Tuesday, June 17, 2008

The Business Benefits of GIS: An ROI Approach

The Business Benefits of GIS: An ROI Approach is an eagerly anticipated book/methodology from ESRI Press that helps GIS practitioners complete a return on investment (ROI) process that clearly demonstrates how, when, and where the implementation of a GIS could create business value for their organization.

The original methodology was developed by PA Consulting Group, Inc., a global management consulting firm. It was customized, under license from PA, for use by GIS practitioners by the book’s authors, David Maguire, ESRI’s chief scientist and director of international activities; Victoria Kouyoumjian, IT strategy architect, ESRI; and Ross Smith, a member of PA’s management team.

Comments Maguire, “Although executives are always faced with pressure to justify their expenditures, in recent years, given the number of high-profile economic and accounting offenses, there have been increasing demands, both globally and locally, to improve accountability, business efficiencies, competitive advantage, and resource utilization. As a result, executives are seeking more sophisticated approaches for prioritizing and targeting investment in GIS technology and for proving how and when that investment will deliver tangible benefits to their organization.”

Maguire believes that a wide variety of GIS practitioners, including managers, business architects, and consultants, will use the material in the book in conjunction with the supporting Web site (gis.esri.com/roi) . The Web site provides access to all the tools and templates necessary to implement the steps in the methodology.

Smith continues, “The 10 steps in the methodology lead people through the whole process, from the initial idea to a complete, compelling report that can be presented to a review committee or funding body. And, although it is written as an end-to-end process, we anticipate that some organizations will use only portions of the methodology. For example, some may use the approach to create a robust budget or to model benefits they expect to be delivered by their ongoing work.”

Kouyoumjian explains, “The approach focuses on six key topics that we believe are critical to creating a defensible position on the value of GIS for any organization: demonstrate the real business value, determine the specific costs, estimate the time frame for delivery of benefits, understand the resource requirements, define the governance and management, and calculate the return on investment.”

Smith indicates that the most difficult challenge typically faced by GIS professionals is gaining stakeholder commitment and buy-in across the whole organization. Because GIS has traditionally been seen as a departmental tool rather than an enterprise solution, such as SAP, there are often difficulties in getting the necessary broad-based support.

Regarding the methodology, one of the most challenging steps for most GIS professionals is estimating the benefits of GIS projects. There are many benefits of using GIS in virtually all types of organizations. Some benefits are tangible and can be assigned a monetary value, while others are soft or intangible and are difficult to measure. Estimating the benefits of a GIS program is more difficult than specifying the costs—not so much in identifying the benefits but in translating the benefits into specific, measurable terms that can be ascribed a monetary value.

Concludes Maguire, “Traditionally, GIS projects have been evaluated mainly by the additional technical capability that they provide to an organization. Today, executives are increasingly concerned with doing more with less and need a way to evaluate and compare all potential business opportunities. This approach is different from traditional methods for measuring the success of GIS projects because it is benefits led, top-down instead of bottom-up, and focused on value rather than activities and considers not just ROI but all the components required to deliver business value successfully to an organization.”



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