Data Is to ESRI as Search Is to Google

March 10th, 2010

Do you remember the SAT exams?  These word games were always fun, so let’s play.

Google is not a web search company, but rather Google is an advertising company (they generated 97% of their revenues from advertising in 2009).  Search is the candy they give away to you so they can market advertising services.  Granted without search they have no advertising sales, so it is hard to separate Google from search.  But the point is that the company uses search as the marketing material to sell its products.

In previous posts (here and here), I have made the case that the mapping industry will change because players like Google and Microsoft (and Apple) will create mapping services embedded in their products as a feature enhancement.  The dollars that these companies are willing to spend on creating mapping products as features to their main business lines create “gravitational” distortions in the geospatial industry.  (For example TomTom stock is down ~60% since Google canceled its Tele Atlas contract in October 2009 and released its own turn-by-turn navigation system for mobile phones using the Android operating system. )

What was a bit unexpected was that other professional software companies would follow this free “Data-as-a-Feature” business model.  Yet this is exactly what ESRI has done.  Over the past couple of years, they bought a big piece of i-cubed to provide raster imagery products to their customers, and they have cut deals with data vendors, such as Microsoft Bing Maps, DeLorme, Tele Atlas, and others.  They have brought free data to light from federal agencies like USGS.  And they are combining these sources (with their stellar cartographic capabilities) to create derivative products that are extremely useful and appealing.

Just look at this topographic synthesis product from ArcGIS Online.  At the FedUC, Jack showed 1:1000 scale topographic data for selected cities within a worldwide map.  Nice and oh and by the way, it is free to users of ArcGIS Desktop products who maintain their license.

Data-as-a-Feature for ArcGIS Users

ESRI is a software company and generates most of its revenues via software sales and maintenance.  In fact, I’ve heard ESRI claim they have >90% of the core professional GIS market.  Data is the “new” free candy that ESRI gives away to maintain its market dominance in GIS software.  You have to admire the strategy to leverage their market dominance.  Data is a necessary “feature” for working in the GIS field.  Getting quality data, styled with beautiful cartography, as part of your content creation tool is a great benefit to users of that tool.

Software customers may be happy with data-as-a-feature; and anecdotal stories from GIS software integrators and solution providers suggest their customers are quite happy with the free regional products ESRI.  However, for independent data vendors it is a scary prospect.  If you produce regional or worldwide data, you can either sell your product to ESRI at “their” price, or face the prospect of losing access to their ecosystem of GIS developers by virtue of ESRI (re)creating the free product.

Life for independent data vendors has become more difficult.  On one hand they have to worry about Google, Microsoft, and Apple creating free worldwide data sets and applications to enhance their products.  Yet, I think these data vendors may have gotten used to this new paradigm and sought refuge in the “professional” data quality niche.  However, another hand is now in the picture (and in their till) with free professional data.  That hand is ESRI with its free Data-as-a-Feature.

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The End of the Neo-Paleo War?

March 2nd, 2010

Sean Gorman (@SeanGorman) writes about the end of Platial and Fortius One’s recent experiences in crisis relief in his most recent blog post.  In reading it, I was struck by the following -

crowd sourced data is playing an integral role in relief efforts. It is a role, though, that complements the traditional sources of geospatial information. The largest impacts we’ve seen is in the fusion of the two sources. The combination has incredible value providing baselines, context and temporal adaptability – resulting in a malleable abstract that can be molded to solve a myriad of disparate challenges.

I agree with Sean’s sentiments. There is no need to try and draw arbitrary bounds around the type or method of collection of geospatially-aware data. The data’s use defines its value. Let’s focus on solving challenges and creating value for our neighbors, stakeholders, citizens, and customers.

