Beyond ZIP Codes

Computerworld - Companies have used geographic information for years to help decide which ZIP codes to target in a mailing, which sites to pick for new stores and how to plan delivery routes. The geographic information systems (GIS) and tools to support those kinds of analyses are readily available and relatively mature.

But now the most advanced practitioners are integrating GIS with mainstream transaction-processing applications and databases, incorporating sophisticated location data in their business intelligence analytics and even tapping into pools of unstructured spatial information. And some companies are finding serendipitous uses of geographic information made possible by the marriage of BI and GIS.

Here's how four companies are pushing the edge of the BI/GIS envelope:

Site Selection at Staples Inc.
Staples plans to open 95 new stores this year after considering as many as 5,000 sites. Mistakes are costly -- closing a failed store can set the Framingham, Mass.-based company back $500,000 to $1 million.

The office supply retailer uses GIS tools from Tactician Corp. in Andover, Mass., combined with analytic tools from SAS Institute Inc. in Cary, N.C., to help it select store sites. The process all begins with a real estate model that forecasts weekly sales or potential sales by ZIP code. The forecasts drive activities such as site selection, budgeting, labor scheduling and marketing programs such as direct-mail campaigns, says Alan Gordon, director of sales forecasting at Staples, which now has GIS tools in a half-dozen departments.

The model considers some 30 factors that affect site selection, including obvious ones such as the presence of competitors and the demographics of the local population. "And there are things we put into our model that other people haven't learned of yet," Gordon says.

He says Staples hones its site-selection acumen by using SAS routines to correct and enhance the geographic data that it buys from external parties.

"The more we work in this area, the more we find problems and correct them," Gordon says. "We have explicitly tried to make that a competitive advantage."

For example, Gordon says, commercial databases of driving times between locations allow users to vary speeds by road type, but the databases don't take into account actual local traffic densities. Staples has written software that incorporates local conditions, so it knows how long it takes to drive from one ZIP code to another location through intervening ZIP codes of varying traffic density.

GIS and BI tool vendors are collaborating to integrate their products, so users don't have to. But the Tactician and SAS tools aren't yet integrated, and Staples passes files back and forth between the two companies' tools via FTP. But Gordon says Staples is building its own interface to allow both SAS and Tactician to access common DB2 or Oracle tables.