February 8, 2007
By Ross Smith and Karl Boone
Directionsmag.com
As GIS has become more mainstream, users and advocates have migrated toward enterprise and integrated solutions. It is no secret to GIS professionals that GIS can deliver real operational efficiencies, ultimately translating into revenue-increasing and cost-reducing benefits. However, despite the tremendous potential to realize benefits , the adoption of GIS is slowed not only by the size of the investment -which requires approval from top management - but also by the difficulty in linking operational and financial benefits together. Furthermore, the general consensus outside the GIS department that "We've always gotten by before, why do we need to invest more?" makes the adoption even more difficult. Paradoxically, those who need the power of GIS the most are often the ones with limited information on the business efficiencies and effectiveness (because they don't have this GIS single view) with which to make the business case for the investment in the first place. Most GIS technology advocates come from the "grass-roots" of the business with a discipline focus in engineering, or environmental or urban planning. As a result they sometimes struggle to build consensus and ownership for GIS initiatives at executive levels. They lack the tools, expertise and time to sell the idea internally. This article is meant to empower people who find themselves in this position.
How can the advocates of GIS demonstrate the return on investment (ROI) to the top management team and ensure that the benefits are realized through implementation?
Through our experience designing strategic GIS programs for clients, we have developed a value-driven framework that has allowed our clients to demonstrate the ROI and derive benefits realization from GIS and related technologies. Our methodology, which is completely independent of technology choice, includes these following key steps, which are further described below:
- Identify GIS benefits collectively
- Build a bottom-up ROI model linking operational drivers and financial benefits
- Link the ROI model to the delivery roadmap
Identify GIS benefits collectively
When identifying GIS benefits, it is critical to emphasize the collective nature of the exercise. Going through this as a group, including not only engineers and operators but also business and financial managers, is crucial to building consensus around the benefits of the implementation of GIS. Although the key output of the exercise is a document linking the business objectives with GIS benefits, it's more about the "journey" than the "destination."
The first thing that the group should do is to agree on the objectives and requirements for both the organization and the individual departments; these should be expressed in business or operational terms. For instance, in the case of one of our clients, a large broadband cable operator, the field operations department claimed that a GIS solution would reduce the number of site visits required during the sales process because of access to better and integrated documentation. Plus, when a site visit was still required, the time required per visit would be reduced.
These operational benefits can be linked to financial benefits, and we will see how in the following sections. At the same time, our client's sales organization claimed that by better targeting prospects close to or on the existing network, their sales force would be able to sell more effectively. The engineering department said that the consequence of targeting prospects close to or on the network would be to reduce the average capital expenditure required to build out to the new customers. These GIS benefits would not only trigger cost savings but could also be directly linked to sales and market share growth through sales conversion.
The team now has two sets of data: one set of goals and objectives, and one set of potential benefits. For this particular client we identified more than 25 potential areas of benefit, covering operational cost savings, revenue growth and capital expense reduction.
This set of goals and benefits provides the organization and the GIS implementation team with:
- A breakdown of the GIS strategic plan into manageable components or objectives (expressed as potential benefits)
- A clear allocation of the benefits across the organization to reinforce ownership and commitment
- An effective communication tool across divisions and functions
- The basis for a solid ROI model and business case
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Please note: The views expressed in this article are not necessarily those of Manatron or its employees. This article is meant for educational purposes only.