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Editor's Introduction
Last Friday I spoke with Styli Camateros, vice president for geospatial at Bentley, about the company's vision and its upcoming user conference.
This week I am writing from the beautiful city of San Francisco, where I attended Intergraph Mapping and Geospatial Solutions' Intergraph GeoSpatial Users Community International Training and Management Conference — or just GeoSpatial World 2005, for short!
Also at the conference, on Tuesday Intergraph introduced version 9.3 of G/Technology and version 6.0 of GeoMedia. G/Technology is an integrated geofacilities management system that, according to the company, is the foundation for a comprehensive IT environment called geospatial resource management (GRM). GRM facilitates integration among engineering, operational, and customer-related corporate systems for utilities and communication companies. Version 9.3 adds capabilities for data integration, software customization, and network maintenance and analysis. GeoMedia is a suite of desktop and Web products for maintaining, integrating, analyzing, and presenting geospatial data to enable an open spatial enterprise. The GeoMedia family consists of 17 applications for national, regional, and local government, military and intelligence, utilities, communications, and photogrammetry and transportation markets. They allow enterprises to visualize spatial information. Version 6.0 according to Intergraph, simplifies end-user access to enterprise geospatial information, enhances the ability of enterprises to deploy spatial data, and provides new Web services and map display tools for cartographic output.
On Wednesday evening, Intergraph released its quarterly earnings and announced a major reorganization. Revenue for the quarter ending on March 31 was $136.5 million, an increase of 3.2% from the $132.3 million reported in the first quarter of 2004. Operating income for the quarter was $5.9 million, or 4.3% of revenue, compared to $7.6 million, or 5.7% of revenue, reported in the first quarter of 2004. The company reported restructuring charges of $1.7 million in the first quarter of 2005 and $0.8 million in the first quarter of 2004. Operating income before restructuring for the quarter was $7.6 million, or 5.6% of revenue, compared to $8.4 million, or 6.3% of revenue, reported in the first quarter of 2004. Net income for the quarter was $81.9 million, compared to $135.6 million, or $3.58 per diluted share, in the first quarter of 2004. Net income includes $81.0 million and $128.7 million of after-tax intellectual property income, net of all fees and expenses, in the first quarter of 2005 and 2004, respectively. On Wednesday I met with
I asked Pulusani how Intergaph's approach to product development has changed over the years. "We used to have core products and then the people closest to the customers would customize those," she told me. "Now we have solutions centers that create reusable solutions - such as white papers, data models, and templates." The company's global reach, she pointed out, allows it to talk to end users around the world. For example, when developing a solution for local governments, it might ask for input from potential end users in Spain, Canada, and Australia. "We are not trying to be everyone's GIS," Pulusani emphasized; rather, the company prioritizes the use of its resources on the basis of its strengths. As for its geographic priorities, "we see tremendous potential in Asia and the Pacific," she told me. "Russia is a pretty significant market," she added, particularly regarding data acquisition for creating cadastral databases. China and India have an abundance of well qualified and trained people, and Intergraph is supporting academic programs in those countries. I asked Pulusani what some of the company's challenges are in the global marketplace. She mentioned one, phrasing it very diplomatically: "Some countries have not been in the habit of paying for software..." To change this, she explained, Microsoft, AutoDesk, Intergraph, and other companies are working to develop awareness and to encourage appropriate legislation. Often, she pointed out, license holders are not able to pay for services and expect them to be included in the licence; in some cases, Intergraph steers them toward academia for support. I asked Pulusani at what stage of development GIS technology is. She gave me an analogy: there was a time when large companies had a VP of electricity; now they have VPs of GIS. Eventually, GIS will be so fully integrated with other software that enterprises will treat it as just another part of IT. I asked Holmes about the company's biggest challenges. He told me that, now that Intergraph has launched into its new seamless geospatial computing vision — which aims to geospatially-enable every IT environment and embrace new IT platforms — "the challenge is to figure out how to do that with our products", following the success of GeoMedia. What will be the bottlenecks in trying to accomplish this vision? Most arise from the tension within the IT industry between open and proprietary standards. "By definition," Holmes told me, "they all have to be open to survive." Another challenge is to enable thick clients to run with the administration provided by Web clients. Users, according to Holmes, will soon want to do with Web browsers what Intergraph's thick clients do — while at the same time running SAP, asset management systems, and other applications. Whenever it can, Intergraph turns projects into repeatable solutions and then turns these solutions into products: "the challenge is to generalize," Holmes told me. "This is great for the customer, because it brings the price down." As an example, he cited the system that the company developed for the Nevada DOT, which introduced the ability to have multiple linear reference systems