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Keeping score - What’s the payback from GIS?

Bill Lloyd
PlanGraphics, Inc.
112 East Main Street
Frankfort, Kentucky 40601


Abstract
Whether you’re planning or building a GIS, you are likely to be asked, “What’s going to be the return on this investment?” This paper will discuss how to identify and measure the benefits of GIS, using examples from both local and state government. The presentation will include benefits from productivity gains, service level improvements, enhanced effectiveness, “home runs,” and quantifiable-but-not-predictable paybacks. In addition, techniques for communicating these benefits to policymakers will be introduced.

Introduction
As GIS has evolved from an emerging technology to a proven operational tool, anecdotal evidence has replaced intuition that there are benefits to applying this technology in state and local governments. One of the industry’s canons is that a well planned, well managed GIS program can provide a cumulative “payback” that exceeds the cumulative expenditure by the end of the implementation’s third year. But what is that “payback” in a local government? How is “payback” quantified? And how can a GIS professional apply the concepts of “payback” and “return on investment” to resource allocation discussions with top management and policymakers?


Figure 1: Summary of Typical GIS Benefits—Cumulative Payback vs. Expenditures

Payback in the public sector
Government exists for the purpose of providing essential services that would not be feasible without the financial support of taxpayers, or that are so risky that the private sector will not touch them. As a result, a government ends up being very much like a private sector conglomerate—a collection of completely different businesses that have very little relationship, except that they occur in the same geographic area. Since each of these different businesses has its own mission and constituency, they end up competing for resources from a limited pool of funds. Historically, each business has maintained its own data (or “silo of information”), limiting governmental effectiveness in achieving broad objectives that involve multiple departments.

Not only does a state or local government contain a variety of disparate businesses, but its success is not measured by its profitability. For the most part, governments deliver services. While services do not have a “bottom line” expressed in dollars, governmental service can be quantified. The quantity of service delivered, the level of service provided, and its effectiveness are all measures of service. The following table shows some examples of quantifying service for various local government functions.

Table 1: Examples of Service Measures in Local Government Functions

Other factors that increase the management challenge in government are their reliance on cash basis accounting, their annual budgeting process, and the possibility of drastic changes in policies. Most governments operate on a cash flow basis, with budgets that are set and balanced one year at a time. This creates a barrier to making investments whose cash payback does not happen in the same year, no matter how great the total payback. Long-term program continuity is not assured, as policymakers may change during the time it takes to implement a program and achieve a multi-year return.

For many of the functions provided by state and local governments, a direct relationship exists between expenditures and the level of service provided. For a given set of work methods, that relationship is illustrated in Figure 2. Each year, the budgeting ritual establishes the level of expenditures for the ensuing year (shown on the horizontal axis).

The curve predicts the level of service that can be provided for that expenditure. As an example, if more money is expended to deploy additional ambulances, the level of service provided to citizens (as measured by the average length of time required to respond to a call) is expected to improve.


Figure 2: Service Levels and Expenditures

Five types of GIS payback
To deal with the variety of measures for services provided by governments, the payback from GIS has been grouped into five types. These include the following categories of benefits:
  1. Productivity Improvements
  2. Service Level Improvements
  3. Effectiveness Improvements
  4. “Home Runs”
  5. Quantifiable but Unanticipated Benefits.
Productivity improvements and “home runs” are relatively easy to quantify and express in dollars. The costs can be estimated and cost reductions can be measured. It is more difficult to place a value on improved service levels, enhanced governmental effectiveness, and preparation for unexpected events. As a result, the benefits of GIS are frequently understated, since only the productivity improvements and “home runs” are considered. It is significant that studies of GIS payback at the federal level have consistently found that the value of service level and effectiveness benefits greatly exceeds the value of productivity benefits, often by a factor of 10 to 1 or higher. For many organizations, the real value of a GIS is not that it helps them do their work cheaper, but that it helps them do their work better.

As examples are presented to illustrate each of the five types of GIS payback, you will note that some changes could fall into more than one category. For example, using GIS to reduce map update effort from days to hours (a productivity improvement) will also result in citizens having access to more current maps (an effectiveness improvement).

