CURRENT PRACTICES IN BUSINESS PLANNING: A Report of a Case Survey Analysis

To learn about the current state of business planning among cultural heritage institutions engaging in digitization projects or programs, the authors conducted a telephone survey of 13 organizations. Participants were selected to represent the types of digital asset initiatives known to be the most common in the current field of libraries and museum digitization. Interviewees included single institutions doing digital library work; collaborative efforts involving two or more institutions; programs providing digital library services or tools; consortial initiatives; and archives, libraries, historical societies, and museums. A list of respondents appears in Appendix A.

The survey was based on a draft business plan template (see next section) and was implemented, recorded, and reported by a research consultant. Survey questions were posed about all major areas of business planning, as well as about the specific digitization projects that had led the cultural heritage institution to engage in digitization activities on an ongoing basis. The instrument was pretested with one museum and one library. Pretest results were reviewed, and the phone calls proceeded after some minor modification of the instrument. A copy of the survey document is included in Appendix B.

The survey asked questions about the planning process for both the project's and the institution's overall digital asset management program, about integration of the project into the overall organizational structure, and about the existence of project planning or business planning documents. It included questions about communication plans and public relations and promotional activities, as well as about market research or needs assessment. The survey asked participants whether they had attempted to identify target markets or user segments for their digitization projects and what their institutions did to reach those markets or users regarding the projects. It also included a question about identifying competitors and potential responses to the competition. The survey then moved to questions about how the project was initially organized and what happened when the project was integrated into the organization. If the responding institution was participating in a collaborative effort, the survey posed specific questions about standards setting, communication, and the collaborative process.

The survey also explored areas such as business decision making, project organization, and project management and financial analysis. Several questions focused on budgets and funding the institutions' ongoing digital asset management programs as well as on sources of funding for both the initial projects and the ongoing digitization efforts. If the organization offered a product or service for sale, questions were asked about pricing strategy.

Because standards are often a significant issue related to infrastructure as well as to communication, organization, and staffing, the survey asked how respondents made decisions in this area, and whether or not they modified these decisions upon moving from a distinct project into an ongoing program or when implementing services or products over time. This was an especially important issue for collaboratives and partnerships.

The last area of inquiry related to assessment and use of assessment information in developing the digital asset product or service. The telephone survey ended with open questions that enabled respondents to share their overall suggestions for doing components of the project differently. At the conclusion of the phone surveys, the authors met with the market research consultant to analyze the phone surveys and to develop the trend analysis.

Summary of Trends

The telephone interviews revealed the following trends:

Planning

• All the digitization initiatives in the sample began as grant-funded projects with a scheduled beginning and end.
• Even though many grant applications require a statement regarding sustainability plans, the plans and their outcomes (as reported by those surveyed) focused on the plans for preservation of the digital objects, associated metadata, and the Web site. The only grants that addressed organizational sustainability were the proposals from the Nebraska Historical Society and the Washington Research Library Consortium (WRLC).
• Most of the respondents indicated that they had a plan for sustainability and that the plan was part of their grant application and documented by the application itself. Such plans were limited to activities associated with the grant and had not been revised or modified since the initial grant proposal was written. The specific goals of a grant were included in the grant documents but were not necessarily the goals and objectives of a sustained effort. A disincentive for planning beyond specific grant applications seems to be the perceived need to first "prove yourself" as a leader in the relatively high-risk digital environment. The need for demonstration projects, each coming after the other in sequence, is unusual in the for-profit environment, where a well-thought-out business plan must be produced before the money is provided. In the educational, governmental, and academic environment, pilot projects and demonstration projects funded by grants provide the proving ground. Digitization efforts and services arrive in a "stealth mode," with planning coming afterward.
• Only one university reported having a business plan. However, further questioning revealed that many other institutions reported the availability of components, such as usability studies and promotion plans, that are in a typical business plan. Most of those surveyed were familiar with components of business planning and were ready to move ahead with developing such a plan.
• With the exception of the university noted directly above, none of the responding organizations had multiyear financial plans such as those associated with traditional business planning. When undertaken, financial planning is done annually or, where a project is a multiyear grant, biannually. This approach is likely undertaken for one of two reasons: (1) digitization initiatives are planned to coincide with the institution's fiscal year; or (2) most ongoing programs depend on grants for creation of new content, and those are determined by the funding agencies' grant cycles. Even consortial budgets are developed on an annual basis, driven by the budget cycles of the member institutions' funding agencies. The lack of a long-term business planning approach has a significant impact, in that institutions do not have information about their financial opportunities and risks. Many institutions cannot undertake longer-term financial planning because they lack full information about revenue and expense. Additionally, their institutional financial management systems may not support the data that are needed for business planning. Nevertheless, they could move ahead with such planning, at least on the basis of known revenue and expense such as endowment release, donor planned giving, membership fees, service revenue based on market analysis, license fees, historic revenue figures, and institutional budgeting information. Most institutions can predict near-term (i.e., three- to five-year) expense information, yet the dependence on grants to support ongoing operations discourages institutions from making the assumption that the initiative could be sustained over time.

