A Retrospective Return on Investment Study for Spatial Data Infrastructure

By its very definition, Spatial Data Infrastructure (SDI) has many different input providers and consumers, as well as emerging and unknown new uses and repeated uses over time. Therefore, placing a quantitative measure on the return on investment (ROI) of an SDI is an extremely complex problem.

In 2005, Indiana completed an ambitious project to map the entire state once over with high-quality orthophotography. These new maps became the foundation of the IndianaMap – our statewide SDI – a detailed map of Indiana to be used by government, business, and citizens. The 2005 orthophotography was part of a grant-funded project coordinated by the Indiana Geographic Information Council (IGIC). With known costs and nearly three years of usage, IGIC endeavored to conduct a retrospective ROI study to see how the investment paid off.

Our approach is similar to that taken by mineral economists’ Bhagwat and Ipe in their pioneering report Economic Benefits of Detailed Geologic Mapping to Kentucky [1]. Their approach is a retrospective study to first estimate the value to an individual map user and then to extend that value to all the possible map users over time to get an estimate of the aggregate benefits of a mapping program. Two separate methods were employed, aggregate value ROI and usage ROI, to evaluate the return on investment. The results of both methods are consistent and show a strong 34:1 return on investment in under three years. IndianaMap Orthophotography proves its worth as a good investment of public funds.

RESEARCH METHODOLOGY

Input was sought from a known user base (those who are registered with the IndianaMap download sites and email distribution lists) through an appropriately designed questionnaire that was implemented through an online survey tool. The response rate to the survey was encouraging and exceeded commonly accepted response rates in marketing surveys.

For the purposes of this study, we make an estimation of total users based on 1521 registered users on the University Information Technology Services at Indiana University’s download site for the IndianaMap orthophotography (http://gis.iu.edu). These users download and use IndianaMap data on their own systems. They include government regulators, engineers, utilities, realtors, appraisers, mining companies, researchers, planning officials, and teachers. Three hundred fourteen (314) responses were received during May and June 2008. This is a 20% response rate and is nearly four times the rate considered acceptable in the marketing business [2].

Statewide, the orthophotography maps consist of a series of photo “tiles” each measuring 4000 feet by 4000 feet. There are 68,592 total tiles in the statewide project. The total cost of the orthophotography project acquisition and initial data distribution was $7,432,625 (this does not include project management or secondary web distribution by the IndianaMap collaborating organizations). For this analysis, IGIC used two standard measures of return on investment (ROI), specifically “Aggregate Value ROI”, and “Usage ROI”. The results show an impressive 34:1 return on investment. The statistical calculations are derived as follows:

Aggregate Value ROI = Vpt * Dt / Ct

This can also be expressed as:

Usage ROI = Upt / BEpt

Tt total tiles produced statewide

68,592 tiles

Ct cost for initial production & distribution statewide

$7,432,625.00

Cpt cost per tile expressed as an average for production and distribution

$108.00

Vpt value per tile as defined by survey respondents

$28.00

BEpt break-even per tile – the number of times  a single tile must be used to break even

3.87

Upt usage per tile – the average number of times each tile has been used

131

Dt distribution total – the estimate of total tiles distributed for use, defined by survey results

8,969,130

 

Figure 1. Sample County Tile Grid Ohio County depicting “tiles” each measuring 4000’ by 4000’ on the ground.  Each tile represents an aerial photograph.  In all, it takes 66,966 tiles to complete a statewide orthophotography map.

 

 

 

 

 

Aggregate Value ROI

To calculate the return on investment, we must calculate the aggregate value and divide that by the total costs for data production and initial distribution. We used the survey results from 312 respondents along with known costs of production for this calculation. Although a theoretical framework for estimating the value of maps exists1, the relevant data required to estimate it may not be available in the real world. Therefore, we used an empirical approach to estimate the monetary value of the maps. First, the estimated value per tile was calculated, where:

Estimate value per tile (Vpt) = average (user-defined value per project / tiles used per project)

On the survey, users were asked, “Had the 2005 orthophotography maps not been available, given the parameters of your operations and/or project, what would have been an appropriate amount of money to spend on the data?” This question was based on the premise that, in the absence of the IndianaMap orthophotography, the users would have to spend money to collect the information themselves. Such data provide a measure of the user-defined value of the maps. 204 (65%) respondents indicated a value or range of values.

