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					                                           ESRI: Changing world.

                                                © Jyoti Bachani
                                            University of Redlands
                                         Jyoti_Bachani@Redlands.edu
                                                 909 748 0545
                                                 909 748 8763

                                           ESRI: Changing world.

                                               Case Synopsis

Environmental Systems Research Institute (ESRI) is a privately held, debt free, company
that is a global leader in Geographical Information Systems (GIS) software used for
visualization and analysis of geographic data by institutional users across the globe. ESRI
has pioneered this technology for four decades as it pursued its founder leader Jack
Dangermond‘s mission to change the world by making it spatially enabled. Since 2000,
the world has changed. The new Internet companies have put electronic maps with live
data and interactivity on the internet enabled desktops of every user, for free. Jack sees
the Internet becoming ‗geo-enabled‘ as an opportunity, but it could also be a threat if
ESRI does not make the right moves. How should ESRI respond to this changing world?
The case describes ESRI, its leadership, management, products and services and internal
organizational structure, in order to facilitate class discussion of their strategic choices.


MBA Strategy Case to be used for topics of maintaining competitive advantage in
the face of changes in the industry and technology, using the firm’s internal
resources and capabilities.




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                                         ESRI: Changing world

In August of 2005, Jack Dangermond, the founder and CEO of Environmental Systems

Research Institute, Inc (ESRI), the company that has been at the forefront of geographic

information systems (GIS) for forty years, speaking at the ESRI user conference in San

Diego, CA, said:



――The Web is the new platform for GIS" and it is becoming "geographically enabled." It

will "change the way we do things and the way we talk about them…GIS on the Web,

provides many additional possibilities for sharing, integrating, and leveraging the full

stack of geographic knowledge," allowing users to "share maps and data, models,

analyses." This, he argued, will create "a whole new way of thinking about GIS at all

scales." Meanwhile, the enabling technology is "evolving nicely:" faster machines,

increased bandwidth, larger storage, Web servers providing real-time information, and a

new generation of geographic software. "I believe this will improve our ability to share

dynamically in this real-time environment." He calls it the "geo-web."‖



Jack Dangermond and his wife Laura have dedicated their lives to creating and spreading

the GIS technology, through ESRI. Their mission, for over four decades, has been to

make a difference in the world by using computers and technology to collect, organize,

analyze and communicate geographical information. ESRI was the pioneer company to

create the first commercial State-wide GIS system for the State of Maryland in 1973.

They also created and supported the online portal www.GIS.com, to disseminate

information about the geographic information systems. According to ESRI website, they

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have the largest GIS software installed base in the world with more than a million users

in more than 100,000 organizations representing government, NGOs, academia, utilities,

healthcare, transportations, telecommunications, homeland security, retail and

agriculture. According to industry analyst Daratech, in 2001, ESRI was the number one

GIS software provider with estimated software revenues of $427 million and 34.6% of

total worldwide GIS software market.



Since the end of the millennium, with the commercial adoption of the Internet, a host of

new technology companies started to provide consumers with computer based geographic

information simply at the click of a mouse button. Initially, it was the ability to simply

look up electronic maps online with any PC connected to the Internet. Mapquest, Yahoo

Maps, and other similar services. Overtime, additional functionality was added to these

maps, for example, one could get directions from one location to another. Other

businesses started adding these electronic maps to their web-sites in order to give their

customers a way to locate their business and get directions to it. By the end of 2006,

many additional interactive features were available on these electronic maps. For

example, in addition to getting directions from one point to another, one could also look

up real-time traffic along the route, in addition to locating a hotel on a map, one could

also locate the nearby businesses and tourist attractions. Related technologies started to

appear in mobile devices from cell-phone to automobiles. Cars could be equipped with

devices that linked to the satellite Global Positioning System that could provide driving

directions as well as local information as one drove through an area, and cell-phones

could be tracked to their exact locations.

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Jack‘s vision of a geographically enabled world was coming true, except that it was

happening with technologies and companies that were unrelated to ESRI or even GIS.

Many of these companies and technologies were not around in 1969, when Jack and

Laura first started ESRI. Will this visionary pioneer of geographic information systems

be a pioneer in this geographically enabled world that they have championed for four

decades? What role will ESRI and GIS play in this new era? What resources and

capabilities does ESRI have and how should it deploy them in order to create its position

in this changing world? Will it continue to be the number one player in the market? How,

if at all, should ESRI be responding to the new technologies and companies that are

redefining the market? What are the risks and challenges associated with the different

moves that ESRI might consider?