Photo by Alfred Eisenstaedt, taken on V-J Day, 1945 (from Life Magazine)

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Spatial Is Special – There’s a (M)App for That

November 12th, 2009

Part 2 – A New Hope

There have been some interesting conversations across the blogosphere on Google’s entrance into the basemap and navigation business. From an interested spectator point-of-view, I am a bit of a fan of the sheer audacity of Google’s mapping effort; creating a US basemap from scratch, building a navigation application, and rolling out a real-time sensor network (with 76 million devices) disguised as a mobile phone, all in the space of a couple of years. Well, that’s just crazy.  However, as much as I am a fan, this event is just one more example of the impacts of rapidly changing technology in our field (Part 1), making previous niches obsolete and forcing individuals (James Fee) and companies (e.g. Cloudmade) to adjust business models to just survive.

sadfa

Geo-powered apps are changing the game for developers

There were a couple of themes from these conversations that I found interesting. The first was represented by Peter Batty (and links therein), which could be broadly interpreted as “Content Matters”. That is, the cost (or lack there of) of the navigation application was less than important than the base content within it. The second theme was summarized by a podcast at Directions Magazine, which posited that the data didn’t matter. Adena and Joe’s point of view was that the application was going to overshadow the importance of the content. They felt that the application cost, functionality, and ease of use would generate more relative value than the content. I personally believe that both these points are two sides of the same business coin, and to be successful in this space you will have to have both great content, and a great marketing and delivery application.

Let’s start with the Batty et al.’s assertion that “Content is King”. In a frictionless marketplace of ideas and data, where the process of disintermediation has reached its peak, the lines of competition will be drawn around product price, branding (think Crest versus Colgate) and quality (think GM versus Lexus). This suggests that our market will continue to separate between the aggregation of (free) commodity data (10 meter USGS Digital Elevation Maps) and premium data (nationwide parcel data). I have been a proponent of premium content for a couple of years and I see it as a bright spot for geospatial professionals because good content tends to be localized providing niche geo-opportunities locally, across the globe.

An example of “premium-content-is-winning” may be found in the newspaper industry

Wall Street Journals Premium Content Drives Growth

Wall Street Journal's premium content drives growth

The Wall Street Journal has maintained its subscription-based revenue model all through the “content-should-be-free” era of the internet. It is now the only major newspaper in the US with a growing circulation, and is the nation’s largest newspaper by circulation. They demonstrate that the quality of content matters, and will continue to matter moving forward. Looking more closely at the difference in content provided by the #1 Wall Street Journal and the #2 USA Today, the Wall Street Journal might be considered a “premium” niche player, compared to the generic “consumer” news offer by the USA Today. Generic news may be found in a lot of places (for free). In the spatial industry, we might compare this to the “free” generic DEMS offered by the USGS and the “premium” high-resolution LiDAR surveys by companies such as Merrick. Clearly, quality content has value and people are willing to pay for it.

But Adena and Joe have a point. We consume digital content differently than other commodities such as toothpaste. Even if today’s premium navigation data becomes a commodity by virtue of the “less-the-free” data offered by Google, the data must still be delivered via a service and application that people wish to use. The consumption of content, and the value-added services built on top of the content, will depend directly on the quality of the application that delivers that content. In this case, the application will matter as much as the content. If either fails to deliver, the whole effort will fail.

While we may currently consider ourselves either data providers or application developers/integrators, I think our industry will move towards a Data-as-a-Service (DaaS) industry, where the data and applications are inextricably tied. I believe this will be the case for all platforms, including web, mobile, and desktop. And in this new DaaS era, the geospatial integrators may have an edge because they are used to thinking about data and applications simultaneously.

In addition, the economic process that is currently squeezing the revenues of integrators and GIS professionals may be turned to work in their favor, as the many sources of free, low cost, or open source software becomes their application supply chain. In the past, these integrators thought about their customer’s data and its integration within a proprietary mapping software stack. In the future, they have an opportunity to become vendors of DaaS, either for their customers, or for themselves. The combination of accessible data (low-cost or free) with low-cost applications and hosting will enable these professional to create premium DaaS niches, recouping the profit margins lost to the commodization of their IT skill set.

This is one path towards a new, hopeful future where the geospatial professional controls the fate of their destiny, rather than trying to survive on the leavings of giants.


A new hope for Geo-Jedi’s

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Spatial Is Special, Spatial IT Is Not

November 3rd, 2009

Part One – The Revenge of Moore’s Law

James Fee made an eloquent case for why he made the leap to WeoGeo. While I would like to claim the powers of a Jedi knight, I think the true motivation of his choice was the hard economic realities of the spatial IT business. As James mentioned, the pricing pressures in basic spatial IT integrations are increasing, which are resulting in a falling revenue flow for many integrators.

