1. ULB MÜNSTER Cost Management in Academic 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. ULB MÜNSTER Reasons for Cost Management 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

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

4. ULB MÜNSTER What we count by now 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

5. ULB MÜNSTER "Costs" are another thing 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) The consumption of resources to acquire, produce or maintain goods or services within a defined period

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

7. ULB MÜNSTER Project: Cost Management for University Libraries FundsDeutsche Forschungsgemeinschaft PartnersUniv. and Regional Lib. Münster (chairing) Univ. and Regional Lib. Düsseldorf Univ. Lib. Paderborn Time4/1997 – 7/1999 MethodActivity-based cost accounting ProductHandbook and Software Ceynowa, Klaus / Coners, André: Kostenmanagement für Hochschulbibliotheken. Frankfurt a. M.: Klostermann 1999.

8. ULB MÜNSTER Connection between Costs and Services ServicesActivitiesCostsResources... Cause...... need...... Consume... Library

9. ULB MÜNSTER Cost Analysis in Public Service Institutions Products are nonmaterial Capacity costs are predominant Many costs are fixed Library

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

11. ULB MÜNSTER Model of cost analysis Which RESOURCES are consumed WHERE by which ACTIVITIES /PROCESSES with what RESULT? RESOURCES WHERE ACTIVITIES RESULT? Cost Type Accounting Cost Center Accounting Activity-Based Analysis Cost Unit Accounting

12. ULB MÜNSTER Cost Analysis in Academic Libraries 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

13. ULB MÜNSTER Cost Center 3Cost Center 2Cost Center 1 Cost accounting method P 1.1 P 1.2 P 1.3 P 1.4 P 2.1 P 2.2 P 3.1 P 3.2 P 3.3 Assigning to products Product 1 Product 2 Processes Cost types StaffCollectionAdministr. CostsDepreciationsOperating Costs Scanning documents Delivering documents Dealing with claims Settling accounts Electronic document delivery

14. ULB MÜNSTER Cost structure ULB Münster 66 % 4 % 5 % 4 % 21 % Total24.770.535,31 Staff costs16.357.001,19 Collection costs 5.126.907,43 Administration Costs 911.288,96 Operating Costs 1.384.577,58 Depreciations 990.760,15 Staff costs 16.357.001,19 DM Collection costs 5.126.907,43 DM Adminstr. Costs 911.288,96 DM Operating costs 1.384.577,58 DM Depreciations 990.760,15 DM Total Costs 24.770.535,31 DM Processes Cost Centers Cost Types Products ULB 52 Cost Types

15. ULB MÜNSTER Costs of service areas 11 % 13 % 39 % 4 % 3 % 16 % 7 % 4 % Subject librarians 2.711.426,05 Book processing 3.284.062,58 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 User services 9.640.321,81 Services as regional deposit library 916.855,38 Processes Cost Types Cost Centers Products ULB 44 Cost Centers

16. ULB MÜNSTER Cost Centers

17. ULB MÜNSTER Analyzing the processes: Circulation Cost Centers Cost Types Processes Products CIRCULATIONCIRCULATION Recording loans Cancelling loans Issuing user cards Monitoring loan periods Account of fines Delivery in electronic form etc. ULB 442 Processes

18. ULB MÜNSTER Analyzing the processes: Subject librarians Cost Centers Cost Types Processes Products SUBJECTLIBRARIANSSUBJECTLIBRARIANS Process 1: Subject cataloguing 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.

19. ULB MÜNSTER Products: Examples Cost Centers Cost Types Products Processes Subject reference Internet- services Collection Building Undergraduate Library User education Exhibitions Collection maintenance Reference Service Service for dep. libraries Document delivery Circulation Online- searches Library Products ULB 55 Products

20. ULB MÜNSTER Product: Book processing legal deposit documents Cost Centers Cost Types Products Processes Search for titles 44.573 Claiming 37.876 Inventory 37.645 Cataloguing 86.144 Subject cataloguing 78.100 Technical proces- ses (binding...) 11.223 Shelving 5.308 Total: 300.869 DM 6.695 books = 44,90 DM per unit

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

22. ULB MÜNSTER Possible starting points for process optimization Different media used Duplicate processes Error correction Waiting times Unnecessary controls Detours Muddled re- sponsibilities Processes too complex Interfaces

23. ULB MÜNSTER Optimizing processes: Cataloguing 8. Controlling cataloguing10,62%0,5257.336,68 9. E-mails in cooperative cataloguing2,78%0,1414.992,28 Disposable capacity 0,66 man years

24. ULB MÜNSTER Rate of capacity utilization: Undergraduate Library maximal capacity? normal capacity? surplus cover? Acquired volumes 5.869 4.5647.2528.051 Period 1994 199519961997 Staff capacity in the process „processing undergraduate books“: 4.689,29 Std. 8.051

25. ULB MÜNSTER Gain in productivity without higher costs Cost reduction without loss in productivity To produce more/better with lower costs = Efficiency Optimizing processes results in...

26. ULB MÜNSTER The use for management decisions 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 adapt capacity costs to output comparing cost-efficiency and quality

27. ULB MÜNSTER Good or cheap? Example 1: Reference service –Cost of 1 reference question4,53 DM –Reference fill rate60 % –Satisfaction rate1,9 Example 2: Subject cataloguing –Cost of 1 document32,60 DM –Subject search success rate87 % –Satisfication of partners in cooperative cataloguing„Best quality“ Subject librarian with full academic qualification. Subject indexing department controlling. Professional librarians from 8 00 to 19 00 Is it worth-while?

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

29. ULB MÜNSTER