Environmental Systems Research Institute Inc. (ESRI) History

Company Perspectives:

We at ESRI believe that better information makes for better decisions. Our reputation is built on contributing our technical knowledge, our special people, and valuable experience to the collection, analysis, and communication of geographic information.

Key Dates:

1969:

Jack Dangermond and his wife, Laura, establish the Environmental Systems Research Institute (ESRI) with $1,100 of their own savings.

1973:

ESRI is incorporated.

1981:

ARC/INFO, ESRI's first commercial GIS application, is released.

1989:

A $10 million contract is received from the United States Defense Mapping Agency (DMA) to build the Digital Chart of the World (DCW).

1996:

Sales reach approximately $170 million.

1997:

GIS World names ArcView GIS and ARC/INFO as the world's two most widely used GIS software applications.

2001:

ESRI plays an important role in the cleanup, rescue, and recovery operations following the September 11 terrorist attacks.

2002:

ESRI Business Information Solutions is formed.

Company History:

Headquartered in Redlands, California, Environmental Systems Research Institute Inc. (ESRI) is a privately held software company specializing in the development of geographic information systems (GIS), which allow users to see visual depictions of their data by incorporating it into maps. ESRI prides itself on its independence and the fact that it carries no debt. In addition to its headquarters, which includes research and development facilities, ESRI serves customers in 220 countries worldwide via 11 U.S. regional offices and 75 international distributors. ESRI's customers span virtually every industry and include all levels of government and business. Its clients include the Central Intelligence Agency, all U.S. Military branches, the Department of Homeland Security, hospitals and healthcare systems, Fortune 500 companies, and many small businesses. With its many applications, ESRI's software can guide military troops; locate lost hikers; find space shuttle debris; document public health concerns; study the effects of global warming; determine where to place schools, roads, fire stations, and restaurants; calculate the most efficient routes for emergency and delivery vehicles; visualize water districts and utility systems; display crime statistics; map the bodies of humans and animals to treat disease; develop effective building floor plans; and more.

1960s-70s: Origins and Early Years

ESRI is the brainchild of Jack Dangermond, considered by many as the father of commercial GIS. A native of Redlands, California, Dangermond earned a Master's degree in urban planning from the University of Minnesota, followed by a Master's degree in landscape architecture from the Harvard School of Design. In the December 16, 2003, issue of The Press-Enterprise, writer Phil Pitchford highlighted a few significant points about Dangermond's academic career: "While at Cal Poly, Jack Dangermond pondered how computers that filled a room could help landscape architects with plant selection, his brother said. He fancied that a computer programmed to understand soil conditions in certain areas could produce a list of plants that would grow there. At Minnesota, he researched how computers could aid in planning, especially in regard to the environment."

At Harvard, Dangermond became more intimately involved with computers. In the mid-1960s, he landed a job keying consumer survey data onto punch cards and entering them into a mainframe computer. Ultimately, he was inspired to create a software tool for depicting data in a visual way.

In a 1996 article in Forbes, Dangermond said: "The idea was to display data in spatial relationships. Think of this as routing--finding the best, and worst, and any other paths through a given universe of data. And seeing it change in front of you as you change variables." Even though he was a poor math student in high school, Dangermond read math books on his own and enlisted a mathematician to help him develop a software program for merging data with digital maps. This monumental step led to the birth of ESRI.

In 1969, Jack Dangermond and his wife, Laura, established the Environmental Systems Research Institute (ESRI) with $1,100 of their own savings. ESRI first operated from the Dangermond's historic home, which was surrounded by orange groves. Eventually, an office building was purchased in Irvine, California, and transported back to Redlands.

ESRI initially focused on the organization and analysis of geographic information. In its first year, ESRI participated in a project to develop an interstate from Milwaukee to Green Bay, Wisconsin. The company's first software customer was the Puerto Rico Planning Board. During these early years, ESRI became involved in several highly challenging projects. The company helped Mobil Oil to choose a location for the new town of Reston, Virginia, and also helped the City of Baltimore, Maryland, with redevelopment efforts.

During the 1970s, ESRI quickly found itself engaged in a wide variety of interesting projects with government agencies at the local, state, and federal levels. In 1970, San Diego County, California, chose the company to develop the Polygon Information Overlay System (PIOS). The following year, ESRI was involved in designing the Land Use Planning and Management System for the City of Los Angeles. After incorporating in 1973, ESRI continued to receive lucrative contracts, including one for developing the Maryland Automated Geographic Information System--the first commercially developed statewide GIS system.

Heading into the mid-1970s, ESRI pioneered a map-based information system for water resource management in Delaware. In addition, the U.S. Army Corps of Engineers praised the company as the only U.S. vendor capable of meeting its technical specifications related to land use and environmental studies. In 1976, ESRI applied GIS technology to the Mississippi River by working with the Great River Environmental Action Team, which consisted of the U.S. Army Corps of Engineers; the Fish and Wildlife Service; and the Department of Fish and Game in Iowa, Wisconsin, and Minnesota.

