Location provides an understanding of place, but why is it important to business?
Recently a colleague of mine asked me a simple question: “what’s so important about location anyway?” He asked because as a consultant he is regularly confronted with this question when working with organizations trying to understand the value of location. Long before the organization had decided to explore a location strategy or implement a GIS they wanted to know something very fundamental: Why should they care about location at all?
As someone who works daily with ‘location’, I was struck by how much I struggled with a response. Isn’t it obvious, I thought? Without location how can a business understand anything about what they do, be it customers, suppliers or operations! Well, as it turns out, organizations can and do operate without a deep understanding of location. In fact, for some industries the perceived importance of location (i.e. businesses indicating location as critically or very important) is < 50%.
So why is location important? What makes it special? In my mind, the answer centers less on 'location' and more on the insights derived from location. This is known as location intelligence.
Location intelligence allows a business to answer questions that couldn’t be answered outside of a geospatial context. Without location intelligence, a power utility business, for example, would struggle to understand the spatial extent of its assets. They would struggle to determine the optimal route for a new power line or the expected service response times in the event of an outage. This is because location is the fundamental dimension of analysis. Without it, a business is essentially flying blind.
But what specifically are they missing out on? Let’s look at an oil transmission pipeline company as an example and the six reasons why location intelligence is so important.
The pipeline business is inherently geospatial. The assets of a pipeline company can span thousands of miles, occupy varied terrain and cross numerous jurisdictional boundaries. An understanding of “where” is critical for operators trying to comprehend the physical location, geographic variation and changing conditions associated with pipeline assets and the surrounding environment.
Visualizing the location of critical resources and the external environment enables operators to grasp the full scope of their operations. Without it, operators risk treating their business as geospatially uniform and fail to consider the variations that exist among assets, stakeholder interests and the surrounding environment.
Q: Why care about ‘understanding where’?
A: An understanding of where, enabled through maps, helps organizations who want to understand the scope of their operations by visualizing company assets, resources and related business interests in their appropriate geospatial context.
Equally as important as understanding “where” is being able to determine the size, shape or distribution of assets and related business interests. An oil pipeline carries materials that can damage the surrounding environment in the event of a leak or spill. Being able to accurately determine the extent of the leak (from aerial imagery, in-situ sensors or other sources) gives operators an understanding of the scale of the impact.
The ability to measure geospatially gives organizations a better grasp of the true scale of their business. Without it, the question of scale is basically a guess.
Q: Why care about ‘measuring scale’?
A: The ability to accurately measure the size, shape and distribution of geospatial features empowers organizations with a quantitative determination of the extent and impact of their business.
A typical pipeline company has numerous geospatially overlapping business interests. These include tangible assets such as the pipeline itself as well as related interests such as environmental protection areas and evacuation zones. It’s vital that a sustainable and well-functioning operator understands the interaction among these co-occurring phenomena. For example, the ability to calculate drive-time estimates for emergency response units is critical for responsible pipeline management.
Understanding the interplay between geospatially related business interests arms organizations with better information for planning and decision-making.
Q: Why care about ‘determining relationships’?
A: Unlike traditional planning methods, the ability to determine how different business interests are geospatially related helps managers and planners understand the inter-relatedness and dependencies that underly their business.
Finding the best locations and routes
Having location intelligence also means you can find the 'best' of many things. For a pipeline company, this could mean finding a pipeline corridor route that best balances economic, environmental and social concerns along the route. It can also mean locating a new a service center so that the distance travelled by maintenance technicians is minimized.
Determining locations or routes that satisfy priority business drivers and constraints, engenders confidence. Planning without location intelligence is a shot in the dark and highly subjective.
Q: Why care about ‘finding the best locations and routes’?
A: Leveraging location to support siting and routing decisions enables planners to understand the geospatial variation amongst relevant economic, environmental and social factors and optimize decisions.
The interplay of so many business influences on a pipeline operation means that the ability to detect patterns from small to large scales is key. Hotspots or clusters, for instance, indicate a degree of commonality, difference or reoccurrence across the operation. For example, identifying hotspots of maintenance activity could indicate underlying problems with pipe material or engineering designs.
Geospatial pattern detection takes location intelligence from human interpretation to quantitative understanding. Without that insight, incidents can be misinterpreted, disconnected from the underlying cause or missed outright.
Q: Why care about ‘detecting patterns’?
A: Geospatial pattern detection helps organizations identify trends and patterns in factors affecting their business by quantifying and visualizing hotspots, clusters, anomalies and outliers across the geographic range of the business.
Like any business, pipeline operators are constantly looking to the future. The industry is constantly in flux, risks are high and stakeholder interests are frequently changing. The ability to make predictions about business outcomes across geography is a significant competitive advantage. This ranges from predicting re-route requirements due to growth of neighbouring communities, to predicting concentrations of at-risk wildlife based on spot surveys.
Making predictions is how a business understands and plans for a changing business environment. Without a handle on location, organizations risk making decisions today that have unintended and potentially harmful consequences in the future.
Q: Why care about ‘making predictions’?
A: Location intelligence helps organizations predict business outcomes across the geographic expanse of the operation by incorporating location as a dimension of analysis into traditional predictive analytics.
Location intelligence is business intelligence
The business intelligence and analytics boom is centered on the idea that organizations have untapped potential locked away in informational assets. With the right application of knowledge and technology, many businesses are making tremendous strides in this area. In my estimation, the next big stride for these organizations is location intelligence.
Location intelligence is indispensable and inseparable from business intelligence. Without it organizations miss out on a profoundly powerful way of unlocking insights about their business. Armed with location intelligence, organizations are empowered to understand their business in its full context.
For those wanting to embrace location intelligence the path is clear – understand how location uniquely impacts the business and build a capability comprised of the right technology, people, process and governance.
So the next time someone asks: “why is location important?” – tell them “it’s not location, location, location…it’s intelligence, intelligence, intelligence!”
About the Author
Matthew Lewin is the Practice Manager of Management Consulting for Esri Canada. His efforts are focused on helping management teams optimize and transform their business through GIS and location-based strategies. As a seasoned consultant, Matthew has provided organizations in the public and private sectors with practical strategies that enable GIS as an enterprise business capability. At the intersection of business and technology is where Matthew’s interests lie, and he thrives on helping organizations bridge the gap to achieve their most challenging GIS ambitions.More Content by Matthew Lewin