Presentation on theme: "Financial Issues. Overview The economic factors of digital AdvantagesDisadvantages Cost factors Planning expenditure Opportunity costs Tendering and procuring."— Presentation transcript:
Overview The economic factors of digital AdvantagesDisadvantages Cost factors Planning expenditure Opportunity costs Tendering and procuring Sustaining the funding stream – revenue models
The economic factor Effective utilisation of resources in developing digital content and establishing digital collections: Start up costs of creating or purchasing digital content Implementation costs for establishing access Implicit costs in managing and maintaining digital resources in the future How do we define value and return on investment (ROI) in this environment? Who will pay, how will they pay and what will they buy?
Benefits of digital resources immediate access to high demand items ability to reinstate withdrawn materials potential to display materials in inaccessible formats e.g. glass plates or art works virtual reunification enhance digital images integration into teaching/learning materials enhanced finding aids through added metadata/descriptions reducing the burden or cost of delivery to enhance the prestige of the organisation the potential for presenting a critical mass of materials
Economic advantages of digital information The communication effect AccessFlexibilityE-commerce Production costs - usually lower Volume enhances Enhanced service availability - the 24/7 culture
Economic disadvantages of digital information Fair pricing Copyright and intellectual property Access versus ownership Infrastructure - high maintenance Authenticity Preservation - the digital dark age?
Cost factors Digitization cost – key factors: Nature of the original item to be digitised Digitization processes possible Information, content and delivery objectives More human intervention in any digitization process means higher costs. 10%Preparation 20%Digitization 30%Metadata creation 40%System development and delivery mechanisms
A model for cost versus benefits Deegan and Tanner (2002) Digital Futures: Strategies for the Information Age
Planning your expenditure Make sure you know what you want to do - clear goals Initial costing at bid stage: important to be realistic, even if it makes the project look expensive Cost EVERYTHING - even if you dont always pay for everything - overheads, staff time, Web connection etc Anticipate the on-going costs for sustaining the resource 2-5 years into the future - think sustainability Katzs Law: the cost of maintaining a database is equal to the cost of creation
Planning your expenditure Work out your core costs by estimating known commitments Consider a very small pilot to work out core costs that you do not know or have trouble measuring Many projects do not come with overheads - thus are a net drain on institutional resources Remember people will be your key cost driver not necessarily technology No-one comes free (even volunteers)
Opportunity costs Consider the opportunity cost of success! The opportunity costs are the strategic costs implicit in directing resources to an activity (X), therefore reducing finite resources that may be expended upon some other strategic activity (Y). The foregone benefits of the strategy Y constitute the opportunity cost of strategy X.
Tendering rules (EU) ~15% of the EUs GDP is represented by public sector spending - therefore should be spent in the EU. Tender notices have to be published in the Official Journal of the European Communities (OJEC). The threshold levels are set in Euro (220,000), and equates to ~£150,000 for goods and services
Formal tendering rules Contracts may not be artificially split to make them fall below the threshold. European criteria for awarding tenders: The lowest price only The most economically advantageous tender – using various criteria such as price, period for completion, running costs, profitability, technical merit. If used, must state most economically advantageous method at point of tender advertising.
Buying big technology Create a decision analysis matrix Talk to users of existing systems and services Vendor assessment - will they be there in 5 years? Try to never: be the 1st customer to buy the product! buy a proprietary product that will not allow open systems access and interoperability!
Sustainability Planning What is sustainability? Big Picture: Meeting the needs of the present without compromising the ability of future generations to meet their own needs. For projects sustainability is: A product or process that can be maintained over a long period of time, especially after grant monies disappear, that is beneficial to stakeholders & the host institution.
Sustainability Planning What to sustain? Products Services Processes Expertise and knowledge People To sustain any of these requires focus and clear objectives. It also requires a cool head to decide what to not sustain!
Sustaining - Revenue models Advertising model: supported by advertising revenue Infomediary model: user data as revenue Merchant model: traditional retail model Affiliate model: financial incentives to affiliated partner sites Community model: users invest in a site (e.g. contribution of content, money, time, hosting) Subscription model: users pay for access to value added content (e.g. high resolution files, complete reports not summaries) Utility model: metered usage or pay-per-view