The fast-changing technology world is shortening innovation life-span
and resulting in profit vulnerability for the industry. Companies are
thus moving towards greater collaboration, integration and user-driven
solutions, finds a study done by Geospatial Media & Communications
A demand for cloud-based and open interoperable solutions has led to a major shift in business models of the geospatial industry. The advent of information technology and connectivity not only makes the world smaller, it also creates stiff competition among industry players, especially in terms of exclusivity and quality of services. These fast-changing technology trends are cutting down gestation periods and innovation life-span, resulting in profit vulnerability. How did the businesses respond? System integration and user-driven solutions became the new direction.
Stakeholders — who have traditionally been working as standalone isolated players — are exploring opportunities of integration, convergence and embedment, leading to evolution of industry workflows and seamless delivery of solutions, besides adding value to geospatial context and content in the world economy and society. At the same time, greater opportunities have paved the way for greater commitment and collaboration amongst key industry stakeholders to develop, harness, and convert these prospects into larger business and professional gains.
Services to solution
A recent study, done by the research and analytics department of Geospatial Media and Communications, of over 1,000 press releases issued by various companies in the last few years has found that the industry is moving from being services-driven to solution-centric . While solutions dethroned services as the top trend when it came to evolving technologies, unfortunately, services still showed up at the second spot. It was closely followed by workflow, with system integration slowly coming up. As geospatial information gets embedded across sectors and the industry matures even more, in the years to come, we may see system integration emerging as the top trend, followed by workflow and solutions. Services may be pushed to the last slot.
As expected, the top technology trends that have emerged are convergence and integration, solution-centric approach, open and interoperable solutions, enterprise-wide implementation and a Web and cloud-based solutions approach. A change in the business models of the core businesses saw the geospatial industry take a vertical industry orientation and move toward consumerisation and commoditisation. The advent of mobile gave the power of location in every hand. And suddenly, locating the nearest restaurant in an area became easier, thanks to location– based services. The geospatial industry needs to harness this power of location for creating further value.
Technology convergence has emerged as one of the top trends in the past couple of years. While technologies, such as, global navigation satellite system (GNSS), earth observation, sensors, surveying and mapping, were prevalent 10 years ago , as they are today, now they are not known as standalone technologies by themselves. Together, they all come together to deliver a seamless product. A solution-centric approach means that the course of action for all end products will include integration, convergence and embedded processes. This eco-system has widened because, today, applications of geospatial are not limited to traditional sectors like defence. Social media is a classic example of a technology that integrated Internet, cloud, mobile, wireless, communication and location.
Consolidation is the key
Ground-breaking acquisitions and consolidations have been taking place in the industry as a way for businesses to integrate systems and gain competitive advantage. A careful analysis reveals these acquisitions were basically of four types. The first — technology oriented/market consolidation acquisition model — was driven by the big players’ need for newer technologies. This saw the established players go on an acquisition spree to boost their portfolio. Thus, we saw Hexagon acquiring a bunch of smaller players, like Erdas, Leica, Novatel, Geomax, Aibotics and Intergraph. Trimble’s acquisition of Info, Ashtech, Spectra, Applanix, Gatewing and Tekla also falls in this category. So does Topcon’s acquisition of Sokkia, or Bentley buying out elcoSystem, Ivara, InspecTech, et al.
Next we saw mainstream IT players like Amazon, Google, Microsoft and Apple venturing into the location sector for competitive advantage. The intention was not to develop geospatial products or solutions, but a need for new technologies for seamless delivery in their own field. For instance, Pitney Bowes, a mailing company, bought MapInfo because it wanted to track every mail. All these companies found that buying a company and then modifying its technology is much cheaper than creating a solution from scratch. And together, these result in definite solutions, like when Microsoft bought Vexcel for spatial dimension, or Google bought Skybox for information management.
The third category, into which some of the past year’s acquisitions can be clubbed, could be called solution-oriented ones, wherein an established geospatial player bought a company because it wanted to venture into a specific vertical market, but didn’t have the domain knowledge. Hexagon’s acquisition of Safe Mine, ILab and Arvus, Acute3D, or C3G’s buyout by Bentley, or Trimble’s takeover of Fifth Element, Linear Project, Mining Information Systems, etc., were all typical examples of this. And finally, there are partnerships between equals for competitive advantage. Examples for these could be Hexagon’s tie-up with Esri, Autodesk and Accenture; Autodesk joining forces with Bentley; and Trimble’s relationship with FARO and Topcon.
From precision agriculture to construction business, the penetration and adoption of technology in the western world has been quite dramatic in the last 10 years. However, the study showed earth observation as the top technology in demand and use, followed by GNSS, GIS and Building Information Modelling (BIM). Interestingly, a readership survey conducted by Geospatial World in February 2015 showed GIS as the most-used technology, with satellite remote-sensing, aerial photography, 3D data and unmanned aerial vehicles (UAVs) ranking somewhere down below . At a glance, these surveys may look contradictory. But, a closer analysis would reveal the industry is actually clubbing satellite remote-sensing, aerial photography and UAVs together as earth observation. Similarly, GNSS ranks behind GIS in the readers’ survey . But if it clubbed with indoor location, GNSS would take over GIS. A look at the industry-wise adoption of geospatial technology threw up a huge surprise. Transport and construction dethroned the well established leader in use of location technology — the defence and security sector. They also edged out other traditional users like environment, forestry and mining. In fact, if one clubs infrastructure, which showed up on the fourth slot, with construction, together they take the top slot. This could be attributed to high activity in the infrastructure and construction market, owing to huge development projects across the world. Also, for a totally new area like business analytics to figure so high up was also a revelation.
