Demonstrating value and return on investment: the ongoing imperative

Information Outlook, March, 2003 by Roger Strouse

Library managers must determine what the organization's leaders look for in judging value. This can be accomplished through executive interviews or an executive library advisory board. Another tactic is to look around at the bestfunded or best-valued departments and find out what they do to demonstrate value. At any rate, before jumping into any data collection activities, it's critical that library managers make sure the information they're planning to collect will provide metrics that resonate with funders.

Collecting Tangible ROI Data

To accurately measure ROI, start with an understanding of the population being served. The universe of users should be broken down by active and inactive users to assess a utilization rate, as well as frequency of use among active users. A representative sample for the survey should be developed so that the conclusions reached are fully defensible and the data can be extrapolated to represent the full organization.

The other element of the user population that must be understood is the breakdown of functional areas and applications for information within the various departments. This is essential to design an effective questionnaire and to segment the results.

Use a questionnaire to identify any benefits that have resulted from using the library. A common example of a tangible benefit is labor savings. This can include time saved looking for and using information or time saved in the job because information was applied more effectively. For example, it used to take two weeks to identify a part for a customer, but by using X service, it now takes only one week.

Some other examples of tangible benefits are increased productivity, improved quality, increased sales, and shorter time-to-market. The resulting returns, easily understood and appreciated by decision makers, include reduced parts costs, speedier product launches, repeat business, savings in staff time, or a sale that would not otherwise have been made. In the academic world, some examples of tangible benefits might be reduced costs of course materials, quicker access to research materials by students and faculty, and increased publishing activities by faculty.

The specific questions asked of respondents in an ROI survey will depend on what metrics have been chosen to illustrate the library's value, but the following standard questions form the baseline for a survey of a corporate library's value (see Library ROI Questionnaire).

Benchmarks for Corporate Libraries

We have aggregated data from all our studies of end users into one normalized database, which we refer to as our Normative Database. Based on data in our Normative Database as of December 2002, the ROI for corporate libraries is very good. These data not only provide some general benchmarks but also illustrate how to calculate ROI from survey data. For the 21,661 users profiled, the ROI data provide the following benchmarks:

* Time saved: $35 per library use

Forty percent of all respondents report having saved time by using the library. That 40 percent report saving time in about 55 percent of library uses. The median number of hours saved is four. The average reported salary is about $39.93. Four hours times 40 percent times 55 percent times $39.93 equals a $35.14 salary equivalent savings per library interaction.