Determining, Measuring, and Analyzing the Benefits of GIS Includes numerous case studies from state and local government Selected papers for state and local government officials as well as GIS professionals. Edited by Stephen R. Gillespie Published by: The Urban and Regional Information Systems Association 1460 Renaissance Drive, Suite 305 Park Ridge, IL 60068 (847) 824-6300 Copyright © 2000 by the Urban and Regional Information Systems Association (URISA), except where otherwise noted. All rights reserved including the rights of reproduction and use in any form or by any means, including the ‘making of copies by any photo process or by any electronic or mechanical device (printed, writen, or oral), ‘or recording for sound or visual reproduction, of for use in any knowiedge or retrieval system device, unless permission in writing is obtained from the copyright proprietor. Printed in the United States of America ISBN #: 0-916848-21-3,Determining, Measuring, and Analyzing the Benefits of GIS Table of Contents Foreword by Stephen R. Gillespie... Section 1: The Benefit Measurement Option “Measuring the Benefits and Costs of GIS” by Nancy J. Obermeyer, Geographical Information Systems, John Wiley & Sons, Inc. Publisher, 1999. “Proving the Worth of GIS in Local Government” by Mike Mull .. “Benefits and Challenges: Integrating AM/FM with Work Management” by Jay Stinson and John L. McCoy, GIS/LIS Conference Proceedings, 1998... we 1-23 “Justifying Investment in GIS a Local Government Perspective” by Professor Les Worrall, The International Journal of GIS, Taylor and Francis Publisher, November/December 1994... “Six Keys to Gaining Executive Commitment to GIS” by Jerry Davis, URISA Annual Conference Proceedings, 1999 ... “Assessing GIS benefits: The Methodology Dimension” by Barry Wellar, GIS/LIS Annual Conference Proceedings, 1997 .... 1-62Section 2: Approaches to Solving the Benefit Measurement Problem “GIS Benefits and Opportunities” by Pat Cummens, URISA Digital Parcel Mapping Handbook, Chapter 1, 1999... “Justifying Automated Mapping Systems in Small Communities” by Colin O. Benjamin and Adel Fadel, URISA Journal, Volume 7, Number 2, 1995 “GIS Benefits and Opportunities” Researched and Compiled by Plangraphics.. “How Good is GIS? An Evaluation of GIS Operational Effectiveness in Local Government” by Richard W. Rourk, 1999 2-42 “Measuring the Benefits of GIS Use: Two Transportation Case Studies” by Stephen R. Gillespie, URISA Journal, Volume 6, Number 2, 1994... 0 2253 “An Empirical Approach to Estimating GIS Benefits” by Stephen R. Gillespie, URISA Journal, Volume 12, Number 1, 1999.. ns 2-56 Section 3: Other Benefit Measurement Considerations “Accelerating the Benefits of GIS Technology” by David McTaggart, GIS/LIS Conference Proceedings, 1997 . “The Role of Organizational Politics in GIS Implementation” by Jeffrey K. Pinto and Bijan Azad, URISA Journal, Volume 6, Number 2, 1994...“Municipal GIS Diversifying the Investment” by Raphael Sussman and Graham Kemp, URISA Annual Conference Proceedings, 1997 .. Look Up tables for Costs and Benefits of GIS...FOREWORD By Stephen R. Gillespie ‘Welcome to URISA’s special compendium of papers highlighting potential benefits to be gained from the use of Geographic Information Systems (GIS). Managers at all levels of government are under increasing pressure to accomplish more with fewer resources and ‘ways must be found to maximize budget dollars. GIS technology is a possible answer to this dilemma. In this compendium, dozens of case studies demonstrate how GIS can benefit government agencies and the constituents that they serve, Identified benefits include increases in productivity, cost avoidance, information security, better decision- making, improved customer service, savings on personnel, improved modeling and planning, easier interoffice coordination, and increased citizen participation. Although valuable, it is not enough to identify the sources of benefits from the use of GIS. To get the most out of GIS technology, it is vital to be able to measure those benefits. Establishing GIS technology requires a sizable initial investment; such an investment is not likely to be approved without solid demonstration of significant potential benefits. Once GIS technology has been established, many possible projects will be competing for GIS resources. Without a reliable way to evaluate benefits, projects of lower value may consume resources that could better be used on projects with higher value. Solid information regarding the benefits of GIS supports the effective ‘management of increasingly more valuable GIS resources. Unfortunately, measuring GIS benefits is often difficult, time-consuming, and expensive. ‘This compendium represents a selection of papers from journals, conference proceedings, and other sources. Taken together, they illustrate the problem, promise, and potential of ‘measuting the benefits of GIS. All current and potential users of GIS technology must deal with the issue of the costs and benefits of their activities. From the common sense to the highly technical, the papers in this compendium describe a variety of approaches tothis challenging topic. It is hoped that the reader, regardless of their skill level, will find practical advice for dealing with real problems. ‘The compendium is divided into three sections. Section 1 describes what is involved in measuring the benefit of GIS. Section 2 presents several approaches for benefit ‘measuring. Section 3 describes other important influences on the level of benefits actually achieved by the use of GIS. Section 1: The Benefit Measurement Problem ‘The basic technique for estimating GIS benefits is the cost-benefit study. In Measuring the Benefits and Costs of GIS, the purpose, methods, and operational issues of conducting a cost-benefit study are reviewed. An awareness of these issues is fundamental to understanding the material that follows. Proving the Worth of GIS in Local Government and Benefits and Challenges: Integrating AMIFM with Work Management are excellent examples of typical GIS cost-benefit studies, the first for a municipality and the second for a utility. These papers illustrate both the strength and the weakness of most GIS benefit studies; the strength being the identification of multiple and diverse sources of benefits from the use of GIS technology, and the weakness being that most identified benefits are not quantified. Justifying Investment in GIS: A Local Government Perspective shows that GIS cost-benefit studies are not limited to the U.S., but are also typical of studies in the United Kingdom. In Six Keys to Gaining Executive Commitment to GIS, the author discusses the most common factors that must be overcome to gain management commitment to GIS efforts. One result of not reliably measuring benefits is described; that top management will not be convinced of the benefit predictions and so will not support a first-time GIS implementation or an extension of an existing implementation. In Assessing GIS Benefits: The Methodology Dimension, a more general approach to the problem is taken, The author argues that the widespread weakness of the literatureconcerning GIS benefit measurement is due to an inconsistent (or missing) methodological framework for identifying, measuring, tracking, and evaluating the benefits realized by GIS implementation. The author proposes a framework based on the stage of information development and the type of analysis/synthesis activity that is being undertaken, ‘Section 2: Approaches to Solving the Benefit Measurement Problem ‘The first approach to resolving the difficulty and cost of GIS benefit measurement is to look for commonalities across GIS installations. Where commonaliti sexist, ‘measurement done at one installation can be applied to similar installations, thereby climinating the need to start afresh at each individual installation. Two papers examine “GIS Benefits and Opportunities” in this compendium: the first identifies the types of benefits likely to accrue wherever GIS technology is applied to parcel mapping, and the second is a generic briefing on GIS benefits in local government. Specific details could be inserted to tailor the briefing to a particular local agency, but the general framework applies to all. In Justifying Automated Mapping Systems in Small Communities, the authors describe a second approach to minimizing the cost of benefit measurement, They point out that some types of GIS benefits are easier to quantify than others. If the easy measurements amply justify the investment in GIS, there is little reason to attempt to quantify benefits that are more difficult to measure. It is recommended that intensive benefit-measurement efforts be restricted to those few cases where the information will make a big difference. A third approach for obtaining better benefit measurements is to improve the techniques used to measure benefits. The premise in this paper is that there are few “nonquantifiable” GIS benefits, but many “not quantified” ones. In How Good Is GIS? An Evaluation of GIS Operational Effectiveness in Local Government, numerous examples are provided on how to reasonably estimate benefits that are often assumed to be unmeasurable.In Measuring the Benefits of GIS Use: Two Transportation Case Studies, a systematic approach to the problem is described. The author argues that the key to measuring benefits is to identify what has changed because of the use of GIS. Examples show how, by narrowing the focus to a single effect on a single user, it is possible to ask pertinent questions about value and to reasonably measure benefits that previously appeared to be nonquantifiable. An Empirical Approach to Estimating GIS Benefits generalizes this approach, Section 3: Other Benefit Measurement Considerations In Accelerating the Benefits of GIS Technology, it is noted that many GIS installations have long payback periods because costs start immediately but benefits do not begin to accrue until later (often much later). If the benefits can be seen earlier, the value of the benefits is increased. The author describes a new approach to data conversion that can significantly reduce start-up time. The Role of Organizational Politics in GIS Implementation cautions against the view that a successful GIS implementation is simply a question of choosing the right technology. Organizational polities can either help or hinder the implementation of GIS. The authors develop an organizing framework to advance the management of organizational political behavior as an integral part of the GIS technology implementation process. A topic not often discussed as a source of GIS benefits, the marketing of GIS products and services, is reviewed in the final chapter in Municipal GIS: Diversifying the Investment. The authors argue that GIS marketing opportunities are not widespread for municipalities, but can be significant under special circumstances. The City of Scarborough, Ontario, Canada is cited as an excellent example of the conditions under which the sale of municipality GIS products and services can be profitable.‘About the Editor Stephen R. Gillespie is an economist in the Office of Strategic Planning & Analysis of the U.S. Geological Survey. He received his Ph.D. in economics from George Mason University. He came to the Geological Survey in 1989 following 17 years of work at the Bureau of Labor Statistics. Dr. Gillespie's primary research interest is the economic value of geographically referenced data.Section 1: The Benefit Measurement OptionMeasuring the benefits and costs of GIS by Nancy J. Obermeyer, Ph.D., Associate Professor of Geography, Indiana State University, Terre Haute, Indiana 47809, USA. (Research interests: institutional and societal issues related to the implementation of GIS; political/ administrative geography.) Telephone +1- 812/237-4351; fax +1-812-237-2567; email genancyo@scifac indstate.edu Abstract The purchase and implementation of a GIS, like that of any other relatively expensive decision support technology, is more than a notion for most organizations, Successful implementation of GIS requires a rather substantial commitment in organizational money, staff, time and effort. Most organizations will make such a commitment only if the expected payoff justifies it. Justification usually begins with an effort to identify and then assign a price to the costs and benefits of adopting a GIS, and often ends by comparing the costs with the benefits. This chapter discusses techniques for measuring the costs and benefits of geographic information systems, beginning with the basics of benefit-cost analysis, including a discussion of the traditional and quantifiable costs and benefits in the GIS context. The chapter concludes with a discussion of the intangible costs and benefits of GIS implementation, including both institutional and societal issues. 1 Introduction ‘The purchase and implementation of a GIS, like that of any other relatively expensive decision support technology, is more than a notion for most organisations, whether they are public or private. Successful implementation of GIS requires a rather substantial commitment in organisational money, staff, time and effort. Most organisations will make such a commitment only if the expected payoff justifies it. Justification usually begins with an effort to identify and then assign a price to the benefits and costs of adopting a GIS, and often ends by comparing the benefits with the costs, in what has become known as a benefit-cost (or cost-benefit) analysis. This chapter describes the techniques for measuring the benefits and costs of geographic information systems. The chapter begins by describing the basics of benefit-cost analysis, including a discussion of the traditional and quantifiable costs and benefits in the GIS context. It continues with a detailed discussion of discounting. The chapter concludes with a discussion of the intangible costs and benefits of GIS implementation.2 Benefit-cost basics The terms benefit-cost and cost-benefit are used more or less interchangeably in the literature describing this technique. Using ‘benefit-cost’ has its advantages, however, the most obvious of which is that this word order implies that benefits outweigh costs in justified projects. Moreover, some scholars (e.g,, Zerbe and Dively 1994) argue that the term ‘benefit-cost’ implies a richer analysis than the alternative phrase. ‘Benefit-cost, therefore, is the phrase used in this chapter. The end of the twentieth century has brought with it a growing emphasis on economic efficiency within both public and private organisations. ‘Doing more with less,’ ‘downsizing,’ and ‘rightsizing’ have all become part of everyday language as euphemisms for budget-cutting and layoffs, In response to calls for increased efficiency, organisations of all types must now provide more reliable and defensible justification for every purchase or new initiative they undertake. Benefit-cost analysis is often the first line of defense in assuring that organisational GIS initiatives are justifiable; indeed, some organisations require it (Huxhold and Levinsohn 1995). While private organisations may use benefit-cost analysis, it is most commonly used in the public sector; the private sector may more easily rely on market prices and basic principles of cost recovery to assess the economic validity of implementing a GIS. The thorniest issues related to benefit-cost analysis are those arising from peculiarities in the public sector that make it difficult (and in some cases, impossible) to establish accurate market prices for their products, and to externalize many of their costs, as organisations in the private sector can do, GIS (and other information technologies) have never been a better buy than they are today. Declining prices have accompanied an explosion in the computing power of GIS that have become remarkably user-friendly in recent years. The potential of GIS to increase overall efficiency and productivity in organisations that rely on geographically referenced data has never been greater. Ironically, the current economic environment also means that the need to justify the purchase and implementation of GIS also has probably never been greater. The use of benefit-cost analysis as a justification for adopting geographic information systems is well established in the GIS literature (e.g, Dickinson and Calkins 1998, 1990; Wilcox 1990; Aronoff 1989; Huxhold 1991; Smith and Tomlinson 1992; Grimshaw 1994; Huxhold and Levinsohn 1995), Traditional benefit-cost analysis as an economic exercise begins with an organisation's identifying the costs associated with implementing a GIS (eg,, costs of hardware, software, transformation of maps and data into digital format, and adding or training staff), along with the expected benefits of using the technology (greater efficiency and effectiveness, for example). The next step inthe analysis requires that the organisation assign economic value (price) to both the costs and the benefits, sum each of them, then compare the results mathematically. If the value of the benefits exceeds the value of the costs, there is justification for making the purchase. Benefit-cost analysis typically covers a tmultiple-year period. This is particularly true for the organisation attempting to justify the implementation of a GIS, because of the high early costs and enduring benefits of the technology. Benefit-cost analysis has received criticism as a ‘dogmatic approach that knows the price of everything and the value of nothing’ (Zerbe and Dively 1994; xv). Not surprisingly, more sophisticated justifications approach the benefit-cost analysis as an art that recognizes the importance of ethics and values as well as the need to consider more interesting and complex questions of economic theory (Zerbe and Dively 1994; Gillroy 1992). Huxhold and Levinsohn (1995) recommend an examination of the financial, technical and institutional feasibility as an alternative to benefit-cost analysis; Grimshaw (1994) suggests a value- added approach to justify a GIS. 2.1 Elements of a benefit-cost analysis A typical benefit-cost analysis contains several elements. The most rudimentary element is the identification and assignment of economic value to the benefits and costs associated with an. should include any cost incurred as a result of implementing the project: purchase of any hardware, software or supplies, the cost of hiring any additional staff, or the training of existing staff, along with the cost of transforming maps and data into digital format. Costs of these types are classified as ‘tangible’ costs. Tangible costs are readily quantifiable, primarily because they represent costs of products that are bought and sold in the free market. Other products are not so teadily quantifiable, creating thorny problems in calculating the benefit-cost ratio, Along with costs, there are some benefits that the organisation can also classify as tangible. For example, if the organisation expects to be able to reduce its work force because of the increased efficiencies that implementation of the technology promises, the numerical value of the salary or wages and benefits of staff members will be both available and quantifiable. Similarly, it an organisation will be able to produce more detailed or more diverse information and information products as a result of implementing a GIS, it should also be able to improve its overall effectiveness. Thus, the first cut at benefit-cost analysis is the easiest: quantifying the tangible costs and benefits. As one might expect, the analysis usually becomes much more complicated. There are three major categories of benefits that a benefit-cost analysis for GIS should examine: (1) cost reduction; (2) cost avoidance; and (3) increased revenue(Huxhold 1991-244). Aronoff (1989) identifies five: (1) increased efficiency; (2) new non-marketable services; (3) new marketable services; (4) better decisions; and (6) intangible benefits (260-261). Aronoff's ideas of increased efficiency and new marketable services correspond to Huxhold's notions of cost reduction and increased revenue, respectively. It is important to recognize, however, that price reductions made possible by the lower costs associated with GIS implementation may actually stimulate demand for some geographic information products. This can result in increased revenues overall because of increased volume of sales (Rhind 1996). Huxhold defines cost reduction as ‘The decrease in operating expenses of the organisation, primarily caused by a savings in time by operating personnel performing their tasks more efficiently’ (1991:244). Cost reductions generally accrue because of the improved productivity of staff members responsible for the tasks performed using the GIS. Cost avoidance is the ‘prevention of rising costs in the future caused by projected increases in workload’ per staff member (Huxhold 1991:246). This benefit is consistent with, and more or less an extension of the first benefit, suggesting that once a GIS becomes part of an organisation's equipment, it may help to optimize the performance of a variety of both current and future tasks. This improvement in performance may make it unnecessary to hire new employees, or at least postpone such hires by making the best use of existing employees (246). Finally, Huxhold suggests that ‘A GIS can increase revenues ... by selling data and maps, increasing property tax collections, and improving the quality of data used to apply for state and federal grants’ (245). The rationalization of tasks that the GIS makes possible does indeed bode well for the increase in tax collections and the improvement in data quality. However, Dansby (1991) suggests that there may be legal impediments to the sale of such products in the public sector, depending on state and local regulations on copyrights and freedom of information. New non-marketable services are ‘useful products and services that were previously unavailable’ and will be used within the organisation (Aronoff 1989:260). Aronoff points out that the organisation will anticipate some of these benefits of geographic information systems. Other benefits, however, will not become apparent until after the GIS is up and running. Therefore, it will be difficult to assess the value of non-market services and include it in the benefit- cost analysis to justify adopting a GIS. As noted, implementation of GIS will make possible the sale of new geographic information products. These new products are the result of theinherent ability of GIS to extract and combine data in a variety of combinations and permutations, essentially enabling its implementors to deliver customized geographic information products on demand, For example, a city government with a comprehensive, large-scale GIS with current, accurate information can quickly produce a map of vacant downtown retail space for an individual wishing to open a bookstore, along with a table identifying the owners. Aronoff also suggests that the adoption of a GIS will produce ‘better decisions’ (261). This will occur, he believes, because ‘more accurate information and faster and more flexible analysis capabilities can improve the decision-making process itself’ (261). Again, determining the economic value of these ‘better decisions’ that may occur in the future is difficult at best. Moreover, Aronoff’s prediction of “better decisions” resulting from GIS adoption is optimistic. The large body of literature on organisational decision-making takes a more realistic view, essentially conceding that most decisions are made on the basis of incomplete information (see Simon 1945/76; Cyert and March 1963; Downs 1967; Douglas 11986, for example). In some cases, organisations deliberately limit their searches for information because of time and/or financial constraints. In other instances, organisations may be unaware of additional relevant information (seeking and. using information have costs). A GIS cannot eliminate these institutional limitations. 