victorian public libraries review - localgovernment.vic.gov.au€¦ · web viewthe word version...

Victorian Public Libraries Review

Local Government Victoria (LGV)Department of Environment, Land, Water and Planning

March 2016

Inherent LimitationsThis report has been prepared as outlined in the Scope, Method and Approach Section. The services provided in connection with this engagement comprise an advisory engagement which is not subject to Australian Auditing Standardsor Australian Standards on Review or Assurance Engagements, and consequently no opinions or conclusions intended to convey assurance have been expressed.No warranty of completeness, accuracy or reliability is given in relation to the statements and representations made by, and the information and documentation provided by the Local Government Victoria.KPMG has indicated within this report the sources of the information provided. We have not sought to independently verify those sources unless otherwise noted within the report.KPMG is under no obligation in any circumstance to update this report, in either oral or written form, for events occurring after the report has been issued in final form.All of the assumptions underlying the cost analysis are set out in the Appendices. KPMG has not tested these assumptions or the underlying analysis, and has consequently not provided an opinion on a preferred option.The findings in this report have been formed on the above basis.

Third Party RelianceThis report is solely for the purpose set out in the Scope, Method and Approach Section and for Local Government Victoria. It is not to be used for any other purpose or distributed by any other party without KPMG’s prior written consent.The definitive version of this report is the PDF version dated April 2016 which was provided to Local Government Victoria. The Word version of the report has been supplied to facilitate increased accessibility to online information for people with disabilities.This report has been prepared at the request of Local Government Victoria in accordance with the terms of KPMG’s contract dated 7 September 2015. Other than our responsibility to Local Government Victoria and the Department of Environment, Land, Water and Planning, neither KPMG nor any member or employee of KPMG undertakes responsibility arising in any way from reliance placed by a third partyon this report. Any reliance placed is that party’s sole responsibility. Any third party receiving this report acknowledges it is not a party to KPMG’s contract and that it may not place reliance on the results and findings contained in this report. KPMG shall not be liable for any losses, claims, expenses, actions, demands, damages, liabilities or any other proceedings arising out of any reliance by any third party on this report.

Contents

Glossary of Acronyms 01Executive Summary 021 Introduction 081.1 Previous reviews 08

1.2 Scope, Method and Approach 092 Section 1 – Current state 1

22.1 Victorian Government Funding Overview 123 Section 2 – Shared Services 1

53.1 Option 1 – Shared Services 153.2 Option 2 – The Victorian Library Model 22

4 Options Analysis 304.1 Option components 30

4.2 Summary options assessment 304.3 Conclusion and next steps 32

Appendix 1: Detailed cost estimates 01Appendix 2: Multi-criteria analysis 08Appendix 3: ILM Process 10

.

2 Local Government Victoria I Victorian Public Libraries Review 2016

Index of Figures and TablesExecutive Summary TablesTable ES - 1: Options for assessment 07Table ES - 2: Options assessment 08TablesTable 1-1: Timeline of work undertaken 10Table 3-1: Summary of State-wide Library Management System benefits and risks 18Table 3-2: Summary of State-wide e-book and e-resource acquisition benefits and

risks20

Table 3-3: Shared Services Options – summary costings 21Table 3-4: Shared Services Options – multi-criterial assessment 21Table 3-5: Summary of ILL system and service benefits and risks 23Table 3-6: State-wide LOTE collection benefits and risks 24Table 3-7: Summary of completing RFID tagging of State-wide collection benefits

and risks25

Table 3-8: Summary of single State-wide library card, benefits and risks 26Table 3-9: The Victorian Library – summary costings 27Table 3-10:

The Victorian Library – multi-criterial assessment 27Table 4-1: Options for assessment 29Table 4-2: Options assessment 30FiguresFigure 1: Timeline of work undertaken 04Figure 2: Current Public Libraries programs and Shared Services Option 05Figure 3: Investment Logic Map for Victorian Public Libraries 11Figure 4: Assessment matrix for benefits 12Figure 5: Current and lapsing programs 14Figure 6: Shared Services Options 17Figure 7: The Victorian Library Model 22Figure 9: Assessment matrix for benefits 41Appendices TablesTable A - 1: KPMG assumptions. 34Table A - 2: Assumptions – Shared Services Options paper 34Table A - 3: Assumptions – Business Case for the Implementation of ‘The Victorian Library’

35

Local Government Victoria I Victorian Public Libraries Review 2016

3Table A - 4: Option 1 costings – Shared Services 36Table A - 5: Option 2 costings – The Victorian Library 37Table A - 6: Option 1 multi-criteria analysis – Shared Services 42Table A - 7: Option 2 multi-criteria analysis – The Victorian Library 42


Glossary of AcronymsABS Australian Bureau of Statistics CALD Culturally and Linguistically Diverse CoE Centre of ExcellenceILL Inter-library LoanILM Investment Logic MapLGV Local Government VictoriaLLIP Living Libraries Infrastructure ProgramLMS Library Management SystemLOTE Language other than EnglishMAC Ministerial Advisory CouncilNPV Net Present ValueOHS Occupational Health and SafetyPRC Premiers’ Reading ChallengePRCBF Premiers’ Reading Challenge Book FundRFID Radio-frequency identificationRLC Regional Library CorporationSWIFT Swift Library ConsortiumVAGO Victorian Auditor-General’s Office


5

Executive SummaryIntroduction and contextAll public libraries in Victoria (except the State Library) are owned and operated by local government. Operations are either directly managed by the relevant local council (41 in 2012) or through a regional library corporation (RLC) (12 in 2012)1. Approximately 17 per cent of operating expenditure is covered by state government funding, with the remainder coming from local councils. The Victorian Government currently supports councils and regional library corporations in the provision of library services through three specific funding programs:– the Public Libraries Funding Program which

provides untied funding of $40.5 million per annum (indexed annually) for library operations. This includes the LibraryLink system which currently facilitates limited inter-library loans;

– the Living Libraries Infrastructure Program which provides grants to local governments for capital library projects and which has $4.3 million per annum for distribution; and

– the Premiers’ Reading Challenge Book Fund which distributes $1.1 million per annum to support libraries in the acquisition of relevant books.

Figure 1: Timeline of work undertaken2

The Ministerial Advisory Council on Public Libraries (MAC), which brought together key stakeholders from peak bodies, councils and library services across Victoria, wasestablished in 2011 to conduct a comprehensive review into the continued role of public libraries across Victoria, and to develop a strategic service delivery framework forthe future.The MAC was engaged to consider all operational elements of the public library system and network, from services offered to funding arrangements. A two-stage review process (the MAC Review) was conducted between 2012 and 2014, commencing with the issue of the ‘Tomorrow’s Library’ discussion paper in March 2012. This paperwas published to stimulate discussion and debate both within the public library sector and throughout the wider community, inviting feedback and initial ideas about a new approach for Victorian Government funding in the future, the Victorian Library concept.The Victorian Library comprised a number of interrelated initiatives to deliver either efficiencies or to improve library service levels through the creation of a “borderless” library.A further piece of work was undertaken by Local Government Victoria to assess the feasibility of implementing only the efficiency based initiatives, in a shared services concept.The timeline below graphically sets out the work undertaken over the period since 2012.

April 2016Shared Services

Sept 2014Implementation Planning Framework for the ‘Victorian Library’ proposal completed

Nov 2013Review of Victorian Public Libraries Stage 2 Report released

Sept 2013The ‘Victorian Library Business Case finalised

Dec 2012MAC Review Stage 1 Report released

Mar 2012‘Tomorrow’s Library’ Discussion Paper issued


1 Mach 2 Consulting (2013), Business Case for the Implementation of ‘The Victorian Library’, p 16.

2 Produced by KPMG.


7

In addition, program evaluations have been undertaken for the Living Libraries Infrastructure Program and the Premiers’ Reading Challenge Book Fund, which have assessed the efficiency and effectiveness of these programs. Both of these programs have funding which lapses in 2016.This document aims to summarise the different initiatives contained in all of the reports which are either:– existing programs (the Public Libraries Funding

Program, the Living Libraries Infrastructure Program and the Premiers’ Reading Challenge Book Fund); and

– proposals for shared services (the component inter-related parts of the Victorian Library).

This report does not evaluate the merit of existing programs, but focuses on two potential enhancements that could build on the ‘current state’:– Option 1 – Shared Services Option– Option 2 – The Victorian Library Option

Figure 2: Current Public Libraries Programs and Shared Services Options3

Scope, method and approachKPMG has been engaged to provide a summary and to undertake a critical examination of the previous work undertaken in this area, namely:– Business Case for the Implementation of the

Victorian Library (Mach 2 consulting September 2013);

– Review of Victorian Public Libraries Stage 2 Report (Ministerial Advisory Council on Public Libraries November 2013);

– Implementation Planning Framework (Mach 2 consulting September 2014);

– Shared Services Business Case (Mach 2 consulting August 2015);

– Living Libraries Infrastructure Program (ACIG February 2015); and

– Premiers’ Reading Challenge Book Fund Program (Roberts Evaluation Pty Ltd February 2015).

Each document provided by Local Government Victoria has been reviewed, and the individual components within each business case or evaluation have been summarised.

CURRENT AND LAPSING PROGRAMS

++ Living Libraries

Infrastructure Program

Premiers’ Reading

Challenge Book Fund

Recurrent "core" funding to councils for libraries and Library Link

Single State-wide

Library Card

RFID State-wide

Collection

State-wideLOTE

Collection Funding

Fully Integrated

Inter-library Loans Service

Library Managementsystem (LMS)

SHARED SERVICES

E-resource Acquisition Program

THE

VICT

ORI

AN L

IBRA

RY

MO

DEL

8 Local Government Victoria I Victorian Public Libraries Review 20163 Source: KPMG analysis


9

In order to identify the current issues facing Victorian libraries, and the benefits of addressing these problems, on the assumption that the situation may have changed or developed since the 2013 Victorian Library concept, a two-hour facilitated workshop4 was held and attended by representatives from Local Government Victoria (LGV), Public Libraries Victoria Network and the Municipal Association of Victoria.The three main problems identified were:– the increasing cost of library provision, and the

proportion falling onto local councils, is putting service deliveryat risk;

– the inequity in access for communities to library resources across the state; and

– the lack of a co-ordinated response to changing technology and rising customer expectations is increasing costs disproportionately.

The benefits of addressing these problems were identified as:– cost efficiencies, using cost effective ways to

deliver library services.– improved library services, such as increase in

accessibility for all customers, depth of catalogue includinge-resources, and compatibility with new technology; and

– community well-being, particularly for vulnerable groups who can use libraries to access the internet, for community group use, improved literacy andsocial cohesion.

This report seeks to build up two options for review and comparative assessment. The option design has been based on being able to address the identified problems and deliver the required benefits.Each option was assessed against cost and net present value (NPV) over a four-year period (the forward estimates), an assessment of the ability of the option to deliver the benefits using a multi-criteria analysis, and the associated risks and barriers to implementation.LimitationsNo new data collection has been undertaken, and all the supporting evidence and costs are taken directly from the documentation provided by LGV.The cost estimates have been re-stated in 2015 AUD$ but otherwise KPMG has relied on these from thedocumentation provided. KPMG has not sought to verify this financial data, or to test the robustness of any assumptions made in arriving at this data.All of the assumptions underlying the cost analysis are set out in the Appendices. KPMG has not tested these assumptions or the underlying analysis, and has

consequently not provided an opinion on a preferred option.

