Using Return on Investment in Collection Development Larry Nash White, Ph.D. NELINET Webinar April 15, 2009

Today’s Agenda What is Return on Investment? Benefits of using RIO Challenges of using ROI Applications to collection development

What is Return on Investment?

Benefits of using RIO

Challenges of using ROI

Applications to collection development

ROI Defined Return on investment (ROI) is simply defined as a ratio of resources (usually financial) or value gained or lost in a process/investment/result to the total amount of resources provided. A positive RIO indicates that more benefit than cost has been generated by the process / investment / result. A negative ROI indicates less benefit was generated than the resources provided.

Return on investment (ROI) is simply defined as a ratio of resources (usually financial) or value gained or lost in a process/investment/result to the total amount of resources provided.

A positive RIO indicates that more benefit than cost has been generated by the process / investment / result.

A negative ROI indicates less benefit was generated than the resources provided.

ROI Development in Libraries (1876) Cutter and cost benefit analysis. Outputs most commonly used then and today 1934 Rider and cost studies to maximize efficiency “ if we don’t assess things and do it correctly, then others from outside of the library will come and do it for us.” (Rider, 1934)

(1876) Cutter and cost benefit analysis. Outputs most commonly used then and today

1934 Rider and cost studies to maximize efficiency

“ if we don’t assess things and do it correctly, then others from outside of the library will come and do it for us.” (Rider, 1934)

Previous Research on using ROI in Collection Development MacEachern, R. (2001). Measuring the Added Value of Library and Information Services: The New Zealand Approach. IFLA Journal , (27, 4), 232-236. MacEachern discusses the use of creating value with collection resources as a way to justify collection allocations and investment in library acquisitions budgets. The model developed was used to demonstrate the value of collection use for the customer.

MacEachern, R. (2001). Measuring the Added Value of Library and Information Services: The New Zealand Approach. IFLA Journal , (27, 4), 232-236.

MacEachern discusses the use of creating value with collection resources as a way to justify collection allocations and investment in library acquisitions budgets. The model developed was used to demonstrate the value of collection use for the customer.

Previous Research on using ROI in Collection Development Carrigan, D. (1992). Improving Return on Investment: A Proposal for Allocating the Book Budget. Journal of Academic Librarianship , (18,5) p292-97, Nov 1992. Carrigan discusses the allocation of library acquisitions budgets, especially for monographs, focuses on the proportional use statistic (i.e., a value that compares circulation and holdings in a subject area).

Carrigan, D. (1992). Improving Return on Investment: A Proposal for Allocating the Book Budget. Journal of Academic Librarianship , (18,5) p292-97, Nov 1992.

Carrigan discusses the allocation of library acquisitions budgets, especially for monographs, focuses on the proportional use statistic (i.e., a value that compares circulation and holdings in a subject area).

Factors influencing use of ROI in library quality assessment today Resource allocations (justifying, expanding) Staff Knowledge, Skills, Abilities (KSA) Increasing stakeholder awareness / involvement with library strategic planning and decision making

Resource allocations (justifying, expanding)

Staff Knowledge, Skills, Abilities (KSA)

Increasing stakeholder awareness / involvement with library strategic planning and decision making

Factors influencing use of ROI in library quality assessment today Technology Technology use needing assessment Technology being used in assessment process Lack of innovation and research in performance assessment Always borrowing tools from others Behind the curve (5-10 year lag)

Technology

Technology use needing assessment

Technology being used in assessment process

Lack of innovation and research in performance assessment

Always borrowing tools from others

Behind the curve (5-10 year lag)

Factors influencing use of ROI in library quality assessment today Time Time to perform assessment processes Timeliness of assessment process and results being available Lack of consistency In assessment processes In interpretation and use

Time

Time to perform assessment processes

Timeliness of assessment process and results being available

Lack of consistency

In assessment processes

In interpretation and use

Factors influencing use of ROI in library quality assessment today More with less: increasing accountability and a diversity of evidence Cost / financial emphasis More quantitative data wanted by stakeholders / more qualitative data by profession

