ROIs Can Validate Your Library’s Value

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ROIs Can Validate Your Library’s Value

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A private law firm library saves attorneys time by quickly providing the information they need to win cases. A corporate library conducts market research to help develop a new product or service ahead of the competition. A court library provides judges with the data and analysis necessary for the delivery of justice. A county library helps citizens access market and financial data, so businesses can launch successfully. An academic library contributes to the success of legal education. Staff recognize these benefits or values created by their library, tangible or not. But what about their value in terms of dollars and cents? That knowledge may be the key to proving the worth of the library.

Creator

Robert H. Hu

Publisher

AALL Spectrum

Date

2002

Relation

AALL Spectrum

Format

RFC3778

Language

English, en-US

Type

Text

Identifier

AALLSpectrumOct2002at20

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public relations

H

ow does a library calculate and prove its worth? Information professionals know by heart that libraries and librarians are good values to the organizations and clients they serve. A private law firm library saves attorneys time by quickly providing the information they need to win cases. A corporate library conducts market research to help develop a new product or service ahead of the competition. A court library provides judges with the data and analysis necessary for the delivery of justice. A county library helps citizens access market and financial data, so businesses can launch successfully. An academic library contributes to the success of legal education.

stated, ROI is a cost-and-benefit analysis that determines whether money spent on the library produces a positive return. Using this measurement, the library calculates its expenditures — i.e., costs for book acquisitions, database subscriptions, computer and equipment maintenance, and staff time and compensation — versus its financial benefits -– i.e., savings in user time, consolidated licensing, market research and analysis, shortened product development cycle and reduction of wasted time. The sum of the expenditure and the sum of the financial benefits are compared to calculate the ROI rate. If the sum of the financial benefits outweighs the total expenditure, a positive ROI rate is reached; if the sum of the expenditure outweighs the sum of the financial benefits, a negative ROI rate is achieved. For instance, when the total of a library’s financial benefits equals $150, and the total of the library’s expenditure amounts to $100, the library receives a ROI rate of 1.5. If the numbers of the library’s financial benefits and its expenditure in the above example are reversed, then the library gets a ROI rate of 0.67 From an investor’s perspective, the ROI . rate is easy to understand: a $1 investment in a library that returns $1.50 is an investment that paid off; by contrast, investing $1 and receiving only 67 cents in return is a failed investment. Amelia Kassel’s “Practical Tips to Help You Prove Your Value” in the May/June issue of Marketing Library News, available at http://www.infotoday.com/mls/ may02/kassel.htm, provides a detailed description of the ROI method. What can the ROI rate do for libraries? In the for-profit setting, corporate executives and managing partners of law firms generally view libraries as overhead expenses, which can be cut or reduced to improve the balance sheet, especially during times of economic retraction. Even in the nonprofit setting, government agencies and state officials do not always consider public libraries as valuable and essential to their missions and will therefore look for ways to cut library budgets. If the libraries can show a positive ROI rate, they will have an effective marketing tool at their disposal when it comes time to prove their value to the parent organizations or clients. As a recent ROI study by the BNA library staff demonstrated, a $1.26 ROI rate
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Staff recognize these benefits or values created by their library, tangible or not. But what about their value in terms of dollars and cents? That knowledge may be the key to proving the worth of the library.

ROIs Can Validate Your Library’s Value
by Robert H. Hu

Economic Justification: An Increasing Necessity
Many libraries today face a daunting challenge of having to prove their worth in the face of electronic information and access. Increasingly, libraries must demonstrate to their parent organizations or governing boards that their sheer existence (let alone growth) is justifiable in simple terms of economics. The challenge becomes even tougher in the world of private law firm or corporate libraries and in times of economic hardship. Corporate downsizing. Law firm layoffs. University budget cuts. Revenue shortfall in state legislative houses. All these factors affect how governing bodies and constituents perceive the importance of their libraries. Does the library help the bottom line? Or does its existence hurt the financial health of the company? T many libraries, it has become a matter o of survival to justify the economic worth of their existence to their organizations.

