 For those of you that don't know me, my name is Rosalind Metz, and I'm here with my colleague, Karen Esslund, and we decided to do a presentation on understanding and evaluating business models around digital infrastructure services. So a little background on this presentation. Karen and I noticed that there were quite a lot of conversations happening in the library space around business models, digital infrastructure, evaluations that were happening, and not everything was always sort of making sense when we were hearing the conversations and listening to folks. So we thought that we would add to that conversation about business models financial sustainability. So we could help our colleagues, all of you, with evaluating all of these different digital infrastructure services. So for the purposes of this presentation, we're borrowing our definition for digital infrastructure services from actually IOI. They did a really great report, totally recommend reading it on digital infrastructure definitions. It's probably the longest definition we'll read, but it was really great. They did an analysis. We are slightly modifying it by adding in preservation to their definition. They are explicit about preservation in their report, but we thought we would call it out specifically for digital infrastructure services. So you can see that here. I'm not going to read it to you because we only have 30 minutes. So Karen and I actually decided to sort of focus on digital preservation service providers. And so here we have a list of different service providers in the digital preservation space. You can see the names of some of them here. Now, these service providers come into sort of two camps. You have the non-profits and the for-profits, but really there are actually subtypes underneath non-profits and for-profits. And oftentimes that gets lost in the conversations that we have about comparing and contrasting these different services. So you can see the subtype list and I'll talk a little bit more about those in a second. So again, this presentation is to help you with identifying criteria for reviewing these different types of services. One thing to note too, even though I did put Islandora, which is Canadian on here, we're really going to focus on US-based organizational models. That's what Karen and I know best. So we're going to talk a little bit more about that. So first I'm going to talk about financials, and then I'm going to hand it over to Karen and she's going to talk about governance. So I'm going to start with a definition of course for for-profit and non-profit. I know that like we should all know that, but just to be safe, for-profit of course is a company that is working to make money in theory. You can always have a for-profit go wrong. But underneath that there are a variety of different ways that for-profit companies can gain funding. You know, they can be a sole proprietorship. They can be, have like a partnership. They can be a corporation, an S-Corp, an LLC. Some for-profits can be get their funding from venture capital firms, and that all places certain regulatory requirements on them, right? Like or business requirements on them from who they're getting their funding from. On the non-profit side, non-profits are organization that do make money, but their goal is to reinvest that money within to the communities that they have set out to support. So that I think is a very important thing to remember throughout this conversation is that's really their goals, is to take their money, reinvest it in their communities, and lift their communities up. In academia, in libraries, we are very familiar with 501c3s. There are around 34 or 35 different types of non-profits in the US, and at the end of this presentation there is a resources slide, and you too can go to the IRS's website and look at all of those. And so how those different non-profits are structured can vary. Even within non-profits like a 501c3 can be structured in different methods. So that's something to keep in mind, like legally, which then has implications on the financial, you really want to think about how your non-profit that you're engaging with is structured, because it does have implications on the services that they're offering. So when you're looking at a for-profit or non-profit, you're going to want to think about their financial health. Not all companies are required to provide information about their financial health, but some things that you could ask for are your balance sheets of a company, income statements, cash flow statements. These are things that most companies will generate as part of doing business. Getting access to those can then help you create financial ratios that will help you understand how well a company is doing financially. I was going to go into financial ratios, but you're lucky this isn't a 45 minute presentation. But again, at the end of this presentation, there is a link to how to calculate financial ratios and some of the different types of financial ratios that exist and what they can help you evaluate about a company. On the non-profit side, there are a variety of things to consider around financial health. First is the funding model. How are they getting their money? Are they diversified? Are they only getting money from one space or are they going off and you know, they have different spaces in which they're taking income in? The other piece of this is the cash flow and sustainability of the cash flow. There's different schools of thought about how much money nonprofits should have and reserve. Some will say six months, some will say one year. But really the non-profits should be thinking about why they're keeping that cash flow, why they're keeping that reserve, what they need in order to sort of sunset the organization if something were to go awry. Those are things that they should be thinking about. Keeping too much cash on hand that doesn't help you with that goal is not good, right? You don't want somebody keeping 20 years and never reinvesting their money into the communities that they're aiming to support. The other thing to keep in mind is expenses and organizational efficiency. If non-profits are not organizationally efficient, then they are doing a poor job of stewarding your money. That's just flat-out true. We can go to battle over it later. The last thing you'll want to look at is debt. How much debt an organization is taking on? Regardless though for financial health is you really want to make sure that your organizations are being transparent with you. It's important to note that some non-profits are not required to be transparent, right? Like a 501c3 has a 990 form which is available on the internet. You can go look up your non-profit and check out its IRS tax form. But some non-profits which are subsidiaries of a larger non-profit, I'm going to pick on Bradley at AP Trust. Like AP Trust is not in itself a legal entity. It's underneath the umbrella organization. They actually don't need to be transparent in their financials. But one of the reasons I appreciate AP Trust and Bradley is actually they're very transparent about their financials, why they keep how much cash on hand they do, and here's the information about what we've spent