LOUIS BUSINESS REVIEW

Transcription

1 LOUIS BUSINESS REVIEW A review of the current situation, competition, and sustainability prospects of the LOUIS project. January 28, 2015 Prepared by: John Smith, Principal Partner, Luma Consulting LLC

2 Table of Contents While reading this SlideDoc in PowerPoint in slide show mode (from the menu choose slide show->play from start), you can click on the page numbers below to jump to the relevant section in the document. If you are using the PDF version of this document, clicking the page numbers can also be used to jump to the relevant section. Page Page Page Page Page Section 1: Introduction Section 2: Current Situation High Level Overview Section 3: Competitive Analysis: High Level Overview Section 4: Sustainability Analysis Section 5: Conclusions and Recommendations Page Page Appendix 1 Situational Analysis Report Appendix 2 Competitive Analysis Report 2 2

3 1 Introduction 3

4 About this report Report Background The current LOUIS strategic plan directs LOUIS Executive Director Sara Zimmerman to prepare a business plan. Sara hired Luma Consulting LLC of Seattle to conduct a Business Review to analyze LOUIS business and make recommendations regarding its sustainability. How Was the Engagement Conducted? Luma Principal Partner, John Smith, conducted the following activities to complete the business review: o Conducted a situational analysis by reviewing past financial statements, visiting LOUIS operations in Baton Rouge, interviewing staff about the consortium s strengths and weaknesses, surveying LOUIS members about quality, availability and satisfaction, and conducting focus groups with LOUIS members at the LOUIS Users Conference in October o Conducted a competitive landscape scan to better understand LOUIS industry the strategic competitive advantage LOUIS provides members versus alternative offerings. o Wrote two previous interim reports: o A Situational Analysis o A Competitive Analysis Is LOUIS Sustainable? This report completes the Business Review engagement and provides conclusions and recommendations for LOUIS sustainability. It incorporates work from the interim reports. Those reports are included as appendices. 4 4

5 Summary of LOUIS LOUIS has been in operation over 22 years! A Brief History of LOUIS The Louisiana Board of Regents commissioned a Task Force in 1990 to consider the needs of academic libraries. The Task Force was reorganized as the Louisiana Academic Library Information Network Consortium (LALINC) in LALINC determined there would be great value in sharing the costs of library information systems and the Louisiana Online University Information System (LOUIS) was born. What Does LOUIS Do? Governance LOUIS is a project of LALINC. The LALINC Executive Board oversees activities, budgets, and funding for LOUIS. LALINC follows a set of bylaws. Members meet twice a year, represented by their library deans or directors. LALINC currently has 46 members representing academic libraries from the five higher education systems in Louisiana. The mission of LOUIS is to manage and operate the Louisiana Online University Information System as stipulated by LALINC. To achieve this mission, LOUIS provides library automation services; provides access to and delivery of electronic information; provides a network of training opportunities for library staff; promotes cooperation and communication among multi-type libraries; researches and implements new information technologies; and maximizes the purchasing power of Louisiana academic libraries. 5 5

6 2 Situational Analysis: High Level Overview 6

7 Situational Analysis What is the state of affairs of academic libraries in Louisiana, and of LOUIS? The following section provides some high level takeaways from the earlier situational analysis report. That report can also be found in Appendix

8 What do higher education libraries need? Libraries need information systems Students need content Teachers need resources Higher education students are wired. They demand easy access to content: Professors and instructors need the library for content they and their students need to: o Articles and books needed for class o Explore a topic deeply o Course information: grades, syllabi, tests, links to library readings (typically through a learning management system, or LMS) o Conduct research o Off campus access to library content o Gain off campus access to library content LOUIS member libraries serve over 230,000 students in the state of Louisiana. o Manage course library content through an LMS such as moodle or blackboard o Borrow unique holdings from other libraries in the state LOUIS member libraries serve over 13,500 instructional staff in Louisiana. Academic libraries, in Louisiana and elsewhere, are critical to student and faculty learning and research. Like hospitals, airports, and chemical plants, libraries have had automated library business functions since the late 1960s. Libraries manage collections of physical and electronic products including acquisition, discovery, circulation and tracking, and sharing with other schools. LOUIS supports these functions by buying information systems and e-content on member libraries behalf. These systems would be prohibitively expensive if schools tried to purchase - and support them on their own. LOUIS serves over 450 library staff in Louisiana. 8 8

9 What are LOUIS three main information system initiatives? Integrated Library System LOUIS provides members with software that supports library business management and access to the library s scholarly resources. The library automation system in use at LOUIS is Symphony, by SirsiDynix. Symphony contains the metadata (pointers) to both books on the shelves and electronic resources that support university accredited programs delivered over the Internet. To search for all this material, especially full-text material, from one convenient web page, LOUIS offers EBSCO Discovery Service (EDS) to its members. This lets students and faculty find relevant content quickly. Authorized library users can also access library content from off campus locations using EZProxy, which LOUIS offers as a solution to member libraries. Electronic Resources Electronic resources are some of the most valuable and convenient library resources that faculty and students can use to enhance research and learning, and these resources can be accessed from anywhere at any time. These resources include formats such as ebooks and ejournals, full-text, indexing and abstracting, and reference databases, statistical databases, and multi-media collections. Electronic resources can also be very costly. LOUIS works on the behalf of members to leverage statewide purchases in order to minimize costs and maximize access. The electronic databases provided by LOUIS support the core curricula in all two and four-year colleges and universities. Interlibrary Loan Software A single library cannot have every item a patron needs in its collection. In order to provide access to material(s) not owned by the library, it will often request the material(s) from another institution. This requesting process is known as interlibrary loan (ILL). ILL is an important initiative that supports the consortium s goal to further enhance member libraries collections through resource sharing. LOUIS facilitates this resource sharing through the support of the ILLiad software, which allows a library to increase staff productivity and reduces the paperwork associated with ILL. 9 9