Sales and Marketing

• Market research is a regular activity in larger museums, but it is seldom done in libraries. Some libraries, however, engage in needs assessment, which can be useful in business planning. Several participants indicated use of focus groups to determine needs and provide input on products. Few interviewees did a lot of work on defining markets or user segments in the traditional market sense, although a few did a fine job of considering markets or user categories or worked in collaboration with partners to develop that information. Few had given much thought to competition or competitive services or content.
• Only a few institutions were selling a product (such as high-quality prints), licensing copies of their collections, or selling a service (such as digital conversion). As a result, pricing considerations were not a regular feature of planning. Those organizations that were making products or services available showed that nonprofit organizations in the digital asset marketplace could become quite sophisticated in developing pricing analyses to ensure cost recovery.
• Cultural heritage institutions place a high value on the public good, including free public access to digital assets. Therefore, few are willing to consider charging fees for digital assets produced through digitization services. Where it was once thought that libraries and museums would establish separate nonprofit entities through which revenue would flow to sustain digital library programs, this has not become the dominant model. Even where a revenue-generating program is established, it is undertaken within the existing library or museum structure, rather than in a separate one.
• Collaborative efforts can involve fees. In some cases, nonmembers pay a higher fee for service than members pay; in others, subgroups within the general membership support specific activity with cost sharing. In the case of access to content created through collaborative effort, the collaborative or consortium may charge fees or require licenses.

Organizational Structure

Two models are emerging in the organizational structure of academic libraries. The first is the establishment of a digital library unit on campus, providing consulting on standards (metadata and digital imaging), Web design, digital imaging equipment, technical infrastructure, and, in some cases, providing digital imaging services and metadata creation services. Respondents all said that the digital library unit was located in the library. In some instances, the unit is located in the technology division on campus, but the library has some relation with the digital library unit. Sometimes there is a centralized digital imaging laboratory; in others, the digital imaging is done in the unit owning the content. If the digital library program is part of the library, then digital imaging is done and access is provided for no additional fee, at least for those resources owned by the library. If the library offers the service to other campus units, a fee structure for the service is established. Generally, the fees recover the direct expenses associated with providing the service, such as providing a copy of the digital image or consulting on a digital imaging project.

The second model is incorporation of digital asset management activities within the library units serving the library digital asset management needs. This is accomplished by reallocating library resources and hiring new personnel as possible. Metadata are produced by the cataloging unit or in the archives or special collections department. Digital imaging services are offered through the library systems unit or the content-owning unit, such as the music department, archives, or special collections department. No single clear organization structure has emerged in this model.

• The number of museums was not sufficient to identify trends in their organizational structure.
• The number of statewide cultural heritage digitization initiatives has grown over the last four years, built on strong resource-sharing initiatives already under way in those states. More than 15 statewide efforts now provide infrastructure such as search engines, digital imaging and metadata standards, training, and grant opportunities. These collaboratives were created with state and federal grants. Projects undertaken by these collaboratives typically combine centralized and decentralized activity for image creation and metadata production, while taking a common approach to other infrastructure elements such as digital preservation programs.
• Organization and staffing trends are hard to pin down, although almost all respondents commented that there should be a full-time project manager. Most respondents felt strongly that they had underestimated the time and staff required, as well as the need for strong continuing management. They also underestimated the learning curve time, resulting in delays in projects. Some organizations recommended that one unit have overall responsibility for the project, even when inter-unit or interorganizational responsibilities are part of a collaborative or partnership.

Other

• The use of outsourcing varied from project to project, but was often considered, especially when dealing with materials that required special equipment, such as oversize materials or maps, or special expertise.
• Once an organization establishes the infrastructure and learns how to digitize materials, budgets for content creation are usually based on additional grants, with most of the monies allocated to staffing or outsourcing. Ongoing infrastructure costs are supported through funds from the operating budget, fees for products or services, or both.
• Among the institutions surveyed, evaluation and assessment efforts center on interface and technical platform usability. Several interviewees reported conducting technical usability assessment and output assessment—the latter focusing on, for example, the number of Web hits or number of images and metadata records created. None of the interviewees reported assessing the outcomes or impact of the service on their markets. This might change, since at least one funding agency, IMLS, encourages outcomes assessment⁵ and even provides assessment training for grantees. Now, however, few organizations are prepared to undertake or pay for outcomes assessment over the long term. Longitudinal outcomes assessment is difficult to implement successfully in the one- to two-year period supported by most grants. Therefore, the cost of long-term outcomes assessment should be included in business planning for a sustainable program. Most of the survey respondents were aware that evaluation is a critical component and that they should be doing more in this area.

Trends in the Two Major Current Models for Digital Asset Development and Management in Cultural Heritage Institutions

Single institutions. Most digital imaging programs are currently based in single institutions, and libraries and museums are almost equally undertaking digitization initiatives. A report from IMLS notes, "More than 78 percent of all State Library Administrative Agencies reported digitization activities in the past year. Compare this with 32 percent of museums, 34 percent of academic libraries, and 25 percent of public libraries. Larger museums, academic libraries, and public libraries are more active than the smaller ones" (IMLS 2002, 5).

