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The Value of GIS: Choosing Good Investments in a Bad Economy

February 18, 2009 By: Cyrena Respini-Irwin


In the current economic climate, many organizations face the twin obstacles of shrinking budgets and growing discontent among their stakeholders. Shopping for superfluous jets and solid-gold bathroom fixtures has become a no-no, and even serious-minded spending has fallen under increased scrutiny, both internally and externally.

With that pressure in full effect, what's the best way to justify a new GIS implementation or expansion to both senior executives and stakeholders? According to the authors of The Business Benefits of GIS: An ROI Approach, the key is using a standardized process to calculate the project's business value. The book — and complementary Web site — demonstrate every step of that process, using a return on investment (ROI) methodology.

The Business Benefits of GIS, an ESRI Press publication, was written by David Maguire, chief scientist at ESRI until the end of last year; ESRI IT Strategy Architect Victoria Kouyoumjian; and Ross Smith, a member of PA Consulting Group’s management team and leader of the firm’s GIS initiatives. The authors customized an ROI methodology previously developed by the consulting firm, adapting it for use with GIS implementations. "It's not a 'homegrown' or organic approach; it's a fully codified process that's been successfully used for years," explained Kouyoumjian.

The methodology presents the process in four stages: planning and investigation, program definition, business analysis, and reporting. These stages are further broken down into the following steps:
  1. Prepare for the ROI project
  2. Identify business opportunities
  3. Prioritize the business opportunities
  4. Construct the GIS program
  5. Define project control
  6. Specify and cost GIS projects
  7. Estimate business benefits
  8. Create a benefits roadmap
  9. Calculate financial metrics
  10. Build and present a final report.
Since the ten-step process requires the help of several participants, and takes up to four months to complete, it's typically employed only when a substantial amount of money is at stake. "It's not for small undertakings," Kouyoumjian explained.

However, not every organization — or every project — will require the entire process. "It's not a requirement," said Kouyoumjian, "that you work through the entire process from step one to step ten to be successful." Some organizations may only need to create a budget, or to model the benefits they expect to realize through a GIS implementation. Kouyoumjian observed that when such a model contrasts two versions of a company's workflow, with and without GIS in place, users can quickly comprehend how much money they could be saving. "Often, that alone speaks volumes to executives," she continued.

Return on Communication

During his years in the consulting field, co-author Smith learned that it's essential to find a sponsor or advocate who can facilitate communications among various departments and levels of management. Another aid to bridging barriers is working as part of an inter-departmental team of individuals, said Kouyoumjian, "so it's not just you working in a vacuum."

That collaboration is crucial, because as Kouyoumjian put it, "ROI alone isn't going to be the key to securing funding." She explained that GIS proponents must break down the silos between departments to "build consensus and commitment across the organization." That's no easy task, especially for middle managers who may be unaccustomed to discussing projects with C-level managers.

Awkward as they may be, those discussions with stakeholders and executives are the most important component of the methodology; it's essential to identify the company's "pain points" and the opportunities where GIS solutions can be most beneficial. In addition, if the company decides against pursuing GIS, it's much better to learn that at the beginning of the ROI process, before much time and effort are expended. But it's rare, Kouyoumjian reported, that a company will begin the analysis and then choose not to go forward: "the success rate that I am witness to, or close to, is very high."

ROI for the Populi

The idea for The Business Benefits of GIS was born when co-author Maguire perceived the need for an ROI process that was specific to the implementation of GIS, and simply explained in accessible language. The authorial team realized that existing methodologies, which were either restricted to a particular market or heavily focused on the financials involved, were "not as palatable or consumable for a GIS professional," Kouyoumjian said. In addition, most methods they encountered took a bottom-up approach, which often failed to persuade executive decision makers.

Instead, the team sought to create a top-down methodology that assesses business needs from an executive perspective, yet isn't obscured by technological jargon, and can be understood without a business degree. That goal is apparent in the design of the book, which includes copious figures, callout boxes that draw attention to insights and tools, and clearly labeled "Tasks" and "Objectives" sections. The supporting Web site hosts all the tools — templates, models, lists, and worksheets — that are mentioned in the text.

Accessibility is important because, as Kouyoumjian explained, this ROI process may be initiated by a GIS manager, IT specialist, or high-level executive in any type of organization: public or private, commercial or governmental. She noted that even non-profit aid agencies, which can't put a dollar value on human life, still must justify their spending and continually make their services more efficient, effective, and repeatable.

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