10 Who Participates in LOUIS? The map at right shows locations of LOUIS participating institutions. Each comes from one of the five higher education systems in Louisiana, as noted by the colors below: Shreveport area detail o Louisiana Association of Independent Colleges and Universities (LAICU) o Louisiana Community and Technical Colleges (LCTC) o Louisiana State University (LSU) o Southern University (SU) o University of Louisiana (UL) A list of member names and what LOUIS provides each member can be found in Appendix 1. New Orleans area detail Baton Rouge area detail 10 10

11 Member Profiles Count of LOUIS Members Count of Members by Librarian and Library Professional Staff FTE per 1000 Student FTEs* Count of LOUIS Members Count of members by LOUIS Fees as a % of Library Operating Expenses Librarian and Professional FTEs per 1000 Student FTE Categories How many professional staff do member libraries have? Almost half of the membership have only 2 professional library FTEs OR LESS per 1,000 student-ftes at their school. *-source of library professional staff data and student FTEs - NCES 2012 FY 2013 LOUIS Membership Fees as a % of 2012 Library Operating Expenses* What is the impact of LOUIS Fees on members budgets? The amount of their library budget spent on LOUIS fees is a good indicator of how important LOUIS is to the library and how significant the fee is in relation to the member s overall budget. We found that at least 20 members spent more than 7.5% of their budget on LOUIS fees. *-source of library operating expense data - NCES 2012; source of LOUIS fees (LOUIS) 11 11

12 Customer Impressions Snapshot LOUIS is beloved by members How satisfied are you with (on a 5 point scale, with 5 the highest rating) LOUIS initiatives are very important to members Of the initiatives LOUIS provides to your library, how important are they to your library community? 12 12

13 Operating Snapshot of LOUIS Operating Services, $183,200, 4% Travel and Training, $25,000, 1% Electronic Resources, $2,710,458, 65% Hardware, $40,500, 1% ILL 65% LOUIS Expense Budget (2015) Personnel Salary, $695,988, 17% Personnel Benefits (41%), $285,355, 7% Software Licenses, $205,140, 5% 68% LOUIS Budget '14-'15 2% 30% ILS & Discovery E-Resources LOUIS Staff Time '14-'15 The annual budget is about $4M Electronic resources make up the bulk of the project cost about 63-65% but running the ILS initiatives takes up the bulk of operations staff time. LOUIS is managed by a seasoned staff of 9 professionals 26% 8% Millions $4.5 $4.0 $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 LOUIS Revenue 66/34 16/84 27/73 13/87 12/88 20/ / /112011/ / / /15 Regent $$ Member $$ Collectively, the staff have 128 years of experience running LOUIS. The median length of service is 20 years. Staff are cross-trained. The combined knowledge and cross training makes the project extremely cost-efficient and cost-effective. A loss of staff however, could put this effectiveness at risk. The Cost-Share ratio has flipped in recent years After the recession and other natural disasters, the Board of Regents hasn t funded LOUIS at levels prior to The burden has fallen more directly on the shoulders of the libraries themselves, who have scrambled to realign resources amidst tight high education funding

14 Incredible Savings LOUIS Saves the State an incredible amount of money for high quality, highly available, library information services and resources. LOUIS has save the state $222,635,523 since LOUIS saved the state over $22 million in 2014 alone. LOUIS does this by negotiating deep discounts for electronic content and library software, and by sharing information systems across its membership that would otherwise be prohibitively expensive. LOUIS also saves students by providing library content at rates much less than they d pay to access the content themselves Were LOUIS not to exist, the state would have to pay 8 TIMES more than it does now for the equivalent service and resources. Millions $25 $20 $20.69 $20.91 $21.53 $22.18 $16.02 $15 $14.32 LOUIS Budget $10 Cost Savings $5 $4.09 $3.17 $3.67 $3.95 $4.09 $4.15 $0 2009/ / / / / /

15 3 Competitive Analysis: High Level Overview 15

16 Competitive Forces Overview The amount of competition LOUIS faces, and its ability to stay sustainable, is a result of the forces outlined in this diagram, an analysis taken from Michael Porter s classic Five Forces concept. Participating Members Note: In nonprofits and other social-good organizations, buyers can be direct beneficiaries and/or third party payers If buyers are many and not discriminating, they have the power to demand low prices from industry Board of Regents The power of buyers to demand low prices If barriers to enter an industry are low, this increases industry competition. High barriers include high capital investment, high intellectual property, and high switching costs for buyers. The threat of new entrants into an industry and the cost of barriers to enter the industry The number and relations among industry participants Library consortia The availability of substitutes or alternatives to buyers If many suitable alternatives or substitutes exist, competition is higher. The power of suppliers to set high prices E-resource and IS vendors If suppliers are few and specialized, they are powerful and can make industry participants price-takers LOUIS Industry is not too competitive, but buyers do have some power LOUIS is in a strong competitive position in an industry that is not too competitive. For details, see Appendix 2. However, the third party buyer (Board of Regents) is fairly powerful and could negatively affect LOUIS sustainability if public funds become scarce. LOUIS market of direct buyers is limited to Louisiana academic libraries, meaning the loss of any one member makes it harder to sustain the costs by the remaining members

