gis roi: how to measure and assign value to your gis

GIS ROI:How to Measure and Assign

Value to Your GIS

Jim SparksIndiana Geographic Information Officer

May 8, 2013

Agenda

• Why measure ROI?• Review GIS ROI studies• ROI: The Process• Discussion and Questions

Why Measure ROI?

• To garner support for your GIS program• To document or estimate impact of changes• To compare effectiveness with other programs• ???

ROI Studies: Enterprise

Authors: Richard Zerbe and Associates Location: King County WashingtonWhen: 2012Target: Net benefits from 1992 to 2010Results: The use of GIS produced approximately

$775 million in net benefits over the eighteen year period

Google “King County GIS ROI”


Authors: Geospatial Information Technology Association (GITA)

Location: State of IowaWhen: 2007-2008Target: 99 counties, 11 state agencies, three

utilities plus Iowa One Call, and consulting firms

Results: 20 year Net Present Value of $271 million

Stewart, 2008


Author: Jill Saligoe-Simmel, PH. D.Location: State of Indiana/IndianaMapWhen: 2007-2008Target: 314 respondents of 1521 registered

users of IndianaMapResults:

– 35:1 ROI– $1.7 billion worth of projects and operations

supported by the IndianaMap http://www.igic.org/projects/roi.html

ROI Studies: Project

Bolder County, CO• Road Maintenance Dept.• Sign Inventory• Over 7,000 signs to manage• Results: $20,000 inventory cost savings

http://www.scaug.org/resources/Documents/Return_on_Investment.pdf


• Los Angeles County, CA• Automated Cadastral Map Books• Results:

– Eliminated 200 Overtime Hours– Eliminated 20,800 Regular Hours– Annual Savings of $90,000



Martin County, FL• Geo-Auditing for Commercial Property Taxes• Results: Increased County Tax Base by $3.5

Million


Create ROI Team

ROI Planning & Prep

Conduct Interviews

Calculate Costs Calculate Benefits

Prepare ROI Report

Assess and Organize Information

Create ROI Team

• 4 to 8 people• Skills needed:

– Knowledge of the Enterprise– GIS Experience– Accounting– Report writing

ROI Planning and Prep (Team)

• Gather and review GIS Returns On Investment• Think about:

– Methodology (with versus without)– Forward looking (estimating) or backward looking

(quantifying)– Who to talk to that can give insight into how an

operation has been improved by using GIS– Study time frame (1, 5, 10, or 20 years) – Audience

Key Points for Budget Holders

• How can business impact be quantified?• What will be the initial and ongoing expenses?• What are the resources required ?• When will the business benefits be delivered?• What’s the financial case?


Conduct Interviews

• Purpose: identify business processes that have been or could be improved using GIS

• Take notes and record interviews• Drill down to details. Not “our snow plow

routes are better” but “We trimmed 48 miles from our routes for each event.”

Assess Information

• Organize and document• Create lists of business process improvements• Categorize into quantifiable and qualitative

benefits lists• Prioritize lists, and move everything beyond

the 10 top to a “look at later” list

Calculate Costs

• Look at all costs associated with day-to-day operations (not project specific) – Personnel– Hardware– Software, including maintenance– IT charges

• Populate year chart for study time period• Determine an inflation rate and apply through

study period

BENEFITS

Generic Benefits

• Save Time• Increase Efficiency• Increase Accuracy• Increase Productivity• Increase

Communication and Collaboration

• Support Decision-making

• Aid Budgeting• Automate/Improve

Workflow• Build an Information

Base• Manage Resources• Reduce Costs/Save

Money

The Business Benefits of GIS: An ROI Approach, ESRI

GIS Benefits Related to Efficiency

• Creating Data• Revising Data• Locating Data• Distributing Data• Using Data

Gillespie (1994) states that efficiency benefits arise when GIS is used to reduce costs of a task that, in the absence of GIS, would be handled by some other method.


