From being a highly compartmentalised industry, geospatial technology has evolved with convergence, collaboration, and integration of constituent technologies as its cornerstone. This facilitated end-to-end geo-enabled workflows across several vertical industries, triggering a series of acquisitions within geospatial industry, leading to its reorganisation. This cover story takes a peek into the dynamics of leading geospatial players in enabling productisation of solutions. Read on to know more..
Geospatial industry, which has several specialised technologies under its umbrella, has evolved through a collaborative process over the past two decades. It has been built on scientific disciplines like geodesy, earth observation, photogrammetry, cartography, positioning and surveying. The industrialisation process in the above disciplines has enabled the application of this technology in almost every human activity; empowered every business process; enhanced productivity, efficiency, cost effectiveness, and value proposition of resources. I may seem to have gone overboard, but not, if one views this industry holistically and defines its ecosystem appropriately. Any ecosystem needs constant re-definition as it evolves along with its stakeholders. And this is more often true about young industries like ‘geospatial’, which has expanded by converging/integrating with several established industries in the last decade.
A fragmented view of the geospatial industry by the so-called stakeholders initially made it a non-saleable story. Compartmentalisation of the industry made it difficult to project the economic value of geospatial technology to businesses in particular and to the society at large. Further, soft adoption of the term ‘geospatial’ by many of its constituents without putting together the jigsaw, increased the communication gap amongst high-level decision makers associated with political, administrative and business spheres.
While advocating for a policy reform, I was asked by a senior policymaker, “What do you expect me to do for geospatial industry, which is just $3 billion globally?” In fact he went on to ask if there was a geospatial industry at all? He was referring to a market research report which pegged geospatial industry at $3 billion. Actually, the report had projections for just one constituent of the industry, which made him feel that geospatial isn’t something that needed his attention. So, my first job was to educate the policymaker about the geospatial ecosystem and project a holistic view of our $100-billion industry and highlight that it was one amongst few industries with a global annual growth rate of 10-15%. More than the $100 billion, the growth rate caught his attention. Th is is not just the case with policy makers; several leaders representing important stakeholder groups of geospatial industry do not have the holistic picture or understanding of the entire geospatial ecosystem. During my interactions with industry executives in the last two years, I have come across a high degree of compartmentalising outlook and it has been a daunting task to educate the leadership about the convergence, enablement, collaboration and integration of the constituent technologies which lead to end-to-end geo-enabled workflows across several industries.
Having talked about integration, I do recognise the business value in developing the niche markets, which facilitate innovation, customisation and appropriate utilisation of geospatial technology for specific markets. What is probably required is representation of the geospatial ecosystem and positioning of the whole along with its constituents to ensure better demonstration of its value proposition.
Before attempting to (re)define geospatial industry ecosystem, it is important to have a quick look at the emerging trends and directions. Stated simply, ‘geospatial encompasses in itself anything and everything that is geo-referenced and spatial in its characteristic and content’ and ‘geospatial industry constitutes everyone and everything associated with the science, technology and application of geospatial data’.
Trends and directions
» Convergence and integration: Convergence and integration can be considered the key drivers, expanding the horizons and extending the utility of geospatial technology across different industries. Economic reforms and end of the Cold War added new dimensions to the business of technology, making them open, connected, collaborative and integrated. An open society with a level-playing field enabled entrepreneurs to experiment and create innovative, multi-disciplinary products. Arup Dasgupta, Managing Editor of Geospatial World Magazine argues, “We need to move away from compartmentalisation and consider all these technologies as part of geospatial ecosystem which need to be used in an integral manner to create solutions.” Advancements not only allowed convergence within the geospatial family, but also facilitated its integration with technologies like the Internet, telecommunications, engineering, machine control and enterprise resource planning. K.K. Singh, Chairman of Rolta Group, says, “Increasing integration of geospatial technology with enterprise information and communication technologies will see the advent of ‘geospatial web’ in the coming years”.
