Cost/BenefitAnalysis

Making the Business Case for Records Management

Karen Trivette Cannell, MLS

NYALGRO 2007

To provide the right information...

at the right place...at the right time...

to the right person...efficiently...

at the lowest possible cost.

A program for managing recordsinvolves…

Creation

Retention

Storage

Retrieval

Technology

Archives

Policy

What is a cost benefit analysis?

An approach to cost

justification

An analysis of an opportunity

What types of opportunities should

require a CBA?Adding staff

Introducing new technologies

Mobile shelving

Changing vendors

Remodeling facilities

CBA Justification

•Hard dollar savings

•Soft dollar savings

•Cost avoidance

“Should our governmentoutsource our microfilmoperation or continue to

perform it in-house?”

“Should our government automate our records management operationor stick with our manual

procedure?”

“Should ourgovernment replacefile cabinets with open shelving?”

The CBA Approach

•Preliminary Study

•Feasibility Study

•CBA

•CBA Report

The Preliminary Survey

•Initial evaluation

•Information about the

existing situation

•Assessment of potential

The Feasibility Study

•Finalizes data gathering

•Assesses the data in detail

•Furthers the analysis

process

Identify the costs

Identify the benefits

Consider the effect of time

Analyze the results

The CostsNeeds assessment/consultant services: $12,500.00

Staff training: 500 hours @ $10.00/h: $5,000.00

Geo-reference drawings: $5,000.00

Color scanner: $25,000.00

GIS software/consultant services: $40,000.00

Total: $87,500.00

The Benefits

Reduced overtime: $60,000.00

Unbilled sewer connections: $12,000.00

Recouped business license fees: $20,000.00

Total: $92,000.00

More BenefitsSoft dollar savings

•Higher level of customer service

•More advanced records stewardship

•Improved staff expertise

Cost avoidance•Compliance with GASB 34

Effect Over Time

Cost / Benefits = Payback

$87,500/$92,000 = 0.95 of a yearOR

approximately 11.5 months

Analyze Results

Is the payback

period

sufficient?

The CBA Report

• Executive Summary

• Introduction

• Scope and Purpose

• Methodology of the Study

• Recommendation

• Justification

• Implementation

• Summary

• Appendices

Executive Summary

• Provides an overview to the CBA

Report

• States the report's purpose, the

nature of the opportunity

• Summarizes the recommendations

• Outlines the benefits

ROI

The King of Justifications

ROI Formulas

Basic ROI

[Gains – Investment Costs]____________________________ =

ROI

Investment Costs

Office Move ROIRS = Reduction in office space

costCS = Cost of mobile shelving

RS – CS_______ = ROI

CS

Imaging ROI

RS = Reduction in office storage cost

PS = Personnel + System costs

RS – PS_______ = ROI

PS

Risk of Inaction

FI = Financial loss from inaction [Negative value]

CI = Lack of investment (= 0)

-FI – CI -FI – 0_______ = _____ = [negative

ROI]CI 0

∞

•Managing records is your legal responsibility

•Address all records

•There are simple strategies to enrich your program

•You are not alone!

Closing words…

Help• Contact the State Archives

– Call your Regional Advisory Officer

– www.archives.nysed.gov

• Network with peers

• Join – NYALGRO

– ARMA International

– Society of American Archivists

Thank you for listening!

www.archives.nysed.gov