GIS Technology and Industry



GIS is computer software that links geographic information (where things are) with

descriptive information (what things are like). GIS produces electronic maps that have

layers of information representing different themes, or feature, of the map. For example,

the information could be about roads in an area, or cables buried underground, or lakes or

cities, in the same area. These provide a stack of information about the same geographic

area, and can be turned off and on, to control the amount of information about an area

that can be visible. Most organizations' have data with spatial components that are not

utilized in this manner. By connecting this data to a physical location, for example, by

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displaying all store, factory, distribution center and warehouse locations with addresses

on a map where it can be visually analyzed, the company can plan routes for deliveries,

or analyze traffic patterns and thus unlock this spatial data to make better decisions.



There are three underlying technologies that work together within any GIS system. These

are: a database, a visualization system and a spatial analysis system. Many GIS systems

rely on Oracle database as their core. Visualization technologies allow for mapping of the

data contained in the database on to electronic maps, similar to Yahoo Maps or Google

Earth. The spatial analysis system is the engine that brings together the data and

visualized information and allows for spatial analysis to be conducted complete with data

manipulation, 3D and network visualizations, and other ways of analysis that use data

and its geographic component together. For example, a company may store addresses of

their customers in an Oracle database. They could use Yahoo Maps or similar

visualization package to display these addresses on an electronic map in order to get

better information from their data by looking at the geographic distribution or density or

other patterns in their customer address database by having it visually displayed. An

example of the spatial analysis on this visualized data may be to try to see how many of

the customers have homes with more than an acre of land, or some other parameter that

the company wants to understand about their customers. A GIS system can add a

component of data from the county land-records of lot-size of each customer address, and

overlay that on the previously visualized map of customer addresses and highlight the

ones that have lot sizes of more than an acre of land.




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The original GIS software was designed for mainframes owned and operated by the large

organizations, like the government departments or utility companies who collected and

maintained their own data, and used GIS as a tool to visualize the data and do spatial

analysis on it. It has evolved over the years to have multiple incarnations, including

desktop personal computer version, GIS delivered as a service over the Internet, server

platform based GIS as well as mobile GIS. More on this in the section on ESRI‘s

products later. The traditional customers for GIS software were larger organizations, like

the government departments that maintain land records, Oil and Gas companies that

analyze geological information to make location decisions about oil and gas exploration,

Telecom companies that analyze information to route their service personnel most

effectively, or kept updated data on exact locations of their buried cables, or found the

best locations for transmitters of cell phone calls. Retail business, from banks to coffee

shops used GIS in combination with demographic databases, to make decisions about

their branch locations, delivery truck routings, as well as product and service mix. The

customers were large organizations because it required substantial investment in

expensive mainframe computers, custom-made software to address their special business

needs and ongoing maintenance and support with data updates. Only larger organizations

with business big enough to recover adequate returns on this investment could use GIS.

GIS was a tool for making better business decisions that were expected provide

substantial sustainable competitive advantage.




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In 2006, the six leading companies in the Geo-Spatial industry were1: The Autodesk, Inc.,

Bentley Systems, Inc., Environmental Research Systems Institute, GE Energy, Intergraph

Corporation, and NAVTEQ Corporation.



Since 2000, many new players like Oracle, SAP, Microsoft maps, Google earth, and

others, have come into the market. Oracle and SAP have started adding a spatial

dimension to their databases, recognizing the value of visualization forms other than

tabular data. A number of these new companies acquired smaller firms and start-ups that

had the spatial visualization technologies. Their primary consumer is anyone with a

personal computer connected to the Internet, as they delivered their maps online, mostly

free of cost for the individual user, and at a subscription based rate for the other

businesses that added the information to their web-pages. These technologies were

developed in the Internet enable world and focus on ease of use for the layman. They

served up visualization without much interactive or analytic ability. Only since the mid-

2000s have these technologies become advanced enough to add real-time data on to the

visuals and offer additional layers of information like traffic along a route or a satellite

image of the mapped area. Google has by far the furthest reach amongst the consumers as

it continues to add new features and aggressively push towards its goal of cataloging the

world‘s information and knowledge.



History and Leadership




1
    www.Daratech.com
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ESRI was started in 1969 as Environmental Systems Research Institute, a land use

consulting company, by the husband and wife team of Jack and Laura Dangermond. They

had worked together at the Harvard Design Lab, designing systems that allowed

geographic information to be visualized on computers. In 1973, when ESRI was selected

to provide the first commercially developed State-wide GIS, entitled the Maryland

Automated Geographic Information System, for the State of Maryland, they decided to

incorporate it as a company.



