More on Search ROI

August 8, 2008

I usually agree with Deep Web Technologies’ commentaries. Sol Lederman has written an interesting essay “Measuring Return on Search Investment.” You will want to read his analysis here. The point of his write up is that Judy Luther, president of Informed Strategies, wrote a white paper about ROI for libraries. The good news in Ms. Luther’s analysis, if I read Mr. Lederman’s summary, correctly is that libraries can show a return on investment in an academic library. As a long time library user, I agree that an investment can pay many dividends.

I do want to push back a bit on library ROI. The sticking point is cost analysis. As long as an institution can chop up costs and squirrel them away, it is very difficult to know what an information service of any type costs. Libraries develop a budget. A tiny fraction of that budget goes for books, electronic information, and journals. Most of the money is sucked up from fixed costs like salaries, maintenance, security, and other institutional overheads.

As a result, the “cost” of an information service is almost always the direct cost at a specific point in time for a specific service or product. Costs associated with figuring out what to buy, installing the product, the share of the infrastructure the product requires, and other costs are ignored. As a result, the calculation that shows a specific return is not too useful.

Without a knowledge of the direct and indirect costs, the basic budget analysis is incomplete. Ignoring the “going forward” costs means that when problems occur, the costs can break the back of the library’s budget. Wacky ROI calculations, particularly where digital information and  search are concerned, push library’s deeper into the budget swamp. Here in Kentucky, budgets for online information are now cut. The looming problem will be that chopping a direct cost allows the unmonitored and often unknown dependent costs to continue to chew away at the budget.

Libraries face some severe budget pressure from these long ignored costs. These burn like an underground mine fire, and like an underground mine fire, these costs are often very difficult to control.

Stephen Arnold, August 8, 2008


3 Responses to “More on Search ROI”

  1. More on Search ROI | Easycoded on August 8th, 2008 1:24 am

    […] Beyond Search with reports onHere’s what its about […]

  2. Library Return on Investment Considerations…08.12.08 « The Proverbial Lone Wolf Librarian’s Weblog on August 12th, 2008 2:52 pm

    […] Arnold has posted an interesting essay that discusses library ROI. Probably the most profound point made is that the costs used to […]

  3. Stephen E. Arnold on August 13th, 2008 5:51 am

    Dear Proverbial Lone Wolf,

    The cost analysis applies not just to libraries with an search – content type of deals but to commercial organizations getting married to SharePoint and its approach to search. I haven’t seen so many opportunities to create hockey stick curves since the Dot Com bubble burst.

    Stephen Arnold, August 13, 2008

  • Archives

  • Recent Posts

  • Meta