1. Geospatial Data in the Value Chain Les Rackham ConsultingWhere
3/28/2017
Geospatial Data
in the Value Chain
Les Rackham
ConsultingWhere
Marine & Coastal Data Workshop
INSPIRE Conference Edinburgh, June 2011 1 1 1

2. Value of geospatial data
3/28/2017
Value of geospatial data
According to the OED value is: “ the regard that something is held to deserve: the importance or preciousness of something” How do we get business, government, policy makers to regard geospatial data as important and precious?
Geospatial data in the value chain

3. Geospatial data in the value chain
3/28/2017
Answer
Get decision makers to understand the role of geospatial data in the value chain
Express that value in terms that decision makers understand i.e. produce a business case
Geospatial data in the value chain

4. The value chain Primary activities Value chain Support activities
3/28/2017
The value chain
Primary activities
Inbound logistics
Operations
Outbound logistics
Marketing & sales
Services
Value chain
Procurement Human resource management
Infrastructure Technological development
Support activities
After: M Porter (1985) Competitive Advantage: Creating and Sustaining Superior Performance
Geospatial data in the value chain

5. The information value chain
3/28/2017
The information value chain
Right information at the right time to make the right decision
Primary activities
Information require-ments
Information acquisition
Information processing
Information distribution
Information use
Value chain
Knowledge management Information governance
Human resource management IT Infrastructure
Support activities
Adapted from: Schwolow and Andersen, 2009
Geospatial data in the value chain

6. Impact of the reuse of public sector information on value chain
3/28/2017
Impact of the reuse of public sector information on value chain
Availability of public sector information brings:
New market players
Increased innovation
More competition
The effects on value chain are likely to be:
Direct prices lowered
Downstream prices lowered
Quantity data used increased
Entry increased down chain
Diversification new products
Quality improved
Elimination of parts value chain
Competition increased
Income of govt agencies lowered
Tax revenue increased
From: Measuring European Public Sector Information Resources
Final Report of Study on Exploitation of public sector information – benchmarking of EU framework conditions, mepsirexecutive_summary.pdf
Geospatial data in the value chain

7. Getting it across to the decision makers
3/28/2017
Getting it across to the decision makers
Building the business case
Geospatial data in the value chain

8. Geospatial data in the value chain
3/28/2017
What is a business case?
A structured proposal for business improvement that provides a package of economic and related information sufficient for decision making
A business case consists of an analysis of needs or problems, proposed alternative solutions, assumptions, constraints, and a risk-adjusted cost-benefit analysis
Geospatial data in the value chain 8

9. Building the business case
3/28/2017
Building the business case

10. Competing priorities for senior managers
3/28/2017
Competing priorities for senior managers
Central Government agenda
Operational efficiency
Shared services
Information economy
Organisation’s agenda
Financial imperatives
CEO’s Personal agenda
How did he / she build their reputation?
What are their “red flags”?
Timeframe
Most CEOs last <3 years
Long projects often fail
Corporate Social Responsibility (CSR)
Moving up the
priority list
Geospatial data in the value chain 10

11. 3/28/2017
Ultimately
…money talks 11 11 11

12. Business case methodology
3/28/2017
Business case methodology
Non-market
impacts
Business
analysis
Options
and risks
Aligning to
strategic
objectives
Cost benefit
analysis
Presentation
This is a simple, practical methodology – there are many more complex approaches but with commensurate higher costs.
Geospatial data in the value chain 12

13. Step 1: intercept the agenda
3/28/2017
Step 1: intercept the agenda
Non-market
impacts
Business
analysis
Options
and risks
Aligning to
strategic
objectives
Cost benefit
analysis
Presentation
Geospatial data in the value chain 13

14. Geospatial alignment External influences Technology Challenges
3/28/2017
Geospatial alignment
External influences
Technology
Challenges
ICT programmes
Candidate
geospatial
opportunities
Corporate
agenda
Business
challenges
Applicability
matrix
Organisational Objectives
Internal Business challenges
Generic geospatial applications
Geospatial data in the value chain 14

15. Geospatial data in the value chain
3/28/2017
Corporate agenda
Geospatial data in the value chain

16. Applicability matrix: mapping corporate objectives to applications
3/28/2017
Applicability matrix: mapping corporate objectives to applications
Applications
Objectives
Decision Support
Environmental impact assessment
Contingency planning
Emergency response
Automated map production
Contingency planning
Web services
Marine resources are managed effectively and regulated proportionately
People and customers of our services are engaged and understand decisions that impact on the marine area
Marine diversity is protected and maintained
Optimised
Routing
Fish and shellfish stocks are managed sustainably
Marine emergencies are responded to in a prompt and co-ordinated way
Decision making is based on the best available evidence 16

17. Step 2: analyse business processes
3/28/2017
Step 2: analyse business processes
Non-market
impacts
Business
analysis
Options
and risks
Aligning to
strategic
objectives
Cost benefit
analysis
Presentation
Geospatial data in the value chain 17

18. Business analysis – current processes
3/28/2017
Business analysis – current processes
Geospatial data in the value chain 18 18