2.2 Variations on basic benefit-cost analysis There are several variations on benefit-cost analysis; one is cost-effectiveness analysis (Layard and Gleister 1994). Cost effectiveness analysis provides a comparison of the costs of providing a specific outcome, or performing a specific task, using different means. In adding this step to the benefit-cost analysis, the organisation would compare alternative means of performing the same task, for example, the cost of providing information on property ownership both with and without a geographic information system. Implicitly, adding this step forces the organisation to demonstrate not just that the benefits of its initiative outweigh the costs, but that a specific strategy for performing a speci more cost effective than other strategies (Layard and Gleister 1994: 21). task is Another variation is the calculation of the ‘payback period’ (Huxhold 1991:249). This is done by dividing the total cost of implementing a GIS by the estimated annual benefits of using the system. The resulting figure tells how many years it would take to accumulate enough benefits to pay for the cost of the system (Huxhold 1991:249). The benefits may include any or all of the benefits described earlier in this chapter. Not surprisingly, this calculation is fraught with the same difficulties apparent in typical benefit-cost analyses. Grimshaw (1995: 121) endorses a third variation, the value added approach. This approach emphasizes the new things technology enables the organisation todo, and what it adds to the capacity ot worth of the organisation, echoing Aronoff’s non-marketable services. 2.3 Refinements of benefit-cost analysis Several problems arise in performing cost benefit analysis, some of which apply across the board, others of which are unique to the public sector. There are several refinements of the process to address these difficulties. 2.3.1 Stakeholders The first of these is the problem of stake-holders (Layard and Glaister 1994; Zerbe and Dively 1994; Sen 1994). Within the context of any organisation’s mission, there are a variety of individuals and/or groups who have an interest (or a ‘stake’) in what the organisation does and the strategies it employs; an organisation's customers or clients are a crucial component in its survival (Weber 1946; Obermeyer 1990). The costs and benefits of the actions of an organisation may not be identical for all individuals or groups with a stake in the organisation's actions. For example, a company whose mission is to produce road maps includes among its stake-holders individuals and groups with varying needs for map detail. The average user who has found the company’s maps to be excellent navigation aids is unlikely to be impressed if the company makes a decision to provide more detailed maps if that additional detail comes at even a slightly higher price. I the company has a competitor that produces a map comparable to the original map at a price lower than the “new and improved” (and slightly more expensive) version, the company may, in fact, lose market share and perhaps suffer declining revenues as a result of its decision to offer greater detail ata higher price. The stake-holder problem is even more complex in the public sector, where levels of income among end-users vary greatly (Layard and Glaister 1994). For example, a professional nature photographer who can afford to hire a native Buide to lead her to the lair of an endangered animal (and may also be able to deduct the cost of the guide as a legitimate business expense for tax purposes, too) has no real need for a detailed, large scale map of the area. A Ph.D. candidate trying to study that same animal, on the other hand, would probably find such a map to be essential. Thus, trying to account for the costs and benefits to all stake-holders can become a complicated task. Certainly, a manager cannot afford to ignore the organisation’s various stake- holders. On one hand, to ignore stakeholders is to risk alienating existing and Potential customers and clients. On the other hand, the organisation may miss an opportunity to report higher benefits arising from its ability to enhance the satisfaction level of existing stakeholders, or by increasing the actual number ofstakeholders reported in its benefit-cost analysis. The flexibility of GIS may, in fact, make it possible for both private and public organisations to increase their product lines and fill new market niches at relatively small additional costs, and as a result, increase their customer and client bases by appealing to a wider audience. Itis up to the manager to estimate the expected value of these potential benefits and include them in the analysis. For example, the director of a local planning agency can build a case for a GIS by first identifying, then estimating the value of the GIS to the local government itself following Huxhold’s categories, for example. However, the availability of a large-scale, comprehensive GIS will also benefit local utilities, developers, and private businesses by making accessible high-quality “official” geographic information products that these groups can then use to inform their own decisions and to help in their day-to-day operations. Not surprisingly, some local governments have exploited the relationship with their stakeholders by working cooperatively with groups such as local utilities and business leaders to build and implement their GIS. For example, the Cincinnati Area GIS (Cincinnati, Ohio, USA) is a joint venture of the city and county governments, the telephone company, the local power and water companies, and local industry (which includes Proctor & Gamble) (Obermeyer 1995). Working with stakeholders has the added advantage of sharing costs among the participants, and improving the level of benefits as a result of the specific functional expertise ~ and data ~ that each participant brings to the project. 2.3.2 Time and discounting A second problem that arises in performing benefit-cost analysis is caused by the effects of time and economic inflation (Layard and Glaister 1994; Little and Mirrlees 1994; Stiglitz 1994; Smith and Tomlinson 1992, Field 1994). Even when the rate of inflation is low, over time the cumulative effects of inflation erode the economic value of the costs and benefits of any activity. Moreover, people perceive immediate benefits as having greater value than benefits far off in the future. As Zerbe and Dively put it, ‘a benefit received today is worth more than one in the future’ (1994: 43). Similarly, a cost that occurs far in the future has far less significance than a cost today (Field 1994). In order to provide a realistic assessment of costs and benefits, organisations must take this into account and adjust their benefit-cost calculations accordingly. A refinement designed to address this problem is discounting (Smith and Tomlinson 1992: 255-56; Field 1994: 119-123), The idea behind discounting is to deflate the costs and benefits in order to remove the effects of inflation. In short, discounting provides a mechanism to operationalize the old saw that moneydoesn’t go as far as it used to. Discounting is needed to provide an accurate assessment of the value of implementing a GIS because of (1) the multi-year life expectancy of a GIS, and (2) the resulting fact that GIS costs and benefits are also spread over multiple years. Still, discounting is not a simple matter, particularly with GIS, which have their largest outlays early in the life of the project, then experience declining costs, but whose benefits last long into the future. Front-end costs include the purchase of hardware and software and either hiring new staff or paying to educate existing staff. In addition, an organisation can expect high start-up costs. arising from the need to put analog maps into digital form. These start-up costs, are likely to seem insurmountable for many small and medium-sized cities. The perception of insurmountable costs is likely to be compounded by the recognition that the local government will not begin to realize the benefits of a GIS (which, as noted, are enduring) for several years. Discounting applies to both costs AND benefits. Its primary purpose is to aggregate a series of costs and/or benefits that occur over the life of a project (1994). The formula for discounting includes three elements: present (or future) value, the length of time appropriate for the project, and an appropriate discount rate (Field 1994). Formula #1 General Formula for Discounting Present value = Future value (1 + discount rate)"years To calculate the present value of $1,000 ten years in the future with bank interest rates at 5%, the formula is as follows (Field 1994): Formula #2 Calculating present value of $1000 in Ten Years Present value = 1000_ = $613.90 (1 +.05) Discounting over a multi-year project like a GIS is more complicated because of the high front-end, but then declining costs and the low front-end, then rising and finally steady benefits of implementing the technology. Multi-year projectsare handled as in the following example, a hypothetical GIS implementation. Assume that the costs and benefits for the first 7 years of the project are as shown below, and that the discount rate is 6%: Table #1 7 Years of Costs and Benefits for Hypothetical GIS Year 1 2 3 4 5 6 Zz i——_—___4..__3_4 5 6 7 Costs 100,000 70,000 50,000 25,000 25,000 25,000 25,000 Benefits 0 25,000 50,000 70,000 70,000 70,000 70,000 Calculate the present values of costs and benefits using the following formula (Field 1994): Formula #3 Discounting Cost of Hypothetical GIS (7-year projection) PVcost= $100,000 + 70,000 + 50,000 + 25,000 + 25,000 + 25,000 + 25,000 14.06 (14.06) (1+.06)3 (1+.06)4 (1+.06)5 (1+.06)6 Formula #4 Discounting Benefits of Hypothetical GIS (7-year projection) PVbenefits = $0 + 25.000 + 50,000 + 70,000 + 70,000 + 70,000 + 70,000 14.06 " (1+.06)? (14.063 (1+.06)4 (14.06)5 (14.06)6 Choosing a discount rate is not a simple matter. First, there is the issue of real versus nominal interest rates. Nominal interest rates are the actual interest rates available in the market. In order to know the real interest rates, its necessary to adjust these nominal figures for inflation. For example, if the nominal interest rate is 8%, but the average rate of inflation over the period in question is 3%, then the real interest rate is 5% (Field 1994). In all instances, managers must always consistently use either real costs and real discount rates, or nominal costs and rates (Field 1994). The plethora of interest rates in use in the world of modern finances complicates the process of discounting. A review of the business/ finance section of any reputable newspaper shows a large variety of interest rates from which tochoose: rates on normal savings accounts, certificates of deposit, bank loans, and government bonds, to name just a few. There are two views on this issue. The first view suggests that the discount rate should reflect the way people think about time and money. Economists refer to this as the rate of time preference. For example, most people would prefer receiving $1 today, rather than waiting ten years to receive that same amount, This is a Positive rate of time preference. Those who support this view would use the average interest rate on 2 bank savings account as their discount rate (Field 1994) The second approach to choosing a discount rate is based on the notion of investment productivity. In this view, people anticipate that the value of future returns will offset the cost of investment today. In the public sector, this means that expenditures used for long-term projects should yield rates of return to society that are similar to what the same expenditures could have earned in the Private sector (Field 1994). Using this reasoning, an organisation should use a discount rate that reflects the rate banks charge their investment borrowers; these rates are typically higher than savings account rates (Field 1994), The debate about discount rates ultimately leaves it up to the manager to and justify -- an appropriate discount rate. One resolution is to perform a sensitivity analysis by repeating the discounting of benefits and costs using two or more different interest rates. It is not difficult to grasp the impediment that discounting imposes on a benefit-cost analysis for GIS, The high start-up costs of GIS will seem even higher than they are in light of the positive rate of time preference. On the other hand, the benefits of GIS will seem smaller after discounting. If one carries out the calculations on the hypothetical 7-year GIS implementation example Provided above, it will tke the entire period for benefits to begin to outweigh Costs. A real-life GIS may take even longer to reach the break-even point, But it is important to remember that the benefits of GIS are enduring. Once an organisation has paid the high front-end costs, particularly those associated with higher staffing costs and digitizing, it will reap the benefits of the technology Year in and year out. Its therefore necessary to emphasize the enduring nature of the benefits of GIS, This can be accomplished by carrying out the analysis for as many years as required to achieve a favorable benefit-cost ratio. In addition, however, the manager should also make it clear that digitizing is a one-time. only expense. Finally, the manager should point out that the investment in GIS will endure for generations to come. 2.33 Uncertainty and risk Time also influences the level of risk and uncertainty among the benefits and costs of an organisation's initiatives. Since humans do not possess perfect 1-10knowledge about the present, it is unrealistic to expect to foresee the future. Zerbe and Dively (1994) identify two types of uncertainty: (I)uncertainty caused by the unpredictability of future events; and (2)uncertainty caused by limitations on the precision of data. Both types of uncertainty are relevant to GIS benefit. cost analysis, particularly in the past. Throughout much of the time since GIS has become commercialized, there has been a great deal of uncertainty about both costs and benefits of the technology. For example, on the one hand, lack of experience in the early days of commercial marketing of GIS meant that many organisations underestimated the long-term costs of the implementation, such as digitization costs, consultation fees, and training expenses that often far surpassed initial estimates. On the other hand, today’s turn-key GIS products (¢.g.,"Maptitude’ and ‘Arcview’ ) enable GIS adopters to know with greater Certainty the cost of the basic package. However, there remains a great deal of uncertainty associated with other critical elements of GIS start-up, namely hiring and/or training staff, digitizing maps and gathering and entering data to customize the GIS. In evaluating the wisdom of purchasing a geographic information system, both the benefits and the costs of implementation may be difficult to assess because of the uncertainty surrounding them. It is well known and generally accepted that the costs of implementing a GIS extend beyond the purchase of hardware and software, For example, assembling and maintaining data, along with training staff are two areas that will require expenditures after the initial Purchase of the GIS. The exact dollar amount of these additional costs is usually difficult to know ahead of time. However, as Smith and Tomlinson (1992 254) optimistically note, ‘the costs [associated with implementing a GIS] are loaded heavily in the early period whereas the benefits increase... and then remain constant,’ This assumes a stable organisation and external environment. The wise manager will prepare for unexpected contingencies throughout the life of the system. The uncertainties surrounding the calculation of benefits and costs of implementing a GIS have been the subject of discussion by several authors (e.,, Aronoff 1989; Huxhold 1991). There are several approaches to handling uncertainty in benefit-cost analyses. The first is to ignore it, which is appropriate if the uncertainty is minor, or where the analysis is intended to be only a rough estimate. It may also be possible to reduce uncertainty by gathering additional information to reduce uncertainty, and the organisation should make every effort to do so. The project manager should also talk with other similar organisations that have implemented GIS in order to add to their knowledge base. Finally, the organisation can recognize uncertainty and factor it into the benefit-cost analysis explicitly (Zerbe and Dively 1994: 371). 