The future of Spatial IT as a technology sub-discipline.

I think this is happening for many reasons, but here is the major one. Spatial technology is becoming more robust and easier to use for repetitive business functions, i.e. building a slippery map that shows points-of-interests (POIs), lines, and polygons no longer requires a specialized GIS technology stack. Just getting an organization’s information on a map that can be viewed internally (intra-net) or externally (inter-net) used to pay a lot of bills. The problem is that it doesn’t anymore. To a large extent, we are the victims of our own success at demonstrating the power of spatially-enabled business content and services.

In addition, for other types of higher-order analysis, display, and spatial enterprise operations, you don’t need a proprietary specialized database any more (i.e. Oracle Spatial 11g ) as Microsoft SQL 2008 and others built geometry and geography natively into their applications. And of course there are the plethoras of open source options that allow you to avoid proprietary databases all together (e.g. PostGIS). With these databases, one does not need the spatial data engine abstraction layers (e.g. ESRI’s SDE, which might be why they quit selling it as a stand-alone product) to expose your organization’s spatial data to those that need it or other applications to consume it.  These spatially enabled databases also provide for some high-order geospatial analysis to be preformed without the need of desktop- or server-side products (like ArcGIS Desktop or Server), and in many cases without the need for GIS Professionals to run that analysis.

Part of this enhancement in the spatial technology stack could be laid at the doorstep of web advertising companies (e.g. Google), which are bringing billions of new dollars to bear on spatially enabling web services. Yet, I believe the trends were there before the release of Google Maps and Google Earth, as Oracle was putting spatial operators into their main release in version 9 in the early 2000’s.  Innovations in web mapping systems have been occurring at an ever-increasing rate; and we in the spatial field are just the latest recipients of the impacts of Moore’s Law on complex business services. As the spatial IT stack continues to evolve, one should expect the distinct separation between the “GeoWeb” and the “Web” to become increasingly fuzzy, with the distinction eventually becoming irrelevant.

What does that mean for the specialized services of the spatial technology integrator? The simple mapping stuff will be just part of the web programming stack, with little separation between web programming and spatial web programming. Spatial technology integrators will have to evolve to create more value from enterprise technology operations, where spatial is just one part of their enterprise project. This can be successfully done, and one only has to look at Dave Bouwman’s group DTSAgile (which is just kickin’ it) to see that it can be accomplished.

However, the competition will be fierce because the specialized spatial IT stack will evolve into the plain vanilla IT stack, with more competitors and easier-to-use technology. This will mean much lower margins per spatial project; and that is just the way of the economic “force”. In addition, I have been hearing stories of increased competition from specialized software vendors like ESRI for consulting revenues on increasingly smaller and smaller projects. This suggests that the integrators will be squeezed from multiple directions, setting up the potential for a shakeout for integrators in our industry.

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Google Will Open Source National Parcel Map

October 29th, 2009

This is my uninformed prediction, but it would be a bold move, backed by the National Research Council since 1980. It is the kind of game changing move that would help solidify their position as the number one search engine for localized business advertising.

A Halloween Treat - Gazing into Google's Future

I alluded to this possibility the other day when I looked at the possible importance of Google Map’s new parcel data layer and suggested that some mapping content that is currently very valuable will be given away for free in order to support a larger location-based advertising market. The release of their free navigation application for Android 2.0 seems to back these thoughts and suggests that mapping is just a means to an (advertising) end for Google. I believe the mapping community should get ready for more game changing moves.

Forbes also made the “free navigation” connection. It seemed pretty consistent with their overall strategy of building on their strengths to leverage into the localized search and advertising market. This local advertising market could be worth $40 B in new revenues to the industry. Since Google has ~70% of the current search related advertising market, a back-of-the-envelope estimate would make it worth ~$28 billion in new revenues, doubling their current revenues. Google has some room to make investments to secure this local search business that others cannot make, and they seem willing to push their advantage without regard to previous players.

