Cost/Benefit Analysis Making the Business Case for Records Management Karen Trivette Cannell, MLS NYALGRO 2007
To provide the right information. . . at the right place. . . at the right time. . . to the right person. . . efficiently. . . at the lowest possible cost.
Creation Retention Storage A program for managing records involves… Retrieval Technology Archives Policy
What is a cost benefit analysis? An approach to cost justification An analysis of an opportunity
What types of opportunities should require a CBA? Adding staff Introducing new technologies Mobile shelving Changing vendors Remodeling facilities
CBA Justification • Hard dollar savings • Soft dollar savings • Cost avoidance
“Should our government outsource our microfilm operation or continue to perform it in-house? ”
“Should our government automate our records management operation or stick with our manual procedure? ”
“Should our government replace file cabinets with open shelving? ”
The CBA Approach • Preliminary Study • Feasibility Study • CBA Report
The Preliminary Survey • Initial evaluation • Information about the existing situation • Assessment of potential
The Feasibility Study • Finalizes data gathering • Assesses the data in detail • Furthers the analysis process
Identify the costs Identify the benefits Consider the effect of time Analyze the results
The Costs Needs assessment/consultant services: $12, 500. 00 Staff training: 500 hours @ $10. 00/h: $5, 000. 00 Geo-reference drawings: $5, 000. 00 Color scanner: $25, 000. 00 GIS software/consultant services: $40, 000. 00 Total: $87, 500. 00
The Benefits Reduced overtime: $60, 000. 00 Unbilled sewer connections: $12, 000. 00 Recouped business license fees: $20, 000. 00 Total: $92, 000. 00
More Benefits Soft dollar savings • Higher level of customer service • More advanced records stewardship • Improved staff expertise Cost avoidance • Compliance with GASB 34
Effect Over Time Cost / Benefits = Payback $87, 500/$92, 000 = 0. 95 of a year OR approximately 11. 5 months
Analyze Results Is the payback period sufficient?
The CBA Report
• Executive Summary • Introduction • Scope and Purpose • Methodology of the Study • Recommendation • Justification • Implementation • Summary • Appendices
Executive Summary • Provides an overview to the CBA Report • States the report's purpose, the nature of the opportunity • Summarizes the recommendations • Outlines the benefits
ROI The King of Justifications
ROI Formulas
![Basic ROI [Gains – Investment Costs] ______________ Investment Costs = ROI](https://present5.com/presentation/60f87d3dc016f1612dc3b6998db4f878/image-24.jpg "Basic ROI [Gains – Investment Costs] ______________ Investment Costs = ROI")
Basic ROI [Gains – Investment Costs] ______________ Investment Costs = ROI
Office Move ROI RS = Reduction in office space cost CS = Cost of mobile shelving RS – CS _______ = ROI CS
Imaging ROI RS = Reduction in office storage cost PS = Personnel + System costs RS – PS _______ = ROI PS
![Risk of Inaction FI = Financial loss from inaction [Negative value] CI = Lack](https://present5.com/presentation/60f87d3dc016f1612dc3b6998db4f878/image-27.jpg "Risk of Inaction FI = Financial loss from inaction [Negative value] CI = Lack")
Risk of Inaction FI = Financial loss from inaction [Negative value] CI = Lack of investment (= 0) -FI – CI -FI – 0 _______ = CI 0 ∞ [negative ROI]
Closing words… • Managing records is your legal responsibility • Address all records • There are simple strategies to enrich your program • You are not alone!
Help • Contact the State Archives – Call your Regional Advisory Officer – www. archives. nysed. gov • Network with peers • Join – NYALGRO – ARMA International – Society of American Archivists
Thank you for listening! www. archives. nysed. gov
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