Delivering Demographic Data-based Solutions at ESRI

Earl Nordstrand, manager of the data and business solutions group.

Over the (many) years, ESRI's ability to offer demographic data (and software delivery solutions relevant to that data) has changed considerably.Through various acquisitions and internal development, a significant demographic data catalog was developed that is broad but also nuanced and customizable.I was wondering how ESRI personnel might approach making decisions about how to propose data purchases to their customers, given the complexity of this issue and the scrutiny the dollars related to such purchases probably undergo.

I spoke to Earl Nordstrand, who has been with ESRI for 17 years, and is currently managing the data and business solutions group, to see if I could get some insight.

Nora Parker (NP): Can you provide information about the history of demographic data development at ESRI (through internal development and acquisitions) and the key drivers behind it?

Earl Nordstrand (EN): I've been involved in the business solutions development area at ESRI since the first release of Business Analyst desktop software in 1998.[The Business Analyst products are one of ESRI's key "private sector" retail-type solutions and tend to be the beginning point of an acquisition for companies in retail, finance, insurance, etc.-Ed.] It's an area we're continuing to invest in, and we're had a lot of successes but frankly, we haven't seen the growth we know is there.

The business market is not an "infrastructure" market, unlike some of the traditional markets we are in (e.g.government, utilities, exploration, etc.).So we figured the key to being successful had to be the data.We decided we had to expand our data offerings so that we could provide better business planning and strategic decision making tools to answer our customers' requirements.We realized we really needed to evolve the data end of things to make that happen.

This year we've merged the ESRI Business Information Solutions (ESRI BIS) group fully into ESRI.[Ed.ESRI BIS was formed after ESRI acquired CACI Marketing Systems in early 2002.Many of the CACI personnel form the core of ESRI BIS.An interview with ESRI BIS's David Huffman in May of 2003 provides more background.] This is the group that is responsible for our business data and solutions.

NP: So the development of the Business Analyst product and the CACI group were important to setting ESRI up to go after this market, and since then, more work has been done to evolve those data products.In working with different types of customers, how do you decide what demographic data is appropriate?

EN: ESRI's always been a "user-driven company," and our sales approach is consultative.We always work with customers to define their data and technology needs and this requires a lot of education, too.(We have to learn what they do; they have to learn what we can do for them.) We have a lot of data we provide that's off-the-shelf.The CommunityInfo packages are an example of that approach.The CommunityInfo packages are "specialized sets of data bundles (census, demographic estimates, projections, consumer expenditure and business data) targeted to specific industries such as retail, restaurants, banking and financial services, telecommunications, etc.They represent our best guess about what data people in those businesses need.

But because we also have thousands of data variables, we also customize datasets according to our customers' needs.We can build custom models, for example.Lynn Wombold's group does that (see interview with Wombold from July, 2004).This custom modeling is an area we're committed to continuing to build and evolve.We haven't been a modeling organization, and we don't have a professional services model within ESRI.Our strength is more that we have depth and breadth in terms of our data and technology offerings.

We tend to group our data sales into three categories: a) standard data packages that are included in our software (off-the-shelf); datasets and data add-ons selected from our Community Data Catalog (including variables, formats and geographies in consultation with clients); and c) completely customized datasets for specific applications.Most of our data sales fall into the first category.

Following are three case studies that illustrate how ESRI took different approaches to the issue of customizing data based on needs. (Company names, unfortunately, are not provided in these case studies to protect client confidentiality.)

Case study 1.We were doing some work for a major apparel manufacturer that also owns and operates retail locations.They challenged us to deliver a tool that would analyze the demographics around existing stores, and allow them to better comprehend how their customer-focused programs, promotions, advertising and merchandising strategies were performing by site.

We responded by providing a simple tool that their marketing, merchandising and store managers could use to perform a site analysis. We delivered simple-to-use and understand site reports that could be easily generated from our Business Analyst Online data and mapping Web service.Managers used these reports to analyze store trade areas as well as the trade areas for their stores, their department store distributors, and also their competitors.When the customer asked the ESRI account team to integrate our demographic data with their retail sales data by store, we established an online report that was added to the profiles of users who needed the report.This client now has a customized tool that combines ESRI data with its customer data in an online environment.

Case study 2.ESRI has had the opportunity to work with a number of divisions within a worldwide advertising agency.The client uses a variety of ESRI products, and recently asked us to provide a customized analysis of census data and to develop current-year forecasts for ethnicity data.To create and deliver the data, the client needed ESRI to aggregate more than 200 variables from the Census 2000 ancestry and ethnic tables from the census tract geography level projected at the block group level.Because block group-level information was not available from the Census Bureau, ESRI's data development team built these estimates for the agency at the block group geography level.The advertising company and its clients are now benefiting from this data that helps them to target specific ethnic groups more effectively as they develop advertising programs.

Case study 3. We work with a regional automotive aftermarket retailer who has a combination of corporate- and franchiser-owned locations.As a franchisor, the corporate executives asked ESRI to help them develop a methodology so they could assign their franchise territories more equitably.Our team recommended a program that we call Scorecard.A Scorecard Analysis, which is based on a correlation model, is now conducted by this retailer for every new franchise and site they analyze.

ESRI began the Scorecarding process by geocoding existing store locations to assign geographic coordinates to each site address, and then analyzing demographics and store sales data.ESRI can assign typical trade areas to each existing site and define the factors that will formulate a successful store performance.Using the knowledge gained from existing stores, the client is now able to run a customized Scorecard Report that has been added to their ArcGIS Business Analyst system.The Scorecard Report lists the variables that ESRI determined would exhibit a strong relationship to strong store sales.This report scores all new sites based on the factors that we know will define a successful performance.

NP: I'm a little surprised that you're still offering hardcopy reports such as the Community Sourcebooks.Couldn't that data be offered via the Internet?

EN: Yes, small real estate companies, retailers and consultants still have a demand for presentation quality, hard copy reports that they're unable to produce in-house.These reports are primarily used in client presentations.It's a stable market.

NP: Can you tell us more about the CommunityInfo data packages?

EN: Yes, these are packages that represent the re-packaging of the demographics, businesses and demand data that's relevant to specific markets.We have ten different industry-specific packages such as "health and human services."

NP: What are the big challenges you see continuing to evolve in the data market?

EN: We are coming out with a new release of Business Analyst desktop software.This product is being enhanced with more modeling and custom segmentation capabilities.We're also working on giving Business Analyst full functionality which can be exposed (or not) as people prefer.Scalable, complementary Business Analyst products include Business Analyst Online, our on-demand data reporting and mapping service, and My Business Analyst Online, the full functionality of Business Analyst Online that can be customized with an organization's "look and feel."

We're continuing to evolve Business Analyst into ArcGIS Server for Business.This functionality allows partners such as IBI (see blog entry on topic) and other business intelligence companies to build these tools into their products.They need data, too.

In addition, we think that this development goes beyond domestic data, so we're looking at globalization.There's increasing demand for international data.We want to work with our global companies and international distributors to make sure that we can address these multinational issues.

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