Cost can be viewed as the amount required to resource inputs into an activity, and there will usually be a need to evaluate these inputs against the outcomes or benefits. Cost modeling techniques exist in many areas, to help to calculate and anticipate the costs of a given activity.However, there are areas where there is still insufficient knowledge about potential costs, and this is relevant for the domain of digital preservation. Particularly in this area, costs can only be understood in relation to benefits, and the benefits of investing in digital preservation have to be assessed against the potential threats that organizations face. For example, an analysis of the risks of format obsolescence or of a failure of business continuity should motivate organizations to undertake digital preservation when it becomes evident that the potential loss of value of not doing so overcomes the cost.In order for cost models to be useful, it is critical that they are linked to an analysis of the risks in the given domain. Risk analysis should be the foundation of cost modeling so that all costs can be traced back to a specific set of threats that are applicable to the relevant domains and contexts. For some domains where extensive risk analysis has already been done and the benefits are well defined, this may be fairly straightforward. For other domains it might be more difficult. That is the case of digital preservation, where the costs and benefits are not currently widely and well understood but there is also anxiety about not engaging with digital preservation. Many organizations struggle to understand its value and the reason for this is that there is an insufficient focus on the role of risk in decision-making and preservation planning.The European Commission's FP7 funded 4C project aims to address a number of issues that relate directly to the cost determinants of digital preservation, one of the most important being an assessment of risk. The objective is to define a clearer economic landscape within which organizations can operate with confidence and where commercial and community-driven organizations can provide solutions that are reliable and effective, but also economic, timely and sustainable. Large memory and archiving institutions are dealing with an ever increasing amount of digital data and there is a concomitant need for scalable and effective solutions and services to emerge that enable them to tackle that challenge. Medium and smaller organizations, as also entities in the private sector, face different types of challenges and a diversity of solutions are required. The cost of digital preservation needs to be understood through a number of different lenses. Benefits, value and sustainability are three different perspectives that must influence cost but a fundamental understanding of risk – and risk in relation to organizational mission – is of crucial importance. This can bring a new view to digital preservation, making it possible to analyze scenarios and take decisions based on perceptions of objective added value, and not only as objective costs and subjective values.
Diogo Proença, José Borbinha, Neil Grindley, "The Role of Risk Analysis to Support Cost Models for Digital Preservation" in Proc. IS&T Archiving 2013, 2013, pp 6 - 11, https://doi.org/10.2352/issn.2168-3204.2013.10.1.art00003