» Solution-centric approach: Convergence and integration paved the way for solutioncentric approach, allowing technology companies to work in close collaboration with end-users, directly or through solution partners. Th is made businesses look at geospatial technology as an enabling tool, laying the road for greater collaboration between technology developers and users. Th is further facilitated feedback from users in product development. Says Greg Bentley, CEO, Bentley Systems, “Geospatial technology is not an end in itself, but the means to an end. The end here is to improve our planet and the quality of life for billions of people around the world.” Voicing similar sentiments, Bryn Fosburgh, Vice President, Trimble says, “Geospatial is not a market in itself but is a capability empowering solutions in different markets.”
» Vertical industry approach: The solutioncentric approach caught geospatial industry unawares. It was imperative to invest in domain knowledge and business processes of the user industries. Driven by scalability and profitability parameters, geospatial industry found new allies in the vertical segments. Evolving strategies specific to industry domains earned geospatial industry an opportunity to engage with the important verticals. Ola Rollen, CEO, Hexagon Group, is of the opinion that “geospatial industry will eventually move from being a horizontal industry, to a vertical one focused on certain industry applications.” Furthermore, it will open up a new era of verticalisation and soon, geospatial products would be customised and bundled for specific vertical industry segments.
» Open standards and interoperable platforms: Integrated solutions and industry– oriented business strategies brought in another challenge with regard to merging geospatial datasets with information sets of particular industry domain. Th is has mandated the development of open standards and interoperable platforms. Amar Hanspal, Senior Vice President of Information Modeling, Autodesk, believes “in a new world, it is extremely important that users are able to use whatever data they need and we have to make it completely transparent to users through disoriented architecture and open standards.”
Kudos to the timely creation of Open Geospatial Consortium (OGC) in 1995, geospatial industry was blessed with the institutional mechanism to enable stakeholders move forward with open, interoperable, and industryoriented business strategy. Stressing the role of OGC, President and CEO Mark Reichardt, says, “Almost all providers of GIS, earth imaging systems and spatial database systems implement OGC standards which enable users to query each others’ systems for data and services.” Quoting a recent German DIN Standards Study which indicates $17-billion economic benefits from standards in Germany alone, Reichardt argues that open standards-based systems save time, reduce costs and save lives.
» Enterprise resource management: Enterprise resource management with spatial competency at its core is another significant direction for the geospatial industry. With increasing acceptance of its value for asset monitoring, maintenance and delivery of products and services, geospatial is getting embedded in enterprise resource planning and customer relations management solutions, helping industries to spatially enable their business processes and workflows. Steven Berglund, President and CEO, Trimble Navigation, believes geospatial technology applies to a number of industries and there is a strong geospatial-centric database at the core of enterprise market. “Eventually, every piece of data and enterprise solution for any industry is going to involve geospatial components, enabling transformation of business processes of these enterprises,” he adds.
» Cloud-based solutions: Cloud-based solutions offer multiplicity to geospatial offerings and allow one to collect, collate, process, analyse and use datasets from different sites on a common platform without the need to migrate or transfer the same. Cloud platforms offer near real-time and live data collected through sensors on several aspects of ongoing activities around society and businesses. Steven Hagan, Senior Vice President, Server Technologies at Oracle Corporation, argues, “The use of Cloud computing is particularly relevant to public sector organisations managing large volumes of geospatial information. Mounted with budget pressures, governments can reduce data storage costs, consolidate operations, and help minimise the overall cost.”
» Commoditisation: Commoditisation of geospatial information is the most signifi- cant trend of the last decade, which added a whole new dimension to the business of each constituent stakeholder. Applications like Google Earth, Open Street Map, and Microsoft Virtual Earth connected geospatial with the common man, enabling spatial thinking en-masse. Emerging spatial functionality in social networking solutions is opening up the next level of commoditisation of geospatial information, through location-enabled apps and games, improving spatial orientation and capabilities of people. Advocating the ‘where’ element, Stephen Lawler, CTO of Bing Maps, Microsoft says, “The current decade is poised to do the same for the ‘where’ dimension across devices, data and services. Just as the ‘who’ dimension increased relevancy of our digital world, the ‘where’ dimension will do the same as our digital connectivity reaches out to touch the entire physical world and reasons with volumes of user-generated data and real-time sensor information.” Such an engagement of the common people with maps and spatial characteristics will give a boost to geospatial industry, both on the professional and consumer front.
