Location Intelligence — The Impact on Cloud-based Reporting
Cloud-based reporting and analytics are the tools organizations are turning to for their ever-increasing demand for optimized decision making and pursuit of improved business processes. Location intelligence (LI) is at the forefront of that demand, given its ability to enrich data, mitigate market uncertainty and unlock a layer of geographic insight. LI is affording organizations the ability to create a competitive advantage via transforming location data to actionable business decisions. Businesses are turning to geo-enriched data sets to understand physical boundaries, demographics, income, purchasing power, consumer behavior, and identify risk and natural hazard information. Via geographic data points overlaid on an interactive map interface, businesses are able to identify new customer markets, improve customer services and marketing efforts, and monitor assets at vast scale. Location data is already and will continue to be a growing component of all business data.
“The global location intelligence market size was valued at USD 8.12 billion in 2016. It is predicted to expand at a CAGR of 15.3% from 2018 to 2025.” (1)
According to Carto, overwhelmingly, businesses executives and data practitioners see Location Intelligence as critical to their organization’s success, and even more critical over the next three years. “Nearly all C-level and management level respondents, especially those from small to mid-size organizations, note a strong likelihood to invest in Locations Intelligence within the next one (78%) to three years (84%).” — Carto (2)
Location data applications include enriching, analyzing, and visualizing data. LI tools find applications in management of workforce, asset integrity, facility management, risk management, and consumer analysis. By verticals, it has entered financial services, healthcare and life sciences, government and utilities, retail and consumer goods, telecommunications and IT, and transportation and logistics. In terms of LI service offerings, systems integration and consulting are the two main categories. The system integration segment accounted for over 44% of the market share for 2017. It is projected to have the highest demand over the forecasted period (2018–2025) due to the high demand for the integration of new data sources with growing adoption of IoT. (1)
“In 2020, there will be 20.4 billion connected “things” in use, up from 8.4 billion in 2017.” — Carto (2)
The rise of LI can largely be attributed to the emergence of IoT, digital transformation, and smart cities. Disruptive mobile applications and enhanced location sharing capabilities of mobile devices have revolutionized the way services are being delivered to end users. It has inevitably led to a growing use of mobile devices for commercial transactions, which has been supported by increasing investments in infrastructure to secure such transactions. With the emergence of IoT and importance of visualization for mobile applications, location is an essential data point. Interactive maps have become an essential display tool to navigating insights. Developers have created more user-friendly spatial mapping and analysis software for “citizen scientists” to explore and manipulate their captured data and insights. This development has shifted geospatial analysis out of the realm of GIS professionals (solely) and into the hands of everyday users. This has led to the increase in the adoption of location analytics by small and medium enterprises (SMEs).
Despite the tremendous developments taking place in the LI market, there are significant hindrances on full market potential, some being: inefficient data collection methodologies, lack of awareness around geospatial and predictive analytics, insufficient staff or technology to successfully adopt the location data or properly analyze it, data privacy, and a lack of network infrastructure. Businesses solving these issues will be of high demand to larger companies seeking to augment their market share capture with acquisitions. Companies are turning to mergers and acquisitions to boost their service and product portfolio.
Below are a few examples of organizations acquiring or partnering with unique firms to capture a greater market share, boost their portfolio of service offerings and solve business inefficiencies:
- IBM collaborated with Mapbox to bring geospatial analysis and mapping capabilities to Watson platform users. Their customers are now able to gather and track geodata and gain insights into location-related revenue streams.
- Intel acquired Basis, allowing it to enter and explore the IoT market via wristwatch devices.
- Google acquired Nest, also expanding its reach via IoT.
- SAP created SAP Geographic Framework, and integrated Esri’s ArcGIS software into SAP’s latest cloud-based offering. The new integration leveraging Esri technology will allow businesses to process and analyze location data, and create location-aware business applications.
Companies such as PlaceIQ, MapAnything, Carto, Galigeo, and Unacast have been disruptive and are establishing themselves in the LI market. Esri, TIBCO Software, Pitney Bowes, Tableau Software, and Qualcomm are already established, but still making significant investments in the industry. 7MA is keeping a close eye on these companies as they continue to shape the industry.
The aforementioned partnerships and acquisitions are examples of organizations investing in companies that will allow them to extract high-value business information from satellite, drone, and open data sources in order to discover and interpret location-based insights. For further market insights on real-time transactions, valuation and market leaders, see our LI Sectorwatch.
LI is now one of the latest layers of data to be uncovered and applied to business processes and decision making. We expect to see increased acquisition interest from organizations wanting to unlock a layer of geospatial insight with application to their business model. Companies with unique data acquisition capabilities and service providers of LI integration will be of high demand and can expect premium multiples on valuation.
Author: Rory Julyan, Associate at 7 Mile Advisors
About 7 Mile Advisors
7 Mile Advisors provides Investment Banking & Advisory Services to the Business Services & Technology Industries globally. 7 Mile Advisors advises on M&A and private capital transactions, and provides market assessments and benchmarking. As a close-knit team with a long history together and a laser focus on our target markets, 7 Mile Advisors helps its clients sell companies, raise capital, grow through acquisitions, and evaluate new markets. For more information, including research on the M&A markets, visit www.7mileadvisors.com.
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