Using an Automated Tool to Calculate Return on Investment and Cost Benefit Figures for Resources: The Health Sciences and Human Services Library Experience EC
Bodycomb, Aphrodite, Del Baglivo, Megan D., Journal of the Medical Library Association
In difficult economic times, libraries experience greater pressure to justify budget expenditures to their fiscal managers. Over the last decade, library administrators have become increasingly interested in incorporating return on investment (ROI) and cost benefit analysis (CBA) techniques into their reporting structures to provide quantitative evidence of the worth of services and resources.
The Health Sciences and Human Services Library (HS/HSL) of the University of Maryland appointed a small task force in 2009 to experiment with an automated instrument for calculating ROI and cost benefit ratios (CBRs) for its collection of books and journals. The tool was developed by the National Network of Libraries of Medicine (NN/LM), Mid-Continental Region , and promoted by them in a series of presentations [2, 3]. This article describes the process used to compile the statistics for the calculator, first using data from the 2008 fiscal year and then with data from the 2011 fiscal year.
The HS/HSL supports the graduate school and the schools of dentistry, medicine, nursing, pharmacy, and social work, which have a combined faculty and student full-time equivalent (FTE) of 6,797. Additionally, some of the library's resources are available to the University of Maryland Medical Center community, a 705-bed teaching hospital with approximately 6,500 employees as well as 1,000 attending physicians. The collection includes approximately 8,500 print and online journal subscriptions, 174,000 print and online books, and 96 databases. The HS/HSL is also home to the NN/LM Southeastern/ Atlantic Regional Medical Library.
ROI is expressed as a percentage and represents the "rate of return" (loss or gain; in other words, benefit) versus the initial "investment" (total cost). The mathematical formula for calculating ROI is:
[(total benefit-total cost)/total cost] × 100
CBA results in a CBR that compares a dollar spent versus dollars reaped in benefit, which is determined by dividing total benefit by total cost .
To complete the NN/LM calculator for ROI and CBR, the library must supply thirteen values (Figure 1, online only), across three sections, one for salary data and two with cost- and benefit-related fields for each type of resource. The specific elements are listed in Table 1.
Once all required metrics are entered, the tool automatically calculates benefit and cost figures and the resulting ROI and CBR values. The formula used to calculate the benefit for books or journals is:
(usage × price per article or book)
+ [(user salary/hours worked per year)
× (usage × time saved per article or book)]
The formula used to calculate the cost of books or journals is:
book or journal budget +
(library salary budget × percent of staff time
spent managing book or journal collection)
The task force began its work in 2009, using library metrics for the fiscal year 2008 0uly 2007-June 2008), since the standard reports regularly issued by the HS/HSL had been completed and were available for that fiscal year. Subsequently, an error was discovered in the 2009 calculations, and the exercise was then repeated with 2011 data. This study reports the results for both years; differences in calculations between the years are noted below.
Users' average annual salary
According to a recently completed survey conducted by an outside consultant, the HS/HSL user population consists of the following categories and percentages: undergraduates, 12.5%; graduates, 56.5%; faculty and postdoctoral fellows, 18%; University of Maryland Medical Center staff, 9%; and unaffiliated, 4%. For practical purposes, usage of the library was considered to be equivalent across all population categories.
Financial aid and stipend figures were substituted for salary totals for undergraduate or graduate students with data from the university's student financial assistance and education department. …