Report: Statistical Research, Inc.
Framework for Discussion: Business and Sociological Issues

To be considered a success, in addition to its technical merits, an archaeological digital data infrastructure must 1) be financially self-sustaining and 2) be adopted and used as an “official” repository.  Technology, finance, and adoption are not independent, and must be considered together in project planning and implementation.  For example, operating funds (finance) must be sufficient to allow state-of-the-art technology and to drive research in archaeoinformatics (technology).  Adoption by a large segment of archaeological users (adoption) plays directly to financial revenues (finance).  Adoption by a large user base (adoption) is partially dependent upon the technological function, interface, and ease of use (technology).  Because of this interrelatedness, the technical aspects of the project cannot be undertaken in isolation from the financial and sociological components.  The informatics project must be undertaken within the framework of a business plan.

A number of topics from the Archaeoinformatics survey and lectures have been identified that must be achieved to make the project a success.  These topics of design and implementation can be considered to be lessons learned from other informatics projects and market research from a good sample of potential future users.  This list of topics is not comprehensive, could be expanded, and should be prioritized.  Additionally, how to implement these key success items is a topic for discussion, debate, and consideration.  These key items include:

• Reduce technological barriers for data contributors and users through a well designed and intuitive interface.
• Quickly make available a critical mass of data that has future research potential and high archaeological interest.
• Adoption of digital archiving provision by regulatory agencies at the federal and state levels.
• Development of a fee structure to incentivize, not penalize, data contribution.
• Creation of a "level playing field" for private-sector firms.
• Change the professional value and reward system to provide professional credit for data authors and contributors.

Components of a Business Model
Any business model presupposes financial sustainability; put simply, revenues must be sufficient to cover expenses.  Building a business model for the digital infrastructure project requires sound financial data, which we are in the process of collecting. Thus, while presenting a business model is premature, we can outline the major components of such a model.  We structure the following discussion first by outlining anticipated costs and then examining possible revenue sources to cover those costs.

Costs
We anticipate three major cost areas: (1)technical costs in terms of hardware and software; (2) facility costs related to maintaining the national center; and (3) staff costs of personnel to oversee the inclusion of adequate amounts and types of data and the distribution of these data upon request can be forecasted over time.  A further assumption of the business model for the digital infrastructure project will be that expenses will change over the life of the project, and we need to adjust revenues accordingly.

Initially, substantial investments in infrastructure will be required. Expenditures in all three cost areas outlined above will be required prior to releasing the infrastructure for use. Over time, however, we expect costs to moderate and then stabilize. We anticipate the demand for adding databases per year will become relatively constant.  Moreover, on-going costs to maintain the system—hardware will need to be updated, data validated and migrated, and tools created—can be anticipated at least one to two years in advance. It is important to remember that there is flexibility in the timing of maintenance costs. Of course, we need to stay abreast of Hardware and software upgrades, but we control when we actually make these changes, and therefore, when monies are expended. Similarly, the amount of data added to the system or tools created to manipulate data are dependent on the number of staff positions. Ideally, we will have a very quick response time, but there is also nothing wrong with creating a backlog of work (say on the order of one fiscal quarter), which will allow us to adjust workforce levels in advance of payroll or independent contractor expenditures.

Revenues
We divide revenue sources into five categories: sponsored research grants, compliance contracts, curation fees, user fees, and endowments. Because the exact mix of revenue streams will greatly influence the trajectory of the digital infrastructure project, the pros and cons of each source are examined below.

Sponsored research grants include funds from traditional sources such as the National Science Foundation, the National Endowment for the Humanities, and even the Mellon Foundation. These grants are generally focused on advancing archaeological research. The digital infrastructure project would be of interest because it provides a means of utilizing already collected data in ways that go beyond the limited goals of the research projects that collected them. Because sponsored grants will provide us with the least restrictive funding source from which to demonstrate the importance of the digital infrastructure on the future of archaeological research, their use in the beginning of the project will be essential to create “stakeholder buy-in” from archaeologists creating new data (e.g., from new field projects) and those using these data sources. It is absolutely essential that we convince the archaeological community that the performance of archaeological research in the future depends on a digital infrastructure. 

Compliance contracts relate to funding available from government agencies responsible for managing cultural resources. Although we anticipate interest in the digital infrastructure at all levels of government—federal, state, tribal, and municipal—we expect that the federal agencies will be the most inclined to fund the project. Government agencies generate huge amounts of data that could more effectively be utilized in decision making if they were integrated. For example, the Department of Defense (DoD) administers 42,000,000 acres within the United States. Of this total, DoD believes, but cannot verify, that it has surveyed about 12,000,000 acres and has found 150,000 archaeological sites. It would be of great value, indeed it is a legal requirement, for DoD to know exactly where the agency stands vis-à-vis its responsibility to inventory and evaluate cultural resources under its jurisdiction. Furthermore, the ability to query across DoD would provide data both to assist the agency in indentifying resources critically important to the country’s cultural heritage as well as opportunities to compare and interpret resources across military installations. The paleoIndian boat building project is a good example. Through serendipity military archaeologists identified similar tool kits of stone tools used to build boats about 10,000 years ago at installations across the country ranging from Fort Drum in upstate New York to San Clemente Naval Air Weapons Station off the coast of California. Although the project is held up as a best practice in DoD’s cultural resource program, project personnel have repeatedly stated that similar advances in the future depend on the ability to link military databases (see http://www.cemml.colostate.edu/paleo/projectsummary.htm) 

Government agencies focus on cultural resources as they relate to their overall mission and legal requirements. Consequently, to invest in digital infrastructure, an agency would need to see an immediate return on their investment. The digital infrastructure project would have to evaluate the extent of overlap between agency goals and project objectives. Using a “case” approach to build the infrastructure may be a sound financial move, but it will require project principals to ensure that the project not be unnecessarily sidetracked.

