state library of NSW A business case framework for RFID in NSW public libraries

state library f NSW A business case framewrk fr RFID in NSW public libraries

A business case framewrk fr RFID in NSW public libraries

STATE LIBRARY OF NSW MACQUARIE STREET SYDNEY NSW 2000 TELEPHONE (02) 9273 1414 EMAIL: library@sl.nsw.gv.au www.sl.nsw.gv.au A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES THIS PROJECT WAS COMMISSIONED BY THE STATE LIBRARY OF NSW ON THE RECOMMENDATION OF THE NSW PUBLIC LIBRARY NETWORK RESEARCH COMMITTEE FOR THE LIBRARY COUNCIL OF NSW AND WAS UNDERTAKEN BY HUEGIN CONSULTING FOR FURTHER INFORMATION ON A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES AND AN ONLINE VERSION OF THIS PUBLICATION, PLEASE VISIT www.sl.nsw.gv.au P&D4060-6/2013 ISBN 0 7313 7218 2 STATE LIBRARY OF NEW SOUTH WALES, JUNE 2013 THIS WORK IS COPYRIGHT. IT MAY BE REPRODUCED IN WHOLE OR PART FOR STUDY AND TRAINING PURPOSES SUBJECT TO THE INCLUSION OF ACKNOWLEDGMENT OF THE SOURCE AND NO COMMERCIAL USAGE OR SALE. REPRODUCTION FOR PURPOSES OTHER THAN THOSE INDICATED ABOVE REQUIRES PERMISSION FROM THE STATE LIBRARY OF NSW. REQUESTS AND ENQUIRIES CONCERNING REPRODUCTION AND RIGHTS SHOULD BE ADDRESSED TO PUBLIC LIBRARY SERVICES, STATE LIBRARY OF NEW SOUTH WALES pls@sl.nsw.gv.au THE STATE LIBRARY OF NEW SOUTH WALES IS A STATUTORY AUTHORITY OF, AND PRINCIPALLY FUNDED BY, THE NSW STATE GOVERNMENT. PRINTER: Pegasus Print Grup PAPER: (COVER) AND (TEXT) 100% RECYCLED PAPER MADE FROM 100% POST CONSUMER RECYCLED WASTE PRINT RUN: 200 ii A Business case framewrk fr RFID in NSW Public Libraries

Frewrd The State Library f NSW, n behalf f the NSW Public Library Netwrk Research Cmmittee, cmmissined and funded a prject t undertake a cst benefit analysis f using Radi Frequency Identificatin (RFID) in NSW public libraries. The aim f the prject was t explre and dcument the csts and benefits f using RFID in a variety f cntexts relevant t the NSW public library netwrk. The prject sught t prvide a guide t NSW cuncils cnsidering RFID and enable an infrmed cmparisn t be made between service mdels using RFID and nt using RFID. This reprt f the prject ffers a practical business case framewrk which libraries can use t ascertain the mst effective and cst efficient service mdel fr circulatin and stck management, in a variety f cntexts. Acknwledgements The Public Library Netwrk Research Cmmittee members fr this prject were: Jill Webb, Ryde City Library Linda Hrswell, Msman Library Adele Casey, Bland Shire Cuncil Paul Scully, Liverpl City Libraries Alexander Mills, Singletn Public Library J Carmdy, Richmnd Tweed Reginal Library Frances Sims, State Library f NSW Camern Mrley, State Library f NSW Leanne Perry, State Library f NSW Camern Mrley and Leanne Perry made a cnsiderable cntributin t this publicatin in terms f subject expertise and editrial assistance. The State Library thanks Huegin's Richard Buller and Ben Petschel, and als the libraries that agreed t be case studies fr the research. Frances Sims Directr, Public Library and Cmmunity Learning Services State Library f NSW A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 3 A Business case framewrk fr RFID in NSW Public Libraries 1

Executive Summary Apprach In cnsultatin with the State Library f NSW, Huegin undertk interviews with a selectin f libraries acrss the State that had existing Radi Frequency Identificatin (RFID) systems installed fr the circulatin management f their library cllectins. These libraries had previusly made the decisin t invest public funds in installing an RFID system. We sught t understand hw each library cnsidered the ptins (and the csts and benefits f these) available t them prir t deciding t install RFID. Supprted by a literature survey n RFID in public libraries and in cnsultatin with the State Library, we prpsed that it wuld be beneficial t establish a rbust business case framewrk arund which future RFID purchases culd be made. This wuld place the nus nt a tender team t prvide crrect and current cst and benefit data fr the business case, rather than use a mdel that wuld quickly becme ut f date. We assessed the influence f RFID n circulatin management in libraries and sught t define the cst drivers and benefits which will aid the design and cnfiguratin f future installatin ptins. We als sught t prvide NSW public libraries with a means t carry ut benefit and key perfrmance indicatr tracking. Results Our investigatins f RFID systems in existing NSW reginal libraries fund limited quantificatin f the installatin csts and little quantificatin f benefits. It was evident that it was ging t be difficult t establish a rbust csts and benefits mdel that culd be used fr future purchases. Thrugh interviews with libraries that currently perate RFID, we established the key csts and benefits f RFID systems fr public libraries. We used these as the basis f a business case framewrk t be used fr making future purchases f RFID systems. Huegin recmmend that the business case framewrk wuld prvide a sund basis fr making prudent and efficient decisins abut the investment f public funds in library infrastructure prjects. We demnstrated a business case framewrk thrugh the use f examples f RFID system installatins. T supprt the business case we have prvided a means t als assess the lnger term benefits f RFID systems. 4 2 A Business case framewrk fr RFID in NSW Public Libraries

Recmmendatins The key recmmendatins frm this reprt are: That the State Library makes available a business case framewrk t help develp prudent and efficient cases fr installing RFID systems. That public libraries track the direct and indirect staff csts assciated with the mre efficient prcesses that RFID can deliver. It is recmmended that these shuld be calculated prir t any future purchase t be able t truly represent any efficiency imprvement that an upgraded circulatin system may bring. Tw means f tracking desired utcmes shuld be implemented during and fllwing RFID installatin. The first is mnitring the lng term generatin f quantitative benefits by tracking planned benefits versus actual benefits achieved. The secnd is using KPIs t enable cntrl f perfrmance thrugh effective feedback. A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 5 A Business case framewrk fr RFID in NSW Public Libraries 3

4 A Business case framewrk fr RFID in NSW Public Libraries

Cntents Frewrd 1 Executive Summary 2 1 Intrductin 7 2 Literature Survey f RFID in the cntext f public libraries 11 3 Case studies 21 4 Circulatin management assessments fr RFID 35 5 Business case framewrk fr RFID in the cntext f public libraries 39 6 Benefits tracking and key perfrmance indicatrs 59 7 Future applicatins f RFID in libraries 64 Annex A Requirements traceability matrix 67 Annex B Interview agenda and particulars 69 Annex C Example csts 72 A Business case framewrk fr RFID in NSW Public Libraries 5

6 A Business case framewrk fr RFID in NSW Public Libraries

1 Intrductin We are primarily investigating the csts and benefits, and verall return n investment fr RFID tagging f library cllectins. We interviewed a number f libraries t understand hw they decided t invest t maximise that return n investment. We sught t understand hw each library cnsidered the ptins available t them, prir t deciding t install RFID and use it as part f a circulatin management system*. In this sectin we prpse that it wuld be mre beneficial t establish a rbust business case framewrk arund which future RFID purchases culd be made. * We use the term circulatin management system t describe any system related t check-in, srting, shelving, item lcatin, reservatins, check-ut and security (as illustrated n page 27). This is different t cllectin management which manages the lifecycle f an item frm purchase t dispsal r archive. A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 7 A Business case framewrk fr RFID in NSW Public Libraries 7

RFID in the NSW library netwrk Public libraries play imprtant rles as infrmatin resurce prviders and cmmunity hubs. Library usage statistics indicate that public libraries are highly valued by their cmmunities, with the 2012 figures shwing mre than 35 millin visits t NSW public libraries, almst 48 millin lans and ver 52,000 public prgrams and events (surce: State Library f NSW Public Library Statistics 2011/12). In 2011, there were 99 public library services in NSW f which 24 had implemented Radi Frequency Identificatin (referred t herein as the RFID systems r RFID ), and in 2012 the number increased t 31. Reasns fr implementatin included, amng thers, imprvements in efficiency and custmer service and the capability t expand in future while maintaining existing staffing levels. As can be seen n page 18, implementatin f RFID was nt limited t libraries serving a large ppulatin r with a high item turnver t staff rati, with many small t mediumsize RFID libraries and the smallest serving a ppulatin f just ver 10,000. Huegin was engaged t develp a cst and benefit mdel that wuld evaluate the installatin f RFID bk tagging systems used in public libraries acrss the State. The riginal intentin was that the csts and benefits culd then be cmbined in a mdel t calculate a return n investment (ROI). The many cmbinatins f library types and pssible RFID slutins meant that calculating any ROI will depend n the design cnfiguratin chsen and that a cst and benefits mdel needed t be cmprehensive enugh t cver all pssible slutins. Our investigatins int RFID systems in existing NSW public libraries fund limited quantificatin f installatin csts and limited quantificatin f benefits. Sme f ur bservatins have been supprted by literature. It was evident that it was ging t be difficult t establish a rbust csts and benefits mdel that culd be used fr future purchases. Instead we prpsed t the State Library f NSW that it wuld be mre beneficial t establish a rbust business case framewrk arund which future RFID purchases culd be made. This wuld place the nus nt the tender team t prvide crrect and current cst and benefit data fr the business case. 8 8 A Business case framewrk fr RFID in NSW Public Libraries

The need t establish prudent and efficient business cases Cnsidering the abve, Huegin recmmend that the basis fr establishing RFID systems in a library cntext shuld start with the use f a business case framewrk. The business case framewrk establishes the pretext fr the purchase f any RFID system within the cntext f csts, benefits, risks and ptinality. This reprt demnstrates hw t build prudent and efficient business case fr libraries wh are cnsidering installing RFID systems. By fllwing the business case framewrk the decisins t invest public funds shuld prvide a clear and cncise means by which a RFID prject can be deplyed. Establishing a hyptheses fr the csts and benefits analysis f RFID T establish the necessary data and infrmatin t build the business cases, Huegin sught t interview a number f libraries with existing RFID systems. Prir t starting this survey we established sme key hyptheses that we set ut t test. 1 T determine a ROI, the csts, benefits and risks need t be quantified. We believe that whilst csts are relatively straightfrward t define, the benefits will be less tangible. We believe that ptential business risks in perating RFID systems have nt been determined. The csts and benefits will depend n the breadth and depth f RFID deplyment in different library cntexts. 2 The full life-cycle f the system needs t be cnsidered t truly understand the investment decisin. Installatin ptins shuld be cnsidered ver a suitable multi-year life span. Additinal lifecycle features f an RFID system shuld be cnsidered such as bslescence and vendr lck. 3 Full ptinality needs t be cnsidered in the investment decisin including the d nthing ptin. There may nly be a few unique features f the technlgy that give it an edge ver existing technlgies. Where the features are similar then it will be difficult t demnstrate a clear financial advantage withut cncrete metrics t cmpare ptins. 4 Ptential benefits are nt necessarily realised. Benefits will nly be f lng term success if the system imprvements allw staff t be deplyed elsewhere. These ptential benefits will eventually be realised nly if the deplyment actually makes an imprvement elsewhere and that this is measured. The literature survey and ur wn investigatins infrmed the hyptheses fr RFID csts and benefits. A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 9 A Business case framewrk fr RFID in NSW Public Libraries 9