The early mission of ESRI focused on the principles of organizing and analyzing

geographic information. The current mission, according to the ESRI website is, ―The

company's focus remains on producing excellent software and delivering exceptional

service to users. Our reputation is built on contributing our technical knowledge, our

special people, and valuable experience to the collection, analysis, and communication of

geographic information.‖2



These priorities do not mean that the Dangermonds have only focused on creating and

disseminating the technology without being financially responsible. To the contrary, they

have carefully managed project work to ensure growth without the need for venture

capital or going public. ESRI remains a privately held company, still owned by Jack and

Laura, who are still actively involved with its operations. They consider this private

ownership structure to be important as it allows them to stay focused on their mission of

changing the world by spreading the GIS technology without being driven by external


2
    From www.Esri.com downloaded on May 22nd 2006
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pressures from venture capitalists or the wall-street, who might be more interested in pure

financial gain. In the year 2004, ESRI had revenues of more than $560 million with an

average annual growth rate of more than 20%. Under their leadership ESRI has enjoyed

steady growth of 10-15% per year for almost four decades. Their conservative financial

management has also created a debt free company that takes pride in running its

operations without debt for year after year.



During the 1980s ESRI devoted its resources to developing and applying a core set of

application tools that could be applied in a computer environment to create a geographic

information system. The commercial success of the technology was used as a way to

reinvest in the technology, thus creating a virtuous cycle of continuing growth and

success. The major milestones in ESRI‘s history are shown in the timeline in appendix

1a, and some of the strategic projects are detailed in appendix 1b. Thus ESRI manages to

conduct business along with pursuing its social mission of bringing geospatial technology

to the world. ESRI has emerged from a small research group to an organization of global

stature.



ESRI is headquartered in Redlands, a small town of 60,000 people where Jack spent his

childhood years, located an hour east of Los Angeles in the USA. The main office is a

sprawling campus of 22 buildings, some old, others new, all in close proximity, amongst

beautifully landscaped grounds. There are ponds with fish, turtles, fountains, and large

rocks placed to enhance the Japanese garden-like ambiance. There are several outdoor

seating areas for people to sit under the trees as they work or take their lunch breaks. Jack

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personally planned the campus landscaping. In addition to the head-office in Redlands,

ESRI has 11 US regional offices and 90 worldwide offices and affiliates. ESRI has a

business partner program with more than 2,000 developers, consultants, resellers, and

data providers; and a network of more than 75 international distributors. As a privately

held company, ESRI does not make its profits and financial statements public but the

continuing growth and expansion of the firm provide ample evidence of its commercial

success. In 2005, it was an organization of 2,900 employees, known internationally for

GIS software development, training, and services.



Despite the powerful influence of the founder-leaders Jack and Laura Dangermond on

ESRI‘s mission and culture, their day-to-day involvement with the company is low-

profile. They both have modest offices in one of the older low-rise buildings on the ESRI

campus in Redlands. There is a complete absence of any bio or photos of these two

pioneers and founder-leaders, either on the company's website or in its publicity

materials. They are both in their 60s. This low profile belies the major professional

achievements and the respect that Jack commands in the industry. Jack Dangermond is a

pioneer in spatial analysis methods and one of the most influential people in GIS. See

appendix 2 for Jack‘s professional bio and how others in the industry see him.



Products and Services



ESRI offers a range of products and services focused on GIS and driven by customer

need. Their software runs on different hardware platforms, from desktop use, mobile

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components, in-house main-frames, servers, and as a service over the web. The original

GIS software was designed for mainframes owned and operated by the large

organizations, while the latest release adds server platform functionality to GIS. These

products and services allow several layers of data to be ‗mashed-up‘ into a single multi-

layered electronic visual map, in which the different layers of data can be switched on or

off the display, depending on the needs of the various users of the system. The systems

are designed to solve certain problems within their virtual worlds by focusing on certain

information e.g. oil wells, flooding, logistical planning, etc. Several of the original users

from the 80s continue to use the product into the mid-2000s. While modifying the

products to adopt the newer technologies that have emerged over the past two decades,

ESRI remains committed to supporting the large established user base on whatever

product and version they happen to be using.



The original mainframe code based product was ArcInfo. It evolved in the era of mini-

computers and Unix based workstations, and in the PC era, ArcView was introduced with

Microsoft Windows interface. In the late 90s, in response to the Internet, ArcGIS was

launched. Internet also offered the opportunity to integrate various products that used to

be sold separately before, into a suite called ArcInfo. ArchInfo contains pieces of

software that could still be purchased separately, like ArcView for visualization tools,

and ArcEditor that allowed data to be edited, manipulated and subjected to geo-spatial

analysis. In 1998, ArcData Online was launched for internet mapping and data. ESRI is

continuously adding new features and functionality to the core GIS product to meet the

customer needs, and releases a newer version of the flagship product roughly every

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eighteen months. The latest release was at the 2006 user conference, the ArcGIS 9.2,

which is essentially ArcInfo product functionality delivered over the Internet from a

server.



