Moving from Enterprise Location Data to Location Intelligence, Part 1

Ed note: This is Part 1 of an excerpt of a report published by Yankee Group on Sept. 15, 2006. It is reprinted here by permission. Parts 1 and 2 are condensed excerpts from the complete Yankee Group report "Moving from Enterprise Location Data to Location Intelligence." Part 2 will be published on Dec. 14.

A company's ability to gain visibility into the "where" of its supply chain measurably enhances its ability to wisely balance conflicting supply chain requirements. For example, in past retail settings, achieving superior customer service (e.g., consistent order fulfillment and delivery rates) required maintaining high levels of inventory. However, inventory carrying costs negatively affect financial performance. In today's real-time supply chain, stockpiling inventory around the globe places an enterprise at a competitive disadvantage.

To stay in business, companies must compete with other companies through the capability of their supply chains. It is no longer company versus company, but rather supply chain versus supply chain. Companies can improve visibility into their supply chain with actionable real-time location information, which is becoming increasingly feasible as emerging wall technology becomes cost-effective.

Location intelligence is defined as leveraging unified location information for business intelligence. Every person, place or thing in an organization is associated with a location. In many cases, ERP, CRM, HRM or another decision support system has already captured that information on an ad hoc or real-time basis. Exhibit 1 depicts a location-intelligent enterprise. Notice the number of activities a company performs that have a location component supported by world and walls technology as well as the interrelationships between activities.

However, enterprises have underutilized that information in their decision-making for many reasons:

Cost of purchasing and maintaining a geographic information system (GIS)
Difficulty obtaining real-time location information
Cost to purchase, store and process location imagery
Poorly maintained location information in information systems
Complexity of using location information in existing business processes
Historically high immaturity of wall technology.

Enterprises are awakening to the amount of location information collecting in their decision support systems. Leaders are beginning to ask how to better leverage the "where" in operational and strategic decisions. And yet, enterprise managers take a diverse rather than unified approach to managing location information and technology investments. Systems remain disconnected. Location information quality is handled in an ad hoc manner on an application-by-application basis - not enterprise-wide. As a result, information gaps exist throughout the various functional areas of the enterprise.

Exhibit 1. Creating a Location-Intelligent Company. Source: Yankee Group, 2006

Moving from Enterprise Location Data to Location Intelligence
For decades, GIS was the only comprehensive option for managing location-centric business processes and decision-making provided and designed by vendors such as ESRI, MapInfo, Northrop Grumman and Lockheed Martin.

However, the market opportunity is expanding with the entrance of familiar giants such as Microsoft, Google and Yahoo!, which are making simple maps and location search accessible to the masses for free. In addition, internet technology such as portals, Simple Object Access Protocol (SOAP)/XML, Asynchronous JavaScript and XML (AJAX) and mash-ups (i.e., Web 2.0 applications that use content from more than one source to create a completely new service) speed and simplify internet application development. And emerging indoor location technology creates new data sets and potential points of interest previously unfathomable due to manual collection.

Collectively, enterprises can leverage location data into intelligence applications that will benefit all aspects of the enterprise. Location intelligence falls into the following enterprise categories.

Business decisions: These are enterprise applications that provide insight into optimal business strategy operations and intelligence. Typically, the solutions are industry-specific, ranging from trade area selections in retail to asset utilization in healthcare.
Customer-facing activities: These are enterprise applications that provide CRM features such as customer service and self-service. Real estate is an area that has embraced location intelligence and has begun to explore the possibilities for sales, marketing, customer service and self-service.
Consumer applications: Mash-ups and companies such as Platial and Zillow.com are perfect examples of businesses focused on providing services to consumers. Ad sales drive the majority of these companies' revenue. In addition, companies are beginning to apply location-based services to mobile gaming consumer applications.

Location Information: Anywhere, Everywhere
With recent technology advances, it is possible to affordably map an area or locate objects regardless of their location. Specifically, satellite-based location systems have delivered enormous benefits to enterprises for at least two decades. However, these systems do not work indoors. Today's availability of location technology for indoor environments is creating a new collection of data that can directly affect how work is done inside an enterprise by knowing where objects came from or where they are.

Yankee Group views location intelligence innovation as clustered around two areas:

The world: A macro-environment where location is determined in a global, latitude/longitude dimension. Examples include applications ranging from geospatial analysis to geographical points of interest.
The walls: A micro-environment where location is determined relative to a limited area such as a building, warehouse or campus. Examples include applications ranging from workflow optimization to asset tracking and utilization.

Exhibit 2 illustrates the technology and application development of location intelligence. Overall, location intelligence is an emerging market with significant undiscovered potential.

Beginning to Leverage Location
As consumers become more location-aware through the use of consumer applications, they bring that awareness to the office, where location traditionally is thought of as an attribute of operations. With Google maps and mash-ups providing fast, convenient and useful information, consumers' expectations about how tools should or could work at the office are changing.

In addition, enterprises are exploring how they can optimize location in their applications. Traditional business intelligence vendors such as Information Builders and SAS are beginning to collaborate with geospatial vendors such as ESRI to strengthen their business intelligence offerings.

Increasingly, consumers want to connect to the internet anywhere and at anytime. To offer these services, businesses manage access through location-sensing technology to prevent security breaches. In addition, the ability to document the "where" for compliance with laws and control of policies and procedures has benefited the healthcare and airline industries.

While compliance and security risks have increased, the cost of location technology for business decisions has decreased. The lower cost, stability and flexibility of campus middleware platforms from companies such as PanGo Networks and AeroScout will enable businesses to more freely invest in and explore WLANs, wireless personal area networks (WPANs) and end devices such as sensors and handsets in their operations.

Part 2 will be published on Dec. 14.