European GIS Market Reaches a Watershed

Frost &amp Sullivan projects an increase in Europe's GIS market

Although the market for Geographic Information Systems in Europe dipped slightly in 1995, U.S. companies and analysts are bullish about future business prospects.

The GIS software and services market in Europe was worth an estimated $431 million in 1995 or 4.3 percent less than one year earlier, according to a recent report by Frost & Sullivan, a research firm in Mountain View, Calif.

But that market is expected to rebound in 1996 with the privatization of telecommunications throughout Europe. The telecommunications services sector has traditionally been a large market for GIS. Also, demand is growing for desktop GIS in the business sector, the report said.

Frost & Sullivan predicts the European GIS market will grow by 13 percent to 14 percent in 1996. GIS could become a vital element in growing markets such as workflow automation, integrated network management, executive information systems and business process improvement.

Shiv Krishnan, president and CEO of Indus Corp., Vienna, Va., said his company has established an international division "in response to a growing demand [in Europe] for GIS services."

Krishnan said even though only 5 percent to 10 percent of the company's overall revenues comes from international clients, the company has received many requests from England and Germany for GIS software and services. For example, Indus is working with a large publishing house in Germany to track circulation and regional demographics.

Germany, England, the Netherlands and Belgium are the largest GIS customers in Europe. Germany accounted for one-third of the total European market in 1995. England, the second largest GIS market, is quickly losing market share to Germany. Tight government funding and the volatile European economy has led to the downturn in the European GIS market, industry analysts said.

But, Krishnan sees promise in the European market for U.S. companies. "The market in Europe is lagging three to five years behind the United States," said Krishnan. "U.S. companies have learned from mistakes in the past and will be able to use their experience to dominate the market."

Seppe Cassettari, president of GIS World Inc. and managing director of Geoinformation International in Cambridge, England, said Europe is trailing the U.S. in its acceptance of GIS technology. Some companies are reluctant to adopt the technology because it means changing their business operations.

Cassettari said the GIS market in Europe has been driven by U.S. companies.

Intergraph Corp. of Huntsville, Ala., and ESRI of Redlands, Calif., are the largest GIS players in the United States and abroad. Intergraph reports that 35 percent of the company's revenues come from Europe.

Even though the market is growing in Europe, analysts are unable to predict where the market will be five years. Cassettari expects to see more integration of GIS applications and information technology and more niche products in markets such as insurance and real estate.

Krishnan is counting on the European market to contribute 25 percent of his company's overall revenues.

The Frost & Sullivan study concluded that GIS suppliers should step up their marketing activities to educate businesses about how they can benefit from GIS technology.

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