Defining csts and benefits f RFID in a NSW library cntext Whilst the data that was gathered will be f benefit t the NSW Public Library netwrk, it will be the ability t use a rbust business case framewrk in which future RFID purchases are made that is imprtant. In establishing a business case framewrk we als made the fllwing bservatins: There is a need t ensure any purchase f a RFID system shuld align with the strategic intent f the verall rganisatin. There is a need t cnsider whle f life csts and benefits and nt just at the installatin stage. This shuld include assessment f staff csts befre and after installatin. Risks shuld be cnsidered frm bth a prject and business perspective. Optinality f installatin pssibilities is an imprtant part f the tendering prcess. In cnsultatin with the State Library, we undertk a number f interviews with a selectin f libraries acrss the State that had RFID systems installed. These libraries had previusly made the decisin t invest public funds in installing an RFID system. As we are primarily investigating the csts and benefits, and an verall ROI fr RFID, we interviewed the libraries t understand hw they decided t invest t maximise this ROI. We sught t understand hw each library cnsidered the ptins available t them prir t deciding t install RFID. The requirements f this csts and benefits prject and where they are addressed in this reprt, are given in Annex A. 10 10 A Business case framewrk fr RFID in NSW Public Libraries

2 Literature Survey f RFID in the cntext f public libraries The literature survey cvers the typical and key csts and benefits f RFID systems fr public libraries, and hw these might prvide a return n investment fr the rganisatin. A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 11 A Business case framewrk fr RFID in NSW Public Libraries 11

Review f csts and benefits f RFID systems in libraries There have been many studies f the csts and benefits f RFID in libraries and many different appraches t the analysis reviewed in this reprt. Sme studies f nte include a survey f 27 Califrnian public and academic libraries (Engel 2006), a technical analysis by the standards bdy fr the UK bk industry (Edwards & Frtune 2008) and an analysis f barriers t implementatin in Australian academic libraries (Butters 2008). RFID is used in varius industrial applicatins. RFID systems in libraries have been in existence fr mre than a decade (Butters 2010 p6) with the first Australian implementatin being as early as 2002 (Butters 2008 p198). The majr alternative technlgies are barcdes (fr item identificatin) and electrmagnetic (EM) strips (fr detectin, als knwn as tattle-tape ). RFID tags can be used fr bth identificatin and detectin, alne r in cnjunctin with barcdes and/r EM. An imprtant feature f RFID is that the radi waves generated during the reading prcess are able t penetrate many materials and s can be emplyed where tags are nt visible t the eye (Butters 2010 p5). The key pints are given t the right. 1 Libraries have different pririties accrding t their lcal requirements (Butters 2008 p200). Since each library is different, with different gals, variatins in size, cllectins, staff, labur csts, pening hurs and ways f prviding service, there cannt be ne single frmula fr determining what csts and benefits culd be btained that is applicable t every library. (Engel 2006 p8). 2 Many f the csts and benefits are intangible, fr example Engel (2006) cnsiders csts vs savings and benefits vs detriments. In particular, Reprted benefits such as reducing lines at the circulatin desk, patrn satisfactin and staff satisfactin are best treated as quality imprvements, and can be as imprtant t a library as cst savings. These need t be included in any cst/benefit analysis even thugh they cannt be easily quantified. (Engel 2006 p37-38). 3 As a relatively new and rapidly evlving technlgy, csts may vary cnsiderably (Engel 2006 p6) and the time perid f useful life f the equipment may be unknwn (Engel 2006 p39). 4 Crrespndingly, sme f the benefits may be nt fully realised r cnsidered as future pssible benefits (Engel 2006 p21, Edwards & Frtune 2008 p17). 5 Sme f the benefits can ptentially be realised thrugh ther technlgies (Edwards & Frtune 2008 p9, Ayres 2012 p17). 12 12 A Business case framewrk fr RFID in NSW Public Libraries

Identifying the key cst drivers with RFID Defining the cst drivers The studies categrise the csts in a manner similar t that f (Engel 2006): Implementatin (ne-ff) Equipment and supplies Cnversin Other (training, installatin, pre-implementatin research and planning) Maintenance (nging) Tagging Equipment maintenance Engel (2006, p28-33) reprted the range f csts bserved by the Califrnian libraries that had implemented RFID at the time f the study. They nte that There is n way t give the typical' cst f a system, because csts vary between vendrs, and the needs and gals f each library are different. Typical equipment csts include (Engel 2006 p31): Bk tags AV tags and cases Security gates Staff check-ut / check-in statin Self-check statins Tag prgrammer Inventry scanner Similarly the study fund significant differences in the cst f labur fr tagging, due nt nly t the size f the cllectin but als wh did the tagging (staff, vlunteers r temprary persnnel) and what tasks were assciated with tagging. Fr example, the study fund that The time t tag an item varied in the way it was reprted as did the tasks assciated with tagging. Sme libraries reprted the time it tk t get the item frm the shelf t the tagging statin, tag it and return it t the shelf. Others cunted nly the time it tk t tag the item nce it was at the statin. A number f libraries used the pprtunity, with the item in hand, t assess it fr cnditin and pssible weeding, which lengthened the time spent per item. (Engel 2006 p31). Estimates varied frm 5 secnds t 2 minutes per item. Similarly, difficulties were encuntered in estimating the duratin f the tagging effrt, being dependent n the size f the cllectin, hw many staff r vlunteers are tagging, hw many A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 13 A Business case framewrk fr RFID in NSW Public Libraries 13

hurs a day tagging is dne, whether the tagging is cntinuus r stp-and-start, and what the deadline is. (Engel 2006 p32) The study als perfrmed a cst cmparisn fr electrmagnetic (tattle-tape) security versus RFID (Engel 2006, p30) by estimating the cst f equipment and supplies fr a hypthetical library with 60,000 items, finding that the csts were bradly similar with RFID being slightly higher due partly t the cst f RFID tags at the time. Onging csts The study fund that nging tagging csts were ften very clse t the cnversin csts n a per-item basis (Engel 2006 p34), whereas equipment maintenance csts were typically a percentage f the installatin cntract. The study nted that it is t sn t estimate the lngevity f RFID equipment, with factrs such as durability f equipment and ease f upgrade being currently unknwn. 14 14 A Business case framewrk fr RFID in NSW Public Libraries

Identifying the key benefits delivered by RFID Each study apprached its benefits analysis differently and fund different specific ptential benefits. Butters (2008, p200) describes the expected benefits f RFID accrding t a cmmn set f psitive utcmes desired by mst libraries: Prductivity Wrk Health & Safety Cllectin management Security Custmer service Image These categries are verlapping and interlinked. Each f the specific ptential benefits listed in ther studies bradly fit within ne r mre f the abve categries; fr example Engel (2006 p40-41) cnsiders ne-time benefits realised during the cnversin prcess (weeding, inventry, lcating missing/mis-shelved items) and n-ging benefits (circulatin staff cst reductin, increase in service and prductivity, theft preventin and lcatin f materials, reliability and quality imprvements). RFID has the ptential t imprve prductivity by reducing the staff time required t prcess items in circulatin. This is regarded as prbably the mst cmmn mtivatin fr implementing RFID (Butters 2008 p 201, Engel 2006 p17, Edwards & Frtune 2008 p11). RFID can imprve prductivity thrugh: Easier / mre efficient handling f items Self-check facilities Self-return Srting Handling f items is ptentially much mre efficient than with previus systems such as barcdes, which require the user t lcate the barcde (pssibly inside the bk) and align it with the infrared beam n an item-by-item basis (Engel 2006 p17). In cntrast, RFID tags can be scanned simultaneusly withut alignment and with the bk r multimedia case clsed. Self-service is ften seen as the quickest win fr significant cst savings, with the methdlgy being very similar t that emplyed by self-service systems fr barcded stck fr ver 25 years (Edwards & Frtune 2008 p11). Fr example, RFID s pssibilities fr faster check ut fr circulating materials and easy t learn self-check ut appealed t libraries that will need t d mre with the same level, r perhaps even less, staffing. Hwever Edwards & Frtune (2008 p9) als ntes that many libraries appear t have invested in RFID in the belief that it was their nly means f deplying self-service, nly t discver later that they need nt have dne s. Prductivity gains can als be realised thrugh self-return and assisted srting. Self-return systems vary and include a mdified self-check unit (with the user instructed t place the returned items A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 15 A Business case framewrk fr RFID in NSW Public Libraries 15

in bins r n shelves), an RFID-enabled chute (that invisibly executes the check-in) and a secure returns slt (where the system checks first that the item belngs t the library and is a cmplete set). Sme libraries have autmatic srting via cnveyrs and bins. The ways that individual libraries utilise the prductivity gains can range frm redeplyment f staff time tward value-added services, t dwnsizing r budget reductins (Butters 2008 p201, Engel 2006 p17). Butters (2008 p201) cnsiders the prductivity cst/benefit calculatin and argues that libraries with high circulatin and small cllectins may find it easier t justify the expense f cnverting t RFID fr reducing the burden n circulatin staff. Hwever Ayres (2012 p17) states that based n hw high-circulating libraries use RFID tday, they are ften much better ff purchasing an AMH system (autmated check-in system with three r mre srts) if their bjective is t reduce perating expenses... RFID implementatins typically cst hundreds f thusands f dllars... a small AMH system can be had fr under $50,000. 16 16 A Business case framewrk fr RFID in NSW Public Libraries

Identifying the key benefits delivered by RFID Wrk Health & Safety RFID systems have the ptential t reduce staff injury. This is expected t be achieved mainly thrugh reductin in the frequency f repetitive mtins used in checking ut materials (Engel 2006 p20 and 37). The Califrnian study nted that mst libraries had this as a gal and several libraries yielded benefits in this area. Cllectin management RFID has the ptential t facilitate tasks previusly cnsidered impractical and intrduce new ways t manage cllectins, such as reducing the time taken fr inventries frm mnths t hurs r days, r lcating items fr custmers. This is perhaps the least well-understd ptential benefit f RFID. The Califrnian study (Engel 2006 p19) fund that mst f the libraries surveyed had purchased RFID with the ability t perfrm inventries as a primary r secndary gal, althugh nly ne library reprted actual experience in using RFID fr inventry. Other studies nte that RFID-based stck management... is an area f peratin that ffers bth the ptential fr greatest innvatin and greatest disappintment (Edwards & Frtune 2008 p14) and the reducing need fr access t printed materials and the large cllectin sizes within academic libraries essentially mean that RFID is a very expensive cllectin management slutin if it is the nly benefit sught, and ptentially ne with a slwly diminishing value (Butters 2008 p202). Security RFID has the ptential t imprve security in libraries. The Califrnian survey (Engel 2006 p19) fund that tattle-tape slutin that has been dminant fr the past decade r mre was seen as unsatisfactry t mst f the libraries interviewed. With RFID systems, sme libraries benefited frm fewer false alarms (and cnsequently fewer bag searches) and knwledge f which items set ff the alarm. Furthermre ne library stated that the self-check system was mre secure than their previus system where it was pssible fr patrns t turn ff the security tag withut checking ut the item. On the ther hand, sme authrs state that RFID-based security is nt as effective as that prvided by EM-based security (Butters 2008 p203) - fr example RFID tags may be easier t find and remve than EM security strips. Hwever libraries that have nly part f their cllectin secured may benefit: the public library psitin that an 80% effective slutin cvering all materials is still better than a 100% slutin cvering 40% f the cllectin may still be sund. Custmer service RFID has the ptential t imprve patrn satisfactin thrugh varius means such as imprved efficiency, reduced lines at check-ut, a reductin in the number f false alarms r bag searches. Interestingly, the Califrnian survey nted that, given the cntrversies abut RFID and privacy, amng the libraries surveyed, mst have patrns that are happy with the system (Engel 2006 p24). A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 17 A Business case framewrk fr RFID in NSW Public Libraries 17

