At ALA Annual in San Francisco last month, one of the interesting panels that I attended featured the executive leadership of six library technology companies. The moderator, Marshall Breeding, started things off with a question about how each company’s business model helped it serve library needs. OCLC’s Skip Prichard spoke about his organization’s governance as a partnership of libraries, while ProQuest’s Kurt Sanford emphasized that because it is family-owned his organization can take a long-term perspective. I found it especially interesting that both Ex Libris’s Matti Shem-Tov and Innovative’s Kim Massana emphasized the importance of having access to the capital needed for research and development and platform reinvestment.

Capital and reinvestment are in no way arcane issues for the academic library community. They are essential if we are to understand the sustainability of the resources on which libraries rely. I don’t mean to suggest that certain organizations reinvest more than other library systems providers, only that libraries (and publishers alike) should concern themselves with this issue, and not just for systems providers. Deferred maintenance shows faster than ever for digital systems and services.

Last year saw the sale of HighWire Press from Stanford University to a group of private investors, apparently driven in no small part by a need for capital investment. This is one of several factors leading to meaningful shifts in the scholarly content platform business, of which HighWire is one of just a few providers. ACRL publications including College & Research Libraries and Sage Journals are but two of many familiar platforms that are powered by HighWire.

Software development is sometimes capitalized just like major construction projects. While a building may have a thirty year expected life against which expenditures are amortized, software might have a three to five year expected life. Even so, choices about how to sustain the investments required can have significance. Thinking about major projects not as one-time but rather as capital investments can sometimes bring clarity both from funding and assessment perspectives.

Both libraries and learned societies do not typically manage reinvestment systematically. Among libraries, some manage a fund for innovation and reinvestment, although rarely as a true capital fund. Others find support for major projects as part of a year-end spend-down process, although this approach does not always lead libraries to invest strategically.  Some libraries “borrow” from the provost to support a major initiative, which funds are paid back over several years like a loan.

While not a library, HathiTrust and its librarian leaders developed a mechanism to secure the operating surpluses necessary to generate “funds to develop new services and functionality.” The transparency of this approach is one of its notable strengths.

The ability to fund ongoing investment, and to assess its adequacy, is a key imperative for libraries themselves and as they look to their collaborations and their vendors.