GeoSpatial: Return on Investment

Transcription

1 GeoSpatial: Return on Investment Bruce McCormack (EUROGI President) Gunther Pichler (EUROGI Excom member) Workshop at the the INSPIRE Conference, Aalborg, 16 June 2014

2 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

3 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

4 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

5 BASIC TYPES OF RoI (1) Various ways of classifying Methodology - 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 nonquantifyables Participation high > low Example later Simple / not too thorough / organisation & societal foci / medium time frame / only quantifyables / low participation

6 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

7 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

8 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

9 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

10 COSTS ASSOCIATED WITH GEOSPATIAL INVESTMENTS Software Upgrade/purchase new software Create new GIS capacity Staff Get new; maybe quite skilled and hence relatively expensive Upgrade skills of existing / training costs Staff time Data Purchase new data / upgrade quality of existing Revising work flows / mindsets Can be disruptive Hardware Broadband Maybe move into cloud

11 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

12 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)

13 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

14 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

15 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

16 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

17 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

18 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

19 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

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24 INSPIRE IMPACT ASSESSMENT 2003 Impact Assessment required before a Directive (European law) can be adopted Time period 2004/6 > 2014/15 Costs m (rounded up) per annum Benefits 1.19b b per annum Overall benefit/cost ratio 4:1 to 9:1

25 INSPIRE: ANNUAL COST ( m)

26 INSPIRE: ANNUAL BENEFITS ( m)

27 INSPIRE - NETHERLANDS Comprehensive 2009 RoI study (findings generally confirmed) Two INSPIRE implementation models evaluated Basic (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

28 INSPIRE C/B SELECTED COUNTRIES UK UK Location Strategy (wider than INSPIRE) costs = 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 m annual average Hard to distinguish INSPIRE costs from overall Benefits - No estimate made

29 WRAP UP DISCUSSION

30 Thank you for your participation