Money MattersFinancial planning from a corporate library perspective

Per Sulg

AZ Library - AstraZeneca

The Öresund Bridge

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• Building cost equals AstraZeneca’stotal research budget …in one year.

Opened in 2000 and connects Malmö in southern Sweden with the greater Copenhagen area

8 kilometers long - the world's longest cable-stayed bridge

Took 5 years to complete and cost EUR 3 billion

AstraZeneca

British-Swedish pharmaceutical company Merger between Swedish Astra and British

Zeneca 1999 AstraZeneca sells drugs in over 100 countries

and has production in 20 countries 62,000 employees worldwide 11,000 within R&D 9 major research sites in the UK, Sweden, USA

and India

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2

AZ Library Organisation

Licensing and DeliveryAcquire, organise and effectively make available information resources following business cases, maximising ROI through resource selection from the information market.

Business EnablingSupport customers through marketing, training and copyright & license compliant information searching services, maximising ROI through resource use.

e-PlatformTechnically manage all systems and content sets of AZ Library.

Customer Relations ManagementIdentify business needs for external information, manage demands, build business cases in close relationship with customers.

Head

Customer Relations Licensing & Delivery Business Enabling

e-Platform

Global Teams

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Me A&L Team

In the past we had 8budgets and dideverything 8 times!

…recent news about AstraZeneca

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Per Sulg, May 20106

New R&D Strategy,

Job-cuts announced 2007-2009: ~12,000 (by 2013)

Additional job-cuts announced in 2010: 8,000

Including net cut in R&D: 1,800 (out of 11,000)

2 main R&D sites will be closed

Increased externalisation: ~40% (in-licensing)

Reduce number of disease areas by 25%

Patents expiring

Generic competition

Increasingly difficult to take new drugs to the market

Regulatory authorities more demanding

…so much for the Fat Cat Syndrome!

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Per Sulg, May 20107

Restructuring, job cuts

Budget Situation At best a flat budget for several years

Considering inflation a significant budget reduction

Price increases haven’t stopped!

Still demand for new journals

Still demand for new costly resources like e.g. Pharmapendium, Reaxys

We have trimmed the portfolio and made some big cuts…

…but eventually cross charges became the only way to add substantial new resources

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Per Sulg, May 20108

Change…

The Library going through a series of reorganisations

Ownership changing

The Library budget being challenged by senior management – who are often not from the business

”Why can’t people just buy their journals from WH Smith?”

”Our scientists don’t read journal articles anymore, they just want the XML feed.”

Increasingly difficult to maintain and justify the collection

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Per Sulg, May 20109

Global journal deals may seem awfully expensive if

you don’t know the business and the background! Brain research Medium car

Tetrahedron Small car

Tetrahedron letters Motor cycle

Current medicinal chemistry Used car

JACS 50” HD TV

Then convert into a global deal for a 62K FTE company!

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Still we all know…

…journals have been the most important means of communication in science for 300 years

…without journals scientists wouldn’t know about the work carried out elsewhere in the world

Yet AstraZeneca only spends a fraction of a percent of the research budget on published information resources including journals.

A structured approach may help to prioritise your resources.

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Need for a content strategy

HIGH ‘STARS’ ‘WILD CATS’

‘?’‘PROBLEM CHILDREN’

‘DOGS’‘CASH COWS’

LOW

MARKETGROWTH

HIGH MARKET SHARE LOW

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The Boston Matrix

MARKETGROWTH

Ejournals

Document Del.

Library Desk

HIGH

‘STARS’ ‘WILD CATS’ ‘PROBLEM CHILDREN’

‘DOGS’‘CASH COWS’

LOW

HIGH MARKET SHARE LOW

AZLibrary pays; Stakeholder agreements, BCs, etc. needed. Reviewed annually.

Ex) Certain databases, Copyright/Licensing training

Executive sponsorship for entire collection. Reviewed every 3 years.

Ex) ejournals, document delivery

Ex) XML feeds,

Often customer-paid, in development, very new, experimental, mid-year agility demand…

Ex) large physical collection, manual photocopy service

Outsourced services, no longer value-adding products, failed experiments

Budget allocation

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Budget/Portfolio Review Cycle (almost the way it works).