17 Yet the alternative scenario to LOUIS is costly Switching/ Self Purchase Costs Are High LOUIS is a better way for academic libraries to get muchneeded electronic content and library management software. If each library in the LOUIS consortium were to go it alone the price of the ILS system and all the related software, would be prohibitively expensive, not to mention the cost of the servers, operating system software and the staffing required to maintain and back up the systems. The electronic resources are licensed from about 26 publishers. LOUIS negotiates price discounts for the consortium. If the libraries were to try this on their own the publisher could readily demand higher prices. In addition, staff would need to spend time in purchasing negotiation, and would have to have systems knowledge and relevant software to allow for off-campus access. Altogether, LOUIS deep expertise, strong vendor relationships and negotiation skills, and its installed systems assets make it very expensive for a member to switch. Loss of Accreditation/Loss of Students/Loss of Athletics? Were LOUIS not to exist and libraries were forced to purchase services on their own, the level of service they could afford would likely be unsatisfactory to higher education accreditation bodies, putting their whole institution s accreditation at risk for not providing adequate library resources to students and teachers. This would be a scenario acceptable to neither the BOR nor the schools

18 4 Sustainability Analysis 18

19 The Sustainability Conundrum What are the solutions to becoming more sustainable? Control Costs Controlling the costs of providing the initiatives would lower funding risks by keeping revenue needs modest. Supplier costs, labor costs, and other costs should be kept as tight as possible while still providing excellent service. Negotiating vendor savings something the project team does very well will continue to be important in this regard. How Sustainable is LOUIS? Despite its high value, excellent savings for institutions and students, and high member satisfaction and despite its strong competitive position - LOUIS could disappear if state higher education officials decided funding library information systems was not important, or at least not as important as other claims on scarce higher education public funding. As we ve discussed, this wouldn t be entirely rational as it might make the overall set of library information system assets in the state MUCH more expensive (as each buys their own solutions with some mixture of public and private dollars) and, as a result, make schools much LESS likely to meet accreditation standards. Try to Shift the Cost-Share Closer To 50%-50% Before the big drop in 2011, funding to cover the costs of running LOUIS came 20% from schools and 80% from Board of Regents (BOR). It s now flipped 80% schools 20% BOR. This creates economic weakness in the consortium by creating incentives for any one institution to make a rational decision to leave (as their cost share continues to rise as a proportion of their own library s budget), thereby making it less and less rational for the remainder to stay. It also could shift the burden for library costs directly to students. The only way to shift the cost-share is to advocate - using the membership s collective voice of staff, libraries, students, faculty, and administration - to secure a line item for $2M to $2.5M annually (with some annual inflation escalator) in support of LOUIS either in Louisiana statute or in the Board of Regents budget. Direct state funding recognizes the shared asset of supporting the initiatives and the expensive e-resources used by all the members, while also giving libraries some skin in the game for frugal collective decision-making about the project

20 The Case for LOUIS: Strong Libraries Help Graduate Job-Ready Louisianans OPEN JOBS in Louisiana needs Certificated Graduates (including bachelors, associates, and technical certificates) Job-ready Employees Shared Library systems and resources Searchable library resources for students and teachers Students able to access resources needed to learn Huge Taxpayer Savings Saves students from having to purchase content on open market Required for accreditation LOUIS is not only efficient for taxpayers and vital for schools, it s an important raw ingredient to graduating students to become employees in Louisiana's economy. Louisiana s academic libraries are part of Louisiana s workforce development pipeline

21 5 Conclusions and Recommendations 21

22 Conclusion: LOUIS is a great deal Louisiana needs higher education to teach students skills needed for the state s economy. Schools need libraries to both stay accredited and to provide students and faculty with what they need to learn. Without adequate library systems and resources, Louisiana s institutions of higher education will not be able to develop students to work in Louisiana s 21 st century economy. For 22 years, LOUIS has provided schools with critical library business management information systems software and electronic resources, saving the state over $220 million! LOUIS members find the service extremely important to their libraries and give strong marks for LOUIS service delivery

23 Recommendations $ $ $ $ $ 1. Make a strong case to re-balance the cost share Raise the collective voice of higher education, particularly students, faculty and administrators, to secure shared library systems funding from the state. Funding a library collective saves the state incredible amounts of money AND gives schools what they need to make sure students learn and graduate ready to fill the jobs that power Louisiana s economy. 2. Continue to control costs LOUIS has done an excellent job keeping input costs (supplier costs, vendor costs) and operating costs (staff) very reasonable. LOUIS will need to continue this cost control to ensure members and taxpayers get the best possible return for their scarce dollars. 3. Monitor changing technologies LOUIS will need to keep abreast of cloud-based ILS systems, demand driven electronic content acquisition (and discovery) models, and other disruptive technologies (e.g. e-textbooks) affecting academic settings and libraries

