Cost Management in Academic Libraries

1. Cost Management inAcademic Libraries "It is an unusual business that cannot say how much it costs to deliver any of its products; and I do not believe we will continue to get away with it." (J. Stephen Town) Roswitha Poll University and Regional Library Münster

2. General demand for transparency of costs Justification of expenditure Dwindling resources Rising prices New tasks and products in libraries Allocation of resources Outsourcing, insourcing Enlarging, reducing, introducing services Service-level agreements Reasons for Cost Management

3. What we could answer exactlyThe price of every document acquired or of one PC bought What we cannot answerHow much for one issue? Or for one reference question answered? How much does a student of philosophy cost per year?

4. Income (from different sources) Expenditure on collection building and maintenance on automation on the operating of the library on staff The new International Standard for Library Statistics (ISO FDIS 2789) contains many differentiations as to expenses, especially with regard to electronic media But it is all "expenses", and that means items that appear on bills or staff payrolls What we count by now

5. The recources consumed for one product can originate in different departments of the library (document delivery) can occur outside the library (central heating) even outside the institution (regional office for staff payrolls) can stretch over several years (depreciation) "Costs" are another thing The consumption of resources to acquire, produce or maintain goods or services within a defined period

6. Occasions for analyzing costs • Outsourcing services (binding) • Buying products (cataloguing) • Introducing new services (document delivery)

7. Funds Deutsche Forschungsgemeinschaft Partners Univ. and Regional Lib. Münster (chairing) Univ. and Regional Lib. Düsseldorf Univ. Lib. Paderborn Time 4/1997 – 7/1999 Method Activity-based cost accounting Product Handbook and SoftwareCeynowa, Klaus / Coners, André: Kostenmanagement für Hochschulbibliotheken. Frankfurt a. M.: Klostermann 1999. Project: Cost Management for University Libraries

8. Services Activities Costs Resources ... need ... Library Connection between Costs and Services ... Cause ... ... Consume ...

9. Products are nonmaterial Capacity costs are predominant Many costs are fixed Library Cost Analysis inPublic Service Institutions

10. Problems Availability of Data Standards for Depreciation Staff Costs: Real or Standardized Costs? Cost Analysis in Libraries

11. Which RESOURCESare consumed WHEREby which ACTIVITIES/PROCESSESwith what RESULT? Cost TypeAccounting Model of cost analysis RESOURCES Cost CenterAccounting WHERE ACTIVITIES Activity-BasedAnalysis RESULT? Cost UnitAccounting

12. Cost Type Accounting: The ascertainment and calculation of all relevant cost factors of a library within an accounting period Cost Center Accounting: The calculation of the costs of the various sections or departments of the library Cost Unit Accounting: The calculation of a single unit or performance of the library´s products/services Cost Analysis in Academic Libraries

13. Product 1 Product 2 Scanningdocuments Assigning to products Deliveringdocuments Settlingaccounts Dealing withclaims Cost Center 1 Cost Center 2 Cost Center 3 Cost types Electronicdocumentdelivery Cost accounting method Processes Processes Processes P1.1 P1.2 P1.3 P1.4 P2.1 P2.2 P3.1 P3.2 P3.3 Staff Collection Administr. Costs Operating Costs Depreciations

14. Adminstr. Costs911.288,96 DM Operating costs1.384.577,58 DM Depreciations990.760,15 DM 4 % 5 % 4 % ULB 52 CostTypes 21 % 66 % Staff costs 16.357.001,19 Staff costs16.357.001,19 DM Collection costs5.126.907,43 DM Collection costs 5.126.907,43 Administration Costs 911.288,96 Operating Costs 1.384.577,58 Depreciations 990.760,15 Total 24.770.535,31 Cost structure ULB Münster CostTypes Total Costs24.770.535,31 DM CostCenters Processes Products

15. 4 % 7 % 11 % 16 % 13 % ULB 44 CostCenters 39 % 3 % 3 % 4 % Subject librarians 2.711.426,05 Book processing 3.284.062,58 User services 9.640.321,81 Services as regional deposit library 916.855,38 Collection maintenance 635.936,12 Services for departmental libraries 751.252,30 Branch libraries 3.941.089,17 General administration 1.856.416,09 Data processing 1.033.175,81 Total 24.770.535,31 Costs of service areas CostTypes CostCenters Processes Products

16. Cost Centers

17. Recording loans CIR C U L A T I O N ULB 442Processes Cancelling loans Issuing user cards Monitoring loan periods Account of fines Delivery in electronic form etc. Analyzing the processes: Circulation CostTypes CostCenters Processes Products

18. Process 1: Subject cataloguing SU B J E C T L I B R A R I A N S Analyzing the processes: Subject librarians CostTypes CostCenters • Percent of staff time: 17,6% • Process time: 3 man years • Process time: 4.467 hours • Process costs: 477.221 DM • Number of documents catalogued: 14.635 • Unit costs: 32,60 • Time per unit: 18 Min. Processes Products

19. CollectionBuilding UndergraduateLibrary Documentdelivery ULB 55 Products Usereducation Subjectreference Library Products Exhibitions Internet-services Circulation Online-searches Collectionmaintenance ReferenceService Service fordep. libraries Products: Examples CostTypes Cost Centers Processes Products

20. Shelving 5.308 Technical proces-ses (binding...) 6.695 books= 44,90 DMper unit Total: 300.869 DM 11.223 Subjectcataloguing 78.100 Cataloguing 86.144 Inventory 37.645 Claiming 37.876 Search for titles 44.573 Product: Book processing legal deposit documents CostTypes CostCenters Processes Products

21. 6.000units 3,5man years Capacity adjustment Optimizing processes 3,5man years 2,5man years 7.500units 6.000units Managing costs by processes...

22. Differentmedia used Duplicateprocesses Errorcorrection Waitingtimes Unnecessarycontrols Detours Muddled re-sponsibilities Processestoo complex Interfaces Possible starting pointsfor process optimization

23. Disposablecapacity0,66 man years 8. Controlling cataloguing 10,62% 0,52 57.336,68 9. E-mails in cooperative cataloguing 2,78% 0,14 14.992,28 Optimizing processes: Cataloguing

24. Acquiredvolumes 5.869 4.564 7.252 8.051 Staff capacity in the process „processing undergraduate books“: 4.689,29 Std. • maximal capacity? • normal capacity? • surplus cover? 1994 1995 1996 1997 Period Rate of capacity utilization:Undergraduate Library 8.051

25. Optimizing processes results in... • Gain in productivity without higher costs • Cost reduction without loss in productivity To produce more/betterwith lower costs = Efficiency

26. to justify claims for resources(e.g. service level agreements) to estimate costs For new or enlarged services Gained by reduction or deletion of services For taking fees benchmarking decisions on outsourcing process optimization, especially to adaptcapacity costs to output comparing cost-efficiency and quality The use for management decisions

27. Example 1: Reference service Cost of 1 reference question 4,53 DM Reference fill rate 60 % Satisfaction rate 1,9 Example 2: Subject cataloguing Cost of 1 document 32,60 DM Subject search success rate 87 % Satisfication of partners incooperative cataloguing „Best quality“ Good or cheap? Is itworth-while? Professional librarians from 800 to 1900 Subject librarian with full academic qualification.Subject indexing department controlling.

28. The price spoils the pleasure(French proverb) ... if money go before, all ways do lie open(Shakespeare) Penny and pennylaid up will be many(English proverb)