10 Local Government Victoria I Victorian Public Libraries Review 2016Where possible, benefits arising from the components have

been quantified, and a Net Present Value (NPV) calculated, to enable comparison between options. Other non-quantifiable benefits have been assessed for relevance (alignment with the Investment Logic Map (ILM) benefits that were developed for each program) and strength (the extent to which they are designed to deliver the desired benefit).

No adjustments have been made to the anticipated cost savings or benefit generated from the original business cases to take into account changes in the economy or library sector which have occurred since March 2012 (the dateof the data included in the “Tomorrow’s Library” Discussion Paper).The link between the component parts of each option and the benefits identified in the revised ILM have been assumed based on discussion with LGV and the commentary within the documents under review.Options analysisThe following options were built up in consultation with LGV for comparison purposes. The ILM identified strategic responses to the problems including efficiency measures, increased collaboration, and increased overall fundingto meet growing expectations of consumers. Option 1 focusses on the efficiency response, including some collaboration, and Option 2 is designed to support

increased collaboration and implement efficiencies.– Option 1 – this option includes a State-wide Library

Management System (LMS) and joint e-resource acquisition. This option is designed to provide operational savings to libraries which can be used for re-investment in the library. This option addresses the issue of e-resource acquisition, by obtaining more advantageous terms for individual library services through negotiating in larger groups with providers. This will enable all library services to benefit from centralised procurement expertise, by removing the need for each service to procure its owne-resource catalogue. Participation in the procurement of a LMS is optional and once procured and implemented, the participation in catalogue sharing between councils is also optional.

– Option 2 – this option represents the original Victorian Library concept. This option is designed to deliver a seamless network of libraries across Victoria, through the addition of a single library card for customers,improvements in the inter-library loan service and system, and completing the RFID (radio frequency identification) tagging of the State-wide catalogue. It is anticipated that this option will provide the community with improved library services in addition to generating the Shared Services efficiencies within Option 1.

4 The workshop followed DTF’s method for investment logic mapping, which is mandatory for all funding bids to the Expenditure Review Sub-committee. More detail on the process can be found at www.dtf.vic.gov.au/ investmentmanagement and in Appendix 3.


11

The table below lists the different component parts of each option.Table ES 1: Options for assessment5

State-wide library management system (LMS) ü ü

State-wide e-resource acquisition program ü ü

Fully integrated inter-library loan system and service ü

State-wide Language Other Than English (LOTE) collection ü

Radio Frequency Identification (RFID) entire State-wide collection ü

Single State-wide library card ü

The table on page 8 summarises the options against a number of criteria, such as cost, net present value (NPV), a ranking of benefits, and barriers and risks. More detail ofhow the costs and benefit assessments have been derived from the earlier consultancies is contained in thereport appendices.The table also contains the outcomes of a multi-criteria analysis which assesses the overall benefits of each option. This is a qualitative assessment, and while the maximum score possible is nine, the contrasting benefits in the ILM (i.e. improving service outcomes versus identifying cost efficiencies) make it difficult for a single component to score highly across all three required benefits. The scoring is useful for comparison between options, and allows the comparative importance of each benefit to be taken into account, rather than just the number of “positive” attributes of each option.

Option 2Victorian Library

Option 1Shared Services

Components from previous business cases and programs


5 Options chosen and collated by KPMG in consultation with Local Government Victoria.


13

Table ES 1: Options for assessment6

Option 1 Option 2

Total Cost – 4 years7 $13,290,081 $28,214,449

Total Savings – 4 years $(19,320,748) $(24,940,456)

Net Cost/(savings) – 4 years $(6,030,667) $3,273,993

Net present value – 4 years $(5,681,541) $3,073,036

Multi-criteria analysis average across components – maximum score – 98

6.3 4.7

Benefits Cost efficiencies of State-wide LMS and e-resource procurement.Improved library servicesAccess to all libraries to a quality e-resources at a competitive costHigher minimum standards across Victoria

Positions libraries for the future with the opportunity for additional IT savings and service improvementsImproved community outcomes through improved access to catalogue through IIL serviceImproved benefits of library membership through single library card

Barriers to implementation Medium – as some libraries will not gain individually from the shared services provision take up may be lowOptional components to participate will enable councils to participate to the level they feel comfortable – it is optional to participate in the collaborative procurement of the LMS and optional to share catalogues with

High – will require additional governance structure for collaborationSome libraries will not participate because of perceived and real loss of autonomyComplex and multi-faceted project requiring level of collaboration which is not currently evident

Risks Libraries may not participate or generate the savingse-resources contractual terms may prevent the full realisation of benefitsComplexity/risk inherent in major IT projects and/or major ongoing contract management in a “third party” contract management

Higher risk of libraries not participating due to the level of change required.Inter-library loan service involves a complex piece of contract management which will require specialist skills to facilitateLibraries may not participate or generate the savingse-resources contractual terms may prevent the full realisation of benefits

As this table shows, Option 1 is expected to generate savings through the use of shared services with regard to the LMS, and e-resources, giving it a NPV which is a saving, rather than an expense. In Option 2, the savings expected to be generated are invested back into the additional components that make up the Victorian Library, such as the improved ILL system and service. Option 1 is expected to deliver net savings over four years (discounted at 4 per cent per annum) of approximately $5.7 million. In contrast, the Victorian Library option would involve a net cost over four years of approximately $3.1 million.

The multi-criteria assessment shows that the two Shared Services components of the Victorian Library concept are expected to deliver more value than the other four Victorian Library components. As a result, the average multi-criteria score for the Shared Service Option is higher than for the Victorian Library Option.In summary, Option 1 has a higher realisation of benefits for libraries, with a slightly lower risk profile than Option 2 which would appear to make it a very attractive option to take forward.

6 Options assessment produced by KPMG – refer to Appendices 1 and 2 for detailed analysis and sources.

7 See Appendix 1 for detailed costings.8 See Appendix 2 for detail of the multi-criteria assessment. Score is

an average of the component parts within each option


Introduction


All public libraries in Victoria (except the State Library) are owned and operated by local government. Operations are either directly managed by relevant local council (41 in 2012) or through a regional library corporation (RLC) (12 in 2012)9. Approximately 17 per cent of operating expenditureis covered by state government funding, with the remainder coming from local councils. Increasing costs for councils may impact their ability to maintain service levels in libraries, particularly in light of the changing role of libraries in their community, and the advent of e-resources.Current funding for libraries by the state government includes:– $40.5 million per annum (indexed annually) in

untied funding which is distributed to councils to spend on libraries, without any requirement to provide reports on outcomes achieved. It includes the annual funding of the existing inter-library loan system, LibraryLink;

– $1.1 million per annum through the Premiers’ Reading Challenge Book Fund provided to councils on the basis of the number of children under the age of 16 in their catchment area, for the purchase of children’s books related to the challenge; and

– $4.3 million per annum through the Living Libraries Infrastructure Program, which provides individual grants to councils of up to $750,000 for library infrastructure projects.

Both the Premiers’ Reading Challenge Book Fund and the Living Libraries Infrastructure Program funding lapse in June 2016.1.1 Previous reviewsThe Ministerial Advisory Council on Public Libraries (MAC), bringing together key stakeholders from peak bodies, councils and library services across Victoria, wasestablished in 2011 to conduct a comprehensive review into the continued role of public libraries across Victoria, andto develop a strategic service delivery framework for the future.

Table 1-1: Timeline of work undertaken10


10 KPMG analysis from documents provided by LGV.

April 2016Shared Services

Sept 2014Implementation Planning Framework for the ‘Victorian Library’ proposal completed

Nov 2013Review of Victorian Public Libraries Stage 2 Report released

Sept 2013The ‘Victorian Library’ Business Case finalised

Dec 2012MAC Review Stage 1 Report released

Mar 2012‘Tomorrow’s Library’ Discussion Paper issued

The MAC was established to consider all operational elements of the public library system and network – from services offered to funding arrangements. A two-stage review process (the MAC Review) was conducted between 2012 and 2014, commencing with the development of the ‘Tomorrow’s Library’ discussion paper in March 2012. This paper was published to stimulate discussion and debate both within the public library sector and throughout the wider community, inviting feedback and initial ideas abouta new approach for Victorian Government funding in the future, the Victorian Library concept.The Victorian Library comprised a number of interrelated initiatives to deliver either significant efficiencies or to improve library service levels through the creation of a “borderless” library. A further piece of work was undertaken by Local Government Victoria to assess the feasibility of implementing only the efficiency based initiatives, in a shared services concept. The timeline below graphically sets out the work undertaken since 2012.In addition, both the Living Library’s Infrastructure Program and the Premiers’ Reading Challenge Book Fund have recently been evaluated to establish their efficiency and effectiveness in achieving the stated objectives.The following documents have been reviewed and summarised within this report:– Business Case for the Implementation of The


– Review of Victorian Public Libraries Stage 2 Report (Ministerial Advisory Council on Public Libraries November 2013);

– Implementation Planning Framework (Mach 2 consulting September 2014);

– Shared Services Business Case (Mach 2 consulting August 2015);

– Living Libraries Infrastructure Program (ACIG February 2015); and

– Premiers’ Reading Challenge Book Fund Program (Roberts Evaluation Pty Ltd February 2014).


Local Government Victoria I Victorian Public Libraries Review 2016 11

1.2 Scope, Method and ApproachKPMG has been engaged to provide a summary and to undertake a critical examination of the previous work undertaken in this area, and to provide, insofar as it is practicable, an analysis of the costs and benefits of the different options available. The business cases listed above each contain a number of constituent components, many of which are inter-dependant and inter-related. The program evaluations each refer to one program component. KPMG has described each of these components, and the costs and benefits attributed to each of them as described inthe various documents. A number of options have been developed from these components, and the estimated cost, risk and associated benefits of each combination have been built up from the constituent parts.1.2.1LimitationsNo new data collection has been undertaken, and all the supporting evidence and costs are taken directly from the documentation provided by LGV.The cost estimates have been re-stated in 2015 AUD$ but otherwise KPMG has relied on these from thedocumentation provided. KPMG has not sought to verify this financial data, or to test the robustness of any assumptions made in arriving at this data.All of the assumptions underlying the cost analysis are set out in the Appendices. KPMG has not tested these assumptions or the underlying analysis, and hasconsequently not provided an opinion on a preferred option.