24 Appendix 1 Situational Analysis Report 24

25 Situational Analysis 1/12/2015

26 Introduction Financial State Operations and Services Staff s Assessment Customer Assessment Public Policy Context Library Context Table of Contents Situational Analysis 26

27 1 Introduction LOUIS was established in 1992 as a consortium to provide equal access to library services and information resources to all publicly funded academic libraries, to maximize the purchasing power of the consortium, and to share expertise in support of research, teaching and learning on each campus. LOUIS is a project of Louisiana Academic Library Information Network Consortium (LALINC) and is governed by LALINC s Executive Board. LALINC is comprised of all public and private academic libraries in the Louisiana. The mission of LOUIS is to manage and operate the Louisiana Online University Information System as stipulated by the Louisiana Academic Library Information Network Consortium. To achieve this mission, LOUIS provides library automation services; provides access to and delivery of electronic information; provides a network of training opportunities for library staff; promotes cooperation and communication among multi-type libraries; researches and implements new information technologies; and maximizes the purchasing power of Louisiana academic libraries. This situational assessment is part one of a three-part report as part of a business review engagement conducted by Luma Consulting Partner, John Smith in Part One (this report) looks at LOUIS situation its budget, operations and services overview, strengths and weaknesses as reported by staff and customers. It also provides some external context (e.g. general library trends, relevant public policy). Part Two (in PowerPoint) is a brief Competitive Analysis, comparing LOUIS services and initiatives to alternatives that members could choose. Part Three is a final Business Review Report (Word and PowerPoint), incorporating the previous reports and discussing opportunities, threats, and recommendations. 27

28 2 Financial State Findings from Financial Review of LOUIS 28

29 REVENUE LOUIS revenue comes from two sources: a contract with the State of Louisiana's Board of Regents and member fee payments. Due to state budget constraints stemming from the recession, starting in FY2011, the Board of Regents allocated significantly less resources to LOUIS. In FY2011, due to the drop in public funding, member libraries and their institutions have had to increase their membership fees to make up the difference. With those member fee increases, LOUIS is just now back to 2010 levels of funding for its services but members are bearing much more of the cost of the LOUIS project (80% in the current fiscal year versus 34% back in 2010) during a time of decreased funding for higher education. $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 Significant funding loss from Regents in FY /34 16/84 27/73 13/87 12/88 20/ / / / / / /15 Member $$ Regent $$ Percent BOR funding/ Member Fee funding 29

30 EXPENSES AND SAVINGS LOUIS expenses are $4.1 million in the current fiscal year. LOUIS provides significant cost savings versus list prices for the tools and services provided to members. Over the lifetime of the LOUIS project, LOUIS members have saved or avoided over $222 million for Louisiana s colleges and universities. $25,000,000 $20,686,692 $20,907,420 $21,534,642 $22,180,681 $20,000,000 $16,021,872 $15,000,000 $14,324,364 LOUIS Budget $10,000,000 $5,000,000 $4,085,971 $3,167,292 $3,674,384 $3,949,184 $4,089,271 $4,145,641 Cost Savings $0 2009/ / / / / /15 30

31 LOUIS FY15 Budget Electronic resources make up the vast majority of LOUIS operating expenses. Shared personnel and benefits constitutes 24% of the projected FY2015 LOUIS budget. This personnel expense is highly effective given that only 9 staff support over 46 institutions for the mission-critical technology services LOUIS provides. Travel and Training, $25,000, 1% Hardware, $40,500, 1% Operating Services, $183,200, 4% Personnel Salary, $695,988, 17% Personnel Benefits (41%), $285,355, 7% Software Licenses, $205,140, 5% Electronic Resources, $2,710,458, 65% 31

32 3 Operations and Services Analysis of Service Lines, Operations and Member Usage 32

33 Strategic Plan LOUIS is operating under a strategic plan, approved June 2013, which covers years The following are the goals in the plan: 1) Optimize development of collaborations and delivery of services and resources by creating an effective and efficient administrative structure. 2) Create a sustainable financial model. 3) Offer services, resources, systems and support that address and fulfill current and evolving needs and expectations of members. 33

34 LOUIS Services LOUIS offers three service lines (called initiatives by LOUIS). Members can opt in or out of any initiative. 1 A Library Services Platform (or LSP) consisting of an Integrated Library System (ILS: SirsiDynix Symphony) with an integrated Discovery layer (EBSCO EDS). There are other enhancements offered to members on this platform. 2 An Electronic Resources purchasing collaborative. These include a list of publisher packages and databases offered to all members (Consortia), discounts on opt-in databases, and small mini-consortia bundles. Off campus access is managed using OCLC s hosted EZproxy middleware solution. 3 An Interlibrary Loan System (based on OCLC s Atlas ILLiad software, hosted on OCLC s servers) Overall participation by LOUIS 46 members in the three service lines are: 76% of members participate in the Library Services Platform (ILS+Discovery package) 100% of members participate in the purchase of electronic resources through LOUIS 100% participate in resource sharing 40% participate in ILLiad 34