Image Sme studies have nted that image may be a factr in the RFID decisin: fr example, it may be expected that the prfile f the library will be enhanced thrugh the implementatin f RFID (Butters 2008 p200). 18 18 A Business case framewrk fr RFID in NSW Public Libraries

Identifying the risk assciated with RFID systems Many authrs discuss at least sme f the risks r cncerns assciated with implementing RFID systems. In particular, the studies by Butters(2010) and Edwards & Frtune(2008) cver many risks frm a technical perspective and discuss ways t avid cmmn pitfalls. Business risk Assciated with any prject is a risk f pr investment return. Libraries wnder whether the expense is wrth the presumed gains in efficiency (Engel 2006 p9). Butters (2008, p6) suggests that the imprtant questins t cnsider are these: D we really knw what we want RFID t deliver in ur library r can we devise a prcess t find ut? Are there systems n the market that can deliver what we want? Can we cnstruct a psitive & realistic business case t demnstrate that the benefits justify the cst? D we have the skills and experience (r access t them) t make the right system evaluatin/selectin? Fr example, we have an envirnment where there are significant differences in the strengths and weaknesses f vendr s RFID slutins... This means that the library must have a very clear visin f what thse success factrs are befre appraching the market. T d therwise is t risk having the success factrs influenced by the pitch f a specific vendr. This is a particular risk when the knwledge gap between the systems supplier and the library is great (Butters 2010 p17-18). Safety and privacy There are perceived health risks assciated with electrmagnetic fields at UHF frequencies emplyed in newer RFID technlgy (Butters 2010 p15), hwever the health risk is cnsidered lw cmpared t devices such mbile phnes (Butters 2010 p4). There are cncerns abut brrwer privacy (Engel 2006 p9), hwever it is nted that varius technical reasns make malicius surveillance impssible at medium t lng range and while shrt range cvert scanning may be technically pssible, there are numerus things that libraries can d t mitigate the risk (Butters 2010 p8-9). A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 19 A Business case framewrk fr RFID in NSW Public Libraries 19

Risk f bslescence needs t be cnsidered fr lng term slutins There is a risk that the technlgy des nt perfrm t expectatins r becmes bslete. Libraries are cncerned that the still-evlving technlgy may leave them with yesterday s prduct that n lnger wrks with a new generatin f equipment (Engel 2006 p9). In particular, with many RFID suppliers nw in the market... RFID is an area in which standards are particularly imprtant... libraries will need RFID systems which can successfully interperate with each ther (Edwards & Frtune 2008 p7). It is suggested that current Internatinal Standards Organisatin (ISO) standards g sme way t address the needs f libraries but d nt address data security and interperability (Butters 2010 p9-10). Edwards & Frtune (2008 p8-9) nte that sme RFID suppliers are nw claiming t be able t read any tag frmat, hwever they recmmend sme pints t cnsider carefully befre pting fr this apprach, including: Hw many different data mdels... can be accmmdated by a Library Management System (LMS) befre the systems perfrmance becmes unacceptably slw? Hw easy will it be t switch LMS r RFID prvider in the future if the new prvider des nt supprt the slutin being used? Edwards & Frtune (2008 p7) als discuss issues in respnsibility fr managing data - while it shuld nt really be a cncern fr libraries, they shuld simply be aware that RFID and LMS suppliers need t c-perate and prvide libraries with slutins that wrk. Primary References Ayre, Lri Bwen (July 2012), Chapter 2: RFID Csts, Benefits and ROI, Library Technlgy Reprts, vl 48 n 5 pp17-19, http://www.alatechsurce.rg/ltr/index Butters, Alan (September 2010), Radi Frequency Identificatin (RFID): an intrductin fr library prfessinals, Sybis Whitepaper, http://www.sybis.cm.au/sybis/rfid Whitepaper Ed 2.pdf Butters, Alan (September 2008), RFID in Australian academic libraries: explring the barriers t implementatin, Australian Academic & Research Libraries, vl 39 n 3 pp 198--206, Edwards, Simn and Frtune, Mick (Nvember 2008), A guide t RFID in libraries, BIC e4libraries prject, http://www.bic.rg.uk/files/pdfs/090109 library guide final rev.pdf Engel, Elena (July 2006), RFID implementatins in Califrnia libraries: csts and benefits, BIC e4libraries prject, http://kcyle.net/rfidcstsbenefits.pdf 20 20 A Business case framewrk fr RFID in NSW Public Libraries

3 Case studies Thrugh interviews with libraries wh currently perate RFID-based systems, we cnslidated ur views n the key csts and benefits f RFID systems fr public libraries. Our investigatin fund that, whilst rbust tender prcesses were fllwed, a business case framewrk wuld be useful in assessing future purchases f RFID systems. A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 21 A Business case framewrk fr RFID in NSW Public Libraries 21

Case study verview In the case studies ur aim was t understand the experiences f a representative selectin f libraries that had already implemented RFID technlgy. In particular, we sught t understand hw the libraries perate their circulatin management system using the RFID technlgy. At sme pint in the past these libraries have made the decisin t invest public funds in installing an RFID system. As we are primarily investigating the csts and benefits, and verall return n investment fr RFID, we interviewed the libraries t understand hw they decided t make the investment. We sught t understand hw each library cnsidered the ptins available t them prir t deciding t install RFID as this technlgy is nt necessarily the nly means by which a circulatin management system can be upgraded. RFID des have its drawbacks s we sught t understand hw the libraries cnsidered these and whether they were vercme. The interviews were cnducted in a structured way. We used a standard agenda fr each case and visited the libraries in persn. The interview agenda and particulars are in Annex B. T assess csts and benefits, we chse a representative selectin frm as diverse a range f cntexts as pssible, including: small, medium and large library services urban and rural envirnments stand-alne, multiple-utlet, cllabrative and reginal implementatins basic, intermediate and advanced RFID features implemented The fllwing libraries were selected in cnsultatin with the State Library NSW: Library Lcal gvernment classificatin RFID implementatin RFID ntes Ryde Urban Metr 2008 Large metr library Sutherland Urban Metr 2008 Very large metr library The Hills Urban Fringe 2003 Early uptake with autsrt capabilities Leetn Rural Agricultural 2007 Riverina Mixed (Urban/Rural) 2009 Early uptake and small standalne Large reginal implementatin Great Lakes / Greater Taree Urban Reginal Twn/City 2010 Cllabrative implementatin 22 22 A Business case framewrk fr RFID in NSW Public Libraries

General bservatins f libraries and RFID in NSW A snap-sht f RFID libraries in NSW The libraries interviewed cvered a diverse range f lcatins which serve ppulatins sizes frm 12,000 t 220,000. The libraries serve either rural r urban ppulatins. Rural services are ntable fr lw ppulatin density and large distances between branches whereas urban libraries tend t serve large cncentrated ppulatins. Included was the Riverina Reginal Library service which has 14 service pints, including 12 branches and a mbile library, and serves 9 member lcal cuncils. See callut bx. Library funding surces All libraries have their peratinal expenditure primarily funded by the lcal cuncils with subsidies frm State Gvernment averaging 8% statewide, and ranging frm 3% t 30% depending n the size f the Lcal Gvernment area ppulatin (Surce: Public Library Statistics 2011/12). On the ther hand, capital expenditure fr prjects such as RFID implementatin are funded by any cmbinatin f cuncil grants, internal budgets/reserves and State Library f New Suth Wales grants. The purchases f the RFID systems were managed thrugh the Lcal Gvernment Prcurement prcess. Callut bx - Riverina Reginal Library Riverina Reginal Library prvides headquarter services in the city f Wagga Wagga by prviding centralised infrmatin systems, technlgy supprt, management and gvernance. Riverina des nt have jurisdictin ver hw the RFID technlgy is used but is invlved in the acquisitin and deplyment. Wh has RFID in NSW libraries? The current uptake f RFID technlgy in NSW libraries des nt necessarily fllw any particular trend by library feature. Neither the size f cllectin, staff numbers nr serviced ppulatin are clear drivers f the need t update t RFID (as illustrated n the fllwing page). It seems that the needs driving the requirements t upgrade circulatin management systems t the RFID technlgy depend n specific lcal circumstances. Reasns t invest in RFID Many f the libraries were seeking t mve their strategic fcus t end-user benefits (such as Riverina s cllectins t clients strategy initiated in 2005) while at the same time reducing the burden n circulatin staff. This created the need fr rbust self-check laning by the custmer and an equally rbust security system t supprt it. Whilst libraries were cnsidering this, there were ther issues f bslescence that needed addressing such as speed f lending, accuracy f returns, ease f items lcatin and simplified and rapid stcktaking. The prevailing view amng the interviewed libraries was (and still is) that tattle-tape security is ld technlgy and that RFID is the way f the future with many mre ptential applicatins invlved in the acquisitin and deplyment. A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 23 A Business case framewrk fr RFID in NSW Public Libraries 23

In 2011/12 there were 99 library services in NSW f which 24* use RFID Item annual circulatin per staff member Ppulatin served by library 50,000 400,000 40,000 300,000 30,000 20,000 200,000 10,000 100,000 0 With RFID Withut RFID 0 With RFID Withut RFID Staff full time equivalents per library Item turnver frequency per annum 80 8 60 6 40 4 20 2 0 With RFID Withut RFID 0 With RFID Withut RFID Surce: NSW Libraries using RFID 2011 (State Library NSW) and Public Library Statistics 2010/11 (State Library NSW) *At the time this study was published in 2013, there were 31 ut f 99 libraries using RFID. 24 24 A Business case framewrk fr RFID in NSW Public Libraries

The transitin made frm nn-rfid t RFID in libraries Prir circulatin management systems The main incumbent technlgies fr circulatin management were barcdes fr item identificatin and electrmagnetic strips fr detectin, als knwn as tattle-tape. Barcding allws cmputerisatin f item data and hence electrnic management f custmer accunts but n its wn des nt prvide security as the exit devices cannt read the barcde. If the system is cupled with tattle-tape then the exit devices can detect secured items but cannt determine which items set ff the alarm. Several f the libraries had n security r had placed inactive dummy gates as a deterrent measure. The remainder f the libraries had tattle-tape security systems, with several service pints using custmer self-check machines (vendr 3M). The feedback frm the interviewees was that existing technlgy had reached the limits f its usefulness in varius ways. The libraries with n electrnic security were lking t upgrade, and sme libraries were pening new branches r mving int new buildings. Sme libraries had experienced a high rate f false alarms (thugh this was nt the primary mtivatin t switch security methds). Where self check was nt available, library staff were required t scan items at the circulatin desk. One library had determined that there were 32,000 lans per staff member per annum creating significant wrk-place pressure, and mst f the libraries described a need t either tighten peratinal budgets r expand services within the existing budget. Additinally, barcded cllectins required significant effrt fr stck take f the inventry. Fr ne case this tk apprximately 3 years t cmplete acrss all branches and anther had nt perfrmed an inventry fr 10 years. A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 25 A Business case framewrk fr RFID in NSW Public Libraries 25