The Forbes article specifically mentions a price per device for turn-by-turn navigation data of $5 – 10 per device. Worldwide mobile phone sales are on order of 300 M units, so if Google wanted to “own” the localized search and navigation space, it was going to cost them billions for the navigation data. So it appears they made a classic build vs. buy decision and came down on the side of build. We can argue about whether Google will be a “trusted” data source for navigation. However, the very fact that three very prominent “geonerds” in our industry are fixing Google’s maps for free suggests that there may be some value to the crowdsourcing of mapping data (see also – Open Street Maps).

The key to building a successful localized search and advertising service is the accurate navigation and business listings (and here as well). This requires highly accurate and timely cadastral data. For Google to be dominant in this space and double their revenues they have to solve the problem of accurate parcel data on a national scale.

The desire for a national cadastral map dates back to 1980 with the release of the National Research Council report, “Need for a Multipurpose Cadastre”. There are lots of issues as to why 30 years later we still do not have a national parcel map; and I believe some of these include the “ownership” and licensing of the localized parcel vectors as a revenue source for municipalities.

If Google really wants to create a national parcel map for navigation and business listing purposes, they will need to go through municipalities. They could obviously buy the data from Pitney Bowes or 1st American. These companies have built relationships with these municipalities over the years to provide high-quality cadastral data at the local level, which these companies then aggregate to provide a national-level geo-coding product.  However, it does not appear that Google has bought their current parcel data from them; and considering that Google is leaving the existing navigation data providers NAVTEQ and TeleAtlas, it would seem that Google plan may be to go directly after the parcel data without the middle man.

So how do they get the parcel data directly from the municipalities without worrying about individual licensing with the 10,000s of local, county, and state governments? One approach is to commit to creating a national cadastre map, and then open source the project by giving yearly updates to the USGS National Map. What municipal GIS professional is going to argue against opening up their data to their users through an open source cadastre project that is backed by the NRC, federal government, and Google?

Google would still run the use and updating of “Google’s” parcel data via its APIs. They would still have the easiest and most recently updated service to drive their navigation and business listing services. They could sell “geo-services” directly to local and federal agencies based on their cadastral maps, which would save government agencies millions a year in maintaining cadastre data in databases that have little interoperability, i.e. a new business line for Google Maps Enterprise. It would also bolster their “Do No Evil” marketing, and perhaps keep the regulators off their backs (re: Microsoft in the 1990’s).

And oh-by-the-way it would speed their creation of a better turn-by-turn routing system and business listing service that would help them dominant a new $40 billion dollar localized advertising market. They could spend $1B on creating a self-perpetuating National Parcel Map, and still generate an enormous ROI on the expense.

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Productivity and Cloning in the Spatial Data Industry

October 21st, 2009

Last week there was a brief twitter thread in the geo-community about cloning Adam Estrada. It started innocuously, but as such things often do amongst our chatter class of geospatial professionals, it degenerated rapidly. One could only imagine what the world would be like with multiple copies of a rabid Georgia Bulldog fan.

The technology for cloning GeoNerds has been developed.

This thread was followed by some great follow-up discussions from last week’s post on the new parcels in Google Maps (and see a better article here). It seems that our way of life in the professional mapping industry is going to change as a result of new data and technology that will be available at increasingly lower costs. That means that the players in the industry will have to change or die. Or put a little less morbidly, we will need to become increasingly more productive in order to stay ahead of the “free stuff” curve.

Yet, how do we become more productive with our time, e.g. make more money with less effort? Productivity varies across industries, and sectors within industries. Our industry can be basically broken down into three groups – software vendors, data vendors, and professional service vendors. In Adam’s case, he is in the professional service sector, working for Zekiah Technologies, and is in a similar position to many in the geospatial industry wrestling with the problem of being more productive.

The productivity problem with the professional service sector is that it is a consulting business. Revenues are generated as a function of billable hours, e.g. how many hours it will it take you to install an ESRI ArcGIS Server or build a map of Maryland. Therefore, to make more revenues, one has to generate more billable hours. Yet, the billable hours per person has an upper limit, say 40 hours per week (unless of course you are a lawyer, in which case it is greater than the 168 hours available to us mere mortals). And therein lies the conundrum, the professional services industry does not scale beyond the bodies you can hire. This means in the good times your upside is limited to the amount of dollars per hour you can charge times your total workable hours. And in the bad times, you have the fixed overhead of salary support for someone who isn’t fully billed out. Large downside risk, limited upside potential. Not the best of business combinations.