35 LOUIS Governance and Operations-Overview Governance: LOUIS is a project of Louisiana Academic Library Information Network Consortium (LALINC), a library collaborative. LOUIS is governed by LALINC s Executive Board. The Executive Board is elected by LALINC members. LALINC members are academic libraries from the five higher education governing systems in Louisiana: Louisiana Association of Independent Colleges and Universities (LAICU), the Louisiana Community and Technical College System (LCTC), the Louisiana State University System (LSU), the Southern University System (SU), and the University of Louisiana System (UL). Operations: LOUIS is located in the Frey Computing Center on LSU s main campus in Baton Rouge, LA, in LSU s Information Technology Services (ITS) department and reporting administratively to LSU s Chief Administration Officer. LOUIS computers and software are hosted in LSU s computer room but reside within Louisiana Optical Network Initiative (LONI) and are separate from the LSU campus network. LOUIS rents office space in the same space as LSU ITS staff. LOUIS is staffed by 9 individuals who are officially employees of LSU. The collective LOUIS staff tenure is 128+ person years, with a median tenure of 20 years. 9 FTEs are an incredibly efficient way to support the 46 current members, over 450 library staff serving over 13,500 instructional staff and over 230,000 students in Louisiana. The current strategic plan directs the LOUIS Executive Director to ensure that services and staff meet the current and evolving needs and expectations of members. LOUIS is run by Executive Director Sara Zimmerman, who has been with LOUIS for 20 years. Sara reports to the LALINC Executive Board. 35

36 Operations Update (October 2014) * Trainings: General training: 13 sessions; 241 people attending Learning with LOUIS (18 sessions; 537 attendees since March 2013) SirsiDynix Mentor Series - online (22 sites participated; 140 courses accessed) Symphony Meeting (11 sites; 26 people attended) ILLiad Meeting (12 sites; 40 people attended) Boot Camp Workshopts (basic: 13 sites; 20 people; refresher: 17 sites; 26 people) LOUIS Users Conference (2013) 59 sessions; 207 registered; (2014) 55 sessions, 67 academic presenters, 192 registered. Site Visits (23 site visits by LOUIS staff since July 2013) Knowledge Base: an online knowledge base (based on Footprints software) is established and contains 648 articles of which 327 are available for authorized member library staff for use in self-help for LOUIS topics. Remaining articles are internal documentation for institutional knowledge used by LOUIS staff. Advocacy and Communications Ongoing media releases Participation Summary Report fact sheets created for each member institution showing cost savings by institution. Resources and Public Relations Web Page added to website LOUIS Brochure added to website Task forces are member-run committees formed to help LOUIS execute strategic initiatives. There are currently six active task forces (Assessment, Committee on Committees, Grants, Nursing e-resources, Statistics, and LALINC card). *- Data excerpts taken from the LOUIS strategic plan October 2014 Update 36

37 Budget versus Staff Time Staff track their time by service area. E-resources make up over 2/3 rds of the expense budget of LOUIS. However, they require 26% of staff time. Collectively, the bulk of staff time (65%) goes to maintaining, and supporting users of the Integrated Library System and Discovery Service software platform. LOUIS Budget '14-'15 2% LOUIS Staff Time '14-'15 8% 30% ILS & Discovery E-Resources 26% 68% ILL 65% 37

38 ILS/Discovery Migration Path LALINC members decided to contract for 5 more years with SirsiDynix Symphony on the locally hosted AIX servers using the ISAM database environment. Over the next few years, as SirsiDynix moves many of its customers to a library services platform (LSP) based on a Software as a Service offering (using a cloud-based multitenant architecture), LOUIS will be working with SirsiDynix to monitor how this might affect LOUIS member institutions and how to integrate the EBSCO discovery service layer architecture on top of the cloud-based LSP. LOUIS has an excellent relationship with both SirsiDynix and EBSCO. Both vendors have agreed to a development partnership and joint product road map to make sure their next ILS and discovery products are interoperable for LOUIS customers. 38

39 Snapshot of services Used by Members as of December 2014 Training& Webpage& Data&Loads& EDS& Listserves& FootPrints& LUC&& Digital&&Library& Baton&Rouge&Community&College& Bossier&Parish&Community&College& Central&LA&Tech&Community&College& Delgado&Community&College& Grambling&State&University& LE&Fletcher&Community&College& Louisiana&Delta&Community&College& Louisiana&State&University& Louisiana&State&University&A&CES& Louisiana&State&University&at&Alexandria& Louisiana&State&University&at&Eunice& Louisiana&State&University&Law&Center& Louisiana&State&University&in&Shreveport& Louisiana&Tech&University& LUMCON& McNeese&State&University& Nicholls&State&University& Northshore&Technical&Community&College& Northwestern&Louisiana&University& Nunez&Community&College& River&Parishes&Community&College& South&Louisiana&Community&College& Southeastern&Louisiana&University& Southern&University& Southern&University&Law&Center& Southern&University&in&New&Orleans& Southern&University&in&Shreveport/Bossier& Sowela&Community&College& University&of&Louisiana&in&LafayeKe& University&of&Louisiana&in&Monroe& University&of&New&Orleans& LSU&Health&Sciences&Center&A&NO&& LSU&Health&Sciences&Center&A&Shrev&& Pennington&BioMed&Research&Center& Centenary&College&of&Louisiana& Dillard&University& Louisiana&College& Loyola&University&New&Orleans& Our&Lady&of&Holy&Cross&College& Our&Lady&of&the&Lake&College& Saint&Joseph&Seminary&College& Tulane&University& Xavier&University& Tulane&Law& New&Orleans&BapPst&Theological&Seminary& Loyola&Law&School& EZProxy& Mini&Resources& Electronic&Resources& AtoZ&Support& ILL&Support& Gov&&&Doc& EDS&Support& Backups&Hotsite& Symphony&Support& 39