Where possible, benefits arising from the components have been quantified, and a Net Present Value (NPV) calculated, to enable comparison between options. Other non-quantifiable benefits have been assessed for relevance (alignment with the ILM benefits) and strength (the extent to which they are designed to deliver the desired benefit).No adjustments have been made to the anticipated cost savings or benefit generated from the original business cases to take into account changes in the economy or library sector which have occurred since March 2012.The link between the component parts of each option and the benefits identified in the revised ILM have been assumed based on discussion with LGV and the commentary within the documents under review.1.2.2Design and assessment of optionsIn order to establish the current problems facing Victorian libraries, and the benefits of addressing these problems, a two-hour facilitated workshop was held, attended byrepresentatives from LGV, a Public Library Victoria Network and the Municipal Association of Victoria. The workshop was facilitated using the DTF Investment Logic Mapping methodology, which has been developed specificallyto assist in the identification of compelling logic for investments and program. More details regarding the Investment Logic Map (ILM) process are set out in Appendix3.The resulting one page ILM summarises in plain English the current problems being faced by libraries, the benefits of addressing the causes of these problems, and the potential strategic responses to the issues, is shown below:

Figure 3: Investment Logic Map for Victorian Public Libraries11

11 ILM produced by KPMG in consultation with LGV.

20% Increased collaboration

Cost efficienciesKPI 1: Cost per visitKPI 2: Cost per member

25%

Lack of coordinated responseto changing technology and increasing communityexpectations is leading to lower efficiency and

30%

Preferredsolutio

n

TBC

Efficiency initiatives to reduceoverall cost

40%

KPI 2: Library programparticipation rates for vulnerable groupsKPI 3: Library membership and visits

55%

Inequity in access to libraryresources across the state is contributing to continuingpoorer literacy and

45%

Community well beingKPI 1: Literacy levels within community

Increase revenue raisingcapacity of libraries

5%

Increase total investment inlibraries for operational and capital expenditure

Improved library servicesKPI 1: Investment per capita KPI 2: Stock

20%

35%Increasing cost burden of

libraries on local councils is putting quality of library services and their role in community life at risk

25%

Assets

Changes

Solution

Strategic Response

Benefit

Investment Logic Map


Drawing on the components from the previous business cases along with the existing funded programs, two options were designed which represented the strategic responses (with the exception of revenue generation which did not appear in any of the work under review).The estimated cost of each option was built up from the cost information in the reports under review. All costs were re-stated in 2015 AUD$ and, where possible, a NPV was calculated over four years (the forward estimate period).However, many of the benefits, particularly those relating to client satisfaction, were described in qualitative terms. Given the inability to quantify these benefits, KPMG has used a multi-criteria analysis approach to assess and compare the benefits of the different projects.In conjunction with the LGV project team and using a multi- criteria analysis framework, KPMG undertook a qualitative assessment of each component part of the options, both of the level of benefit expected and the strength of the component design to deliver each benefit. Both of theseelements were out of a total score of three. The comparative weightings allocated to each benefit in the ILM were used to weight the assessment as agreed with LGV.Figure 4: Assessment matrix for benefits12

By multiplying the strength and relevance scores, each component was given an overall score against each benefit in the ILM. These scores were then weighted based on the importance of each benefit, as stated in the ILM:– community wellbeing – 55% weighting;– cost efficiencies – 25% weighting; and– improved library services – 20% weighting.In interpreting the final overall scores, it is important to understand that they represent a judgement about the marginal or relative benefits of investing additionalresources. That is, if one additional dollar is invested, it is more likely to provide greater returns if invested in activities that fall under an option with a higher overall score. In terms of informing decision-making in the future, it is critical to examine the existing mix of projects being funded and consider the interaction between different components.As scores are not derived using quantitative data, KPMG cautions against using or manipulating the numbers out of the context of this report.

Strength

Rele

vanc

e

1 - Low 2 - Medium 3 - High

3 - High 3 6 9

2 - Medium 2 4 6

1 - Low 1 2 3

12 KPMG (2015), Value for Money Assessment of the CFA Bushfires Program, p 4.


Section 1 Current State

state


2.1 Victorian Government Funding OverviewFigure 5: Current and lapsing programs13

The Victorian Government provides funding and grants to libraries via Local Government Victoria (LGV) through the following programs:– Public Libraries Funding Program – $40.5 million

(indexed annually), including the LibraryLink ILL system ($320,000 annually);

– Living Libraries Infrastructure Program – $4.3 million (annually); and

– Premiers’ Reading Challenge Book Fund – $1.1 million (annually).

These programs make up the current state for Victorian public library funding. Evaluations have been undertaken on the lapsing programs, however commenting on the evaluated performance of these programs is outside the scope of this report. Below are short summaries of the program evaluations.2.1.1 Premiers’ Reading Challenge Book

FundDescriptionThe Premiers’ Reading Challenge (PRC) is a program designed to encourage children from prep to Year 10 to read a set number of books over the year and record their efforts online. Each year, students choose books to read from the PRC book lists. This creates demand for particular books within libraries. Between 2011 and 2015, the Premiers’ Reading Challenge Book Fund (PRCBF) provided $4.5 million to libraries across Victoria to help meet the increased demand for books and other resources (e.g. audio books, e books) relevant to the PRC.With the program lapsing, LGV commissioned an evaluation to inform the government’s current and future policy and decision-making around the program.

Evaluation of the Premiers’ Reading Challenge Book Fund14

In February 2014, Roberts Evaluation Pty Ltd completed an evaluation of the PRCBF. Key components were surveys and interviews with library representatives:1. Interviews: Interviews were conducted with six

key representatives from the Victorian public library sector and explored how libraries have experienced the PRCBF; how they have used the funds; the meaning and value of the program to their libraries; what opportunities there might be for improving the program; and what impact withdrawing the fund would have.

2. Survey of public libraries: 39 library representatives completed an online survey that explored the useof funds, the value of funds and opportunities for improving the program. There were also specific questions relating to historical expenditure on books and other materials for children and young adults.

Surveys found that, following the introduction of the PRCBF, most libraries rate their current children to young adult collections as improving (65%) or significantly improving (30%). Prior to the funding, most libraries considered these collections to be declining (41%) or remaining steady (35%), with only a small proportion who considered it to be improving (19%).15 Most respondents also stated that the PRCBF has increased the funding directed to children and young adult collections, and all respondents agreed that the program supports their collection of junior reading items on the PRC lists.16

Sixty-five per cent of respondents reported that should the fund cease, the quality and comprehensiveness of their children to young adult’s collection would decrease, while 24 per cent of respondents reported that it would decrease significantly.17

13 Source: KPMG analysis

CURRENT AND LAPSING PROGRAMS

++ Living Libraries

Infrastructure Program

Premiers’ Reading

Challenge Book Fund

Recurrent ‘core’ funding to

councils for libraries and Library Link

14 Roberts Evaluation Pty Ltd (2014), Evaluation of the Premier’s Reading Challenge Book Fund Program.

15 Roberts Evaluation Pty Ltd (2014), Evaluation of the Premier’s Reading Challenge Book Fund Program, p 9.



16 Local Government Victoria I Victorian Public Libraries Review 2016 Local Government Victoria I Victorian Public Libraries Review

2016 15

2.1.2 Living Libraries Infrastructure ProgramDescriptionThe Living Libraries Infrastructure Program (LLIP) is a grants program designed to assist local governments and regional libraries to provide high quality, accessible and robust public library infrastructure to meet growing community needs.Grants received through this program are additional and separate from the Victorian Government’s core public library service funding. During the most recent four-year program period, a total of 63 projects were approved, with grants ranging up to a maximum of $750,000.With the program lapsing, LGV commissioned an evaluation to inform the government’s current and future policy and decision- making around the program.Evaluation of the Living Libraries Infrastructure Program18

In February 2015, the Australian continuous improvement group completed an evaluation of the LLIP. Scope ofthe evaluation included an assessment of the LLIP’s effectiveness, and to determine whether the program met the appropriate policy objectives, planned outputs and desired outcomes.The evaluation comprised:1. Collection and analysis of data relating to library

services that have received funding as part of the LLIP; and

2. Surveys completed by 42 library service managers and interviews with 10 library service managers.

Stakeholders interviewed and surveyed for the evaluation were overwhelmingly in favour of the program and were unanimous in stating that much of the public library infrastructure would remain unbuilt or left in a dilapidated state in its absence. Most respondents either agreed or strongly agreed that the LLIP made a signifi contribution to their infrastructure project, a measurable increase in user satisfaction had resulted from the increase, and measurable increase in usage had been made possible by the infrastructure project.19

The evaluation found that a rapidly growing population in Melbourne’s urban fringe regions is driving demand for new libraries, while new technology and the changing way in which libraries are being used by the community means that spaces in many long-established library buildings need to be reconfi 20

Data contained in the evaluation also showed that the program was having a greater impact in regional areas. The proportion of total project expenditure funded through the LLIP was higher in regional areas (22 per cent of total project expenditure) than metropolitan areas (six per cent of total project expenditure).21

18 Australian continuous improvement group (2015), Evaluation of the Living Libraries Infrastructure Program.

19 Australian continuous improvement group (2015), Evaluation of the Living Libraries Infrastructure Program, p 16-17.

20 Australian continuous improvement group (2015), Evaluation of the Living Libraries Infrastructure Program, p 14.

21 Australian continuous improvement group (2015), Evaluation of the Living Libraries Infrastructure Program, p 4.

3Section 2 Potential future options


This section includes analysis of two potential enhancement options that could build on the ‘current state’.– Option 1 – Shared Services: This includes a

State-wide Library Management System (LMS) and joint e-resource acquisition. This option is designed to provide operational savings to libraries which can be used for re-investment in the library. This option addresses the issue of e-resource acquisition, by obtaining more advantageous terms for individual library services through negotiating in larger groups with providers. This will enable all library services to benefit from centralised procurement expertise, by removing the need for each service to procure its owne-resource catalogue.

– Option 2 – The Victorian Library: This option builds on the Shared Service Option to deliver a seamless network of libraries across Victoria, through the addition of a single library card for customers, improvements in the Inter-library Loan Service and system, and completing the RFID (radio frequency identification) tagging of the State-wide catalogue. It is anticipated that this option will provide the community with improved library services in addition to generating the shared services efficiencies within Option 1.

These options are discussed in more detail below.3.1 Option 1 – Shared ServicesThe shared service option contains two components:– a common State-wide Library Management

System; and– a State-wide E-Book/E-Resource Acquisition

Program.Figure 6: Shared Services Options22

3.1.1 Implementation Planning Framework (Mach 2 consulting September 2014) A commonState-wide Library Management System

DescriptionThe introduction of a single State-wide LMS – effectively the ‘engine room’ of a library IT system,23 would involve the procurement of an LMS which would be available for all Victorian public libraries.24 The LMS would be“state-of- the-art” with features and functionality equal to or better than the systems currently in place at library services, and therefore specified to the highest common denominator in terms of both service level and functionality for staff and customers. A State-wide LMS would remove the need for the current LibraryLink system.A single State-wide LMS is a key enabler for a common bibliographic database of Victoria’s library collectionand provides a mechanism for lending, sharing and tracking all collection resources across the state within policy parameters determined and agreed by libraries.25 Participation in the procurement of a LMS is optional and once procured and implemented the participation in catalogue sharing between councils is also optional.FeaturesThe core LMS includes:– a high quality, integrated discovery layer

(including apps for mobile phones and tablets, and multi-source, multi- format and multi-lingual search capability); and

– a choice of other third party add-ons and products (such as management reporting, content review and collection management modules).

This section provides a summary evaluation of these two components as described in:– Shared Services Option (Mach 2 Consulting 2015);– Business Case for the Implementation of the

Victorian Library (Mach 2 consulting September 2013); and

– Review of Victorian Public Libraries Stage 2 Report (Ministerial Advisory Council on Public Libraries November 2013).

SHARED SERVICES

Library Management system (LMS)

E-resource Acquisition Program


22 Produced by KPMG.

23 Mach 2 Consulting (2015), Shared Services Options, p 16.24 Mach 2 Consulting (2015), Shared Services Options, pp 4-5.25 Mach 2 Consulting (2013), Business Case for the

Implementation of ‘The Victorian Library’, p 4.

18 Local Government Victoria I Victorian Public Libraries

A single State-wide LMS would include the following key features:– Optional participation by libraries.– Flexibility – with each participating library

retaining its own separate catalogue and members’ database to ease the transition to the new shared LMS.

– All library services would be required to meet a series of targets, such as eliminating duplication of the catalogue and membership records before transitioning to the new system.26

– Staff training would be provided as part of implementation.27

– Does not include a shared State-wide e-resource collection, although it does create a shared technological platform from which e-resources may be easily accessed.

– Will ensure all participating libraries are using the same, high-quality system.

