Financial Issues. Overview The economic factors of digital AdvantagesDisadvantages Cost factors...
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Transcript of Financial Issues. Overview The economic factors of digital AdvantagesDisadvantages Cost factors...
Financial Issues
Overview
The economic factors of digitalThe economic factors of digital
AdvantagesAdvantages
DisadvantagesDisadvantages
Cost factorsCost factors
Planning expenditurePlanning expenditure
Opportunity costsOpportunity costs
Tendering and procuringTendering and procuring
Sustaining the funding stream – revenue Sustaining the funding stream – revenue modelsmodels
The economic factor
Effective utilisation of resources in developing Effective utilisation of resources in developing digital content and establishing digital digital content and establishing digital collections:collections:
Start up costs of creating or purchasing digital contentStart up costs of creating or purchasing digital content
Implementation costs for establishing access Implementation costs for establishing access
Implicit costs in managing and maintaining digital Implicit costs in managing and maintaining digital resources in the futureresources in the future
How do we define value and return on How do we define value and return on investment (ROI) in this environment?investment (ROI) in this environment?
Who will pay, how will they pay and what will Who will pay, how will they pay and what will they buy?they buy?
Benefits of digital resources
immediate access to high demand items
ability to reinstate withdrawn materials
potential to display materials in inaccessible formats e.g. glass plates or art works
’virtual reunification’
enhance digital images
integration into teaching/learning materials
enhanced finding aids through added metadata/descriptions
reducing the burden or cost of delivery
to enhance the prestige of the organisation
the potential for presenting a critical mass of materials
Economic advantages of digital information
The communication effectThe communication effect
AccessAccess
FlexibilityFlexibility
E-commerceE-commerce
Production costs - usually lowerProduction costs - usually lower
Volume enhancesVolume enhances
Enhanced service availability - the 24/7 cultureEnhanced service availability - the 24/7 culture
Economic disadvantages of digital information
Fair pricingFair pricing
Copyright and intellectual propertyCopyright and intellectual property
Access versus ownershipAccess versus ownership
Infrastructure - high maintenanceInfrastructure - high maintenance
AuthenticityAuthenticity
Preservation - the digital dark age?Preservation - the digital dark age?
Cost factors
Digitization cost – key factors:
Nature of the original item to be digitised
Digitization processes possible
Information, content and delivery objectives
More human intervention in any digitization process means higher costs.
10% Preparation20% Digitization30% Metadata creation40% System development and delivery mechanisms
A model for cost versus benefits
Deegan and Tanner (2002) Digital Futures: Deegan and Tanner (2002) Digital Futures: Strategies for the Information AgeStrategies for the Information Age
Planning your expenditure
Make sure you know what you want to do - clear goals
Initial costing at bid stage: important to be realistic, even if it makes the project look expensive
Cost EVERYTHING - even if you don’t always pay for everything - overheads, staff time, Web connection etc
Anticipate the on-going costs for sustaining the resource 2-5 years into the future - think sustainability
Katz’s Law: the cost of maintaining a database is equal to the cost of creation
Planning your expenditure
Work out your core costs by estimating known commitments
Consider a very small pilot to work out core costs that you do not know or have trouble measuring
Many projects do not come with overheads - thus are a net drain on institutional resources
Remember people will be your key cost driver not necessarily technology
No-one comes free (even volunteers)
Opportunity costs
Consider the opportunity cost of success!
The opportunity costs are the strategic costs implicit in directing resources to an activity (X), therefore reducing finite resources that may be expended upon some other strategic activity (Y).
The foregone benefits of the strategy Y constitute the opportunity cost of strategy X.
Tendering rules (EU)
~15% of the EU’s GDP is represented by public sector spending - therefore should be spent in the EU.Tender notices have to be published in the Official Journal of the European Communities (OJEC).The threshold levels are set in Euro (€220,000), and equates to ~£150,000 for goods and serviceswww.tenders.co.uk
Formal tendering rules
Contracts may not be artificially split to make them fall below the threshold.European criteria for awarding tenders:
The lowest price only The most economically advantageous tender – using various criteria such as price, period for completion, running costs, profitability, technical merit.
If used, must state “most economically advantageous” method at point of tender advertising.
Buying big technology
Create a decision analysis matrixTalk to users of existing systems and servicesVendor assessment - will they be there in 5 years?
Try to never:be the 1st customer to buy the product!buy a proprietary product that will not allow open systems access and interoperability!
Decision matrix
Sustainability Planning
What is sustainability?
Big Picture:
Meeting the needs of the present without
compromising the ability of future generations to
meet their own needs.
For projects sustainability is:
A product or process that can be maintained
over a long period of time, especially after grant
monies disappear, that is beneficial to
stakeholders & the host institution.
Sustainability Planning
What to sustain?
Products
Services
Processes
Expertise and knowledge
People
To sustain any of these requires focus and clear
objectives.
It also requires a cool head to decide
what to not sustain!
Sustaining - Revenue models
Advertising model: supported by advertising revenue
Infomediary model: user data as revenue
Merchant model: traditional retail model
Affiliate model: financial incentives to affiliated partner sites
Community model: users invest in a site (e.g. contribution of
content, money, time, hosting)
Subscription model: users pay for access to “value added”
content (e.g. high resolution files, complete reports not summaries)
Utility model: metered usage or pay-per-view