1. 1 Ex Libris Alma TCO/ROI April 2011

2. 2 Why Use Financial Tools like ROI?

3. 3 “It used to be that the way you put together a library budget was to look at like- institutions and then argue for a little more. Now my provost is saying to me, “If I give you ‘X’ dollars, what is the return on investment to the University?” —T. Scott Plutchak, Librarian, University of Alabama at Birmingham

4. 4 Using Financial Tools for Effective Decision Making Using financial tools will help you answer key questions and improve the quality of your decision Return on Investment (ROI) Do the benefits really justify the cost? How long will it take to recover our investment? Total Cost of Ownership (TCO) What is the true total cost of ownership over time? These tools are not new – they have been used for decades by organizations of all kinds Applying them to IT services is simply good business practice

5. 5 What’s In It For You? Demonstrate a ‘business approach’ Minimize risk and costs through informed, higher quality decision Build stronger business cases for proposals A more strategic approach, aligning with institutional goals Help ensure successful outcomes for the library Increased credibility with administration

6. 6 How to Measure ROI & TCO?

7. 7 Return On Investment (ROI) Purpose: ROI is a calculation that attempts to determine the actual or perceived future value of an investment In its most basic form ROI is calculated as follows: ROI = (Benefits – Costs)/Costs Net Present Value (NPV) - calculates the profitability of the project Internal Rate Return (IRR) - determines if the expected return is greater than the cost of funds used to finance the project Internal Rate Return (5 year) Benefit - Cost Cost (over 5 years) Net Present Value (5 years) Benefit - Cost (discounted)

8. 8 Total Cost of Ownership (TCO) Definition: all costs of owning and operating a system over its expected useful life Benefits: Accounts for not only the initial investment, but all the other costs associated with further use of the system (including hidden costs) Yet both may have a similar TCO over the period analyzed! System A Have a lower acquisition cost, but higher ongoing maintenance costs System B Have a higher acquisition cost, but lower ongoing maintenance costs

9. 9 Ex Libris Alma - TCO, ROI and DIV

10. 10 The Cloud Delivers Fast Time to Value 53% of software projects cost 189% of original estimate 53% of software projects cost 189% of original estimate Average 51% ROI Within 12 Month Average 51% ROI Within 12 Month On-Premise SoftwareCloud-based Service Automated Upgrades Large Operating Expenses Large Capital Expense & High Risk Upgrade Expense No Capital Expenses Cloud Computing Value Value Time

11. 11 The Cloud Delivers Lower TCO

12. 12 Alma Delivers Optimized Library Services  Realize value of all systems (ease of integrations)  Lower the total cost of ownership  Manage information, not servers  Extend the range of services  Augment the library’s value  Improve user experience  Optimize collection usage  Leverage collaboration  Increase productivity (simplified workflows)

13. 13 >30% Decrease Cost, Maximize Benefit, Demonstrate Value DIV Demonstrated Institutional Value ROI Return On Investment TCO Total Cost of Ownership EfficiencyEffectivenessValue Improved user experience Optimized collection usage Increased staff productivity Maximized collaboration Improved teaching and learning processes Increased faculty research productivity Delivery of new value-added services No HW/SW investment No maintenance for HW/SW, databases, updates, upgrades No IT resources needed Reduced administration

14. 14 Alma ROI and TCO Analysis Tool

15. 15 Purpose of the ROI Analysis Tool The Alma ROI Analysis Tool helps to: Quantify investments Measure value Justify costs Analyze hidden cost factors Validate internal analysis Define ROI assumptions

16. 16 1 2 3 4 5 6 1.Infrastacture 2.System Admin 3.Library Opeartions 4.Collection Utilization 5.Learning Impact 6.Research Impact Alma ROI and TCO Tool – Areas of Analysis

17. 17 Real Example of ROI Analysis

18. 18 Real Example of ROI Analysis – Cont’d

19. 19 Reduce IT Unified Resource Management Cloud service Increase Productivity Optimize Collection Usage Minimize Admin Extend Services Decrease Complexity & Silos Alma Delivers Reduced TCO and Accelerated ROI Optimized workflows & sharable data User-driven collection development 100% >30% >50% >10% Collaborative & Open platform Ease of use and integration >40%

20. 20 When to use Commitment Required Engagement Approach Ex Libris Offers Three Approaches to the ROI Conversation You want examples and benchmark data None Leverage ROI Benchmarks and customer cases to highlight value 1 Low Calorie Library Value Discussion 3 You want a customized ROI analysis for your institution, your project Committed (multiple discussions with various stakeholders) Walk-through ROI methodology Direct engagement with account team 5-Course Meal Detailed ROI Analysis You need to provide a high level ROI back to the management / administration Minimal (1-2 discussions) Account team assists with ROI Analysis Tool (utilizing tool’s assumptions) 2 Light Lunch ROI Analysis Tool

21. 21 THANK YOU!