Elective ParticipationTo date, each library service has been responsible for the procurement and maintenance of their own LMS. In 2007, the Swift Library Consortium (Swift) was formed, with a

number of library services joining to procure a single LMS. While membership databases have been maintained separately by individual library services, a condition of Swift membership has been access to unlimited inter-library loans (ILLs). This has been a deterrent for some library services to join the consortium.28

Participation in the procurement and implementation of the State-wide LMS would be entirely voluntary and libraries would be able to choose to continue to use their own LMS of choice at their own cost.29

Participation would not require libraries to share their existing collection resources with other library users (as is the case with SWIFT), although they could elect to do so and this would be supported by the LMS.Moreover, policy in relation to collection management, access, lending policy matters or the charging of fees or fi would remain at the discretion of individual libraries.30

The table 3-1 summarises benefits identified in previous analysis of a State-wide LMS; aligns those benefits against benefits in the ILM; and summarises other benefits/advantages and risks associated with the project.

Table 3-1: Summary of State-wide Library Management System benefits and risks31

Description of proposed benefits and alignment to identified ILM benefits

Improved Library Services

– A consistent, integrated LMS will improve services by providing libraries with a system that allows them to meet constantly changing user needs. These benefits will be greater in areas currently experiencing a lower level of service quality, primarily in rural areas.

– The LMS is an enabler of other components of an integrated library system, which will in turn produce more benefits.

– Brings all libraries (that participate) up to a new and higher minimum level of service.32

Community Wellbeing

– Will enable more equitable access to library services across the state, including statewide digital archive, LOTE collection and Inter-library Loan (ILL) services.33

Cost Efficiencies– A common LMS is likely to achieve net savings34 in information and communication technology

related costs. The economies of scale delivered through a State-wide approach to LMS procurement are projected to deliver financial savings to library services although the quantum will vary depending on existing costs.

Other Benefits/Advantages:35

– Increases reporting capability for public libraries (through data capture, statistical and performance reporting functionality), to better support decision-making and policy development.

– Improves functionality and presentation of public libraries (through standardised discovery layers) while retaining distinctive local branding, service and program specific information.

– Creates a strong basis for improving the quality and consistency of collection cataloguing throughout Victoria.– Creates the opportunity for a more integrated approach to statewide collection procurement

Risks (Indicative only):

– Over 50 per cent of libraries need to participate to provide a positive cost benefit analysis. Once a level of 80 per cent participation is reached there will likely be no further marginal costs, so benefits will be proportionally greater.

– State-wide standardisation of core system features will inevitably result in a loss of individual library autonomy in respect of selection of features.

– Substantial process of change and transition.– Risk of non-compatibility between new LMS and council systems/websites.– Additional inherent risk of complexity for major IT project, and contract management of third party– Individual libraries, or the RLCs, with high specification LMS may not perceive sufficient benefit in the proposed new system to

26 The Ministerial Advisory Council on Public Libraries, Review of Victorian Public Libraries Stage 2 Report, p 59.

27 Mach 2 Consulting (2015), Shared Services Options, p 6.28 The Ministerial Advisory Council on Public Libraries, Review of

Victorian Public Libraries Stage 2 Report, p 58.

29 Mach 2 Consulting (2015), Shared Services Options, p 5.30 Mach 2 Consulting (2015) Share Services Options

Local Government Victoria I Victorian Public Libraries Review 201631 KPMG summary of Public Libraries stage 2 report, Review of

Victorian Public Libraries Stage 2 report, and Shared Services document, provided by LGV on 20 August and 16 September 2015.

32, 33, 35 The Ministerial Advisory Council on Public Libraries, Review of Victorian Public Libraries Stage 2 Report, p 58.

34 Mach 2 Consulting (2013), Business Case for the Implementation of ‘The Victorian Library’, p23.


3.1.2State-wide E-Book/E-Resource Acquisition Program

Description36

Over the past decade, the way in which the community accesses information has changed significantly . An increased uptake of internet resources and the proliferation of e-readers and e-books has led to a shift away from traditional printed materials. To maintain relevance and meet the needs of their local communities, libraries need to facilitate access to digital material.37

The MAC review identified the development of a cohesive, State-wide response to e-books and e-resources to be the number one priority for a state-sponsored project involving public libraries.41

This would involve the implementation of a State-wide e-book/e-resource procurement/acquisition program on behalf of library services, with the objective of adding to the existing collection, and a focus on maximising the breadth, quality and range of the collection.In the absence of a shared State-wide LMS, the collection could be made available through a single portal (a discovery layer), offering access to the collection for all Victorians.Both the State-wide e-resource collection and the necessary delivery platform and discovery mechanisms to enable search and delivery of the shared resources by, and to, library users would be subject to robust procurement processes.It is envisaged that there will be three key parts to this e-content specification:– access to a quality range of content through the

market on reasonable commercial terms;– the tools and mechanisms for customers to search

through e-content and to easily discover the content they want in a convenient, single layer process (preferably within the library ecosystem rather than the aggregator platform); and

– a delivery process to the customer’s choice of reading device.

Having a single point of access to the entire e-resource catalogue will provide significant

community benefit.Features39

A State-wide e-book/ e-resource acquisition program will include:– a series of State-wide contracts and pricing

(agreed with database suppliers);– access to e-resources (e-books, e-music and e-

magazines)

Access and LicencingMany libraries are already procuring e-content and offering it to users through a range of content providers/aggregators and through a variety of web-based delivery platforms. However, the quality and range of these collections is limited.40

Libraries have also raised concerns in relation to the terms upon which e-content is licensed and made available to public libraries. In many cases, the terms upon which content is being offered (to libraries specifically are regarded as prohibitive, punitive, unreasonably expensive or too restrictive.41

Libraries are concerned that they are being offered access to e-books under licenses with limitation of rights of use rather than outright ownership, and even then, only to a selection of resources, as dictated by the publisher.42

The challenges of accessibility stretch beyond e-books, to include other resources such as database subscriptions. While database subscriptions have been provided to public libraries in the past through a consortia approach (Gulliver), this arrangement is no longer available. Any State-wide procurement program for e-resources could addressthis issue and include a core set of State-wide database subscriptions (to be specified) and procured.43

E-Book Acquisition ZonesSubject to further developments in the publishing sector over the next year or so (and the resultant availability of e-books to libraries and prices/license terms offered), the procurement process may be specified and structured on a block/zone basis. Such a block/zone structure would be designed to encourage wider publisher/aggregator participation in the procurement process by substantially removing the current perceived market-driven impediments that would likely otherwise apply.44

provided by aggregators determined by a panel of chosen suppliers; and – the single LMS will allow storage and discovery of

Local Government Victoria I Victorian Public Libraries Review 2016digitised local content.

36 Mach 2 Consulting (2015), Shared Services Options, p 5-6.37 The Ministerial Advisory Council on Public Libraries, Review of

Victorian Public Libraries Stage 2 Report, p 60.38 Business Case: a conclusion based on consultation in phase 1.

39 The Ministerial Advisory Council on Public Libraries, Review of Victorian Public Libraries Report, Stage 2, p 60.

40,41 Mach 2 Consulting (2013), Business Case for the Implementation of ‘The Victorian Library’, p 49.





Such an approach would be designed to establish e-book acquisition zones/blocks to:– quarantine larger public library population

blocks for the purposes of e-book acquisitions;– aggregate smaller public library populations into

larger blocks/zones for the purposes of e-book acquisitions; and

– quarantine the availability of e-books (i.e. those acquired under the program) to library users within the defined zones/blocks.

Challenge Summary45

The key challenges for the library sector with e-content are access and terms of acquisition, coupled with the need to provide high specification content discovery and delivery processes which meet community expectations. Moving into the future, libraries need to be able to:– access a quality range of e-content through the

market on reasonable terms;

– offer their patrons the tools and mechanisms required to search the e-content they have acquired and to easily discover what they want in a convenient, seamless way. This needs to be integrated within the main library discovery layer/process so that the transaction is, asfar as possible, seen by the library user to be occurring within the library ‘ecosystem’ rather than on an external (aggregator) platform; and

– facilitate delivery of borrowed content in formats that are readily able to be used by users on their choice of device.

The table below summarises benefits identified in previous analysis of a State-wide e-book and e-resource acquisition project; aligns those benefits against benefits in the ILM; and summarises other benefits/advantages and risks associated with the project.

Table 3-2: Summary of State-wide e-books and e-resources acquisition benefits and risks46


Improved Library Services – Increases content available

Community Wellbeing – Maintenance or growth of library participation rates since e-content borrowing rates are likely to match, or even exceed, printed-content borrowing rates over the next 10 years.47

Cost Efficiencies

– Cost savings on e-resource costs for lower population rural libraries able to benefit from aggregate library e-content purchasing power.

– Decrease in individual library acquisition costs through a State-wide procurement program using an established supplier panel.48

Other Benefits/Advantages:

– Strategically positions libraries to remain relevant in the future digital content era.– Increases customer satisfaction by providing a simplified solution to e-resources for the community.– This component does not hinder any future actions or initiatives that may be undertaken either individually by libraries or at

a State-wide level in relation to e-resources. It enables continued development of, and investment in, existing larger library e-resource collections.49

Risks (Indicative only):

– While this approach does not provide a comprehensive or conclusive solution to the challenges of e content accessibility and rights, which is driven by the e-resource market and could be subject to change over time, it is a feasible solution to the issues faced by public libraries in this area.50

– It relies on being able to effectively harness, through the State-wide procurement process, a significant level of competition in the market for the provision of e-content. Recent history indicates that there is likely to be a level of publisher resistance to a consortia procurement of e-content.51

– It improves, but does not resolve, one of the key challenges currently faced by libraries in relation to e-content - that is, enabling seamless search and discovery. In this respect, it is possible (depending on the degree to which individual library services participate in the State-wide e-content collection and choose to share their resources) that some users could still be presented with three discrete web sites in searching for e-content - the library service’s own discovery layer, the State-wide e-content discovery layer and finally the aggregator’s delivery site.52

– “The proposed zone/blocked based approach to e-content procurement is wholly-reliant on e-content supplier/aggregator participation (which is not guaranteed). Suppliers and aggregators may choose not to participate in a State-wide procurement process and/or participate in a limited fashion in a manner that is not considered acceptable to public libraries. This risk is mitigated by structuring the tender specification to respond overtly to known commercial concerns of likely participants.”53

45 Mach 2 Consulting (2015), Shared Services Options.46 KPMG summary of Public Libraries stage 2 report, Review of



48 Mach 2 Consulting (2013), Business Case for the Implementation of

‘The Victorian Library’, p 53.

Local Government Victoria I Victorian Public Libraries Review 201649 The Ministerial Advisory Council on Public Libraries, Review of Victorian

Public Libraries Stage 2 Report, p 61.50,53 Mach 2 Consulting (2013), Business Case for the Implementation of

‘The Victorian Library’, p 53.51,52 Mach 2 Consulting (2015), Shared Services Options.


3.1.3Shared service option- LMS and e-resource combined

The cost analysis and multi-criteria tables shown below relate to the combination of the State-wide non-mandatory LMS and the e-resource acquisition element. In combination, the discovery layer procured as part of the State-wide LMS wouldbe specified to enable it to operate seamlessly with the shared State-wide e-content collection. In addition an e-content discovery layer accessible to all library users State-wide, would need to be sourced to enable access to the shared e-content collection for users of libraries which choose not to take upthe shared LMS. Take up of both elements of this option will provide an inter-library loan system in place of LibraryLink.3.1.4 Financial and multi-criteria analysis

– Shared Services OptionsThe figures in the tables below are shown in more detail in Appendix 1. The estimated costs identified synergies in acquiring both components which reduces the overall cost below the cost of each separate component.Table 3-3: Shared Services Options – summary costingsState-wide LMS and State-wide E-book/E-content Collection (Shared Services Options)

Costs Year 1 Year 2 Year 3 Year 4 Sum over 4 years

Total cost $ 3,448,488 $ 3,313,544 $ 3,229,901 $ 3,298,148 $ 13,290,081

Total savings $ (4,830,187) $ (4,830,187) $ (4,830,187) $ (4,830,187) $ (19,320,748)

Net savings $ (1,381,699) $ (1,516,643) $ (1,600,286) $ (1,532,039) $ (6,030,667)Net present value - 4 years: ($5,681,451)

Table 2-3 indicates that implementation of the Shared Services Options is expected to yield significant

net financialsavings.