Given this combination, it is easy to see why Adam might wish to clone himself. If he could scale the number of hours he could work to the available billable hours he could sell, and not incur the additional overhead and risk, Adam would be less stressed, and would make more money. Of course he may have to share his Bulldog tickets with his clones, but there are disadvantages to bulldog cloning that I’ll leave for your imagination.

The geo-data industry sector is different. A lot of effort goes into developing the data product, but once developed this product may be sold multiple times. This make-once, sell-many product model is a great example of a scalable business. Like the software business, the cost of development is incurred upfront, after which the only marginal expenses are sales and marketing. In essence, instead of cloning yourself to garner more revenues, you clone your product (which is a bit easier than cloning yourself with today’s technology).

The problem with the data business model is the upfront costs, as well as the sales and marketing expenses once the data product has been produced. These costs can be significant and there is always the risk of, “if you build it, they won’t come.” So while it scales well, the risks are high. Given this risk and expense, many geo-professionals choose to continue along the path of lower risk, but lower upside, consulting business; and like Adam they dream of cloning themselves while working late in the evenings, instead of watching their favorite college football team.

Is there another path? I would like to think so, but it requires a blending of the data and professional services business model. In this new path, people like Adam, who create content (or advanced data transformers and geospatial analysis tools) on a daily basis for others, would retain an explicit stake in their days work at creating valuable content. Much like songwriters, who retain residuals on the songs that they write, GIS professionals who create products for others could retain royalties and derivative rights on their products. These royalties and rights would allow them to resell their works in a manner that would generate new revenues, which would scale far better than the original hours required to produce the original work.

There would need to be some trade-offs for the original purchasers, e.g perhaps they get a lower price for the job if Adam was able to retain the derivative rights to his works. In this case, Adam could bet a little of his current revenue in the hopes of generating a better scalable revenue stream. This would be a win-win for both parties, as the original purchasers would be getting a product a lower cost (and thereby increasing their overall productivity); and Adam would be able to generate more revenue with less effort, which could possibly create a new business model for greater success in our industry.

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GOOG = BORG, and I Mean That in the Nicest Way

October 14th, 2009

The geo-world was a-twitter last week with the fact that Google had dropped TeleAtlas as their map supplier in the US (here too), and that they have included parcel-level data and geo-coding in their API release. The big question is, “Why?”. Is Google moving into the enterprise mapping business?

Word is Google Maps did >$100M in enterprise sales last year (I got this from multiple sources). A significant revenue number in the mapping industry. Yet, while this is certainly a big number, it represents a drop in the bucket compared to their $20B per year advertising business. Heck, they made more than $100M in the 2Q:2009 just from foreign currency exchange risk management efforts.

Why bother with such a small geo-related business, when to move the revenue needle they need to look at >$1B businesses? Maybe from Google’s perspective’s it is easier/cheaper to build a $1B business from a $100M business, than to have to buy a $1B+ businesses to generate earnings growth. However, here is what I believe. I have seen estimates from Microsoft and others that suggests the hyperlocal advertising business is worth $25 to $60 billion (e.g. this report on directional advertising at $41B). Getting the navigation right helps build the traffic to this advertising business. Parcel level geo-coding helps make sure the addresses are correct for navigation. A green-field $40B directional/hyperlocal advertising business is right in Google’s primary area of focus. Everything else (i.e. other geo revenues) may just be gravy.

Google is building geo-related services, and selling them at much lower costs than traditional service providers, because of the synergistic revenue generation from the advertising business. If I am right, they will probably be taking a similar direction in the mobile market, including support of their Android OS. This is also very logical and consistent with their advertising model as good geo-location for hand-held devices combined with hyperlocal and augmented reality applications will drive future advertising revenue opportunities.

What does this mean for traditional mapping data vendors such as TeleAtlas and NAVTEQ (as well as parcel data providers)? Probably not much in the very near term as the directional/hyperlocal advertising markets are mostly untapped by these traditional vendors. In addition, the quality of the data for advertising-relevant navigation probably doesn’t need to be as sound as for insurance, e911, legal, etc., type businesses. It is also unclear if the licensing and the most up-to-date data from municipalities are properly addressed in the new Google APIs.  But if the price point is right and service is “good-enough”, these services could encroach on the more traditional markets of traditional commercial data vendors.