2.3.4 Selling dataThe sale of geographic information products is often suggested as a ‘benefit’ to be included in a benefit-cost analysis. Properly managed, these benefits can indeed be significant. For example, David Rhind reports that Great Britain’s Ordnance Survey generates $100 million in annual revenues through the sale of geographic information products, Ownership of the copyright to data sets is a Prerequisite to having the right to make such sales. In most countries, the national government holds the copyright to all such data sets they develop; the U.S. federal government is an exception to this rule (however, U. S. cities and states can copyright data). ‘There may be difficulties in establishing prices for geographic information products, but an organisation can compare its geographic information products with similar products offered for sale by the private sector in order to establish a basic price list. Once products are officially offered for sale, the organisation can adjust the price to try to achieve its desired sales and revenue goals. Sale of data and other geographic information products may expose an organisation to liability risks arising from negative outcomes associated with tunintended uses or deliberate abuse of the products. The wise manager will consult with the organisation's legal department to resolve these issues, In short, organisations contemplating the sale of data as a benefit of their GIS should be aware of the pitfalls as well as the benefits. The potential rewards certainly warrant the sale of geographic information products, ifthe organisation is permitted to do so. The sale of data is discussed fully in another chapter, 2.3.5 Externalities and spillovers Externalities and spillover effects are mirror-image problems that may arise in developing benefit-cost analyses. Externalities arise when a firm shifts its costs outside the organisation, usually by ignoring a problem (Papageorgiou 1978). Externalities are particularly troublesome for public institutions, which are limited in their ability to externalize, yet frequently are the only hope for cleaning up problems created when private organisations externalize their costs, For example, in the U.S, the federal government has assumed responsibilty for cleaning up toxic waste dumps created by the private sector. It is true that the government could ignore the problem, but this strategy could lead to problems cropping up elsewhere, for example in the overall health of people living near the sites. These are ramifications that private firms can - and often do - ignore. Spillover effects, or positive externalities, are the benefits that an organisation enjoys because the activities of another organisation extend beyond its jurisdictional boundary (Faulhaber 1975), Private firms often enjoy the spillover effects created by public expenditures (e. transportation networks, sewer and water projects), just as some public agencies may benefit from the activities ofPrivate firms or other jurisdictions. For example, a GIS firm that includes government census data with its software is able to add value to its product and thus receives tangible economic (spillover) benefits from the government's data gathering and dissemination activities. Handling externalities and spillover benefits in the benefit-cost analysis is a matter that merits mention. In the case of governments that are performing a benefit-cost analysis as a prelude to their implementation of a GIS, Smith and Tomlinson (1992:250) recommend incorporating ‘all benefits .. in the analysis whether or not they accrue to the potential GIS purchaser or to the departments that will use the information products.’ Among the non-government groups that may realistically expect to benefit from the implementation of a GIS are taxpayers, private firms, and special service districts (Smith and Tomlinson 1992:250). How does an organisation handle these externalities and spillovers? First, it is necessary to identify them. Perhaps the most significant externality of a GIS is the potential loss of privacy associated with the ability of GIS to disaggregate data. Large public data sets based on national censuses are most likely to raise privacy concerns, however, some private firms have collected large data bases that may also threaten the privacy of individuals. It is extremely difficult to place a value of this potential loss of privacy to an individual. Is it $1 per person? $10? More? In this instance, managers are left to make their own assessment, Spillover effects of a GIS, as Smith and Tomlinson (1992) note, may accrue to taxpayers, private firms, and special service districts as they reap the benefits of readily accessible maps, data and other geographic information products made possible because of the implementation of a GIS. Spillovers, while still problematic, are a bit easier -- and obviously more pleasant —- to handle. For ‘example, the county assessor might anticipate shorter transaction times for fulfilling requests for basic information, such as a plat map. In order to assess the value of these time-savings to customers and clients, one should multiply the average number of annual transactions by the economic value of the anticipated ‘time savings per transaction, which in tum is based on the average hourly wage figure for the region. Given the range of beneficiaries of spillover effects, there is great value in paying careful attention to assigning benefits to spillovers. Governments, in particular, since they have a broad (and in some cases nearly universal) set of stakeholders, can bolster their anticipated “benefits” by considering spillovers. 2.3.6 Intangible benefits and costs Many of the benefits and costs that contribute to the development of a benefit- cost analysis are intangible. For example, how can one place a numerical economic value on increased reliability, or institutional confusion? Aronoff 13agrees that adopting a GIS may bring intangible benefits to an organisation, Smith and Tomlinson (1992:249) define intangibles as ‘...not as much a separate category of benefits as they are a class of benefits that is more difficult to quantify’ These benefits might include such things as better internal communication in the organisation, improved morale and a better public image (261). Obviously, placing a precise dollar (or Deutschmark or franc or pound) value on these intangible benefits is not Possible. Still, it is necessary to give an estimate. Organisations may begin by describing these potential benefite and costs in text accompanying the benefit-cost analysis. Assigning an economic value to intangible benefits is part of the “art” of the benefit-cost analysis. Assigning such value may be accomplished by using surrogates. For example, improved morale may result in reduced staff turnover, which in turn results in lower costs for personnel searches and training. These items are easier to value than morale. Organisations may experience negative changes as they implement GIS (Grimshaw 1994; Huxhold and Levinsohn 1995), resulting in additional intangible benefits and costs. For example, an organisation may find as it introduces GIS that those who are most knowledgeable become more important to the organisation; conversely, those who are slow to accommodate to the technology may find themselves losing ground and eventually, their jobs. The overall result may be institutional confusion, which may in turn temporarily cause a drop in productivity. While a manager might find it impossible to place a precise economic value on institutional disarray, assigning an economic value to time lost to the disruption of the social order of the organisation is easier to do. Similarly, organisations may find that their foray into the world of GIS may give them increased visibility and an enhanced reputation. For example, the U. 5. Department of Housing and Urban Development is attempting to solidify its client base by collaborating with the Caliper Corporation to develop and sell its Consolidated Planning Software GIS program. Similarly, the U.S. Geological Survey notes the value to society of improved decisions made possible by its many mapping products (Bernknopf, Brookshire, Soller, McKee, Sutter, Matt, Campbell 1993). Given the zeal of the calls for ‘downsizing’ the public sector, solidifying this relationship makes sound organisational sense, given the importance of the relationship between organisations and their client groups (Weber 1947; Obermeyer 1990). Again, in assigning an economic value to these intangible benefits, organisations need to be creative, For example, public organisations that make available low-cost or even free geographic information products to citizens ‘might place a value on the good will they generate through these actions bycalculating the aggregate cost savings that their customers or clients received by using the organisation’s products rather than more expensive commercial alternatives. Assigning value to intangible benefits and costs can be difficult. In the case of benefits, it is extremely important to do So, in order to accumulate benefits to offset costs as part of the analysis. In the case of costs, it is necessary to do so in order to achieve fair and honest results. As noted, this part of the analysis is as much art as it is science, Still, through careful thought, an organisation can assign plausible and defensible values to these intangibles, Table2 Costs and Benefits of GIS Category Costs Benefits Economic Hardware Cost reduction (tangible) Software Cost avoidance Training Increased revenue New staff New market services Additional space Institutional Internal personnel shifts _Improved client relationships (intangible) Layoffs Better decisions Improved morale 3 Conclusion Benefit-cost analysis is the preferred method to justify the implementation of a geographic information system, particularly in public organisations. The GIS must be assessed in comparison with existing practices and technology used in the organisation. In addition, the organisation must also consider other alternative means of performing the same tasks. Making these comparisons Fequires the organisation to perform a separate benefit-cost analysis for each alternative under consideration. The alternative with the highest ratio of benefits to costs is the most efficient one. The purpose of this discussion of benefit-cost analysis is to briefly describe the method and the related problems in implementing it. Benefit-cost analysis plays an important role in providing an economic rationale for an organisation's decision to adopt a GIS. Performing a benefit-cost analysis is not always easy, but it may be a necessity for some organisations, and it is advisable for all others,Taking the time and effort to perform a thoughtful, careful benefit-cost analysis is a first step in building a foundation for a successful GIS implementation. References AronoffS 1989 Geographic Information Systems: A Management Perspective, Ottawa, Ontario, Canada, WDL Publications Bernknopf R L, Brookshire DS, Soller D R, McKee M J, Sutter J F, Matti C, Campbell R H 1993 Societal value of geological maps. Washington, DC, U’S, Geological Survey Cleveland H 1985 The twilight of hierarchy: speculations on the global information society. Public Administration Review 45(2):185-195 Coopers and Lybrand 1996 Economic aspects of the collection, dissemination and integration of government's geospatial information, Southampton, U. K, Ordnance Survey Cyert R M and March J G 1963 A behavioral theory of the firm. Englewood Cliffs, NJ: Prentice-Hall. Dansby B 1991 Recovering GIS development costs by copyright use. GIS World 4(2) 100-101 Dickinson H J, Calkins H W 1988 The economic evaluation of implementing a GIS. International Journal of Geographical Information S} 2(4) 307-327 Dobson J E 1993 The G in GIS: technology transfer is a major mission. GIS World 6(4):26-27 Douglas M 1986 How institutions think, (Syracuse, N Y: Syracuse University Press) Downs A 1967 Inside bureaucracy. Boston, Little, Brown Faulhaber GR 1975 Cross-subsidization: pricing in public enterprises. American Economic Review 65(5) 966-977 Field B C 1994 Environmental economics: an introduction. New York; McGraw: Hill Gold, 1993 UNITAR promotes GIS training programs worldwide. GIS World 6(4):56-59 Grimshaw D J 1994 Bringing geographical information systems into business, Essex, England, Longman Scientific & Technical Huxhold WE 1991 An introduction to urban geographic information systems, New York, Oxford University Press Huxhold W E 1995 Managing information systems projects. New York, Oxford University Press Layard R and Glaister S (eds) 1994 Cost benefit analysis, second edition, New York, Cambridge University Press Little, Mirrlees 1994 The costs and benefits of analysis: project appraisal and planning twenty years on. In Layard R and Glaister S (eds) 1994 Cost benefit analysis, second edition, New York, Cambridge University Press: 199-234Oakland WH 1972 Congestion, public goods and welfare. Journal of Public Economics 1(3)339-357 Obermeyer N J 1990 Bureaucrats, clients and geography. Chicago, University of Chicago Geography Research Papers, #216 Obermeyer N J 1995 Ameliorating inter-organisational conflict in order to share Seographic information, in G. Rushton and M. Goodchild (eds.), Organisations sharing geographic information, New Brunswick, NJ, Center for Urban Planning Research. Obermeyer N J, K Pinto 1994 Managing Geographic Information Systems, New York: Guilford Press Olson M 1971 The logic of collective action: public goods and the theory of groups. Cambridge, Mass, Harvard University Press Papageorgiou GJ 1978. Spatial externalities: parts I and II. Annals of the Association of American Geographers 68(4)465-492 Rhind D 1992 Data access, charging an copyright and their implications for geographical information systems. International Journal of Geographical Information Systems 6(1)13-30 Rhind D 1992 Personal communication Samuelson P A 1954 The pure theory of public expenditures. Review of Economics and Statistics 36(4) 387-89 Sen A K 1994 Shadow prices and markets: feasibility constraints. In Layard R and Glaister S (eds) 1994 Cost benefit analysis, second edition, New York, Cambridge University Press: 59-99 Simon H A 1945/1976 Administrative behavior: A study of decision-maki rocesses in administrative organisations, New York: Free Press. Smith D A, Tomlinson RF 1992 Assessing the costs and benefits of geographical information systems: methodological and implementation issues. Intemational lournal of Geographical Information Systems 6(3) 247-256 Stiglitz 1994 Discount rates: the rate of discount for benefit-cost analysis and the theory of the second best. In Layard R and Glaister S (eds) 1994 Cost benefit analysis, second edition. New York, Cambridge University Press: 116-159 Tosta, N 1994 Data Data: The Data Wars, Parts I, I” Geo Info Systems 3(1)25- 2B Weber M 1946 Bureaucracy. In H.H. Gerth and C.Wright Mills, (eds. and trans.), From Max Weber: Essays in Sociology, New York, Oxford University Press, 196-244. Zerbe RO, Jr, Dively D D 1994 Benefit-cost. analysis in theory and practice, New York, Harper Collins College PublishersNote: This material was originally printed in: Geographical Information Systems: Principles, Techniques, Applications and Management, 2nd Ed., 2 Vol. Set Edited by: Paul Longley (Univ. of Bristol, UK) Michael Goodchild (Univ. of California at Santa Barbara) David Maguire (Environmental Systems Research Institute, Inc. (ESRI, Redlands, California) David Rhind (Ordance Survey of Great Britain, Southampton, UK) ISBN #, 0-471-32182-6 Hardcover Price: US$375.00 Published: Jan 1999 Copyright: 1999 The material was reprinted with the permission of the author.Mike Mull, GIS Supervisor Town Of Cary, North Carolina Management Information Department Cary, North Carolina PROVING THE WORTH OF GIS IN LOCAL GOVERNMENT ABSTRACT: Significant changes in the social, political, and technological arenas over the past decade have brought enormous pressures to bare on local governments. Local governments have been forced to rapidly adapt to these changes by becoming leaner, efficient, cost effective and more customer based. The Town of Cary, located near the Research Triangle Park in North Carolina, responded to these and local ‘growth pressures by participating in a countywide GIS effort. This response includes access and use of information within and between departments, between other governmental entities, and between government institutions and private citizens. This presentation will showcase how GIS proved its worth in the Town of Cary. TOWN OF CARY, NORTH CAROLINA GIS OVERVIEW The Town of Cary, North Carolina currently is using MapInfo, GDS, and AutoCad software products in their GIS effort. There are two full time GIS staff; Mike Mull, GIS Supervisor and Steve Nelson, GIS Specialist. MapInfo software is the primary software used to distribute digital information to town staff. Over 125 employees have at least participated in an introductory training course. There are approximately 100 data layers available to the staff and citizens. MapInfo resides on a NT server running version 4.0. ‘The Engineering Division is running local installation AutoCad 14 under Windows 95. ‘We have two licenses for the GDS software installed on a Digital Equipment Corporation Alpha Workstation and a DEC Xterminal. The Town of Cary is connected to Wake County by a 16 megabit communication line which permits fast transmission of data. WHY DID CARY NEED GIS? Cary is and has been one of the fastest growing municipalities in North Carolina for several years. GIS has been an invaluable tool for the Town of Cary in helping to manage its growth. Cary’s population has increased. from 7,000 in 1970 to over 83,000 currently. ‘The town limits have expanded form 6 square miles in 1970 to over 40 square miles. WHAT IS THE WORTH OF GIS TO CARY? Decision makers in Cary as with most governmental agencies and private companies want to know they are getting their money's worth, Of the GIS projects in Cary, only two have an easily measurable dollar value. It would be difficult and time consuming to place an actual dollar amount on the worth on the many aspects of the GIS 119implementation is Cary. Most aspects of the GIS implementation has provided additional services beyond those that were provided in the past. Benefits relative to the day to day operations, planning for future growth, and aiding in natural disaster relief are harder to place a value on The two project that had easily calculated dollar amounts associated with them were related to increased tax revenue. The first project identified a shopping center that was not annexed properly. It was not being taxed as being in the Town of Cary, but the town was providing all the services, police, fire, and utility. In addition to not paying taxes, the utility fees were much lower because it was assessed as though it was in the town limits of Cary. The Town of Cary had lost $250,000 in revenue through the lost taxes and utility fees. GIS based procedures were established to verify that annexations were being properly tracked to prevent the loss of future revenue. ‘The second project was titled the “PUDZONE PROJECT”. One third of Cary’s residents live in a PUD (planned unit development). Every parcel is zoned as PUD. A PUD may have both residential and commercial landuses. GIS was used to identify and assign the actual zoning based on the landuse within each PUD. This information was sent to the ‘Wake County tax assessor’s office in the form a map and a report sorted by tax account ‘number for each parcel in the PUD where the zoning codes did not match. Bottom line is 42,000 additional dollars in tax revenue is now being collected. Measuring actual dollar value for other GIS projects is much more difficult to quantify and time consuming to calculate. How do you measure the value of being able to answer citizens’ questions in minutes rather than hours or days? Is it possible to quantify the benefit of creating annexation and rezoning presentations for Town Council meetings that are easily viewed in color and also available for preview to council members as well as the public over the Internet? How much time and money is saved by being able to identify property owners in a defined area and creating a digital list of their names and addresses within minutes compared to doing a manual search , writing down each name and address, and then typing them into a letter? Finally, how valuable is a tool that streamlines the organizational planning and tracking of clean up after a hurricane? These are just a few of the benefits experienced by the Town of Cary through the implementation of GIS. BELOW ARE SOME OF THE DEPARTMENT BY DEPARTMENT. DESCRIPTIONS OF DAY TO DAY OPERATIONAL BENEFITS AS WELL AS PROJECT SPECIFIC APPLICATIONS OF GIS IN THE TOWN OF CARY. Finance - Water Meter Reading Route Balancing - Tax Collection ~ Development Fee Tracking 1-20Fire - New Fire Station Locations - Accreditation + ISO Ratings + Fire Call Analysis + Inspection Scheduling - Fire Hydrant Inspections - E911 Calls - Spills ~ Locating Lost Persons Police - Balancing Beats - Incident Pin Maps ~ Informational Tool BOLL - Emergency Preparation PwUT ~ Road Repair ~ Recycling + Solid Waste Collection ~ Water Conservation Efforts ~ Maintenance Scheduling and Tracking - TOC Facilities Maintenance - Sewer Spill Reporting - Water Sampling Reporting + Information Tool Personnel - Directional Maps Development Services Construction Management - Addressing - Inspections Districts ~ Condemnations Engineering + Utility updates - Traffic counts ~- Thoroughfare Planning ~ Studies and Modeling internally and externally 121- Pavement Management Analysis ~ Powell Bill Planning - Annexation Review and Presentations - Rezonings - Growth Planning - Sites/Subs Tracking ~ Cellular Tower Tracking = Info Tool Parks and Recreation - Locating Parks - Park Site Planning - Program Registration - Notification to Homeowners = Team Assignments Management Information Services - Updating Data Bases Administration ~ Special Projects ‘Town Council ~ Internet Previewing of Council Agendas - Power Point Presentations at Council Meetings Conetusion GIS has been and is an invaluable tool for the Town of Cary in managing its immense growth while greatly increasing the level of service to its citizens.BENEFITS AND CHALLENGES: INTEGRATING AM/FM WITH WORK MANAGEMENT Jay Stinson, PMP. Executive Manager Enterprise Professional Services Intergraph Corporation (LR24B2) Huntsville, Alabama 35894-0001 John L. MeCoy, PE DIS Manager TU Electric Company 115 W. Seventh Street PO Box 970 Fort Worth, TX. 76101 1g an AM/FM system and a Work Management System. ‘These systems provide the tools to perform engineering design and analysis for electric distribution projects and improve business methods by streamlining processes, eliminating paperwork, and improving communications with field offices. This paper discusses