Alternate View of Library Budgets, A Living Document

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This is a presentation on: How to create a budget and business plan for your library? How to use your budget throughout the year as a focal point to support library services? and How to use strategic …

This is a presentation on: How to create a budget and business plan for your library? How to use your budget throughout the year as a focal point to support library services? and How to use strategic budgeting?

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  • 1. ALTERNATE VIEW OF LIBRARY BUDGETS: A LIVING DOCUMENT Janice E. Henderson, Esq., M.L.S.
  • 2. 2012 LAW FIRMS IN TRANSITION © 2012 ALTMAN WEIL, INC. „Yes‟ - Permanent Change 2009 Response 2012 Response Changei n % MagnitudeIn crease More price competition 42.4% 91.6% +49.2 2.2x More commoditized legal work 25.5% 83.6% +58.1 3.3x More non-hourly billing 27.9% 80.0% +52.1 2.9x Fewer equity partners 22.8% 67.6% +44.8 3.0x More contract lawyers 28.3% 66.2% +37.9 2.3x Reduced leverage 12.1% 57.7% +45.6 4.8x Smaller first year classes 11.4% 55.4% +44.0 4.9x Lower PPP/Slowdown in PPP 13.2% 47.7% +34.5 3.6x Outsourcing legal work 11.5% 45.5% +34.0 4.0x Lower / Hold line on associate comp 9.5% 21.5% +12.0 2.3x 2
  • 3. ALTERNATIVE BILLING ROBERT HALF LEGAL SURVEY 3 0% 10% 20% 30% 40% 50% 60% Flat or fixed project fees Volume discounts and discounted fees Blended hourly rates Capped fees 2011
  • 4. TRENDS FROM THE 2012 LAW LIBRARY SURVEY BAD NEWS / GOOD NEWS  Only 29% of firms in the survey reported recovering more than 60% of their online costs through chargeback.  For the second year in a row there was a double- digit increase in the number of libraries reporting an increase in their budgets. 4
  • 5. TRENDS FROM THE 2012 LAW LIBRARY SURVEY BAD NEWS / GOOD NEWS 2009 2010 2011 0% 10% 20% 30% 40% 50% 60% 5
  • 6. BLOOMBERG LAW 2012 LAW FIRM COST RECOVERY RESEARCH SURVEY FINDINGS  Law firms are recovering less of the research costs they incurred two years ago.  The downward trend in the amount of research costs is most dramatic at medium and small law firms.  The cost of legal research and client expectation/demand is what typically drives cost recovery policies, regardless of law firm size. 6
  • 7. BLOOMBERG LAW 2012 LAW FIRM COST RECOVERY RESEARCH SURVEY FINDINGS 0% 10% 20% 30% 40% 50% 60% % Decrease Large Medium Small 7
  • 8. POLL Have you ever done a business plan for your library? 8
  • 9. PREPARING THE BUSINESS PLAN & BUDGET “…budgets are prepared annually and not reviewed until the next budget cycle. This annual look at the budget is very ineffective in helping you reach your financial goals.” Budgeting Strategieshttp://www.entrepreneurship.org/en/resource- center/budgeting-strategies.aspx 9
  • 10. BUSINESS PLAN AND BUDGET PREPARATION Business Plan and Budget Preparation  Analysis of current year financial results  SWOT Analysis - strengths, weaknesses, opportunities and threats  Balanced scorecard - analysis of the impact of achieving objectives from a financial perspective, a customer perspective and an internal perspective, and on innovation and learning, together with identification of critical success factors and performance measures  Brainstorming - for alternative scenarios, opportunities, strategies 10
  • 11. “THE DIFFERENCE BETWEEN A TRADITIONAL BUDGET AND A STRATEGIC ONE IS THE PROCESS SURROUNDING HOW THESE PROJECTIONS ARE DERIVED”. STRATEGIC BUDGETING FOR LAW FIRMS,HTTP://WWW.RBZ.COM/NEWS-CATEGORY/THE-BOTTOM- LINE/STRATEGIC-BUDGETING-FOR-LAW-FIRMS/ Strategic Budgeting  Projected Revenue  Projected Expenses  Salaries  Bonuses  Marketing  Capital Expenditures  library automation systems  Operating Expenditures  Library Collection  Fee-based Databases  Projected Profit and Cash Flow 11
  • 12. “MANAGING IN A TIME OF CHANGE REQUIRES THAT LIBRARY DIRECTORS THINK STRATEGICALLY AND CHALLENGE ASSUMPTIONS ABOUT TRADITIONAL ROLES LIBRARIES HAVE PLAYED IN THE PAST.” STRATEGIC PLANNING AND PROGRAM BUDGETING FOR LIBRARIES, LIBRARY TRENDS, VOL. 42, NO. 3, PP. 420-47 (1994)  Library Collections  Technology  Library Services  Training Strategic Budgeting Questions 12
  • 13. SUPPORTING LIBRARY SERVICES 13
  • 14. BUSINESS PLAN SECTIONS  Executive Summary: Write this last.  Services: Describe what library services will be in the coming year. Focus on customer benefits.  Market Analysis: You need to know your market, customer needs, where they are, how to reach them, etc. 14
  • 15. BUSINESS PLAN SECTIONS  Strategy and Implementation: List the library improvements. Be specific. If you can track results.  Management Team: Describe the current library team and any requests for additional team members.  Financial Analysis: Budget 15
  • 16. STRATEGIC BUSINESS PLAN SAMPLE EXECUTIVE SUMMARY MISSION STATEMENT MARKET ANALYSIS GOALS AND OBJECTIVES  Customer Service  Quality Research and Reference Service  Collection Maintenance and Space Planning  Electronic Resources  Interlibrary Loans  Electronic Access – Sharepoint, Library Catalog  Staff Training  Technical Services 16