Not unexpectedly the responses vary widely, for as stated by Barr and Masser [3], “Information has no inherent value, it is only of value once used and that value is related to the nature of the use rather than the nature of the information. As a result, information has very different values for different users.” Of those responding, some people indicated a range in the amount of money they would have reasonably spent. To maintain a conservative perspective, we consistently used the lesser value in cases where a range in values was indicated. Many of those not responding indicated that the total monetary value was difficult for them to estimate. Of those not providing a value, several indicated they had no budget to spend on the map data—their project simply would not have been possible without the availability of the IndianaMap. We put the user-defined estimate of the monetary value of the maps in the context of a single project and/or government operation for each respondent.

Respondents listed the geographic coverage area of their project and/or operations. Project size ranges from single acre sites to statewide. That coverage area was used to estimate the number of map tiles used per respondent. For each respondent, the monetary value (as described above) was divided by the number of tiles used to arrive at an estimated value per tile for each respondent. To ensure the results provide a conservative perspective, these results were plotted, and outliers (in this case, all estimated value equal to or greater than $300 per tile) were removed from the calculation. Finally, we averaged the results for all respondents, arriving at the estimated value per tile (Vpt) of $28.

Vpt original response summary statistics:

Mean 70.7
Median 1.38
Standard Deviation 217.84

Vpt summary statistics after removing outliers:

Mean 28.17
Median 1.10
Standard Deviation 57.89

It is noteworthy that on a per-response basis, a broad range exists in Vpt. This range reflects distinct value differences in the size of projects. When the data are grouped by the size of the project, the average Vpt for statewide projects ($4.71) is considerably lower than either multi-county projects ($22.14) or single county or smaller projects ($84.14). This can be interpreted as a function of the number of tiles required for different sized projects, with vastly more tiles statewide lowering the average Vpt. While smaller sized projects generally report large Vpt, it is the aggregate value of distinct (and sometimes unpredictable) uses that impart its worth, be it an important highway project, emergency response to flooding, tornado, or earthquake, or the location of a company like Honda to Indiana.

Next, we estimated use. Using the survey data, IGIC calculated the number of orthophotography map tiles used per project and/or operation and then summed the total number of map tiles used by all respondents. The results indicate an estimated total distribution and usage (Dt) of 8,969,130 tiles—a conservative estimate of usage based on a 20% response rate of known users. We use these data along with known project costs ($7,432,625) to calculate the ROI:

Aggregate Value ROI = Vpt * Dt / Ct = ($28 * 8,969,130) / $7,432,625 i.e., a 34:1 ROI [/av_textblock] [av_textblock size=” font_color=” color=” av-medium-font-size=” av-small-font-size=” av-mini-font-size=” av_uid=’av-kf1lvty5′ admin_preview_bg=”]

Usage ROI

To test the reliability of our model, we look at the problem another way by examining the “Usage ROI” in which the return is based on an estimate of usage per tile divided by the number of times a tile must be used to break even. For this approach, we express the return on investment by the following calculations:

Usage ROI = Upt / BEpt

Where,

Upt = Dt / Tt = 8,969,130 / 68,592 = 131

And where,

BEpt = Cpt / Vpt = $108 / $28 = 3.87

First, we estimated the number of times each tile has been used by taking the estimate of use (8,969,130 tiles) divided by the total number of tiles for the statewide project (68,592). Using these data, we see that, on average, each tile has been used 131 times.

Again, it should be noted this is a conservative estimate based solely on reported survey results and does not account for anonymous usage through the www.indianamap.org web site, Google Maps, public libraries, or other public access points not accounted for in this study. It also does not comprehensively account for the use of imagery by groups who have local data copies and typically do not download it, such as county GIS staff, state agencies, and the Indiana National Guard.

Next, we used known cost figures to calculate how many times the maps need to be used for the investment to break even. There are 68,592 total tiles in the statewide project. The production and initial distribution costs to the counties and the state was $7,432,625. Thus, the average production cost was $108 per tile. Using the estimated value per tile previously calculated ($28), we calculate the usage ROI:

Usage ROI = 131 / ($108 / $28) i.e., a 34:1 ROI


CONCLUSION

Two separate methods were employed to evaluate the return on investment. The results of both methods are consistent and show a strong return on investment in under three years. The retrospective analysis is possible given a discrete set of data with known costs and input from a known user base.

[1] Bhagwat, S.B., and Ipe, V.C. 2000. The economic benefits of detailed geologic mapping to Kentucky. Illinois State Geological Survey Special Report 3, 39 p.
[2] Van Bennekom, F. (2003) www.greatbrook.com
[3] Barr, R., and I. Masser. 1997. The economic nature of geographic information. In Z. Kemp (editor) Advances in GIS 4. London: Taylor and Francis.

Acknowledgments

The Indiana Geographic Information Council (IGIC) is a nonprofit organization whose mission is to lead the effective application of geographic information in Indiana.  The IndianaMap not only advances this mission, it also contributes to the present and future work of numerous state agencies, local governments, private businesses, and academic institutions involved in economic development efforts, environmental management, transportation planning, public safety, land use planning, and much more.