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Per Sulg, May 201015

Early spring Late spring/summer Summer Early September

Main negotiations season starts

Mid September End September Early October

In reality: December

ABU

KPIs etc. Budget targets

Cost per download

Comparison with document delivery

Internal usage data by monitoring the firewalls (”XIM data”)

70% of usage is R&D

Saturation within R&D is >90%

Validating XIM data by comparison with publisher COUNTER usage stats

CSAT Surveys

Information Scientist surveys

SLAs with key stake holders

Thorough documentation of negotiations results (”Summary of Deal”) needed for approval in the procurement system

Including data from outsourced negotiations (JISC)

Including financial info and key clauses agreed with the publishers

Text Mining, Outsource Providers, Exit Clause for MYDs

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Per Sulg, May 201016

Budget tracking on 3 levels.1. The Library, simple spreadsheet. All costs. Fixed currency rates.

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Budget tracking on 3 levels.2: Dept. level. Excel spreadsheet incl. Accruals, Forecasting.

These payments represent >90% of the budget, so ensures costs are evenly allocated throughout the year.

Provides a means to prognosticate costs.

Budget figures are actuals

Includes comparison with previous year and Target Figures

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KInvoices >$50K are accrued,i.e. charged internally to thelibrary budget in 12 monthlyincrements.

Budget tracking on 3 levels. 3: Function level. FIND Report: Accruals, Targets, Forecasting, Breakdown

Choose report page

Actual spend vs. target/latest forecast

Budget Tracking - small payments

Small payments <$50K are all charged at once to the library budget.

Because negotiations are seasonal this creates a somewhat strange looking picture (next slide)

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K

Budget tracking – small payments.I Don’t know how many times we’ve had to explain this to Finance…

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Our Procurement System

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Having a Procurement System means:

Compliance with the process is Mandatory!!

Also for vendors!!!

To do business with AZ, and get paid(!), you MUST be set up in the system and comply with it

Fill out and return form

Save the P2P brochure!!

Major suppliers often have several offices and subsidiaries

PO and invoice must match!

Work with us to create a smooth process – otherwise confusion is inevitable!!

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Per Sulg, May 201023

The ezBuy process The vendor to fill out form

The account is set up

Vendor sends quote on letterhead paper (Word, PDF)

The PO is raised based on quote, with the correct vendor (code)

Approval chain – can go to CIO (did he delegate…?!). For ScD 7 people needs to be involved excl Purchasing. Works on line mgmt.

POs under £1,000 only need approval by the requestor but we don’t have many of those…

When fully approved, a PO is sent to the vendor with a PO#

Only then the supplier can send the invoice to AZ – to Accounts Payable, not to me!!!

Must quote PO#!!

AZ receives the invoice and scans it into the system (this is being carried out by a 3rd party company). It will take a couple of days to get into the system.

PO# and vendor code must match, otherwise there wilol be problems

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Per Sulg, May 201024

Lots of pot-holes The quote is in the wrong format, e.g. just an excel file

The PO is raised against the wrong vendor in the supplier list

Someone didn’t delegate their approval

The PO was fully approved and successfully sent , but didn’t reach the vendor

The invoice didn’t quote the PO#

The invoice was sent to me and I was on holiday

The invoice came from a different vendor subsidiary

The invoice was in the wrong currency

The payment terms wasn’t changed to 30 days

The invoice was paid but the publisher is unable to trace the payment.

Invoice was too long and only the first pages were scanned

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Per Sulg, May 201025

 What you can do about it

Document the process thourougly and make sure everyone in the team is familiar with it

Have all category codes etc. easily available for everyone in the team

Have one person raising all orders on behalf of one mgr

Use Watcher functionality if available

Educate the vendors – use standard emails, remind them repeatedly of the process

List the details of all purchases – be meticulous, it will save you time and hassle!

Ask the publisher to confirm they have received the PO

Multi year deals don’t hurt

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Per Sulg, May 201026

Category Management

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Per Sulg, May 201027

Procurement facilitates Category Management

Capture all spend with a supplier

The Library co-operates with a Category Manager for external Information Resources

The Category Manager captures all spend – and signs the contracts.

Improves the negotiation process, leads to mutual cost savings

Frame work agreements - simplifies for both parties

Cost spread: 1/6 journals, 1/6 databases etc – 1/3 reprints – 1/3 from other areas (non-library)

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