The pricing for the products and services was varied, depending on the customer, usage

and other factors. Users could buy packages software that they would own, bundled with

support and service including training contracts. Users could also simply use ESRI

software or services as a paid-service to solve specific problems. For example, a large

retails like Sears could buy and install ArcInfo product as packaged software. It could

then use it for several in-house operations decisions with a geographical component, for

e.g. for routing delivery trucks most efficiently between the various distribution

warehouses and the store locations. A smaller business, say a delivery service using a

dozen trucks to service clients within a specified area, does not need to invest in building

and maintaining an ArcInfo system. Such a firm could still plan its delivery routes using

spatial analysis purchased as a service from ESRI either through the ArcGIS Server based

applications for route-planning or by using an online product like the Business Analyst,

that can solve the problem with better data analysis than would have been possible

without the technology.



ESRI products are used at two levels – there is the final application for users to simply

use and there is a developer aspect to the products where the customer‘s developers need

to be able to use Java and other tools to develop applications on the ESRI system for the

final end-user customer. For example, a county land use office may have a GIS system

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and GIS developers that create applications on the GIS system for the city planners and

citizens who actually use the final output. This developer tools aspect of GIS creates

many unanticipated uses of the products, and these place a demand on ESRI for

providing additional support and development over time. One of the challenges of

product development is to understand these unanticipated uses. To get close to the

customer, ESRI hires product engineers from the user community. They bring the

language and user-centric understanding of the business problems that the technology is

supposed to address. See appendix 3 for a detailed list of ESRI products and services and

their descriptions.



Organization



With its focus on creating technology, ESRI has adopted a project based organization

with several teams handling specific aspects of the technology. The top management of

ESRI consists of a small team reporting directly to Jack Dangermond. Most of them have

been with ESRI for over a decade, and some for over two decades. The organization chart

in appendix 4 shows this top layer of management at ESRI. There is more of a team

approach to handling all responsibilities than is evident from the chart.



Marketing



Linda Hecht started her career with ESRI eighteen years ago, just after she graduated

with a degree in geography, from University of California in Los Angeles. By 2006, she

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had risen through the company ranks to become the director of marketing. Along the

way, she acquired a masters degree in management and was placed on the board of

directors of Geospatial Information Technology Association. She said: ―My marketing

mission is to educate the world about the Geographic Information System (GIS)

technology we create to help organizations make better, more informed decisions by

adding the spatial component to their businesses.‖ 3 She leads 180 marketing

professionals, organized into seven broad teams, three strategic and four tactical, who

market the 40 products and services ESRI offers, to 40 industries worldwide. The three

strategic groups—Corporate Marketing, Industry Solutions, and Product Marketing—

develop marketing plans, strategies, campaigns, and promotional programs to build brand

equity and effectively market ESRI products and services. The four tactical groups—

Events Marketing, Marketing Communications, Marketing Operations, and Technical

Marketing—execute the plans and programs developed by the three strategic groups. The

tactical groups are responsible for managing ESRI events (seminars, trade shows,

conferences), developing ESRI‘s presence on the Internet, generating exposure through

the press and ESRI publications, implementing direct mail and e-mail campaigns, and

developing product demonstrations and benchmarks.



――Half or more of what we do is building a relationship with our customers‖, Hecht says.

―It helps build a relationship, and then we can upsell them.‖ That ―half or more‖

encompasses a lot of efforts. ―ESRI‘s marketing strategy relies on a number of customer

touches every year. These include ArcNews, a quarterly general-interest print publication


3
    Reaching the world with your message. ASPATORE Books: Inside the Minds.
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for geographic information users; ArcWatch, a technical newsletter for more

sophisticated users of the global information systems; and a variety of permission-based

e-mail alerts, including conference notices and advanced-use training sessions.‖4 ESRI

also surveys its customers regularly and builds relationship with them by using the

information from the surveys. Customers can get a book just for completing an online

survey, and after they have filled the survey, ESRI has information to direct them to other

users in their area or to conferences that may be of interest to them.



In 2003, ―the level of qualified leads accepted by the sales force was just 2% -- there was

no organized way to divide leads up into those best for senior sales people, telesales

partners and so on.‖5 According to Linda, ―our sales force was overwhelmed with

activity we were generating from events and other standard marketing fare. But we had

no way to manage and track leads.‖6 Linda brought structure and systems to these

activities by using technology, specifically, Aprimo (an enterprise marketing

management system) to manage leads, and their own ArcGIS to analyze customer trends.