What does that mean for the rest of the geo-market participants, including software, collaboration, game-playing, and other crowd-sourcing groups hoping to build geo-related revenues. It means GOOG = BORG. They have a mission: “to organize the world’s information and make it universally accessible and useful,” as well as to build revenues from advertising. The phrase, “Assimilate or Die” in the mapping space is not evil, it is just economic Darwinism. Google is chasing a big market, and they are going to leverage their heft and dominance in the advertising space by building better services in the mapping space. They will create and give-away or under-sell geo-related products, which represent large amounts of revenue in geo-related industries, for no other reason than to dominant the directional advertising market.

If you don’t believe me, just look at the impact of Microsoft and Google on the wide-area imaging market.

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The Internet Is Not the Computer – Yet

October 6th, 2009

Has an IT professional in your organization told you that Software-as-a-Service (SaaS) just does not work for your enterprise?  I am going to help their argument; then I’ll tear it down.

The biggest problem for a professional engineering organization with SaaS is latency.  Also called disk-access-time , data transfer rate, bit rate.  Rapid communication between processing units and data storage pools is critical for today’s professional computing efforts.  If you don’t believe me, try opening (and editing) a large GIS or CAD file via a VPN from a network storage device operating in a satellite location from across the country.

For example – Our realized transfer rates from our facility in Portland to Amazon Web Services (AWS) in Virginia is 3.5 megabits per second (mb/s).  We have a 100 megabit per second dedicated service pipe to our facility.  This latency is not Amazon’s fault, but rather it is a function of the speed of light and the number of Internet “hops” or network transfer points between WeoGeo and AWS.  From Florida, we average about 7 mb/s to the same facility.  This issue is one of the fundamental reasons AWS released their Import/Export feature to S3.

To put this into perspective, in a typical disk drive on a desktop computer (circa 2008) operating at 7200 rpm operates at a disk access transfer speed of 560 – 2400 mb/s (70 – 300 megabytes per second).  That is 2 – 3 orders of magnitude faster than accessing the same file via the Internet.  The last time desktop computer users “suffered” thru 5 mb/s disk access transfer speeds was in 1987 when IBM released the PS/2 with a 5 MegaByte ST-506 Seagate Technologies hard drive.

When will latency be reduced to the point where we might consider “the internet is the computer”?  That is kind of hard to say.  Even with ubiquitous broadband access at >100 mb/s to all business, we will stuff suffer the “speed of light” problems – photons can only go so fast.  In addition, every time you have to go through an Internet junction or telecommunication switch (i.e. hops) you will increase the packet transfer times.  A report from the National Broadband Coalition (also covered here) suggests the pipe speeds to small and medium business will not approach those of hard disk drives until sometime between 2015 and 2020 (see table below).

This suggests that the internet-as-the-computer to replace your desktop is still some time away, maybe as long as 3 – 5 years.  This latency argument is what many in corporate IT departments would use to strike against SaaS, PaaS, or IaaS services within your organizations.  (I am purposely ignoring security, but will address this issue in another post).  I would counter that those arguments are very similar to the ones once used against the IBM PS/2 as a corporate workhorse back-in-the-day; and ultimately I believe they are rooted more in bureaucratic inertia than true cost/benefit analysis to the enterprise.

Internet-based services have a place in today’s enterprise environment.  Depending on the use case, they can be more efficient in managing your limited IT dollars.  These services can also provide greater, timelier, software support, which together with the lower costs, increases the bottom-line productivity of your organization.  More importantly, these managed, off-site, services will have a greater place in your organization tomorrow.  Data transfer speeds will increase to a point that the latency issues will be negligible for the services you require.  As a decision maker in your organization – are you planning for greater productivity and enhanced profits tomorrow, or adding to the “mainframe” infrastructure of today?

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Why the Platform Is Important

September 17th, 2009

Sometimes we can miss how large marketplaces can be, and their importance to development new ecosystems and technologies. The iPhone app market gives a glimpse as to why a SaaS-based application platform is so important for future geospatial business growth.

