Return on investment (ROI) is one approach to demonstrating the value of the academic library to university administration and faculty. In this way, ROI helps in choosing the most effective ways forward for the library in tight economic times.
Together with measuring the implied value of library products and services (through patron usage) and assessing the explicit value of the library to stakeholders through testimonials gathered in interviews and focus groups, ROI can be a part of the ongoing assessment and measurement tactics that modern academic libraries must undertake.
ROI in a nutshell
The basis of measuring ROI is to quantify and demonstrate the library’s economic value to the institution. For every euro, dollar or yen spent on the library, the university immediately receives euros, dollars or yen back in the form of additional grants income, and/or it receives long-term value through a more productive faculty and more successful students and graduates.
ROI must be articulated within the mission and objectives of the specific institution. An ROI project must be measurable, replicable both in the given institution and in others, and meaningful (and interesting) to funders.
Academic libraries today must use a variety of strategies to demonstrate their value.
Results of ongoing ROI studies looking at academic libraries
Establishing ROI is not simple, as demonstrated in an ongoing series of studies, supported by Elsevier, in academic libraries. The ROI study Phase 1, conducted at the University of Illinois at Urbana-Champaign, found a $4.38 return in grants income alone for every dollar invested in the library. Phase 2 tested the methodology and results through studies of eight more institutions in seven countries.
Phase 2 found a range of ROI for grants, depending on the varying missions of the institutions and reliance on externally funded grants. ROI for grants ranged from under 1:1 to 1:15. For a purely research institution in Western Europe, the grants ROI was over 1:15. (For every euro invested in the library, there was a 15 euro return.) Another US research university had a grants ROI closer to that of Illinois, of 1:3.44.
With the data gathered above, ROI for grants income can then be calculated. See the ROI formula below.
The importance of using a variety of ROI strategies
Other services can be included for a more complete picture of ROI. Adding comments and testimonials from administrators and faculty puts the library’s complete ROI and value in context. The library makes an ongoing contribution to many aspects of the institutional mission, and so academic libraries today must use a variety of strategies to demonstrate their value.