Hw RFID has been implemented by libraries in NSW Typical cnfiguratins Implementatin f the RFID systems generally began with retrspective tagging/cnversin f the cllectin fllwed by installatin f the equipment at the central library, and later purchases f additinal upgrades r rllut t ther branches in the netwrk. Mst f the interviewed libraries have retained the barcdes as a backup system r t assist the tagging prcess (ne is planning t phase ut the use f barcdes), hwever nne still use tattle-tape as an additinal security measure (sme libraries had cnsidered a dual RFID/tattle-tape system but fund it much t expensive). After funding had been apprved, implementatin f the RFID systems jintly purchased by Greater Taree and Great Lakes tk apprximately 6 mnths frm negtiatin t installatin. This included tagging f the entire cllectins, althugh RFID systems were installed nly at the central libraries at Taree and Frster where the bulk f the lan transactins ccur. The remaining branches still use barcdes, with rllut f RFID systems planned fr the near future. Fr the case f the Riverina Reginal Library the implementatin f RFID was perfrmed initially at Wagga Wagga and then rlled ut t the branch netwrk ver 3 years in a significant prject management undertaking. Only tw very small Riverina branches were nt fitted with RFID technlgy; the mbile library has a staff-check statin but n security gates due t signal interference frm metal in the bdywrk f the truck. The typical equipment installatin cnfiguratins include: Custmer self-check service pints Staff-check statins at the circulatin desk Internal return chute with an ptinal RFID-enabled bin External return chute with an ptinal RFID-enabled shutter Tag prgramming statins fr new items Prtable scanners fr item lcatin and inventry checks DVD unlckers which accept up t 3 DVDs per multimedia case A cmbinatin f barcde and RFID tags which use the barcde item number (smetimes t ISBN). Cmbined tagging helped with quality cntrl during the cnversin prcess. The libraries with self-check kisks ften differed in their apprach t self-check: sme give custmers the ptin t check at the desk and thers (especially the busier libraries) encurage every custmer t use self-check. 26 26 A Business case framewrk fr RFID in NSW Public Libraries

Defining key csts and benefits Our investigatins int RFID systems in existing NSW public libraries fund limited quantificatin f installatin csts and little quantificatin f benefits. It was evident that it was ging t be difficult t establish a rbust csts and benefits mdel that culd be used fr future purchases. The many cmbinatins f library types and pssible RFID slutins meant that calculating any ROI will depend n the design cnfiguratin chsen and that a cst and benefits mdel needed t be cmprehensive enugh t cver all pssible slutins. On the fllwing pages we have detailed the breakdwn f csts and benefits that we develped frm the literature survey and interviews. These breakdwns are t be used in building the business case framewrk fr RFID. Cst Drivers The level f RFID implementatin at libraries varied frm a basic standalne installatin with a security gate, staff-check units and ptinal self-check units, t a full installatin with RFID-enabled return chutes and autmated srting. Csts varied significantly between libraries fr varius reasns including library size and market factrs. The key csts types defined fr circulatin management systems in libraries are: Circulatin and staff Security and inventry Prcessing f materials Equipment System benefits Frm ur interviews the reasns fr chsing the RFID rute were mainly due t saved staff time thrugh custmer self-service and imprved circulatin efficiency althugh this wasn t quantified. Other benefits include imprved ability t perfrm inventries and manage the cllectin. One library stated the pprtunity t invest in updating systems during a library extensin rather than reinstalling the utdated technlgy. The pprtunity t shwcase a new technlgy as an attractin t the library and t imprve the verall custmer experience was als cited as a benefit. The key benefit types defined fr circulatin management systems in libraries are: Security Prductivity Cllectin Management Custmer Service Wrk Health and Safety A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 27 A Business case framewrk fr RFID in NSW Public Libraries 27

Hw libraries treat csts? Implementatin csts Fr the libraries interviewed, csts f the initial implementatin varied between $150,000 and $900,000. One f the libraries purchased the system thrugh a five-year cuncil-funded lease finance arrangement and the ther libraries purchased directly with funds mainly frm cuncil and/r state gvernment grants. Cnversin labur Csts f cnversin f the cllectin t RFID varied nt nly due t the size f the cllectin but als the surce f labur. One library had its cllectin tagged by the RFID vendr as part f the cst f implementatin. The ther libraries perfrmed the tagging in-huse using either existing staff, temprary staff, cmmunity vlunteers, r sme cmbinatin f the abve. Of the tw libraries that reprted cnversin labur csts, ne was cmpleted fr $85,000 using temprary staff, whereas the ther was estimated at $28,000 in-kind using existing staff. Equipment and supplies The csts f equipment and supplies varied cnsiderably between libraries. Imprtant factrs affecting the cst included the chice f vendrs and whether r nt a scale f ecnmy acrss a branch netwrk culd be negtiated with them. Csts f nging purchase f equipment and supplies als depended n individual Library needs such as cllectin size and mix (bks and AV materials). While mst libraries prvided an apprximate ttal figure fr the csts, tw f the libraries were able t prvide an itemised breakdwn as listed in Annex C. These are nly t be used as indicative csts. Installatin and training Installatin csts are directly related t the amunt f wrk required t accmmdate the RFID system int the library. On the sftware side, mst f the libraries we interviewed were using an RFID system that plugs directly int the existing Library Management System. One f the libraries required a purpsebuilt intermediate system t interface between the RFID system and the LMS, althugh we were unable t determine hw much this influenced the cst f the implementatin. On the hardware side, additinal cmputing r netwrk infrastructure may be required - fr example if the LMS requires reliable netwrk cmmunicatins between the service pint and a central server. Nne f the interviewed libraries reprted a specific hardware cst. Sme f the libraries that we interviewed had made sme building mdificatins t accmmdate RFID equipment such as self-check statins r return slts; thers had installed the system in a new purpse-designed building. Of the tw libraries that reprted installatin and training csts, ne was $20,000 and the ther was $5,950 (cnsisting f $3,200 fr building mdificatin and $2,750 fr training and installatin fees). 28 28 A Business case framewrk fr RFID in NSW Public Libraries

Additinal staff csts N libraries reprted r estimated the cst f pre-implementatin research (althugh every RFID implementatin invlves a significant effrt in preparatin and planning by senir library staff). One library reprted prject management and evaluatin csts f $7,800 in-kind. A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 29 A Business case framewrk fr RFID in NSW Public Libraries 29

Maintenance csts are the mst significant nging csts Maintenance and nging csts Maintenance csts are primarily related t maintenance f the equipment and nging tagging f new stck. Other indirect nging csts are related t nn-benefits r detriments that may ccur. Equipment maintenance Equipment maintenance csts include the cst f the service cntract and any additinal cst f repairs (arund $20,000 per annum). This can increase twards the end f the life f the cntract and after the initial maintenance cntract has finished. Typical maintenance cntracts may be fr five years, whereas the lifespan f the equipment is generally unknwn but estimated at between seven and ten years. Sme libraries are cnsidering drpping items frm the service cntract where the cst f replacement is cheaper than maintenance f the item. Indirect csts can be incurred while parts f the system are malfunctining, fr example thrugh lst efficiency, and similarly if the rate f exceptins increases and mre manual interventins are required. The time taken t reslve issues depends n the library s access t technical supprt. This culd include nt nly in-huse expertise r vendr supprt but als nearby branches, cllabrative partners r fellw members f a user grup. On the spt diagnsis can smetimes save expensive utcalls r replacement, hwever distance can als be a factr: sme libraries had experienced lng waits fr service calls r delivery f parts when the vendr was based verseas r in anther city. Onging tagging If the nging tagging f new stck is perfrmed in-huse, the cst can be estimated in a similar manner t the retrspective tagging. Libraries have all fund that the cst f RFID tags has decreased since the initial tagging (after The Hills Library s RFID implementatin in 2003, tags cst ver $1.01 each; nw they are between $0.20 and $0.35 each). Mst f the libraries have utsurced the tagging t the bk vendr where the service is bundled with ther prcessing tasks such as catalging, binding/cvering, labeling and barcding. The libraries each may use several different vendrs with the ttal prcessing fees between apprximately $5.00 and $6.00 per item plus the cst f the RFID tags supplied by the library. We were unable t determine the precise amunt that the vendrs charge fr the tagging cmpnent f the service. One f the libraries demnstrated that an efficient tagging prcess can take less than 15 secnds t prcess an item that has already been barcded and catalgued, and this culd be used as a basis fr estimating the labur cst and assessing the incremental value f utsurced tagging. 30 30 A Business case framewrk fr RFID in NSW Public Libraries

Risks There were varied issues related t the peratin f RFID. In the cntext f cst and benefits f perating these systems ver a number f years. The key findings were: Security is nt difficult t circumvent. DVDs and multimedia are a cmmn target fr theft; althugh mst libraries indicated that security is nt a great cncern. Srt assist fr item return, flags where the item ges but still needs physical handling. System data exchange respnse fr sme netwrks was nt reliable s check-in/checkut lst efficiency (negating the ptential efficiency benefits f reduced manual handling and simultaneus prcessing). WH&S was imprved thrugh a reductin in manual handling and, in sme libraries, the use f smart bins which autmatically adjust benches t the crrect height. Hwever, sme f the wrkflws culd be imprved. A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 31 A Business case framewrk fr RFID in NSW Public Libraries 31

The main csts drivers fr typical RFID installatins Categry Cst Driver Circulatin and staff Staff training requirements Current staffing levels fr circulatin staff (base and peak, current and prjected fr 10 years r life f the equipment) Average cst per hur f circulatin staff incl. benefits (current and prjected) Annual circulatin statistics (current and prjected) - may see large jumps if mving int a new r larger facility Number f pening hurs per year (current and prjected) Current turnarund time frm bk return t placing n shelf Cst f staff injuries (histrical and prjected) Average length f line at circulatin desk (base and peak) Security/Inventry Amunt f time spent lking fr lst, misplaced r items n hld Prcessing f materials Percentage and cst f items presumed stlen Cst and amunt f time needed t prcess a new item with current system Estimated cst and amunt f time t prcess a new item with RFID Number f items added per year (current and prjected) Cst f supplies fr new and replaced items (including AV materials) Labur/staff cst invlved in rutine tagging, prcessing, checking services, inventry and heath and safety Equipment Current cst f maintenance n electrmagnetic r ther circulatin/security equipment Reliability and effectiveness f current equipment (dwn time, service calls, distance t vendr etc) Installatin f equipment such as self-check ut units, self return statins and tag prgrammers Supplies such as RFID tags and RFID tags fr AV cases. Obslescence and whle f life cycle csts 32 32 A Business case framewrk fr RFID in NSW Public Libraries

The main benefits delivered by typical RFID installatins Categry Benefit Outcme Security Identificatin f missing items Less staff time spent searching if better idea f items missing r stlen Theft preventin and deterrent System can identify stlen item; fewer bag searches Prductivity Staff service and prductivity increase Acts as an additinal deterrent if n previus security system, but can still be circumvented Ability t cmbine security features f different systems fr identificatin and detectin Faster handling f items Custmer self service - self check and self return Autmatin fr srting prir t shelf placement Efficiency thrugh streamlined circulatin desk prcesses System service reliability cst reductin Imprved item recgnitin reliability Imprved reliability and reduced maintenance csts f system equipment Vendr supprt and cmpatibility acrss netwrk systems, imprved ecnmy f scale Cllectin Management Inventry management prductivity increase Prtable scanners can mre easily and quickly scan large cllectins Inventry checks can be dne as part f the tagging prcess Autmated srting at the return pint may reduce time t reach shelf A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 33 A Business case framewrk fr RFID in NSW Public Libraries 33

Reduced time lcating f missing items Scanners can detect items withut visible r physical cntact Mre regular inventry checks ensure cllectins are mre thrughly cmpiled Custmer Service Privacy issues limited Self-check allws custmers t brrw in privacy Privacy vilatin thrugh malicius scanning risk lw Fewer false alarms and bag searches Interactin time with custmers increased Circulatin staff can assist in ther areas such as queries r cmmunity prgrams Staff can scan items withut breaking eye cntact Custmer use satisfactin imprvements Self check ptin gives custmers anther ptin if they are in a hurry Self return enables return via cllectin bins, smetimes utside business hurs Staff able t spend mre time engaging in ther library services such as cmmunity prgrams WH&S Reduced repetitive strain injuries Reduced risk f injury thrugh less repetitive mvements, s lng as wrk statin is crrect design Lw electrmagnetic radiatin Electrmagnetic energies are lwer than fr mbile phnes Staff satisfactin and mrale imprved Staff can spend mre time ding a mre fulfilling range f duties 34 34 A Business case framewrk fr RFID in NSW Public Libraries