Curation is both an ethical and legal requirement for most archaeological projects. Most repositories currently curate digital material, although standards and requirements for accepting and maintaining digital information vary greatly. In almost no case are repositories positioned to maintain digital information into the future; few ensure that digital media remains viable and few migrate digital material with changes in software and hardware.
Curation represents an opportunity and a challenge for the digital infrastructure project. We are cognizant that repositories are financially strapped and will be reticent to forego any fees they currently receive. At the same time, repositories and sponsors of archaeological research recognize the compelling challenges of curating and maintaining digital material and archives as well as the fact that they are currently failing to meet these challenges. We believe that by partnering with curatorial repositories we can accept and maintain their digital material and share in the curation fees. Of course, curation fees will have to increase. However, because these fees are already part of current archaeological practice, we will not have to create a new fee requirement. Our challenge will be to demonstrate to sponsors of academic and compliance research that to maintain their digital collections they must use the digital infrastructure. We are confident if we can make that case, increased fees will follow.

In addition to curatorial fees associated with placing information into the system, we might consider charging users of the system a fee to obtain data or to use tools that we create to manipulate data. A current user fee that serves as a good analogue are access fees levied by many states that allow archaeologists in cultural resource management to access state site files. In these cases, archaeologists that meet certain requirements, such as holders of state permits or registered professional archaeologists (RPAs), pay an annual or as-you-go fee (the latter usually based on time and material expenses). For digital data, fees might be assessed annually, fixed fee per set, or fee by download size.

User fees are a sensitive issue in archaeology. Although we might expect major universities, museums, and government agencies to shoulder the burden of most of the fees, we anticipate that individual archaeologists will show great resistance. Because our ultimate goal is to have data used, we remain committed to insuring that user fees, if used at all, will not become an impediment to accessing the digital infrastructure as a research tool. A sliding scale fee structure in which large university departments and government agencies pay larger fee then smaller institutions and ultimately only modest fees would be assessed on credentialed individuals is a likely solution. 

Endowments are an excellent means of assuring that certain fixed costs are always met. Although endowments can be established for the general operation of an organization, often it is easier to raise money for specific objectives; for example, endowing a permanent research program into new and innovative ways of using digital data in archaeological research. Regardless, endowments are generally secured through fundraising. Soliciting donations is easier once an organization has demonstrated its “proof of concept”.

Before soliciting donations, we need to show that digital infrastructure is the way of the future for archaeological research and the digital infrastructure project is the best mechanism for the archaeological community to achieve this goal. Accordingly, we do not anticipate fundraising until after the digital infrastructure has been in operation for at least a year.

Matching Revenues to Costs
Our business plan will take into account not only aggregate costs, but incremental ones as well. We anticipate that initially, we will require a large infusion of cash to establish and staff a national center. In addition to physical costs, we also will budget for adequate staff time to incorporate into the digital infrastructure sufficient data of various types so that once the infrastructure comes on line it will be immediately useful to archaeological research. We suspect that most of this upfront cost will have to be absorbed by sponsored research grants.

Over time, we expect that government agencies will decide to make their data available through the digital infrastructure. Many agencies have on-going database projects, but there remains a critical need to integrate these databases that no federal agency has been tasked with or is willing to undertake. We expect that these “case studies” will occur periodically, each with their own funding source. We will need to work out policies for accepting contracts to ensure that the key objective of the digital infrastructure, that of serving data to advance archaeological research is met.
While the incorporation of major data sources will have to be funded by individual sponsors, a steady and reliable funding source will be required to maintain the system. Because these costs consist of staff salaries and hardware/software upgrades, they are relatively easy to project. Anticipated costs will then be offset by adjusting curatorial fees and user fees. To achieve long term sustainability, the project will look toward creating one or more endowments through fundraising.

The types and mix of revenue sources affect the staffing structure of the project. We anticipate that some positions, such as the executive director and administrative support, will be considered largely overhead expenses. Other staff positions will be project dependent. Our objective is to maintain a relatively constant staff structure so it is important that we accurately assess the number of research grants, compliance contracts, and the flow of curatorial and user fees. At the same time, we need to have an adequate number of project positions to generate sufficient overhead to fund administrative salaries and facilities. In the beginning, it will be critical to keep the number of administrative positions low, thereby minimizing overhead costs.

Determining the feasibility of sustaining the financial model will require us to match anticipated costs with revenues. Initially costs will be relatively easy to define: facilities, hardware and software, and personnel. The much more difficult part of the business model will be to assess: (a) the likelihood of sponsored research grants; (b) the willingness of government agencies to integrate their databases as a step toward fulfilling their legal compliance requirements; (c) the response by repositories to partnering with the digital infrastructure as a means of solving their digital curation crisis; (d) the willingness of the archaeological community to incorporate user fees as a necessary expense to conducting research; and (e) the potential of raising targeted funds through fundraising campaigns.

Business plans must be flexible. Although a good plan should identify all cost and revenue components, it is important that the plan not be tied too closely with particular expectations. The failure of any one funding source should not critical to the success of the project. For example, if we are unable to secure sponsored grants at the outset, we can accept more “case” studies from government agencies. However, the method of compensating for the loss of revenues will affect the trajectory of the project, and if we are not careful, the final character and composition of the digital infrastructure. It is critical, therefore, that the business plan faithfully encapsulate the mission of the project and chart a path for making financial decisions that assures that the mission is met.