Cost Analysis for Record Management

By Dmytrenko, April | ARMA Records Management Quarterly, October 1998 | Go to article overview
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Cost Analysis for Record Management


Dmytrenko, April, ARMA Records Management Quarterly


Cost analysis has become a decision making pre-step for businesses today. Especially since the bottom-line - that is, cost - really became the bottom line. Long gone are the good old days when "because" was justification enough. Smart decision makers demand cost analysis, and savvy professionals target the expectations of smart decision makers.

Research on cost analysis shows there is relatively little available on the topic. The frustrations of records and information managers trying to cost justify everything from temporary help to imaging systems, automated software, or complete file room conversions are apparent. Some people have the knack, while most have great difficulty, resulting in missed opportunities due to poor analysis and/ or justification. (Consider that there may be more to lose than support for a proposal if a cost analysis is done poorly.)

How does one go about becoming skilled in cost analysis? Most of the people I know (including me) learned the hard way, and maybe the best way, by simply doing and redoing. My first cost analysis was performed to justify a new microfilm reader-printer, a number of years ago. I initiated my analysis during a time when budgets were being cut back and I knew I had one chance to make my request with my justification. As it was my first cost analysis, I invested a lot of time in not only performing the analysis, but also in compiling a cost justification document. I got approval for the reader-printer, but I gained even more by realizing the tremendous benefit of cost analysis.

Performing cost analysis today is much the same, but the RIM opportunities have expanded. To complicate matters, there is no one best way of performing a cost analysis. It depends on many factors, including those that have nothing to do with costing, such as the financial climate of your organization.

There now is a resource book available on the topic of cost analysis written for records and information management professionals using records management applications. Cost Analysis Concepts and Methods for Records Management Projects is an ARMA International publication written by William Saffady, and it is excellent.

A short section introduces the book's purpose and scope, and provides some basic information, such as definitions and financial relationships. Although only four pages, it prepares you for delving into the wonderful world of cost analysis.

Cost Analysis Concepts and Methods for Records Management Projects focuses on two aspects of cost analysis: categorizing costs and justifying costs. "Part One: Categorizing Records Management Costs" addresses different cost categories, and there are many. By understanding costs, information professionals become better skilled in analyzing, managing and controlling them.

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