4 Circulatin management assessments fr RFID T aid future business cases we assessed the circulatin management f library items. We fund that the typical csts and benefits f RFID systems fr public libraries were assciated with the varius stages in the circulatin life-cycle f a laned item. We determined that the mst significant influence f RFID n csts and benefits were in the Check-ut and Srt stages. Secndary t these, RFID impacts n the Reserve Items, Security and Check-in stages. The influence f RFID n circulatin management will aid the design and cnfiguratin f future ptins. Our assessment by library size fr a generic library is als included in this sectin. A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 35 A Business case framewrk fr RFID in NSW Public Libraries 35

Hw RFID applies t circulatin management Strng influence Medium Influence Lw Influence 36 A Business case framewrk fr RFID in NSW Public Libraries

Hw RFID applies t circulatin management by library size Large Libraries Check-in Security Srt Saved staff time thrugh self check-ut Self check-in with RFID-enabled returns chute r smart bins Check ut Put n shelf Large enugh t benefit frm autsrting - number f bins that can be used effectively depends n individual library circumstances Reserve items Shelving /display Prtable scanners can speed up inventry prcess (thugh at reduced accuracy) Find bks Strng influence Medium Influence Lw Influence Medium Libraries Checkin Saved staff time thrugh self check-ut Check ut Security Reserve items Find bks Srt Shelvin g/displa y Put n shelf May benefit frm a small srting machine - if space permits and if staff time saved can be allcated t smething else r t enable grwth An RFID-enabled returns chute r smart bin can check items ff a custmer s card immediately, but still requires additinal handling by staff A Business case framewrk fr RFID in NSW Public Libraries 37

Small libraries Self check-ut and staff-enabled Security Checkin Srt RFID check in statins - but nly if staff time saved can be allcated t smething else r t enable grwth Self check becmes the additinal staff member, withut salary Check ut Put n shelf If n existing security, prvides anther level f deterrent Reserve items Find bks Shelvin g/displa y If internal technical expertise is limited, having a strng external supprt netwrk is crucial t realising the full benefits Strng influence Medium Influence Lw Influence 38 38 A Business case framewrk fr RFID in NSW Public Libraries

5 Business case framewrk fr RFID in the cntext f public libraries This sectin prvides the justificatin fr building prudent and efficient business cases fr libraries that are cnsidering installing RFID systems and are seeking public bdy funding. The framewrk utlined is based n Huegin s knwledge f building business cases in a number f sectrs. A business case fr RFID is demnstrated in this sectin. We have used infrmatin and data gathered during the interviews t demnstrate the prcess. A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 39 A Business case framewrk fr RFID in NSW Public Libraries 39

Why shuld yu use a business case? Defining a business case framewrk helps make the decisin t invest Fr this cst and benefit analysis f RFID enabled libraries, Huegin fund that they fllwed the NSW lcal gvernment prcurement prcess. Whilst this prvides a gd framewrk fr assessing tenders, we recmmend that further assessment shuld be dne arund the areas f fit with bjectives, cnsideratin f the d nthing ptin and risks and a csts and benefits analysis f sme different design ptins. We prpse a business case framewrk that we believe wuld prvide a sund basis fr making prudent and efficient decisins abut the investment f public funds in library infrastructure prjects. T demnstrate the framewrk we have used the infrmatin gathered frm the interviews f a number f NSW libraries which already have had experience with installing and perating RFID systems ver a number f years. The business case prcess is shwn belw. A business case framewrk serves five purpses: It explains t prgram administratrs, funding bdies and ther stakehlders why the prject represents a prudent decisin t invest. It helps the applicant think thrugh the prject in a systematic, step-by-step manner and describes hw the preferred ptin is necessary. It prvides a framewrk fr where the initiatin, deplyment and cmpletin f the prject will ccur and fr the peratin f the system thrughut its lifecycle. It helps ptential funding bdies t understand the ecnmic value f the prject in the cntext f cmpeting pririties. When will the majrity f the investment activity take place? It describes wh the key stakehlders are. Investment stakehlder versight Why is the prblem t be slved? What are the investment bjectives and strategic fit? What is the ptential risk and impact f nt investing? Assess the slutin design ptins available Chse the preferred ptin Prudent and efficient justificatin 40 40 A Business case framewrk fr RFID in NSW Public Libraries

Setting ut the case fr a business case framewrk Need t cnsider strategic alignment A business case framewrk determines the strategic case fr the RFID system purchase. By establishing the investment ratinale fr RFID in the cntext f the verall rganisatin s strategy then it shuld als prvide a clear criteria fr screening ut ptins that may nt deliver any value r ROI. Need t cnsider whle f life csts and benefits Our bservatin f participating libraries indicated that csts were nt cmprehensively cnsidered acrss the whle lifecycle f the RFID system. We recmmends that any RFID system ptin shuld be csted using an aggregatin f ne-time installatin csts and als nging csts ver the lifecycle f the RFID systems which culd be up t ten years. Recgnising that the RFID systems have a lifecycle means that csts will accrue: frm installatin; fllwing the installatin fr system maintenance, cnsumables, upgrades; and ultimately dispsal f an bslete system. Similarly, the benefits mdel shuld cnsider the ne-ff and nging benefits gained thrugh implementing the system within a library r library netwrk. Of the benefits that are intangible, and nt measurable by a dllar value, these shuld be rated at least qualitatively. The qualitative scres can then be weighted and cmbined t give an verall benefit scre. Benefits that are tangible shall be quantified by a dllar value. Risks ccur frm bth prject and business perspectives Whilst the literature review utlined the typical csts and benefits f installed RFID systems, it als cnsidered the risks invlved in installing RFID. Huegin recmmend that the risks shuld be cnsidered bth frm a business perspective and frm an installatin prject management perspective. Such risks culd be that maintenance csts rise significantly r that lack f functinality becmes a burden fr the staff perating the system. Perhaps custmer satisfactin levels culd als drp. By understanding the shrtcmings f the existing system the library is best placed t define the requirements f a replacement system t mitigate the risks. Such requirements culd cver cst targets, benefits targets, system lifetime, risk reductin and RFID system perfrmance. Optinality is an imprtant part f the tender prcess When a library seeks an upgrade t its existing circulatin management system, it shuld cnsider an array f ptential ptins. T ensure that any investment made by public bdies is cnsidered t be prudent and efficient, the library shuld als cnsider the ptin f cntinuing with the existing system. We call this the d nthing ptin and it is used t benchmark pssible design slutins fr a RFID system. Fr sme cases the cntinuatin f this ptin can pse a significant risk t the rganisatin as nging maintenance csts rise. The d nthing ptin cnsiders the risk f nt investing. A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 41 A Business case framewrk fr RFID in NSW Public Libraries 41

The business case framewrk Why is the prblem t be slved? Defining the investment need The investment lgic is presented as a summary f why a prblem r need is driving the request fr funding. The justificatin fr the need fr the investment shuld be defined by the business case authr. It sets the scene fr why the rganisatin r bdy shuld invest public funds in the slutin. What are the investment bjectives and strategic fit? Defining the strategy and bjectives The investment need shuld align with the strategic bjectives f any cntributing funding bdy and the need fr the investment shuld generate the bjectives that the eventual slutin shuld meet. What is the ptential risk and impact f nt investing? Assess the d nthing ptin A key cmpnent f the ptinality f the business case is the s called d nthing ptin. This case represents the ptin t the rganisatin f deciding nt t invest in a new slutin. It will be used t assess the effectiveness f the actual slutin chsen; it is the baseline ptin. It defines the risk t the rganisatin if it cntinued with the current peratin. Assess the slutin design ptins available Determine best pssible slutin thrugh ptinality An assessment can be made fr each ptin t determine hw they cntribute t the investment bjectives. Fr each ptin, the risks shuld have been mitigated in sme way against the d nthing risks. The cst and benefits f each ptin shuld be cnsidered ver the slutin s system lifecycle. Assess the slutin design ptins available Justify the reasn fr chsing Optins analysis assists the decisin maker in understanding the Authr's cnsideratin f the mst efficient and effective means f executing the investment. 42 42 A Business case framewrk fr RFID in NSW Public Libraries

What is the prblem t be slved? Defining the investment need The investment lgic prvides the cntext fr the funding prpsal. Here the investment lgic is presented as a summary f the prblem r the need that is driving the request fr funding. Imprtantly, this business case des nt discuss any slutins but rather defines the prblem that needs slving alng with the bjectives fr the funding and the risk t the rganisatin shuld the funding request be turned dwn. The justificatin fr the need fr the investment shuld be defined by the business case authr. It sets the scene fr why the rganisatin r bdy shuld invest public funds in a new RFID system fr a library. It may be the case that the library simply needs t replace an ageing circulatin and security system and that RFID is ne f a number f pssible slutins t the prblem. This stage f the business case requires the authr t determine the level f cnfidence f the need fr the funding. The fllwing assessments can be used: 1. Certain - Indicates that the prblem exists currently. 2. Highly Likely - Indicates that there is a need existing r the need arising in the future. 3. Likely - Indicates there is a cmmn belief that the need exists r will exist in the future. 4. Pssible - Indicates there is a reasn t believe the need will exist in the future. Investment Objectives The need fr the investment shuld generate the bjectives that the eventual slutin shuld meet. That is, the design f the RFID system shuld meet the specific bjectives f the library rganisatin. By defining these bjectives the slutin can be assessed bth frm the pint f view f the slutin versus the d nthing ptin and against the ther design ptins f the RFID installatins. Setting f the investment bjectives at the start f the business case prcess will ensure that the design f the slutin can be mnitred thrughut the RFID lifecycle. The rll-ut prject can mnitr the cmpletin f key milestnes and the library management team can cntinue t mnitr the RFID system s key perfrmance indicatrs. Huegin prpse ne primary and three secndary investment bjectives fr any library RFID system business case. The business case authr will select these frm the list n the fllwing page. Strategic Alignment The RFID investment shuld be aligned with the strategic bjectives f the lcal cuncil bdy and/r the State Library f NSW shuld investment funding be sught frm the latter. Typically, the investment need shuld align with the strategic bjectives f any cntributing funding bdy. Huegin prpse ne primary and three secndary strategic bjectives fr a library RFID system. The business case authr will select these frm the list n the fllwing page als. A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 43 A Business case framewrk fr RFID in NSW Public Libraries 43

What are the investment bjectives and strategic fit? Defining the strategy and bjectives The RFID investment bjectives are likely t cver a number f higher level bjectives similar t the current circulatin management systems in place acrss all libraries. Nrmally in a business case framewrk the individual prject will have a primary and three secndary investment bjectives. This higher level assessment will prvide each library with the initial decisin t invest, r nt invest. The list belw prvides fur categries f bjectives. The aim is fr the business case authr t make a selectin frm a predefined list t ensure that the lgic des nt stray t far frm what the verall rganisatin requires. (Sme bjectives have been highlighted t identify pririty and secndary P1, S1, S2 and S3 t be used in ur example n p 51) Cmpliance Imprvement t Staff WH&S cnditins thrugh reductin in repetitive strain injuries. Business Perfrmance High circulatin efficiency thrugh patrn self check and return- S3 High inventry management efficiency thrugh management f multi-media materials Increase security effectiveness thrugh reductin in theft Increase security effectiveness thrugh reductin in false alarms Efficient inventry management thrugh quicker inventry cntrl- S2 Efficient and precise inventry management thrugh precise item tracking Cst reductin and peratinal prductivity imprvement thrugh reductin in circulatin desk staff csts Cst reductin and peratinal prductivity imprvement thrugh reductin in inventry management csts Efficient materials prcessing fr new items thrugh faster prcessing times. Efficient materials prcessing fr new items thrugh reduced prcessing csts-p1 Custmer & Stakehlder Expectatins Imprved satisfactin f custmers thrugh lans circulatin queue shrtening at peak times High circulatin efficiency thrugh return f items t shelf mre quickly Imprved satisfactin f custmers thrugh lans circulatin service quality Imprvement f staff mrale thrugh imprved lans circulatin service quality 44 44 A Business case framewrk fr RFID in NSW Public Libraries

