Internal vs. External Internet GIS
There are considerable merits to outsourcing as well as internalising the functions of spatial ASP services. First, by keeping these functions as an internal business unit there is the satisfaction and “peace of mind” that comes with having “employees” rather than “vendors” managing business-critical information. Also, the resources and infrastructure in many mid to large organizations are sufficient to deliver spatial ASP services comparable to an outsourced vendor. However, in an internal spatial ASP service, there still needs to be the same level of formality and structure in establishing an SLA and other “contractual” standards so as not to fall victim to corporate complacency that is endemic to many companies. If the internal spatial ASP provider cannot fulfill it’s service mission then there is little chance it will realize the full potential to the organization.
In considering an external spatial ASP vendor, cost is the primary driver for most organizations. The spatial ASP provider can leverage economies of scale and “skill” where an internal spatial ASP provider would not be able to do so. Because an spatial ASP vendor provides core services to many different industries and clients, they can spread overhead and infrastructure costs across multiple revenue-generating users, whereas the internal spatial ASP serves only “one” customer. Secondly, an external spatial ASP provider is more likely to stay current with technologies that further improve it’s services to the market. It will continue to re-invest in capital improvements such as storage, servers, security, provisioning, communications, etc. because of competitive pressures, while an internal spatial ASP would likely be allotted an operating budget that does not allow for such interim improvements in technology.
Content Is King
As demonstrated, the fundamental technology for delivering GIS and mapping solutions through the Internet exists, and continues to improve both in quality and availability. Consumers will drive what specific data a vendor will create and provide (ie. Roads, demographics, cell tower locations), and the spatial ASP vendor will need to incorporate and integrate those various data products into the suite of spatial solutions that are offered as a service through the spatial ASP. Many spatial content providers have refined and developed mature processes for delivering their products in the Internet domain. This fits comfortably with the overall business model for a spatial ASP. Delivery of spatial data, on demand, to a wide variety of users through a spatial ASP solution is an encouraging market for the data product vendors. This also provides a sufficient variety of choices for the user-consumer, and ensures that the best-price for best-value is reinforced in the market.
In the telecommunications market, leveraging spatial data products in a spatial ASP solution is a smart strategy. It avoids costly redundancy in base map data, or disparate portions of data that are “out of control” and consequently result in untimely decisions or inaccurate projects. Utilising the same spatial data for all departments in a telecommunication organization not only maximises productivity, it also reduces cost per unit by implementing the spatial data in a spatial ASP. The spatial data content can be customized and delivered to specific user-groups within the organisation yet managed and controlled centrally in the spatial ASP hosting center.
Licensing Considerations
There are several pricing models put forth by spatial ASP vendors, and while the process of refining those models continues, there are two basic options for consumers.
t Fee
This pricing model allows a user to pay a fixed fee in exchange for access to the application solution at any time, for an unlimited amount of time. For simplified accounting purposes, users are typically billed and usage quantified on a monthly or quarterly basis. This is an attractive model for organizations that need predictable costs. It is also useful in organizations that have little fluctuation in their “consumption” demands for the service. In other words, if users will have a consistent demand for the duration of the service agreement and the number of users is not likely to vary, then this pricing model is likely to best suite the needs of the organisation.
Per Unit
This option consists of a base price for an account, and a subsequent price per unit of time, typically in minutes or in some cases, seconds. The consumption record begins when the user successfully logs into the system and continues until the user logs off. This is an attractive option for those organisations with cyclical demand and staffing needs such as project management firms that operate in the telecommunications industry. This allows them the flexibility to leverage the spatial ASP without committing capital resources to maintaining internal infrastructure and operations and still service their respective clients’ needs. The drawback to this pricing option is that is there is no predictability in monthly costs due to the cyclical and temporal nature of the individual user’s consumption of the service.
Obstacles to Profitability
Despite the considerable merits and advantages of the spatial ASP model, there are still several major obstacles that will require radical innovation by industry stalwarts in order for the spatial ASP model and users to realize maximum benefits.
First, software and data vendor licensing of traditional products is inconsistent with the premise of the spatial ASP business model. There are many excellent applications that have loyal users, and these same applications can be delivered through the spatial ASP model. However, these applications cannot be cost-effectively delivered in the spatial ASP model with the traditional licensing model still in use today. The spatial ASP model demands a pay-as-you-go licensing model, one that generates income for the spatial ASP, the ISV, the data vendor and other partners as new consumers are signed-up for the various solutions. The current licensing model requires the spatial ASP to either develop their own applications (which is costly and risky for everyone) or invest significant sums of capital in purchasing licenses and then “re-selling” them as packaged spatial ASP solutions. While this model is popular with software and data vendors, it does not advance the spatial ASP model and technology past the initial early-adopters, and it certainly is not a profitable approach for the spatial ASP provider. This hurts consumer in the end, because if the spatial ASP provider is encumbered by onerous licensing requirements in delivering spatial ASP solutions, then the risk of failure is needlessly exaggerated.
Secondly, most GIS software vendors have an internal “services” division that competes with it’s very own network of business partners. This not only cannibalizes important opportunities for the business partners, but it removes a level of competitive pricing from the consumer’s choice. Along the same line, in order for the spatial ASP to become truly successful, the ISV will have to relinquish absolute control over the customer-vendor relationship. Software vendors are accustomed to being the center of their customer’s universe, and with a spatial ASP solution, those same software vendors are little more than a component to a more extensive solution. This is a hard pill to swallow for most GIS software vendors, but necessary medicine if the spatial ASP model is to succeed in profitability.
Conclusions
It is clear from growing GIS industry support that the spatial ASP model for delivering solutions is a clear strategic alternative for consumers and vendors. Service providers continue to find new and innovative ways to build and integrate various location-based solutions and delivery cost-effective products to a variety of industries and markets. However, there is still a considerable amount of work to be done by the software, database and content vendors to help propel the spatial ASP model beyond early adopters. This includes more favourable licensing models, a true partnership program and a relinquishing of power by the software vendors. The demand, infrastructure, products and content are all present for the spatial ASP business model to succeed in delivering innovative spatial solutions.