When more than one type of benefit accrues from the same improvement, the payback is the sum of the benefits.

Productivity Improvements
Productivity (also called efficiency) improvements are usually the easiest benefits to identify and quantify. Productivity is defined as Output divided by Input. The more output that results from a given amount of input, the higher the productivity. The implicit assumption is that all units of output are of identical quality and are thus interchangeable.

When the implementation of GIS technology results in a productivity improvement, the product and quality is the same as previously. The difference is that less staff time and/or less money was spent producing that product.

Staff time savings may be realized in the following ways:
  • Performing more transactions without adding staff
  • Reallocating staff time to other activities
  • Eliminating positions.
The following are some examples of quantifiable productivity improvements experienced by state and local governments as a direct result of implementing GIS technology, in the areas of updating maps, notifying citizens, and garbage truck routing:
  • Updating Maps
    • The City of Raleigh, North Carolina, eliminated 2 staff positions.
    • Palm Beach County, Florida, reduced staff from 32 to 18.
    • The City of Winnipeg, Manitoba, reduced average staff update time from 3 days to 4 hours.
  • Citizen Notifications
    • Clark County, Nevada, reduced average staff time from days to minutes.
  • Garbage Truck Routing
    • The City of Philadelphia, Pennsylvania, saved over $1 million in the first 12 months of using GIS technology to support garbage truck routing.
Note that, in all of these cases, GIS technology is used to produce the same product that was being generated previously. Whether the product is current maps, address lists for citizen notifications, or routes for garbage trucks, the end result has not changed. The productivity improvement is the savings in staff time and expenditures.

Service Level Improvements
The level of service is a direct measure of “how much service” is being provided to citizens. Management or policymakers frequently define service levels as objectives to be attained. Examples include the following:
  • Ninety-five percent of pothole complaints will be repaired within two weeks.
  • Emergency medical service response time will not exceed 5 minutes.
  • All sewer lines will be videoed at least once every 3 years.
Note that management has reasonably direct control over the attainment of service level objectives. Some examples in which GIS technology contributed to increased service levels included reducing response time, reducing travel time, or assuring consistency. The following are some examples of service level improvements experienced by state and local governments as a direct result of implementing GIS technology, in the areas described earlier:
  • Response Time
    • Dallas Area Regional Transit, TX, reduced average customer inquiry time from 45 seconds to 10 seconds.
    • Numerous emergency service providers use GIS-centric Computer Aided Dispatch to identify the closest qualified responder and the best route to an incident.
  • Utility Reliability
    • Various utilities use GIS with land use projections to plan for new capacity (mains, treatment plants).
  • Identifying Pollution Sources
    • The Northeast Ohio Regional Sewer District uses GIS to trace pollutants upstream from a treatment plant to their source, expediting corrective action.
Effectiveness Improvements
In state and local government, effectiveness is defined as “doing the right job, and doing it right.” GIS can improve effectiveness by supporting the following aspects of governmental service delivery:
  • Better Decision-making
    • Access to additional data
    • Evaluation of more alternatives
    • “Creation of new knowledge”
  • Enhanced Consistency
  • Improved Quality
  • Error Reduction
  • Error Correction.
While measurement of the amount of service and the level of service assumes that the specific activities of government have been decided, improving effectiveness frequently involves stepping back and asking, “What should government be doing?” to address a particular problem. “What is the best solution to the overall issue?” “What services should government provide?” Measurements of governmental effectiveness also address the quality (i.e., accuracy, reliability, kindness) with which services are delivered.

GIS improvements to service levels and effectiveness involve producing new or improved output in comparison to what was produced previously without GIS. In other words, the GIS enables government to do something that could not or would not have been done without GIS technology. For example, a GIS can quickly and easily produce maps showing how the proposed route for a new road would affect a series of environmentally sensitive resources. Such maps could be manually drafted, but the process would be so expensive that they probably would not be prepared. A GIS can also overlay a large number of separate environmental themes and calculate an overall impact.