Asset Perfrmance Cst reductin and imprvement thrugh reductin in space used fr circulatin functins Efficient and effective asset management f system equipment thrugh increased reliability Efficient and effective asset management f system equipment thrugh reduced impact f bslescence Efficient and effective asset management f system equipment thrugh reduced maintenance supprt csts-s1 Library netwrk grwth imprvement thrugh expansin f circulatin system. A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 45 A Business case framewrk fr RFID in NSW Public Libraries 45

What is the ptential risk and impact f nt investing? Assess the d nthing ptin The key cmpnent f the ptinality f the business case is the s called d nthing ptin. This case represents the ptin t the rganisatin f deciding nt t invest in an RFID system. It will be used t assess the effectiveness f the actual slutin chsen; it is the baseline ptin. The d nthing ptin defines the risk t the rganisatin if it cntinued with the current circulatin management system such as barcding. The ptin is cnsidered in tw ways: 1. Inherent risks f nt investing in new technlgy 2. Ptential financial impact f nt investing in new technlgy Inherent risk f nt investing Fr the d nthing case, the business r rganisatin shuld cnsider the risks f cntinuing with the existing circulatin system. The risk assessment can fllw ISO 31000:2009 (Risk management - Principles and guidelines) and shuld cnsider the fllwing risk categries used t assess the uncertainty in utcmes such as Plicy and legal cmpliance, Safety (emplyee and public), Circulatin system perfrmance and capacity, Envirnment, Custmer reputatin and public image. Fr the case f RFID, the fllwing risks have been identified frm ur survey f libraries: Risk 1 - Pr perfrmance f current identificatin tagging (e.g. Barcdes) Risk 2 - Reductin in prcessing csts fr existing tagging systems may nt be realised as the supprting systems becme bslete. Obslescence may ccur earlier than expected. Risk 3 - Existing security system allws easy circumventin and theft f items resulting in increased new item purchases. Risk 4 - Cst reductin and peratinal prductivity imprvement nt able t be realised thrugh increased circulatin desk staff csts; especially as library patrnage increases ver time. Risk 5 - Increase f maintenance csts thrugh reducing reliability f existing systems. Maintenance csts may be greater fr mre remte libraries. The risks can be assessed by estimating the cnsequence and likelihd f each risk defined. Bth cnsequence (impact) and likelihd can be scred n a scale f 1-5, 1 being lw impact and 5 being extreme impact. Fr the purpse f this demnstratin we have assumed the cnsequence and likelihd f these n investing risks as fllws, resulting in ne medium, three high and ne extreme risks: 46 46 A Business case framewrk fr RFID in NSW Public Libraries

Risk analysis Impact Likelihd Risk Reasn Risk 1 3 3 High Significant staff csts Risk 2 4 2 High Significant replacement csts mid-life Risk 3 2 3 Medium Generally lw cst impact Risk 4 5 4 Extreme Library patrnage level high burden Risk 5 3 3 High Gegraphic spread significant verhead The assessment shwn is fr demnstratin purpses. A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 47 A Business case framewrk fr RFID in NSW Public Libraries 47

Ptential financial risk f nt investing The ptential financial risk f nt investing is cnsidered as the business as usual csts fr perating a current circulatin and security system. The csts shuld be be established n the same basis as the subsequent ptins analysis. We have established the fllwing categries suitable t assess library circulatin systems (see table at right): Circulatin and staff csts Security and inventry management csts Prcessing f materials csts. e.g. tagging new bks Equipment, maintenance and replacement csts When determining the financial risk t the rganisatin f nt investing, the business risks that may impact the implementatin and peratin f the existing system shuld be cnsidered ver the same perid f time that the subsequent ptins assessment is dne. Huegin recmmends that this shuld be a perid f up t ten years. The financial risk shuld be expressed in the same dllar values as the subsequent ptins assessment. In this demnstratin n business as usual csts will be identified and we have made the assumptin that staffing levels will nt change nce a RFID system is be put in place. Hence cmparisn f the business as usual csts and the ptins assessment will nt include any underlying staff csts. It is recmmended that staff csts shuld be calculated in future assessments t be able t truly represent any efficiency imprvement that a new circulatin system may bring. 48 48 A Business case framewrk fr RFID in NSW Public Libraries

Cst Driver type Cst driver assessment Circulatin and staff Security and inventry Prcessing f materials Equipment Staff training requirements Current staffing levels fr circulatin staff (base and peak, current and prjected fr 10 years r life f the equipment) Annual circulatin statistics (current and prjected) - may see large jumps if mving int a new r larger facility Current turnarund time frm bk return t placing n shelf Cst f staff injuries (histrical and prjected) Amunt f time spent lking fr lst, misplaced r items n hld Percentage and cst f items presumed stlen Cst and amunt f time needed t prcess a new item with current system Number f items added per year (current and prjected) Supplies fr new and replaced items Labur/staff cst invlved in rutine tagging, prcessing, checking services and inventry management Current cst f maintenance n EM r ther circulatin/security equipment Reliability and effectiveness f current equipment (dwn time, service calls etc) Installatin f equipment such as self-checkut units, self return statins and tag prgrammers Supplies Obslescence and whle f life cycle csts A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 49 A Business case framewrk fr RFID in NSW Public Libraries 49

Assess the slutin design ptins available Determine best pssible slutin thrugh ptinality The next stage f the business case cnsiders the pssible RFID design ptins. Typically, up t three pssible ptins fr slving the investment ratinale shuld be analysed: first address the investment bjectives and the d nthing risks. Fllwing this, a detailed csts and benefits analysis shuld be carried ut. During the interviews we bserved that mst libraries nly had detailed cst infrmatin fr the first installatin f the RFID system, based n the tender respnses f the successful vendrs. Secndary t this, sme libraries mnitred nging maintenance csts thrugh fixed cst maintenance cntracts with vendrs and the csts f tagging purchased items. Beynd this, little infrmatin was available t determine activity based csts f staff directly interacting with the RFID systems. T demnstrate the business case framewrk we cnsider three ptins fr a theretical library requiring a replacement f an existing barcde system with a new RFID system. The cnfiguratins f the three ptins cnsidered are detailed in the table belw: Optin A B C Installatin Full Partial Partial Self Check Y Y Y Aut-srter bins N N N Inventry wands Y Y N Branch system deplyment Y Y N Maintenance cntract Y Y N Tagging Outsurced Internal Internal Defer prject 0 0 2 years 50 50 A Business case framewrk fr RFID in NSW Public Libraries

Assess ptin cntributin t bjectives An assessment can be made fr each ptin t determine hw they cntribute t the investment bjectives. Each f the primary and secndary bjectives defined earlier can be ranked n a scale f n cntributin t high cntributin. The chsen bjectives (see page 44-45) were: P - Efficient and effective asset management f system equipment thrugh reduced maintenance supprt csts. S1 - High circulatin efficiency thrugh patrn self check and return. S2 - Efficient inventry management thrugh quicker inventry cntrl S3 -Efficient materials prcessing fr new items thrugh reduced prcessing csts. Design ptin cntributin t investment bjectives Cntributin t bjectives Optin A Optin B Optin C P S1 S2 S2 P S1 S2 S2 P S1 S2 S2 Objectives P - Primary, S1 - Secndary 1, S2 - Secndary 2, S3 - Secndary 3 Cntributin High Mderate Lw Nne A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 51 A Business case framewrk fr RFID in NSW Public Libraries 51

Assess ptin residual risk expsure Each design ptin shuld in sme way mitigate the risks identified previusly and mve the severity t a lwer level s each ptin can be cmpared in terms f the benefit t business risk. Fr each f the three ptins, the risks shuld have been mitigated against the d nthing risks. The table belw shws an example f hw each ptin changes the residual risk prfile. In this case, Optin C prvides a greater risk fr maintenance as the ptin chses nt t include a maintenance cntract. Optin A may prvide the best mitigatin f risks. Design ptin residual risk expsure Residual Risk Expsure Cunt Lw Med. High Extre. D Nthing (Baseline) 0 1 3 1 Optin A 3 1 1 0 Optin B 2 2 1 0 Optin C 3 1 0 1 The assessments shwn are fr demnstratin purpses 52 52 A Business case framewrk fr RFID in NSW Public Libraries

The cashflw f the ptins shuld be cnsidered ver the system lifecycle The cst t the library netwrk f installing and perating RFID shuld be calculated fr each ptin. The csts can be brken dwn by the cst drivers identified earlier (Sectin 3) but shuld als include a cashflw ver time. Fr this analysis we recmmend that a ten year life span be cnsidered fr RFID. Typical RFID systems have abut a seven year life span, s ten years cnsiders the ptin t maintain an bslete system until a new system can be tendered, surced and installed. During the survey we fund that few libraries had cmprehensive cst data fr bth installing and perating an RFID system. Mst csts data were derived frm the riginal tender dcumentatin. Nting that csts may vary significantly between libraries due t the size and cmplexity f the installatin, we demnstrate the business case framewrk based n the csts prvided by ne f the medium-t-large libraries. We have assumed that staff csts are the same fr the design ptins and the incumbent circulatin management system (eg barcde) - the d nthing ptin. Our ptins analysis excludes inkind csts fr the initial installatin and nging supprt. This is a reasnable assumptin given that there have been n significant staff level changes in the libraries we interviewed fllwing RFID installatin s the cst psitin is neutral. Where additinal staff were hired fr the installatin these are included as separate csts. These shuld als be included in any future business cases fr prper cmparisn f the ptins. The ten year cashflw fr each ptin in presented in the figure belw. The cstliest ptin is Optin A cnsidered in islatin f risks and benefits. Optin C demnstrates the special case where the ptin is t defer the purchase by tw years. In this case the purchase price in the first year has been inflatin adjusted. All ther cst are assume t be in present dllar value; the assessment shwn is fr demnstratin purpses. 0-250000 -500000-750000 -1000000 Optin A Optin B Optin C -1250000-1500000 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 53 A Business case framewrk fr RFID in NSW Public Libraries 53

What are the benefits delivered by each design ptin? Benefit categry Of the previusly identified benefits f a circulatin management system (Sectin 3) we have categrised them int five types including security, prductivity, cllectin management, custmer service and wrk health and safety. Benefit Categry Security Prductivity Cllectin Management Custmer Service Wrk Health and Safety (WHS) Benefits can be brken dwn by types fr assessment The benefits ultimately need t be quantifiable t enable a cmparisn f benefits during the ptins assessment. The benefits can be further categrised in 3 ways: 1. Direct revenue increase r cst saving - the benefit has a direct cst saving thrugh either a reductin in staff interactin time r reduced material csts. 2. Indirect ptential benefit - where RFID makes staff available t perfrm ther duties there is an indirect benefit t anther part f the rganisatin. Hwever, it is nly a ptential benefit if the assigned time is used effectively. 3. Qualitative benefit - the benefit is intangible and includes such things as custmer and emplyee satisfactin. Fr the libraries interviewed, few had any prgram in place t directly measure direct staff cst savings as a result f the benefits the RFID technlgy. Nne had any prgram in place t measure indirect ptential benefits. Therefre we have develped a screcard that cnsiders all benefits f any RFID system t be nn-financial. That is, n dllar value can be attributed t the benefit. 54 54 A Business case framewrk fr RFID in NSW Public Libraries