The maturity of adoption is also most clear in the construction industry, where productivity and efficiency hold the most value. For defence, prime benefit was in the field of monitoring because this sector needs constant inflow of data from EO. The correlation is very clear. Moreover, in the times to come, for agriculture, GNSS and EO will be of equal importance, because GNSS is picking up very strongly.
Integration and convergence
In terms of technology-wise integration and convergence, it was seen that for earth observation (EO), all factors — solution, workflow, service and system integration — seemed to be of equal importance. This is because EO is only a source of data, and these factors are prevalent everywhere. For GIS, solution is the most important because it is both a visual and analytics tool. It doesn’t have system integration simply because it doesn’t bring together technologies, unlike a hardware-system like GNSS, which needs integration.
So what kind of benefits are these convergence and integration leading to? Most of the time service and solution are dominating. This is why geospatial industry is seen as a manpower-oriented industry. Almost 70-80% manpower in the industry is in the process of digitisation of data. However, that is changing rapidly. As a result, data collection and capture is moving towards automisation. The companies, which are in the business of data convergence, will die if they don’t move to the next level. The demand for real-time information is increasing for applications like monitoring. That change is leading to more and more satellites and drones collecting data automatically and autonomously. Workflows and system integrations, not part of the gameplan till yesterday, are emerging as top trends today. They will prove to be of prime importance tomorrow.
The study also discovered that the industry is moving from position to precision. Different kinds of geospatial applications need different kinds of data . The resolution requirement changes according to the application being targeted. For consumer applications like navigation, land use and forestry, resolution of only up to 10 metres is needed. Mapping, utilities and transportation can do with a resolution of up to 1 metre. Centimetre- level resolution is required for more complex applications like mining, archaeology and construction. While, millimetre-level precision is needed in tasks like engineering, metrology and seismology. Accordingly, the industry is striving to keep up to this demand.
Evolving sales models
As the industry moves towards consolidation and value addition, companies are becoming more open with their policies in terms of collaboration within and outside the industry. We are also seeing the need for better information driving business strategies. Good, authentic content and information are becoming fundamental to all systems and the industry is increasingly looking for partnerships with deep subject matter experts, who can be educated in terms of geospatial aspect, and then deliver better and smarter solu-tions to the users. The industry is looking to capture unmapped areas of the world through crowd-sourcing and partnerships with regional agencies in various fields.
This trend shows in the new products being released . While a few years back, a product was just that – a standalone product – slowly the focus shifted to providing product and services, and then added solutions to the product-plus-services portfolio. This is the reason why big players have been buying out their resellers (who sells the product and helps in capturing the market) and distributors (who sells products and services, thus helping in creating the market) across the world. While the market is still catching up with this, a significant number of players with a futuristic mindset have already started moving towards system integration with strategic alliances. Five years down the line this will be the dominating trend across the industry.
Position To Precision
The study also showed that the industry is favouring hardware over software today. Even though, the product releases graph shows otherwise, if one clubs software and apps together, it safely nudges out hardware. Ten years ago, hardware was a much larger stakeholder in a company’s growth. Today, Trimble and Hexagon, which are primarily hardware companies, have 40-50% software business. This is happening because solution has become the end of the value chain and a company cannot give a solution with just hardware alone. Earlier, there were beta versions of software, but now all major companies have apps for smartphones. They may not be charging directly, but they are teasing users with their products and solutions on their apps. They are also increasing their footprint in terms of education and outreach.
Even though companies are trying to make their products more affordable to expand their business footprint, in the software sector, cost remains a big challenge – they are still not affordable — a factor that is hindering the exponential growth of this industry. Further, there remain challenges over availability of software or availability technical support. A $10-million company may have the same software capability when compared to much-bigger firms, but its products will not be purchased by someone in a place where there is no distributor or technical support network. In countries like India,China or Dubai, there are many Tier 2 distributors. On the other hand, in Taiwan or Malaysia, one can find trading partners because it is not feasible for companies to set up a large unit in smaller markets.
In the hardware market, the most difficult challenge before the hardware industry seemed to be high, skewed up taxation. For instance, if a phone is embedded with a GPS chip, it is an easy import. But, when survey equipment is implanted with the same GPS chip, it is categorised as a radio communication tool. In India, for instance, one has to pay an additional 42% as taxes for that. This is the case in many other countries as well.
Workflows and system integrations, which were not a part of the gameplan till some years ago, are emerging as top trends within the industry today. They will prove to be of prime importance in times to come
High on productivity
A decade ago, there was GIS. Geospatial as a domain was still evolving. And every one felt that GIS could be used only for decision-making. This is what was being taught in colleges and universities too. However, as technologies evolved and the demand for location increased, GIS’ role as a decision support system diminished. Integration with other technologies meant the most important benefit that GIS offers today is the efficiency . This is followed by precision, monitoring, analytics and productivity. In the coming times, the value from increase in productivity will become much higher as is with all technologies. Most users today are not even aware what the return on their investment is since there is no mechanism to calculate that as geospatial is deeply embedded somewhere in their IT processes.
Ten years ago, geospatial was all about visualisation. Today, it is more prevalent at the enterprise level. The GIS silos are breaking. They are becoming a part of a larger enterprise. Business processes are being integrated. This is the future direction — a representation of tomorrow.