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2. Economic and practical justifications for a LIMS

As a lab manager or stakeholder in your organization, you've concluded that a laboratory information management system (LIMS) makes a lot of sense for solving some of the challenges your lab faces. But you're not the primary decision maker for LIMS acquisition and deployment. At some point, you will have to present your case (i.e., provide justification) for the LIMS to management, and the material included in this chapter will help you make that case. There are different approaches to the justification of LIMS in the laboratory; the methodology you adopt should be based on your understanding of the technology and the dynamics of your management structure. In some cases, presenting practical aspects of a core organizational system like LIMS will be sufficient, while in others a more rigorous analysis will be warranted.

This chapter will examine this justification process by first encouraging your organization to look at the factors that are closest to the lab's essential laboratory functions. From there, we can look at the more traditional economic and practical considerations, justifications, and benefits that can help you with your presentation to management. This allows us to lead into the following chapter, which will discuss the importance of management buy-in, as well as how to pitch the LIMS project to management and critical stakeholders.

2.1 Organizational justifications: Why is it important?

Before we get into the more classical aspects of justification, we need to look at those factors that are closest to your lab's essential operations. It's all well and good for us to broadly speak about the typical challenges, requirements, and considerations for labs of all types; some important deductions can be made by looking at the industry as a whole. However, no two laboratories are alike, and the challenges, requirements, and considerations for your laboratory may very well differ from the typical. This is why it's vital to not only use broad facts to justify LIMS acquisition but also integrate those facts within the context of your own lab. A series of important questions sets the stage for better explaining why the LIMS is necessary and beneficial to the lab. Questions that need to be asked include:

Why is acquiring a LIMS important to meeting the goals of your lab?
What problems does the LIMS solve that currently affect your lab?
What operational, financial, and personnel improvements do you expect to see in your lab because of LIMS implementation?
Why is this important to the larger organization, as well as those outside the lab?

No "one size fits all" justification template exists for a pivotal system like a LIMS. It can be the basis for restructuring your lab's operations and changing how it operates. Additionally, the justification for LIMS acquisition and deployment is—as the above questions emphasize—more than a dollars-and-cents consideration, although ultimately, it boils down to that. Management often thinks in terms of cost, and the further someone is in the corporate organizational chart from lab operations, the more financial issues become a driving factor in understanding the impact of a LIMS. They may need to be educated on the benefits of LIMS to lab operations, as well as the organization's bottom line. If lab budgets are tight, money may be a driving factor in that department. In other cases, it might be more straightforward, as reported by one oil company: “In our case, it pays for itself the day LIMS prevents one single day of refining gone to waste.”^[1] Similar cases can be made for any regulated industry. Yes, it’s a money issue, but that is considerably removed from the lab's budget. The justification needs to be viewed from more than one perspective.

2.2 Economic considerations and justifications

The previous chapter's Table 1 compared 1980-era concessions, considerations, and justifications for maintaining an existing lab's operations vs. acquiring and deploying an on-premises LIMS. While those same aspects largely pertain to today's on-premises LIMS installation, most of the costs of hardware, installation, IT support, data storage, etc., go away with a cloud-based LIMS installation. Suddenly the economic justification for a LIMS looks rosier due to the reduced costs associated with having your LIMS securely hosted by another entity. The core cloud LIMS could be available on an annual basis for less than the cost of one person, easily justified through productivity improvements, improved data governance, and improved regulatory compliance. For example, the average annual salary for a government lab worker is $43,757 (2022 average)^[2], which is very close to the base pay for a lab technician in Boston, Massachusetts (2023).^[3]

The first year’s charges for a basic cloud-based LIMS with two concurrent users, including one-time and annual recurring charges, are less than that yearly salary value. The yearly recurring charge is less than a third of that technician's income. As you add on functions such as instrument interfacing, both the initial and recurring costs will increase, and so will the productivity gains through faster, more efficient data entry and automation. Additionally, cloud-based LIMS largely eliminates the need for on-site server hardware, software installation, and IT support. (Note: It is not our position that people should be laid off to justify the added cost of a LIMS, but some future hiring may be avoided or deferred.) Yes, training still needs to be provided, as does support for instrument connections. However, the latter can be phased in on an as-needed basis.