Commercial GIS Pioneer in the 1980s

During the 1980s, ESRI took its software applications to a new level when it released its first commercial GIS application in 1981. Called ARC/INFO, ESRI explained that the application "combined computer display geographic features, such as points, lines, and polygons, with a database management tool for assigning attributes to these features. Originally designed to run on minicomputers, ARC/INFO offered the first modern GIS. As the technology shifted to UNIX and later to the Windows operating systems, ESRI evolved software tools that took advantage of these new platforms. This shift enabled users of ESRI software to apply the principles of distributed processing and data management."

In tandem with ARC/INFO's release, ESRI hosted its first user conference in 1981, which was attended by a mere 18 people. The following year, ESRI performed its first commercial installation of ARC/INFO at the New Brunswick Department of Natural Resources. The application's first academic license was granted to the University of Maryland in 1983.

During the 1980s, ESRI became involved in projects of greater size and scope. In 1983-1984, the company worked with the United Nations Environmental Programme (UNEP) on several projects, including the development of high-resolution digital world maps. Around the same time, the State of Alaska Department of Natural Resources tasked ESRI with building an automated geographic database for the entire state.

In 1989, ESRI received a $10 million contract from the United States Defense Mapping Agency (DMA) to build the Digital Chart of the World (DCW). According to ESRI, the DCW was "the first 1:1,000,000-scale digital basemap of the world."

In addition to working on projects of a larger scale, ESRI's domestic and global market reach also was growing during the 1980s. In 1984, ESRI Canada Ltd. was established. Expansion unfolded at a rapid pace in the second half of the decade. Regional offices were established in Olympia, Washington, and Charlotte, North Carolina, in 1987, and ESRI France was established the following year along with another regional office in Minneapolis. The company concluded the decade with a bang, opening regional offices in Boston; Washington, D.C.; Denver; and Austin, Texas in 1989.

One of the decade's most important developments occurred in 1986, when ESRI unveiled a second product called PC ARC/INFO--a version of its software designed for individual personal computers. According to the company, PC ARC/INFO was a major milestone in that its release set the stage for future innovation at ESRI. Other noteworthy milestones included the establishment of ESRI's Instructor Certification Program for international distributors and its Business Partner Program in 1988.

Expansion and Modernization in the 1990s

During the 1990s, ESRI continued to experience phenomenal growth. In addition to doubling the size of its employee base, the company continued to open new offices. After establishing ESRI Italia in Rome during 1990, ESRI opened regional offices in St. Louis and California in 1991 and 1992, respectively. In 1995, offices were opened in Chicago, New York, Philadelphia, and Pennsylvania, along with another international office in Rotterdam, The Netherlands.

That year, ESRI employed about 1,200 people and was in the process of constructing new headquarters in Redlands--an X-shaped building spanning about 80,000 feet. The company held 28 percent of the GIS market and served major municipal clients including Los Angeles, Miami, Phoenix, Pittsburgh, and Seattle, and was helping countries like Japan to design entire towns. By this time, its ARC/INFO product had been updated 14 times since its 1981 release.

ESRI's strong growth during the 1990s was fueled by innovative new product introductions, as well as enhancements to existing applications. These included ArcCAD, as well as a new desktop mapping program called ArcView, which sold 10,000 copies in the first six months of 1992 alone. This was followed by the introduction of the ArcData GIS program. ArcData eventually became the Geography Network, which the company described as "a collaborative, multiparticipant system for publishing, sharing, and using geographic information on the Internet."

In 1994, ESRI's sales reached $150 million, supported by the release of applications for the business-to-business and business-to-consumer markets. The suite of available ESRI applications, which strengthened the company's market share, continued to expand during the mid-1990s, including programs like ArcInfo for Windows NT.

ESRI's sales reached approximately $170 million in 1996. That year, the company completed a new research and development facility and acquired Atlas GIS from Claritas. In 1997 ESRI initiated a project to reengineer all of its GIS software. Subsequently, GIS World named ArcView GIS and ARC/INFO as the world's two most widely used GIS software applications.

By 1998, ESRI employed approximately 1,800 workers and had sales of $278 million. That year, the company entered into a partnership with Bellcore to develop telecommunications software, as well as a software agreement valued at more than $20 million with the National Imagery and Mapping Agency (NIMA).

Other important developments during the 1990s included various enhancements and improvements in customer service, an arrangement with Oracle to resell the company's database products, and the formalization of the ESRI Conservation Program (ECP), which provided free software and training to worthy organizations. ESRI also started a national scholarship competition for high school students called GeoChallenge and co-sponsored the first GIS Day to increase awareness about the technology.

