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Where is the money in geospatial industry?

The geospatial industry has been expanding at a breakneck speed with ‘geo’ getting embedded in more and more workflows. As new innovative players enter the game with disruptive business models, existing players have no choice but to go through a transformation to stay relevant. By Anusuya Datta

Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate.

The world is changing. The next wave of Industrial Revolution, also known as the Second Machine Age, is fundamentally changing each and every aspect of our life. It is the power of the World Wide Web and the onset of smartphones that has unleashed a movement which is rapidly destroying the old models. Smart machines can now deliver a pizza on our dinner plates, turn on the AC at our residence as we start off from the office in a driverless car, plough our fields, work out the insurance for us, prepare our business reports and even fly our planes.

All over the world, governments, public institutions and businesses are finding it extremely difficult to keep up with these disruptive innovations. Old school businesses of many years, run by established leaders of many years of experience, are disappearing in a flash, even as new age innovators take the world by storm. And like all industries across the world, the world of geospatial is shaken and stirred.

The ground has never been more fertile

Interestingly, if growth drivers are to be considered, the geospatial industry couldn’t have had it better. The continuing global economic uncertainty has brought an increased focus on productivity. While companies and governments are battening down the hatches, dramatically reducing staff and spending, there are others looking at how they can use the time of uncertainty to advance their business. “For those people, productivity is more important than ever,” emphasizes Chris Gibson, Vice President, Trimble.

Geospatial technologies provide not only the ability to manage and integrate data, but also the analytical tools that sharpen decision making and, ultimately, save time and money, underlines Russ Johnson, Director of Industry Solutions at Esri. Using data in new ways counteracts the forces of a sluggish economy. It helps make organizations efficient and resilient during economic downturns.

No wonder then most developed countries and forward-looking governments are turning into geo evangelists by encouraging the uptake of spatial technologies in work processes. Additionally, the United Nations sustainable development agenda in 2015 also recognized the importance of space-technology-based data, in situ monitoring and reliable geospatial information for sustainable development policymaking, programming and project operations.

On the other hand, the proliferation of the Internet as the primary medium for data publishing and information exchange has seen an explosion in the amount of online content available on the Web. And this holds true for geospatial content too. More so in a world where location is becoming the centre point of almost all decision-making. “Location provides the underlying footprint and fabric upon which we can make smart decisions,” says Mladen Stojic, President, Hexagon Geospatial. “If you don’t know where you are, you cannot make decisions about a given situation. Location is really the lowest common denominator.”

In 2013, a report prepared by Oxera and commissioned by Google found that the global geo services generate $150-$270 billion in revenues. By way of comparison this was broadly equivalent to the $140 billion revenues generated from the global security services industry or about one-third of the global airline industry’s revenue of $494 billion then. According to another report by The Boston Consulting Group, within the US economy alone, the geospatial services industry was estimated to employ more than 500,000 people, generate $75 billion in annual revenues, and have an overall economic impact estimated at $1.6 trillion annually in revenues. That was in 2013, and while no exhaustive study has been done since then, informal estimates at a CAGR of 15-20% would safely put the geo industry at more than $500 billion today. And that is a lot of money.

But then, why is the profitability of the sector hit? Why are the traditional geospatial companies smarting from reduced profits and lowered bottom lines? In short, where is the money?

Read more at Geospatial