Location intelligence empowers organizations to discover new insights.
In the IT industry, “Where?” is a question most commonly answered by facts about storage locations, Internet URLs or virtual servers. With the growing use of geospatial data in enterprise data warehouses (EDWs), however, the question “Where?” is leading many organizations to new insight—and potential competitive advantage.
Although business intelligence (BI) practices have long focused on answering questions about who, what, why and how, rarely have business analysts been able to use geographic data to support their work. The growing availability and increasingly mainstream use of geospatial data is changing that.
By combining information about location or geography with other critical business data, organizations create location intelligence (LI). With this new perspective on their data, consumers and businesses can make more efficient and effective choices. “Location analytics use the spatial aspect of data to determine patterns and items that are not found without understanding location and distance,” explains Mark Smith, CEO of Ventana Research, a research and advisory services firm. “LI can help companies gain critical insights, make better decisions and optimize important processes and applications. We believe that LI will be one of the key technologies to enable business innovation in the rest of this decade.”
Enriching data with geography
Using geographic data to inform business decisions is not groundbreaking for some industries. Traditional geospatial technology has been used for decades by companies with extensively distributed assets—such as logistics providers, utility companies and government agencies. Technicians with deep geography and analytics backgrounds use rich spatial databases, third-party demographic data, and specialized geographic information system (GIS) tools to plan more efficient routes, place new power lines or map pole locations.
But compared with the next generation of business analytics, traditional geospatial technology, which is typically found in departmental applications run on dedicated servers, is the technological equivalent of a fold-out map. Used primarily for special-purpose applications, this technology is eclipsed by the instantaneous, Google Earth-like views provided by LI tools, which can be accessed by users at many skill levels across an enterprise.
"Today GIS is being implemented as an enterprise asset. GIS data and processes are viewed as strategic assets."
How does it work?
Organizations create LI when they integrate postal references, mapping and other geographic information within their EDW. In many cases, locations are already in existing data stores but not in a format that’s conducive to analytics. A simple process called geocoding can convert postal addresses to geospatial data that can then be measured and analyzed to deliver LI. By tapping into this resource, decision makers can use the geographic or spatial context to inform choices and respond to opportunities. The possibilities are vast:
- By merging location information with demographic and other business data, companies can create interactive maps that let users drill down to details about any specific location.
- Analysts can investigate new relationships and trends to pinpoint the average income in areas where the highest-performing stores are established.
- Retailers can determine how store sales vary by population level or proximity to competitors.
- Consumer products companies can identify customer complaint locations, enabling rapid product traceability if a recall is required.
- Sales reps might better target their customer visits by analyzing the geography of sales targets.
- Fleet managers are able to use new tools to maximize asset utilization across the business.
A broader worldview
The maturity of LI applications varies by industry. “Public sector organizations, especially governments and municipalities, are leading the charge in terms of spatial applications,” says Michael Gonzales, managing partner of DSS42 LLC, an industry research company specializing in strategy and architecture. “They can’t function without LI. On the other hand, there are many larger companies that could benefit from spatial analysis capabilities but are holding back.”
Among the laggards are private sector organizations that suffer from a lack of understanding of spatial data as well as a fear of highly complex geospatial data technology. “IT sometimes struggles with trying to understand spatial data,” says Gonzales. “ ‘What is it? How do we maintain it? How can we glean value from it?’ For these groups, LI is just new.”
Yet the growing use of geospatial technology is forcing even late adopters to rethink their approach. With today’s technologies and platforms that support geospatial data, it can be easily incorporated and managed within most standard BI architectures. A simple user interface enables vendors to buffer the complexity of spatial technologies from users. What’s more, geospatial data is increasingly embedded in other systems.
At the same time, business users are becoming more familiar with spatial technologies. With tools such as Google Earth and Global Positioning System (GPS) devices in their cars and mobile phones, they are more accustomed to thinking about data from a geographic perspective.