While the iPhone article describes a consumer based platform (mobile phones) for applications, the concept for a geospatial application platform is similar. By providing a platform on which developers can “write their own visions” of products, more products are developed, tested, purchased, and discarded at a much higher frequency than previous enterprise development cycles. This increase in the velocity of the product development cycle will provide opportunities in the future beyond those previously seen in the traditional software business. It will also increase the risk of marginalization of current software packages.

Our mission has been to develop a means to bring platform technologies to the geospatial industry. We focused on content first, because most of the current value of geo-knowledge is “stored” in the content produced under professional services and consulting contracts. The geospatial content are also larger and has proprietary file issues that are not necessarily seen in the consumer web space, which add to the difficulties in providing a true application platform to the Spatial Data Infrastructure (SDI).

However, it became clear to us about 2 years ago that cracking the content index, search, customization, and delivery process required developing an application platform along with the content management platform. So we began the process of creating an application platform that is accessible through APIs, which we then used to build our content management platform. Furthermore,we sought a partnership with a vendor who could supply additional transforms and ETL functions (Safe Software), which we could expose via our SaaS offerings, to allow others to build their own applications. We have thus created a geospatial application platform that will allow others to rapidly create their own small, but very targeted applications. By providing this application platform at the same time as providing the content management and financial services, all on a scalable SaaS-based architecture, we are poised to create an ecosystem around developer-driven applications and content.

This application/content (de-)evolution from the traditional software vending models is happening all around us. It will come to the SDI, probably a little later than other consumer driven niches, but it is coming. We strive to be that platform that others use to make money, and in that process help change our world.

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Businesses Bucking Cloud Computing

September 9th, 2009

I just returned from holidays with my family and am spending hours catching up on my blog reading. The advantages to reading so much, so quickly, is that articles separated by time and distance take on new meaning when compared together. This happened when I read about the Gmail failure and this article on a survey of Small and Medium Business (SMB) use of cloud-based services.

The survey begs the question, “Why are SMBs not rushing to use cloud-based services?”   This got me to thinking about our own experience at WeoGeo with cloud-based content management services, as well as our discussions with hundreds of SMB customers. I think I can break this down into 3 key points.

  1. Compartmentalization – The top cloud-services used in the survey are conceptually simple to understand and compartmentalize from an IT and business perspective. These web-hosting (#1 in the survey), email (#2), and data archival (#3) services can be broken apart from the daily operations of any business unit and provided back to that business unit as a service, either internally by an in-house IT operation, or externally from a service provider, i.e. Google Mail. The workflow within a business unit is not impacted by the internal or external delivery of these services.
  2. Uptime and bandwidth – These services require a high degree of availability, whose functionality can be felt by every single person in the organization. Ask an IT manager what makes their cell phone ring more – the downtime of a processing computer, or the downtime of the email server. In addition, the internal IT solution downtime can be measured and compared easily against the performance metrics of external “cloud” vendors. Prior to the GMail failure of 100 minutes this past week, Google was apparently averaging 10-15 minutes per month. That is better than most in-house operations.
  3. Cost can be measured and is favorable for the use case – When we switched from our own Microsoft Exchange Mail Server to Google Mail Premium, the cost savings was enormous. We estimated our all-in costs on the Exchange Server at ~$30,000 per year for 15 employees, including IT staff, outside contractors, data center charges, storage and archival expenses, and spam filters. $2,000 per employee per year. Google Mail Premium is $50 per email box per year. The math is pretty simple.

What about the other Infrastructure-, Platform-, and Software-as-a-Service products? My own thoughts are that outside of the tech industry, these other services do not appear to be as easily compartmentalized within an organization. Most business applications seem to run on workstations or internal services quite fine, and the downtime of those processing units just don’t seem to resonant with the IT and business leaders of an organization. In addition, the “simple math” of extreme costs savings (a la Google Mail) of moving more complicated operations to cloud services has yet to be definitely proven.

There are other concerns like the security and integrity of production or sensitive data that also have slowed the uptake of these services within the SMB community. However, I think that providing compelling solutions to business problems that can be (1) compartmentalized and (2) provide a high degree of availability at (3) a dramatically lower total cost of ownership will help allay those concerns. Make this case, and the greater adoption of cloud services by SMBs will be assured.

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