Return-on-Investment Rate: A Powerful Marketing Tool
Although there are many ways to prove the value of a library, the most straightforward and decisive approach is to conduct a “return-on-investment” assessment. Simply
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Multifaceted World - continued from page 18
as knowledgeable experts in their field, and they often speak for the whole library community. That reflects positively on AALL and on law librarians. It’s a very good example of where we’ve had impact beyond our own community by working collaboratively with other associations. I feel most excited about my role in the four-year effort to sponsor the international conference in Boston of the International Federation of Library Associations. Not only was that conference a huge success in attracting people from all over the world to Boston, it raised AALL’s visibility among librarians internationally. As an outcome of the IFLA conference, AALL and the International Association of Law Libraries are creating the first discussion group for law librarians at IFLA. They will meet for the first time in Glasgow, Scotland, this year. It raises our visibility internationally at a time when it’s very important for us to do that. Q. What are some of the challenges AALL will face in the next 10 years? A. There’s really one thing that comes to my mind: the Professional Development Program. Providing continuing education for our members is extraordinarily important and has a very high priority. However we haven’t really got that program on solid ground yet despite wonderful support from BNA Inc. We still face some challenges in terms of how we deliver programs. Are workshops at the local level the best approach long term? Are the program topics and the way we go about selecting program topics working as well as they should? How do we pay for and support this program on an ongoing basis? There’s a tremendous amount of price resistance from our members to paying registration fees over $200. The next executive director is going to have to bring some creativity to that effort. Q. Clearly the Association’s investment fund fluctuates somewhat, but the Association’s investment manager seems to have been successful in keeping the fund on an even keel. A. AALL has used the same investment strategy for a long time [with two different investment managers]. Funds are invested conservatively. We minimize the risks that we’re willing to take. We’re probably never going to out-perform the market, but at the same time, the losses will never exceed dramatically the stock market either. We have knowledgeable people at Chevy Chase Trust managing the portfolio, which has grown to almost $2 million today. Our current treasurer, Anne C. Matthewman, continues the commitment to this philosophy about the permanent investment fund that her predecessors put into place. So there’s no danger of our beginning to chip away at the value of that fund. Q. Are there any particular aspects of the job that you enjoyed, that you particularly looked forward to? A. Member interaction, without any question whatsoever. That’s the part I love the best because I find working with the members intellectually challenging. I am always working with different groups of people, and there’s an almost unlimited range of issues that people are interested in and concerned about. It really is a way of keeping in touch with what’s happening in the field. I love the fun of interacting with members socially and in business meetings as well. I think we have had some of the most fun at meetings where people are really engaged in what they are doing but at the same time not taking themselves too seriously. When working with Association leaders, I work with the best and the brightest in the field. They are the people who are also successful at home. They tend to be the leaders of their libraries, leaders of their chapters and leaders at the national level. It’s really quite wonderful to have a chance to work with people like that continually as I have for over 20 years. Q. Has this been a personally rewarding job? Are you pleased you took the job? A. Yes, this experience in AALL has been the best. It’s terrific to end a career in librarianship and association management on such a high note. I feel good about what I have contributed. I feel that my contributions have been recognized and appreciated by the leaders and the members. It’s wonderful to end a career and to leave a position where people respect you and express so much support. Kay Todd (kaytodd@paulhastings.com) is the senior legal researcher at Paul Hastings Janofsky & Walker LLP in Atlanta.

Public Relations - continued from page 20
helped convince the editor-in-chief and other BNA managers that their library is an economical and reasonable resource for the company to keep. (For more information about the BNA ROI study, please go to “Return on Investment” in Leadership Series Measurement at http://quantum.dialog. com/q2_resources/casestudies/.) university — is not in the business of making money, it is difficult, if not impossible, to translate many library functions, such as routing service and document delivery, into financial figures. This kind of environment may require a set of criteria different from those used for libraries in the for-profit setting. David Selden, law librarian at the National Indian Law Library/Native American Rights Fund, suggests that when calculating the ROI, the criteria for nonprofit libraries should include the following factors: the value of time saved with the help of a librarian or library; how one’s life was enhanced or enriched by understanding or learning from the library or librarian; and perhaps the amount of money saved by not having to consult with an attorney to understand or solve a problem. While corporate libraries have conducted RIO studies, such as the one by the BNA library, it is not clear whether any nonprofit libraries have embarked on this kind of investigation. However, the Social Law Library, a private, not-for-profit legal research institution in Boston, is seriously considering such a study. Proving and communicating a library’s value to its governing board or constituents is increasingly necessary for law libraries to survive and flourish. There are multiple approaches to demonstrate the value of a library, but the ROI rate, when determined and positively proven, may be the most effective tool for the library to market itself. Although the ROI is a time-consuming and difficult analysis, libraries should take advantage of this instrument. Robert H. Hu (robert.hu@ttu.edu) is head of public services at the Texas Tech University School of Law Library in Lubbock, Texas.

ROI in Different Library Settings
It is relatively easier to determine the library’s ROI rate if it is part of a for-profit organization. Under those circumstances, it is logical to assign a dollar value to a particular service or function provided by the library. However, a ROI analysis may be difficult to undertake if the library works in a notfor-profit setting, such as government, public or academic institutions. In those situations, where the parent organization — be it a government agency, a municipality or a

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Robert H. Hu, “ROIs Can Validate Your Library’s Value,” St. Mary's Law Digital Repository, accessed July 18, 2019, http://lawspace.stmarytx.edu/item/AALLSpectrumOct2002at20.

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