When there are more than just a few overlays, this task is simply not feasible using non-GIS techniques.

Some examples in which GIS technology contributed to increased governmental effectiveness included improved designs, enhanced consistency, and reduced errors. The following are examples of effectiveness improvements experienced by state and local governments as a direct result of implementing GIS technology:
  • Improved Designs
    • The City of Raleigh, North Carolina, used topographic and land use data to perform preliminary engineering design work, considering more factors and alternatives than had been feasible previously.
    • The City of St. Petersburg, Florida, used 3D modeling of designs to reduce underground utility conflicts, thus decreasing change notices during construction.
  • Enhanced Consistency
    • Orange County, Florida, used GIS to improve the accuracy with which parcels and floodplains were mapped, reducing citizens’ flood insurance costs 20 percent.
    • Numerous jurisdictions regularly use GIS to evaluate tax assessment consistency.
    • Many governments’ generation of mailing lists for citizen notifications of zoning change requests assures that no property owners are missed.
  • Correcting Errors
    • Palm Beach County, Florida, used GIS to produce thematic maps of neighborhood codes, which facilitated isolation of code problems and their resolution.
“Home Runs”
There are numerous anecdotes in which the application of GIS technology produced a quantifiable result that repaid the entire investment in GIS. In many cases, the original intent was improving consistency and quality, but the result was increased revenue. GIS makes it feasible to overlay a large number of separate themes, making comparisons possible that would be prohibitively expensive without GIS. The following are examples of some “home runs” scored by state and local governments using GIS:
  • Orange County, Florida, used GIS to increase its ability to collect resort taxes, recovering $640,000 that had not been collected previously.
  • The State of Wyoming discovered 250,000 parcels that were not on the tax rolls when it used its GIS to audit the mass appraisal process.
  • The City of Ontario, California, generated $190,000/year in lost business license fees by using GIS to audit its billing files.
  • The City of Greenville, South Carolina, generated over $65,000/year in new business license fees by address-matching State Retail Business License locations against City-licensed business addresses.
  • Martin County, Florida, generated $3.5 million in tax revenue by geocoding an FCC database of telecommunication towers against County parcel data, revealing many parcels with towers that were under-assessed.
  • Orange County, Florida, also generated $250,000 in additional revenue from correctly geo-coding cable television customers.
Quantifiable but not Anticipated
For all of the preceding types of paybacks, the anticipated return on investments in GIS can be reliably predicted based on the ongoing operations of government. “Quantifiable but not predictable” benefits come from applying GIS to governmental functions whose frequency can not be anticipated. In particular, GIS has provided well-documented benefits supporting management and recovery from emergencies and disasters. All state and local governments are expected to lead the response to emergencies—they just don’t know when those emergencies are going to occur.

In the recent World Trade Center disaster, New York City’s seven years of investment in a “GIS Utility” provided an extensive base for the following emergency activities:
  • Supporting rescue and recovery
    • Pre- and post-attack orthophotos and maps
    • Map production
    • Aerial photography
    • Thermal and LIDAR imagery
    • Subsurface structural, utility, and transportation datasets
  • Providing public information
    • Utility outage status
    • Transportation status
    • Traffic and pedestrian restrictions
    • Web access
  • Supporting City government
    • City-owned buildings and status
    • Building inspections.
Prior emergencies, including Hurricane Andrew, the Valdez oil spill, and various forest fires, have shown that the benefits of GIS include productivity gains, as well as service level and effectiveness improvements. For critical local events, many emergency service providers rely on GIS to produce ad hoc incident maps for an area of interest.

Explaining GIS payback to policymakers and executives
In general, government policymakers and executives are interested in a sound business proposition quantifying the kinds of benefits described above. They seldom spend money if technology is perceived as the only driver. They may have been to conferences at which some of their peers characterized GIS as a “black hole for money,” which has admittedly been true of some poorly managed GIS projects. Don’t plan on having policymakers shower you with resources if your only justification is the need to move your GIS to “object-oriented” technology. You must present benefits in terms of the services that your organization provides.