project management issues and challenges encountered and benefits reaped by the integration. : INTRODUCTION ‘Texas Utilities (TU) completed deployment ofthe Distribution Information System (DIS) in September 1997. This project represents a significant achievement in combining AM/FM/WMS applications and legacy mainframe systems to form a true enterprise solution for a client base of 1,500 employees. This paper reviews the issues encountered by the Project Management team and the benefits Texas Utilities has already received by implementing an enterprisewide system. COMPANY BACKGROUND ‘TU is an investor-owned utility whose United States operations provide service to East, North Central, and ‘West Texas, including the densely populated Dallas/Fort Worth area, ‘The company serves 4.0 million electric and gas customers in its 100,000 square mile service area. Approximately 65,000 miles of electrical distribution lines and 23,000 miles of gas main serve the energy needs of one-third of Texas, The staffing level is currently at 15,000 employees. ‘The merger of Dallas Power and Light, Texas Electric Service, and Texas Power and Light in 1984 formed TU Electric, until recently the principal operating subsidiary of TU Company. A re-engineering ‘and downsizing in late 1992 was undertaken to improve TU's competitiveness in the energy market and resulted in many innovative methods of performing business processes, accompanied by a work-force reduction of almost 4,000. One ofthe innovations endorsed by the re-engineering effort was the Distribution Information System, which has eliminated the dissimilar systems utilized in the former ‘operating companies. ‘TU Australia was established in tate 1995, with the acquisition of Eastern Energy as a part of the privatization of the industry by the Vietorian government. Eastern Energy provides distribution and retail 123sales of electric energy and serves 481,000 customers from the eastern suburbs of Melbourne to the New South Wales border. Through Eastem Energy and TU Australia, TU intends to be a long-term supplier of energy and related services in the Australian market, Branching out further, TU acquired Lone Star Gas Company, one of the largest natural gas companies in Texas, in 1997 and The Eastern Group in the United Kingdom In 1998. Texas Utilities also has subsidiaries in gas transmission, telecommunications, and energy supply. ‘The Texas-based electric and gas operations are organized into five regional organizations. The business functions in each region include operations, customer service, construction, maintenance, and. ‘engineering. Within each region are service centers where the majority of the customer interface and construction activities occur. Corporate-level engineering, operations, and marketing groups support the region organizations. A tiered approach has been adopted for planning service to customers, Based on the projected cost and complexity, projects may be handled by utility designers atthe service centers, or by engineers and technicians atthe corporate level. This tiered approach provides greater efficiency and service response by placing the routine work near the customer while maintaining centralized engineering expertise for the more complex projects. Locating the utility designers at the service centers with the distribution crews also improves communication at the Engineering/Construction interface. PREVIOUS DIS SYSTEMS ‘The three predecessor operating companies each developed separate work-order management and mapping systems over the past three decades. Prior to DIS, there was little consistency in the tools used to provide service to customers. ‘One system consisted of a PC-based, cost-estimating system and mainframe-based project tracking, cost management, and property accounting systems. Automated landbase mapping functions used the IBM GFIS platform, but electrical facilites were mapped manually on mylar sheets. Facilities on the maps ‘were not identified by X,Y coordinates, but rather by a square-mile numbering system. Some electrical facility attribute data was maintained in numerous files on the mainframe. ‘A second system used both mainframe and VAX systems. The mainframe systems included a project ‘tracking system and a property accounting system. Graphical design and cost estimating, as well as mapping, were performed on a vintage Intergraph system, but electrical connectivity was maintained in a mainframe database. TU engineers developed the grid coordinate system in the 1950s, customized to the specific shape of the service territory. ‘The third system used the mainframe to perform project cost estimating, tracking, and property accounting. Automated landbase mapping functions were performed on the IBM GFIS platform. The ‘geo-coded electrical facilities and their attributes were stored in the property accounting system and could be programmatically overlaid on the landbase for the plotting of paper maps. Electrical connectivity was also maintained on the mainframe, Grid coordinates were based on the Texas State Plane coordinate system. PROJECT ORGANIZATION ‘TU initiated its DIS project in May 1993, and the first step was to build a prototype, or proof of concept, for integrating AM/FM with WMS. TU, traditionally a mainframe company, also wanted to test and validate client/server technology. TU chose Intergraph's FRAMME product as the AM/FM tool and Logica’s WMIS product as the work management provider. Selecting Intergraph as the prime contractor, as well as using the (ntergraph AM/FM application, reduced the number of direct contractors, thus avoiding potential conflict during the integration of FRAMME and WMIS. 128‘A project team was formed to include TU's information systems (IS) and engineering personnel and the Intergraph/Logica team. The team was segmented according to areas of responsibilities, with each group ‘consisting of (S and engineering people to work with the Intergraph/Logica team. This project ‘organization was one of the key factors in making this project altogether successful. By having the ‘engineering team available to define user requirements and perform system testing and the IS team to provide technical support, the project team was able to develop a system that met the users’ needs and was technically feasible. The following diagram shows the project management organization. Executive Sponsors Paul Willams. HB. Keating Steering Committos ‘Judd Putnam Ken White Project Management ‘John McCoy Craig Carter Intergraph AMEM was MAM-TLM | | Conversion | | Integration J. Stinson R. Morris 1M Smith R Smith R. Smith M. Young Relseminger | |. Litetoid N.Barwig T.MeCastin J. Fur D. Kendrick Because this was such a complex undertaking, communication was crucial tothe project's success. To facilitate the information flow, TU conducted a weekly project-review meeting, with representatives fom cach group participating, Each group's project schedules were reviewed, then summarized in a high-level schedule, Project management analyzed delays and reviewed proposed schedule and scope changes. TU adhered closely tothe originally conceived scope ofthe project, with the goal of implementing a system ‘with basic functionality quickly and adding advanced functionality later. ‘One product of this team meeting was alist of issues that included a description of each problem, the responsible person, and the target resolution date. The issues list was reviewed at each meeting. ‘This process helped the team address significant issues in a timely manner, rather than neglecting them until they became critical. 1.25PROJECT METHODOLOGY ‘TU and Intergraph chose a phased approach to managing the DIS project. The following diagram outlines the project phases and is followed by descriptions of each phase. SOLUTION Engineering «-SOLUTIONLifecycle Analyze current systems and develop requirements Build and test prototype Design ultimate system Develop, integrate, and test Implement, train, and accept Cutover, operate, and sustain Assess Phase ‘The team analyzed TU’s current systems and identified the requirements for the DIS. They outlined the major developmental activities and schedules, The result was an overall project plan and budgetary estimates that were presented to executive management for approval before proceeding to the next project phase. Define Phase ‘During this phase, the team constructed a prototype system with basic functionality. Test plans were developed to validate the AM/FM/WMS software functionality and to test the capabilities of client/server technology. The prototype was conducted in a UNIX environment. During this time, server technology and Microsoft Windows NT began to mature as corporate-class solutions, Following a technical and ‘economic evaluation, TU decided to implement the full system on the NT environment, Design Phase ‘After completing the prototype successfully, the team began to design the final system. The knowledge and experience gained from building the prototype aided the team immensely during this phase. At the Completion of the Design phase, a design walk-through session was held to review all ofthe design documents. The team also focused on the primary integration points between FRAMME and WMIS to ‘ensure that the applications were synchronized. 1-26Build Phase ‘When the design was accepted, the teams began to build the software. Both Intergraph and Logica focused on developing the application software. TU began developing test and verification plans to ensure that the customized software would meet TU's requirements. {nergraph and Logica divided the software into logical units and delivered them to TU for unt testing prior to the final delivery and system integration. These incremental deliveries served both the software developers and end users positively. ‘The developers received early feedback on problems or issues before getting too far into the developmental process. TU, in turn, was able to judge the quality of the software without waiting until the final delivery, and they confirmed periodically thatthe vendors were meeting the development schedule. ‘The other major activity during this period was developing data migration tools to move TU's digital data from its mainframe and legacy Intergraph systems. This data would be used during the Delivery phase to verify that the software would function against the production data. Deliver Phase ‘The main purpose of this phase was to verify thatthe integrated systems supported the business workflows as defined by TU in its test and acceptance plans. Various workflow scenarios tested the end-to-end functionality required to conduct daily business within TU. For this phase, TU brought in an additional fifteen people to execute the test plans and log any problems. As these Software Discrepancy Reports (SDRs) were logged, developers addressed the issues and resolved the SDRs. TU then delivered the ‘corrected software tothe testers for resolution verification. TU also conducted regression testing. During this period, TU delivered production data to be tested for compatibility with the software. This strategy provided a real-world approach to testing and revealed problems that would have been undetected, otherwise. In many cases, these problems were difficult to resolve. Often, the team would have to decide whether to redesign the software or correct the data. In most cases, the more reesonable approach was to correct the data. Deployment Phase Once the software had been accepted, TU selected a representative pilot area in which to put the system into production. Although TU had conducted extensive testing during the project, they now encountered ‘unexpected issues that had to be resolved before moving forward. Following hands-on training in a classroom environment, trainers and support people went on site for approximately three weeks to provide ‘on-the-job training and moral support to field personnel. 127‘The following diagram depicts TU's new DIS. re an jee ee faa — sums || SEB Sim] | SYSTEM BENEFITS The DIS has achieved TU's goal of creating a single graphical interface that enables hundreds of users to access all ofthe utility's major information systems and applications without recognizing that multiple systems are in use. Projectrelated tasks are executed seamlessly in the automated environment, throughout the project life cycle. 1.28‘The employees" daily productivity improved immediately, and in 85% of its projects, TU’s cost-estimation time has been reduced from 24 hours to 12 minutes. Other benefits include the following: © Reduced training time for system users, © Reduced time and costs for facility design and installation. © Improved resource management, '® Better and more consistent customer servi © More efficient business processes, resulting in a 9% cost reduction for serving a typical customer. © Close control over construction operations. © Reduced service center build-out and warehousing, © Improved planning, budgeting, accounting, and tax-accounting processes. © Personnel reduction made possible by increased efficiency. * Reduced supplier costs because of materials standardization and component reduction, In addition, TU management is finding value in the unprecedented ability to gather and analyze network, customer, and financial information. One profitable use of the latter will be identifying potential sources of new revenue, The DIS is the foundation onto which TU can add new applications and business. improvements. ‘CONCLUSION With the implementation of DIS, TU has accomplished its goals and realized the benefits its project leaders envisioned. As in any suecessful project, many factors were instrumental in achieving the ‘company’s goals, including the following: © Strong executive sponsorship. © Open lines of communication and cooperation. © Excellent project management and organizational skills. © Strong IS and engineering project teams. ‘© Clear vision for the project. ‘© Commitment to stay the course, © Strong financial suppor, based on real-dollar savings. TU consolidated operations by integrating the operations of its three companies into one system. All TU. business systems are now able to retrieve mission-critical data from this central repository. The results of increased productivity, information access and analysis capabilities, and enhanced customer service will Prove invaluable as TU prepares to compete in a deregulated world. TU is positioned to manage its assets ‘and make crucial business decisions, based on information that was not available previously. This is truly ‘2 new era of business for one of the largest utilities in the United States. 1.29REFERENCES “Competi iveness Through Integration: Texas Utilities’ DIS.” John L. MeCoy, DIS Manager, Texas Utilities, AM/FM International Conference, 1997. “TU Consolidates Information Systems with an Integrate Solution.” UTILITY AUTOMATION, March/April 1997. 1-30JUSTIFYING INVESTMENT IN GIS: A LOCAL GOVERNMENT PERSPECTIVE By Prof. Les Worrall, Wolverhampton Business School, Wolverhampton University, UK Published in the International Journal for GIS, vol 8(6), 545-565, 1994 Abstract: Making a business case for GIS in local government is a complex task for ree ain reasons: first, a GIS implementation can range from a single well-defined ‘pplication in one department to a corporate multi-purpose GIS; and, second, local authorities are complex organisations currently facing major pressures for change considerable uncertainty about their future structure and role. The Purpose of this Paper is to review the potential use of cost-benefit analysis; 10 explore tangible and intangible benefits; to identify the costs involved; to explore the effect that a robust GIS strategy can have on the relationship between costs and benefits and to review some of the published material on the cost.justification of GIS in loco ‘government, Acknowledgements: I would like to acknowledge the helpful comments of Tony Black, GIS Adviser at the Local Government Management Board and two anonymous referees. 1. CONTEXT implications of investing in a particular development or to assess the relative business advantage of different investment options. ‘The broad objectives of ‘CBa are, first, to develop a complete picture of all the costs ofa project; second, to evaluae- financial an’, the benefits accruing from the development; and, third, to provide the business with an overview of the cash flows involved with an estimate of the payback period of the Project. CBA is by no means a new methodology and it has been effectively applied over 4 Wide range of developments in a wide range of business organisations (LOMB, 1991). ‘An objective of this paper is to review the applicability of this method to te process of developing a business case for GIS in a local authority context.From a review of the literature, it would appear that the task of cost-justifying investment in GIS in local government has proved difficult and that some GIS implementations are more an act of faith than the result of a period of critical evaluation, Within local government there are many examples of GIS applications: some have been implemented as large scale corporate applications (i.e. targeting several application domains in several departments); some have been implemented incrementally - often starting off in one particular department and gradually being implemented across other departments; others are tightly circumscribed applications that have been implemented within one department often to support a particular application. The variety of GIS implementations has led some researchers to the view that GIS in local government is ‘ill-defined (CICA, 1993). The variable scope of GIS projects in local government - coupled with the very nature of local government - would seem to imply that the development of a generic CBA model is difficult. Indeed, from a scan of the local government sector, the existence of a formal cost-benefit evaluation would appear to be the exception rather than the rule (LGMB, 1993; Mahoney and McLaren, 1993), In at least two instances, GIS has been installed ‘opportunistically' as vendors have sought to develop demonstration projects for their products - this approach has reduced the overall Project cost to the Purchasing organisations. A recent study (CICA, 1993) found that ‘while most respondents were able to identify what the benefits were (in terms of simple headings), none were able to express these benefits in financial terms. The cost-justification and cost-benefit analysis of GIS are tasks that the LGTB (now the LGMB) has addressed in studies of Northamptonshire and Hertsmere (LGTB, 1989) and in the development of a ‘generic’, spreadsheet-based cost-benefit model (LGMB, 1991), The LGMB mode! is highly flexible and allows each local authority to input its own structure into the framework and requires the Chief Executive to assess the relative strategic importance of services. Arguably, the task of defining a generic cost. benefit approach is more difficult in local government given the fact that local goverment sector is heterogeneous and lacks the relative communality of operational focus that exists in the utilities for example (i.e. the ‘engineering’ task of planning and managing a large network and the administrative tasks of billing and customer service), Most local authorities are also highly departmentalised along rigid ‘professional’ lines (Gault and Peutherer, 1989) and, as budgets are controlled departmentally, this serves to make the funding of corporate projects highly problematic (Clegg, 1993). Not only are there considerable differences between the functional requirements of the differing types of local authorities (London Boroughs, Scottish Regions, English and Welsh Counties, Shire Districts and Metropolitan Districts) but there are also considerable differences within the various classes of Jocal authority in terms of their internal organisation and procedures. While the various tiers are charged with undertaking the same statutory functions, the way that each local authority discharges that function is usually determined locally. This is further confounded by the fact that different local authorities have, in response 0 local needs and political pressures, developed extensive portfolios of non-statutory services, 1-32While there is a need to demonstrate a business case for GIS, this can be very difficult to achieve as the boundaries of GIS are vague and subject to change ~ the environment into which GIS is being introduced is also complex and changing. It has been argued that organisational issues have not been given due weight in the review of the impact of GIS on the effective and efficient delivery of local government services (Campbell and Masser, 1991; Campbell and Masser, 1992 and Campbell, 1991), While many people outside local government perceive a local authority as a corporate entity, in truth, many local authorities - though not all - are far from corporate and are 'Balkanised’ into autonomous, professionally-based departments with little corporate interworking. Recent moves within many local authorities to establish (increasingly autonomous) business units have tended to accelerate and accentuate the process of fragmentation and make local authorities even less corporate, There is an interaction effect between changes in local government organisational structures and changes in the GIS market place and changes in the GIS product range available. As organisations are fragmenting and becoming less amenable to waiting for (any paying for) the ‘corporate solution’, the cost of some GIS products is reducing and desktop GIS products are becoming more sophisticated - the interplay of these trens will affect the ratio of costs to benefits, In addition, many local authorities are now entering into facilities management deals (or 'outsourcing’) corporate IT departments - the possible rise of GIS offered as a bureau service could have a substantial effect on the GIS cost- benefit equation, Different local authorities will also be in different states of ‘readiness’ to adopt GIS. An organisation's state of readiness can be measured using a mix of organisational factors such as structure, culture and dynamism (Campbell, 1991) and human factors such as ‘staff needs, practices and abilities’ (Bromley and Selman, 1993, Medyckyj-Scott and Cornelius, 1991). Despite these many difficulties (organisation flux and a dynamic GIS market), it is important to develop a rigorous procedure to test if GIS can be cost-justified and to estimate - as best one can - the ‘economic yield’ profile of the project over time. Just as the boundaries of GIS are ill-defined so too are the boundaries of the cost-benefit evaluation - for example, should the project identify only economic costs and benefits to the business or should it try to build in wider societal or other indirect benefits benefits? While indirect benefits are important, emphasis in this paper is focused more on those isues of more relevance to the UK local government context. The purpose of this paper is to review the issues in cost-justifying GIS within UK local government with reference to documented examples, While there are a number of putative cost-justification cases in existence, some of these must be treated with caution as they have been developed by vendors who have products and services to sell and people who have been closely involved in the projects themselves. It is these peoples’ interest it is to overstate benefits while understating the costs and there are relatively few impartial and objective studies. The purpose of this paper is to be as objective as possible and to give a balanced view of the relative costs and benefits of GIS in the context of UK local government. 