26 Quarter Three 2012

Feature

27Quarter Three 2012

The ‘Spatial industry’ has for decades appreciated the real, exciting and powerful benefits of geospatial analysis. But if geospatial tech is so wonderful and is such a ‘no brainer’, why haven’t small to medium enterprises embraced the technology?

Brave NewWorld

By Brad Spencer, managing director, numapS

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28 Quarter Three 2012

Feature // Brave New World

There are approximately 1.5 million SMEs in

Australia representing about 40 per cent of the

Australian workforce and contributing around half

a trillion dollars to Australia's GDP. SMEs make a

substantial contribution to domestic production in

a wide range of industries and much of the productivity gains in

these SMEs can be attributed to the high take-up of information

technology and more recently the increasing use of the internet.

Given this huge potential market hungrily adopting new

smart technologies, why has business use of mapping technol-

ogy been slow to take off? Geospatial technologies have been

around for a long time, but the entrenched use of this technolo-

gy is largely limited to niche markets within a number of sectors

such as public, defence, mining, finance and others. It’s rarely

found in the 20-99 man businesses that are selling products

direct to consumers. Yet these organisations have recognised

the value of investing in IT and are operating with an internet

presence. There are several reasons why an increased take-up

has not eventuated.

Firstly, the spatial industry tries to over sell technology into

this market. These businesses do not want to invest in GIS and

all that goes along with that investment – it’s simply not core to

their business. Targeting these organisations as potential GIS

customers is a waste of time.

Secondly, spatial technology is generally over-priced for these

markets. These organisations are reluctant to make any financial

investment in technology unless its benefits are clearly apparent

over and above any alternative investment. So asking SMEs to

invest in thousands of dollars for access to the latest imagery

or access to the latest geocoding engine will simply fall on deaf

ears. Google have done more to commoditise spatial data and

thus get it in the hands of the broader community more suc-

cessfully than all the spatial industry's efforts.

Thirdly, geospatial analysis applications are typically not tar-

geted to particular operational needs. They are invariably trying

to be all things to all markets and therefore over complicated.

Generic open source GIS products are available but they are not

being used because there is too much of a learning curve and

little data available even if they accept the benefits.

Finally, these markets need clear proof of the benefits. There

are rarely individual champions within organisations that get it

and lobby within to invest in this technology.

All the above probably only represent a few of the show-

stoppers but they do indicate the magnitude of the challenge. If

these markets are to embrace geospatial analysis these issues at

least must be addressed.

Case Study

By way of example, the Rooftops application has been devel-

oped and is being tested for its benefits in Sydney. The original

objective of Rooftops was to demonstrate software develop-

ment capability and to also leverage access to ABS census

data in the form of online thematic map overlays. These can be

draped atop of a Google Maps-like application or mashup. The

result is a web-based application that has SME market appeal if

packaged affordably.

The target market for Rooftops is any SME that wants to

identify households that are candidates for their product micro-

marketing efforts. These are not vast swathes of suburbs or

postcodes but a subset of properties that are more likely to be

converted into a sale. These organisations may typically be selling

solar panels, swimming pool products, outdoor pergolas, garden

sheds, landscaping, etc. These are big ticket residential items that

historically have been attacked with postcode/suburb wide mail-

out strategies. These strategies have proven to be expensive per

converted sale. The objective of the Rooftops application is to use

information to identify households that have an apparent capacity

and/or a need for these products and are more likely to invest.

Rooftops consists of a two-step analysis process:

1. Inspect the Demographics. In this first step the user has

access to a demographic analysis tool that lets them iteratively

identify the ABS Census Collection District (CCD) areas that on

average have financial capacity to invest. Currently, this is based

on economic capacity to spend (In Fig 1 we are overlaying low

Mortgage Stress with high Household Incomes). The user can

vary these overlays interactively by simply changing criteria val-

ues in order to isolate high priority target CCDs (in Fig 1. The CCDs

rendered purple). Other analysis profiles can be supported such

as based on education, employment, religion and other attributes.

2. Inspect the Individual Properties. Given that the user

knows that the area they have identified has more financial

capacity to invest, they can now invest the time and effort into

looking at each individual property to identify those they would

like to market directly to (Fig. 2). The user switches the base

map to the high resolution imagery version and can zoom in

and pan around to inspect each property within the target area.

The address for any property can then be harvested into a list of

addresses by the included reverse-geocoding tool. The result is a

list of property addresses suitable for target marketing purposes.

When inspecting a property the user can measure rooftops,

backyards, etc with the measure tool and objectively include or

exclude properties based on inspection of house aspect, exist-

ing landscaping and tree shadows etc. In Fig. 2 the user was

“ Asking SMEs to invest in thousands of dollars for access to the latest imag-ery or access to the latest geocoding engine will simply fall on deaf ears. ”

29Quarter Three 2012

measuring rooftops and harvesting addresses shown as red map

symbols. In this application example, it was important to exclude

houses with solar panels already installed.

This type of application does resonate with SME businesses;

it does not require any GIS software investment, no user training

and can be accessed via a standard browser-based PC con-

nected to the Internet. However, there are details that have to be

sorted not least of which is pricing. As explained above enterpris-

es will simply not invest time and money even in a simple web

based application if it does not have an immediate return. In this

case that is a list of remotely qualified sales leads. But they will

invest once they are convinced that the cost per converted lead

is affordable. SMEs simply cannot afford to waste any resources.

Price for any web-based service inevitably comes down to dif-

ferent business model options. There are two ways to price such

applications:

a.) as a software product sale that delivers the software to the

client to run on their own Internet server, or

b.) as a software as a service (SaaS) offering that is hosted in

the cloud and paid for under a subscription model.

The preferred option would appear to be as a SaaS model

because the SMEs see this as an operating expense which

requires no capital outlay and can be terminated at any time

– low cost of failure investment. The other key reason is that

should they invest as a capital purchase they would need to

arrange licensing agreements with at least three downstream

data suppliers. Under a SaaS model this is all undertaken for

them by the provider of the service on behalf of all users of the

service. However, the downstream suppliers of the data used in

this or any similar application must look at this market in a differ-

ent light to the typical GIS aware market. For example, there are

limitations on geocoding and there are licensing costs for access

to the most recent imagery that could make the whole exercise

cost prohibitive and or impractical.

ConclusionIt is clear that SMEs are a ‘greenfields’ market for geospatial

analysis presented with the right applications and that data and

network infrastructure are improving all the time to facilitate such

initiatives. However, if these initiatives are to flourish and brave new

markets breeched then the suppliers of the dependent resources

need to re-package their offerings to accommodate these mar-

kets and cloud-based initiatives otherwise geospatial analysis will

struggle to be adopted in the broader market place.

Fig. 1 Blue areas are CCDs where Median Total Household Income is greater than $9,000 per month, Red areas are CCDs where Median Mortgage Stress is less than 22% and the purple area is where the two overlap. Study area is Castle Hill in Sydney’s Hills district.

Fig. 2 Red circles are harvested addresses