According to SalesForce magazine, ESRI raised its sales conversion rate to 30% over the

past (2003) year by using CRM Aprimo system to track a prospect‘s response through

each step and taking appropriate action.



―(ESRI) It combined data from a number of different sources, including licensing

operations, prospects databases, and files of people interested in receiving its

4
  In Getting to Know Them by Richard H Levy, published March 1, 2005, © 2006 Prism Business Media
Inc. downloaded from www.directmag.com/mag/marketing_getting_know/index.html (on 6/19/2006)
5
  Sales Force (Sept 2005, p14) www.salesforcemagazine.co.uk case study bridging the Gap: The gap in
question? Between sales and marketing at GIS vendor ESRI.
6
  Reaching the world with your message. ASPATORE Books: Inside the Minds, (p 113).
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communications. In all, ESRI whittled down 1.7 million records to 600,000 unique

customers. These customers were then slotted into highly targeted cross-sell, upsell, and

product information and use streams. …. capturing customer data on Aprimo‘s system,

ESRI has determined the CRM stream to place given customers into largely based on the

product purchased. For instance, ESRI‘s ArcSDE, a database engine, and ArcIMS, an

Internet master server system, often are used together. The database lets ERI cull those

customers who have one system and are likely candidates for the other. Cutting down

communications costs has beefed up ESRI‘s cross-sales effectiveness. The return on

investment for a recent ArcIMS sales campaign was 12-1, and for an ArcSDE effort 31-1.

With this systems starting between $6000 and $7000, that‘s not small potatoes.‖7

According to Linda, ―… Aprimo (allows me to go in and look at campaign results. I also

use our customer relationship management system, our accounting system, and web

trends to look at current data in those areas of the company. In addition, we use our own

GIS software (ArcGIS) to analyze customer trends by location.‖ These systems have

been key to ESRI handling its marketing more effectively than would have been

otherwise. Linda, Clint and Scott also communicate regularly through a Product Planning

Group that meets to set priorities and monitor the products and their links with the

markets.



Sales




7
  Computer world (marketing gets with the program by Drew Robb, May 24 th 2004
8 In Getting to Know Them by Richard H Levey, published March 1, 2005, © 2006 Prism Business Media
Inc. downloaded from www.directmag.com/mag/marketing_getting_know/index.html (on 6/19/2006)

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Sales function resides primarily in the regional offices, and with the partner network of

regional, national and global partner firms. Partnering is critical to the technology as

database companies, applications developers, resellers and others are needed to make the

GIS platform broadly useful and accessible. ESRI has about 1400 the domestic partners,

ranging from consultants (OEMs like Telecordia or Bell Labs who visualize and analyze

their telecom networks using GIS, and then sell to Telecom companies) to resellers.



Will ESRI be able to continue with its present strategy and be successful in the future?

After all, Google measures its success in eye-balls it attracts or advertising revenue, while

ESRI has been a debt free privately held company that has grown to be a world leader in

its field. The new world of geographically enabled internet will have room for all.




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Appendix 1a: TimeLine: Major Milestones

                                         ESRI Product Milestones




ESRI User Conferences




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Appendix 1b: Special Projects:

GIS consultants at ESRI have made themselves available from time to time to deal with
special projects that their unique technology allows them to address in a manner that
others can not. I describe two here.
   1. Wildfire in San Bernardino National Forrest in 2003 (verify):
        ESRI consultants used GIS maps to update information on the location of fires,
        wind and weather patterns, population areas, old growth forests and deadwood
        liable to ignite more easily, to provide high quality information to combat these
        fires. In addition, they also provided information to the press to allow for timely
        evacuations and keeping the affected public informed. Fire fighters arriving from
        different parts of the country to assist in fire fighting efforts could be deployed
        most effectively based on the analysis and information provided by the GIS aided
        services made available to them. Thanks to the disaster planning and preparation
        that had gone into gathering the information on everything from vegetation
        patterns to population areas and topography, the fire fighting was a much more
        coordinated and systemic effort that led to the containment of fire with minimal
        loss of life and property. A similar wild fire in San Diego County a few years
        earlier, without planning and GIS aided analysis led to several deaths and
        significant loss of property as well.
   2. NASA shuttle debris recovery effort:
        When the NASA shuttle Columbia went down in a fiery accident in 2003, the
        pieces of the shuttle were scattered over an area of several hundred kilometers.
        GIS teams of specialist consultants worked in collaboration with several federal
        government agencies, including NASA, to the plot the geographical path of flight
        and accident and possible patterns of distribution of the debris over the maps of
        the area. Overlaying the information on debris scattering with the topographical
        details of the terrain, the GIS software provided the information necessary to plan
        the recovery effort. The kind of terrain or debris the recovery crew may expect to
        find determined the size, expertise, tools and kind of recovery crew that needed to
        be assigned to the area. This recovery effort yielded tens of thousands of pieces
        of the shuttle to be recovered efficiently by guiding the recovery effort.
   3. Some other strategic projects supported by ESRI are:
        In 2001, following the September 11 World Trade Center tragedy in New York,
        the American Geographical Society (AGS) acknowledged and commended
        ESRI's service to New York City. The following year, software from ESRI played
        an instrumental role in managing security at the Winter Olympics in Salt Lake
        City, Utah. Internationally, in 2003, a Severe Acute Respiratory Syndrome
        (SARS) Web site was developed by ESRI China (Hong Kong) Ltd, to keep Hong
        Kong residents up-to-date and aid health officials in tracking and studying the
        disease. Based on ArcIMS, the site displays color-coded maps and data of Hong
        Kong and other regions with SARS infections. ESRI also provided teacher
        training to Iraqi nationals from the Ministries of Planning, Mines, Housing and
        Construction, and Water Resources in support of the country's redevelopment
        efforts, as part of the US government‘s intervention in Iraq. These are just a
        sampling of ESRI‘s efforts in this domain of social service.