  • 17. STRATEGIC BUSINESS PLAN SAMPLE (CONT.) ACTION PLAN TO ACHIEVE THE STATED GOALS & OBJECTIVES  Customer Service  Quality Research and Reference Service  Collection Maintenance and Space Planning  Electronic Resources  Interlibrary Loans  Electronic Access - Sharepoint  Staff Training  Technical Services MANAGEMENT TEAM 17
  • 18. GOAL & OBJECTIVES SAMPLE  Electronic Access  Whenever appropriate, print subscriptions will be converted to electronic sources.  The format for conversions will include: ebooks, databases, Lexis Advance and/or BloombergLaw.  When deemed appropriate the library will maintain duplicate subscriptions to titles in print and their electronic version while the conversion is in process. 18
  • 19. ACTION PLAN TO ACHIEVE THE STATED GOALS & OBJECTIVES SAMPLE  Electronic Resources  In substituting an electronic source for a print subscription, the Director of the Library will make the decision with impute from the attorneys and the department head.  When making decisions the following parameters should be taken into account:  Ease of use of the electronic version.  Is the coverage the same as the print?  What is the demand of the print? Is the print continually off the shelf because of high usage?  Will it be more convenient to the practitioner to have access to an electronic version vs. the print?  In conversion discussions with the vendors, LexisNexis and BloombergLaw, a „free‟ period of use for the titles will be included in the contract or a print discount will be negotiated for the remaining period of the print subscription. 19
  • 20. WHEN AND HOW DO CORPORATIONS PLAN THEIR BUDGETS?  Budget discussions begin in August.  Every budget must start at zero (Zero-based budgeting).  Each and every cost is added until the total budget needed is identified.  Last, paring down begins.  Budget is signed off in November. 20
  • 21. POLL Have you ever used zero-based budgeting? 21
  • 22. REASONS FOR ZERO BASED BUDGETING VS. TRADITIONAL BUDGETING  Zero based budgeting allows resources to be used based on needs rather than the traditional model.  Managers will become more efficient and search for ways to improve their operating procedures instead of relying on funding based on previous performance.  It can aid in finding areas that are expensive and indicate more cost effective ways of dealing with the problem. 22
  • 23. USE OF ZERO BASED BUDGETING VS. TRADITIONAL BUDGETING Identify which „Fixed‟ costs will be in the budget.  Print Collection  Electronic Resources  Fixed Fee Databases  Online Databases  Library Supplies  Professional Memberships for Staff  Professional Development / Training for Staff 23
  • 24. USE OF ZERO BASED BUDGETING: BREAKDOWN Expense Categories by Department  New Titles or Monographs  Print Titles  Electronic Titles  Continuations / Looseleafs  Reporters, Statutes & Regulations  Print Titles  Electronic Titles  Journals  Print Titles  Electronic Titles  Fee-based Database (examples)  Knowledge Mosaic  D&B  Pacer  Intelliconnect  HeinOnline  Fastcase  Online Databases  Lexis.com / Lexis Advance  Westlaw.com /WestlawNext 24
  • 25. ACCOUNTING PARENT / CHILD CATEGORIES Library – Parent Tax – Child  New Titles or Monographs  Print Titles  Electronic Titles, i.e. ebooks  Continuations / Looseleafs  Reporters, Statutes & Regulations  These can be depreciated.  Journals  Print Titles  Electronic Titles  Electronic Resources  RIA Checkpoint  Intelliconnect – Standard Federal Tax Reporter  eBooks 25
  • 26. TAX COLLECTION ANNUAL BUDGET - $200,000 January New Titles: $1,200 Continuations: $5,000 Reporters/Statutes/R egs.: $600 Journals: $2,800 Electronic Resources: $3,000 26
  • 27. MONTHLY / ANNUAL COMPARISON Annual January % New - Print Titles $2,000 $700 35% New - Electronic $26,500 $500 1.89% Continuations $50,000 $5,000 10% Reporters, Statutes & Regulations $9,000 $600 6.67% Journals - Print $10,000 $2,000 20% Journals - Electronic $37,000 $800 2.16% Electronic Resources $65,500 $3000 4.58% Total $200,000 $12,600 6.3% 27
  • 28. USING A PROJECT MANAGEMENT APPROACH, LAW FIRMS ARE BEING MORE TRANSPARENT ABOUT THEIR COSTS WITH CLIENTS. AT THE SAME TIME, BY ORGANIZING ALL THE COMPONENTS OF A SINGLE CASE INTO ONE PLACE, LAW FIRMS SAY THE STRATEGY IS HELPING THEM BECOME MORE EFFICIENT. NASHVILLE BUSINESS JOURNAL HTTPS://MARKETCENTER.BAKERDONELSON.COM/FILES/UPLOADS/DOCUMENTS/NBJ%20BAKER% 20MANAGE%2009-28-12.PDF Project Management results in:  more effective planning,  cost control,  resource allocation and  appropriate risk management throughout the duration of a case/project, giving project team members the structured tools to make deliberate, fact-based decisions. [ACC PRIMER – Legal Project Management http://www.acc.com/advocacy/valuechallenge/toolkit/loader.cfm?csModu le=security/getfile&pageid=1293786&page=/index.cfm&qstring=&title=A CC%20Legal%20Project%20Management%20Primer] 28
  • 29.  Start the budget process early.  Seek out those individuals who know the direction the organization will take in the coming year.  Review and track the budget monthly.  Develop month‐by‐month charts of expenditures (% for total) for each category.  Track expenditures at a finer level. 29
  • 30. ALTERNATE VIEW OF LIBRARY BUDGETS: A LIVING DOCUMENT 30