Why Location Intelligence Matters

By Silvia Banchini, August 26, 2015

Location Intelligence (LI) is a Business Intelligence (BI) tool that relates geographic contexts to business data. Like BI, LI tools are designed to turn data into insight for business purposes. LI uses fundamental concepts and methods drawn from the BI field, and combines them with Geographic Information Systems (GIS) technology, to develop a new knowledge base with which to produce more comprehensive analyses (S.Milton, Forbes, oct 2011)

Over 80 percent of enterprise data has a spatial component (IDC).  The value of merging the two fields of BI and GIS, enables a firm to progress from underusing an asset to gaining a competitive advantage. That value is easily recognizable in:

1)     Fostering a better understanding of a company context and how it affects business operations – achieving a much more complete overview of the business’s behaviour

2)     Enabling an analysis of a business location and time dimensions

Thanks to Google and other online information sources, nearly all of us are now familiar with a multitude of consumer uses of spatial data — for example, getting directions for finding restaurants, hotels, hospitals, government buildings or whatever we might need to find.

But can location intelligence applications increase sales or decrease costs? Of course they can. Just think for examplu of how critical it is for any organization to understand customers’ wishes and needs.

Location intelligence tools play a major role in enriching current customer data with demographic or economic data, based on where people live, where they spend their leisure time, where they move for work and where they consume most- using them in sales forecasting models. Gelocated data thus improve the customer profiling research, opening up new spaces for competitive analysis applications.

Moreover, location intelligence tools  help retailers find the best location for a new store or suitable sites for an whole chain of stores. (Retail site selection and expansion planning.)
Potential sites can be evaluated and prioritized quickly without actually visiting the place, simply by analyzing local demographic and economic data and geographic factors such as transportation access,  competitors’ positions and consumer behaviour. Companies looking to add stores and fill geographic gaps, benefits by using location analytics, measuring the potential to “cannibalize” customers who already shop at the existing outlets.

LI helps resolve a business problem by supplying the context to business data. It enables business managers to detecte new business opportunities by uncovering previously hidden or unidentified patterns inherent in the same data produced by their firms.

As IDC put it: “Location intelligence is defined as the capacity to organize and understand complex data through the use of geographic relationships. LI organizes business and geographically referenced data to reveal the relationship between locations and people, events, transactions, facilities, and assets.”

Deloitte says of the recent development of location-aware technology,  that: “In the past, only a handful of geographic information system (GIS) analysts in specific industries (oil and gas, governmental agencies, transportation and logistics firms) invested in using location as an organizing principle for advanced analysis. New tools and access to data are now allowing the power of location to be unleashed across many more business areas and to a much broader base of users.”

How quickly things have changed… Gartner’s 2012 BI Magic Quadrant survey revealed that many organizations, across a diverse range of industries, are beginning to apply BI and analytics to new business areas. As a result, respondents listed “geographic-intelligent functions” as the standout new product requirement for the near future.

Today Gartner affirms that “By linking location to corporate information, every organization can use location intelligence to make better decisions, enhance planning capabilities, and achieve real business benefits.”

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