Costs and Benefits of GIS in Business

Abstract

This chapter examines the costs and benefits of geographic information systems (GIS). It focuses on the research questions of what components to include in GIS cost-benefit (C-B) analysis, what distinguishes GIS C-B analysis from non-spatial C-B analysis, what methods to use, and how to invest in GIS systems in order to obtain net payoffs over time. It categorizes costs and benefits of GISs. It considers the topics of systems analysis sub-steps in cost-benefit analysis, the feasibility decision, stakeholders and externalities, and the importance of timing and timeliness in investing in GIS and assessing payoffs. It examines the C-B aspects of a well-known GIS case study of Sears Roebuck’s delivery system. The literature on the value of investment in IT and productivity paradox is analyzed for its relevance to GIS investment. The major findings are, first, that the costs and benefits of a GIS can be estimated through modifications of standard non-spatial IS methods. Second, the key factors that differentiate GIS cost-benefit analysis from that of non-spatial IS are more extensive analyses of the costs of data acquisition, need to pro-rate the GIS costs and benefits for tightly linked combinations of GIS and other systems and technologies, and need for improved techniques to estimate the costs and benefits of the GIS’s visualization features.