Since most digital asset development is being undertaken by single institutions, many factors related to business planning exist in the context of regular library and museum planning and budget development.

While libraries typically resist looking for revenue from the sale of digital content, an emerging trend in single academic institutions is to look for revenue opportunities outside the initial primary university market, offering fee-based services to help support ongoing costs once an investment has been made in creating the digital imaging infrastructure. This trend is well established within public libraries, archives, historical societies, and museums, which frequently license use of their photo archive collections and have easily adapted this model to their digital photo collections. Their pricing is based on the cost of staffing the service and producing the print or digital image; it is not designed to offset the cost of creating the digital object or the infrastructure.

Institutions with significant collections may have an opportunity to license an entire digital collection. (The University of Virginia provides an example that will be discussed later in this report.) Undertaking such an initiative requires considerable investigation and effort in market analysis, promotion, pricing, legal and intellectual property issues, and production.

Consortial/partnership effort. The IMLS has been a major influence in encouraging collaboration between museums and libraries. Digitization initiatives have particularly benefited from this collaboration through the IMLS National Leadership Grant programs. The number of partnerships and collaborative digitization projects has increased dramatically over the past three years;⁶ it remains to be seen whether these partnerships can be sustained through joint or collaborative business planning. Other federal agencies, including the NSF, as well as foundations such as The Andrew W. Mellon Foundation, have long encouraged collaborative proposals. Consequently, multi-university or academic library projects and subject-based museum projects have been formed on the basis of creating discipline-based virtual collections presented together but owned by individual institutions.

• Budget development is inherently more complex for partnerships and collaborative projects than for single-institution projects. For example, the WRLC has a business plan that must be linked to the business plans of the digital library units or activities within each of its member institutions. Similarly, if two organizations partner over time to create a digital asset program, costs and revenues may be shared, but the long-term business plan is affected by and supported by local considerations within each institution. The whole is more than the sum of its parts, but is also dependent on factors outside its control.
• Almost all digitization projects are collaborative. The collaboration may occur among units within a parent institution (e.g., the library science program, the library, the computer science department), within the library (the cataloging unit and the systems office), or between organizations (a public library and a local historical society). The contributions of the partners vary widely and could include subject expertise, metadata skills, technical skills, equipment, publicity, or cash. One partner might want access to another's collections and barter service to create that access.
• It is difficult to ensure strong, open, and regular communication across different types of cultural heritage organizations. Differences in professional values persist, and successful planning requires significant attention to communication and an understanding of roles and expectations. Museums and libraries do things differently, and issues must be talked through. While cultural heritage institutions share values and goals, the participants in collaboratives must focus on meeting the missions of their institutions as well as the goals of the project.
• Allocation of collective responsibilities must be stated up front; assumptions must be avoided. The basis for decentralized decisions must be discussed. Project managers must be alert to new misunderstandings or loss of focus as the project moves forward.
• The more complex the project, the more likely it is that priorities, goals, and even aspects of the mission will change over time. This means that for partnership and collaborative projects, the business plan may have a moving target. Ongoing review is essential.

Sustainability through Making Digital Asset Management a Core Function

Business planning for digital asset management programs is part of a trend leading to the inclusion of digital resource management in the core functions of cultural heritage organizations. Although few museums or libraries are now fully funding, from their operational budgets, digital resource development and management, larger organizations are beginning to assign regular operating funds to maintaining the infrastructure. Among case study participants in this survey, there is evidence of this pattern at the libraries of the University of Michigan, University of North Carolina at Chapel Hill, Indiana University Bloomington, Cornell University, University of Southern California, Tufts University, and University of Washington. Other large organizations, including museums, are undoubtedly moving in this direction as well. Over time, as library users and museum visitors increasingly expect digital services, cultural heritage institutions may be more likely to consider digital asset programs as vital to the success of educational services, information literacy, and other library or museum programs designed to reach out to specific markets.

Business planning will help museums and libraries design the pathway to the future, taking into account evolving market demands and fitting the pieces of businesslike activities into the organization's strategic planning.

⁵ Go to http://www.imls.gov/grants/current/crnt_obe.htm on the IMLS Web site for a discussion by Beverly Sheppard on the value of outcomes-based assessment. She says, "This system of measuring results replaces the question 'What activities did we carry out?' with the question 'What changed as a result of our work?'" A focus on measuring outcomes—the effect of an institution's activities and services on the people it serves—rather than of the services themselves (outputs) is an emerging keystone of library and museum programs. In addition, http://www.imls.gov/pubs/pdf/pubobe.pdf is a publication on that topic entitled Perspectives on Outcome-Based Evaluation for Libraries and Museums.

⁶ "The percentage of National Leadership Grants (NLG) for Libraries and Library-Museum Collaborations with partners for 2001 was 54%. For 2002, it was 49%. If you leave out the library and museum collaborations (which of course require partnerships), the percentage of NLG grants for libraries with partners for 2001 was 34% and for 2002, 36%." E-mail from Joyce Ray, associate deputy director, Office of Library Services, IMLS.

Next     Previous

Return to CLIR Home Page >>