Taken together, the benefits of these components have been assessed against the required benefits in the ILM.The multi-criteria assessment framework shows that the Shared Services Option delivers significant cost efficiency benefits and indirectly contributes to community wellbeing outcomes and improved library services. However,these two components also provide the platform for implementation of the Victorian Library Concept which is expected to deliver significant community wellbeing outcomes.Table 3-4: Shared Services Options – multi-criterial assessment54

Project Community Welgeing

Cost Efficiencies Improved Library Services

Overall Score (out of 9)Weighting 55% 25% 20% 100%

Score Out of 9

(relevance, strength)

Weighted Score

Score Out of 9


Weighted Score

Score Out of 9


Weighted Score

1. State-wide LMS 4 (2,2) 2.2 9 (3,3) 2.3 6 (3,2) 1.2 5.7

Local Government Victoria I Victorian Public Libraries Review 20162. State-wide E-book/E-

content Collection 6 (2,3) 3.3 9 (3,3) 2.3 6 (3,2) 1.2 6.8

Average across components 3 2.8 9 2.3 6 1.2 6.3

54 Produced by KPMG in consultation with Local Government Victoria and based on the qualitative findings referenced in this report.


3.2 Option 2 – The Victorian Library Model

The Victorian Library Model option includes both components of the Shared Services option, as well as a:– Full Integrated Inter-library Loans Service;– State-wide LOTE Collection Funding;– RFID State-wide Collection; and– Single State-wide Library Card.This section summarises these components described in the:– Business Case for the Implementation of the


– Review of Victorian Public Libraries Stage 2 Report (Ministerial Advisory Council on Public Libraries November 2013); and

– Implementation Planning Framework (Mach 2 consulting September 2014)

The interrelated nature of this option is shown in the figure below.Figure 7: The Victorian Library Model55

3.2.1 LMS and E-Resource Acquisition program

The LMS and e-resource elements for this option are the same as in the Shared Services option, described in the previous section. The remainder of the narrative describes the remaining components, with cost and multi-criteria analysis for all the components combined.

3.2.2 Inter-library Loan ServiceDescriptionThe need to increase the ease of access to inter-library lending is partially based on equity of access arguments, but alsoon efficiency arguments. It was identified that it would be more efficient to offer Victorians access to a broader range of information and literary resources by sharing resources, rather than trying to replicate the breadth and diversity of the State- wide collection within each individual library collection.56

The introduction of a fully Integrated ILL service is included as a core component of the Victorian Library concept.57 This service would operate within agreed lending and collection management policy parameters, supported by a State-wide courier management system and with the centralised offsite sorting of material. This option also includes the progressive integration of a State-wide catalogue search function.Background/contextThe existing ILL LibraryLink58 is a relatively dated integrated search function and website. It supports the State-wide sharing of physical resources, allowing users to search cataloguesof all Victorian library services and to place requests for ILLs.

The system is not embedded within an LMS, and is awkward to use. Some libraries charge fees for inter-library loans and consequently current loan fi are low. ILLs59 are moved through the State-wide toll (DX) contract, which is managed by the state government, but which is paid for by libraries that use the system.

Single State-wide

Library Card

RFID State-wide

Collection

State-wideLOTE

Collection Funding

Fully Integrated

Inter-library Loans Service

Library Managementsystem (LMS)

E-resource Acquisition

Program

THE VICTORIAN LIBRARY MODEL


55 Produced by KPMG

56,57 Mach 2 Consulting (2013), Business Case for the Implementation of ‘The Victorian Library’, p 24.

58,59 Mach 2 Consulting (2015), Shared Services Options, p 16.


SWIFT60 consortium members report that ILLs account for approximately five per cent of total circulation. SWIFT member libraries have access to a shared cataloguedatabase and users can readily search the collections of all libraries in the consortium. Transactions are simple; users can easily order an item on the system to be delivered to their local library for collection.The table below summarises benefits identified in previous analysis of a fully integrated ILL service; aligns those benefits against benefits in the ILM; and summarises other benefits/advantages and risks associated with the project.This fully integrated ILL is expected to enhance the customer experience across the State, enabling all library customers to gain access to the full catalogue held across Victoria.

3.2.3 A State-wide LOTE CollectionDescriptionA ‘Centre of Excellence’ (CoE) model is recommended to facilitate collaboration with libraries across the state toachieve targeted, continued and new investment in LOTE resources with an agreed State-wide profile.In addition to the current investment by library services, a grants program would be established so that library services could apply to purchase, manage and store a collection in a particular community language. These resources would be available for loan as required, and would move around the state on demand.63

Once acquired, items could be made accessible State- wide through the ILL system, with libraries required to make their full LOTE collections available to all Victorians. Under the CoE model, the LOTE acquisitions program would be overseen by a dedicated LOTE sector working group (established under the Victorian Library governance model64)65.

Table 3-5: Summary of ILL system and service benefits and risks61


Improved Library Services – None identified

Community Wellbeing– Clients have access to a greater range of State-wide resources and the ability to

borrow anywhere, return anywhere, improving participation rates and associated education benefits (particularly noting the enablement of a ‘floating’ State-wide LOTE collection).

Cost Efficiencies

– Reduces the need for duplication of books between libraries and makes better use of existing resources across the state.

– The introduction of a State-wide courier management system and centralised offsite sorting will reduce and minimise the current ILL handling and sorting costs incurred by libraries.62

A State-wide catalogue search function will also streamline library cataloguing processes and minimise duplication within libraries.


– It will provide the inter-library communication and loan delivery network necessary to market public libraries as an integrated, seamless State- wide service with reciprocal membership rights across the state (‘borrow anywhere, return anywhere’).

– It provides the inter-library communication and resource delivery network that is necessary to implement a ‘floating’, State-wide LOTE collection.

– It enables libraries to substantially retain local control/autonomy over the collection management policy.Risks Assessment (Indicative only):

– Increased access to inter-library lending decreases the incentive for individual libraries to continue to invest in their own collection development (i.e. in the absence of any state government funding/policy measure or conditionality that may be introduced to counter this).

– It requires standardisation of some policy and processes.– The movement of a high number of physical print resources around the state may have an adverse and

unwelcome impact on the environment, as it relies on the use of motor transport.

60 Mach 2 Consulting (2015), Shared Services Options, p 16.61 KPMG summary of Public Libraries stage 2 report, Review of


62 Mach 2 Consulting (2013), Business Case for the


Local Government Victoria I Victorian Public Libraries Review 201663 Mach 2 Consulting (2013), Business Case for the

Implementation of ‘The Victorian Library’, p 4364 Mach 2 Consulting (2013), Business Case for the

Implementation of ‘The Victorian Library’, pp 60-77.65 Mach 2 Consulting (2013), Business Case for the



Current LOTE Resource GapAccording to ABS 2011 data, 23.1 per cent of Victorians speak a LOTE at home, but LOTE items comprise only 5.8 per cent of the total State-wide library collection. Currently, there is no central LOTE collection in Victoria to meet the needs of these communities; rather, LOTE collections are acquired and held by individual libraries based on their locally assessed needs, community profile and resource capacity.An informal, collaborative culture currently exists for sharing of library-owned LOTE resources (libraries negotiate and arrange bulk ILLs to meet needs where local resources are deemed insufficient for this purpose). The effects of this informal approach include:66

– concentration of higher quality LOTE resources in libraries across the state in larger, more populous communities, where need has been identified by local policy makers; and

– larger LOTE language groups are better catered for than language groups of new arrivals and emerging population groups.

The table below summarises benefits identified in previous analysis of a State-wide LOTE collection; aligns those benefits against benefits in the ILM; and summarises other benefits/ advantages associated with the project.Table 3-6: State-wide LOTE collection benefits and risks67


Improved Library Services – No benefits identified

Community Wellbeing– Increased literacy, leisure and education options amongst groups who speak a

LOTE at home. According to ABS 2011 data, 23.1 per cent of Victorians speak a LOTE at home68, but only 5.8 per cent of the total library collection State-wide will comprise LOTE items.69 It would also assist in the education process for new migrants trying to learn English.

Cost Efficiencies – No benefits identified


– The establishment of a State-wide LOTE collection is a substantial investment in the literacy, leisure and educational options that are available for Victoria’s non-English speaking communities. It represents a substantial service level improvement.

– An increase of approximately 10 per cent in the total number of LOTE resources available through Victorian public libraries.– Creates a structure within which a state-owned LOTE collection can be profiled using an evidence-based approach to target

‘niche’ language group needs, with ‘new arrivals’ to benefit.– The acquisition program would complement existing resources rather than duplicating, replicating or cutting.

Risks Assessment (Indicative only):

– None identified

A State-wide LOTE collection will benefit a relatively small proportion of the population, but will, like the ILL, improve accessibility for all library users to specialised content, reduce duplication and increase usage of LOTE resources.

66 Mach 2 Consulting (2013), Business Case for the Implementation of

Local Government Victoria I Victorian Public Libraries Review 2016‘The Victorian Library’, p 44.

67 KPMG summary of Public Libraries stage 2 report, Review of Victorian Public Libraries Stage 2 report, and Shared Services document, provided by LGV on 20 August and 16 September 2015.

68 Reflecting a Nation, ABS Pub. No. 2071.0, 2012.69 Annual Public Library Survey, 2012, (PLVN).


3.2.4 RFID State-wide CollectionDescriptionApproximately 55 per cent of public library collections throughout the state had been RFID tagged (as at 2012/13). The balance of the State-wide collection would be RFID tagged in the first year of project implementation. Thisis a component which is an enabler of other parts of the Victorian Library, and efficiencies within libraries rather than any intrinsic benefits.The table below summarises benefits identified in previous analysis of State-wide RFID tagging; aligns those benefits against benefits in the ILM; and summarises other benefits/ advantages associated with the project.RFID tagging is an enabler of the ILL, and other efficiencies within the Shared Services option, with no inherent benefits.

Table 3-7: Summary of completing RFID tagging of State-wide collection benefits and risks70


Improved Library Services

– To facilitate security of and accountability for a more mobile State-wide collection (that is owned by numerous library entities).

– As part of the tagging process, an RFID standard compliance audit procedure would be conducted to ascertain the level of compliance of data sets applied by libraries to all existing RFID tags. The proposed project includes allowance for a standardisation procedure for all data models currently in place (and those being installed).

Community Wellbeing – Making it easier for clients to locate books is likely to improve satisfaction and library usage.

Cost Efficiencies– State-wide RFID should improve the operational efficiency of libraries by reducing

manual handling and sorting costs associated with ILLs and a more mobile State-wide collection. The option for self-check-out facilities could further reduce operating costs.


– This component is an enabler of other activities, such as the LOTE State-wide collection only.


– None identified

70 KPMG summary of Public Libraries stage 2 report, Review of Victorian Public Libraries Stage 2 report, and Shared Services document,

Local Government Victoria I Victorian Public Libraries Review 2016provided by LGV on 20 August and 16 September 2015.


