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European Umbrella Organisation for Geographic Information
GeoSpatial:
Return on Investment
Bruce McCormack (EUROGI President)
Gunther Pichler (EUROGI Excom member)
Workshop at the
the INSPIRE Conference,
Aalborg, 16 June 2014
European Umbrella Organisation for Geographic Information
WORKSHOP OUTLINE
EUROGI
Introductory comments
Basic types of RoI
Types of investment which generate need for RoI
Benefits & costs of geospatial investments
RoI process
Some guiding principles
Some general difficulties
Some RoI examples
Wrap up
European Umbrella Organisation for Geographic Information
EUROGI
AIM
Promote the widespread and effective use of Geographic Information
and Geotechnologies in Europe
Membership
National GI Associations, GI companies, other types of organisations
23 members; thousands of ‘member’s members’
Activities
Liaison/influencing EU Commission DGs
Participation in GI related Commission funded projects
Information sharing
Networking
imaGIne conference in Berlin, 8 & 9 October 2014
F
European Umbrella Organisation for Geographic Information
INTRODUCTORY COMMENTS
Participants introduce themselves
Who has had direct experience of RoI
Workshop aim
Participatory approach
Recording main comments/points and EUROGI
produce succinct post-workshop write up
European Umbrella Organisation for Geographic Information
BASIC TYPES OF RoI (1)
Various ways of classifyingMethodology - complex > simple
Investment amount – large (millions) > small
Thoroughness – very > less
Focus - individual organisation > societal
Time frame - short > medium > long term
Measurables - only quantifyables > quantifyables and non-
quantifyables
Participation – high > low
Example later
Simple / not too thorough / organisation & societal foci / medium time
frame / only quantifyables / low participation
European Umbrella Organisation for Geographic Information
BASIC TYPE – INDIVIDUAL
ORGANISATION FOCUS
Benefits (returns) and costs within/for a single organisation (the
organisation doing the RoI) are measured and inputted into the RoI
Generally this type of RoI is more straightforward and likely to give
more accurate results than a societal RoI
The focus could be on:
Altering internal business processes with an aim to improve
efficiencies
Developing new products/services to service existing or new
customers
Companies generally not willing to divulge results of the RoIs which
they undertake or have had undertaken for them
European Umbrella Organisation for Geographic Information
BASIC TYPE – SOCIETAL FOCUS
RoI would aim to identify benefits and costs for
some wider social entity (eg country, region,
municipality, etc)
There may be multiple cost centres and multiple
benefit centres (possibly many thousands)
This type of RoI is more difficult/problematic for a
variety of reasons
Example – Spatial Data Infrastructure
European Umbrella Organisation for Geographic Information
TYPES OF INVESTMENT WHICH GENERATE
NEED FOR RoI (1)
Internal focus - Examples
Investing in GIS – software, staff, reference data etc. to
capacitate itself.
Purchasing a new dataset
External focus; developing a new product/service
offering - Examples
New offering in addition/as complement to existing GI
related offerings
Open up a whole new/relatively new market … break into
a new market segment
Provide a public service eg eGovernment
European Umbrella Organisation for Geographic Information
BENEFITS OF GEOSPATIAL
INVESTMENTS
Better policy making, monitoring and review
Create new business opportunities
Retain existing clients
Efficiency improvements – resource (eg money) savings, time savings
Effectiveness improvements – better targeting of investments, minimising risks
Improved cooperation between different agencies
More open data > job creation
Deepening/expanding democracy … greater transparency
Human capacity building
Data quality improvement cycle (accuracy, currency, more harmonised)
Making life easier, more comfortable
Expanding what is possible
European Umbrella Organisation for Geographic Information
COSTS ASSOCIATED WITH GEOSPATIAL
INVESTMENTS
SoftwareUpgrade/purchase new software
Create new GIS capacity
StaffGet new; maybe quite skilled and hence relatively expensive
Upgrade skills of existing / training costs
Staff time
DataPurchase new data / upgrade quality of existing
Revising work flows / mindsetsCan be disruptive
HardwareBroadband
Maybe move into cloud
European Umbrella Organisation for Geographic Information
PROCESS – GENERIC EXAMPLE
Step 1 – Confirm the need and decide in principle to go ahead
with an RoI
Step 2 - Establish more clearly/thoroughly the basis for
undertaking/carrying out the RoI study
Confirm the need, secure organisational legitimacy (eg get agreement
from management to undertake a RoI), obtain finances needed, make
sure right staff available, ensure oversight/management arrangements
in place, secure buy-in/support from key stakeholders, etc)
Different if CEO wants RoI or someone lower down or in a section of a
larger organisation
European Umbrella Organisation for Geographic Information
PROCESS – GENERIC EXAMPLE
Step 3 – Establish/clarify basic parameters
Aims/goals for the RoI exercise
The nature of the proposed expansion/investment; ‘what
exactly is being proposed’
How many and what alternatives should be tested
