Instructor:

1
Measuring Library Costs and Benefits

• Instructor
• Jeanne Goodrich
• jeanne_at_jeannegoodrich.com
• An Infopeople Workshop
• Winter/Spring 2008

2
This Workshop Is Brought to You By the Infopeople
Project

• Infopeople is a federally-funded grant project
  supported by the California State Library. It
  provides a wide variety of training to California
  libraries. Infopeople workshops are offered
  around the state and are open registration on a
  first-come, first-served basis.
• For a complete list of workshops, and for other
  information about the project, go to the
  Infopeople website at infopeople.org.

3
Introductions

• Name
• Library
• Position
• What have you been asked to prove?
• Your librarys value?
• The value of a program or service?

4
Agenda

• Speaking the language of business
• Costs and benefits
• Peer comparison tools
• Benefits analysis studies
• Social return on investment
• Communicating effectively

5
Talk the Talk

• Make your case using business/management language
• What is valuation language?
• quantitative language
• qualitative language

6
Why It Matters

• Defining credible evidence-based advocacy
• Competition
• Accountability
• Transparency

7
Your Experiences

• What questions are you being asked by your
  community or decision-makers?
• How are you making budget or management decisions?

8
Effectiveness/Efficiency

• Questions to ask and answer regarding your
  librarys services
• Doing the right thing?
• Am I getting the right thing?
• Doing things right?
• Am I paying too much for what Im getting?

9
Focus

• Libraries tend to take an internal view
• inputs collections, staff, facilities,
  technology and the budget to provide
• Funders take an external view
• want assurances that library is meeting community
  needs and operating efficiently

10
Goodness vs. Demonstrable Value
11
Goodness Questions

• How good is the library?
• How good is the library management?
• What good does the library do?

12
General Evaluation Model
Individual
Community
13
Effects

• Impact - effect or influence of one person,
  thing, action or service on another
• Outcome - consequence, result or effect of an
  event or activity
• Value - the importance of something, perception
  of actual or potential benefit
• Benefit-the helpful or useful effect that a thing
  or service has
• Economic
• Social

14
Question for the Group

• What situations have you encountered where youve
  used or could have used quantitative analysis to
  make the case for your library, a library
  service, or program?

15
Making Your Case

• Within the library
• services
• materials
• staffing
• With policy and decision-makers
• To the public
• General advocacy

16
Return on Investment (ROI)

• A calculation that represents the percentage of
  return (a ratio) from the capital investment made
  in a project or activity.
• Net profit
• Cost of investment

ROI
17
Exercise 1

• Library Coffee/Gift Shop

18
Cost/Benefit Analysis

• A way of measuring the benefits expected from a
  decision, good, service, or activity, measuring
  the costs expected to be incurred in the
  decision, good, service or activity, and then
  seeing if the benefits exceed the costs.

19
Costs

• Seems easy, quickly gets complicated
• Back to that apple pie
• Direct costs
• Indirect costs
• Fixed costs
• Variable costs
• Actual
• Budgeted
• Standard

20
More Cost Considerations

• Observable, budgeted costs
• Staff costs
• Often seen as free
• Fewer productive hours available
• Costs of benefits
• Unit costing
• Cost analysis
• Workload analysis

21
Cost Data

• Where to find?
• How know if reliable?
• How know if appropriate?
• data benchmarking
• peer comparison tools

22
Data Benchmarking

• Benchmarking is an organized process for
  measuring products, services and practices
  against external comparators.
• Data benchmarking measures and compares data
  about a librarys inputs, processes, and outputs
  to assess performance. Data can include costs,
  productivity, quality, timeliness, and customer
  satisfaction.

23
Peer Comparison Tools

• California State Statistical Report
• Public Library Data Service Statistical Report
• Public Library Peer Comparison Tool
• National Center for Educational Statistics
• www.nces.ed.gov/surveys/libraries/
• BibliostatConnect
• connect.informata.com

24
Data Sources

• Statistics
• Work effort analysis
• Comparative information
• Managers dashboards
• Demographic information
• Studies/reports done by other community agencies
• Other ideas??

25
Exercise 2

• DVD Processing Cost Comparison

26
(No Transcript)
27
Benefits

• Direct
• Indirect
• Tangible
• Intangible
• Economic
• Social

28
Benefits What User or Community Saves
29
Economic Benefits
30
Social Benefits
31
Major Caveat

• Emphasis on social benefits has a strong
  emotional appeal, BUT
• it is difficult to find solid measurements that
  go beyond the counting of activities.
• Causal links cannot be made, so claims of social
  benefits are just thatclaims.

32
Exercise 3

• Benefits Matrix

33
Model Studies

• Over 25 valuation studies have been conducted
  during the last decade. These have evolved in
  sophistication and approach.