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Appendix 2: Jack Dangermond’s Bio

Jack grew up in Redlands, California when it was primarily an orange growing
community. He graduated with a bachelor of science in environmental science from
California State Polytechnic University in Pomona, California. He holds a Master of
Science degree in urban planning from the Institute of Technology at the University of
Minnesota and a Master of Science degree in landscape architecture from the Graduate
School of Design, Harvard University, where he worked in the Laboratory for Computer
Graphics and Spatial Design. Laura was also at Harvard and their partnership formed
while at the Laboratory. Jack also holds honorary doctorates from The City University of
London, University of Redlands, and Ferris State University. Over the last 30 years, Jack
has delivered keynote addresses at numerous international conferences, published
hundreds of papers on GIS, and given thousands of presentations on GIS around the
world. He is the recipient of a number of awards, honorary degrees, lectureships, and
medals including the 2000 LaGasse Medal for his notable contributions to the
management of natural resources, public lands, or other lands in the public interest by
the American Society of Landscape Architects, the Brock Gold Medal of the
International Society for Photogrammetry and Remote Sensing, the Cullum Geographical
Medal of the American Geographical Society, the EDUCAUSE Medal of EDUCAUSE,
the Horwood Award of the Urban and Regional Information Systems Association, the
Anderson Medal of the Association of American Geographers, and the John Wesley
Powell Award of the U.S. Geological Survey. He is a member of many professional
organizations and has served on advisory committees for U.S. agencies including the
National Aeronautics and Space Administration's (NASA) Science and Technology
Advisory Committee, the U.S. Environmental Protection Agency, the National Academy
of Sciences, the National Science Foundation, and the National Center for Geographic
Information and Analysis (NCGIA). In 2003, he met India's president, Dr. A.P.J. Abdul
Kalam, and Thailand's prime minister, Pol. Lt. Col. Thaksin Shinawatra, to discuss the
role of GIS technology. He also met with Dr. Jorge Batlle Ibanez, president of the
Republic of Uruguay, to discuss various national GIS initiatives. In recent years, in
addition to several key note speeches, he has also been a featured speaker at the U.S.
Department of State's Open Forum entitled 'A Conversation on Geographic Information
for Diplomacy, Development, and Homeland Security.'

What others think of Jack and Laura Dangermond

Matteo, the editor of www.gismonitor.com writes this about Jack and Laura
Dangermond:

          ―In a world dominated by ideology, faith, and narrow self-interest, in which we
          continue to devastate the environment and underfund education, I greatly
          appreciate Jack Dangermond's steady emphasis on rationality, scientific analysis,
          interdependency, collaboration, and social responsibility, and his strong support
          for environmental protection and education.



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          Though the leader of a company that produces sophisticated technology,
          Dangermond never gets lost in the technical details. His focus is always on the big
          challenges, on big ideas (one of his favorite words is "interesting"), and on
          people. ………Off-stage, too, Jack is personable and engaging. Despite the fact
          that ESRI now has more than 3,100 staff, he and his wife, Laura, are still
          intimately involved in every aspect of the company. When I was trying to figure
          out in which line to stand on Monday morning, to get my conference materials
          and then enter the huge room in which the plenary session was about to begin,
          Laura was on hand to give me directions. She also signs the company's checks
          and supervises the gardeners at the Redlands campus.