3.2.5 A Single State-wide Library CardDescriptionThe Victorian Library concept proposes the introduction of a single State-wide library card that offers portability andreciprocity of membership benefits and lending rights across the state. This initiative would enable users to join the library service of their choice (maintaining the current membership structure) and give access to public libraries across Victoria, with the benefit of borrowing and returning materials to any service; a cohesive, seamless and user-friendly approach.Cards would be procured on a State-wide basis, pre-printed and ready for use by each individual library. A base template would be developed with sector input into design, features and functionality (with any additional functionality, such as RFID or stored value chips to be funded and installed by, and at the election of, individual library services).This initiative would give rise to marketing opportunities for libraries, with the foundation for a State-wide marketing campaign launch.The table below summarises benefits identified in previous analysis of a single State-wide library card; aligns those benefits against benefits in the ILM; and summarises other benefits/advantages and risks associated with the project.The single library card component is probably the best marketing tool for libraries to increase library participation, and provides the customer with tangible evidence of the benefits of the shared LMS.

3.2.6 Financial and multi-criteria analysis – The Victorian Library

The Victorian Library is a concept designed to facilitate the ongoing viability and relevance of public libraries. Itrecognises that the digital shift fundamentally changes how people access information, and consequently how they view the role of the public library in the community. It emphasises the need for collaboration to deliver value for money and positive community outcomes across the state, and positions the sector to be responsive and successful into the future.This is a fully integrated and inter-dependent option, and although the costs of components and their benefits have been identified separately, they all need to be includedto achieve the full range and quantum of benefits of this option. Although the appendices and previous reports show separate costs for each component, many are effectively interdependent and so could not be implemented in isolation at the cost described.Costs are summarised in the table below with a fuller breakdown available in Appendix 1.73

Table 3-8: Summary of single State-wide library card, benefits and risks71


Improved Library Services – N/A

Community Wellbeing

– A single, State-wide library card is likely to improve client satisfaction and library usage by increasing user access and reducing red tape associated with accessing different libraries and resources across the state.

– This proposal also includes a State-wide marketing campaign designed to encourage increased library usage.

Cost Efficiencies

– Eliminates the need to change library membership when a client changes their address and reduces costs associated with maintaining the quality and integrity of library membership data State-wide.

– Savings due to economies of scale in purchasing cards State-wide.72


– None identified


– Ability to retain individual branding for the library of issue is considered to reduce the risk of non participation– Entirely dependent on the introduction of a common State-wide LMS

71 KPMG summary of Public Libraries stage 2 report, Review of Victorian Public Libraries Stage 2 report, and Shared Services

Local Government Victoria I Victorian Public Libraries Review 2016document, provided by LGV on 20 August and 16 September 2015.

72 The Ministerial Advisory Council on Public Libraries, Review of Victorian Public Libraries Stage 2 Report, p 48.

73 Mach 2 Consulting (2013), Business Case for the Implementation of ‘The Victorian Library’ and Mach 2 Consulting (2015), Shared Services Options.


Table 3-9: The Victorian Library – summary costingsOverall financial impact


Total cost $ 6,254,210 $ 6,662,077 $ 8,118,141 $ 7,180,021

$ 28,214,449

Total savings $ (5,590,839) $ (6,192,135) $ (6,578,741) $ (6,578,741) $ (24,940,456)

Net savings $ 663,371 $469,942 $ 1,539,400 $ 601,280 $ 3,273,993Net present value - 4 years: ($3,073,036)

Table 3-9 shows that the Victorian Library option is expected to result in net costs which are far below the total costs before savings. The Victorian Library Business Case74 shows that costs incurred by libraries include:– Labour costs associated with crate processing for

the fully integrated inter-library loan service – $1.2 million over four years;

– Tag installation costs for RFID of the State-wide collection- $745,000 over four years; and

– Card processing costs for a single State-wide library card- $27,000 over four years.

Detailed costings are in Appendix 1.Each library service which participates in the State-wide initiatives will have to put in place efficiency plans to realise these savings, particularly those relating to labour costs.The table below assesses the ability of each component to deliver the required benefits.

The multi-criteria assessment shows that the Victorian Library option is expected to deliver strong outcomes, although the two Shared Services option components appear to deliver more value than the other four Victorian Library components. As a result, the average multi-criteria score for the Victorian Library option is lower than for the Shared Service option.

Table 3-10: The Victorian Library – multi-criterial assessment75

Project Community Welgeing Cost Efficiencies Improved Library Services


Score Out of 9


Weighted Score

Score Out of 9


Weighted Score

Score Out of 9


Weighted Score

1. State-wide LMS 4 (2,2) 2.2 9 (3,3) 2.3 6 (3,2) 1.2 5.7

2. State-wide E-book/E-content Collection

6 (2,3) 3.3 9 (3,3) 2.3 6 (3,2) 1.2 6.83. Fully Integrated State-wide Inter Library Loan Service 4 (2,2) 2.2 6 (2,3) 1.5 1 (1,1) 0.2 3.9

4. State-wide LOTE Collection 6 (3,2) 3.3 1 (1,1) 0.3 3 (1,3) 0.6 4.2

5. RFID State-wide Collection 1 (1,1) 0.6 4 (2,2) 1.0 4 (2,2) 0.8 2.4

6. State-wide Library Card 6 (3,2) 3.3 6 (3,2) 1.5 1 (1,1) 0.2 5

Average across components 4.5 2.5 5.8 1.5 3.5 0.7 4.7

74 Mach 2 Consulting (2013), Business Case for the Implementation of ‘The Victorian Library’.

Local Government Victoria I Victorian Public Libraries Review 201675 Produced by KPMG in consultation with Local Government Victoria and

based on the qualitative findings referenced in this report

4Options

Analysis


The following options were built up in consultation with LGV for comparison purposes. The ILM identified strategic responses to the problems including efficiency

measures,increased collaboration, and increased overall funding to meet growing expectations of consumers. Option 1 focusses on the efficiency response, including some collaboration, and Option 2 is designed to increase funding, collaboration and implement efficiency – Option 1 – this option includes a State-wide

Library Management System (LMS) and joint e-resource acquisition. This option is designed to provide operational savings to libraries which can be used for re-investment in the library. This option addresses the issue of e-resource acquisition, by obtaining more advantageous terms for individual library services through negotiating in larger groups with providers. This will enable all library services to benefit from centralised procurement expertise, by removing the need for each service to procure its owne-resource catalogue. Participation in the procurement of a LMS is optional and once procured and implemented, the participation in catalogue sharing between councils isalso optional.

– Option 2 - this option represents the original Victorian Library concept. This option is designed to deliver a seamless network of libraries across Victoria, through the addition ofa single library card for customers, improvements in the inter-library loan service and system, and completing the RFID (radio frequency identification

tagging of the State- wide catalogue. It is anticipated that this option will provide the community with improved library services in addition to generating the Shared Services efficiencies within Option 1.

4.1 Option componentsThe table below lists the different component parts of each option.Table 4-1: Options for assessment76

State-wide library management system (LMS) ü ü

State-wide e-resource acquisition program ü ü

Fully integrated inter-library loan system and service ü

State-wide Language Other Than English (LOTE) collection ü

Radio Frequency Identification (RFID) entire State-wide collection ü

Option 2Victorian Public Library including programs

Option 1Shared Services including programs

Components from previous business cases and programs

Single State-wide library card ü

76 Options chosen and collated by KPMG in consultation with Local Government Victoria.



4.2 Summary options assessmentThe table below summarises the options for comparison purposes against total cost savings and net present value (over a four year/forward estimate timeframe) as well as the multi- criteria scores, benefits, risks and barriers to implementation.As this table shows, Option 1 generates savings through the use of shared services with regard to the LMS, ande-resources, which mean that it has a lower NPV than the current funding options. In Option 2, the savings generated are invested back into the additional components that make up the Victorian Library, such as the improved ILL system and service. The Shared Services Option delivers net savings over four years (discounted at 4 per cent per annum) of approximately$5.7 million. In contrast, the Victorian Library option would involve a net cost over four years of approximately $3.1 million.

All of the assumptions underpinning the fi analysis are contained in the Appendices.The assessment of non-quantifiable benefits in the multi- assessment criteria is very sensitive to the ranking allocated, meaning that relatively small adjustments to the strength or relevance of a benefit to the option (particularly community benefits) could result in a different result, compared to other options.

Table 4-2: Options assessment77

Option 1 Option 2

Total Cost – 4 years78 $13,290,081 $28,214,449

Total Savings – 4 years $(19,320,748) $(24,940,456)

Net Cost/(savings) – 4 years $(6,030,667) $3,273,993

Net present value – 4 years $(5,681,541) $3,073,036

Multi-criteria analysis average across components – maximum score – 979

6.3 4.7

Benefits Cost efficiencies of State-wide LMS and e-resource procurement.Improved library servicesAccess to all libraries to a quality e-resources at a competitive costHigher minimum standards across Victoria

Positions libraries for the future with the opportunity for additional IT savings and service improvementsImproved community outcomes through improved access to catalogue through IIL serviceImproved benefits of library membership through single library cardAll benefits of options 1

Barriers to implementation Medium – as some libraries will not gain individually from the shared services provision take up may be lowOptional components to participate will enable councils to participate to the level they feel comfortable – it is optional to participate inthe collaborative procurement of the LMS and optional to share catalogues with

High – will require additional governance structure for collaborationSome libraries will not participate because of perceived and real loss of autonomyComplex and multi-faceted project requiring level of collaboration which is not currently evidentRisks Libraries may not participate or

generate the savingse-resources contractual terms may prevent the full realisation of benefitsComplexity/risk inherent in major IT projects and/or major ongoing contract management in a “third party” contract management

Higher risk of libraries not participating due to the level of change required by the forward looking nature of the optionInter-library loan service involves a complex piece of contract management which will require specialist skills to facilitateLibraries may not participate or generate the savingse-resources contractual terms may prevent the full realisation of benefits

77 Options assessment produced by KPMG – refer to appendix 1 and 2 for detailed analysis and sources.

78 See Appendix 1 for detailed costings.

79 See Appendix 2 for detail of the multi-criteria assessment. Score is an average of the component parts within each option

Local Government Victoria I Victorian Public Libraries Review 2016 31

4.3 Conclusion and next stepsBased on the analysis in the table above, Option 1 offers benefits in excess of costs in NPV terms, making it an attractive option. The multi-criteria assessment shows that the two Shared Services components of the VictorianLibrary concept appear to deliver more value than the other four Victorian Library components. As a result, the average multi-criteria score for the Shared Service Option is higher than for the Victorian Library Option. Option 2 still has a relatively strong multi-criteria score and is still an attractive implementation option, and although it has been assessed as being higher risk than Option 1 it has the potential to position Victorian Public Libraries to remain relevant into the future.In conclusion, based on the analysis detailed in this report, Option 1 and Option 2 will both deliver significant benefits for the local government sector and broader community, with some variation in cost and risk profile, and should be considered for implementation.

Appendices


Appendix 1: Detailed cost estimates

Costing AssumptionsAll financial data in this report has been sourced from the following documents:– Mach 2 Consulting (2015), Shared Services Options; and– Mach 2 Consulting (2013), Business Case

for the Implementation of ‘The Victorian Library’.

Assumptions made by Mach 2 Consulting are listed in Table A - 2: Assumptions – Shared Services Options paper.Additional assumptions overlaid on this data by KPMG are listed in Table A - 1 on page 34.

.


Table A - 1: KPMG assumptions80

Data source used for each component

For table Table A - 4: Shared Services Options, KPMG has only used data from the Shared Services Options paper.The following table details costings for the full Victorian Library options. The costings have been sourced from the Mach 2 Consulting Shared Services Options paper and the Business Case for the Implementation of the Victorian Library.– Table A - 5: The Victorian Library, KPMG has costed the State-wide LMS and State-wide e-book

components using costings from the Shared Services Options paper and costed all other components using costings from the Victorian Library Business Case.