every single year. Bradley tells me all about it, and he openly shares that with anybody who asks. So that shows an organization that's doing a good job of stewarding in my mind my funds. And with that I'm going to hand it over to Karen to talk a little bit about governance. All right. Good morning everyone. I am going to speed through this because we do want to have some time for questions. So I apologize as I'm about ready to go on my speed journey. So come with me. The first thing that I wanted to point out is governance is something that Rosie and I have been involved in in many different projects and actually an unexpected find of us doing preparation for this report is I dug too deep. And what happens when you dig too deep? Well, you find out that boards are not only inextricably linked to capitalism but they are inextricably linked to the slave trade and to colonialism. So as we think about all of our structures and behaviors, boards are based in a racist society to make differentials about people and people treated as not people. So this is a very important thing to know. Thanks for the clap there. So that said, we live in a capitalist society in America which highly provides and promotes this. So you are actually legally required to have a board if you are for profit publicly traded company. You are legally required to have a board if you are a non-profit. The only option where you can kind of get out of it is if you have a private or closely held company. So a group of individuals, if you're running your own company, if Rosie and I start an amazing business, we'll probably keep it close. So here are the things to note, though. With both the for-profits, there is the intent to make a profit and so really you're doing what's in the shareholders or the members best interest. In a for-profit public model, that is almost entirely synonymous with growth. So as you look at companies and back to Clis' remarks yesterday about what if this company gets sold to this other company or how does your data get through? Part of it is they have to. If you have to grow, you have to buy more, you have to have more services in order to get more money for your shareholders. Non-profit boards, Rosie has dived into a little bit so I'm going to just skip past this, but really it's more about advancing the mission. So when you're looking at boards and you're looking at your digital preservation services, we are now looking at apples and oranges. We're looking at for-profit. We're looking at non-profit. What are some of the things that we can look across them? One of the things is how are their members selected? Do they have an election? What is the representation of that board? Are they compensated? One of the big struggles we have in boards and companies have as well is what's known as a weak board. A weak board is where the CEO goes to the board and says, please tell me all this is great and they say, hey, yeah, you're great. Part of that comes down to two things. Usually it is either that people have been handpicked by the CEO or subset of the organization, or they don't have enough time in their daily lives, so they're giving five percent of their attention to the board. So when board members are compensated, it is usually supposed to say, we value your time and you are worth compensation. Right? Kind of the opposite. Some of us think, well, you're buying off your board members. That's not the rationale. It could be what it is in practice, but the rationale is you are buying their time because their labor is worth it to make your company or organization better. So who really has the authority? A strong board is a board wherein often CEOs will rotate quite frequently because they do not have the support or the function of the board to continue in their work. So when you're looking at companies and organizations for digital preservation services, take a look at the board makeup and see if it is a strong or a weak board. I'm going to touch very briefly on fiscal sponsor organizations because this has come up quite a bit in our digital preservation discussions and one of the things that is really tricky here is there's a wide spectrum of services that they provide. At the very minimum, usually it is the financial services, but they can also provide administrative services, healthcare, employees, legal services if you do get sued to Morris's point earlier. So again, I'm going to kind of slip past this, but fiscal sponsor organizations really can have a tight relationship with the project or a very loose relationship. It all depends on what the agreement is. So I decided you couldn't have a presentation about capitalism without clip art, so I hope that you appreciate that I made sure there was plenty of clip art in this presentation. One of the things I think we do in our library and our IT communities is we often convolut advisory groups with legal entity boards. And so a couple different things that are important about advisory groups. They are not legally required. They really should be specialized experts. They can provide things like a sounding board, fundraising, mentoring, program evaluation. They should have a very specific scope and sometimes many experts would argue a short duration as well so that you are refreshing that advice. The other things to look at is what is the organization doing as far as outreach and or market research? If you are an academic library and the organization is only talking to museums, is that problematic? If you're a museum and they're only talking to academic libraries, is that problematic? So making sure that you are a valued audience and customer with whatever company you decide to engage with. So like I said, I want time for questions, so I really am zooming through this, but we have provided in the slides will be available a checklist. And this really is focusing on things that you would ask yourself when you're looking at evaluating digital preservation services. This is not the will my data get exported. That's something else. This is in addition. So yes, there's a lot more work for you, but is the board fully informed? Is the financial health available? Are the reports out there? What are those health indicators that Rosie talked about? Are the reserves aligned with business growth? A lot of times in higher education we like to keep accounts of reserves for like three years, six years. Really the best practices in nonprofits is six years. So one year and four profits, it could be reserves that are as little as three months. Advisory councils that have a divine role, if there is one, what kind of fiscal sponsor relationship is their selection and compensation for the board that you should be aware of? And really are the goals and program evaluations that come out communicated with the community and the audience spoken with. So with that, we're going to go to questions, but I also want to put up, we did an extensive kind of list of references and resources that will also be available after this presentation. So thank you. Questions? Was it too fast? Okay, I had to check in with my friends. I'll come sit by you Rosie. I'm always good for a comment. Michael Siegel, University of Berlin, and I am Executive Director of the iSchools, so it's