Time frame for estimating benefits and costs
Scope; particularly important in the case of
societal/community RoI (eg are all or only some levels of
government included, all types of business or just one or
two sectors, what geographical area is involved, etc)
European Umbrella Organisation for Geographic Information
PROCESS – GENERIC EXAMPLE
Step 4 – Identify and estimate the benefits/income over
the time frame determined in Step 3
Up front/initial
Ongoing
Step 5 – Identify and estimate the costs/investment over
the time frame determined in Step 3
Up front/initial
Ongoing
European Umbrella Organisation for Geographic Information
PROCESS – GENERIC EXAMPLE
Step 6 – Discount the benefits and costs to
the present time (if necessary)
Step 7 – Write up and communicate
Step 8 – Follow up / implement if RoI shows
sufficiently positively
Step 9 – Monitor and review
European Umbrella Organisation for Geographic Information
SOME GUIDING PRINCIPLES
Approach/methodology fit for purpose
Try to involve key decision-makers and
stakeholders in the process as much as possible
from as early as possible; try to get them to have
some level of ownership
Set the exercise clearly within overall
business/governmental goals/objectives/mission
Ensure that there is a reasonable and common level
of understanding of what is geospatial amongst the
persons involved; reduces possibilities of
misunderstanding or unrealistic expectations
European Umbrella Organisation for Geographic Information
SOME GUIDING PRINCIPLES
Set out assumptions clearly and succinctly;
explore them reasonably thoroughly
Find equivalent (or approximately equivalent)
RoIs studies (if any exist) and use them as a
general guide and/or test of the results being
generated
Where reasonable/feasible include one or more
alternative expansion/investment options. One
alternative could be ‘do nothing’ which would set
out a baseline
European Umbrella Organisation for Geographic Information
SOME GUIDING PRINCIPLES
Err somewhat on the conservative side, but
not excessively conservative
Be sensitive to needing to decide when to draw
the line regarding collecting further
information/exploring more deeply; be sensitive
to diminishing returns and ‘mission creep’
European Umbrella Organisation for Geographic Information
SOME GENERAL DIFFICULTIES
Predicting the future
An issue of greater relevance the longer into the future the RoI
intends to estimate benefits and costs
Quantifying the intangibles
Most usually intangible benefits. Alternative approaches possible
Multiple cost and benefit centres
Particularly in the case of societal/community RoIs, multiple cost and
benefit centres gives rise to high levels of complexity and difficulties
in obtaining necessary information and deciding where to draw the
line
Missing/lacking information
Alternative ways of dealing with this
European Umbrella Organisation for Geographic Information
EXAMPLES
No 1
National public GI based information service
Simple / not too thorough / organisation & societal foci / medium time
frame / only quantifyables / low participation
No 2 INSPIRE
2003 overall benefit/cost assessment
Netherlands 2009 INSPIRE options evaluation
Other Member States benefit/costs
No 3
A small data supplier business
European Umbrella Organisation for Geographic Information
European Umbrella Organisation for Geographic Information
European Umbrella Organisation for Geographic Information
European Umbrella Organisation for Geographic Information
European Umbrella Organisation for Geographic Information
INSPIRE IMPACT ASSESSMENT 2003
Impact Assessment required before a Directive
(European law) can be adopted
Time period 2004/6 > 2014/15
Costs
€200-300m (rounded up) per annum
Benefits
€1.19b - €1.80b per annum
Overall benefit/cost ratio
4:1 to 9:1
European Umbrella Organisation for Geographic Information
INSPIRE: ANNUAL COST (€m)
European Umbrella Organisation for Geographic Information
INSPIRE: ANNUAL BENEFITS (€m)
European Umbrella Organisation for Geographic Information
INSPIRE - NETHERLANDS
Comprehensive 2009 RoI study (findings generally confirmed)
Two INSPIRE implementation models evaluatedBasic (do minimum) vs ‘collective’ (do more than minimum)
Basic approach adopted the approach adopted … RoI used to make this decision
Basic model Costs = abt €4m per annum (Net Present Value)
Benefits = abt €8.2m per annum (NPV) excluding wider strategic benefits
Benefit/Cost ratio = 2.1 : 1
Costs equal Benefits after 3 years after which Benefits > Costs
Full cost recovery after 8 years
Benefits very substantially outweigh costs into future
European Umbrella Organisation for Geographic Information
INSPIRE C/B – SELECTED COUNTRIES
UK
UK Location Strategy (wider than INSPIRE) costs 2010-13 = £4.04m
Estimate of benefits of INSPIRE for producing environment reports
(SEA & EIA) = £7.5m pa
Not yet developed a robust system for accounting for INSPIRE costs
& benefits, but working on it for reporting in 2016
Denmark
Cant distinguish INSPIRE costs and benefits from general SDI
development work
France
Costs - €14.2m annual average 2010-14
Hard to distinguish INSPIRE costs from overall
Benefits - No estimate made
European Umbrella Organisation for Geographic Information
WRAP UP
DISCUSSION
European Umbrella Organisation for Geographic Information
Thank you for your participation