Why Hasn’t Business Adopted GIS? - A Strategic Review - Part 1

By David Goldstein

This is the first of a three-part series on GIS addressing the complex issue of why the business world has not embraced this powerful software's functionality and what needs to be done to maintain or increase market share.Author David Goldstein is president of CMC International, a Dallas, Texas consulting organization which has been helping businesses address their fundamental obstacles to growth, finding better value for their money and cutting costs to maximize return.Specialists in business intelligence, strategy, growth and planning, CMC International has implemented GIS into their winning programs since 1988.

We call it "our little secret." Quite honestly, GIS has been the basis for our consulting practice since the late 80's.We call it our "secret" not because it is one, but simply because most client executives sitting across our table are very unaware that it even exists.Most corporations remain happily in the dark about the awesome power that it contains, that the mere implementation to a basic customer database can help them make intelligent business decisions that will put them at a strategic advantage over their competition.Not that the implementation is ever easy, but certainly worth the effort in terms of our bottom line - and theirs.It is peculiar to me that more companies do not employ this valuable tool internally when it makes economic sense, but at the minimum to outsource the job, and at the same time I'm grateful for its obscurity because GIS makes us an absolute hero in the eyes of our clients.

When I was first approached by Directions Magazine to put my thoughts regarding the low adoption rates of GIS in the corporate world to paper, I was a little hesitant.I was afraid that what I had to say could come across as biting the hand that feeds me.My company's specialty is to help businesses grow by developing their markets and addressing their strategic weaknesses, and by that definition alone, any GIS vendor could quite honestly qualify as one of our clients.So that is the approach I took with this project, I looked at the GIS industry as if it were a client who had come to us with the request to help them improve their market share.Bottom line: What I truly hope to gain with this series of articles is to open the discussion about the challenges of using GIS based on our many years of observation, address the threats to it is livelihood and suggest steps which need to be taken to ensure its survival and spur its much needed growth into the corporate world.

Part One:
Why Corporate GIS Users Bang Their Heads on the Wall in Frustration

In business, everything starts and ends with a sale. Every cost that goes into that sale is measured, evaluated, and scrutinized.Prime example, who has not heard marketing cry foul because their advertising budget was first to get cut when the budget belt tightens? That is because their contribution to sales is intangible.Salespeople will be the first to tell you it is not the ad that closed the deal, it is their savvy and expertise at persuasion - and they, quite frankly, are tangible.

GIS has a similar problem in that the benefits not only are largely intangible, the cost versus perceived value is not inherently obvious. Most people in the corporate world cannot explain what GIS is, let alone justify the immense cost needed to raise and feed the beast.

The GIS industry has done a poor job at defining the return on investment in relation to its infinite value in business intelligence.While some government and specialty applications are willing to take the plunge, the GIS industry relies on blind faith that the investment will provide the return -without adequately educating mainstream business on how to demonstrate its power.If they could do that, the incremental expense to adopt the system and programmers wouldn't be second-guessed but embraced.

Which leads me to my next point: If businesses knew what could ultimately be achieved by integrating a sophisticated GIS system, do not you think they would spend the big bucks or even devote a whole staff to becoming GIS gurus? If they knew you could apply it to a customer database and census information, they could produce a customer profile report which through a series direct mail campaigns would lead to a sharp increase in sales, do not you think they would? And often? Face it, the business world is accustomed to investing large sums of money - sometimes at a high risk of failure - in order to try and achieve their objectives.It has invested billions of dollars in failed technology, so whether the business customer could achieve their goals with GIS right out of the starting gate is irrelevant. They would invest the money if only they were aware of GIS success stories in their world.

But back up a step.GIS IS used in the business world to a limited degree. The problem appears to be that GIS has a tendency to be implemented at the bottom layers of the company, by the worker bees.It is only through reporting exposure that it begins to slowly work its way up the ranks to the eyes of management.Still, as a whole, most senior executives are not aware their company has GIS or do they know what it is.If they do have the software in-house, they most likely have no idea the starring role the software played in creating or analyzing their vital business intelligence.

It seems that most companies that do grasp the value of GIS often maintain it within their real estate operations primarily for site selection services and seldom share it outside of their department.The full potential of the product is wasted with such drastically limited utilization.

But what about the companies who intend to fully utilize the product? What department does GIS belong in?

  • Marketing? In the marketing department, GIS can assist with a customer penetration study, apply it to area demographics to determine which zip codes the company can send its next direct mail campaign to.
  • Or how about the IT department? GIS might make sense here with the requirements for servers, database development, planning and networking, someone utilizing the functionality of GIS would certainly be directly IT related.
  • What about the Finance department? Finance likes to disseminate sales, revenue and profitability information to many people across the company. GIS provides and excellent front end for that.
  • Or maybe the Planning department? GIS is no stranger to assisting companies with growing new markets, growing the customer base, adding locations for stores, warehouses, distribution centers, it all makes sense here too.
  • Or lastly, what about in the Operations department? GIS can link to the supply chain software to visually analyze and identify areas needing optimization. You can see how easily arguments could be made for any of these departments to be the GIS home.
In summary, GIS's predominant hurdle is the lack of awareness of the software to business, the decision makers within business and the many uses of it, and once it is made it over those hurdles, it is got one more - the turf war of where within the company it operationally makes sense.

Be sure to catch next issues continuation of Why Has not Business Adopted GIS where we will address the competitive threats to GIS survival in the marketplace.

If you have comments or questions for author David Goldstein, please direct them to .(JavaScript must be enabled to view this email address) or 972.960.0800

Published Wednesday, February 19th, 2003

Written by David Goldstein

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