A screcard t assess benefits T gain the mst frm the business case methdlgy Huegin have prduced a specific screcard that enables each ptin t be quantitatively assessed in the absence f direct cst and revenue data. Each benefit is allcated a scre and a weight. The prduct f each benefit is added t give an verall benefit scre per ptins. The allcatin f a scre will depend n the benefit type. The type f benefit is indicated n the screcard and Huegin have prvided weightings based n ur interviews with RFID libraries. State Library f NSW has the ptin t mdify the weightings based n a mre subjective understanding f the benefits. The fllwing screcard uses dummy scres t demnstrate the methd. A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 55 A Business case framewrk fr RFID in NSW Public Libraries 55

Benefits screcard t assess benefits f RFID design ptins Categry Benefit Type Screcard Security Prductivity Cllectin Managem ent Identificatin f missing items Theft preventin and deterrent Staff service and prductivity increase System service reliability cst reductin Inventry management prductivity increase Reduced time lcating f missing items Indirect Qualitative Direct Direct Indirect Indirect 1. (lw) <5% impact n staff redeplyment 5. (mdest) 11-15% impact n staff redeplyment 9. (breakthrugh) > 25% impact n staff redeplyment 1. Little change 5. Mdest change 9. High degree f theft change 1. <$20,000 pa saving 5. $20,000 - $100,000 pa saving 9. >$100,000 pa saving 1. <$20,000 pa saving 5. $20,000 - $100,000 pa saving 9. >$100,000 pa saving 1. (lw) <5% impact n staff redeplyment 5. (mdest) 11-15% impact n staff redeplyment 9. (breakthrugh) > 25% impact n staff redeplyment 1. (lw) <5% impact n staff redeplyment 5. (mdest) 11-15% impact n staff redeplyment 9. (breakthrugh) > 25% impact n staff redeplyment Scre (a)* Weight (b) Weigh ted Scre (a x b) 5 1 5 5 1 5 1 1.5 1.5 1 1.5 1.5 5 1.5 7.5 5 1 5 Privacy issues limited Qualitative 1. Little change 5. Mdest change 9. High degree f privacy change 1 1 1 Custmers Service Interactin time with custmers increased Indirect 1. (lw) <5% impact n staff redeplyment 5. (mdest) 11-15% impact n staff redeplyment 9. (breakthrugh) > 25% impact n staff redeplyment 5 1 5 Custmer use satisfactin imprvements Qualitative 1. Little change 5. Mdest change 9. High degree f service mdel change 5 1 5 Reduced repetitive strain injuries Direct 1. <$20,000 pa saving 5. $20,000 - $100,000 pa saving 9. >$100,000 pa saving 1 1 1 WH&S Lw electrmagnet ic radiatin Indirect 1. (high) Significant risk t health 5. (mdest) mderate risk t health 9. (lw) >lw risk t health 9 0.5 4.5 Staff satisfactin and mrale imprved Qualitative 1. Little change 5. Mdest change 9. High degree f service mdel change 5 1 5 Ttal Scre 48* * the assessment shwn is fr demnstratin purpses 56 56 A Business case framewrk fr RFID in NSW Public Libraries

Chse the preferred ptin Justify the reasn fr chsing Optins analysis assists the decisin maker in understanding the Authr's cnsideratin f the mst efficient and effective means f executing the investment. The selectin f the preferred ptin has been infrmed by the ability t mitigate the d nthing risk, the cntributin t the investment bjectives and the net present value (NPV). The summary f that analysis is prvided belw. The ptins cmparisn summary table shuld be a gd visual aid t the selectin f the preferred ptin. At this stage f the business case framewrk the visualisatin can help with distinguishing the imprtant artefacts that each ptin cntributes t. The assessment shwn is fr demnstratin purpses. D Nthing (Baseline) Residual Risk Expsure Cunt 0 2 3 0 Lw Med. High Extreme Cst ($) Benefits Scre Cntributin t bjectives Direct NPV ($) Optin A 3 1 1 0 Lw Med. High Extreme 1.227m 48 P S1 S2 S2 $$ Optin B 2 2 1 0 Lw Med. High Extreme 0.868m 65 P S1 S2 S2 $$ Optin C 3 1 0 1 Lw Med. High Extreme 0.731m 52 P S1 S2 S2 $$ Objectives P - Primary, S1 - Secndary 1, S2 - Secndary 2, S3 - Secndary 3 Cntributin High Mderate Lw Nne A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 57 A Business case framewrk fr RFID in NSW Public Libraries 57

Preferred ptin recmmendatin The authr f the business case shuld make a recmmendatin f their preferred ptin t the investment stakehlders. This shuld include a justificatin as t why the selected ptin is t be implemented ver and abve the d nthing ptins as well as the ther designed ptins. If the ptin is t be deferred then the reasn why shuld als be stated. Scpe f deliverables The scpe and deliverables f the preferred ptin are t be defined in the business case t indicate t the investment stakehlders that sufficient planning and detailing has gne int the preferred ptin. As this ptin is mst likely t be deplyed using prject management methdlgy then this part f the business case shuld utline the fllwing: Prject scpe This shuld include a detailed descriptin f the extent f the equipment t be installed and the assciated tenderer. The way the installatin shall prceed may be included. Prject schedule and milestnes This shuld include the key milestnes fr the prject. The schedule may include typical design, build and deply phases. Prject dependencies These can be the key t whether r nt a prject may prceed r in fact why a preferred ptin may be selected within the business case. In sme case the prject dependencies may include new library facilities being built and that an RFID installatin may nt be able t prceed until certain building wrks are cmplete. Funding details The preferred ptin shall include details f the surces f the funding fr the prject. The funding surces may be separated ut depending n lcal accunting requirements. 58 58 A Business case framewrk fr RFID in NSW Public Libraries

6 Benefits tracking and key perfrmance indicatrs T ensure that the end benefits are delivered thrugh the RFID system, Huegin recmmend tw means f tracking desired utcmes. The first is mnitring the lng term generatin f quantitative benefits by tracking planned benefits versus actual benefits achieved. The secnd is using KPIs t enable cntrl f perfrmance thrugh effective feedback. A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 59 A Business case framewrk fr RFID in NSW Public Libraries 59

RFID benefits and perfrmance during and after installatin Mnitring perfrmance f installed systems The benefits identified in the design stage are ultimately delivered t the library rganisatin nce the RFID system is installed and made peratinal. These same benefits will have been quantified during the business case prcess s shuld have been clearly defined. T ensure that the actual benefits are delivered thrugh the RFID system, Huegin recmmend tw means f tracking desired utcmes. The first is mnitring the lng term generatin f quantitative benefits by tracking planned benefits versus actual benefits achieved. The secnd is using KPIs t enable cntrl f system perfrmance thrugh effective feedback. Benefits tracking Direct and indirect benefits generated during the ptins analysis can be quantified in dllar terms (r value) and given a delivery date (r schedule). Upn sign-ff f the business case, the investment stakehlders shuld hld the initial prject team and perating rganisatin t accunt fr the delivery f these benefits. The benefits may be realised sme time after cmpletin f the prject and ften the benefits delivery will be the respnsibility f the rganisatin, nt the prject team. Huegin recmmend that these benefits shuld becme part f the nging business plans fr the library. In a similar way t hw a prject is managed, the value f the benefit can be tracked ver time (planned versus actual) and can be assessed t whether r nt it is n schedule fr delivery r has been achieved. Management interventin can be applied t crrect the perfrmance f the system if it is predicted that any benefit is nt n track. Over time, the tracking f actual versus planned returned benefits can be used t define a perfrmance benchmark f the RFID systems in the NSW netwrk. The screcard defined earlier in the business case is transfrmed t track benefits realisatin. Seethe fllwing example template. The assessment shwn is fr demnstratin purpses nly.. 60 60 A Business case framewrk fr RFID in NSW Public Libraries

RFID benefit Planned benefit (Refer t business case screcard) Schedule (days late frm planned) Actual achieved benefit (% planned) Identificatin f missing items 5. (mdest) 11-15% impact n staff redeplyment t ther value adding activities, eg. prgramming 0 X% Staff service and prductivity increase System service reliability cst reductin 1. $20,000 pa saving per FTE 120 X% 1. $20,000 pa saving per FTE 20 X% Inventry management prductivity increase Reduced time lcating f missing items Interactin time with custmers increased 5. (mdest) 11-15% impact n staff redeplyment t ther value adding activities, eg. prgramming 5. (mdest) 11-15% impact n staff redeplyment t ther value adding activities, eg. prgramming 5. (mdest) 11-15% impact n staff redeplyment t ther value adding activities, eg. prgramming 120 X% 0 X% 25 X% Reduced repetitive strain injuries 1. $20,000 pa saving per FTE 0 X% Lw electrmagnetic radiatin 9. Lw risk t health 40 X% Act Mnitr On track A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 61 A Business case framewrk fr RFID in NSW Public Libraries 61

Mnitring RFID key perfrmance indicatrs Key perfrmance indicatrs (KPIs) Bradly, there are tw ways in which KPIs can enable cmmunicatin and decisin making; they can be infrmative r they can be investigative. Infrmative KPIs simply prvide insight int the status f the element n which they are reprting; fr instance time and cst perfrmance n a prject. Investigative KPIs allw managers t lk at the drivers and causes f perfrmance at a deeper level. Once the decisin has been made t install an RFID system in a library then a suite f KPIs can be develped t mnitr the perfrmance f the system and t prvide the ability fr managers t investigate rt causes. Typical KPIs that culd be used include item circulatin efficiency, inventry management duratin, staff peratinal prductivity and efficiency, asset management csts f system equipment and health and safety events. These are inherent in the bjectives, risks, csts and benefits identified during the business case. The utcme f the business case prvides a range f KPIs t be tracked by the managing library. The apprach taken t develping the prpsed new suite f KPIs fr any RFID installatin was t prvide a suite that answered three key questins: Objectives alignment: hw well des the system cntinue t meet the investment bjectives? Cst perfrmance: hw well is the system meeting cst targets? Benefits delivery: hw well is the system delivering qualitative benefits? KPIs can be presented at a peridicity suitable t the managing library t ensure that decisin makers have access t a cnsistent and apprpriate measurement. Huegin recmmend the example template t right; the assessment shwn is fr demnstratin purpses. 62 62 A Business case framewrk fr RFID in NSW Public Libraries

KPI Assessment Actin Objectives alignment Efficient materials prcessing fr new items thrugh reduced prcessing csts at service desk Efficient and effective asset management f system equipment thrugh targeted maintenance supprt csts. +/-5% cntract variatin. Efficient inventry management thrugh quicker inventry cntrl. Annual inventry stcktake 2 days p/a. High circulatin efficiency thrugh patrn self check and return. 10% imprvement year-n-year. X X X X Cst Perfrmance Circulatin and staff cst targets being met X Security perfrmance targets being met. Lw rate f false alarms. X Prcessing f materials csts within <10% cntract estimates. X Equipment csts as per tender in +/-5% cntract variatin. X Benefits delivery Theft preventin and deterrent mdest change. Less than X%. X Privacy issues limited r unaffected. N adverse feedback. Custmer use satisfactin shwing mdest imprvements thrugh mre diverse delivery f services. eg prgramming, digitisatin f lcal histry, develping nline services. Staff satisfactin and mrale shwing mdest imprved thrugh imprved feedback f quality f custmer service. X X X Act Mnitr On track A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 63 A Business case framewrk fr RFID in NSW Public Libraries 63

7 Future applicatins f RFID in libraries We briefly lked at RFID applicatins in tw ther industries fr cmparisns n system perating speed and finding missing items. Ultimately the decisin t invest in RFID will be dependent n the individual library building a relevant and current business case that demnstrates that the decisin is prudent and efficient. 64 64 A Business case framewrk fr RFID in NSW Public Libraries

