Industry Insights

Four Reasons Why It’s Time for Big Bets on Geospatial PPPs

A recent WGIC report Public-Private Geospatial Collaborations: Exploring Potential partnerships Models, examines the forces that are paving the way for the increased openness and adoption of public-private partnerships (PPPs) in the geospatial industry.

WGIC Secretariat June 15, 2022
geospatial PPPs - geospatial public private partnerships - WGIC

A recent WGIC report Public-Private Geospatial Collaborations: Exploring Potential partnerships Models, examines the forces that are paving the way for the increased openness and adoption of public-private partnerships (PPPs) in the geospatial industry.  

One wouldn’t deny that the accelerated digital adoption, forces of de-globalization, supply chain disruptions, and sustainability concerns made business executives pay close attention to the impact of these forces on their businesses and, more specifically, on their business models. These forces have necessitated continuous business model innovation and the need to examine the responsiveness and sustainability of those models. This blog enumerates four reasons why its high time geospatial stakeholders embraced new business models, especially public-private partnerships (PPPs).  

Reason One: Preparedness and Effective Response 

The clearest and most recent force is the global spread of COVID-19. To respond to the pandemic, not-for-profit organizations, government agencies, transnational institutions, and the private sector mobilized resources and technology to innovate, develop and deliver drugs/vaccines, medical equipment, safety and security measures on the one side, and digital technology for the smooth conduct of social, educational and economic activities on the other. The geospatial community developed billions of maps, apps, and dashboards to support global efforts. Reams of data were processed and analyzed and insights were disseminated in near real-time to manage the unprecedented situation.  

The response, however, came after the pandemic brought to stark focus the lack of preparedness, weaknesses in supply chains, and the inability to quickly and optimally place emergency response centers. It served as a clear message to all – when the scope of a global challenge is staggering, new ways of delivering services are necessary. More importantly, the situation called for greater preparedness so that an effective response could be enabled.  

Reason Two: The Fiscal Imperative 

The second imperative is the growing debt levels of nations. Periods of deficit spending are followed by periods of deficit and debt reduction. For geospatial organizations, especially national mapping and space agencies, the need to adopt new business models was a direct response to operational budget reductions. Budgetary decreases had the two-fold effect of not being able to deliver on national geospatial programs and slowing the integration of new technologies and processes into operations. 

To find new ways to continue or better deliver essential public good services, data, and knowledge, governments started working with private sector partners to explore such options as privatization, creation of special operating vehicles or agencies, and the contracting-out of services. These early experiments with new public service delivery included public-private partnerships (PPPs), primarily in large-scale transportation and construction projects. The geospatial community was not an early experimenter with formal PPP arrangements, but its members did adopt other transformative innovations, including open data, open-source collaboration, a focus on interoperability, and a clear call for efficiency and effectiveness through the mantra of “build once, closest to source, and use many times”. By embracing these innovations, the geospatial community created an environment conducive to new business models, especially public-private partnerships (PPPs).  

Today, in the face of the pandemic, fiscal deficits and debts are higher than nations ever faced before (Graph 1). According to the Institute for International Finance, record global debt levels will continue to rise through 2020 and 2021, and sharply declining revenues will make debt servicing more onerous despite lower debt servicing costs. The report predicted stabilization of debt levels post-2021 but expected that demand for expenditures in climate change, infrastructure, and healthcare would continue. These circumstances present both a challenge and an opportunity for the global business community: how best to continue our efforts in an environment of scarce resources and in the face of staggering global challenges? PPP shows the way.   

geospatial PPPs - global debt 2013 to 2020
Graph 1: Global debt topped $272 trillion in 2021. Sources: IIF, BIS, IMF, national sources 

Reason Three: Rising Costs, Falling VC Funding  

Another factor that underscores the importance of delivering new business collaborations is whether investments in geospatial will hold as high a priority as healthcare, infrastructure, and large-scale initiatives to transition to a carbon-neutral global market.  

More recently, the Russia-Ukraine war, the rising inflation leading to increased cost of borrowing, and the threat to food security is causing instability in global markets, leading to a contraction in capital markets. This increases the threat to levels of investment available to the private sector. A recent report by CBInsights indicated that global venture capital (VC) funding fell to $142.4 billion in Q1 of FY2022, down by a fifth from the previous quarter’s total. Further, the report predicted a continuous downward trajectory of private markets in Q2 of FY2022. As economic uncertainty lingers on and investors tighten their belts, global funding for Q2 is projected to decrease by 19% quarter-on-quarter. Further, the deal activity is expected to register a 22% drop from Q1 FY2022, a seven-quarter low for global venture deals (Graph 2).  

geospatial ppps - Venture funding 2018 to 2022 - 19% drop
Graph 2: Global venture funding trends. Source: CBInsights   

Against this backdrop, the global geospatial community may wish to proactively position itself for sustainability through business model innovation away from traditional approaches of relying on governmental contracting and procurement models. Particularly, business executives and governments could look to offer stability and predictability to venture capitalists by adopting PPP models, especially in long-term projects. 

However, the geospatial community will require a deep understanding of the contexts in which they propose to operate and develop models that go beyond simple models of return-on-investment and shareholder value. This will ensure that when PPPs are directed at delivering public good and public services, the lens also focuses on creating and delivering value to citizens.  

Reason Four: Openness to embrace PPP Models 

When one examines the national or specific contexts of PPP operation, it is observed that some jurisdictions are better suited, legislatively and ideologically, to embrace new models of public service and public good delivery.  

Over the past thirty years, many developed nations have experimented with several business models through which public services were delivered. Their legislative and regulatory environments have adapted to the new realities of fiscal constraint and have embraced the idea that the private sector is better able to adopt and implement rapidly changing technologies and business approaches. At the same time, it may appear that the legislative and regulatory frameworks in developing regions are opening up more slowly to new private sector-led business models. This situation has had the effect of limiting the adoption of trust in PPPs so far, but the rapidly evolving global business environment is pushing developing nations to open to the potential of PPPs like never before.  

In summary, there is no better time than now for geospatial PPPs. As countries continue to invest in geospatial infrastructure, climate resilience, health, and human security, the advantage of opting for PPP business models is more pertinent now than in the past. 

For more information on the potential for geospatial PPPs, available business models, and PPP use cases, download the complete WGIC report on Public-Private Partnerships. 


The original content of the blog post is sourced from the WGIC Policy Report “Public-Private Geospatial Collaborations: Exploring Potential Partnership Models”

Editor of the blog: Bhanu Rekha, WGIC