in the same data model. Within six months of completing the Nevada project, Intergraph incorporated this capability into GeoTransportation and made it available to all state DOTs. In every market there are a handful of risk-tolerant, leading edge customers, Holmes explained, adding "We love them!" Intergraph looked for such a customer for water management for its GeoMedia platform and found a perfect one: the City of Winnipeg, Canada. A feature becomes a market requirement when it is proven and everyone wants it; "but first you have to serve a handful of customers and be good at it. The easier we make the availability of geospatial technology and the more we push it into the mainstream of IT, the more folks will be willing to take risks." Is Intergraph developing access control systems? No, Holmes told me, "because that is not our business; we let IT people do that." I asked Guerrero to explain how his division manages product development. He told me that each solution center reports its needs regarding core technologies. He and his team then take this input — as well as input from the customers and Intergraph's support network — integrate it into new products, and work out priorities, depending on the market and the relevant business issues. I asked Guerrero how Intergraph handles its dependence on broader developments in IT. "We leverage existing IT technology," he told me. "Our goal is to integrate as much as possible. [IT developers] are solving higher level problems." What are his toughest challenges? Selecting technologies in which to invest and having to forecast trends, Guerrero told me. He then gave me one example of a difficult decision he had to make a few years ago: whether or not to believe the hype about tablet PCs. They incorporated technologies — such as ink layers and character recognition — that appeared promising for geospatial applications. "It wasn't clear whether it was going to be a revolution. It turned out to be just one more thing." A more dramatic and consequential example, however, was the decision whether to continue supporting Unix workstations or switch to PCs, given how big a task it would be to migrate data and applications from one platform to the other. Intergraph chose to go with PCs and Guerrero is now convinced that it was the right decision. By contrast, it was easy for the company to decide to shift to a service-oriented architecture and support Web services. From time to time Intergraph conducts a strategic review and chooses the areas in which it wants to invest its energy. Recently, security and intelligent transportation emerged as areas of significant potential growth. "We like to maintain our focus on the industries that we are targeting," he told me. "There is always the temptation to recycle technologies, but you also need to know the industries [to which your are trying to apply them]." I asked Guerrero what he sees as Intergraph's greatest strengths. He listed three: its commitment to open standards, its very good connectivity with a large variety of data formats, and its in-depth knowledge of five industries: military and intelligence, state and local government, Earth imaging and photogrammetry, utilities and communications, and transportation. Conversely, the company is not interested in pursuing, for example, the health field. "We probably have the technology," he told me, "but we don't have people that understand that industry's dynamics, cycles, and requirements." Finally, I asked Guerrero, if GPS, other sensors, and wireless connectivity are the most important enabling technologies right now for the development of mobile geospatial computing, what is the principal obstacle? His answer was quick and emphatic: batteries! I asked Tate how his Solutions Center fits into Intergraph's larger structure. He explained to me that the company has three levels that deal with product development and sales: product centers; solutions centers, which deal with vertical industries; and global sales regions. Intergraph gathers customer requirements and market demand from its sales regions, builds solutions, and then takes them to market through the regions for the verticals. The product centers operate on product development cycles — but, meanwhile, market demands are constantly changing. So the solutions centers piece together existing technologies to meet customer requirements. The solutions centers also handle marketing, pricing, and training and bring customers together for workshops (which function, in effect, like focus groups). Geospatial Solutions Federal, which sells into the federal government, is in effect one of Intergraph's sales regions. Tate's biggest client by far is the NGA, which is also the single biggest client for all of the company. U.S. civilian agencies, however, do not necessarily follow NGA's standards. Among these agencies, the biggest prize, of course, is the Department of Homeland Security. I asked Tate for an example of a solution developed by his Solutions Center and he cited Image Scout, a tool for broad area search that allows mosaicing and the querying of attributes. GISC put it together using GeoMedia, Z/I software, and third party software from Paragon. Image Scout is also the example that Tate gave me when I asked him about spin-offs from military technology to the civilian side. It was developed as an image analysis tool for the military, but then civil government agencies needed it to bridge the gap between pixel data and feature data. It can also be used to do fusion with other data types. I asked Tate what the major differences are between the U.S. and the European markets. He told me that the Europeans are more in tune with OGC data exchange standards, whereas the NGA is slower to adopt them. Intergraph, he added, is always lobbying NGA to follow OGC standards. Intergraph's GIPS (geospatial intelligence production solutions), is a