All costings in 2015 $– The Victorian Library Business Case was completed in September 2013 but the Shared Services

Options paper was completed in September 2015. To ensure projects from the two papers are comparable against each other, KPMG has inflated the costings in the Business Case into 2015 dollars. Costings were inflated by 1.4% per annum for two years - the average rate of inflation in Melbourne over this period81).

Net present value

– In order to compare projects that yield costs and benefits over different time periods, KPMG has discounted future cash flows and produced a net present value for each option. A discount rate of 4 per cent has been used by KPMG to calculate net present values. This is consistent with Department of Treasury and Finance guidance on discount rates for education projects.82

Increasing or decreasing the discount rate by 3 per cent does not change the overall ranking of projects.

Medium range costings– The Shared Services Options paper used low, medium and high range cost estimates. This

report has used the medium range cost estimate, however switching to the high or low range cost estimate does not change the overall ranking of projects.83

Table A - 2: Assumptions – Shared Services Options paper84

Assumptions – Shared Services Option

Low, medium and high range cost estimates

– The Shared Services Options paper used low, medium and high range cost estimates. The low range cost estimate reduces the cost projections by 10 per cent (as compared to the medium range option) and the high range cost estimate increases the cost projections by 10 per cent.

Library participation – The Shared Services Options paper assumes 100 per cent take-up by all libraries from the beginning of year one.85

Accrual of savings – The Shares Services Options paper assumes savings accrue in full as soon as money is invested. In reality, there is likely to be a gap between when initial investments are made and when savings begin to accrue.94

Governance/staff

– Specification/Contracts (year 1 only): 1 Projects and Engagement manager ($160,000), 1 Procurement and Finance Officer ($100,000), 1 Contracts and Administration Officer ($80,000) and 1 Administration support/EA/Reception ($120,000).

– Ongoing contract management (year 2 onwards): 1 Manager, Projects and Engagement ($160,000) and 1 Contracts Admin Officer ($80,000). Costs indexation at 2.5% per annum (salaries and expenses).

Project officers– Specification/Contracts (year 1 only): 2 Project Officers ($200,000) and 1 Program Officer

($80,000).– Ongoing contract management (year 2 onwards): 1 Program officer ($80,000). Cost

indexation at 2.5% per annum (salaries and expenses).Support staff – Every year: 1 LMS Systems Manager ($160,000), 1 LMS Systems Administrator ($130,000),

LMS L1 Help Desk Staff ($120,000). Cost indexation at 2.5% per annum (salaries and expenses).

Staff on-costs – 13.85% of total staff costs.

Office accommodation – 33% of staff costs and includes office space, equipment, vehicles, insurance, electricity and cleaning.

80 KPMG assumptions, based on Mach @ Consulting's costings assumptions.81 Australian Bureau of Statistics (2015), 6401.0 Consumer Price Index, Australia.82 Department of Treasury and Finance (2013), Economic Evaluation for

Business Cases Technical guidelines, p 25.83-86 Mach 2 Consulting (2015), Shared Services Options.


Table A - 3: Assumptions – Business Case for the Implementation of ‘The Victorian Library’87

Assumptions – Business Case for the Implementation of ‘The Victorian Library

Library participation

– The Victorian Library Business Case assumes 100 per cent take-up/participation by Victorian Libraries in all components. Reduced participation levels will progressively undermine both the financial and non-financial benefits outlined in this report. The Business Case does not define a specific participation threshold required in order for the project to be viable/successful but does include some indicative scenarios:– 80 per cent participation: The business case states that an 80 per cent participation

scenario would produce a satisfactory outcome as the savings achieved are only marginally eroded and the project would still deliver significant benefits to the majority of Victorians.

– 50 per cent participation: The Business Case states that a 50 per cent participation

Accrual of savings– The Victorian Library Business Case assumes savings begin accruing as soon as money is

invested (for the single State-wide library card project, annual savings begin accruing in full before up front investments are made). In reality, there is likely to be a gap between when the money is invested and when the savings begin to accrue.89

Fully integrated ILL service

– Assumes ILLs set at 4% of total loans (through ILL policy ‘levers’).– Assumes $4.16 delivery fee for any crate between library service and sorting centre.

This is $5.20 discounted by 20%.– Assumes centralised sorting at $2.40 per crate.– Assumes entire State-wide collection RFID tagged.– Assumes 15% of ILLs will be delivered directly to next hold location (ie; not returned to owner

library).– Assumes 15% returns to non-owner service (‘borrow anywhere, return anywhere’).– Represents time taken to process crates at library service, at eight crates per hour.– Assumes 600 crates purchased over years two to four.– Current annual courier subscription fee.– Annual courier subscription for week day delivery to 150 branches State-wide.– Discontinuation of interim ‘LibraryLink’ service.– Courier labels purchased by library services in 2012-2013.– Savings from library staff time associated with handling and sorting.

Single State-wide library card

– Includes cost of cards and printing. Cards will include magnetic strip, bar code and signature panel. Quoted supply price of 32¢ per card.

– Includes ongoing purchase of membership cards and elimination of library membership duplication State- wide.

– Includes initial mail-out of leaflet to current library members. Quoted 7¢ per leaflet including folding in to DL.

– Includes marketing campaign in years two and three.– Library card printing will no longer be done by library services.– Allowance for time taken in preparing card for new members.– Cards are presented to members in person, not posted.– Savings identified reflect estimate of existing library card-related costs.


88 Mach 2 Consulting (2013), Business Case for the Implementation of ‘The Victorian Library’, p 84-85.



Assumptions – Business Case for the Implementation of ‘The Victorian Library

RFID entire State-wide collection

– Includes initial acquisition of tags at 18¢/54¢ per tag (book/AV).– Also includes ongoing purchase of RFID tags.– Supply of one RFID reader to every branch/mobile.– Ongoing replacement of pad readers at five years of age.– Includes tagging of entire collection. Tagging stations hired at $1,000 per month. Assumes

two people can tag 250 items per hour.– Includes ISO compliance testing of existing tags/data models. 60% assumed not to comply.

Assumes 20 tags can be checked for compliance every minute.– On-going purchase of RFID tags and replacement readers (at one per branch/mobile) will

no longer be done by library services.– Additional readers may be purchased by services at their expense.– Installation of RFID tags will remain services’ responsibility.– Includes savings from ongoing provision of tags at 23¢/68¢ per tag (book/AV).

State-wide LOTE collection – Acquisition and management of ‘floating collection’ and/or provision of tied LOTE funding to ‘centre of excellence’ libraries.

Costing of OptionsThe table below details costings for a State-wide LMS and a State-wide e-book/e-content collection. The costings have been sourced from the Mach 2 Consulting Shared Services Options paper.

Table A - 4: Option 1 costings - Shared Services90

State-wide LMS and State-wide E-book/E-content Collection (Shared Services Options)


Specification/Contracts

Oversight committee $ 51,700 - - - $ 51,700

Governance/Staff $ 460,000 - - - $ 460,000

Project officers $ 280,000 - - - $ 280,000

Staff on-costs $ 102,490 - - - $ 102,490

Office accommodation $ 244,200 - - - $ 244,200

External consultants $ 100,000 - - - $ 100,000

Procurement

Federated discovery $ 280,000 $ 280,000 $ 280,000 $ 280,000 $ 1,120,000

LMS $ 514,178 $ 1,328,754 $ 1,214,991 $ 1,252,366 $ 4,310,289

E-content $ 500,000 $ 500,000 $ 500,000 $ 500,000 $ 2,000,000

90 Mach 2 Consulting (2015), Shared Services Options.




Implementation

Staff training $ 313,835 - - - $ 313,835

Ongoing contract management

Oversight committee - $ 105,985 $ 108,635 $ 111,350 $ 325,970

Governance/Staff - $ 246,000 $ 252,150 $ 258,454 $ 756,604

Project officers - $ 82,000 $ 84,050 $ 86,151 $ 252,201

Support staff $ 410,000 $ 420,250 $ 430,756 $ 441,525 $ 1,702,531

Staff on-costs $ 56,785 $ 103,633 $ 106,223 $ 108,879 $ 375,520

Office accommodation, etc $ 135,300 $246.923 $ 253,096 $ 259,423 $ 894,741Total Cost $ 3,448,488 $ 3,313,544 $ 3,229,901 $

3,298,148$ 13,290,081

Savings Year 1 Year 2 Year 3 Year 4 Sum over 4 years

LMS Licences $ (3,830,186) $ (3,830,186) $ (3,830,186) $ (3,830,186) $ (15,320,744)

Ebooks no longer purchased $ (1,000,001) $ (1,000,001) $ (1,000,001) $ (1,000,001) $ (4,000.004)

Total savings $ (4,830,187) $ (4,830,187) $ (4,830,187) $ (4,830,187)

$ (19,320,748)

Net savings $ (1,381,699) $ (1,516,643)

$ (1,600,286) $ (1,532,039)

$ (6,030,667)

Net present value $ (1,381,699) $ (1,458,311) $ (1,479,554) $ (1,361,977)

$ (5,681,541)

The following table details costings for the full Victorian Library Option. The costings have been sourced from the Mach 2 Consulting Shared Services Options paper and the Business Case for the Implementation of the Victorian Library.Table A - 5: Option 2 costings – The Victorian Library91



Specification/Contracts

Oversight committee $ 51,700 - - - $ 51,700

Governance/Staff $ 460,000 - - - $ 460,000

Project officers $ 280,000 - - - $ 280,000

Staff on-costs $ 102,490 - - - $ 102,490

Office accommodation $ 244,200 - - - $ 244,200

External consultants $ 100,000 - - - $ 100,000

Procurement

Federated discovery $ 280,000 $ 280,000 $ 280,000 $ 280,000 $ 1,120,000

LMS $ 514,178 $ 1,328,754 $ 1,214,991 $ 1,252,366 $ 4,310,289

E-content $ 500,000 $ 500,000 $ 500,000 $ 500,000 $ 2,000,000

Implementation

Staff training $ 313,835 - - - $ 313,835

91 Mach 2 Consulting (2015), Shared Services Options. Mach 2 Consulting (2013),Business Case for the Implementation of ‘The Victorian Library’.




