Demonstrating value and return on investment: the ongoing imperative

Information Outlook, March, 2003 by Roger Strouse

AS LIBRARY STAFF SIZES CONTINUE TO SHRINK AND BUDGET PRESSURES MOUNT, Libraries of all types are clearly doing more with less. Library functions have reacted to this dynamic in a number of ways, including refining the definition of their priority service markets; developing technology-reliant one-to-many information solutions; increasing user self-sufficiency; and redeploying staff and broadening job descriptions of Library workers. In all the "busyness" resulting from these Large-scale changes, however, strategic management initiatives, such as value and return-on-investment (ROI) measurement, have been pushed to the back burner.

With library budgets under scrutiny and executives looking to squeeze maximum value from every expenditure, demonstrating value should be a high-priority activity for all special library managers. Strategically thinking library leaders are preparing for the time when the holders of the purse strings ask the inevitable question: What is the return for the money I'm pumping into the library? The climate is particularly ominous for libraries that rely on overhead for their funding. Although overhead is declining as a primary method of funding special libraries, it is still the most common method. Nearly half (46 percent) of corporate libraries rely on budgeted dollars, as do 41 percent of government libraries and 25 percent of academic libraries. (1)

The State of Value Measurement

Precious little attention is currently given to development and collection of ROI data. Among the three primary types of special libraries (corporate, academic, government), corporate libraries are most likely to study their value impact, and academic libraries are least likely. But all three types rank these performance measurements low on their priority list.

It is not surprising that academic libraries spend less time on ROI measures, as they enjoy a high level of tacit acceptance of the value of libraries among their executives. However, given the budget constraints colleges and universities are facing, it would behoove even academic libraries to increase their focus on documenting their value proposition.

With changes occurring apace in all special libraries regarding the portfolios of services offered (reference, intranet/portal support and management, physical libraries, content management, etc.), it makes sense not only to measure the function's overall value but also to apply those value metrics to individual product and service offerings in order to justify resource prioritization. The importance of this kind of measurement applies equally to all special library types.

In the 2002 study The Changing Roles of Content Deployment Functions, participants were presented with a list of standard performance measurement metrics and asked to indicate whether they collect those metrics. The metrics most directly related to demonstrating value and ROI were collection and publication of data on cost savings, formalized tracking of how the service's users apply or use the content provided by the library, and formal quantitative ROI data collection. None of these measures was ranked higher than ninth, among the various performance metrics, by any of the special library functions.

Further, ROI metrics are collected in alarmingly low numbers. For corporate, academic, and government libraries, quantitative ROI data are the least often gathered value metric, collected by 7 percent, 2 percent, and 9 percent, respectively. This is a drastically underperformed strategic management activity, and the results are not much better for other value metrics (see Performance Measurement chart).

Suggested ROI Metrics

The ROI metrics of most value in justifying the library's budget are both quantitative and qualitative. Quantitative measurements for a special library's ROI include time saved by library users (when average salaries of users are known, this can be translated into actual dollar savings); the money users save by using the library instead of alternative sources; and revenue generated with the assistance of the library. These values can be expressed in dollar amounts and speak directly to the bottom line in a way executives can relate to.

Qualitative measures include the reliance of users on library-supplied content and services for decisionmaking; the level of decisions that the library supports; and the relative value of having the support of a professional information function that knows, in-depth, the subject matter the parent organization works with and applicable sources. Another key qualitative value metric revolves around the importance of information provided by the library that the user would not have found or had access to without the library's intermediation. Combining quantitative and qualitative data in the library's value Statement provides decision makers with objective, dollar-oriented bottom line data and then goes on to tell the story behind those data in users' own words.

The metrics of choice depend on corporate culture and executive mindset. A university dean many have a substantially different definition of value than a corporate executive, and even within the corporate landscape, organizations have different concepts of what constitutes value or ROI. Therefore, the specific metrics chosen by any given library should reflect what library management knows about the parent organization's leadership and how they think.