Mapping a New Millennium

At the dawn of the 21st century, ESRI served some 500,000 customers worldwide, including 2,000 city governments. The company's Redlands campus spanned 16 buildings. ESRI employed about 2,500 workers, including 1,000 at its California headquarters. It operated from 15 international offices and marketed products through distributors in 290 countries. Among the interesting projects at ESRI in 2000 was a $112 million initiative with Microsoft to incorporate mapping technology into different consumer products.

When the United States withstood devastating terrorist attacks on September 11, 2001, ESRI played an important role in the cleanup and rescue operations, earning recognition from the American Geographical Society (AGS). In addition to providing manpower and other resources to rebuild New York City's GIS infrastructure, ESRI helped to form the Emergency Mapping and Data Center, which used GIS technology to create maps of command posts, first aid stations, and continuing dangers, such as fires and debris.

At the time, ESRI led the industry with a market share of nearly 35 percent and 2001 revenues of approximately $427 million. In July 2002, the company purchased a two-story, 40,000-square-foot office building in Broomfield, Colorado. Situated on nearly 18 acres, 12 of which were undeveloped, the facility was formerly home to a traveling performance firm called Up With People.

ESRI acquired the Marketing Systems Group of CACI International, Inc., in 2002, leading to the formation of ESRI Business Information Solutions (ESRI BIS). The new group was devoted to serving ESRI's business and private sector clients. It also was in 2002 that ESRI partnered with Pasco Corporation to form ESRI Japan. That year, ESRI Hong Kong Ltd. was renamed ESRI China (Hong Kong), and ESRI China (Beijing) was formed.

Topping off 2002 were accolades from two government organizations, including a Certificate of Special Recognition from the National Association of Counties (NACO) for ESRI's role in the September 11 recovery efforts, as well as a Distinguished Public Service Award for Jack Dangermond from the U.S. Department of State's Open Forum for his positive role in domestic and world affairs.

By 2003, some 60 percent of U.S. counties used ESRI software. That year, approximately 12,000 people attended the company's annual user conference, hailing from 135 countries. This represented a significant increase from the 18 people who attended the conference in its first year. With 23 offices throughout the world, ESRI employed 2,750 people, about 1,400 of who worked at its headquarters.

In early 2003, ESRI acquired Alida, a French digital mapping company founded in 1996 by Marc Oliver Briat and Theirry Kressmann. ESRI announced plans to incorporate aspects of Alida's DataDraw application into its ArcGIS system.

It also was in 2003 that ESRI's technology was employed in southern Iraq and Kuwait, as part of a pilot project involving the U.S. Agency for International Development's Disaster Assistance Response Team. The project allowed humanitarian workers to collect data with laptop computers and create maps showing the location of residents who needed food and buildings requiring repair. Late that year, ESRI's software was used to map and fight wildfire outbreaks in the western United States.

ESRI achieved revenues of $497 million in 2003, capturing approximately 40 percent of the more than $1 billion GIS software market. Its nearest competitor, Intergraph, held about 10 percent market share in the early 2000s. With $1,100 and a clear vision of how GIS could benefit humankind, Jack and Laura Dangermond propelled a mere idea into a global software powerhouse that was poised for continued success well into the 21st century.

Principal Operating Units: ESRI Business Information Solutions; ESRI Japan; ESRI China (Hong Kong); ESRI China (Beijing).

Principal Competitors: Intergraph Corporation; Geographic Data Technology Inc.; MapInfo Corporation; Autodesk, Inc.

Further Reading:

• Bylinsky, Gene, "Managing with Electronic Maps," Fortune, April 24, 1989.
• "ESRI Creates a Global Community in San Diego," GEO World, August 2001.
• "Geographic Information Systems Center Maps a Future for Inland California," Press-Enterprise (Riverside, Calif.), March 7, 2001.
• Newman, Morris, "The Great Connector," Planning, July 1995.
• "One-to-One," GEO: connexion, November 2002.
• Pitchford, Phil, "Founders of California-Based Software Firm Maintain Low Profile," Press-Enterprise (Riverside, Calif.), December 16, 2003.
• Rothman, Matt, "Plotting Profits with Maps," California Business, September 1991.
• Smith, Tom, "Oracle, ESRI Team Up for Spatial Data," Computer Reseller News, September 18, 1995.
• Tucker, Darla Martin, "Redlands, Calif., Research Institute's Technology Puts Software Firms on Map," Business Press (San Bernardino, Calif.), December 18, 2000.
• Tucker, Darla Martin, "Software Partnership Puts Redlands, Calif., Business School on Map," Business Press (San Bernardino, Calif.), August 4, 2003.
• Young, Jeffrey, "Treasure Maps," Forbes, November 18, 1996.

Source: International Directory of Company Histories, Vol.62. St. James Press, 2004.

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