Business

This paper involves a discussion of the ESRI, the pioneer company in introducing GIS and other market players, who came in later, took advantage of this new technology and changed its dynamics. It further highlights the problems faced by ESRI and its significantly reduced market share in the GIS sector due to mass consumption of the technology introduced by giants like Yahoo Maps, Google Earth, etc. Lastly, it highlights the firms strategy to operate in such a dramatically changed and competitive business environment and recommendations to solve the problems faced by ESRI.

ESRI Changing the World
Jack Dangermond and his wife Laura first had the idea to incorporate ESRI when they sold their first GIS technology system to the State of Maryland. Since, 1969 when the company was founded they dedicated their lives to creating and spreading this revolutionary technology which they thought would make a difference in the world by using computers and technology to collect, organize and analyze information about geographical locations. Its client base includes large organizations such as governments, academia, utilities, NGOs, homeland security, telecommunications, and transportation.

However, by 2006 things started changing when new companies started adopting this technology and using it on a mass consumption level incorporating it in desktop PCs, cell phones, and internet websites. There were six leading companies at that time in the Geo-Spatial industry namely, The Autodesk,Inc., Bentley Systems, Inc., ESRI, GE Energy, Intergraph Corporation and NAVTEQ Corporation. Since 2000 several new players have also emerged in the industry including well known names such as Oracle, SAP, Microsoft Maps, Google Earth and others. They all realized that adding a spatial visualization to their product offerings is an added value and Google Earth has so far been the most successful by offering increased number of features in real time.

One of the earliest problems that ESRI faced in terms of GIS was that it had developed this technology for only large organizations and mainframes that collected and maintained their own data. These companies could then, with the help of GIS, make strategic decisions regarding their geographical locations and how best to exploit the opportunities and reduce their costs. For example, the Oil and Gas exploration companies could use this technology to track the suitable areas from where they could discover more oil resources. Sears used it as a technology to map and track the routes of its delivery trucks making its delivery services faster, reliable and more efficient. This approach of expending GIS to only mainframe companies and large organizations caused the first set of problems for ESRI since it neglected the possible commercialization of its software until much later when services like Yahoo Maps, Map Quest etc. started being offered. The company failed to see an opportunity in the consumer sector of the market and offered specialized and limited products designed for larger clients.

The second area where ESRI faced problems was narrowing its industry and limiting the scope of its operations. This is termed as Marketing Myopia by Theodore Levitt of Harvard University. Sustained growth depends on how broadly you define your business and how carefully you define customer needs. He asked the question What business are you really in According to him, if railroad executives saw themselves as members of the transportation business rather than the railroad business, they would have continued to grow. (Levitt, T. 1960)  

This example clearly illustrates the problem with ESRI. They made the same mistake. ESRIs outlook should have been that they are in the business of providing geographical solutions, that not only included the planning and controlling aspect of information and their operations, but also commercialization of the technology in such a way that common consumers could use it as a mapping device, locate places and areas, know more about the world, sightsee different places at the click of the mouse, use GPS on their car devices and cell phones. This would have helped it prosper before services like Map Quest and Google Earth captured that part of the market.

The company environment is kept competitive by the marketing and sales department. The company is focused on building strong customer relationships and focusing on how they can offer products which provide customized solutions like a bundle of software such as ArcInfo or availing services separately from ESRI. Since information technology is a fast paced industry information inventory has the shelf life of a cabbage (Dell, M. 2005). The company must keep itself updated with the latest trends and consumer preferences so it can adapt its designs and make changes that cater to the broader market of consumers. ESRI has been a privately held company ever since its inception and even though it had good growth rates it had the same people working for it for decades as part of the management team.

This highlights that there were no major changes or fresh perspectives employed by the company in enhancing their overall strategic direction and competing on par with the competitors. The industry has started developing more consumer friendly products out of the GIS technology after the advent of internet. Real time traffic information, directions from one place to another, electronic maps by businesses to highlight their locations, tracking cell phones all had consumer markets for geographical information that were relatively simple and easy in interface.

There are several firms that have fallen apart because they did not have a proper strategy. The once-unassailable Xerox is engaged in an attempt to revive itself, amid criticism from its own executives that the company lacks a strategy. Says oneI hear about asset sales, about refinancing, but I dont hear anyone saying convincingly, Here is your future. (Bianco, A.,  Moore, P. L. 2001) ESRI after having faced competition from Microsoft, Google, Yahoo, Map Quest etc has segmented customer categories the end users who only require some applications and services and those who are large scale and want to install the entire system for their geographical controlling and planning purposes. It aims at providing excellent customer service, running promotional campaigns, creating brand equity, and furthering the spread of GIS based products and GIS systems as its core competency.

In order to excel further and make its way in this cut throat world of competition ESRI now needs to start revamping its strategy by recruiting new talent to the company as managers. Fresh perspective will help the company to deliver to its clients broadly. Also ESRI needs to cater to the consumer market by commercializing its products by providing geographical solutions and integrating the latest internet technologies and providing customers with real time data as the need for information integration increases in the society. People want to know where they are, what time they will reach at a certain place, how they can best optimize their routes. Mass commercialization of these products can not only help the company build its revenues but also build strong customer relationships since it has pioneered this technology and can further enhance it better to meet the requirements of the ever changing, fast paced, technology driven needs of the modern consumer be it individual, governments or corporations.
 The company needs to get out of its marketing myopia and instead of being in the business of GIS it should come in the business of integrating mapping technology that links all kinds of customers together and provides maximum solutions possible for its revival and rebirth as a competitive and pioneer in this form of business and further rely on its promotional strategies and strong customer relations to help it break through the barriers and see fresh direction.