geospatial systems integration. He feels that CH2M HILL's strength is in the way the company has designed, built and managed critical infrastructure projects. In so doing, the ESS unit has assembled the expertise of 280 people who had once been scattered throughout the company.

But unlike its other business units, where $50 to $100 million contracts are considered the norm, ESS is quite content with the $1 to $5 million dollar business. "I'd rather have fifty $5 million projects rather than five $50 million engagements," said Underwood. Currently, Underwood has his unit focused on the state and local government infrastructure market but he is attuned to what he calls "white space," an untapped area where the commercial application of GIS has yet to take off. He mentions that he has had interest from several "blue chip" companies looking for solutions. These companies often seek the comfort level of a systems integrator with the track record like CH2M HILL’s. Underwood thinks his unit could grow in the range of 50% in state and local government and perhaps 100% in the "white space." This kind of credibility and growth potential helped convince Google that it was the right partner to become the first Google Earth certified partner in the Google Enterprise Professional Program.

The Vision
CH2M HILL's ESS business unit currently deploys in excess of 500 spatial consultants and expects to grow that number to 1,000 in the next 2-4 years. Underwood's goal is to stay away from commoditization and to help clients gain top and bottom line business value. His vision for CH2M HILL is to be recognized as one of the top three geospatial systems integrators in the SIM market.

Published Thursday, June 1st, 2006

Written by Joe Francica

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