Changing business scenario and re-defining the geospatial ecosystem
Broadly speaking, geospatial industry could be arranged in the following five categories:
- Data acquisition via surveying, positioning, space, aerial and ground-based sensing .
- Data processing through image processing, photogrammetry and laser processing.
- Data modeling through DEMs, 3D models.
- Data analysis, Data visualisation and decision support systems.
- Data publishing and printing.
In addition, several technology developments in the World Wide Web, telecommunications, engineering and Cloud have been playing a role in enhancing and expanding the utility and relevance of geospatial industry.
Solution companies like Rolta, Infotech, Intermap, AAM, PASCO, Critigen, DataWorld and Geodan have been an integral part of the geospatial ecosystem. Small and medium enterprises, engaged with delivering services, reselling and trading of geospatial products, forms the largest and a critical component of this ecosystem, contributing more than half of the entire geospatial turnover.
Acknowledging their contribution, Jack Dangermond, President, Esri says, “Small businesses are seeds of information; they often are places where new ideas can be birthed and tried out. They are also often close to end-users and are best able to respond to their needs.”
With advancements in the Web and Cloud technologies as the medium of storing and publishing geospatial data, content companies took the lead in shaping the business direction of the ecosystem. Recognising the potential and challenges of the Web community, Dangermond says “one of the challenges is to reach the Web community that is less interested in details of GIS technology and more interested in having simple mapping APIs that can be embedded and used to build their applications.”
Acquisitions for solutions
The emerging trends of the solution-centric approach and enterprise orientation triggered a change in the existing business practices and policies of geospatial companies. The entire ecosystem of geospatial industry, which was working with well-defined boundaries of its constituents, went through a rigorous scrutiny both by players within and outside the industry. The industry realised that the required degree of integration/convergence for developing a solution-centric workflow environment wasn’t an option to sail through by mere partnership and collaboration. It requires acquisition of technologies, integration of processes, and embedding of workflows, which was possible with a structural re-organisation of the existing ecosystem. The process began in early 2002-03 when Leica Geosystems (a GPS and surveying company) acquired the well-established and leading image processing company Erdas, subsequently launching the Leica Photogrammetry Suite. Th is marked the beginning of an integrated approach towards offering photogrammetry and image processing, along with the well-established data acquisition technologies like surveying, positioning and aerial sensors.
The story didn’t stop at this stage, and very soon, Leica Geosystems itself was acquired by Hexagon, a much smaller company than the size of Leica. Hexagon, initially seen as an investment company, began consolidating its position in geospatial market and continued to pursue its objective of completing the geospatial workflow either through in-house development or technology acquisitions. Having developed sufficient capabilities in the field of data acquisition and data processing, Hexagon began to experiment with the development of visualisation and analysis tools through its Erdas team sometime in 2006, entering into a well-defined GIS market, which further caused breaking of long-standing collaborative relationship of Erdas and Leica Geosystems with Esri — the largest GIS player of all time. Th is opened up the doors for many more companies to associate and partner with Esri to fill the gap, and soon BAE Systems (photogrammetry) and Excelis (Image Processing) got into strategic alliance with Esri.
By this time, Google launched its revolutionary product ‘Google Earth’, creating a global awareness about geospatial information and tools. Overnight, it changed the course of geospatial business and opened up the market, attracting attention and investments from large companies. Microsoft followed soon and launched ‘Virtual Earth’. An important point to be noted here is that both Google and Microsoft acquired geospatial companies, Keyhole and Vexcel, respectively, adding a new dimension to the ongoing process of re-organisation of the geospatial ecosystem. IBM and Oracle, who until then participated in this game more as partners or associates of major GIS companies, also began to have larger and independent positions for their respective spatial database products.
Getting back to the core geospatial industry, we must acknowledge that another major geospatial player, Trimble, made a soft entry in this game with the acquisition of Spectra Precision around 2000. Considered to be a market consolidation step originally, this acquisition soon proved to be a step to expand Trimble’s technology portfolio, offering value to the customer base of both the companies.