IGIC owes a debt of gratitude to the State of Indiana and all our many collaborating organizations and individuals for the outstanding cooperation and support that has gotten the IndianaMap to where it is today.

The Economic Benefits of the IndianaMap Return on Investment Study was conducted by Saligoe-Simmel, LLC, and the Indiana Geographic Information Council (IGIC) originally published by IGIC in 2008. The study was supported by a grant from the Federal Geographic Data Committee Cooperative Agreements Program Grant Agreement Number: 07HQAG0042. Download the PDF [/av_textblock]

Communicating Value of GIS to Policy-Makers

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When faced with communicating the value of the IndianaMap and the need for established funding, we didn’t want to create another report sitting in a binder on someone’s shelf.

In 2006, the IndianaMap Return on Investment (RIO) Study proved the value of the IndianaMap as an investment in Indiana. The challenge was, how best to communicate those results? The report was presented in an unconventional “newspaper” format directed at the target audience – primarily legislators and other elected officials. The format provided the advantages of attention-grabbing headlines; topical organization (for example, transportation, economic development, and environment), and photo-documented case studies. The paper was printed on full-sized news-stock and folded like a traditional newspaper, with room for a mailing address on the reverse 1/2 fold.

Here’s how we communicated that value:
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The ROI analysis identified current GIS spending, duplication of effort, needs, benefits, financial and non-financial return. The objective of the project was to substantiate adequate funding (or establish cost-sharing mechanisms) to support and enable the operation. The results of the ROI demonstrate that over $1.7 billion in Indiana projects and programs are supported by the IndianaMap, with 90% of respondents indicating that the IndianaMap was essential to their project. A 34:1 ROI in less than three years was documented. The entire study was supplemented by additional qualitative use-benefits, testimonials, and case studies.

The Economic Benefits of the IndianaMap return on investment study was conducted by Saligoe-Simmel, LLC and the Indiana Geographic Information Council (IGIC). The study was supported by a grant from the Federal Geographic Data Committee Cooperative Agreements Program Grant Agreement Number: 07HQAG0042. Download the PDF.

Designed & Illustrated by Matt Kelm
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SDI Return on Investment: The Economic Benefits of the IndianaMap

From transportation to public safety to economic development, the IndianaMap supports hundreds of local, regional and statewide projects each year. The IndianaMap was used for response and recovery during this year’s major flooding, tornado, and earthquake events, Honda’s selection of Indiana for its new facility, and much more.

$1.7 Billion Supported by the IndianaMap

Stories documenting how the IndianaMap is used are presented throughout this report, IndianaMap Return on Investment. Phase one of the IndianaMap is complete and the results are in—the initial investment of $8.5 million in the IndianaMap supports over 200-times its value in projects and operations—with 90% of users indicating they could not do their projects without it. As is evident from this study, the IndianaMap proves a good investment by saving taxpayer dollars and providing an information infrastructure that benefits all Hoosiers.

86% indicated that IndianaMap orthophotography was essential to their operations.

Still there are many challenges to completing and maintaining the IndianaMap. Conflicting interpretations of the meaning of “electronic map” as set forth in Indiana Code 5-14-3-2(d) and confusion surrounding the validity of copyrighting factual data result in inconsistent access to electronic map data. Non-standard maps present technical obstacles to data integration. The importance of multi-jurisdictional data providers (local, region, state and federal) is not well recognized. But perhaps most significantly, Indiana’s Legislature has not allocated funding specifically for support and maintenance of the IndianaMap. To help address these issues and justify future financing of the IndianaMap, IGIC answers the question “What are the economic and use-benefits of the IndianaMap?” ‘Economic value’ is taken to mean the contribution that the IndianaMap makes to Indiana’s economy as a provider of geographic information.

untitled-image-3Like roads and bridges, the IndianaMap is part of a public infrastructure that is a longterm investment in Indiana’s future. There are hundreds, potentially thousands of IndianaMap users. Truly a public good, anyone can access it, anonymously, through a web viewer (e.g., www.indianamap.org and www.maps.google.com), through data download websites, off-line at public libraries, and other public access points. Because the users are widespread, it is difficult to estimate the total user base. All Hoosiers benefit through the money it saves taxpayers, as well as improved quality of life through better-managed resources, transportation, and business. For this study, input was sought from a known user base (those who are registered with the IndianaMap download sites and email distribution lists) through an appropriately designed questionnaire with the following objectives:

  • Discover what types of projects are utilizing the IndianaMap.
  • Identify the priority placed on the different types of IndianaMap framework data by the users.
  • Assess the importance of the IndianaMap in projects and operations by the users.
  • Determine how the IndianaMap contributes to the quality and cost of the user’s work.
  • Estimate the dollar value of the IndianaMap to end users.

