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Smarter Libraries Through Technology: Toward Greater Transparency in the Library Tech Industry

Smart Libraries Newsletter [February 2019]

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Libraries benefit from access to the most information possible as they make technology decisions, especially regarding their needs to replace or retain strategic products such as integrated library systems, library services platforms, discovery services, or other major automation components. These products represent major investments by organizations with limited budgets and that depend on technology for much of their work and in the provision of their services to their communities.

In many ways, libraries have access to substantial data regarding vendors and products. There are industry reports and publicly available registries that provide many different types of information. But other potential information remains cloaked in secrecy, hidden behind non-disclosure clauses in contracts. While libraries should appreciate that they have access to more data than might be expected in other industries, they can also benefit by working toward even more transparency.

Library vendors provide substantially more information than legally required. Most library vendors are privately held companies with no substantive requirements to report the details of their business. Private companies generally do not reveal specific revenue earnings or product sales statistics. Private companies tend to share financial and operational details with their current or potential investors, but not with their customers or the general public. Yet, those working with libraries have generally been much more willing to share information and take a more collegial stance. Doing business with libraries or other non-profit organization requires a more collaborative approach than might be the case in business-to-business commercial spheres.

Non-profit organizations are required to reveal detailed financial statements. In the United States, non-profit organizations are required to file a 990 form with the Internal Revenue Service and make them publicly available. Non-profits in the library technology industry include OCLC, Lyrasis, and Equinox Open Software Initiative. Publicly-traded companies also have reporting requirements. The only public company in our industry is Agent Information Software (AIS), the parent company of Auto-Graphics. Private companies have no such requirement. All the remaining companies are privately owned. Those owned by their founders include Follett Corporation, EBSCO Information Services, The Library Corporation, Biblionix, Soutron Global, and ByWater Solutions. Those owned by investment firms include SirsiDynix, Innovative Interfaces, bibliotheca, Civica, and Infor. ProQuest has a more complex ownership structure including founders and investors.

Despite the absence of legal requirements, most of the major companies in the library technology industry provide detailed information regarding their sales performance. The annual “Library Systems Report” that I have authored since 2002 (published by American Libraries since 2014 and by Library Journal from 2002-2013) is based on data provided by each of the companies regarding new customers contracting for their products and services and cumulative customer counts. Almost all the companies in the industry provide these statistics and most will also provide lists of the libraries acquiring their products in that year. These statistics reveal important industry trends such as which vendors are gaining or losing ground and the rates of adoption or defection for specific products. I appreciate the willingness of all the companies to provide these statistics for each annual report.

In addition to the quantitative data that forms the basis of the “Library Systems Report,” the annual International Library Automation Perceptions survey and report I conduct through Library Technology Guides (https://librarytechnology .org/perceptions/) provides some qualitative information regarding how well these products function in libraries and the levels of support provided. This annual report produced since 2007 is based on a survey offered to libraries that in recent years has received around 4,000 responses. The report provides tables and visualizations that summarize the satisfaction levels that libraries have with their installed products and reveal trends across the multiple annual editions of the survey.

The universe of libraries is relatively finite and within the realm of feasibility to comprehensively track. While the total number of libraries worldwide may be over a million, only a few tens of thousands fall within the addressable market of the library technology vendors. The directory within Library Technology Guides tracks the technology products used or selected by libraries throughout the world. This directory contains about 185,000 entries, with automation system data for over 82,000 libraries. Through reports and visualizations offered on Library Technology Guides, libraries can get a good understanding of the implementation trends for each of the major products according to factors such as collection size, type, and geographic location. Though not necessarily comprehensive, this data set has been continually updated since about 1996.

These resources aim to contribute to the transparency in the library technology arena. They each work toward providing data regarding the technology products used in libraries from different angles. This information can benefit libraries in support of technology procurement decisions as well as vendors as a benchmark of their own performance relative to their competition in addition to other types of competitive analysis they may perform internally.

Beyond these efforts, data regarding many other aspects of the library technology business environment remain much more difficult to acquire. Almost all contracts for library systems include a non-disclosure clause that prevents the library from revealing the business details, such as the price paid or detailed technical information regarding the products involved.

The pricing for library technology products tends to be secretive and mysterious. As with business applications across different industries, each procurement project comes with a scaled pricing structure usually finalized through private negotiations. Different libraries will pay different amounts for the same software. Vendors posit a price scaled to the size and complexity of the library. Most vendors have a formula based on factors such as modules selected, collection size, population served, number of personnel, or other considerations to calculate the cost of the software for a given library. This pricing models are not unfair. Larger libraries will press the capabilities of the software to their limits and will require more resources for initial installation and ongoing support. Smaller libraries usually require fewer support resources. Scaling the cost of software products according to the size and complexity of the library also correlates somewhat to feasible amounts relative to available budgets.

This pricing model also involves a certain amount of unevenness. In addition to the standard scaling factors, the pricing offered may also take into consideration factors, such as the anticipated competitive environment. The combination of factors often results in considerable differences in pricing paid by libraries with similar profiles.

The confidentiality of pricing generally places libraries at a disadvantage when negotiating with a vendor. Information regarding what other organizations have paid can indicate how low of a price a vendor is willing to offer. Libraries do not necessarily object to scaled pricing models, but they also would want to ensure that what they are paying is in line with that offered to other institutions of similar size and complexity. These issues apply more broadly than the technology sphere. The procurement of content products can also involve similar concerns relative to the confidentiality of pricing and inequities among customers.

In some cases, Freedom of Information Act (FOIA) requests can be used to gain access to proprietary details of a contract. Vendors often use this approach to gain access to contract details for deals they may have lost to a competitor. It is less common for libraries to use FOIA requests to reveal pricing and other contract details.

It seems unlikely that the practice of confidentiality in contract details will change. These terms are not necessarily just at the discretion of the vendor. In many cases, the procurement department of the library or its parent organization

require confidentiality of contracts. At best we can hope to adjust the balance between information that needs to be protected in non-disclosure agreements and what can be made publicly available. As libraries enter into contracts with vendors for major products, it would be ideal for them to advocate for more openness to strengthen the transparency of the industry as a whole. More transparency in the industry should eventually lead to more positive relations between libraries and their vendors and lead to a clearer understanding of the cost of major technology products as libraries prepare to make new investments in their technical infrastructure.

View Citation
Publication Year:2019
Type of Material:Article
Language English
Published in: Smart Libraries Newsletter
Publication Info:Volume 39 Number 02
Issue:February 2019
Publisher:ALA TechSource
Series: Smarter Libraries through Technology
Place of Publication:Chicago, IL
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Record Number:24089
Last Update:2022-12-05 14:49:52
Date Created:2019-03-06 13:12:16