• Creating spatial data and spatial products:

The Riverside, California, Planning Board used to take up to four hours to manually produce a single map for a board meeting. They now produce an equivalent map in about half an hour using their GIS.

Typical efficiency ratios of 2:1 to 5:1

GIS Benefits Related to EfficiencyRevising spatial data:

At the City of Indianapolis, a full time draftsperson and two part time drafters were unable to keep up with base map updates that involved subdivisions. After GIS implementation, these same activities were accomplished with a half-time staff position and the base maps were kept current within a few days.


GIS Benefits Related to EfficiencyLocating spatial data:

Lee County, Florida frequently requires an assortment of information about land use, flood zone, watershed, zoning restrictions and variances, parcel frontage, parcel acreage, and owner verification for land development issues. GIS has reduced time requirements from hours to less than five minutes per occurrence.


Industrial LocationAnalysis in

Warren Township

N

0 1 2 Miles

Vacant Parcel ZoningCommercial OfficeCommercial RetailGeneral IndustryLight IndustryParksResidential LowResidential MediumResidential HighSpecial Uses

Floodplain

Main Street

Railroad

Warren Township


Distributing spatial data:

Spatial data distribution on a network is instantaneous and replaces such tasks as making copies, mailing copies, replacing copies in books and files.



Using spatial data:The Metropolitan Sewer District of Greater Cincinnati saved 10 to 16 workweeks in a single instance by using GIS rather than manual methods to estimate the number of customers in a particular drainage area as part of a permit renewal process.


Graphic from www.esri.com

GIS Benefits• Quantitative (Predictable)

– Money/time saved• Improved efficiency related to spatial data activities• Elimination of redundant data collection and data

creation efforts• Quantitative (Not predictable)• Qualitative

– Does access to better information generally lead to better decisions?

– What is the value of a better decision?– What is the value of better customer service?

Unpredictable Benefits of GIS

• The City of Indianapolis used GIS to discover non-paying sewer customers. These additional accounts were worth about $1.3 million for the two-year period of 1992 and 1993, and have continued to see about $1 million per year in cash revenues from this one application of GIS.

• According to Wyandotte County, Kansas, Surveyor Murray Rhodes, the county collected $500,000 in delinquent taxes in a single year that otherwise would not have been collected under the county’s (pre-GIS) manual system.

Unpredictable Benefits of GIS• The Metropolitan Sewer

District of Greater Cincinnati reported that for the first time ever --sewer system problem areas were being analyzed by matching complaint locations with storm event, frequency, and proximity to other complaints.

• Scottsdale, AZ. was able to use their GIS to successfully protest findings of the U.S. Census Bureau that declared Scottsdale’s population to be some 8,000 to 10,000 less than the city’s projections. The city believes the appeal will result in $9 million of additional federal, state, and county funds from 1996 through 2000.

Qualitative Benefits of GIS

•Faster and better public service•New services and products•Increased design and planning capacity•Increased analytic capacity•Increased interagency communication•Improved decision making•Increased transparency

Calculate Benefits

• Work with the priority list• Look for ongoing benefits of really significant

one time winners• Consider factors that impact the yearly value

of the benefit (inflation(+), ramp-up(-))

Calculate Benefits from Priority List

“We trimmed 48 miles from our snow plow routes per event.”

• Cost of gas• Other costs of equipment operation and

maintenance• Personnel time• Average events per year

Prepare ROI Report

• Make it interesting: add graphics, charts, maps. Newspaper format?

• Use conservative numbers (use the lowest number if given a range)

• Be transparent about assumptions and methodology

• Add a section for qualitative benefits – these are compelling (and not everyone is a numbers person)

Prepare ROI Report

• Prepare for several review iterations • Include a non-technical reviewer• Include an executive summary that highlights

the methodlogy and results

QUESTIONS

Jim SparksIndiana Geographic Information Officer

(317) [email protected]