Future applicatins f RFID in libraries Desirable future applicatins We asked sme f the librarians what kind f RFID-based technlgies (existing r future) wuld be nice t have fr their library. Bk vending machines t allw 24/7 access t ppular bks and multimedia (e.g. the mk LibDispenser ). Smart shelves fr reserve items, r t assist with stcktake, lcating items and tracking misplaced items (e.g. the Starhme SmartShelf System). An app t use RFID-enabled smartphnes as self-check statins r t deliver enhanced cntent such as reviews, find like me etc. Readers advisry kisks t find me mre bks like this ne while accepting returns. Gates that check items in/ut as yu walk thrugh. Smart phne applicatins Smart phne applicatins appear t have the mst ptential as a means f directly cnnecting the library custmer with the lan item. These enable the custmer t use their wn phne t link with the library catalgue system, recmmended prgrams and received directed marketing which targets advertised prgrams based n their brrwing habits. The latter is similar t the methd used by supermarket lyalty card schemes whereby the supermarket analyses the custmer s buying habits and custmises advertising fr that particular target. The mst prmising use f smart phnes t date appears t be the emerging technlgy f near-field-cmmunicatins (NFC). This technlgy can use radi waves t interact directly with an RFID tag enabling the custmer t find ut mre abut a bk they see r find an item they require. Finding a bk may als need interactin with an in-library navigatin (GPS, wifi) as the NFC has limited range. NFC is already being used as cntactless payment systems fr credit cards and transprt smart tickets. The next step in the develpment f this technlgy is t allw users smartphnes t be the substitute NFC device (e.g. Ggle Wallet). In such a rapidly changing field we d nt wish t secnd guess what the emerging cupling f RFID and smart phne technlgy use in libraries wuld lk like. We d believe such a cupling is likely, given the ever increasing mmentum f smart phne use in all aspects f peple s lives. RFID applicatins in ther industries als suggest sme future avenues fr develpment f RFID technlgy. Learnings frm the retail industry One f the unreslved questins in library inventry management is hw t efficiently detect missing r malfunctining tags withut testing each item individually. Prtable scanners and checkut units nly read wrking tags, and even if a tag is wrking it might nt be detected if it is aligned with nearby tags in a particular way. Lking t the retail industry, sme self-checkut units, such as thse ften seen in supermarkets, use scales t detect when an item has been placed in the bagging area withut being scanned. Libraries culd emply similar systems t verify items at checkut r t perfrm accurate inventries in a mre efficient way. A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 65 A Business case framewrk fr RFID in NSW Public Libraries 65

Learnings frm the agricultural industry The agricultural industry has been successfully using RFID technlgy fr many years befre RFID was intrduced int libraries. Livestck can wear RFID transpnders as ear tags which typically perate at a lw frequency and are passive (i.e. n battery) in rder that they cntinue t perate fr the lifespan f the animal. One f the librarians has first-hand experience wrking with RFID n a sheep farm, where the time taken fr stcktake was reduced frm several days using barcdes dwn t a few hurs with RFID. The librarian had fund that the library RFID system culd be very slw t respnd at times, and that the presence f metal restricted the use f inventry scanners and security gates. On the ther hand, the RFID livestck readers were able t mnitr livestck in real-time as they were running thrugh metal gates and srt them with a push in the apprpriate directin frm a pneumatic device. Whilst feedback frm libraries indicated that they were generally happy with the technlgy, they did pint t sme failings in perfrmance. The main area where RFID perfrmance was less than satisfactry was the ability t perfrm rapid inventry checks. Perhaps library RFID systems can achieve a similar level f perfrmance t retail and agriculture in the future. In summary There are many pssible ways that libraries culd yet harness the ptential f RFID systems fr circulatin management. Whilst RFID des have advantages ver ther systems, it is imprtant that each library, intending t replace their incumbent system, assess all the ptins and determine whether r nt similar benefits can be achieved thrugh use f ther technlgies. The business case framewrk encurages the cnsideratin f ptins (ptinaility). Fr example, security, self-check and aut-srting can all be perfrmed with existing barcde and tattle-tape systems but with varying degrees f perfrmance in cmparisn t RFID. The whle f life csts invlved will be different fr each type, but it will be up t the individual library t justify this investment against the eventual benefits that will be delivered. Early uptake f rapidly-evlving technlgy als intrduces the risk f bslescence r interperability issues. On the ther hand, with RFID technlgies pening up new ways t manage their inventries, libraries need t carefully assess whether the ptential benefits, such as versatility, utweigh the csts f implementatin. The business case framewrk prvides a means t justify this investment in light f nt nly the csts and benefits, but als the risks and cntributins t the stakehlders bjectives. Huegin recmmend that the business case framewrk presented here will prvide a sund basis fr making prudent and efficient decisins abut the investment f public funds in library infrastructure prjects such as RFID. Whilst prviding a business case framewrk gives libraries a methd t carry ut a prudent and efficient investment, it will be up t the individual library making the business case t gather the infrmatin and data t ensure that their justificatin is up-t-date, relevant and has the means t fllw thrugh t deliver the desired benefits. 66 66 A Business case framewrk fr RFID in NSW Public Libraries

Annex A Requirements traceability matrix A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 67 A Business case framewrk fr RFID in NSW Public Libraries 67

Requirements traceability matrix ID State Library requirements Where addressed Cmment 1 Identify the csts and benefits f implementing and using RFID in a public library cntext Sectins 2 and 3 Literature survey and interview with libraries identified the key items 2 Identify the return n investment in a public library cntext ver the life f RFID Sectin 5 Actual ROI was nt determined. A business case framewrk has been prpsed 3 Identify and analyse the csts and benefits fr small, medium and large library services Sectins 4 and 5 Csts and benefits were identified. Analysis is cntained in business case framewrk 4 Identify and analyse the csts and benefits f implementing and using RFID fr NSW libraries at lcal, reginal and cllabrative envirnments Sectins 2 and 3 Csts and benefits were identified. Analysis is cntained in business case framewrk 5 Identify the library cntext (including demgraphics, cllectin size, service mdel, resurcing mdel, cllectin management mdel) in which the ptimum benefits f RFID are achieved Sectin 5 Optimum benefits were nt determined frm data cllected. Business case framewrk prvides ability t perfrm ptins analysis 6 Identify the csts and benefits f RFID in terms f Wrk Health and Safety Sectins 3 and 5 WHS was identified as a key cst and benefit 7 Cnsider issues relating t RFID such as cllectin security, privacy issues, impact n library staff, prductivity and service prvisin, use with nn bk material and any ther issues relating t the implementatin f RFID Sectins 2, 3 and 5 These issues have been identified as key benefits and csts t be assessed by the business case 8 Identify key perfrmance indicatrs fr measuring the successful use f RFID Sectin 6 Framewrks and templates are prpsed 9 Identify variables which may influence the utcmes f implementing and using RFID, eg. partial/cmplete implementatin, use f self check technlgy, returns srting technlgy, funding surces Sectin 5 Key csts and benefits which impact n the decisin t upgrade a circulatin management system are identified 10 Explre future applicatins f RFID in public libraries Sectin 7 Future applicatins f RFID were explred, including technlgy frm ther industries 68 68 A Business case framewrk fr RFID in NSW Public Libraries

Annex B Interview agenda and particulars A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 69 A Business case framewrk fr RFID in NSW Public Libraries 69

Sample meeting agenda fr library interviews Why we d like t meet We wuld like t understand yur experiences with RFID and use these t guide ur verall apprach t develping the SLNSW RFID business case. 1. A preliminary descriptin f the cntext, ptins, benefits and csts f yur RFID implementatin. What we d like t get ut f the meeting 2. Sufficient descriptive detail t prduce an illustrative case study, t be shared with ther NSW libraries. 3. An understanding f the further data r resurces available fr us t fllw up with in mre depth, if required. Wh will be there Library: Library Manager (please feel free t invite any further participants if apprpriate). Huegin: Ben Petschel, Nick Dillenbeck 1. Quick cntext n Huegin s prject: backgrund, aims, scpe, required utput ~ 5 min What we d like t discuss 2. Bradly understand hw yur library perates (things like: wh yur patrns are, hw yu service them, the types and vlumes f services prvided and activities perfrmed, what yur majr revenues and csts are, etc.) 3. Discuss the ptins yu cnsidered - and finally tk - regarding RFID ~ 20 min ~ 25 min 4. Understand hw this changed hw yur library perates ~ 20 min 5. Discuss the csts, benefits and drawbacks f the implementatin ~ 50 min Is any preparatin required? Please advise us if there are any further peple yu think we shuld meet with s that we can arrange t meet them while we are n site. Any backgrund dcuments yu can share prir t the meeting wuld als be greatly appreciated. 70 70 A Business case framewrk fr RFID in NSW Public Libraries

Interviews summary Interview lcatin Lcal gvernment classificatin Date held Attendees Ntes Ryde Urban Metr 12 Nv 2012 Jill Webb Large metr library with central library in a new building. Sutherland Urban Metr 15 Nv 2012 Lyn Barakat Very large metr library with apprximately 2 millin items in circulatin per year and eight branches. The Hills Urban Fringe 16 Nv 2012 Brenda Barrett Early uptake (first in Australia) with autsrt capabilities and ne f the highest circulatin per staff member. Leetn Rural Agricultural 21 Nv 2012 Lyn Middletn Early uptake (first west f the Blue Muntains) and the smallest NSW public library t have implemented RFID. Riverina Mixed (Urban/Rural) 21-22 Nv 2012 Rbert Knight Brian Plummer Helen Graetz Rs Flyd (Temra) Rb Chapman (Mbile) Linda Dyer (Junee) Large reginal implementatin spanning 200,000 sq. km and nine lcal cuncils; includes 12 branches and a mbile library. Great Lakes Urban Reginal Twn/City 26 Nv 2012 Chris Jnes Cllabrative implementatin with Greater Taree acrss 5 service pints. Greater Taree Urban Reginal Twn/City 27 Nv 2012 Margie Wallis Cllabrative implementatin with Great Lakes acrss 5 service pints. A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 71 A Business case framewrk fr RFID in NSW Public Libraries 71

Annex C Example csts 72 72 A Business case framewrk fr RFID in NSW Public Libraries

Example f supply and equipment csts Nte that the figures are as at September 2008 - current csts may vary cnsiderably. Fr example, sme libraries indicated that the price f RFID tags is currently well belw $0.35 per tag and can be clse t $0.20 depending hw hard yu negtiate. The table des nt list prices fr an RFID-enabled secure returns chute r an autmated srter (these were typically installed after the initial implementatin), althugh anther library reprted that in 2007, in respnse t an Expressin f Interest, the pricing fr a 5 bin autmated srter frm each f three respndents ranged as fllws: $47,600, $113,216 and $590,000. Categry Item Cst per unit (Library A) Cst per unit (Library B) Standard RFID tags $0.45 $0.41 Supplies RFID tags with barcde $0.59 Lckable multimedia bx (1-2 discs) $1.10 Lckable multimedia bx (3-6 discs) $2.20 RFID read/write pad (plugs int an existing library terminal) Mbile cnversin unit (leased during cnversin f the cllectin) $1,100 $1,700 $2,200/mnth Autmatic multimedia unlcker $3,300 $2,600 Equipment Duble clumn security gates (single aisle) $8,800 Prtable scanner $9,500 Triple clumn security gates (tw aisle) $10,500 Self lan statin $11,000 $12,000 Autmatic returns bin $19,500 Typical csts fr supplies and hardware fr tw libraries as at September 2008 (Surce: Library Develpment Grants 2008/09) A BUSINESS CASE FRAMEWORK FOR RFID IN NSW PUBLIC LIBRARIES 73 A Business case framewrk fr RFID in NSW Public Libraries 73

74 A Business case framewrk fr RFID in NSW Public Libraries 74

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