1.332, COST-BENEFIT ANALYSIS: AN OVERVIEW OF RECENT PRACTICE Cost-benefit analysis is essentially a framework for structuring the decision Process to invest in a project. Attempts to develop such frameworks and apply them to GIS have been undertaken by Dickinson and Calkins (1988, 1990) and DeMers and Fisher (1991). The approach suggested by Dickinson and Calkins contains the central assumption that ‘GIS products’ can be defined and quantified though they acknowledge that this is often not possible and they suggest two approaches to supplement the basic model. The first of these - cost performance evaluation - relates the volume of output (where it is difficult to assign an economic value to that volume) to the resources required to deliver the output (ie. this is a classic productivity measure). Within the GIS implementation this can arise where more output is produced for the same input or where the same volume can be produced for a lower input. This mode of analysis will be particularly relevant to GIS in a local government environment where ‘real’ cash savings may be difficult to achieve. The second method suggested by Dickinson and Calkins (1988) identifies how unquantifiable benefits can be incorporated using risk analysis and the concept of derived demand. However, as these techniques involve some highly subjective assumptions, Dickinson and Calkins suggest that these components of the assessment are reported separately. ‘These techniques have been substantially criticised (Wilcox, 1990). Wilcox questioned Dickinson and Calkins’ assertion that the application of CBA to GIS evaluation involves ‘situations too complex for the basic cost-benefit model’ (Dickinson and Calkins, 1988) and argued that ‘there are few occasions where information (on costed benefits) is genuinely unavailable, either directly or by proxy’. In all to many instances in local government, benefits are articulated in non-financial terms. The problems surrounding the analysis of GIS implementation in local, regional and national government are discussed by DeMers and Fisher (1991) who note the ‘serious lack of....documentation’ and the ‘sketchy, disorganised and often contradictory information available from past experiences’. If GIS is to be used to transform an organisation, rather than to automate procedures, the GIS cost-benefit case is likely to be more favourable: what is difficult at the origin of a GIS project is to assess the eventual impact of GIS on an organisation and to assess how the availability of more effective geographic data processing facilities and their integration into business processes will trigger organisational change and development. The Local Government Management Board (LGMB) has developed a ‘generic’ cost-benefit model which was designed to be applied in various decision contexts in local government ranging from an evaluation of an individual GIS application within a department through to an assessment of the feasibility of a corporate, authority-wide GIS, The model requires information about many factors related to the storage and use of ‘geographic information within a Council through to the relative strategic importance of functions undertaken by an authority. The model is complex and potentially all- embracing: it is assumed that the exercise will take a senior officer with significant GIS. knowledge twenty working days over a three month period to perform the analysis,CBA can be conducted at several stages within the overall GIS project life cycle = these application stages can be both future-oriented and retrospective. CBA can be conducted at each (or any) of the following project phases: + as part of a basic feasibility study and to assist in the overall ‘go or no go' decision; + retrospectively to review the impact of a pilot study; + to evaluate the business advantage of moving from pilot to full-scale implementation; + to evaluate different implementation options; and, * a5 a post-implementation review (PIR) to verify that the original cost-benefit assumptions were accurate or reasonable and to assess the overall impact of the project on the business. Mounsey (1993) argued that cost-benefit appraisals are needed for three broad Teasons: first, to make an initial assessment of the resources needed to implement a Project; second, to establish a case for investment either of a free-standing project or to evaluate the relative retums of several candidate projects; and, third, to provide a benchmark for assessing the success (or otherwise) of a project. While there are some published cost-benefit cases in existence, few have developed a scenario based on the ‘do nothing’ option as a benchmark against which GIS investment scenarios can be evaluated. It is clear from a review of GIS applications in local government that many local authorities had (have) no idea of what they were (are) spending on, for example, map use and management prior to the implementation of GIS. An appraisal of existing non-GIS practice and procedure and their cost implications may even reveal that the do nothing option is less advantageous than a GIS-based altemative! A comparison against a ‘do nothing’ benchmark is also important as it can be used to express the appraisal in marginal rather than absolute terms. 3. THE STRATEGIC FRAMEWORK FOR GIS EVALUATION The fundamental issue to be tested in any cost-benefit appraisal of a GIS is that the investment in GIS will enable the local authority effectively and efficiently to meet its business objectives. (Effectiveness is considered to be a measure of the impact of Policies and programmes while efficiency is geared to maximising the ratio of outputs to inputs - consequently, efficiency benefits are far more capable of being measured than effectiveness benefits. Listings of Potential efficiency and effectiveness benefits are included as Figures | and 2), Ideally, the GIS should be fully integrated within the IS/TT infrastructure of an organisation and strongly linked to the organisation's business strategy (Grimshaw, 1991). The strategically-driven, top-down approach, on which the LGMB model is based, contains within it the view that the local authority as a whole (or the sponsoring department as a whole) has a clear view of its strategic, business objectives. Recent studies have shown that only about 30% of local authorities have a formal ‘corporate’ business plan that identifies the aims and objectives of the Council as a whole (SOCITM, 1992) and that only 45% of service departments have business plans (SOCITM, 1991).Both SOCITM surveys report that the linkage between business planning and [S/T Planning in local government is tenuous. Given that the majority of local authorities and service departments have not formally defined their aims and objectives and that the link between business planning and IS/IT planning is generally tenuous, the top-down approach is not starting from a position of strength. ‘The rational model for the development of IS/IT plans - of which GIS should theoretically be part - comprises a hierarchy of strategies: * 4 corporate business plan comprising statement of corporate or departmental business objectives; * a statement of information requirements and information access requirements to ‘monitor and review the implementation of the business plan; + an information systems strategy (ISS) which identifies what systems are required to support the information needs identified above and the nature of the inter- relationships between those systems; and, + an information technology strategy (ITS) which identifies how the required systems are to be supported and information delivered to end-users. These related strategies will have a major impact on the cost-benefit equation: the business plan and the information requirements statement will identify who needs what information to support what business goals; the ISS will identify the standards to which data needs to be held if it is to support decision-making and the priorities for procuring systems; and the ITS will identify the most appropriate platform(s) for supporting the various information systems and ensuring their integration where this is required. Given the present position in many local authorities, what is most important is that the process of developing this hierarchy of plans will provide many local authorities with their first, documented appraisal of their business information requirements, with a view of the steps that they need to make to ensure that decision-takers have access to the information they require and with an understanding that this information should be held to agreed and documented standards consistent with their decision-making needs. While this process is costly, often difficult to achieve and time-consuming it is seen as essential for the evaluation of any development whether it be GIS, EIS (executive information systems) or MIS (management information systems). The process provides the framework for assessing the potential and actual contribution of candidate systems to the organisation achieving its business objectives. Due to the heterogeneity of local government it is often not possible to produce an exhaustive list of corporate or departmental goals. At the strategic level, it is likely that the goal statements will be abstract and require translation into a more measurable form if they are to assist in the structuring of the GIS decision, A list of potential strategic goals against which GIS could be evaluated includes the following: 1:36+ improved resource targeting to meet demographic, social, economic and environmental needs more effectively; proving the ability of the organisation to bid for additional resources; improving the accessibility of/to services (e.g. facility location planning); improving the integration of service delivery (e.g. Community Care); managing the organisation's resources more effectively and efficiently; ‘managing the area's resources and infrastructure more effectively and efficiently; planning the social and economic development of the area to meet future needs; and, implementing legislation effectively (e.g. environmental protection legislation). While the above list is by no means exhaustive, it is indicative of the types of Policy statement that are often contained with the strategic plans of local authorities: potentially, GIS can contribute in all areas - but at what cost and how can the benefits be quantified? What is also important is that these statements are not directly measurable of themselves but provide the context in which more detailed and directly measurable objectives can be articulated. 4. IDENTIFYING TANGIBLE 'HARD' BENEFITS While the LGTB study of Northamptonshire and Hertsmere (LGTB, 1989) identifies several hundred ‘benefits’ that GIS can bring to local government, it does not seek to translate these benefits info financial returns. The benefits are generally articulated in terms such as ‘improved planning; better access; better targeting; improved sharing....'. While these are benefits, itis very difficult - perhaps impossible - to express these in a form that can be easily inserted into a spreadsheet and used within a formal cost-benefit model of the type developed by LGMB. (LGMB, 1991). In this section, the focus will be on assembling what ‘hard’ information there is available under the following headings: map benefits; data management; procedural efficiencies; and, cost avoidance/income generation. 4.1 Map benefits Local authorities are massive users of Ordnance Survey (OS) maps. All Councils will own a range of map sets some of which will be maintained to high standards and in good condition - others will be maintained inadequately and perhaps falling apart. Bromley and Coulson's (1991) study of Swansea City Council, identified 24 different OS map sets in use. Buxton's (1989) analysis in Cardiff City Council quantified the benefits that can arise from the introduction of GIS simply to replace paper maps and the manual effort required to maintain them. A study of map use in local government by ICL (Palmer, 1991) found that 50% of map use time was consumed simply by finding and replacing a map; 9% by adding data to the map; 27% by extracting information; 3% by modifying data on a map; and 11% by copying maps or map segments. The issue is the extent to which these global figures are applicable to different local authorities and different functions within an authority as the pattem of map use can vary between 137organisations, within organisations and over time in the same organisation, Recent developments, as a result of negotiations between the LGMB and the Ordnance Survey in 1992-3, have reduced the cost of OS map products to local government and there is some Gnconclusive) evidence to suggest that this change in cost structure has had the effect of increasing the uptake of GIS in local goverment (between 1991 and 1993, the percentage of GB local authorities with GIS increased from 16.5% to 29% with the Percentage of local authorities planning to acquire GIS within a year rising from 8.6% to 9.7% - see Campbell and Masser 1992, and Campbell et ai., 1993) A review of map use in Wrekin Council revealed several factors of direct relevance to a cost-benefit appraisal (Wrekin Council, 1993 - unpublished) and also that map usage within a local authority can be a very complex activity. The Wrekin map use study catalogued the use of maps within the Planning and Environmental Services department for a period of two weeks (the department does NOT contain the Council's Land and Property Unit which manages the Council's land assets). There are two important caveats: the representativeness of the two week period; and, it is known that the measured usage of maps substantially underestimated the actual use level due of under-reporting by the respondents, The main findings of the study were: * where several functions use a shared map set, the percentage of map use time spent on finding and replacing a particular map is high (for example around 45% of map usage time in Development Control) but where a section has exclusive use of a map set the percentage of time spent in finding and replacing is significantly lower (10% in the land stability section); ‘+ some staff (excluding technicians) spend 40% of their time working with maps with one of the most common problems being the difficulty of merging information from different map sets (at differing scales) into composite maps; * aggregate figures for map use can be easily skewed by a small number of one-off projects (such as the remarking of a failing map set which has a low percentage of time spent on finding and replacing map sheets but can take map sheets out of use for considerable periods of time); and, * map use varies significantly by section (for example, while some functions tend to use a large number of maps each for a very short period, other sections tend to use a small number of maps for very long periods). Both the ICL and the Wrekin studies demonstrate that local government planning departments spend a considerable amount of time using maps and that in some cases up to 45% of time can be spent simply locating a map (which may have been wrongly filed or being used in another section). The studies would indicate that a productivity gain of up to 2:1 for using GIS as a 'simple' map management tool is feasible. (It should, however, be noted that the Joint Nordic Project (INP, 1987) indicated that a digital mapping system would have a benefit:cost ratio of 1:1; that this would rise to 2:1 if the system is used to assist operational procedures; and that the ratio would rise to 4:1 where 1-38all commonly used data sets have been converted. The conclusion is that the full benefits of GIS will not be gained until this new technology has been fully integrated with existing corporate information systems.) The Wrekin and ICL studies both show that productivity gains can be made from automated mapping but that it is important to be aware of the potential for 'adding value’ over and above simple map automation by ‘moving incrementally towards the better integration of GIS with other business systems. The Wrekin study was also used to make an initial assessment of how much it costs the Planning Department to maintain and use its paper map base. The study identified that 238 person hours were spent during a two week period working explicitly with maps. If this is representative, and itis assumed that staff costs are £15 per hour (excluding various overheads), then the total annual cost to the Planning department for this level of map access and use is around £180,000 per year. If productivity was doubled, this could 'save' the department around £90,000 per year. Given the personnel policies of many (though not all) local authorities, it is unlikely that redundancies will Occur with staff either having to be retrained to do different tasks (e.g. maintaining databases rather than performing routine clerical tasks or being re-deployed to other areas of the Council). The task of actually achieving productivity gains is another organisational issue that must be addressed, From the above it is clear that a ‘map delivery system’ (like that developed at Kent County Council ~ see Laming, 1993) will have substantial benefits in reducing map search and replace time and in reducing the need to maintain and store multiple map sets. Such a system will require the redesign of procedures and necessitate the creation of 2 Post of ‘map manager’ who will oversee the administration of the Council's map resources. The analysis also shows that the resultant figures for input into a cost-benefit case will be highly sensitive to local conditions, custom and practice. 4.2 Data management While the costs of GIS hardware and software can be considerable, the most costly (and valuable) component of any GIS is the data contained within it. The data within a system also has a considerably longer life span than any hardware or software, It is a fact of life that many managers tend to be preoccupied with the minutiae of the ‘application than with the quality and fitness-for-use of the data on which those systems depend. It is also true to say that many systems in local goverament are based on inadequate data models (i.e. no clear understanding of data flows within an organisation and the relationships between entities); this is particularly so for geographic data and this has been demonstrated by recent LGMB work on the development of a specification for a ‘and and property gazetteer (Pugh and Cushnie, 1992) and a generic spatial data model for local authorities (LGMB, 1993). One of GIS's greatest selling points is its role as a data integrator - while this is Possible technically, itis often not deliverable practically (thus calling into question the ability of GIS to achieve operationally the 4:1 benefit:cost ratio outlined in the Joint 1:39Nordic Project (INP, 1987)), If data is to be accessed from a variety of disparate applications systems and analysed against a map base, it must conform to standards, Unfortunately, systems in different departments have usually been designed using differing conventions and in some instances the same entity is geographically referenced using different conventions and usually lacks a common identifier. While the benefits from data integration are potentially valuable, in many instances, they can only be achieved at significant cost and after an extended period of data standardisation, conversion and, possibly, re-capture. 