40 4 Staff s Assessment Findings from Staff Interviews about LOUIS strengths and challenges 40

41 Findings from Staff Interviews Part 1 Internal Strengths Well-defined mission Staff cohesion; deep expertise and long LOUIS tenures (strong institutional knowledge); cross-training Great technical documentation Quick responsiveness to member inquiries and problems Great relationships with primary systems and e-resources vendors Strong relationship with LSU ITS, LOUIS sysadmins, and management Synergy and cooperation amongst member institutions and LOUIS staff Challenges With so many long staff tenures, there may be a problem when those employees retire Funding requires constant justification to members since large the drop in Regents funding in 2010 Holistic tracking and display of members usage of (and counts or records in) ILS and e-resources is difficult because of the stats packages associated with those services are different Hard to get library staff to communicate back to us (we ping them, but they often don t respond) and to make better use of LOUIS easy-to-use LOUIS training and self-help services and communications 41

42 Findings from Staff Interviews Part 2 Customer needs/changing library environment Gathering collection stats Help with textbook purchases Shrinking library budgets/staffs need more staff Making sure faculty can use technology (e.g. Curriculum Builder) to ease/improve student s use of relevant library resources Changing library technology environment Mobile circulation for library staff Thin clients/web services Users with mobile devices Single sign-on for library users ISAM to Oracle migration for SirsiDynix Symphony is possible ILS in the cloud (Software as a Service) Possible rising demand for institution-level digital repositories (for digitized copies of unique collections) Continued shift from print to electronic material using various pricing models (e.g. patron-driven and demand-driven e-book acquisition) and making those discoverable; related: possible e-book inter-library lending? Some independent community colleges, particularly those with exclusively electronic resources (versus hard copy holdings), may find the LALINC/LOUIS collaborative pricing too high and choose to purchase a hosted ILS solution directly from a vendor. 42

43 5 Customer Assessment Findings from Customer Survey and Focus Groups 43

44 Who Are LOUIS Customers-Overview LOUIS supports all academic libraries in the state s higher education systems (LAICU, LCTC, LSU, SU, UL) and LUMCON (Universities Marine Consortium). LOUIS currently has 46 academic institution members, 12 private, and 34 public (see list on page 15). In addition, LOUIS works closely with the State Library of Louisiana. 44

45 Count of LOUIS Members Who are LOUIS Customers-Detail Count of Members by Librarian and Library Professional Staff FTEs* Count of LOUIS Members Count of Members by Librarian and Library Professional Staff FTE per 1000 Student FTEs* Librarian and Professional Staff FTEs - Categories Librarian and Professional FTEs per 1000 Student FTE Categories Count of LOUIS Members by 2012 Library Operating Expenses* Count of members by LOUIS Fees as a % of Library Operating Expenses Count of LOUIS Members Count of LOUIS Members Library Operating Expense Categories FY 2013 LOUIS Membership Fees as a % of 2012 Library Operating Expenses* *Source: NCES 2012 Data for library operating expenses, staff and student FTEs 45

46 What Do They Say about LOUIS? In October 2014, LUMA conducted an electronic survey of LOUIS membership (library professional staff). Following is an overview of respondents: 141 responses out of approximately staff at member institutions (approximately 28% response rate). Primary staff roles of respondents are listed in the chart at right. Of those choosing Other, 3 were clearly Deans and Directors, 4 were technical specialists and 2 were collections specialists. 38 respondents indicated they authorized the yearly LOUIS membership payment (representing nearly 87% of membership. 47 respondents indicated they determined the list of electronic resources ordered by their library from LOUIS catalog of e-resources Count of Survey Respondents by Primary Staff Role

47 Importance of Various LOUIS Services to Members Electronic resources were chosen most often as very important (mean of 4.85 on a 5 point scale) to members responding, followed by the ILS (mean of 4.55) and then the ILL system (4.10). These findings indicate members feel these three initiatives are, overall, very important to their institutions. 47

48 Member s Perception of LOUIS fidelity to its Mission and Vision Members were asked to rate how strongly they agreed if LOUIS was pursuing its mission and vision. For the mission LOUIS provides electronic resources access and delivery for my library LOUIS promotes cooperation and communication between my library and other libraries in the LOUIS consortium LOUIS maximizes my library s purchasing power for the services LOUIS provides LOUIS provides library automation services for my library LOUIS researches and implements new information technology solutions for the consortium and my library LOUIS provides training for my library Responses indicate most respondents strongly agree LOUIS is meeting its mission, with median responses all at 5 and mean responses at 4.3 on a 5 point scale. 48

49 Member s Perception of LOUIS fidelity to its Mission and Vision Members were asked to rate how strongly they agreed if LOUIS was pursuing its mission and vision. For the vision LOUIS is a model of collaboration. LOUIS is a leader in providing library information services LOUIS identifies, evaluates, and implements state-of-the-art information technologies; LOUIS fosters an environment of communication, cooperation and collaboration within the state; LOUIS ensures my library is a premier source of information to support research, teaching, and learning needs of my library s community Responses indicate most respondents strongly agree LOUIS is meeting its vision, with median responses all at 5 and mean responses at 4.5 to 4.7 on a 5 point scale. 49

