Mark Smith's Analyst Perspectives

Adding geographic and location context to business information enables organizations to develop fuller understanding and optimize the activities of people that use the information. We call this location intelligence, and to achieve it requires location analytics, which focus on that context where the processing and presentation of geography and spatial aspects of data are utilized. Analysis of geographic information can provide business insights that help organizations make better business decisions. I have written about this new generation of location analytics previously and noted that it can provide fresh analytic perspectives on information collected and integrated from in-house applications and across the Internet.

In our latest benchmark research on location analytics two out of five (41%) organizations said it is very important to have information about location to improve processes and performance. Participants in business roles (51%) insisted more on its importance than did those in IT (30%); this difference indicates the importance of location to business professional to improve activities and processes they are responsible for improving. However, the research also shows that most businesses aren’t taking advantage of this enhanced perspective. Our Performance Index analysis found the largest percentage (29%) of participants at the lowest Tactical level of location-related performance. Almost all organizations have room for improvement: Only 12 percent said they are very satisfied with the available location information and analytics. Similarly only 15 percent are very confident in the quality of their location information.

Bringing a new perspective, location analytics requires familiarity to deliver benefits. Users that are very experienced in location analytics most often said it has significantly improved the results of their activities and processes (62%), compared to 23 percent of those who described themselves as experienced. To achieve this value organizations must invest in skills and knowledge of this domain for their analysts and tools that can help them derive value from this type of information.

As with other new areas of technology and analysis, to improve effectiveness using location intelligence will require a business case for investment. Our research found several barriers to building the case: lack of resources and lack of awareness (each cited by 41%), no budget (33%) and the business case not being strong enough (30%). While training and understanding of the potential of location intelligence are essential, some decision-makers need better examples of its use in terms of business results to make it an investment priority. In this regard organizations said the most important factors are to increase speed of response to customers, improve the quality of business analysis and decisions, and increase the accuracy of information. Nearly all that have adopted location intelligence said this focus has improved the organization’s processes significantly (40%) or slightly (56%).

The research found several key business areas in which value can be found. Improving customer relations is a significant driver for change: Two-thirds (68%) of organizations using location analytics and a customer focus will be changing the way they use it in the next 12 to 18 months. A focus on customers is a natural use of location analytics; our research shows that for more than one-third (37%) of organizations it is the type of information for which location is most important. The benefit most often ranked first by those analyzing customer data is to improve the customer experience and customer satisfaction (20%). But customer facing areas are not the only place to apply location analytics that can be especially useful in areas: optimizing sales efforts for territory management, identifying fraud for risk mitigation, optimizing routes and customer interactions across field service, routing optimization for distribution and warehouse management for supply chain management or identify best markets for advertising effectiveness.

The emphasis on location analytics by the lines of business appears again in funding for initiatives. It comes not just from the general IT budget (40%) but also from the business technology budget (31%) and the business budget (28%). And the investments pay off. Those that have invested in location analytics have improved the results of their activities and processes significantly (34%) or slightly (51%). Business people, who are better-positioned to see the benefits, indicated significant improvement three times as often (48%) as did IT staff (16%).

Analysts in the lines of business should assess their existing efforts and determine how the use of location analytics could improve the results they provide to decision-makers. One key tool for this is visualization through maps, which can provide more intuitive presentation of information than more general visualization. Simplifying the presentation of location information and making it easier to identify insights are essential for business professionals, who should not have to be trained to see the insights. Location Analytics is more than just a map and pretty picture, but a method to process data to get information for delivering geographic insights that are actionable and impactful to business. Organizations not yet taking advantage of this valuable supplement to their business information should evaluate it.

Regards,

Mark Smith

CEO & Chief Research Officer