Authors: -Paul Amos, Managing Director. Wharton Geospatial Initiative, The Wharton School, University of Pennsylvania -Dr. Susan Wachter, Professor of Real Estate and Finance. The Wharton School, University of Pennsylvania

As GIS technology has grown and permeated into business applications from its roots in the public sector, CIO’s in the public and private sectors are increasingly focusing on the Return on Investment (ROI) that GIS technology can provide. In his opening address at the 2004 ESRI GeoInfo Business Summit, Jack Dangermond, president of ESRI, quoted CIO Magazine as saying that "70% of all CIO’s have identified GIS as a strategic IT component." With this in mind, ESRI and the PA Consulting Group are publishing a ten- step methodology titled “The Business Benefits of GIS: An ROI Approach”

The ten steps of the ROI methodology identified by ESRI and the PA Consulting Group are as follows: 1.) Prepare for the ROI project 2.) Identify business opportunities 3.) Prioritize business opportunities 4.) Construct the GIS program 5.) Define project control 6.) Specify and cost GIS projects 7.) Estimate business benefits 8.) Create a benefits roadmap 9.) Calculate financial metrics 10.) Build and present a final report

Each chapter in the book describes one of the steps in the ten step methodology. The chapters provide detailed instructions on the fundamental theme of the chapter and includes a case study that builds successively from previous chapters of an ROI project of a fictitious city municipality. The book takes a hands-on approach which includes a website (http://www.esri.com/roi) with supporting material such as examples used in the book and digital templates to construct your own ROI analysis with the steps described in the book.

The first three chapters of the book lay the groundwork with a series of Planning and Investigation steps to implement an ROI study for a new or existing GIS program for an organization. Preparation for the project and defining how GIS fits into an organization’s mission and technology strategy should be completed upfront. During these steps a team is assembled to undertake the ROI project. The team should be a cross-functional team of individuals from several different departments. The team will meet with senior executives and stakeholders to identify key business challenges and opportunities along with the benefits and improvements that GIS can provide. The team will rank and prioritize the business opportunities based on the level of benefits to the organization and the ease of implementation involved in delivering the benefit.

The GIS Program Definition is discussed in steps 4 and 5. The GIS Program Definition involves converting the business opportunities identified by senior management into distinct projects that have defined deliverables, outcomes and a time frame to completion. After the projects are defined, the team will assign responsibility to key individuals to manage the projects to completion.

The Business Analysis occurs in steps 6 through 9. The first step in the Business Analysis is to create a detailed budget that outlines the resource costs associated for each GIS project. The team should involve personnel from the organization’s Finance department to discuss all unit costs that should be included in the budget. After a budget is developed, the team will focus on estimating the benefits to an organization for each project.

The team should develop a list of 10-12 benefits for each GIS project of which about half should be tangible benefits. Tangible benefits include adding value though revenues generated or costs saved. The team should focus on measuring tangible benefits and translate these benefits into measurable monetary value for the project. Intangible benefits are typically difficult to assign a monetary value but should be

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