50 Member satisfaction Members were overall very satisfied with 7 dimensions of quality, availability and price of LOUIS services, rating them on average 4.3 to 4.66 on a 5 point scale. 50

51 LOUIS Fees The survey asked those respondents who are responsible for authorizing LOUIS membership fee expenses the following question: For your library, please choose a category below of the approximate percentage of the LOUIS annual membership expense to your library's total annual operating expenses. Count of Responents LOUIS Member Fee as a % of Library Operating Budget % 3-5% 6-10% 11-20% 21-30% 41-50% more Not sure than 50% Member Fee as a Percent of total library operating budget - categories This analysis tells us that, for a large proportion of members, LOUIS fees represent a significant (greater than 20%) percent of their operating budget. We note that this data are at odds with the data comparing 2012 LOUIS fees to budget data from NCES on slide 21 (though that is 2012 data and this is 2014 data), where only 1 member was identified as having an expense higher than 20%). With the NCES data, we were unable to compute percentages for 15 institutions because of lack of data. 3 51

52 6 Public Policy Context Louisiana and Federal Policy Context Impacting LOUIS 52

53 LOUIS is partly funded by public taxes appropriated through the State of Louisiana and administered by the Board of Regents (BOR). The BOR budgeting process submits its budget to the state for all higher education expenses in October, including funding for schools, for BOR s operating budget (which includes an amount for LOUIS). The state has a spring legislative session at which the BOR budget (and hence LOUIS budget from BOR) is approved/appropriated. After the appropriation is approved by the legislature the BOR drafts a contract between BOR and LSU for LOUIS services. LOUIS sends an invoice and then a check is sent to LSU. Note: Within a current fiscal year, any state general fund money not spent by BOR is returned to state, so in April and May, BOR reallocates uncommitted money to a list of priority under funded projects, of which LOUIS is at the top of the list because it is a high priority for the BOR. The BOR contracts with LOUIS for the services provided to members. Louisiana s public higher education funding is not protected by statute in the State s constitution or state law. LOUIS funding is also not protected in state law. Consequently funding can be volatile from year to year. Between FY2009-FY2014, loss of state revenues resulted in dramatic cuts (-34.4%, the largest percentage loss of any state in the nation over that timeframe) to the state s higher education systems. FY2015 was the first year in six years when state appropriations to higher education weren t cut further. 53

54 Federal Policy Changing Federal Policy issues of interest to academic libraries include Funding for and access to federally funded research; e.g. Frontiers in Innovation, Research, Science and Technology Act (FIRST) hampers public access to research whilst FASTR Act (Fair Access to Science and Technology Research) is a pro-open access bill. Recent changes to the Federal Depository Library Program (libraries of record for access to government publications) which negatively impact the program s sustainability and the public s ability to access government records. 54

55 7 Library Context High Level Trends in Academic Libraries Impacting LOUIS Customers 55

56 Academic Library Context Lower funding levels have been experienced in higher-ed libraries throughout the country and, notably, have not recovered in line with the general economic recovery. This has caused a loss of staff, forcing libraries to make due with less. Libraries are increasingly becoming less about physical locations and collections, and more about access to just-in-time resources to aid in research and the classroom. Embedded librarian-ship is also on the rise in some higher-ed settings. The major change in academic settings is the increasing reliance by students and professors on electronic tools and resources for learning. In addition to electronic articles, e-books (and specific chapters of e- textbooks) are becoming increasingly prevalent in post secondary education. Learning management systems are common aspects of post secondary student course management. In addition, many institutions are providing distance education offerings which increases the need for off-campus access to library resources. Other consortia for libraries are providing services similar to that of LOUIS (more will be provided on consortia in Report 2, Competitive Assessment). 56

57 Appendix 2 Competitive Analysis Report 57

58 Competitive Analysis 1/14/2015

59 Introduction Competitive Industry Analysis Consortial Landscape Library Technology Industry Trends Conclusions- Competitive Analysis Table of Contents Competitive Analysis 59

60 1 Introduction This competitive assessment is part two of a three-part report. The reports are the result of a business review engagement conducted by Luma Consulting LLC of Seattle. Principal Partner John Smith conducted the review in the 2 nd half of Part One looked at LOUIS situation its budget, operations and services overview, strengths and weaknesses as reported by staff and customers. It also provided some external context (e.g. general library trends, relevant public policy). Part Two (this report) is a brief Competitive Analysis. This report analyses LOUIS relative to competitive forces and also looks at relevant library technology supplier industry trends. Part Three is a final Business Review Report (Word and PowerPoint), incorporating the previous reports and discussing opportunities, threats, and recommendations. 60

61 2 Competitive Industry Analysis Industry Snapshot and Implications for LOUIS 61

