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Www.consultingwhere.com Geospatial Data in the Value Chain Les Rackham ConsultingWhere Marine & Coastal Data Workshop INSPIRE Conference Edinburgh, June.

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Presentation on theme: "Www.consultingwhere.com Geospatial Data in the Value Chain Les Rackham ConsultingWhere Marine & Coastal Data Workshop INSPIRE Conference Edinburgh, June."— Presentation transcript:

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

2 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 chain2

3 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 3Geospatial data in the value chain

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

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

6 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: 6 –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, 2006 mepsirexecutive_summary.pdfmepsirexecutive_summary.pdf Geospatial data in the value chain

7 Getting it across to the decision makers Building the business case 7Geospatial data in the value chain

8 8 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

9 Building the business case9

10 Competing priorities for senior managers Central Government agenda –Operational efficiency –Shared services –Information economy Organisations agenda Financial imperatives CEOs 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 chain10

11 11 Ultimately …money talks

12 12 Business case methodology Aligning to strategic objectives Aligning to strategic objectives Cost benefit analysis Cost benefit analysis Options and risks Options and risks Non-market impacts Non-market impacts Business analysis Business 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

13 13 Step 1: intercept the agenda Aligning to strategicobjectives strategicobjectives Cost benefit analysis Cost benefit analysis Options and risks Options and risks Non-market impacts Non-market impacts Business analysis Business analysis Presentation Geospatial data in the value chain

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

15 Corporate agenda 15Geospatial data in the value chain

16 Applicability matrix: mapping corporate objectives to applications 16 Applications Objectives Decision Support Environmenta l 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 Optimis ed 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

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

18 Business analysis – current processes 18 Geospatial data in the value chain

19 Business analysis – improved processes Geospatial data in the value chain

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

21 21 Processes Outputs Finances Benefits categorisation Geospatial data in the value chain

22 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 22 Geospatial data in the value chain

23 Discounted Cash Flow Presenting it in financial terms Geospatial data in the value chain

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

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

26 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 26 Geospatial data in the value chain

27 Risk and uncertainty 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 27 Geospatial data in the value chain Impact Probability LowHigh Low High

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

29 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 29 Geospatial data in the value chain

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

31 The presentation of the business case Two key elements: 1.Pain statement – what problem are you trying to solve 2.Value proposition – how your project will solve the problem Four tests: 1.Succinct 2.Easy to understand 3.Show a return on investment 4.Irrefutable Geospatial data in the value chain 31

32 Summary: 10 top tips 1.Address the corporate agenda – where geospatial can make the biggest difference may not be where you think it does 2.Understand the human factors – its all about people 3.Push at open doors not closed ones – work with those who want a solution, make them successful 4.Look for early wins – small successful projects that build confidence 5.Dont reinvent the wheel - reuse existing case studies 6.Dont accept benefits are intangible – most can be measured 7.Focus on a small number of large benefits 8.Present the financial information in the way the CFO expects 9.Assemble backup information on the social and environmental benefits but dont lead with them 10.Spend time on the elevator pitch – presentation is key! Geospatial data in the value chain

33 Thank you 33Geospatial data in the value chain


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