Did you think the economic crisis of the last 18 months was going to pass without impacting the geospatial marketplace? Was there some element of naivetÃ© that perhaps led us to expect that geospatial would be left unscathed by such disruptive financial upheaval, and that somehow growth would continue unabated? And, if one wanted to assess the effect of the vicissitudes of the economy, how accurate would those measurements be?
While there has been modest growth by geospatial technology solution providers, according to at least some recent market research reports (see Daratech GIS/Geospatial Survey) we may be entering a new era where it may be impractical to take the pulse of GIS because of an increasingly bifurcated market of sellers and buyers and inadequate market definitions. Where once we had the big four in geospatial (ESRI, Intergraph, MapInfo, Autodesk), there are now so many choices, including developer platforms (e.g. APIs) and open source end user and developer options, that it's difficult to keep score. The needs of the information technology community have moved from buying point solutions to a more customized approach to software, data and services. Specifically, Web 2.0 business models mandate new technology delivery platforms like mashups and cloud computing that accelerate development cycles, deliver solutions faster and reduce the total cost of ownership.
How, then, do we measure the market for geospatial technology and location intelligent solutions? Is geospatial technology considered merely part of the broader business analytics sector? If not, how are the geospatial technology providers perceived and measured by those conducting market research for the broader enterprise computing sectors? Is it even possible take the pulse of this increasingly fragmented market?
At Home Among the Other IT Giants?
For these answers, let's look at some recent reports from the leading market research firms, IDC, Daratech and Ventana Research, that are familiar with the geospatial and location intelligence technology sectors. IDC recently ranked (Source: Intelligent Enterprise, Aug. 24, 2009) companies in the business analytics market. The top ten included Teradata, Informatica and Microstrategy, names familiar to many in the data warehouse and business intelligence markets. "The top 10 vendors account for 66% of the software revenue from business analytics, leaving the remaining 34% a competitive battleground for hundreds of independent software vendors worldwide," IDC reported. But both ESRI and Intergraph were ranked just below the top ten. This serves as a data point. Perhaps geospatial technology is an ever-increasing necessity in decision making, and measuring business performance has found favor with the market researchers watching the industry, not to mention those doing the actual IT procurement.
"IDC has included spatial information vendors in its broad business analytics practice for several years," said IDC analyst David Sonnen when asked about the IDC report. "While companies like ESRI, Intergraph and PBBI do a lot more than just analytics, some of their software does include sophisticated analytic capabilities. So, IDC tracks spatial companies as part of the overall business analytics market. Also, most business analytics companies include spatial capabilities in their analytic platforms. It's hard to track exact revenue figures for features in a software platform, but IDC does think it's important to recognize the role that spatial capabilities play in enterprise markets." Spatial analytics is just one of IDC's nine business analytics segments, according to Sonnen. "IDC uses â€˜business analytics' as a broad category that includes analytic applications, business intelligence tools, data warehousing platform software and spatial information analytics tools. We divide some of those categories into subsegments, like financial analysis software and CRM."
Describing how IDC is able to develop a consistent methodology of reporting on the spatial analytics market Sonnen said, "All the analyst firms have their own taxonomies for the markets they cover. Those taxonomies are somewhat arbitrary, but they give the analyst firms a consistent structure for tracking revenue and trends."
The market growth numbers tell the real story of why geospatial is more than a blip on the radar screens of researchers. Daratech recently released its GIS/Geospatial Industry Report in which the company reported: "GIS/Geospatial industry worldwide growth is forecast to slow to 1%, down from 11% in 2008 and a whopping 17.4% in 2007... However, industry CEOs interviewed by Daratech were unanimous in their belief that growth consistent with the robust 11% CAGR (compounded annual growth rate) of the past six years would return in 2010." While these numbers reflect the current economic malaise, do they capture the market in total? Do they account for service revenue from those companies that have built applications with the aforementioned APIs and do they accurately assess the impact of another big four: Microsoft, Oracle, IBM and Google?
A Revolution in Geospatial for the Enterprise and the Masses
The "new" big four are now key players in geospatial analytics. In addition, there are so many consumer mapping products on the Web and on the shelves of retailers that these products have, in the words of Dave DiBiase of Penn State, "made geography...ordinary, which is the most extraordinary thing of all." This gang of four has revolutionized, popularized and educated business professionals in location intelligent solutions. The question now: Just how much has their influence changed the geospatial market and added to the overall market growth? The growth numbers associated only with sales of geospatially related technology products (e.g. Oracle Spatial) are hard to come by since those companies do not segment their geospatial lines of business.
Moreover, while traditional geospatial markets in local and state government as well as the regulated markets of telecommunication and utilities still buy complete GIS solutions, business analytics players like Information Builders, Netezza and others can also just as easily provide targeted solutions for whatever small part of the workflow requires a more location intelligent view of the world. While spatial is still "special" to many, solutions that provide geospatial analysis and data management are not relegated to just a few software companies anymore. So, can we still rely on the standard definitions of "traditional GIS" to accurately capture the size of the overall market?
"The scope of software that is location aware has grown geometrically in the past five years," says Charles Foundyller of Daratech, author of the most recent report issued by the company. "Nevertheless, there is still a need to understand the market presence, on a consistent basis, of the underlying technologies as represented by what we call Traditional GIS. In short, Traditional GIS are products and services related to computerized database management systems used for the capture, storage, retrieval, manipulation, analysis and display of spatial (or locationally-defined) digital data capable of responding to geo-relational queries."
In a Web 2.0 world that "mashes up" and leverages the "cloud" for storage, retrieval and management of geospatial data, the so-called traditional GIS vendors might find total disruption if they continue to follow the traditional model, as defined by Daratech. The new model that is emerging, especially with the proliferation of APIs, is one that rapidly develops targeted solutions on the fly and eschews thick client applications. "The use of geography and location related information and technology is a contributor of business innovation and breakthrough performance," said Mark Smith, Ventana Research's executive vice president of Research, in a 2008 report. The research in which Ventana has been engaged over the last several years has found "viral use of consumer mapping technology like Google in business, but organizations are challenged in utilizing it to deal with the volumes and frequency of data that needs to be integrated." It's that "viral use" that is fueling geospatial technology growth, and managing geospatial information is certainly solved by the database providers at this time.
We are at the threshold of a new business environment, both economically and technologically, that requires new ways to measure the growth of the market. The "viral" expansion of location-enabled solutions coupled with new data sources (see news about the upcoming DigitalGlobe WorldView-2 launch) make market research a near-impossible task. Though our market research friends must continue to work within their own framework and "taxonomies," the market's fluidity and cast of new players create challenges. Revenue from services is increasing as we see fewer desktop solutions delivered and more cloud computing solutions offered, for example. As such, some of the recent market research numbers may be incomplete. The scope of market research must expand if it is to capture the true breadth of the geospatial technology marketplace.