43 Procedural efficiencies While various local authorities have audited the fitness-for-use of the spatial data sets held within their organisations, many appear to have stopped short of redesigning the processes and procedures that create and maintain data or require access to data created and maintained elsewhere, Procedures such as the determination of planning applications, managing land and property assets, landscape maintenance and undertaking local land charges/searches are four of many activities routinely carried out in local authorities that require either repeated and rapid access to a dedicated database or ease of access to a large number of disparate data sets. ‘The land charges/searches procedure in a shire district, for example, requires access to around 35 data sets some of which are created by processes within the planning department others of which are ‘imported’ from the County Council and beyond (Note: a ‘search’ is carried out when a property or piece of land is sold to establish, for example, whether the property is subject to an outstanding Planning consent or whether rights of way cross the property or whether the property is situated over previous mineworkings). These procedures are data intensive, labour intensive, time consuming, complex and costly: they are also accuracy-dependent and errors can render - and have rendered - Councils liable to costly and embarrassing civil action (see Markham and Rix, 1991). An investment in GIS must generate ‘operational’ benefits from the more efficient management of services and assets. The recent CICA study (CICA, 1993) asked users to list what benefits (here defined as the type of benefit rather than the value of benefit) they hhad derived from their investment in GIS: the largest response was recorded for ‘operational benefits’ from activities such as highways maintenance, development control, land charges, property management and landscape maintenance. However, the report noted that where ‘sophisticated’ operational uses were undertaken, the system customisation and data capture period could generate a three year ‘inter-regnum’ before significant operational benefits were generated. 4.4 Cost avoidance and income generation 1-40A common element of many GIS business case documents - particularly at the District Council level - is the assumption that income can be readily generated from improving the land charges/searches service: indeed, this together with the desire to automate the terrier, is one of the main reasons for selecting a GIS-based solution. (Note. a ‘terrier’ is a term for a mapped register of the land and property assets in a Council's ownership and is a term used extensively in UK local government). This approach is not without its critics (Markham and Rix, 1991) wo lave pointed out that this requires the Tapid conversion of the majority of the data sets in the planning department and is tantamount to a ‘big bang’ approach. Little has been done to assess the 'economic' fee level either to cover the costs of the basic existing manual process or to cover the additional costs of a period of intense data capture. While the income-generation argument is sustainable in a bouyant property market (as in the late 1980s), it is less sustainable in a period of low demand for property and a low rate of property turnover. In this area, the major contribution of GIS is more likely to result from reducing the chance of maladministration and error than from reduced tumover times yielding higher income, It will rest with the local authority concemed to identify how adverse itis to tisk - which in turn will be related tothe quality of the existing mapped data and the robustness of clerical procedures. Organisations such as Strathclyde, Kent and Cheshire who have acquired the OS digital maps for their areas can offer a 'Superplan’ service within their respective organisations (Note: Superplan is a service offered commercially by the Ordnance Survey in which map users can request a ‘map to order’ from the OS (ic. one centred on a Particular feature of interest)). The possibility of developing a ‘data brokerage unit Within local authorities remains an interesting innovation yet to be developed and evaluated. Local authority spatial data holding are massive and potentially a very valuable asset but few local authorities are yet positioned to benefit from these assets. In many instances, local authorities produce information for other organisations and it is often these other organisations that reap the financial benefits. For example, local authorities are responsible for street naming and property numbering. This data is provided to many organisations such as the Ordnance Survey and the utilities, OS Products such as Address Point are based on information provided free by local authorities. Some project reviews have demonstrated that cost-avoidance is possible - the Sheffield review (Clegg, 1992) itemised the cost of manually remarking the Sheffield terrier on paper (which is necessary every few yeats) at over £250,000, 5. IDENTIFYING INTANGIBLE 'SOFT' BENEFITS ‘The majority of cases examined as part of this literature review (as typified by the LGTB studies of Hertsmere and Northamptonshire referred to above) identify the soft benefits that can be gained from GIS. While the factors they list are no doubt benefits it is difficult, if not impossible, frst, to express those benefits in financial terms; second, 10 identify precisely who would obtain the returns from those benefits; and, third, whether Lalthe benefits accrue to the same section or department which is bearing the cost of investment. ‘The broad categories of benefit identified in the reports are: reducing the potential for maladministration and liability; those resulting from introducing data standards; more rigorous data management; enhanced visualisation of graphical data; improved data security; the provision of better information; more consistent access to data; improved services to customers an ability to integrate data; the ability to generate new ‘understandings’; and, easier access to data. While the above are all clearly benefits, it is virtually impossible to translate them into a cash value. Some analysts have tried to develop methods for estimating the economic value of non-quantifiable benefits (see Clarke, 1991; Dickinson and Calkins, 1988) but it is considered to be more appropriate simply to list these ‘unquantifiables’ and to relate these directly to the Council's stated business objectives so that senior decision makers can exercise their judgement about the implicit worth of the proposed development. The fact that GIS and its related business applications are still a relatively immature in local goverment (and the utilities - see Ives, 1992) may mean that many benefits - both hard and soft - yet remain to be discovered particularly the indirect benefits which may arise well into the life of a GIS project. 6. GIS COSTS Most papers on GIS will state with authority that somewhere around 60-70% of the global cost of a GIS project will be consumed by the processes of data conversion though this can be seen to vary quite considerably depending mainly on the condition of the primary source of data. Based on a review of several reports on the implementation of GIS in local govemment it would appear that the cost profile is roughly 65% data conversion: 30% hardware, software, customisation: 5% training. This ratio must, of course, be treated with some caution as the actual profile will depend on the scope and scale of the project, the initial condition of the data sets involved, the ‘customisability’ of software and the knowledge base/trainability of existing staff. ‘What is more important than the current profile of GIS costs is the way that the Profile can be expected to change over the next five years. Generally, the view is that hardware and software costs will continue to fall and that data conversion costs (and subsequent maintenance costs) will come to account for an increasing share of the global project costs. The cost of software in particular is a function of the structure of the GIS market, Rickman (1993) argued that the GIS market is typified by a large number of low 142volume-high margin vendors. Over the next five years, he assumes that the market will stabilise and mature and that the current large number of products will reduce as a smaller number of vendors capture increasing market share. Under this scenario, software longevity (and vendor longevity) might be shorter than some users might think and the user requirement to ensure the ‘exportability' of data to other systems and into other data structures becomes an increasingly important aspect of future-proofing an organisation's investment in GIS data capture and conversion. What is undeniable, however, is that the Price/performance ratio of GIS has improved enormously over the last three to five years and is continuing to improve. Any analysis of costs for a large scale GIS will need to consider the following items - some of which are obvious, others of which have been missed by some authorities in their initial assessment of costs: hardware integration with pre-existing Council-wide computing infrastructure; the evaluation, selection, acquisition and installation of software; undertaking requirements analysis; contractual aspects; consultancy support; systems customisation; applications portfolio development (and/or customisation); interfacing to other ‘data servers’ and operational systems; training, human resources planning, skills development and reskilling; additional vendor services (e.g. possible turnkey development); business analysis; project management; delivery and installation; communications (LANs and WANs); business process re-engineering; documentation redesign; transitional costs (i. parallel running of old and new systems); on-going revenue implications (ie. staff costs and consumables); data modelling, data flows analysis and redesign; data purchase (e.g, Address Point, Census); data capture, data conversion; and, data re-survey and validation. What is just as important as the ‘itemised bill’ of potential GIS costs is that the majority of the cost factors listed can be addressed in several ways - each of which has its own impact on costs. For example, a local authority could enter into a single supplier contract with a vendor who would in tum manage sub-contracts covering hardware acquisition and installation, data conversion and applications development - on the other hand, the local authority could manage each of the contracts itself. Both of these options have their costs and benefits which will impact on the overall cost-benefit profile of the GIS project. The linking of a GIS to pre-existing operational systems can be both 143technically difficult and costly: for example, some planning applications systems and grounds maintenance systems can be linked to a GIS mote easily than others and there is. the issue of maintaining the integrity of the two systems (i.e, demolishing a property in the GIS causes a property to be deleted in the text database), Different definitions of linkage have different degrees of cost associated with them. As a result of GIS implementation, some of the functionality previously undertaken in the ‘text based’ operational system may now be undertaken within the GIS. If this switching of functionality is significant, it may undermine the viability ofthe pre-GIS system causing it to become less cost-effective and eventually requiting the integration of residual functionality within the GIS. Taking an example from network modelling in the utilities, the cost of maintaining two identical representations of the distribution network (one in the forecasting model and one in the GIS) may be problematic and costly and, it may even be possible that making the forecasting model endogenous to the GIS could produce significantly different results. While derived costs of this type are difficult to foresce, they can be substantial and demonstrate the need to take a broad view of potential costs, Local authorities in the UK differ enormously in size even within the same ‘class’ of local authority. The differences are most pronounced among shite districts which range in size from populations of 30,000 to around 250,000. What is unclear from the review of literature is whether there is any relationship between the ability to generate (Particularly corporate) benefits from GIS and the size (and hence complexity) of a local authority. What is also unclear is whether there are economies of scale in the costs of data conversion. For example, Wakefield Metropolitan District (Aspinall and Boxer, 1993; Musgrave, 1993) have recently undergone a massive data conversion exercise (capturing 216,000 graphic items) yet whether the relationship between cost and volume is linear is not clear - neither is the relationship between fixed and variable costs in the data conversion process. ‘What is perhaps most important isa strategy for funding such a (potentially) large scale project - ideally by having a pool of available resources to pump-prime the project. In the Nottingham study (Waller, 1993), the City Council estimated that the procurement of a tumkey system would cost around £346,000 and, incidentally that data preparation and loading would cost a further £333,000. A study by Plymouth City Council (Plymouth City Council, 1991) compared two options the first costing £466,000 and the second costing £1,258,000. Given the scale of these costs, it would be massively frustrating for a GIS project team to develop a positive business case and then to find out that sufficient up-front funding is not available. 7. STRATEGY, INVESTMENT INTENSITY AND COST-BENEFIT PROFILE Having identified some of the costs and benefits involved in implementing a GIS, it is important to examine in what ways a good GIS strategy can be improve the relationship between costs and benefits and make investing in GIS a (more) acceptable option. The aspects of GIS strategy include (amongst others) issues such undertaking a rigorous requirements analysis, agreeing priorities for coverage development, assessing 144investment intensity, specifying a data model and hardware acquisition, GIS has been characterised as a cost front-loaded technology as it requires considerable investment to ‘ake place in data conversion early in the project life cycle (Joint Nordic Project, 1987). Other GIS projects have also been based on a ‘big bang’ approach to data ‘capture (Aspinall and Boxer, 1993) and (not surprisingly) it is an approach recommended by a number of companies specialising in data conversion (Corcoran, 1992). Given that data conversion (or more accurately data validation and conversion) accounts for such a large Proportion of the total costs of a project, it is here that efficiencies should be sought and that innovations in automating data capture through the development of line-following techniques are likely to have a major effect, While a massive data capture exercise may be better done by a bureau, this would result in a substantial and ‘visible’ cost. With an in-house approach - while it may be less efficient - costs can be ‘lost’ or disguised. This can be a material consideration in some local authorities. In some (unattributable) instances, local authorities have spent years in populating databases and in this period it has not been possible to produce any benefits as data sets are either incomplete or systems are locked up in the data capture process. These Problems have obviously antagonised many potential users and clearly it is important to Phase and plan data conversion so that some benefits are achievable early on in the implementation. It is advisable to identify which benefits can be won without the full implementation of the data model, to have a clear understanding of users’ priorities and to manage their expectations of what is achievable by when (though with vendor hype, managing expectations can be difficult). On coverage development, opinion seems to differ about whether it is more appropriate to take a thematic or area-based approach to the programming of data capture and conversion (i.e. whether it is more appropriate to develop a single coverage for the whole area of interest before moving to another coverage or whether it is more appropriate to develop several coverages simultaneously for the sub-area(s) in which map use or the level of user interest is greatest). Other strategic data capture issues also have an impact on the cost-benefit equation. For example, an organisation may decide (perhaps wrongly) that its existing records are suitable for instant conversion and that errors can be exposed and rectified later by using various aspects of the GIS toolkit functionality (Wakefield has used this approach, see Aspinall and Boxer, 1993). Another organisation may decide radically to overhaul its manual systems by producing new map manuscripts for later digitisation and thus resolve data problems ‘up-front’ where thi Possible. The impact of these alternatives on global project costs and the time frame in which benefits are realisable can be considerable. Indeed, one local authority has spent 2- 3 years on simply recapturing and verifying its core operational data sets. The INP (1987) also shows that the benefit/investment curve is not smooth - it displays several ‘critical mass’ points of declining intensity. More simply, a local authority might spend £120,000 on converting data in the first year and generate, say, only 10 units of benefit but with the expenditure of a further £10,000 over the next month, it may generate, say, another 30 units of benefit. By spending the £130,000 in 6 145months rather than 13 months the local authority could generate benefits quicker but if the staff who will use the system cannot be adequately trained in 6 months, it is pointless compressing the data capture period - benefits are only benefits if the local authority can exploit them. Where a GIS is being acquired as a business solution in a tightly defined application domain, the cost-benefit evaluation should be significantly easier than where the objective is to enhance the cross-departmental sharing of information within ay organisation, As many (but not all) GIS appear to be being ‘sold’ as a data sharing toolkit, it is important to select an initial applications portfolio where there is considerable Potential for data sharing by identifying those application domains that depend on eeumon data sets (for example, searches, planning applications and building regulations) rather than selecting a disparate applications portfolio that has little data in common. The objective should be to select a bundle of applications that maximises synergy. At this Point the organisation has to face a major question of whether to take the ‘toolkit route by acquiting a GIS toolkit and developing applications itself orto take the ‘applications route’ by scquiring @ GIS solution which bundles both the toolkit anda set of cisipmisable applications - which is the most costeffectve route depends largely on the skills available within the organisation, In addition, there are a number of actions that can be taken which could have a significant effect on reducing costs and winning early benefits. For example, it is often femptation to over-specify the data model by identifying too many attributes and to ove, Specify the resolution, accuracy and tolerance to which data should be captured. ‘The dass sets within an organisation need to be audited critically to identify the extent to whieh they are ‘quality-sensitive’ (Milletc, 1989). Given that data conversion = and, move important, the validation of data at conversion - will account for a large component of slobal project costs, it is important to identify tactics that make the conversion’validation process as costeffective as possible. For example, it may be sensible to use existing CAD facilities within the Council to input some of the lower volume data sets ant subsequently import these data sets into the GIS where the GIS can be used to build topology. The feasibili itis so that the Council could obtain the best value for money from any hardware that i may have hired to cope with the large volume of work during the initial data conversion phase ~ though this might be slightly counter-cultural in some local authorities, There is