The results of the survey clearly indicate that over $1.7 billion in Indiana projects and government operations are supported by the IndianaMap. Meeting these objectives will help plan for future mapping projects and assess the IndianaMap in qualitative as well as monetary terms.

METHODOLOGY

The questionnaire had nine questions implemented through an online survey tool. The response rate to the survey was encouraging and exceeded commonly accepted response rates in marketing surveys. For the purposes of this study we make an estimation of total users based on a sample of 1521 registered users on the University Information Technology Services at Indiana University’s download site for the IndianaMap Orthophotography. These users download and use IndianaMap data on their own systems. They include government regulators, engineers, utilities, realtors, appraisers, mining companies, researchers, planning officials, and teachers. Three hundred fourteen (314) responses were received from May to July of 2008. This is a 20% response rate (approximately +/- 6% margin of error3) and is nearly four times the rate considered acceptable” (Van Bennekom, F. (2003) www.greatbrook.com) in the marketing industry.

Because the IndianaMap has many different users, as well as emerging and unknown new uses and repeated uses over time, placing a quantitative valuation on it is an extremely complex problem. Our approach is similar to that taken by mineral economists’ Bhagwat and Ipe (Bhagwat, S.B., and Ipe, V.C. 2000. The economic benefits of detailed geologic mapping to Kentucky. Illinois State Geological Survey Special Report 3, 39 p.) in their pioneering report “Economic Benefits of Detailed Geologic Mapping to Kentucky.” Their approach is a retrospective study to first estimate the value to an individual map user and then to extend that value to all the possible map users over time to get an estimate of the aggregate benefits of a mapping program. This approach is applicable to the IndianaMap as we can conduct a retrospective study based on currently available maps and the 2005 Statewide Orthophotography Project. Slightly modifying Bhagwat and Ipe’s method to our purpose, we developed a study of the economic benefits of the IndianaMap to demonstrate the value of statewide map data, period of return, and a positive business case for funding the ongoing creation and maintenance of statewide framework data.

First, input was sought on the total costs of projects and/or operations that are supported by the IndianaMap. Of 314 responses, 69% (216 responses) provided information on the total cost of their projects and/or operations. Of those responses, some indicated a range in the cost of projects and operations. To maintain a conservative perspective, we consistently used the lesser values in cases where a range in costs The IndianaMap was indicated. Many of those not responding indicated that total costs were difficult for them to estimate. The respondents identify $1,751,000,145 in Indiana projects and government operations that are supported by the IndianaMap. In addition, of those providing project cost information, 90% indicated that IndianaMap orthophotography was essential to their operations (defined as “project requires high resolution/accuracy data, maybe supplemented with other data; couldn’t do project without it”) and 6% indicated orthophotography was of secondary necessity (defined as “project requires other data that depend on high resolution/ accuracy imagery to create, align, verify, and/or maintain those data”). These projects range from statewide to discrete area projects.

CONCLUSION

The results of the survey clearly indicate that over $1.7 billion in Indiana projects and government operations are supported by the IndianaMap. In short, this means that an initial investment of $8.5 million in the IndianaMap supports over 200-times its value in projects and operations—with 90% of users indicating they could not do their projects without it.

The IndianaMap is by definition a public good— those goods that, once they have been produced, are available to all, without exclusion. While the IndianaMap has many of the characteristics of a resource, a commodity, a capital asset andinfrastructure, it does not fit neatly into any of these categories. The difficulty in assigning a particular role to the IndianaMap reflects, to a large extent, the diffuse, and hence extensive, impact that it has on the economy. The gains from the IndianaMap can be categorized into three types:

  • Increases in efficiency, so that the same task can be performed with fewer, often significantly fewer, resources.
  • Increases in effectiveness, so that the same task can be performed with greater accuracy and fewer mistakes.
  • New products and services, which could not have been produced without this new
    technology.

These tangible, measurable, economic impacts only partially reflect the contribution of the IndianaMap. Consideration must also be given to the social gains resulting from the use of the IndianaMap products. Such an analysis is, by its very nature, largely of a qualitative nature, but it is important to ensure that the monetary estimate deduced in this study does not detract the reader from the wider importance of the IndianaMap.

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The Economic Benefits of the IndianaMap return on investment study was conducted by Saligoe-Simmel, LLC and the Indiana Geographic Information Council (IGIC). The study was supported by a grant from the Federal Geographic Data Committee Cooperative Agreements Program Grant Agreement Number: 07HQAG0042.