Ongoing contract management

Oversight committee - $ 105,985 $ 108,635 $ 111,350 $ 325,970

Governance/Staff - $ 246,000 $ 252,150 $ 258,454 $ 756,604

Project officers - $ 82,000 $ 84,050 $ 86,151 $ 252,201

Support staff $ 410,000 $ 420,250 $ 430,756 $ 441,525 $ 1,702,531

Staff on-costs $ 56,785 $ 103,633 $ 106,223 $ 108,879 $ 375,520

Office accommodation, etc $ 135,300 $ 246.923 $ 253,096 $ 259,423 $ 894,741Total Cost $ 3,448,488 $ 3,313,544 $ 3,229,901 $

3,298,148$ 13,290,081


LMS Licences $ (3,830,186) $ (3,830,186) $ (3,830,186) $ (3,830,186) $ (15,320,744)

Ebooks no longer purchased $ (1,000,001) $ (1,000,001) $ (1,000,001) $ (1,000,001) $ (4,000.004)

Total savings $ (4,830,187) $ (4,830,187) $ (4,830,187) $ (4,830,187)

$ (19,320,748)

Fully interagted inter-library loan service (The Victorian Library Business Case – inflated to 2015 $)


Courier annual fee - $ 105,007 $ 262,518 $ 262,518 $ 630,044

To sorting depot - $ 125,799 $ 314,497 $ 314,497 $ 754,792

Sorting - $ 109,723 $ 274,309 $ 274,309 $ 658,340

To borrowing service - $ 125,799 $ 314,497 $ 314,497 $ 754,792

Return to sort depot - $ 106,929 $ 267,322 $ 267,322 $ 641,573

Return sort - $ 93,265 $ 233,162 $ 233,162 $ 559,589

Return to owner service - $ 106,929 $ 267,322 $ 267,322 $ 641,573

Homers return to depot - $ 18,870 $ 47,175 $ 47,175 $ 113,219

Homers sort - $ 10,886 $ 27,216 $ 27,216 $ 65,319

Homers to owners service - $ 18,870 $ 47,175 $ 47,175 $ 113,219

Crate purchase - $ 10,035 $ 15,053 - $ 25,088

Total centrally incurred costs - $ 832,112 $ 2,070,245 $ 2,055,192

$ 4,957,548

Labour – crate processing - $ 201,049 $ 502,623 $ 502,623 $ 1,206,295

Total library incurred costs - $ 201,049 $ 502,623 $ 502,623

$ 1,206,295

Total Cost (inflated to 2015 $) - $ 1,033,161 $ 2,572,868 $ 2,557,815

$ 6,163,843


Existing DX annual fee - $ (32,902) $ (82,256) $ (82,256) $ (197,414)

Library link - $ (329,023) $ (329,023) $ (329,023) $ (987,068)

Total centrally incurred savings - $ (361,925) $ (411,278) $ (411,278)

$ (1,184,482)

Toll 15Kg Labels - $ (83,867) $ (209,668) $ (209,668) $ (503,202)

Labour – crate processing - $ (134,911) $ (337,277) $ (337,277)

$ (809,466)

Total library incurred savings - $ (218,778) $ (546,945) $ (546,945)

$ (1,312,668)

Total savings (inflated to 2015 $)

- $ (580,703) $ (958,223) $ (958,223)

$ (2,4


State-wide LOTE Collection (The Victorian Library Business Case – inflated to 2015 $)

Centrally incurred costs Year 1 Year 2 Year 3 Year 4 Sum over 4 years

Total costs - $ 514,098 $ 514,098 $ 514,098

$ 1,542,294

RFID entire State-wide collection (The Victorian Library Business Case – inflated to 2015 $)


Chips for books $ 877,058 $ 228,506 $ 228,506 $ 228,506 $ 1,562,574

Chips for A/V $ 384,345 $ 134,084 $ 134,084 $ 134,084 $ 786,596

Pad readers $ 459,604 $ 92,538 $ 92,538 $ 92,538 $ 737,217

Tagging station hire $ 49,353 - - - $ 49,353

Tagging installation $ 914,149 - - - $ 914,149

Tag converter cost $ 20,564 - - - $ 20,564

Tag data model conversion $ 93,801 - - - $ 93,801

Total centrally incurred costs $ 2,798,873 $ 455,127 $ 455,127 $ 455,127

$ 4,164,254

Tag installation - $ 248,460 $ 248,460 $ 248,460 $ 745,381

Total library incurred costs - $ 248,460 $ 248,460 $ 248,460

$ 745,381

Total Costs (inflated to 2015 $) $ 2,798,873 $ 703,587 $ 703,587 $ 703,587

$ 4,909,635

Library incured savings Year 1 Year 2 Year 3 Year 4 Sum over 4 years

Tags for books $ (202,521) $ (211,236) $ (215,081) $ (215,081) $ (834,919)

Tags of A/V $ (121,894) $ (126,468) $ (128,486) $ (128,486) $ (505,335)

Tag installation $ (173,486) $ (180,790) $ (184,013) $ (184,013) $ (722,302)

Replacement readers $ (50,896) $ (50,896) $ (50,896) $ (50,896) $ (203,583)


$ (548,797) $ (569,390) $ (578,476) $ (578,476)

$ (2,275,139)

Single State-wide library card (The Victorian Library Business Case – inflated to 2015 $)


Printing - $ 429,743 $ 429,743 $ 99,524 $ 959,009

One page ‘One Card‘ leaflet - $ 77,738 $ 77,738 - $ 155,475

Postage - $ 531,948 $ 531,948 - $ 1,063,896

Marketing - $ 51,410 $ 51,410 - $ 102,820

Total centrally incurred costs - $ 1,090,838 $ 1,090,838 $ 99,524

$ 2,281,200

Card Processing (labour) $ 6,849 $ 6,849 $ 6,849 $ 6,849 $ 27,395

Total library incurred costs $ 6,849 $ 6,849 $ 6,849 $ 6,849 $ 27,395

Total Costs (inflated to 2015 $) $ 6,849 $ 1,097,687 $ 1,097,687 $ 106,373

$ 2,308,596

Library incured savings Year 1 Year 2 Year 3 Year 4 Sum over 4 years

Existing card printing $ (205,006) $ (205,006) $ (205,006) $ (205,006) $ (820,024)

Card Processing (labour) $ 6,849 $ 6,849 $ 6,849 $ 6,849 $ 27,395


$ (211,855) $ (211,855) $ (211,855) $ (211,855)

$ (847,419)


Overall financial impact

Year 1 Year 2 Year 3 Year 4 Sum over 4 years

Total costs $ 6,254,210 $ 6,662,077 $ 8,118,141 $ 7,180,021

$ 28,214,449

Total savings $ (5,590,839) $ (6,192,135) $ (6,578,741) $ (6,578,741)

$ (24,940,456

Net Costs $ 663,371 $ 469,942 $ 1,539,400 $ 601,280

$ 3,273,993

Net Present Value $ 663,371 $ 451,867 $ 1,423,262 $ 534,536

$ 3,073,036


Appendix 2: Multi-criteria analysis

Given the inability to quantify many of the qualitative benefits that result from the different projects, KPMG has used a multi-criteria analysis approach to assess and compare these benefits.In conjunction with the LGV project team and using a multi- criteria analysis framework, KPMG undertook a qualitative assessment of each project. The assessment considered how well the project achieved the benefits described in the ILM (strength), how much evidence there was to support that link (relevance), and gave a score out of three for each.

Figure 9: Assessment matrix for benefits92

By multiplying the strength and relevance scores, each project was given an overall score against each benefit in the ILM. These scores were then weighted based the importance of each benefit, as stated in the ILM:– Community wellbeing – 55% weighting;– Cost efficiencies – 25% weighting; and– Improved library services – 20% weighting.In interpreting the final overall scores, it is important to understand that they represent a judgement about the marginal or relative benefits of investing additionalresources. That is, if one additional dollar is invested, it is more likely to provide greater returns if invested in activities that fall under an option with a higher overall score. In terms of informing decision-making in the future, it is critical to examine the existing mix of projects being funded and consider the interaction between different components.As scores are not derived using quantitative data, KPMG cautions against using or manipulating the numbers out of the context of this report.

92 KPMG (2015), Value for Money Assessment of the CFA Bushfires Program, p 4.

Strength

Rele

vanc

e1 - Low 2 - Medium 3 - High

3 - High 3 6 9

2 - Medium 2

1

4 6

1 - Low 2 3


.


© 2016 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

While the maximum score possible is nine, the contrasting benefits in the ILM (i.e. improving service outcomes versus identifying cost efficiencies) make it difficult for a single component to score highly across all three required benefits. The scoring is useful for comparison between options, and allows the comparative importance of eachbenefit to be taken into account, rather than just the number of “positive” attributes an option has.The table below details multi-criteria scoring against each benefit in the ILM for Option 1 in this report. The overall score of 6.3 is an average of each component of the option.Table A - 6: Option 1 multi-criteria analysis – Shared Services93

Project Community Wellbeing Cost Efficiencies Improved Library Services


Score Out of 9


Weighted Score

Score Out of 9


Weighted Score

Score Out of 9


Weighted Score

1. State-wide LMS 4 (2,2) 2.2 9 (3,3) 2.3 6 (3,2) 1.2 5.7

2. State-wide E-book/E-content Collection 6 (2,3) 3.3 9 (3,3) 2.3 6 (3,2) 1.2 6.8

Average across components 3 2.8 9 2.3 6 1.2 6.3

The table below details multi-criteria scoring against each benefit in the ILM for Option 2 in this report. The overall score of 4.7 is an average of each component of the option.

Table A - 7: Option 2 multi-criteria analysis – The Victorian Library94

Project Community Wellbeing

Cost Efficiencies Improved Library Services


Score Out of 9


Weighted Score

Score Out of 9


Weighted Score

Score Out of 9


Weighted Score

1. State-wide LMS 4 (2,2) 2.2 9 (3,3) 2.3 6 (3,2) 1.2 5.7

2. State-wide E-book/E-content Collection

6 (2,3) 3.3 9 (3,3) 2.3 6 (3,2) 1.2 6.8

3. Fully Integrated State-wide Inter Library Loan Service 4 (2,2) 2.2 6 (2,3) 1.5 1 (1,1) 0.2 3.9

4. State-wide LOTE Collection 6 (3,2) 3.3 1 (1,1) 0.3 3 (1,3) 0.6 4.2

5. RFID State-wide Collection 1 (1,1) 0.6 4 (2,2) 1.0 4 (2,2) 0.8 2.4

6. State-wide Library Card 6 (3,2) 3.3 6 (3,2) 1.5 1 (1,1) 0.2 5

Average across components 4.5 2.5 5.8 1.5 3.5 0.7 4.7

Local Government Victoria I Victorian Public Libraries Review 201693,94 Produced by KPMG in consultation with Local Government Victoria

and based on the qualitative findings referenced in this report.


© 2016 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

Appendix 3: ILM Process

The Investment Logic Map (ILM) was developed as part of the investment management standard (IMS) a widerinitiative introduced by the Victorian Treasury to manage and prioritise investments in both infrastructure and programs. It provides a mechanism allowing decision-makers to assess whether:– there is a real problem needing to be addressed

at this time;– the benefits provided by successfully addressing

the problem are of high value to the organisation/society at large;

– the way the problem will be addressed is both strategic and innovative; and

– the solution is likely to be delivered within the time and cost expectations.

The ILM is designed to be developed in a series of workshops to support the primary investment decision- making functions of an organisation in a number of ways.The Investment Logic mapping workshops can be used to:– shape a new investment;– prioritise investment proposals;– develop new policies;– monitor and measure the delivery of benefits;– refocus an organisation to improve its effectiveness; and– monitor an organisation’s outcomes.An ILM is a single page graphic representation of the underlying investment logic. It has a summary of the problem(s) which need to be addressed, with potential strategic interventions and the resulting benefits all written in simple concise English that anybody can understand. It is a very powerful visual tool for explaining the reason why a program has been selected for development and will enable the identification of robust and relevant KPIs to measure success.A completed ILM will include:– Problem definition– Benefit identification with indicative KPIs– Strategic interventions;– Prioritisation of all of these aspects:– Changes required; and– SolutionThe ILM is prepared during a two hour workshop facilitated by an accredited facilitator, with key stakeholders present. It consists of robust discussion and consensus building around the issues facing the different stakeholders which the proposed investment is going to address. More details can be found at the DTF website

Local Government Victoria I Victorian Public Libraries Review 2016www.dtf.vic.gov.au/ investmentmanagement.

The information contained in this document is of a general nature and is not intended to address the objectives, financial situation or needs of any particular individual or entity. It is provided for information purposes only and does not constitute, nor should it be regarded in any manner whatsoever, as advice and is not intended to influence a person in making a decision, including, if applicable, in relation to any financial product or an interest in a financial product. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

victorian public libraries review - localgovernment.vic.gov.au€¦ · web viewthe word version...

Documents