62 Competition Primer LOUIS provides services through a collaborative - jointly entered into by academic libraries in Louisiana - for sharing the costs of purchasing and maintaining library technologies and access to electronic library resources. Any organization that provides a service is part of an industry of similar providers (unless they re the only provider; i.e. a monopoly). An industry experiences more, or less, competition based on five forces: 1) the threat of new entrants (if entry is easy, typically there s more competition), 2) the presence of substitutes or alternatives (more and cheaper substitutes creates higher competition and vice versa), 3) the bargaining power of suppliers (if suppliers are stronger, industry participants have lower cost-controlling power and more competition ensues), 4) the bargaining power of buyers (if buyers are powerful, industry participants have less price-setting power, thus making competition higher), and 5) relations among industry participants (if relations are cordial and services are differentiated, competition is low, if acrimonious and similar, competition for customers is high). In nonprofits, the bargaining power of buyers includes both direct buyers and third party funders. In LOUIS case, buyers are both collaborative members (who directly benefit from the services) and the state (i.e. through the Board of Regents) as a third-party payer. The next five (5) pages discuss each force as it relates to LOUIS. 62

63 Threat of Entrants Generally speaking, LOUIS can be said to be in the library information technology products delivery, service and support industries. The form of LOUIS organization is a formal library consortium, functioning as an entity governed by members and operating tax-exempt out of LSU Information Technology Services. Other entrants could be other nonprofit consortia or for profit providers of similar services. LOUIS, by construction and bylaws, is a geographically-based consortium operating solely in Louisiana and for the benefit of higher education libraries. Nothing legally precludes other entrants from serving LOUIS members (In section 3 below, we discuss other consortia that might intersect in this geography). However, LOUIS has several advantages that act as barriers to other entrants: Goodwill: LOUIS has, since 1992, built strong brand goodwill from members, who have volunteered their personal time as capital toward building the collaborative, and who have voted with their institutions dollars and advocacy energy to support the collaborative. Other entrants would have to overcome this goodwill to provide a similar offering. Switching costs: LOUIS, and their members, as incumbent beneficiaries of their shared purchasing agreements, have built up a significant set of knowledge and capital assets over time. These assets have become embedded in the operations of member institutions libraries. Switching to alternative products or providers would entail significant costs and risks to current members, particularly smaller library members, as assets are owned collectively by members, but the knowledge of running the systems exists in LOUIS staff, documentation, and relationships with primary vendors. Conclusion: The threat of entry of other consortia is low. LOUIS has an incumbent advantage and switching costs are high. For a review of consortia, see section 3 of this report. 63

64 Threat of Substitutes/Alternatives Substitutes to a product or service can come from innovations that cause services to be obsolete, or alternative (possibly unconventional) methods customers might use to get their needs met. Substitutes to LOUIS providing library information services might come from the following: New technologies that make ILS/Discovery software and related tools obsolete, or dramatically cheaper Currently, the complexities of coding enterprise resource management software, either client-hosted or cloud-hosted, make it unlikely that dramatically cheaper alternatives will be available. Inexpensive open source offerings exist but require significant switching costs and offer less robust features than industry-leading ILS and Discovery packages such as the ones in use at LOUIS. Enterprise resource management is not necessarily needed for libraries with very small holdings or exclusively digital content. As more and more content becomes digital in nature, and libraries own and lend less and less physical objects, ILS could become increasingly easier and cheaper to own. It is unlikely that higher education libraries would have small holdings but it is possible that some institutions, particularly two-year technical colleges, could own predominately digital content. New technologies or licensing models that make licensed e-resource content delivery not institution-specific Though self-publishing and open access models are starting to gain tiny inroads into mainstream monograph and serial e-resource/e-content aggregators, open access marketing and distribution channels cannot compete with that of large aggregators yet. A change in library lending models and behaviors that makes inter-library lending software obsolete Demand driven acquisition could make interlibrary lending obsolete, assuming the marginal demanddriven purchase of the currently un-owned item needed by the library s patron is cheaper than the marginal cost of supplying the same item owned by another library within the ILL system. 64

65 Power of Buyers Even though LOUIS can be seen as a unified collaborative, each member makes rational purchasing decisions about its desire to use and afford the services jointly agreed by the collaborative. Since participation is not mandated, any one member (currently there are 46) could opt-out of some or all of the supported initiatives and, by so doing, increase the fees to remaining participants as costs to support the initiatives are re-distributed. Likewise, the state, or its agents, could opt out of funding the collaborative as a whole, as it almost did in 2010 when funding for higher education was scarce. Historically, in its early years (early 1990s) this decision of the state to fund LOUIS was mandated in legislative statute. Since 1996, however, support of LOUIS has been at the discretion of the the State of Louisiana Board of Regents (BOR) as a component of their general operating budget. Academic libraries, however, have limited budgets, limited technical staff, and, hence, switching costs for library information systems are high, meaning the incumbent collaborative solution (LOUIS) is the most effective. Conclusion: Direct buyers are somewhat powerful. The third party funder (BOR) is more powerful, however, as they don t themselves have switching costs (they aren t direct beneficiaries) and because neither LOUIS funding - nor higher education funding in general- is guaranteed or protected in Louisiana statute. However, the risks to NOT funding LOUIS are high to both academic library members of LOUIS and the BOR because for two key reasons: 1. In the absence of much cheaper alternatives, having each member make alternative purchasing arrangements for similar information services and resources would be prohibitively expensive. 2. Were libraries forced to purchase services on their own, the level of service they could afford would likely be unsatisfactory to higher education accreditation bodies, putting their whole institution s accreditation at risk for not providing adequate library resources to students and teachers. This would be a scenario acceptable to neither the BOR nor the members. 65