Evaluation of the State Library of North Carolina

1
The Return on Investment of Collaborative Virtual
Reference Service
Jeffrey Pomerantz Lorraine Eakin School of
Information Library Science UNC Chapel
Hill ltpomerantz, eakgt_at_unc.edu
2
Recent library ROI studies
Florida 6.54 returned for every 1.00 invested
(Griffiths et al., 2004) South Carolina 4.48
returned for every 1.00 invested (Barron et al.,
2005) Southwestern Ohio 3.81 returned for every
1.00 invested (Levin, Driscoll Fleeter,
2006) Florida Pennsylvania numerous economic
and social benefits (McClure et al., 1998, 2000)
3
Older reference ROI studies
Murfin (1993) reviews several from late 1960s
early 1980s Cost-per-transaction range from 2.20
10.80 Some issues in identifying costs Length
of a transaction, idle time ? librarians
salary Librarians task analysis, reference
collection usage Portion of a reference
collection to charge to the reference desk
4
Rationale for Model

• These ROI studies focus on benefits (the return)
• Cost provides essential determinant of ROI (the
  investment)
• Few libraries know the true costs of their
  virtual reference service
• Accounting practices make accurate costing of
  individual services difficult to achieve
• Focus tends to be on costing librarys structure
  rather than services provided to patron
• Staff resistance (Marsteller, 2003)

5
Trajectory from vertical integration
6
to collaborative and third party sourcing
around shared processes and data
Collaboratively sourced
Sourced
Third party
7
Accounting Practices

• Typical Reference Expenditure Categories

8
Structure vs Service Costing

• Typical System Level Expenditure Reporting

9
Accounting Approach
To provide the most value to the patrons requires
being able to tie the costs of service provision
to the benefits received Approaches that have
been taken Traditional Functional
Costing Focuses upon the internal administrative
structures of operations Difficult to tie
activities to the value provided Activity-Based
Costing Focuses on cost drivers, those goods or
services that provide value to the patron and are
costly to produce More detailed attempt to tie
value provided to cost of providing that value
10
Activity-Based Costing
Steps to engage in ABC Costing Identify
operational activities Assign Resource costs to
activities Identify service/good/output Assign
activity costs to output
11
Breakdown of costs
Individual libraries / Entire collaborative Capita
l / Operational Start-up / Ongoing
12
Individual/Collaborative
Micro approach how an individual library can
begin to cost the virtual reference services
provided Line item approach detailed line item
activities that lead to overall costs Costs of
collaboration to be determined in future studies
13
Capital/Operational
Capital expenditures on resources like
equipment, buildings and land Typically long-term
costs that can be depreciated Associated with
resources that have a long-term (e.g., gt1 year)
useful life Operational expenditures on
resources that have a shorter-term lifespan Will
not be depreciated Associated with the relatively
short-term resources used to engage in creating
the organizations goods or services
14
Start-up/Ongoing
Start-up The upfront costs associated with
implementation of the service May be fully or
partially funded from a project budget,
external agency or grant that will not be
continued after the implementation is
complete Ongoing The ongoing operational costs
associated with the service after it goes
live Usually comes directly from the librarys
operational, materials, and equipment budgets
15
Costs Over Time - NPV
Net Present Value The value in terms of todays
dollar of cash flows that extend over a period of
time, such as months or years Uses the idea that
getting a dollar today is more valuable than
receiving that same dollar next year Inflation
would reduce the dollars value over time so next
years dollar is worth less than this
years Interest rates would allow you to take
that dollar and invest it, making todays dollar
worth more than next years Evaluating costs over
time require you to take into account that future
dollars spent cost less in terms of todays
dollar
16
Cost Categories
Licensing costs Outsourcing costs Staff salaries
benefits New hardware purchases Telecommunicatio
n costs Print materials costs Electronic
materials costs Training Facilities costs Program
planning management
17
Example large urban library
Excel file of model
18
Use of this model
Cost-Benefit Analysis Cost Effectiveness
Analysis Budgeting and Budget Planning Controlling
Operations
19
Citations
Barron, D. D., Williams, R. V., Bajjaly, S.,
Arns, J., Wilson, S. (2005). The Economic
Impact of Public Libraries on South Carolina The
School of Library and Information Science,
University of South Carolina. http//www.libsci.sc
.edu/SCEIS/home.htm. Griffiths, J.-M., King, D.
W., Tomer, C., Lynch, T., Harrington, J.
(2004). Taxpayer Return on Investment in Florida
Public Libraries Summary Report Florida
Division of Library and Information Services.
http//dlis.dos.state.fl.us/bld/roi/FinalReport.cf
m Levin, Driscoll Fleeter. (2006). Value For
Money Southwestern Ohios Return from Investment
in Public Libraries. Columbus, OH.
http//9libraries.info/. Marsteller, M. (2003).
Models for Measuring and Evaluating Reference
Costs. 2003 Virtual Reference Desk Conference.
San Antonio, TX. http//data.webjunction.org/ea/do
cuments/12674.pdf McClure, C. R., Bertot, J. C.
(1998). Public Library Use in Pennsylvania
Identifying Uses, Benefits, and Impacts Final
Report Pennsylvania Department of Education.
http//slis-two.lis.fsu.edu/cmcclure/padeptedumer
ge.pdf. McClure, C. R., Fraser, B. T., Nelson, T.
W., Robbins, J. B. (2000). Economic Benefits
and Impacts from Public Libraries in the State of
Florida. Tallahassee, FL Florida State
University Information Use Management and Policy
Institute. http//dlis.dos.state.fl.us/bld/finalre
port/. Murfin, M. E. (1993). Cost Analysis of
Library Reference Services. Advances in Library
Administration and Organization, 11, 1-36.
20
Additional information

• Project report
• oclc.org/research/grants/awarded.htm
• Cost model Excel file www.ils.unc.edu/jpom/costm
  odel/