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Gis Roi Methodology Overview


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GeoSpatial Information ROI

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Gis Roi Methodology Overview

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