LI meets the EDW
As a result of these trends, companies are beginning to migrate from siloed geospatial tools designed for use by departmental experts to enterprise tools available to a broader range of users. Many in the private sector are rethinking their earlier aversion to geospatial tools, especially considering how readily available the technology has become.
"LI can help companies gain critical insights, make better decisions and optimize important processes and applications."
In addition, users need little or no mathematical or statistical training. “Today’s LI is easy to use and designed for a broad range of business needs—not only the GIS specialist,” says Smith.
In addition, early adopters of GIS technologies are beginning to incorporate geospatial data into their EDWs so they can generate cross-enterprise intelligence. “Today GIS is being implemented as an enterprise asset,” says Jack Dangermond, founder and president of ESRI, the leading GIS technology vendor. “GIS data and processes are viewed as strategic assets and competitive differentiators in the current economic environment.”
Industry experts detect clear parallels between LI and technologies such as data mining, which also existed in silos for most of its first three decades. Then, as BI teams began to see the value of performing in-database processing to handle applications—such as immediate scoring of customers—they realized they could no longer propagate the data to siloed marts. Instead, they had to work within the EDW. “Spatial analysis shares similar characteristics and will progress on the same path,” Gonzales predicts. So just as in data mining, geospatial analysis is shifting to an in-database approach.
However, organizations should not wait to get started. “If you’re not at least at the start of a spatial perspective in your data warehouse, then you’re behind,” notes Gonzales. “In the next two to three years, it will be difficult to remain competitive without some spatial perspective.”
As geospatial technologies become mainstream, companies can find new ways to use LI to create competitive advantage. Consider the following scenarios:
"In the next two to three years, it will be difficult to remain competitive without some spatial perspective."
- Public safety. A municipal contact center representative takes a call from someone who says a light is out in front of her house. After receiving an address, the agent displays a map of the area, which shows multiple nearby streetlights. With a view of the intersection, the agent asks focused questions and determines that the non-functioning light is a traffic signal. By tying the geospatial data into the EDW, the agent is able to submit a proper repair request.
- Optimum store locations. A retail chain with plans to open several hundred new stores uses geospatial technology to determine where those stores should be placed. Using LI, analysts identify relevant clientele demographics, such as most profitable customers. Analysts combine that knowledge with information about potential sites’ proximity to highways, public transportation and competitors’ stores to select the best location options.
- Proactive service. An insurance company represents customers in an area that sustains hurricane damage. Geospatial data shows wind velocities in the vicinity of the storm. The company sends service representatives to affected customers to survey damage, offering payment on the spot for damages or repair services. At the same time, the company uses the data to identify potentially fraudulent claims from customers whose properties lie outside the range of the storm’s damaging winds.
The benefits delivered by creating geographic context within data can be significant. Early adopters report cost savings, faster and more effective decision making, and enhanced customer service and satisfaction. Better intelligence supports increased insight, reduced risk, decreased fraud and improved business process efficiency—all creating a wealth of bottom-line advantages. In one case, an insurance company that used LI to create a self-service, risk-density analysis environment for underwriters reduced data processing time from three hours to five minutes.
Map a path to success
If there is a challenge to successfully deploying LI, it might lie in demystifying spatial technology to incorporate location analytics as part of corporate BI culture. With sufficient knowledge within IT and business organizations, enterprises can identify spatial opportunities to enhance analytics insight. Essentially, it’s a matter of applying business knowledge with existing corporate data to determine LI.
Because IT organizations may be unfamiliar with geospatial data, that knowledge can be transferred by hiring experts to facilitate geographic data integration. Fortunately, BI vendors are starting to offer solutions to do just that as they guide their customers down the LI path. In the end, the key to driving value is for companies that understand their business and data to derive new location measurements and analytic data.
As always, cultural change—especially from the top down—is critical. “Getting business executives to understand the power of LI and how to ensure their organization is using it effectively is key,” Smith says. “Leadership and sponsorship are also critical, along with understanding the benefits of the investment.”
However, as business executives grasp how they can use LI to not only innovate but also discover opportunities, the value will be obvious. Then the primary question will shift from “Where?” to “Why not?”