1. The Return on Investment of Collaborative Virtual Reference Service Jeffrey Pomerantz Lorraine Eakin School of Information & Library Science UNC Chapel Hill @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. Collaboratively sourced Third party … to collaborative and third party sourcing around shared processes and data Sourced

7. Typical Reference Expenditure Categories: Accounting Practices Operating BudgetEquipment BudgetMaterials Budget Supplies Leased Copier Charges Supply Room/Computer Supplies Departmental Supplies Current Services Travel Postage Phone/Infrastructure Printing Computer Services Bibliographic Charges Facilitiy/Equip/Furniture Transit/Parking Fees Fixed Charges Annual Recurring Charges Memberships Equip/Facility Contingency Equip/Facility Requests EDP Equipment Special Purchases/Projects ContentDM Credit Card Equipment Serials Standing Orders New Subscriptions Monographs General (Special Orders) Binding Processing Electronic Manuscripts Preservation Research

8. Typical System Level Expenditure Reporting: Structure vs Service Costing Books and Serials Publications Academic Affairs Library Health Sciences Library Law Library Binding Academic Affairs Library Health Sciences Library Law Library Salaries Academic Affairs Library Health Sciences Library Law Library Fringe Benefits Academic Affairs Library Health Sciences Library Law Library Wages Academic Affairs Library Health Sciences Library Law Library

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 Capital / 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., >1 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. Licensing costs Outsourcing costs Staff salaries & benefits New hardware purchases Telecommunication costs Print materials costs Electronic materials costs Training Facilities costs Program planning & management Cost Categories

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.cfm 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/documents/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/padeptedumerge.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/finalreport/. 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/costmodel/