Though GIS has gained entry into the mainstream IT and has become a part and parcel of commonly used day-to-day applications and technologies, its advocates still need to prove its mettle when introducing it to stakeholders – in their own organisations and elsewhere.
Statements like ‘GIS can deliver real operational efficiencies, ultimately translating into revenueincreasing and cost-reducing benefits’ are heard all the time. GIS applications are some of those few recipes where the intangible takes the front seat and hence quantifying the benefits becomes many a time an exercise in textual superlatives. In such scenario, a few think-tanks have been working to provide an effective model to identify, monitor and quantify the benefits which will accrue by implementing a GIS. An ROI (Return On Investment) approach provides such a base – both, from an operational as well as a monetary or financial point of view.
PA Consulting Group, USA has been working at ROI approach to model the business benefits of a GIS and has refined it over many years. In September 2006, (https://www.gisdevelopment.net/ magazine/years/2006/sep/44_ 1.htm) this magazine published one of the early articles written by the PA Consulting Group. They have come a long way, and in collaboration with ESRI have published this book The Business Benefits of GIS- An ROI Approach which as the authors put it – sets out to develop a standardised methodology for calculating the business value of GIS projects. The methodology is fact-based and benefit-focussed, robust, objective and repeatable.
Earlier attempts at quantifying the benefits of a GIS focussed on highlighting the novelty and dominance of the technology or that GIS can do things in a different way! The target audience of the sales pitch were mid-level executives.
Today, with stakeholders willing to spend more, the buyin of this technology should necessarily be by the CEO and key executives – who need to be convinced that their higher investments will get them returns of a much higher magnitude – hence the need and efficacy of “An ROI Approach”. The entire book is spread over ten chapters taking 243 pages. It follows a tried and tested pedagogical approach at simplifying the entire methodology slotted in ten distinct sequential steps with a case study running through the entire ten steps. The first step or chapter – ‘Prepare for the ROI project’ is in effect a check list of what to do before you embark on your ‘convince the boss GIS project’ voyage. It includes an excellent insight on the psychology of key stakeholders and strategies to ensure peer cooperation. In the case study section, a fictitious city of Springfield in the United States is considered and a GIS project advocate’s first steps towards convincing the city authorities (could be a typical municipality) is depicted. A great deal of attention has been given to the project timeline. The second step (chapter), ‘Identify Business Opportunities’ – gives an insight on winning over key stakeholders and collecting their input for business benefits.
The art of interviewing the stakeholders for gaining insight into their “pain points” is also discussed. The third step, to logically follow after identifying the business opportunities is to prioritise them.
Chapter three of this book deals with setting priorities by combining the information and knowledge obtained from the key stakeholders about the benefit an opportunity will bring in relation to the ease with which it can be executed by using GIS. The importance of the ‘GIS proponent’ being humble enough to accept that GIS is not a ‘manna from heaven’ and hence not trying to ‘force-fit’ GIS as a solution to all business problems is highlighted.
The fourth chapter – ‘ Construct the GIS Program’ explains the Project Definition Pyramid and the construction of the project definition template for listing the project objectives, key activities and key deliverables of every possible GIS project in the organisation. The importance of prioritising crosscutting, enterprise projects is highlighted. Chapter five – Define Project Control – is all about governance. The ways of identifying the capabilities of the core GIS programme team are explained along with ways to determine the optimal team composition.
The Capability Maturity Model (CMM) has been used to measure the organisations’ programme management competencies. Any ROI study will need the ‘cost’ associated with a project. Chapter six deals with how to create a budget that will incorporate all possible expenditure heads. The importance of a ‘calendar’ to fine tune the time line as well as the budget are explained.
Chapter seven provides the GIS proponent a template to identify and quantify the business benefits – ‘Estimating Business Benefits’ that will result from implementing a GIS. It is only by building a strong business benefits model that the project proponent will be able to justify GIS expenditures. The methods of listing of tangible as well as intangible benefits of a GIS are discussed. Any project before being sanctioned necessarily has to have a convincing timeline communicating to the stakeholders as to when the ‘tangible’ and ‘intangible’ benefits will finally fructify.
Chapter eight focusses on how to ‘Create a benefits roadmap’ which will be a timeline that shows major milestones and realised deliverables. By amalgamating the information on ‘benefits’ obtained in step seven along with the ‘costs’ listed in step six, chapter nine explains how to ‘calculate financial metrics’.
This chapter put forth a precise formulaic definition of RoI. The need to be able to adjust the budget or rather ‘tweak’ the budget even at the penultimate step is emphasised. The last chapter discusses how to write the report and also how to present the report so as to make a recommendation to the evaluators that the GIS project be funded as proposed.