relevant what you were saying. And as a Chief Executive, I love this passive board. Exactly for the reasons you were saying. We don't generally have very passive board. We have elections, we have the rules listed in our bylaws, which I think is very important. Persuading people to run for board is a non-trivial challenge sometimes, because we don't pay people. And in the academic world we rarely pay people what their time is worth. I think one of the most important issues though from my perspective is the degree to which the board members must understand international practices. We are a highly international organization with members, it's schools of information, relevant here, worldwide, universities that have doctoral programs in this field. And I will tell you a story that my wife tells. I hate to cut you off, but I'm going to cut you off from a story, because in the interest of time we had to cut ourselves short. And I really do want to have time for questions. I won't tell the story, I will just say getting, especially the North Americans to understand European and Chinese practice is a real challenge. That's an educational issue. And I will say two things in response to your comment. One, we specifically did not look at higher education boards. We are looking at companies that provide services in a different way. So I would be careful about some of the things we did not do research in that area. We are not higher education, we are 501c3. Okay, great. But I think it is really interesting to look at what that board is made up of, right? Who is on that board? A proper board is going to have a diverse amount of experts from inside and outside the community. And that's what we are looking for. If you have a board of all of your friends, because those are the only people that you have convinced, then you are probably not a sustainable organization that I want to engage with. Now I scared everybody off from asking questions. Thanks, Eric. Hey Rosalind, hey Karen. I really appreciate your presentations. I am Eric Mitchell of the ULUC San Diego. You started with talking about digital preservation. And so I would actually just love to ask kind of an open question about how you see board membership kind of lending sustainability to that kind of that big, you know, 100-year challenge of digital preservation? Yeah, it is an interesting thing to consider, right? It's one of the things, you know, I know Karen said that like six months one year of reserve is good practice. But when you're looking at an organization that's hopefully stewarding things for the long term, like it's one of the things like I called out AP Trust before, they do have longer reserves. But that is mostly for the long tail, right? Like if I have all this data and I'm trying to get it out quickly and I want to steward not only my organization's money well but also their content well, like how much time do I need to like sunset, right? How to do that work versus something like actually the San Vera community, you know, for us sunsetting would probably look like how long do we want to keep our community manager on for? And how much time do we want to give her to be able to find some new career or new position? Because we aren't stewarding content the way AP Trust is, right? And so it's different. You don't want to end up in a situation where, you know, suddenly AP Trust just turns off the AWS bill. It's not. We don't want that. So that I think it depends, right? Like use your best judgment, think through some of that around sustainability and what they're trying to sustain to for the long haul. Jeff. I'll just add, I mean, when we were creating the checklist, a lot of it is asking questions, right? What is a parent from this board? Is it strong? Is it weak? Where does it fall along that? So it's not trying to provide guidance on which one that you pick, but it's a very important question. And I think one of the things that I do think we struggle with is if we have a very weak board and we concentrate on cult of personality for a CEO for any of our digital preservation services, that is also very problematic. And we are as a group prone to cult of personality. So I do think that's another thing just to watch for. In the scholarly communication space, we're seeing a lot of reduced number of vendors, more complicated situations where this company owns this company, but it operates separately, et cetera. And I think we're starting to get glimmers of that in the digital preservation space as well. And I wonder if you have any advice for somebody who doesn't know anything about how these laws work and how the companies work. How does navigate that environment? You start. Okay. Well, so I would say one of the nice things is that because of the U.S. and legal rules, most of that has to be transparent for any non-profits. So you're going to see who the parent company is and where that sits in a or a sponsor organization. And honestly, Googling it is probably the best thing. I think the thing to think about on the corporate side is the more and more you learn about whomever that parent company is, and this is something, of course, we run into with B-Press and Elsevier, Ralex is a data distributor of a different variety, and their goal is to make money for their shareholders. It's a very different goal. So understanding who those companies are and what their goals are is important. But I honestly think the best way to do it is to Google, and I say that as a librarian. I think, too, I'll add that the other piece of it is engaging with the company, right? So we have the big companies, but there are some digital preservation services out there that are smaller companies, and the way that they do their business can sometimes be much more, you gain more trust as you're having those conversations. I had an organization that I did a contract with, and it was the most pleasant contractual experience I've ever had. It was great. Procurement was very happy. I was very happy. They were really engaged and open to hearing feedback on their contracts. And then the one thing that I had a problem with, they said, oh, yeah, we don't put that here. We put it up on our website, and it's all here, and you can peruse it at any time you want. And I was like, oh, this is great. Right? And so it's through those conversations of the initial conversations trying to gain an understanding of how they operate and who they are and how they're open to conversations, right? If they just ignore you when you try to ask questions about your contract, that seems problematic, right? I have legitimate questions. I would also say if you have a moment, schedule a meeting with procurement, that was like, it's the best 30 minutes of your life. They can really, I mean, they do this, right? That's their job. And they can really help you understand how to hold organizations accountable through the contractual process. And how to make the contractual process open to different types of organizations. Right. Really your takeaway. Make friends with your procurement officers. I think we're out of time. So thank you all for joining us. And through the speed review, the slides with the links will be available through CNI. So much appreciate it. And enjoy lunch.