Worth Their Weight provides an excellent overview
of the field of library valuation and synopses of
seventeen studies.
34
ROI Calculators
35
Simple ROI Example

• Miami-Dade claimed a 6.31 total return on
  taxpayers investment in 1998-1999
• Total benefits of 154.4 million
• Total taxpayers investment of 24.6 million

Benefits included estimated value of borrowed
materials, questions answered, programs attended,
etc.
36
Pros and Cons

• What are the arguments for and against the simple
  ROI approach?
• How credible and compelling would you find this
  approach if you were a local decision-maker or
  community member?

37
Consumer Surplus Analysis

• This approach measures the value that consumers
  place on the consumption of a good or service in
  excess of what they must pay to get it.

38
Contingent Valuation Analysis

• An economic technique that measures the value an
  individual places on a good or service
• Willingness to Pay (WTP) for a good or service
  rather than do without it
• Willingness to Accept (WTA) payment to do without
  the good or service

39
Measuring Your Librarys Value

• Cost-benefit analysis methodology developed by
  Donald S. Elliott and Glen Holt
• Tested on a number of large, medium-sized and
  small public libraries
• Uses consumer surplus and Willingness to Pay
  approaches
• Surveys library users by web-based instrument and
  telephone interview

40
Sound Bites

• For each dollar of local tax support to operate
  our library, members of our community receive
  more than ____dollars in benefits from library
  services.
• A dollar invested in our librarys facilities,
  equipment and collections returns more than ____
  percent per year in benefits to our community.
• ____cents of a dollar of community benefits from
  library service typically goes to households and
  families. The remaining ___cents to educators
  and students.

41
Secondary Economic Impact

• Impact of library purchases and of purchases made
  by library employees locally
• Calculated using a variety of economic modeling
  tools such as RIMS (Regional Industrial
  Multiplier System)

42
Seattle Public Library

• Economic benefits assessment of the new Central
  Library
• Contributions to
• economic activity and business growth
• community character and livability
• image and identity
• Value as information source
• Measurements of circulation and door counts over
  eight year period

43
Value for Money

• Southwestern Ohios Return on Investment in
  Public Libraries
• 9 public libraries
• 2.56 to 1 in direct benefits
• 3.81 to 1 when Household Expenditure multiplier
  applied (people got to spend the money they would
  have otherwise spent on library materials)
• Conservative valuation used (sellback deflator)
• Indirect benefits noted but value not calculated

44
Social Return on Investment

• SROI is a measurement approach developed by
  expanding traditional cost/benefit analysis to
  include the economic value of cultural, social,
  and environmental impacts

45
Value Proposition

• A value proposition is what the customer gets for
  what the customer pays.
• Evaluated by
• Relative performance what customer gets
  relative to competitors
• Price payment made and access cost

46
Exercise 4

• Writing Value Propositions

47
(No Transcript)
48
Making the Case

• Public Agenda used the following slides based on
  their findings published in Long Overdue A Fresh
  Look at Public and Leadership Attitudes About
  Libraries in the 21st Century

They do a terrific job of developing the value
proposition.
49
Value Proposition

• A value proposition is a clear statement of the
  tangible results a customer gets from using your
  products or services.
• The more specific your value proposition is, the
  better.

50
(No Transcript)
51
(No Transcript)
52
(No Transcript)
53
(No Transcript)
54
(No Transcript)
55
Effective Data Presentation

• Know purpose or objective
• Know your audience
• Focus on quality, relevance, and integrity of
  your content
• The best way to improve your presentation is to
  get better content.
• Edward Tufte

56
Presenting Benefits

• Compare measurement to a perfect score
• Establish baselines and track over time
• Translate measures into language audience will
  understand

• 90 of all students are using the library
• 90 of students are using the library compared to
  80 two years ago
• Last year alone, students received the equivalent
  of 15,000 in Internet training at the library

57
Presenting Benefits, continued

• Make connections to other supportive community
  research

• The number of students using the library
  increased by 10 in the last two years in this
  same period, test scores in this community
  improved by 15.

58
Presentation Options

• Narrative description
• Tables
• Graphs and Charts
• Maps
• Spreadsheets

59
Another Example

• Colorado conducted a number of ROI studies
• Range of return on taxpayer investments 4.28 to
  31
• Reports developed for each participating library

60
(No Transcript)
61
Libraries How They Stack Up
OCLC Report, 2003 http//www.oclc.org/reports/2003
libstackup.htm
62
More Examples
63
Exercise 5

• Make YOUR Case

64
Evaluations

• Please remember to fill out the evaluation form
  before leaving.
• Thanks!!