          Until a couple of years ago, when ESRI bought electric vehicles, every morning
          Jack loaned his Ford Taurus to the mailroom staff to deliver mail around campus.
          Recently, when a new sidewalk was being built, he supervised the pouring of the
          concrete. When I needed a book that was not currently on display in the ESRI
          Press area of the Exhibit Pavilion, a staffer told me that he would mail it to me,
          because "only Jack and Laura can authorize books to be checked out of
          inventory."8




8
 http://www.gismonitor.com/news/newsletter/archive/archives.php?issue=20060811&style=web&length=f
                                   th
ull#introduction (taken on Sept 20 2006 at 4:16pm)
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Appendix 3: ESRI products and services and their descriptions:

Products:

ArcGIS is an integrated collection of GIS software products for building a complete GIS.
ArcGIS enables users to deploy GIS functionality wherever it is needed in desktops,
servers, or custom applications; over the Web; or in the field.

ArcGIS Framework
Desktop GIS—ArcGIS Desktop GIS software products are used to compile, author,
analyze, map, and publish geographic information and knowledge. ArcGIS Desktop is a
scalable suite of GIS products that starts with ArcReader and extends to ArcView,
ArcEditor, and ArcInfo—the most powerful GIS product available today. Each product
exposes progressively more GIS capabilities. An extensive collection of desktop
extensions provides additional capabilities.

Server GIS—ArcGIS Server, ArcIMS, and ArcSDE are used to create and manage
server-based GIS applications that share GIS functionality and data within organizations
and to many other users on the Internet. ArcGIS Server is a central application server that
is used to build serverside GIS applications that run in enterprise and Web computing
frameworks. ArcIMS is a scalable Internet Map Server for publishing maps, data, and
metadata over the Web using standard Internet protocols. ArcSDE is an advanced spatial
data server for accessing geographic information in relational database management
systems.

Developer GIS—The ESRI Developer Network (EDN) is an annual subscription-based
program that provides software developers with the resources needed to build a wide
range of custom GIS solutions. EDN subscribers will receive the latest versions of
ArcGIS Engine Developer Kit, ArcGIS Server, ArcIMS, ArcSDE, and ArcWeb Services,
with a license that expires when their EDN subscription expires.

Mobile GIS—ArcPad coupled with a wireless mobile device that is location enabled is
widely used for data collection and GIS information access in the field. ArcGIS Desktop
and ArcGIS Engine running on laptop and Tablet PC computers are being used for field
tasks that require GIS data collection, analysis, and decision making.

GIS Web Services—ArcWeb Services offer a cost-effective way to include mapping and
location services in Web-enabled applications. Because data storage, maintenance, and
updates are handled by ESRI, ArcWeb Services eliminate the overhead of purchasing and
maintaining large datasets. An ArcWeb Services subscription provides you with instant
access to imagery and aerial photos, real-time weather and traffic incidents, extensive
demographic data, and much more. You can use ArcWeb Services in ArcGIS, or you can
use them to build unique Web-based applications.

Geodatabase Technology

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All these software products utilize geodatabase technology—the core ArcGIS geographic
information model and data management functions.

Services:

Consulting Services and Technology Solutions
ESRI Professional Services
Systems Integration Services
Developer Support Program
ESRI Enterprise Advantage Program: provides technical advisory and GIS strategy
consulting.
Business Information Solutions
Data Publishing Tools and Services
Web Services
ArcWeb Services
Business Analyst Web Services
Partner Solutions
Business Partners
Corporate Alliances
Corporate Hardware Partners




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Appendix 4:
Organization Chart Here

Need permission to release this.




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             ENVIRONMENTAL SYSTEMS RESEARCH INSTITUTE INC.
                        INSTRUCTOR’S MANUAL

• Case synopsis

Environmental Systems Research Institute (ESRI) is a privately held, debt free, company
that is a global leader in Geographical Information Systems (GIS) software used for
visualization and analysis of geographic data by institutional users across the globe. ESRI
has pioneered this technology for four decades as it pursued its founder leader Jack
Dangermond‘s mission to change the world by making it spatially enabled. Since 2000,
the world has changed. The new Internet companies have put electronic maps with live
data and interactivity on the internet enabled desktops of every user, for free. Jack sees
the Internet becoming ‗geo-enabled‘ as an opportunity, but it could also be a threat if
ESRI does not make the right moves. How should ESRI respond to this changing world?
The case describes ESRI, its leadership, management, products and services and internal
organizational structure, in order to facilitate class discussion of their strategic choices.


• Courses and levels for which the case is intended

This case is appropriate for MBA level courses on strategy, technological change, and
organizational change. It is good for covering related to topics: organizational resources
and capabilities, value chain analysis, maintaining first mover and competitive advantage
by adapting in the face of change.