also a temptation to specify data items that are not maintained by a business process and, consequently, data rapidly becomes outdated and unreliable and so is never used. GIS application has also revealed data currently maintained within on organisation that no-one actually uses as well as data which is held by more than one user department (usually to different standards), Users must be encouraged to specify what data items and standards are required for them to fulfil their business requirements and to be educated to understand that increasing accuracy means higher costs. ‘There is aleo a tendency to over-specify the functionality thought to be required - though this might in Part be explained by unrealistic expectations caused by over-zealous marketing and hype. 1-46In some cases, on the other hand, there may be a tendency for projects to escalate way beyond what was specified in the original requirements analysis document: this is usually because users become aware of more sophisticated applications as their awareness of the potential of GIS increases (KPMG, 1990). Prototyping can be an effective way of ‘overcoming these problems with project specification (Rickman, 1993). A difficult problem facing those organisations secking to acquire a GIS is the specification of a suitable configuration in terms of the number of full licences and view only licences that may be required. The resolution of this problem requires the authority to develop a full understanding of who will want to use the system, when they will want to use it (i.e, the number of concurrent sessions required) and what they will want to do on accessing the GIS. These questions are best resolved by a site visit to a local authority which is further down the GIS route which, now that almost 30% of local authorities have GIS is an easier option than it used to be, Products like ArcView, tight control over the number of concurrent sessions acquired and well designed management procedures can drastically reduce costs. These issues of GIS strategy show how it should be possible to offset some of the up-front costs with early benefits to end users. Consequently, the design of a robust GIS strategy and implementation plan, while they may not alter the global costs of a GIS Project, may substantially alter the relative phasing of the costs and benefits to generate visible business advantage. It is imperative to define the design variables that structure any GIS strategy and to test the sensitivity of the strategy to each design variable both individually and in permutation, 8. REVIEW OF COST-BENEFIT STUDIES The purpose of this section is to review some of the published material on GIS cost-benefit studies in UK local government and to draw out some of the main findings of these exercises, 8.1 The Nottingham City Council study The Nottingham City Council study (Waller, 1993), was originally focused on four applications (cleansing; contaminated land; land terrier and land survey) and comprised five main stages: * identifying the data - and the processes using that data - which would be affected by the introduction of a GIS; identifying the current cost of storing and processing that data; assessing how costs will change over time; calculating the impact of GIS in each application area; and, assessing the total cost of replacing existing data stores and processes with a GIS,After an initial analysis, it was concluded that a positive business case could not be made for a project with such a limited scope (the application areas listed above), Consequently, as a number of ‘duplicate activities’ were known to be conducted in other aeas, it was decided to redefine the scope of the project to include planning, land charges and grounds maintenance (each of which are large applications). A reappraisal identified that significant improvements in benefits were possible without a commensurate increase in costs. Within the study, benefits were categorised as quantifiable direct: quantifiable indirect; intangible direct and intangible indirect. Only the direct quantifiable benefits Were included into the cost-benefit appraisal. The project appraisal identified a ‘saving’ of 89 person years over a 6 year period (generating a cash saving of £1,166,000). Given previous comments about personnel practices in local government, the issue is whether these savings (benefits?) would actually be achieved or whether they are illusory. A cash-flow model was produced which identified that the project would begin to generate a positive cash-flow after five years (.e. in the period months 61-66). While Waller's Paper shows that a rigorous business case has been produced, it is vague on the definition. of direct benefits and on how these have been assigned cash values. Most important, the Paper demonstrates the point made earlier that the cost-justification case is sensitive to the scope of the overall project and the ability to generate synergy between the application portfolio selected in the GIS implementation strategy. 8&2 The Sheffield City Council study The Sheffield study appears to have been implemented without a formal ‘up-front’ cost-benefit study (Clegg, 1993) and is an example of an opportunistic response to a GIS vendor keen to test its products and to create an installed base that can be used to demonstrate its product in the local authority market place. It shows that it is important to examine GIS costs within the context of the overall value of the local authority's asset base, (As a metropolitan district, Sheffield has an asset base valued at over £3 billion including 70,000 council houses and 12,000 hectares of land.) Initial funding for the Project was found partly from an increase in the land charges fee and from 'start up’ investment from the main departments involved. The business justification was based on the assumption that benefits would cover annual costs after the first year with the project achieving full payback in year four. Within the project, it was originally assumed that data conversion could take place from the maps used day-to-day: this however, proved to be an unrealistic assumption with considerable pre-digitising data cleaning being necessary. Clegg (1993) does not state whether the project is on target to achieve ite stated cost-benefit goals, 83 Strathclyde Regional Council: Department of Estates Between 1988 and end-1992, the Department of Estates at Strathclyde Regional Council invested £400,000 in GIS hardware and software alone. The cost profile of a total GIS spend of £790,000 over the period was reported as hardware 21%; software 9%; ‘customisation and applications development (both in-house and bought-in) 13%; and data capture/conversion 57%. The scope of the project is tightly defined and geared 148Primarily to landscape maintenance and contract management. An independent review of the application (reported in McKay, 1993) showed that the application has made substantial savings and generated large productivity gains: * with map production, a 2:1 efficiency ratio has been achieved generating savings of £90,000 per year (this productivity gain accords reasonably with the ICL and Wrekin examples quoted earlier); * estimated savings on the terrier application are expected to generate savings of £180,000 per year; and, + the creation of a digital map library service to the rest of the Council is being developed as a service to generate income but the level of income is not disclosed, While the project described by McKay (1993) is of limited scope, it is a large scale operation and is built around a massive map library of some 11,000 500m x 500m. tiles. It is also one of the few instances where a formal GIS project plan has been validated by external consultants. 9, CONCLUSIONS The material reported in this paper has been gleaned largely from published sources but, in many cases, the authors of these papers have been heavily involved in the projects themselves, and this may mean that the findings may ert towards the optimistic. ‘What is readily apparent is that formal cost-benefit cases tend to be the exception rather than the rule and the identification of so many ‘intangibles’ either means that the application of the pure CBA model is inapplicable or that inadequate thought has been siven to identifying robust techniques to quantify these intangibles (either directly or by using proxy measures), to assess potential indirect benefits and to allocate them to a budget owner. However, this approach of itself may be 'counter-cultural’ in local government. These findings also question whether itis appropriate to attempt to use the whole CBA approach to a high level of detail or whether a partial application to provide a rough assessment of general orders of magnitude is a more appropriate use of the method in local government. In some cases, local authorities may lack the skills required to use these techniques effectively. What is clear from the many phone calls made to GIS project managers in local government is that the majority of them are unwilling to make public what detailed cost- benefit information does exist. This is for several reasons: * embarrassment that data sets are unfit for use and require substantial investment to make them capable of supporting the applications that depend on their accuracy; + reticence arising from the fact that the organisation may have paid tens of thousands of pounds to consultants in the task of identifying actual costings, benefits, GIS strategy and investment profile; and, * because of commercial sensitivity or the desire to use the information - and the techniques used to derive it - to generate income from other local authorities, 149What is evidently clear is that a large scale corporate GIS implementation is a tong term investment and - while several local authorities seem to be gravitating towards 4 published payback period of five years - informed opinion seems to be suggesting that a 10 year payback period is more realistic for such an implementation. If this was communicated to the decision makers involved it is unlikely that the project would be approved and thus is seems sensible to rescale or rescope the project so that benefits are senerated as early as possible. This reinforces the need to identify a package of high synergy applications that share a common set of data and the need for a well considered and robust GIS implementation strategy. Perhaps this recognition that large scale GIS Projects have such long term payback periods will ensure that these type of grand designs are not feasible and are rarely sanctioned. PCs. Making intelligent forecasts about the diffusion of GIS technology throughout local government is also made even more difficult by ongoing changes in the structure of the GIS market and in the rapid development of the products and product ranges available. Recent evidence shows clearly that workstation-based and PC-based GIS are becoming increasingly predominant at the expense of mainframe and mini-based options. (Workstations increased from 40.8% in 1991 to 55.4% of installed GIS in local government in 1993; PCs increased from 25.5% to 32.3%; mainframes declined from 25.5% in 1991 to 7.7% in 1993 - from Campbell and Masser, 1991 and Campbell, 1993), OF the 71% of GB local authorities which did not have GIS many are facing the ‘GIS paradox’: while many perceive, financially, that they cannot afford GIS, they realise that, strategically and operationally, they cannot afford not to aequire GIS. ‘There is, unfortunately, a curious ‘hang-up! with GIS in local government - while few accountants Wwould question the need fora financial management system or ever consider subjecting a bid to replace a financial management system to CBA - they would apply the double Standard of expecting a GIS to be formally appraised. Pethaps when GIS ceases to be ‘special’ and seen as an integral part of local government operational planning and strategic management that real progress will be made. BIBLIOGRAPHY Aspinall, R., and Boxer, A., 1993. City of Wakefield MDC land charges implementation, GIS'93 Conference proceedings, 157-171, London. Bromley, R.D.F., and Coulson, M., 1991. GIS in British local government: the benefits to resource allocation and planning. In L.Worrall (ed) Spatial analysis and spatial policy using GIS, Belhaven Press, London. Bromley, RD.F., and Selman, J.M., 1993. Geographic information usage in a local authority: the human environment for GIS. Area 25(3), 228-236,Buxton, R., 1989. Integrated spatial information systems in local government: is there a financial justification, Mapping Awareness 2(6), 14-16. Campbell, H., and Masser, [., 1991. The impact of GIS on local government in Great Britain, Association for Geographic Information Conference Proceedings, 2.5.1-2.5.6. Campbell, H., and Masser, 1., 1992. GIS in local government: some findings from Great Britain. International Journal of GIS, 6(6), 529-546. Campbell, H., Masser, I., Poxon, J., and. Sharp, E., (1993) Monitoring the take up of GIS in British local government. Report available from the Local Government Management Board, Luton. Campbell, H., 1991. The impact of GIS on local government, TRP 101, Department of ‘Town and Regional Studies, University of Sheffield. CICA 1993. Survey of local authority GIS usage, Construction Industry Computing Association (document avaialble from CICA, Guildhall Place, Cambridge). Clarke, A.L., 1991. GIS specification, evaluation and implementation. In D.J. McGuire, MF. Goodchild and D. Rhind (eds) GIS: principles and applications. Longman, London. Clegg, P., 1992. GIS implementation: the Sheffield experience. Association for Geographic Information Conference Proceedings, 3.9.1-3.9.6. Clegg, P., 1993. Escape from the labyrinth. Computer Graphics, 117-120. Corcoran, L., 1992. Data conversion: the issues. Unisys GIS Conference, Unisys International Management Centre, Saint Paul de Vence. DeMers, M.N., and Fisher, P.F., 1991. Comparative evolution of statewide ‘Geographic Information Systems in Ohio, Intemational Joumal of GIS, 5(4), 469-485. Dickinson, H.J., and Calkins, H.W., 1988. The economic evaluation of implementing a GIS. Internation Journal of GIS, 2(4), 307-327. Dickinson, H.J., and Calkins, H.W., 1990. Comment on ‘Conceming "The economic evaluation of implementing a GIS". Internation Journal of GIS, 4(2), 211-212. Gault, H.L., and Peutherer, D., 1989. Developing GIS in local government in the UK: case studies from Birmingham City Council and Strathclyde Regional Council, In L. Worrall (ed) GIS: developments and applications. Belhaven, London. 181Grimshaw, D.J., 1991. Geographical information systems as part of the corporate information strategy. International Journal of Information Management, 11, 292-297, Ives, M.J., 1992. Reaping the benefits. Association for Geographic Information Conference Proceedings, 1.6.1-1.6.3. Joint Nordic Project 1987. Digital map bases: economics and user experiences in North America. Nordisk Kvantif. KPMG 1990. Runaway computer systems: a business issue for the 1990s. Available from KPMG Consulting, London. Laming, R. 1993. GIS in Kent County Council. Paper to the AGI/ESRC seminar on GIS in local government, Sheffield (available from the author now at ESRI (UK). LGMB 1991. — Cost-benefit methodology. (Available from Local Government Management Board, Luton). LGMB, 1993. Experience in geographic information management. Available from Local Government Management Board, Luton. LGTB 1989. An approach to evaluating GIS for local authorities. Local Goverment Training Board (available from the LGMB, Luton). Mahoney, R.P., and McLaren, R.A. (1993) Best Practice guidelines for GIS implementation in GB local government. Association for Geographic Information Conference Proceedings, 1.20.1-120.5. Markham, R., and Rix, D., 1991. Local land charges: corporate application or corporate report? Association for Geographic Information Conference Proceedings, 2.8.1-2.8 6, McKay, I, 1993. Monitoring the benefits: realising the potential of an organisation's investment in GIS. Proceedings of the IIR Conference on GIS: weighing the costs and maximising the benefits (available from HR Ltd, London). Medyckyj-Scott, and D., Comelius, S. 1991. The move to GIS: some empirical evidence of users’ experience. Proceedings of the Mapping Awareness Conference, 115-137, Millete, T-L., 1989. The Vermont GIS: a model for using regional growth planning commissions to deliver GIS in support of growth management. In L. Worrall (ed) GIS: developments and applications, Belhaven, London. Mounsey, H., 1993. Accurately estimating the costs of using GIS. Proceedings of the IIR Conference on GIS: weighing the costs and maximising the benefits (available from IIR. Ltd, London). 152Musgrave, T., 1993. Success or failure: the key to GIS lies in data capture. GIS'93 Conference proceedings, 85-96, Palmer, B.D. 1991. GIS or GIM? Association for Geographic Information Conference Papers, 2.7.1-2.7.5, Plymouth City Council 1991. Cost-benefit study report for a city wide implementation of GIS. Unpublished working paper. Pugh, D. and Cushnie, J., 1992 The land and property gazetteer. Association for Geographic Information Conference Proceedings, 2.20.1-2-20.6. Rickman, D., 1993, Establishing the right framework to meet user needs, Proceedings of the IIR Conference on GIS: weighing the costs and maximising the benefits (available from IIR Ltd, London). RO CITM 1991. IT trends in local goverment 1991. (Society of Information Technology Managers - publication available from INLOGOV, University of Birmingham), SOCITM 1992. IT trends in local government 1992, (Society of Information Technology Managers - publication available from INLOGOYV, University of Birmingham). Waller, R.K.C., 1993. Cost-benefit analysis in a local authority: an implementation case study. GIS'93 Conference proceedings, 5-14, Wilcox, D.L., 1990. Conceming ‘The economic evaluation of implementing a GIS’, Intemational Journal of GIS, 4(2), 203-10. Wrekin Council 1993, Review of map use in Wrekin Council. (Unpublished - details available from the author).Figure 1: GIS: efficiency benefits Efficiency - cost saving | Records maintenance system for a variety of applications e.g. planning Digitising existing records systems applications, grounds maintenance A Efficiency - productivity in ‘Requisition of OS digital base Efficiency cost avoidance | Removal of technician duty of manually ‘remarking map sets ‘Automation of existing procedures ¢-g. Efficiency - productivity ‘Acquisition of OS base and of relevant data sets Capture of relevant data sets land charges; grounds maintenance and acquisition of GIS-based contract production; maintenance applications portfolio schedules Efficiency - productivity [Exploiting new range of procedures ag. | Purchase of OSCAR) oF ain optimal routing of refuse collection alternative and appropriate rounds, modelling traffic flows etc software Bificiency ~ productivity | Assistance with strategie plan Capiure of relevant layers gain preparation c.g. ability to buffer and overlay different layers to identify planning zones Efficiency ~ productivity | Development of map delivery System gain (OS digital base and map server architecture land and other infrastructure Efficiency - cost avoidance | Secure map system Investment in system security measures Efficiency - cost aveidance | Ability to respond to changing OS map base and capture of | legislation e.g. land contamination, _| relevant data sets environmental legislation Efficiency beter service | Ability to mest customer requirements | OS map base, dala GonveRTon, {and performance measure e.g, planning | applications acquisition applications, searches Efficiency ~ beter Ability to assess ‘impact of change more | OS map base, plus relevant data ‘regulatory functions easily and more accurately eg. impact | and GIS toolkit ‘of environmental hazards Efficiency ~ more accurate _| Greater accuracy, more exhaustive ‘OS map base, development of referencing of property, | inventory of resources ‘various gazettoers Efficiency - income Improved asset management, jeneration, productivity io analysis Efficiency - consistency | Consistent decision making due to ‘automated decsion making and decision ‘OS map base, development of "layer (8 digital base plus relevant map layers support Efficiency - productivity | Ability to develop and manage the Relevant data and linkages to ain implementation of capital programmes _| existing systems Efficiency - Income Developing new services e.g. map ‘OS maps plus appropriate neration roduction servic, data brokerage software and hardware C)OSCAR is aroad network (centrelines) dataset available from the Ordnance Surveys. OS refers to the Ordnance Survey throughout. 