Some major consulting firms like Deloitte, Accenture, McKinsey, and EY announced the launch of their space practice offerings over the past few weeks and months (I used to work at PwC's Space Practice before).

But, what is their strategy when it comes to Earth observation?

If you have read my stuff before, you already know my thesis on the importance of having a customer-focused, solution-driven intermediary advisory layer in EO, with an objective, independent and holistic mindset.

https://newsletter.terrawatchspace.com/i/70709819/my-spiky-point-of-view-towards-an-intermediate-advisory-layer-in-earth-observation

But, how would this play out? Which layer of the EO value chain would these consulting companies want to position themselves in?

Using the simple “Build, Buy and Partner” framework, could play out in one of three ways:

1. Build EO Capabilities (in-house)
2. Buy EO Capabilities (M&A)
3. Partner for EO capabilities (incl. investments)

1. Build

Some will want to build their own in-house EO capabilities to add EO to their firm’s DNA and potentially differentiate from their competition. This might make sense as most of these firms have strong data science and in some cases, geospatial capabilities.

Companies might already do this on a case-by-case basis, depending on the problem needs - using EO whenever needed but without really having an EO strategy. Some might see enough customer needs and interest to go ahead and create an EO strategy within a specific vertical.

Most consulting firms want to build end-to-end EO-driven solutions for their customers, whose problems they know very well. At some point in the building process, they might decide to switch to a Buy strategy, but those who start with a Build model are intent on owning their work

2. Buy

The technology consulting firms that do not want to reinvent the wheel in EO go with a Buy strategy, which typically involves acquiring a company and then incorporating its technology into its core offering. Technology licensing would also fall under the Buy model.

Firms that see enough customer demand for EO-derived products and those that cannot afford to wait (in the fear of losing out) turn to a Buy model. This is only a way of gaining time and postponing 'Build' as most products would need to be integrated into the core offering.

A Buy approach is more likely to happen on a vertical-specific basis than on a company-wide horizontal basis, although the latter could signify a complete shift in the firm’s strategy. I expect quite a bit of M&A activity in this space for EO in the next 3-5 years!

3. Partner

This is the easiest, least risky option of the 3 because it is also the most obvious way for companies to test the waters for a strategy, particularly for consulting companies that are always eager to partner. Even though this comes with the added threat of wasted ...

... time and effort on both sides consulting firms have a lot to gain from the new revenue streams that EO-related partnerships might open up, while EO companies, which are desperate for customer traction, can start evaluating their product-market fit.

While we are yet to see much activity in EO from the large consulting firms, some of these partnerships are already in place. And I am confident we will more coming up, especially as the investment arms of these large firms start making investments into EO companies.

This is a summary of my thoughts from last week's @terrawatchspace newsletter. Subscribe to receive this directly to your inboxes every Monday!

https://newsletter.terrawatchspace.com/p/last-week-in-earth-observation-april-10

Consulting Firms Strategy in Earth Observation

2 areas I wish we talk about more in Earth observation:

1. RoI and opportunity costs of using EO
2. Benchmarking and trade-offs in EO

Some thoughts and learnings from building EO adoption strategies for end-users from different verticals 🧵

1. RoI and opportunity costs

What is the value ($) of using EO? What does it bring to the organisation? How are the insights derived from EO more efficient than the method already being used to solve that problem? How many $ will this bring or save over the next few years?

Cost-benefits analysis of doing more than a pilot project?  The opportunity cost of not investing in EO today - whether it is to buy off-the-shelf products or build in-house? What is my organisation missing out on (in $), if I do not decide to integrate EO into the workflow?

2. Benchmarking and trade-offs

The "satellite costs are going down and we are launching more EO satellites than ever before" is a good attention grabber. But, what is important for the end-user are the real differences between a 1B $ govt mission and a 1M $ private satellite...

The benefits of using higher quality data, what they are missing out on by not using commercial data, the trade-offs of going with different data sources based on price, quality, reliability, accuracy etc., what risks they are taking and what this means for their bottom line...

Benchmarking different sensors, data sources and platforms based on criteria they care about, trade-offs for choosing between buying off-the-shelf EO-derived products vs building EO-derived solutions in-house or a mix of both, risks of outsourcing EO vs benefits of insourcing ...

All of this holds for most end-users I speak with, but particularly those who don't have in-house EO expertise (that is a big majority of them).

Unless we build efficient and effective ways to answer some of these questions, I wonder adoption of EO can ever be scalable!

2 areas I wish we talk about more in Earth observation

Had to chance to take a look at the @WorldViewSpace SPAC investor presentation - the biggest highlight is really how the presentation is all about Earth observation with very little mention of tourism, underscoring their pivot!

Few more things that caught my attention👇

1. Interestingly, the stratospheric EO capabilities of the company are highlighted as 'complementary' to existing EO infrastructure,(which I obviously subscribe to) - but curious how the public markets respond and whether they would understand/appreciate data 'complementarity.'

2. The difference in resolution capacity (5 cm vs 30 cm) is clear and persistent coverage along w/ ability to capture video is shown as a differentiator with satellites. But for what use cases? How frequently would customers need this data, in addition to other sources?

3. This is probably one of the clearest and simplest business model slides compared with other EO SPACs. But, how does it work? Would data be delivered directly to customer's cloud? Also, makes me wonder if they plan on archiving data from past missions and sell it separately?

4. Clearly, they expect stratospheric EO to be more of an on-demand project model rather than something customers would sign up for the long-term - unlike other satellite EO companies which focus on winning some large contracts (subscriptions) and many small contracts (projects).

5. Couple of partnerships in place - the one with SNC looks attractive (esp. in the defence context), while the one with Maxar looks opportunistic. Would satellite EO companies really want to go-to-market in tandem with another data source, viewed somewhat as a substitute?

6. Clearly, they have some flight heritage and have developed a technology with barriers to entry - although I did not see any mention of competitors Urban Sky or Near Space Labs, nor their overall differentiation in the market. Also, no mention of the existing weather balloons?

7. And, they do not seem to have a vertical-focused strategy, which is surprising as, I think, there as some obvious winning use cases for stratospheric balloons - instead they resorted to the typical EO market slide - "we can do many things", possibly to show a bigger TAM.

Bottomline: Somewhat of a surprising SPAC in EO that seemed to have came out of nowhere especially their complete pivot into EO from tourism (no surprises there).

But, does entering the EO market and showing a sat-complementary, multi-purpose pitch enough to convince investors?!

Go take a look at the presentation yourself and let me know what your thoughts.

https://www.sec.gov/Archives/edgar/data/1824153/000119312523024186/d380996dex991.htm