More with less: increasing accountability and a diversity of evidence

Cost / financial emphasis

More quantitative data wanted by stakeholders / more qualitative data by profession

Factors influencing use of ROI in library quality assessment today Wider scope/size service environment to assess and involve in process Dynamic alignment Using the right resources and knowledge Using the right assessment metrics / processes To answer the right accountability questions

Wider scope/size service environment to assess and involve in process

Dynamic alignment

Using the right resources and knowledge

Using the right assessment metrics / processes

To answer the right accountability questions

Potential Benefits of Using ROI Predictive costing tool for large-scale activities in decision making or planning of larger library systems (i.e. library information system, large capital expenditures, etc.) Primarily used in the areas of assessment of organizational performance or value creation after implementation.

Predictive costing tool for large-scale activities in decision making or planning of larger library systems (i.e. library information system, large capital expenditures, etc.)

Primarily used in the areas of assessment of organizational performance or value creation after implementation.

Potential Benefits of Using ROI Creates a fiscal assessment of service / product delivery Offensive and defensive uses Scalable

Creates a fiscal assessment of service / product delivery

Offensive and defensive uses

Scalable

Potential Challenges of Using ROI Lack of consensus in values used in constructing values Used primarily in defensive / reactive position in libraries

Lack of consensus in values used in constructing values

Used primarily in defensive / reactive position in libraries

Potential Challenges of Using ROI Not always reliable in intangible value assessment Not appreciated by libraries as an assessment tool

Not always reliable in intangible value assessment

Not appreciated by libraries as an assessment tool

How can we apply ROI to collection development? Developing allocations for acquisitions Evaluating success of previous acquisitions Defending allocations budget against reductions Provide evidence of value creation / impact on community of stakeholders Demonstrating efficiencies / values of the collection development process

Developing allocations for acquisitions

Evaluating success of previous acquisitions

Defending allocations budget against reductions

Provide evidence of value creation / impact on community of stakeholders

Demonstrating efficiencies / values of the collection development process

How can we apply ROI to collection development? Developing allocations for acquisitions Evaluating success of previous acquisitions Defending allocations budget against reductions Provide evidence of value creation / impact on community of stakeholders Demonstrating efficiencies / values of the collection development process

Developing allocations for acquisitions

Evaluating success of previous acquisitions

Defending allocations budget against reductions

Provide evidence of value creation / impact on community of stakeholders

Demonstrating efficiencies / values of the collection development process

How can we apply ROI to collection development? Developing allocations for acquisitions Evaluating success of previous acquisitions Defending allocations budget against reductions Provide evidence of value creation / impact on community of stakeholders Demonstrating efficiencies / values of the collection development process

Developing allocations for acquisitions

Evaluating success of previous acquisitions

Defending allocations budget against reductions

Provide evidence of value creation / impact on community of stakeholders

Demonstrating efficiencies / values of the collection development process

How can we apply ROI to collection development? Developing allocations for acquisitions Evaluating success of previous acquisitions Defending allocations budget against reductions Provide evidence of value creation / impact on community of stakeholders Demonstrating efficiencies / values of the collection development process

Developing allocations for acquisitions

Evaluating success of previous acquisitions

Defending allocations budget against reductions

Provide evidence of value creation / impact on community of stakeholders

Demonstrating efficiencies / values of the collection development process

How can we apply ROI to collection development? Developing allocations for acquisitions Evaluating success of previous acquisitions Defending allocations budget against reductions Provide evidence of value creation / impact on community of stakeholders Demonstrating efficiencies / values of the collection development process

Developing allocations for acquisitions

Evaluating success of previous acquisitions

Defending allocations budget against reductions

Provide evidence of value creation / impact on community of stakeholders

Demonstrating efficiencies / values of the collection development process

What ROI applications to collection development can you think of?

Other ideas / Questions Contact information: Larry Nash White 252-328-2315 [email_address]

Contact information: Larry Nash White

252-328-2315 [email_address]