set of solutions that handles the collection and extraction of feature data from imagery; the management of feature-level data; and product generation (in softcopy, in hardcopy, and on the Web). It was developed mostly for the MGCP (multi-global co-production) process. Under this system, countries produce cells of feature data, then hand them over to the NGA, which houses the data and gives each country access to the whole data library, depending on that country's contribution to it. The NGA, of course, has access to the whole library! (However, when I asked Tate for shortcomings of the system, he griped that it is maintained at the cell level, "whereas the technology today is at the feature level.") What is Intergraph's greatest strength? It is the company's ability to bring complex data together, Tate told me, to allow its customers to make better and faster decisions. What is its greatest challenge? Communicating across the divide between the military and the civilian geospatial communities, whose objectives are increasingly the same. What is the greatest geospatial challenge for the United States? Tate worries that the country may not be as prepared now in the spatial dimension as when taxpayers where paying for the USGS to map quadrangles at 1:24,000 scale and the private sector was taking those maps and adding value to them. Now that the mapping task has been turned over to the private sector, Tate told me, each vendor tends to put its own proprietary spin on the data. As a result, the data is much less accessible than most people assume - and probably much less accessible than what may be necessary in an emergency. On a related issue, I asked Tate about restrictions on data access due to security concerns. The data that are readily used by consumers, he told me, are all open; however, data about oil pipelines, water systems, etc. are being restricted. "That is good for all those times when you don't have disasters," he told me, "but how do you turn it back on in minutes in case of a disaster?" We have much more data available than what is in the paper maps that first responders typically consult, spread out over the hoods of their vehicles at the site of an emergency. Unfortunately, Tate concluded, it often takes a combination of economic opportunities and disaster to wake us up to the need to improve these systems. I asked Keating to summarize the history of the relationship between Z/I Imaging and Intergraph. He began the story in the late 1980s and early 1990s, when Intergraph decided to get out of Unix-based work stations and move into the new generation of "fast" PCs with accelerated graphics. Through the mid-1990s, he told me, Intergraph was bleeding money at the rate of about $20 or $30 million per year. Intergraph then restructured and came up with new "verticals" — divisions dedicated to vertical markets — that it was ready to spin off as necessary. Z/I was one of them, "packaged and isolated." In early 1999, to meet growing worldwide demands for digital photogrammetry, Intergraph and Carl Zeiss Inc. formed Z/I Imaging Corp., a joint venture dedicated to providing open Windows NT-based photogrammetry processes, including digital aerial survey cameras, plotting systems, and image processing software. Intergraph's Photogrammetry and Remote Sensing and Zeiss' Photogrammetry and Aerial Reconnaissance divisions combined complementary hardware and software products to form Z/I Imaging, which was owned 60 percent by Intergraph and 40 percent by Zeiss. The two companies shared Z/I Imaging's board of directors, which was headed by Intergraph's CEO. Additionally, Z/I Imaging had access to all of Intergraph's software. Intergraph eventually came out of its hardware commodity loss when it sold its Clipper microprocessor technology for $864 million and its interest in spinning off Z/I diminished substantially. Instead, it bought out Zeiss' 40 percent interest in the company and maintained Z/I as a brand. Among other things, Z/I had the DMC (digital mapping camera) and the ImageStation platform, as well as the TerraShare enterprise infrastructure for geospatial data management and earth imaging production. Now Z/I is fully integrated with Intergraph, has cameras and scanners for data acquisition, and a collection of earth imaging tools, including photogrammetry and stereo and 3D visualization. Given this history, I asked Keating what Z/I's special niche in the industry is today. He told me that "it can apply industrial strength in producing data out of raw imaging" and that TerraShare's data distribution abilities are unique. Like the rest of Intergraph, Z/I is "putting a lot of time and energy into getting the user out of the business of files;" rather, it provides Web-enabled tools that allow the user to quickly get all kinds of data — internal, external, and legacy — onto the Web. I asked Keating how Z/I is reacting to the new security requirements, including the need for access control. "We find that a lot of environments need to put the data behind a wall of security," he told me; however, instead of getting into the business of providing this security, Intergraph "[embraces] letting Oracle do the security while we work behind the wall." What about the big shift, shortly after 9/11, in data access policies — when federal, state, and local government agencies quickly removed a lot of data from their Web sites? The Rand Corporation, Keating told me, studied the question and issued a report that recommended against that shift. There's a positive correlation, he explained, between a country's GNP and how available it makes geospatial information. "Now state and local governments have geospatial one-stop Web sites and nodes and all this stuff is back on line. When all is said and done, taking the information off line was irrelevant [to security concerns]."
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