The benefits that policymakers most want to hear about are ones that affect citizens. Benefits for staff (e.g., reducing the effort looking for a file, desktop access to maps) are of less interest. However, remember that many benefits for staff also result in benefits for citizens. For example, if staff can obtain the answer to a citizen’s question in minutes, instead of days, that also provides a higher level of service to the citizen. If that answer is more reliable, or if all citizens receive the same consistent answer, service effectiveness has increased.

Anecdotes and examples, particularly in peer organizations, are very effective at showing the value of GIS to policymakers. Naming the agency and specific “before and after” conditions adds to the credibility of the presentation. Quantifying the results in dollars, service levels, or other service measures will further add credibility. Avoid justifications based on broad, fuzzy benefits, such as “enhancing public trust in the fairness of the process.” These can backfire and can create skepticism toward solid, measurable GIS benefits. Remember that the real value of a GIS is not that it helps government deliver services cheaper, but that it helps deliver services better.

Benefits Projection
The following case study is an example of projecting expected benefits of a GIS application that will support the City of Memphis Planning Division in analyzing zoning change requests and performing small area studies. The productivity improvement benefits of this application will be calculated in the case study. In addition, the application will improve service levels by reducing the amount of time a citizen has to wait for Planning to process a zoning change request and will improve quality by reducing the opportunity for errors and inconsistencies in gathering and calculating property data.

The proposed application will enable a Planning Division analyst to identify the parcels comprising an “area of study” for use in evaluating a zoning change request or performing a small area study. The GIS will calculate the standard data listed in Table 2 that forms the foundation for Planning’s analysis.

Table 2: Summary of Functionality for Proposed GIS Application
User identifies parcels comprising an area of study for a zoning change request, small area plan, community redevelopment project, or grant application. Computer accesses Assessor’s parcel database to compute answers to the following standard questions:
  • Appraised Land Value (Area-wide Total)
  • Appraised Land Value (Average per Square Foot)
  • Appraised Building Value (Area-wide Total)
  • Appraised Value of All Property (Area-wide Total)
    • Classified by Property Class (Agricultural, Residential, Commercial, Industrial)
    • Classified by Tax Status (Exempt, Non-exempt)
  • Assessed Value of all Property (Area-wide Total)
  • Parcels Classified Residential (Quantity)
  • Parcels Classified Residential (Average Size)
  • Private Dwellings (Number)
    • Classified by Legal Status (Individual, Condominium)
  • Private Dwellings (Average Value)
  • Individual Private Dwellings (Average Lot Size in Square Feet)
  • Commercial Apartment Units (Number)
  • Building Area (Area-wide Total in Square Feet)
    • Classified by Property Class (Agricultural, Residential, Commercial— Apartments, Commercial—Other, Industrial)

The development of the benefits projection involves answering the following questions:
  1. How is the process done now? How long does it take? The analyst determines the parcels in the area of study, and spends 4 to 8 hours obtaining the required data on those parcels from the County Assessor’s office. After the parcel data is obtained, the analyst spends approximately 30 minutes computing the standard data.
  2. How long will the process take using GIS? The analyst will still have to determine the parcels in the area of study and identify these in the GIS, requiring approximately 15 minutes. The processing and printing of standard data is expected to take less than 5 minutes.
  3. How frequently is the process performed? The City of Memphis Planning Division performs 35 to 50 of these analyses monthly.
  4. Calculation of the resulting payback reveals a savings of 150 to 200 hours per month, which translates into a savings of $50,000 to $80,000 annually.
Summary
When you are asked, “What’s going to be the return on this investment in GIS?” be prepared to talk about results, services to citizens, and the five types of benefits (productivity, service levels, effectiveness, “home runs,” and quantifiable but unanticipated). You should use anecdotes and examples from others who have already been there and quantifiable projections that reflect the specifics of your organization. Most GIS professionals intuitively understand the return on investment provided by GIS technology. It is a short step to focus on the business processes that government uses to deliver services and to measure the resulting benefits to service quantity, service levels, and governmental effectiveness.

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