Total Cost of PreservationCost Modeling for Sustainable Services

Stephen AbramsPatricia Cruse

John KunzeUniversity of California Curation Center

California Digital Library

Screening the Future 2012: Pause, Play, and Press ForwardLos Angeles, May 21-23, 2012

Goals

Understand costs in order to plan for and implement sustainable preservation services

Investigate the possibility of paid-up pricing in order to address► Boom-or-bust budget cycles► Fixed-term, grant funded projects

Source: www.sharedidiz.com/

Final

report

Meeting the expectation

Corner store► Fry’s ≤ $ 100/TB

Commercial cloud► Amazon $1,000/TB/year► Apple $2,000/TB/year► Dropbox $1,980/TB/year► Google $1,200/TB/year► Microsoft $ 500/TB/year

Preservation repository► Princeton DataSpace $6,000/TB for “forever”► USC Digital Repository $1,000/TB for 20 years

Prior work

Nationaal Archief (2005)http://www.nationaalarchief.nl/sites/default/files/docs/kennisbank/codpv1.pdf

LIFE (2008)http://www.life.ac.uk/

KRDS (2010)http://www.beagrie.com/krds.php

DataSpace (2010)http://arks.princeton.edu/ark:/88435/dsp01w6634361k

Jean-Daniel Zeller (2010)“Cost of digital archiving: Is there a universal model?”8th European Conference on Digital Archiving, Geneva, April 28-30, 2010 http://regarddejanus.files.wordpress.com/2010/05/costsdigitalarchiving-_jdz_eca2010.pdf

Rosenthal (2011)http://blog.dshr.org/2011/09/modeling-economics-of-long-term-storage.html

}Identification of granular cost components

}Assumption of annual decrease in aggregate cost, i.e., discounted cash flow (DCF)

Critique of DCF approach

Cost model components

System, composed of various

Services providing curation function, running on

Servers, deployed by

Staff, in support of content

Producers, who use

Workflows to submit instances of

Content Types, which occupy

Storage, and are subject to ongoing

Monitoring and periodic

Interventions; all subject to managerial

Oversight

Number and unit cost of Producers

Total cost of preservation

OViMjSkCWmPnATCP

Fixed cost of System

Number and unit cost of Workflows

Unit cost and number of

Content Types

Number and unit cost of

Storage

Number and unit cost of Monitoring

Number and unit cost of

Interventions

System component subsumes Services

and Servers

Staff costs are subsumed by other

components

Total cost to service

provider

Fixed cost of oversight

Cost to a single producer Cost of the Archive, Workflows, Content Types,

Monitoring, and Interventions are “common goods”► Equally beneficial to all Providers► Properly apportioned across all Providers

SkPn

OViMjCWmAG P

Number of Storage units attributable to

Producer

Number of Producers

Unit cost of a Producer

Total cost attributable to a given Producer

Price models

Pay-as-you go pricing► Annual billing cycle► Price = cost of providing curation service to a given Producer► Only viable if Producers have predictable and reliable

sources of funding● Any interruption in funding, and therefore service, may result in

irretrievable data loss

Paid-up pricing► Assumption of an annual decrease, d, in aggregate service

cost, and investment return, r● In economic terms, this is a Discounted Cash Flow (DCF) or Net

Present Value (NPV) model

Pricing over time

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30

$16,000

$14,000

$12,000

$10,000

$ 8,000

$ 6,000

$ 4,000

$ 2,000

$ 0

Year (T)

Cost

($)

(1–d)t discount factor

Discounted pay-as-you-goG (T,d )Discounted pay-as-you-goG (,d )

Cumulative pay-as-you-goG (T )

dd T

GdTG 11),(TGTG )(

Pricing over time

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30

$16,000

$14,000

$12,000

$10,000

$ 8,000

$ 6,000

$ 4,000

$ 2,000

$ 0

Year (T)

Cost

($)

)()1(

)1()1(),,(drr

drT

TT

GrdTF

(1–d)t discount factor

(1+r)t investment return

Paid-up price, for TF (T,d ,r)Paid-up price, for F (,d ,r)

Discounted pay-as-you-goG (T,d )Discounted pay-as-you-goG (,d )

Cumulative pay-as-you-goG (T )

Predicting the future is hard

TCP modeling is dependent on the predictive reliability of d and r

www.flickr.com/photos/mcgraths/3248483447

Predicting the future is hard

Model the risk► Add a risk premium to the modeling equations

Recalibrate the model► Periodically reset the values of d and r (and G andF ),

based on contemporary conditions, to be applied prospectively

Bound the uncertainty► Stochastic modeling to determine the probability

distribution of possible outcomes

Hybrid price model

Distinguish between costs that are (relatively) easy to quantify and forecast, and those that aren’t► Use the paid-up model for the former and pay-as-you-go

for the latter

Easy Difficult

Archive Intervention

Producer

Workflow

Content Type

Monitoring

Storage

Hybrid price model

Distinguish between costs that are (relatively) easy to quantify and forecast, and those that aren’t► Use the paid-up model for the former and pay-as-you-go

for the latter

Easy Difficult

Archive Content Type

Producer Workflow

Storage Monitoring

Intervention

Preservation forever

Some things are intended to last forever…

Source: John Church Company Source: United Artists

Preservation forever

?

Some things are intended to last forever…

Preservation for …

A fixed term – 10 years? 20 years? – may be appropriate for much content► Give content an opportunity to prove its worth, as

evidenced by someone’s commitment to pay for its subsequent preservation

Transparency and opportunity

Possible outcomes…► We overestimate our costs and collect too much

● Fund a higher level of service● Refund some portion

► We underestimate● Ask for additional funds● Lower service levels● De-accession content – but at least it was preserved up to that

point and had a chance to prove its value, and gain an advocate

Conclusions

Different customers have different funding capabilities► Flexibility in price models is important

Any price model is based on an idealization of the real world► Assumptions matter

Understanding all of your costs is a precondition to a policy decision to recover all or part of those costs► Cost accounting is difficult

If investment return and discount factor can be reliably projected, DCF can be used to model of long-term costs► What if not?

Conclusions

Even if we don’t have a perfect model, we need to move forward now with a “good enough” model

Source: Getty Images

For more information

Total Cost of Preservation: Cost Modeling for Sustainable Serviceshttp://wiki.ucop.edu/display/Curation/Cost+Modeling

UC Curation Centerhttp://www.cdlib.org/uc3uc3@ucop.edu

Stephen Abrams Mark ReyesPatricia Cruse Abhishek SalveScott Fisher Joan StarrErik Hetzner Tracy SenecaGreg Janée Carly StrasserJohn Kunze Marisa StrongMargaret Low Adrian TurnerDavid Loy Perry Willett

Source: Getty Images