1-54Figure 2: GIS: effectiveness benefits Effectiveness strategic Ability to target resources more Census type data linked with accurately based on a better assessment | operational records systems of need e.g. from targeting capital (eg. housing arrears, Programmes trough to corporate issues | turnover, social services) like an anti-poverty strategy “Effectiveness -sratgie "Abily wo monitor the implementation of | Lng Census-type data social, economic and environmental With other statistical systems icy (e.g. labour market policy) and operational data sets Ability to assess the suitability of land | OS data, various layers oF for development and to test impact on | environmental data, buffering the wider environment and overlay tools Effectiveness strategic, — | Ability to link models (©@- Retail data transport network environmental shopping ox tanspor) with is model, G1S-model interface ‘Effectiveness - operational | Ability to develop better integrated Environmental data, hazards, ‘emergency plans based on buffered Tinkages to Census data and zones around hazards road networks ‘Abily to idenify quickest route with | Road network data, rouing— alternatives for emergency response (e.g. | model fire, ambulance, potice) Ability to visualise complex data and | Base data plus appropriate ‘communicate results to senior GIS toolkit { management and politicians Effectiveness - managerial | Ability to conduct marketing analysis Link ‘operational data to (€g, leisure centres, libraries) data and road network/public transport data, sets Erectivencss managerial | Ability to Yelate new developments for | Consus data, road network services to measures of accessit data and GIS toolkit Ability find spatial patterns in | Operational date MakGd 16 managerial ‘operational data and to search for Census data plus interfaces explanation e.g, crime pattern analysis | between GIS and statistical software 1-55Note: This material was originally printed in the: International Journal of Geographical Information Science Editor: Peter Fisher, Department of Geography, University of Leicester, Leicester LE1 7RH, UK Publication Details: Volume 14, 2000, 8 issues per year ISSN 1365-8816 Published by the Taylor & Francis Group 2000 Subscription Rates Institutional: US$695/£420 Individual: US$327/£198 The material was reprinted with the permission of the author. 1-56URISA 99 ANNUAL CONFERENCE PROCEEDINGS, CHICAGO, IL Jerry Davis, President G.P, Davis & Associates Limited 22 OakBay Point ‘St. Albert, Alberta, Canada TSN 6N6 (780) 459-3605 Fax (780) 458-6275 ‘gpdavis@ oanet.com ‘SIX KEYS TO GAINING EXECUTIVE COMMITMENT TO GIs. ‘Abstract: One of the most frequently-heard comments from staff in ‘organizations who wish to either implement GIS for the first time, or extend an ‘existing implementation, is, “My managers don’t support GIS.” Although there are no guaranteed means of overcoming management shyness regarding GIS, there are a number of steps which can be taken to relieve management anxiety. ‘This paper will discuss the six most common factors which must be overcome to gain executive management commitment to GIS efforts. For each, proven tips will be offered to assist in understanding executive management's needs in supporting GIS. Understanding these will assist GIS professionals in obtaining approval of GIS proposals, INTRODUCTION Nearly everyone who is involved in information technology has been or will be confronted with the problem of decision makers who are unwilling to invest in technology. ‘The reasons for executive shyness toward technology are many, but one major reason is risk. It has been publicized that even among Fortune 1000 companies, 40% have reported that a major IT project has been cancelled during implementation. For GIS, it has been estimated that the proportion of unsuccessful projects exceeds 60%. ‘The common myth is that executives should expect any IT project to be completed over budget and behind schedule. For many executives, the enthusiasm of GIS professionals is tempered by anecdotal evidence that GIS implementation is plagued by high costs, organizational disruption, and marginal perceived benefits. Executives who have the expectation that successful GIS implementation is risky, even if Presented with favorable cosvbenefit projections, will weight the anticipated benefits by the probability that the benefits will not materialize. This unfavorably alters the perceived cost/benefit relationship. There is no magic cure for executive shyness about approving GIS projects. In some organizations, executives will remain unyielding in their opposition to GIS, and no amount of analysis will change their minds. However, for most organizations, there is hope that GIS professionals can alleviate the fears of management to the point where they are more comfortable that the projected benefits will in fact be achieved. Below is a discussion of six important factors that the GIS professional must address to reduce the level of perceived risk and win management support. For purposes of tis discussion its assumed that there isa viable business case for GIS implementation; that is, the value of expected benefits (both tangible and intangible) will exceed the costs 1.57KEYS TO EXECUTIVE COMMITMENT Managing Expectations Success has been defined as that state which occurs when results excced expectations, As itis not always possible to control results in technology implementation, itis incumbent upon the GIS professional to manage expectations. Paradoxically, the opposite ofien occurs. GIS professional, in an attempt to gain management support, are eager to sella long term vision of the benefits of GIS and are often exhaustive in describing the potential benefits. If they do this too well, management can expect that all of the benefits will be achieved, sometimes after only the first phase of implementation, If all of the benefits do not meet these heightened expectations, managers then judge the glass to be half empty, rather than half full, and the project to be a failure. Overselling the benefits of GIS is unwise. There is nothing to be gained, and lots to lose, in Preparing a costbenefit analysis showing a two year payback on investment, if the organization's investment policy only requires a five year payback. The bottom line isto promise sufficient benefits to gamer support, but only those benefits that can be virtually guaranteed, Different people have different expectations about GIS. Managers, engineers, administrators and front line users all will have unique expectations arising from previous knowledge of GIS, ‘marketing materials from vendors, conferences and similar experiences. Many times, these expectations are unrealistic, and will have to be tempered. In these situations, the GIS professional become the skeptic, and treads the fine line between gaining support and raising. ‘expectations unduly. ‘The key to managing expectations is to separate long term vision from short term objectives. ‘While itis important to have a long term vision (this is discussed further, under planning), itis ‘more important to clearly identify which benefits will materialize at each point along the {implementation plan, particularly in the beginning phases. Planning Although many GIS implementation plans thoroughly cover hardware, software, data and training, what is often missing is how GIS technology will make a difference in areas that are {important tothe organization. Executives appreciate a GIS plan which recognizes that business processes drive GIS implementation, and which clearly connects desired business results and Proposed GIS technology. Executives need to know what the future holds in both the short and the long term, For the GIS professional, this is a double-edged sword: GIS typically involves long implementation timelines, soit is necessary to project well into the future. On the other hand, a major concern of ‘management is that technology implementation is a black hole that keeps expanding, and that scarce budget funds will disappear into the vortex. ‘One way to site a balance between these opposing considerations isto create a long term vision, which describes what the organization's business processes could be, at some undefined point in the futur, if unlimited time, money and expertise were applied to GIS. (These unrealistic assumptions will be dealt with later.) The GIS vision needs to focus on the business processes, and how GIS tools can be employed to redefine them. The best GIS visions are those which are created by line managers who are responsible forthe business processes which GIS will support. 1-58To develop a GIS vision, managers require a clear understanding of the benefits of the technology being proposed, and the ability to see how technology can be applied. This often ‘means that the GIS professional must provide information to management about what GIS is, how it is being used by similar organizations, and what results can reasonably be expected. ‘The GIS vision that results is entirely unrealistic ~ it was created under the assumptions of the availability of unlimited time, money and expertise. But it does seta target that is cleat for all, and provides benchmark against which to measure short term actions. Narrowing down the scope of the GIS plan, that is, aligning expectations to the realities of budgets, time and expertise, is a process of setting priorities. This is where the business goals ofthe organization come into Play. The most important business objectives need to be reflected in the GIS plan for it to be considered relevant and attractive to executive management. The best GIS plans go one step further to include how tangible benefits that are projected will be ‘measured and harvested, and to spotlight intangible benefits so that they can be recognized by senior management, ‘The GIS plan should also address the risks that are inherent to GIS, and how they will be ‘managed and minimized, Major sources of risk in GIS implementation that need to be addressed are the costs and effectiveness of data capture and conversion. Finally, the GIS long term plan, if possible, should be broken down into discrete projects, each with identifiable operational benefits. This permits executives the opportunity to view each project as a separate investment decision, and greatly reduces the perception of risk. User Involvement Executives need to know that there is agreement among affected users that proposed GIS technology is going to result in improved operations. Gaining this consensus from user groups ‘means involving them in the planning phase. It is the users who know the business best and will pay for GIS not only in dollars, but more importantly in the effort that will be needed for ‘successful implementation. They are in the best position to determine how the business processes can be refined to take advantage of GIS technology. Furthermore, itis line managers that are in the best position to determine the value of technology investments. Without their agreement that GAS will be valuable to their business units, any GIS implementation will be seen as an imposition, and chances are good that they will either ignore it or subvert it. If they truly believe that GIS will result in more effective or efficient business operations, they will do whatever is needed to ensure success. Getting user involvement at this level requires a fine art of soft selling (remember about expectations). Potential users must be guided through a process of awareness, visioning, and pragmatic planning. Potential users who do not wish to participate in GIS planning or even Consider GIS should not be coerced or pressured. Perhaps the most effective approach to raising awareness and gaining support is to conduct demonstration or pilot projects. Often these can be created quite quickly, using low cast/low tech tools or freeware. The demonstration should be designed to atleast superficially mimic the real business environment, and answer frequently asked questions, such as: + where are our assets? how many customers are in each service area? what is near our assets that will impact them? what are the characteristics of customers in each area? are particular characteristics geographically correlated? 1-59‘+ where should new programs take place? * how should service delivery be geographically organized? ‘Ifthe answers to these questions are important to the success ofthe business unit, chen the users will quickly show their commitment to GIS. Integration GIS implementation is most likely o succeed when itis integrated into the business processes that drive GIS, and the business information systems which manage and support the processes. The ultimate goal of GIS is not necessarily enterprise GIS, as it must be justifiable in each business unit it affects. Instead, GIS needs to become a part ofthe fabric of business goals and processes; when this occurs, GIS becomes invisible ~ just a part of how the organization does its business. Integration must also build GIS data maintenance into the business processes, Data maintenance ‘will be made easier, and the data will be higher in overall quality, if itis captured close to its source by users who rely on its quality. This may mean that business transaction recording Processes will need to be modified to collect additional information, or that automated recording Processes be implemented. In many instances, opportunities exist to simplify business processes and add value while maintaining GIS data, Integration with other systems is technically complex, and risky. To the extent that i is important to show clearly identifiable benefits in the beginning phases, integration efforts should be Scheduled for the later stages, where possible. Organization “Failures in several respected GIS efforts have to do with strategy, people and ‘management practices, not technology. In almost all aspects of GIS today, from business to implementation, technology is not the limiting factor. Experience and ‘customer awareness are.” Douglas Gerull, (Former) Vice President Intergraph Corporation ‘The inability of organizations o effectively deal with their own organizational and political milieu is a hidden risk for GIS. Although its generally beyond the ability of GIS professionals {0 solve all oftheir organizations’ problems, awareness of the organization and its politics can help ensure success. First, there must be an understanding of orgenizational dynamics: what are the areas that attract. ‘executive attention because of their excetience or problems? The managers of these business units are likely to have more influence in decision-making, and their support for GIS will greatly assist in getting approval. Support from these managers can be strengthened when their staff are involved in GIS planning (see user involvement, above), and when GIS is seen by them as ‘making a difference in their business by helping staff to resolve problems or further their ‘excellence. Although there is a need for GIS specialists to plan and co-ordinate efforts within larger ‘organizations (that is be process managers), there is no need for all GIS staff to be centralized into a “GIS Department.” In fact, this approach to organization ~ an example of the infamous 1-60silo - is one wich has proven to be a major impediment to successful GIS implementation ‘There must be a fit of GIS tasks into existing operations and GIS staf into the existing business cnganization. This is facilitated by the integration of GIS into business processes. AA secondary benefit to this approach is that line management perceive that they have control over the ‘operation of the GIS, and this increases their support for it. ‘Technology GIS technology is complex (especially to those who are unfamiliar with i), and executives ‘connect complexity with risk. The perception of risk can be reduced through the following approach. First, recognition ofthe learning curve being faced by those who develop, support and use GIS ‘must be apparent in the implementation plan. Where possible, first phases of a GIS project should use simpler technologies, with more complex ones introduced only after the ‘organization's collective knowledge and experience level has increased. This fts well with the phased implementation approach suggested above. Training should be planned to occur early in the implementation process. A good rule of thumb here is that the training budget for GIS (exclusive of staff time) should be 150% of the budget for software. Executives fear that staff are prone to promoting technology for its own sake, and recommending the flashiest technology as a form of self-aggrandizement or professional one-upmanship. There is just enough anecdotal evidence available to keep fueling these fears. Selection of appropriate technology that balances business process nceds and available resources will reduce these fears. If the vision for GIS requires that higher level technologies be employed, then a GIS technical growth path will need to be created as part of the plan. This will support the phased-in project deliverables, and recognize the learning that must occur. GIS technologies that are selected must also pass the tests of both industry standards (that is, ‘open systems architecture that supports integration with other IT tools), and the market test, Risk of technical obsolescence or of being stranded with unsupported products is greatly reduced by selecting products that are recognized and accepted by the marketplace. This does not mean that only market-share leading products should be chosen. It does men that the risk of choosing “Brand X" products needs to be explicitly recognized. CONCLUSIONS Executives may discount the benefits of GIS claimed by GIS professionals. This is due to executives’ view that there is a chance that the benefits will not be as expected. Changing these views will lead to a more favourable view of GIS by decision-makers. GIS professionals require more than just technical skills to be able to attract support from ‘executives for their efforts. An understanding of executives" perceptions of risk, and the factors which contribute to these perceptions, is fundamental to being able to influence decision-makers. 1-61Source: 1997 GIS/LIS Annual Conference Proceedings ASSESSING GIS BENEFITS: THE METHODOLOGY DIMENSION Barry Wellar Department of Geography University of Ottawa Ottawa, KIN 6NS ABSTRACT ‘The methodology dimension of assessing GIS benefits is of fundamental and continuing importance to both the management and operations functions In particular, the validity of claims made about the benefits of GIS technology depend directly uponthe ‘means, that is, the methods used to advance or “back up" the claims. Given the central importance of methodological matters to credible GIS benefit assessment, the focus of thi paper ison the design of methodologically -based frameworks for identifying, ‘measuring, tracking, and evaluating the benefits realized by GIS implementation. Derivation ofthe principal components of the framework is a two-phase process that includes: 1) an overview of pertinent literature; and 2) consultations with an IS/GIS/LIS panel about the literature findings and proposed framework features. INTRODUCTION ‘This paper departs from the one that I had in mind when I submitted my proposal for GIS/LIS 97. Two conversations shortly after [learned the proposal had been accepted were instrumental in making the changes, First, IS/GIS consultant Dan Parr, member of the Program Committee for GIS/LIS 97, and Program Chair for URISA 8, noted that my GIS/LIS 97 proposal is pertinent to the management component that he wants to build into URISA. 98. "The commonality between the GIS/LIS 97 proposal and this aspect of the URISA 98 program may be summarized in a problem-sotution expression as follows: Senior administrators/managers are faced with the high-powered, hype-laced promotion of IS/GIS/LIS technology on the one hhand, and are in serious need of rigorous, straightforward, well-organized, targeted, and non-vested critiques of the ‘technology and its “benefits” on the other. ‘The approach chosen to define a management wrack for URISA 98 adopts a solutions-oriented outputs perspective. The intent is to design sessions that provide management with the “tools -- frameworks, questions, criteria, more questions, benchmark. ‘measures, indicators, et. -- needed to ascertain the known and likely benefits and other consequences of corporate significance arising from GIS investment. (Cullis, 1995; Evans, 1996; Mullin and McEvoy, 1995; Radchuk, 1995; Steger, 1991; Steger, etal, 1996; Wellar, 1989, 1990, 1995.) Asa result, the framework developed in this paper on GIS benefit assessment emphasizes a management rather than an operations, planning, or IS/GIS/LIS "techno" perspective. I is explicitly recalled in this regard that emphasis on the management function increases and enhances applicability of methodology to other functional, input domains such as planning, operations, technology, research. (Bayer, 1985; Burman; 1968; Evans, 1996; Vincent, 1966; Wellar, 1985). ‘The second conversations of note were with Dr. David Arctur, Chief Scientist, Laser-Scan Inc. Arctur, upon learning of the nature of the proposal, expressed what I took to be skepticism about the quality and quantity of published material on the met ‘behind how GIS benefits and other consequences are assessed. In very few words, his response appeared to boil down to, "What methodology?” To a considerable degree Arctur's questioning comment reflects what had been found to be the case in earlier investigations. (Steger, 1991; Wellar 1981, 1985, 1995) That is, the anecdotal literature vastly exceeds the methodological in weight, volume,