Acquisitions for competitive advantage
Post 2007, a series of acquisitions and mergers took place in geospatial industry, led primarily by Trimble and Hexagon. In the meantime, the industry also witnessed two major acquisitions of geospatial content companies in high-value transactions. TomTom acquired TeleAtlas for $4.3 billion and Nokia followed with acquisition of Navteq at $8.1 billion. Additionally, we also witnessed the acquisition of SmallWorld and MapInfo by GE and Pitney Bowes, respectively. These acquisitions, mainly done to add a competitive advantage to their respective businesses, were also the harbingers of hope and opportunities. However, unaffected by the increasing threats of prospective hostile acquisitions from outside, leading geospatial players like Trimble, Hexagon, Bentley, Esri continued increasing their technology portfolio through regular purchase of small and medium companies, primarily in the field of imaging and modeling software, strengthening geospatial workflows to serve the developing markets of plants, buildings, design, engineering, mining and exploration industries.
The economic slowdown put a break on high-value transactions by large business houses, but the trend of acquisitions and mergers continued (with a limited period pause in 2008-09), probably because of the sheer survival instinct of geospatial industry. The acquisition of Intergraph by Hexagon could be considered as the most triggering and important one in this series. Th is acquisition took the geospatial industry by storm. It definitely displayed the market’s failure to anticipate and understand the future business direction of Hexagon. Many had apprehensions and many continue to have apprehensions about the value and utility of this acquisition, but looking at the current market trends it seems to be most strategic acquisition which empowered Hexagon with end-to-end solution capabilities, covering every part of the geospatial workflow.
Business value of geospatial industry
The past decade has brought significant value to several vertical industries, making geospatial one of the fastest emerging technology sectors. In addition to market trends which forced the geospatial industry to innovate, converge and integrate with business processes of promising industries like manufacturing, plant design and buildings, it was the visionary leadership of Trimble, Hexagon, Topcon, Bentley and Esri that initiated the process of evolving geospatial workflows and solutioncentric approach that proved to be instrumental not only in expanding the size of geospatial business but also brought forward its unique economic value propositions to the forefront, opening avenues for further development.
We at Geospatial Media, have not done any scientific study to measure the market size of geospatial industry. However, based on our formal and informal interactions with the key stakeholders and analysis of existing reports, we strongly believe that the size of global geospatial industry is very close to $100 billion and it is growing at an annual growth rate of 10-15%. The total revenue of top 10 geospatial technology companies is estimated to be about $10 billion. Additionally, the next level of technology companies contributes almost similar revenue of $10 billion. Since most of the technology companies trade their software and hardware products through distributors/ resellers and partners, this segment accounts for about 20- 25% additional business opportunity for the market, pitching the total technology business at around $25 billion. These technology companies leverage a much larger volume of business through their solutions and service providers. For instance, Esri’s 2012 revenue through software sales is estimated to be $1.4 billion.
Dangermond says Esri software leverages somewhere between $16 and $19 billion in sales of data, hardware and services. Following the above, on a very conservative estimate, technology companies put together leverage about $60-75 billion, making the total closer to the $100-billion mark.
While adding to the actual market size, one needs to take into account the revenues of national mapping, cadastre and space agencies. According to an estimate from the Chinese government, the total business of the geospatial market in that country is $31 billion. In fact, several progressive governments, including Japan, South Korea, Canada, US, UK, Germany, India, Brazil and China, have been investing heavily in geospatial technologies. Providing another dimension to the geospatial market size, a recent Google-commissioned study estimated the global geo-services market to be between $150 billion and $270 billion.
In all probability, this phase of re-organisation of the geospatial ecosystem is over, at least for a few years. Leading geospatial players have demonstrated their business urge and willingness to continue with technology acquisition, enabling productisation of solutions. One can very well see the alignment and re-alignment of companies featuring in different categories of geo-system with different emerging groups and alliances.
The next phase of re-organisation will began with the beginning of the revival of the world economy and we could expect the entry of very large business houses, not necessarily with the purpose of capturing existing geospatial business, but to utilise and harness the true value of geospatial ability in industrial processes and economic activity.
Disclaimer: The author has collected the information presented in this article over a period of time through formal and informal channels and does not hold any responsibility towards its authenticity.