Calculating the business benefits of GIS as a Technology using ROI Methods.

1. End-to-End Process Win Hearts and Minds Business Led
The Business Benefits of GIS: An ROI Approach
Benefits Driven
● Treat the return on investment (ROI) study as a
project:
● Defined group of stakeholders who will
contribute
● Project plan with start and end dates and well-
defined activities
● Active stakeholder management
● Deliverables
● Define your ROI project timeline.
● Build strengths, weaknesses, opportunities, threads
(SWOT) analysis of your existing geographic
information system (GIS) implementation or past
attempts.
● Identify key stakeholders and socialize ROI project,
preparing for step 2.
ROI Study Project
Timeline
SWOT Analysis
Step 3: Prioritize Business BenefitsStep 1: Prepare for ROI Project
● Practically determine what will need to be
done to deliver the benefits.
● Distill the program into component parts
(hardware, software, data, etc.).
● Seek to combine like projects together, not
1:1 to each benefit opportunity.
● Take an enterprise view, not an application
view.
● Be pragmatic and technology neutral.
● Use practical approaches to deal with
complexity.
Project Description
Template
Program Pyramid
Step 4: Construct GIS Program
1 2
● Identify business opportunities for GIS by
interviewing your executives.
● The objective is to link GIS opportunities to
organizational strategy and objectives.
● Utilize structured interview techniques and
scripts.
● Focus on perceived challenges or problem
areas in the organization.
● Take time to involve and educate executives,
but don’t “sell” GIS to them.
Interview Template
Step 2: Identify Business Opportunities
3 4 5 6 7 8 9
10
● Use the information gathered from your executives
during interviews and follow-up meetings with their
direct reports.
● Collate it in the template provided.
● Identify metrics that relate to each opportunity.
● Avoid sensitive benefits (e.g., cost reduction via
headcount).
● Use the template to help prioritize the benefits
identified based on
● Value to the organization
● Ease of implementation (delivery)
● The template will generate a quadrant diagram.
● At this stage, value is subjective but is guided by
executives.
Benefits Template Quadrant Diagram
Step 5: Define Project Control
Program
Governance
Delivery Team
Structure
● Inadequate governance is a leading cause
of program failure.
● Ensure you have robust controls in place to
be successful.
● Use the Project Governance Capability
Maturity Model (CMM) to assess your team’s
abilities.
● Expose your strengths and weaknesses.
● Shore up any weak spots, and be realistic.
● Define your delivery team structure (in-
house versus external).
Step 6: Calculate Costs
Budget Model
● Assemble your GIS program budget forecast
(capital expenditures [CapEx] and operational
expenditures [OpEx]).
● Team with your finance department.
● Build your budget from the bottom up in a
robust, defensible manner.
● Use the Budget Template to guide you through
the budgeting process.
● Guidance is provided about capital versus
operational expenditure, depreciation, and
internal capitalization of labor.
● The output is used to populate the cost side of
the ROI calculation.
Step 7: Quantify Benefits
Benefits Model
● Quantify all business benefits in tangible
terms.
● This is one of the most challenging aspects
of any ROI calculation.
● It requires you to model the impacts of GIS
on workflow as an enabling technology (base
case versus GIS case).
● Use the Value Driver Tree concept (benefits
that enable other benefits).
● Tap a subject expert—get to the numbers.
● Study the Sensitivity Analysis and Benefits
Realization Curve.
Step 8: Build Benefits Road Map
Benefits Road Map
● This is built from the discrete projects
defined in step 4.
● It visually communicates the program
activity on a quarterly basis.
● It focuses on benefits delivered, not
project milestones.
● It provides a clear road map for the
program.
● It must be realistic and achievable and
have broad commitment from the business
to succeed.
Step 9: Calculate Financials
ROI Financial
Calculations Model
● Team with the finance department.
● Use previous budget (cost) and benefits to
calculate ROI, NPV, IRR, etc.
● The template provides fill-in-the-blank
entry and automatically calculates financial
metrics.
● The template also provides guidance on
interpreting the results (e.g., creates value or
destroys value).
● It’s not just about a positive NPV; it is
about successfully delivering on the
promised benefit.
Step 10: Draft and Deliver Report
Final Report (Word)
● The final stage simply summarizes the
results of the study, pulling it all together.
● At this stage, it should be for
comprehensiveness, not to win a budget.
● Hearts and minds should have been won
long ago, well before executives read the
report.
● Normally, a Word-based report, plus an
executive presentation or summary, is
produced.