• Teaching objectives

Competitive and first mover advantage. Value chain analysis to see how over time ESRI
has entered newer products and services that fall in different regions of a value chain.
Building capabilities from different resources: the GIS technology, a broad network of
partners and customers in different markets, established customer relationships, loyal
well-trained work-force, etc. Technological evolution, how GIS evolved and became an
industry and is changing with the advent of competition. How a company should respond
to external changes in order to maintain its competitive position by making the right
decisions with respect to its resources and capabilities, the investments in technology,
marketing, organizational structure, and how to define good business strategy.

• Theory application.

Value Chain Analysis to show the many aspects of ESRI products and services as where
they fall on the value chain. Resource based view of the firm and how complex resources
cannot be easily replicated. Founder/leader and their role in shaping the vision and
culture of the company, and organizational structure. (Barney, 1991, 1996, and
Christensen 1997 and Christensen et al 2000).

• Research methods
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  This case is ongoing with primary field based research and secondary archival data on
the company, including presentations by company executives. The present version is
based purely on archival data mostly from public sources and company web-site.

• Discussion questions :

1. What is ESRI‘s business?
      Electronic mapping, geographical databases and spatial reasoning based decision
aids.

2. What are the products and services offered by ESRI? Were they unique when ESRI
first started offering a particular product and/or service? How has that changed over
time?

        ESRI products and services were ground-breaking and original at the time they
were introduced, and it continues to lead the market with its mapping software
technology. From the history of the firm, it is also evident that these have been updated
and released in several versions since, as the company tries to keep up with the trends in
new technology. This is also because with experience and expertise, the company has
moved up the value chain. There can be doubt about whether these products are as unique
or not today since there are many new technologies in the market and ESRI is no longer
alone. The company maintains they are, especially since their customers continue to
reward them with business, and because other companies offering mapping technologies
do not offer the same back end package of supporting databases, and analytical tools to
support decision making by data manipulation. However, there are several other decision
aides that can use the data from the other mapping packages and provide the analytical
capabilities.

3. How have Jack and Laura influenced the company so far?

        Jack‘s vision is to drive a change in the world using GIS software. His long term
vision has sustained ESRI as a private company. He is instrumental in keeping the
company focused on his long term vision and not be worrying about the bottom line like
the firms who are answerable to Wall Street need to be doing. His modest ways have
created a culture where people who work at ESRI do not behave in the same manner as
those at similar technology companies. There is a real sense of the mission to change the
world, to participate in the community (fire-fighting to space-shuttle debris recovery) that
drives ESRI. This is all due to Jack‘s vision.

5. How is the competitive landscape facing ESRI changing? What are the technological
changes over time?
        Case needs further work on the competitive aspects and more details on the
evolution of technology. Since this is an ongoing research project, these will be provided
as it develops further.



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6. What are ESRI‘s unique resources and capabilities? Are these strengths or weaknesses
in the emerging environment?
        Resources and capabilities include: a unique leader in Jack, the private ownership
structure, the clear mission, the flexible organizational structure, the deep technology
base and knowledge that cannot be imitated, large locked-in customer and partner base
and a strong loyal employee base with a strong culture. A debate is likely on whether
these are strengths or weaknesses depending on how the competitive information leads to
the creation of the different possible future scenarios.

7. Is ESRI organizational structure an efficient and effective one?
        Debate on setting up an organization to meet the challenges of specialization and
coordination.

6. Assuming ESRI continues on its current strategy under Jack, what do you think the
future will bring?
        ESRI has a unique bundle of resources and capabilities. These are hard to imitate
or replicate, and the appropriation regime favors ESRI. ESRI cannot grow as fast partly
because they face the challenge of hiring the right talent. It is conceivable that the
company will continue to enjoy great returns into the foreseeable future with its current
strategy. On the other hand, with several new entrants to the electronic mapping business,
and an overwhelming customer preference for simplified software products, and heavy
innovation and investment in technology all over the world, there could be the leap-frog
phenomena where an upstart of a company will put together another unique bundle of
technical features that will make the ESRI product obsolete and make it appear
unnecessarily cumbersome. There is a chance that ESI will remain what Intel‘s Andy
Grove has called it (find exact source) ―a fishbowl company‖.

• References

     www.ESRI.com

     www.GIS.com

     Barney, JB (1991). Firm resources and sustainable competitive advantage. Journal of
           Management.

     Barney, JB (1996) The Resource-Based Theory of the Firm. Organization Science,
           Vol. 7, No. 5, 469. Sep-Oct., 1996.

     Christensen CM and M Overdorf, (2000). Meeting the Challenge of Disruptive
            Change, Harvard Business School Pubublication.

     Christensen CM (1997) The Innovator's Dilemma: When New Technologies Cause
            Great Firms to Fall.



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