Esri created this map to show demand for cat treats by location. Retailers use this kind of analysis to evaluate store locations. View Larger Map

Starting July 23, an estimated 15,000 customers and partners of Esri, a geographic information systems (GIS) vendor, are gathering in San Diego for the company’s annual user conference with analytics featuring prominently on the agenda.

For Esri, analytics is about location and building on the company’s 43-year history in blending digital mapping techniques and external data sets—data sets that might be an organization’s own data, or data that has been sourced from third parties, or a combination of the two.

Founded in 1969 as the Environmental Systems Research Institute by present-day company president Jack Dangermond and his wife Laura, Redlands, Calif.-based Esri has parlayed its expertise in maps, satellite imagery, demographic data, socioeconomic data, and other sources of information to provide organizations with the answers to questions that are either difficult or outright impossible to tackle through other means. “We own the ‘where’ question,” says Chris Ovens, director of location analysis at Esri.

While Google Earth and Google Maps have made geographical representations and searches ubiquitous for consumers—and invited challenges from Microsoft and, more recently, Apple—the privately-held Esri has amassed a billion-dollar business serving hundreds of thousands of customers, in governments, businesses and non-profit organizations.

At its conference this week, the company is expected to highlight its recently unveiled ArcGIS Online, a service that mark’s Esri’s entrance into cloud computing and allows users to collaborate using geospatial data. The company also will highlight its Esri Maps for Microsoft Office. The new service is a means of carrying out simple location analytics within Microsoft Excel, and presenting the results within PowerPoint. These are important moves for a company that started in the days of mainframes and has followed the major computing trends so that now it is a featured application provider at Amazon Web Services.

Use cases: For business customers of Esri, where people shop is a prime example of answering the where question. Retailers, for instance, can couple consumers’ addresses to those same consumers’ spend data in order to figure out each store’s catchment area (where their shoppers originate). Measurements include customers’ driving times to the store, and where a particular store’s most profitable customers reside. The objective: Targeted marketing messages to other nearby consumers who may possess similar lifestyle and demographics characteristics. Or, in the case of sportswear manufacturer Nike, tailoring the color mix of inventory held by merchants stocking the company’s sportswear to the colors favored by local schools—resulting in rising sales.

Store performance, too, can be monitored, and calibrated for the lifestyle and demographic characteristics of the area it serves. Is a store over-or under-performing others with similar geographical characteristics? Once again, ArcGIS Business Analyst, Esri’s flagship location analysis product, can provide the answers.

New store locations can be piloted virtually, to establish both their viability, and the extent of any cannibalization of sales from any existing outlets. Privately-held PETCO Animal Supplies, for instance, is on record as stating that its investment in Esri’s locational analysis capability has successfully enabled it to avoid the downside risk associated with several prospective locations in which it otherwise might have established stores.

“The challenge isn’t getting the raw sales data,” says Esri location analytics product lead James Killick, pointing out that the growing use of location analytics is fuelling retailers’ adoption of loyalty cards, which provide a simple way of harvesting address data from customer transactions. “Instead, the challenge is getting the appropriate leverage to analyze the data—and typically, it’s the geographic dimension that is usually lacking. Our job is to fill that gap.”

Other use cases vary according to industry. The oil and gas industry, for instance, can use location analysis to analyze the performance of oil and gas wells, overlaying geographic data with seismic and other information. Government, too, is a user, with applications ranging from crime prevention to assessing the likely impact of storm surges and other environmental disasters.

Ovens asserts that location analytics “isn’t just mapping” but rather is a complex ability to drill down into data sets, with maps and charts updating in real time, conducting analyses and building models. The map is geospatial data, and simply one more piece of data in the mix. While GIS aims to capture, manage and display geographically-referenced information, location analysis-enhanced GIS builds on this to reveal relationships, patterns, and trends, adding richness in the form of non-geographic data (such as statistical analysis of U.S. Census data, consumer surveys and proprietary sources like sales data).

What’s next: Cloud computing is making its mark on both the promise and practice of location analysis, as the ArcGIS Online announcement in June, and Esri’s Software as a Service offering with Amazon Web Services, highlight. Social media, adds Ovens, is the next frontier for location analysis.

The launch of Esri Maps for Office, says Killick—a means of carrying out simple location analytics within Microsoft Excel, and presenting the results within Microsoft PowerPoint—represents a key advance.

“Excel is the most widely-used analytics tool in the world, and with Esri Maps for Office, it takes just a few seconds to create and interactive map of your data within Excel,” he notes. Maps in PowerPoint can be static or can be “live” for interactivity during presentations, with zooming in and out and popup displays for additional information, he said.

An outsider’s view: Jonathan Raper, a visiting professor of information science at City University, London, is a long-time Esri watcher and user conference attendee. He said that in spite the company’s strong history in GIS applications, it must keep an eye out for famous newcomers.

“In the past five years, Google, Yahoo, Microsoft and Apple have all gatecrashed the location field, with offerings that developers are using to create apps,” he notes.  “Esri have the definitive set of location analysis tools—but understand that they can’t stand still.”

Freelance writer Malcolm Wheatley lives in Devon, England, and can be reached at editor@malcolmwheatley.co.uk.