Validation of the Life approach

1. Validation of the Life approach Prof. Bo-Christer Björk Swedish School of Economics and Business Administration Life conference, 23.6.2008 British Library

2. Purpose • Validation of the economic modelling and methodology for the Lifecycle and Generic Preservation formulae developed in the Phase 1 of the Life project • Done in order to provide feedback for the further development done during phase 2 of the project Life conference, 23.6.2008 British Library

3. Life cycle costing as a method • Has been discussed as a theorically attractive idea but is not much applied in practice • Many investors/owners of capital goods have a very short term time horizon • National libraries and universities have a very long term horizon for their collections Life conference, 23.6.2008 British Library

4. Facility management • Facilities (buildings, infrastructure, plants) are owned and operated for decades • In the long term the operating costs overshadom the initial investments • Energy production and saving is one area of use Life conference, 23.6.2008 British Library

5. Total Cost of Ownership • Principle originally proposed by the consulting firm Garnter group • Way of estimating the total cost of IT investements, including also other costs than initial hard and software • Could for instance be used to compare the long term costs of licenced vs open source software in public organisations Life conference, 23.6.2008 British Library

6. Method • Validation of the basic structure of the model using a formalised process modelling tool (IDEF0) • Critique of a number of basic assumptions underlying the formulae Life conference, 23.6.2008 British Library

7. IDEFO modelling • A graphical process modelling tool originally developed for the US navy • Models processes using activities, inputs, outputs and mechanisms Life conference, 23.6.2008 British Library

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9. Output Control Input Mechanism Life conference, 23.6.2008 British Library

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12. Results of the modelling • Overall the modelling did not reveil any significant flaws in the LIFE methodoly • A closer harmonisation with the Reference model for an Open Archival Information System (OAIS) would be useful • Analogue material and their initial conversion to digital might be included in the model Life conference, 23.6.2008 British Library

13. Treatment of inflation • All costing should be done in real monetary terms, not in nominal • This is no problem for future costs • Historic costs should be adjusted to take into account inflation • But in the case of extemely long periods other methods should be used Life conference, 23.6.2008 British Library

14. Discounting • Technique used in investment analysis where costs and incomes occur in different years • With a discount rate of 5 % 100 pounds cost or income in 10 years time is worth 32 pounds today • Well suited for large investements (ie building a mobile phone factory), where the investors could have gotten other alternative yealds for their money • Not well suited if there is a steady stream of costs over years • Not well suited if there is no income to compare with • Not recommended in this connection Life conference, 23.6.2008 British Library

15. Convergance of file formats? • In the activity technology watch (maintaining knowhow about different digital file formats) one might assume convergence to a few formats, thus reducing the overall cost • Otherwise a few very rare formats could cause quite a lot of costs in the long run. Life conference, 23.6.2008 British Library

16. When is the Life method particularly applicable • National libraries and institutional repositories • Making priority choices about what to preserve • In a situation of relatively stable archiving budgets Life conference, 23.6.2008 British Library

17. Thank you for your attention! Life conference, 23.6.2008 British Library