19. Business analysis – improved processes
3/28/2017
Business analysis – improved processes
Geospatial data in the value chain 19 19

20. Step 3: assemble the financials
3/28/2017
Step 3: assemble the financials
Non-market
impacts
Business
analysis
Options
and risks
Aligning to
strategic
objectives
Cost benefit
analysis
Presentation
Geospatial data in the value chain 20

21. Benefits categorisation
3/28/2017
Benefits categorisation
Finances
Outputs
Processes
Geospatial data in the value chain 21

22. Measurement principles
3/28/2017
Measurement principles
Decompose - breakdown the problem into measurable components
Plagiarise (secondary research) - has it been measured before?
Compile - you probably have more measurement data than you think
Minimise - how much more measurement do you really need to reduce the uncertainty to an acceptable level?
Standardise - use a repeatable measurement process
Geospatial data in the value chain 22 22

23. Presenting it in financial terms
3/28/2017
Discounted Cash Flow
Presenting it in financial terms
Geospatial data in the value chain 23

24. Simple Discounted Cash Flow (DCF)
3/28/2017
Simple Discounted Cash Flow (DCF)
Year 0
Year 1
Year 2
Year 3
Year 4
Total
Project Cost
-£900
-£700 £0
-£1,600
Contingency(10% )
-£90
-£70
-£160
Support Costs
-£110
-£440
Total Benefits
£400
£800
£2,800
Net Cost
-£990
-£480
£690
£600
Discount Rate (5%)
1.000
0.952
0.907
0.864
0.823
NPV
-£457
£626
£596
£568
£343
Cumulative NPV
-£1,447
-£821
-£225
Payback
Point
Cumulative Net Present Value (NPV) = £343
Internal Rate of Return = 14% (increase discount rate until NPV = £0)
Geospatial data in the value chain 24

25. Step 4: options and risks
3/28/2017
Step 4: options and risks
Non-market
impacts
Business
analysis
Options
and risks
Aligning to
strategic
objectives
Cost benefit
analysis
Presentation
Geospatial data in the value chain 25

26. Geospatial data in the value chain
3/28/2017
Options? What options?
Points to consider in framing options:
Varying time and scale
Staging development v “big bang”
Out-source or contract-in
Developing in partnership with others
Co-locating, or sharing facilities with others
Varying IT solutions
Use of Open Source software
Varying quality targets
Improving existing processes
Be objective not biased in presenting options
List the evaluation criteria used in your analysis
Geospatial data in the value chain 26 26

27. Geospatial data in the value chain
3/28/2017
Risk and uncertainty
Impact
Probability
Low
High
For each option:
Calculate an expected value for all risks
Consider exposure to future uncertainty
Optimism bias - adjust for over-optimism
For valuing risks can:
Add a risk premium as an uplift to discount rate
Can derive an ‘expected value’ (EV) as a single cost for the expected impact of all risks.
Calculated by multiplying the likelihood of a risk occurring by the size of the outcome (as monetised), and summing the results for all the risks and outcomes
Geospatial data in the value chain 27 27

28. Geospatial data in the value chain
3/28/2017
Step 5: and also ....
Non-market
impacts
Business
analysis
Options
and risks
Aligning to
strategic
objectives
Cost benefit
analysis
Presentation
Geospatial data in the value chain 28

29. Geospatial data in the value chain
3/28/2017
Non-market impacts
“Non-market” - cannot be bought and sold in the market
Examples
Social impacts - equality: ethnicity, disablement, ageism
Personal impacts – injury, loss of life
Environmental impacts – pollution, loss of amenity
Impacts can be positive or negative
In monetary terms, a cost or a benefit
Quantification of non-market impacts requires an alternative approach to valuation
Establishing money values involves the inference of a price
Revealed preferences – inferring an implicit price
Stated preferences – “Willingness to Pay”
Geospatial data in the value chain 29 29

30. Geospatial data in the value chain
3/28/2017
Step 6: presentation
Non-market
impacts
Business
analysis
Options
and risks
Aligning to
strategic
objectives
Cost benefit
analysis
Presentation
Geospatial data in the value chain 30

31. The presentation of the business case
3/28/2017
The presentation of the business case
Two key elements:
Pain statement – what problem are you trying to solve
Value proposition – how your project will solve the problem
Four tests:
Succinct
Easy to understand
Show a return on investment
Irrefutable
Geospatial data in the value chain 31 31 31

32. Geospatial data in the value chain
3/28/2017
Summary: 10 top tips
Address the corporate agenda – where geospatial can make the biggest difference may not be where you think it does
Understand the human factors – it’s all about people
Push at open doors not closed ones – work with those who want a solution, make them successful
Look for early wins – small successful projects that build confidence
Don’t reinvent the wheel - reuse existing case studies
Don’t accept benefits are intangible – most can be measured
Focus on a small number of large benefits
Present the financial information in the way the CFO expects
Assemble backup information on the social and environmental benefits but don’t lead with them
Spend time on the elevator pitch – presentation is key!
Geospatial data in the value chain

33. Geospatial data in the value chain
3/28/2017
Thank you
Geospatial data in the value chain