By: Victoria Kouyoumijan
Geographic information systems (GIS) are more than maps. They work behind the scenes, enabling public works departments to manage infrastructure and constituent services in one integrated system. The technology offers desktop and online spatial analysis to aid in asset management, work-order management, capital-improvement planning, and map-based public Web pages. And it can be extended to the field, giving mobile personnel direct access to office-based geographic information.
Whether you want to introduce GIS to your team or enhance an existing system, the first step is to convince decision-makers to fund the investment. Standing before the governing board, you must defend the budget request, secure buy-in, prioritize spending, and demonstrate that your team can deliver the expected benefits. The key is to communicate the value of the investment to the entire organization.
Return on investment (ROI) is a powerful financial metric that compares net benefits with costs to determine whether a project is worthwhile. For instance, a measure that shows a $2 million payback on a $300,000 investment speaks the language of the funding executive. As important as the calculation is the ability to show exactly when value will be delivered. This communicates that projects have realistic and achievable goals that contribute to the entire organization's success.
Following these instructions will help you build and deliver a business-driven case.
- Prepare for building a business case by assessing the current role of GIS in the organization. Identify key stakeholders and align the goals of the project to the organization's mission. At this stage, form a project team responsible for completing a defensive business case for the GIS investments.
- Elicit stakeholders' input to determine their business objectives and help them understand GIS basics and benefits. Learn their concerns, whether it's maintaining aging assets, reducing operational costs, complying with regulations, or improving customer relations. Translate these business needs into GIS opportunities and prioritize them based on value to the organization and ease of implementation.
- Construct a technology program portfolio that defines the objectives, deliverables, and duration for each GIS project. Break each project into component parts including hardware, software, data, custom applications, labor, and controls for project governance.
- Ensure the program's success by creating an optimal team of program governance with clear lines of responsibility and accountability. Apply a capability maturity model to expose gaps between existing competencies and those required to complete the program. Identify the solutions that will shore up the weak spots to bridge the capability gaps in order to instill confidence in the stakeholders that the program is set up to succeed.
- Create a budget based on all costs associated with each of the projects in the program portfolio. Use your finance department to validate your numbers and ensure that your budget can stand up to scrutiny by decision-makers.
- Determine project benefits that are measurable and achievable. Instead of saying “money will be saved,” a more quantifiable benefit would be expressed as “will avoid $300,000 in overtime over three years.” Consider GIS as an enabler of downstream benefits that are indirectly back to one or more geospatial solutions. Use existing workflows to quantifiably model the return when comparing the situation before and after the addition of the GIS program.
- Design a road map that illustrates when the benefits will be realized for the entire GIS program of projects. Use a timeline that visually identifies the interconnectedness and dependencies of all of the projects that together deliver the intended benefits. This approach presents a case for funding the entire program.
- Calculate financial metrics such as net present value and internal rate of return to evaluate the GIS program's fiscal impact. The finance department can provide the organization's preferred financial metrics.
Present a final report that summarizes the results of the ROI study. The report should have a business rather than a technical focus. The most frequently read component of most reports is the executive summary, which in one page explains the background, challenges and opportunities, proposed solution, budget, benefits, and financial metrics.
Here's an example of how a public works department can put each step into practice.
The goals: to increase revenue, retain and improve the community's vitality, strategically manage growth, comply with government regulations, and enhance citizen services and confidence.
Proposed projects include completing a fire hydrant inventory to help the city meet regulatory mandates and ensure correct hydrant operation. The argument is that, compared with a manual approach, more inspections can be completed and costs reduced. This project meets business goals of the organization by generating significant savings, and the combined benefits of the program return twice the initial capital investment to the public works department. The true value to citizens is that in an emergency, working hydrants save lives and minimize damage to property.
— Victoria Kouyoumjian is an IT strategy architect for ESRI in Redlands, Calif., and co-wrote The Business Benefits of GIS: An ROI Approach. Based on methodology developed by PA Consulting Group and written in collaboration with the firm, the ES-RI Press book helps users create a budget, determine business benefits, and calculate quantifiable financial measures that confirm whether benefits outweigh costs. Each chapter includes objectives, tasks, and expected outcomes, and readers can access templates, digital models, and other resources online.
Using GIS to sustain funding levels
Golden, Colo., uses GIS software to manage pavement and sign inventories, snow removal, cleaning and inspecting storm inlets, and special com munity days. “Our strategy is to be efficient, do more with less, and do it well,” says GIS Coordinator Quint Pertzsch.
He uses the software to track how much time the operation spends on each activity. For example, when sign inspections were paper-based, the total cost per sign, including labor and equipment, was $5.27. After mobile GIS was introduced, the figure dropped to $1.21.
In the first six months the department saved $13,000 — not including the secondary benefits of using less paper and fuel and spending less time entering data — while doubling the number of signs inspected. The department reallocated the unspent monies to other areas.
GIS is also used for long-range budget planning. If a major storm occurs, the department knows how much it will cost to replace all signs. If there are plans for a new subdivision, it can quickly calculate additional service-delivery expenses.
When the city manager asked all departments to report where overtime dollars were being spent, Pertzsch conducted a return-on-investment analysis of the department's GIS program.
“In less than five minutes, we could show him how public works spends,” Pertzsch says. He found that 95% of overtime is spent on snow removal, spring cleanup days, and a summer festival. City leaders felt residents would protest if these services were reduced, so public works retained its overtime funding.
A department that wasn't using GIS lost funding because it needed six months to perform the analysis. Because of its success, public works is teaming up with other departments to integrate GIS more fully into city systems.