Division IV Report to NPS-S AdCom

Peter StaeckerDivision IV Director

May 31, 2002

Objectives for this morning:

• Financial Background:• Emerging from a tough spell with a challenging, but

balanced budget for 2002.

• The need to understand our cost structure

• Membership:• Growing, but not self-supporting. Is membership a

“business”?

• Principles for a membership business plan

• Business Rules Simplification: An opportunity to focus on reducing costs related to Membership services, and the need to agree upon a simplified set of services and rules.

Finances

Some IEEE Financial History

10

100

1000

1995 1996 1997 1998 1999 2000 2001 2002(B)

total staff

membership (000)

reserves ($M)

core expenses ($M)

2002 IEEE Operating Budget

Revenue $220.4MExpense $220.2M

Net from Operations $0.2M

Continuing Initiatives ($4.0M)2002 Dividends & Interest $4.6M

IEEE Net $0.8M

Membership

More is better, right?

MembershipClimbed to Record High!

Total Membership

100000

150000

200000

250000

300000

350000

400000

1963

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2001 Membership Total = 377,342

Membership: A Business?

•Membership has revenue and expenses

•Expenses outweigh revenue by approximately $15/member for S/Cs

•Does it really make sense to look for ways to increase membership until we fix the membership business?

IEEE OpportunitiesPrinciples to Simplify Business Rules

• Membership dues recover variable costs of bundled pubs (Principle 1):

• One IEEE member price for each publication• Specific price for electronic and print

• Optional Publication pricing (Principles 2 and 3): Pub optional prices recover their variable costs Non-member pub costs to recover their fixed costs

• Simplify Membership Categories (Principle 4):• Specific price for electronic and print

• Limit the number of options for reduced rates

• E-Services for Reduced Rate members

Principle 1: Member Dues Pricing

Guideline:

• Dues covers variable costs of membership: • Newsletters, magazines, and any other

bundled pubs

• Xplore infrastructure

• corporate allocations

• free extras

• Subsidized (reduced rate) members

Simplified Dues Pricing Model

Reduced rate includes: low income, unemployed, retired, student, recent grad

Life member dues are zero

X is set by Society based on meeting variable cost elements of electronic offerings, including those supplied at half or zero dues.

Multiplier for reduced rate dues set by TAB/RAB

IEEE Member = X Reduced Rate = X/2

includes e-version of bundled pubs

Society Duesincludes e-version and

print version of bundled pubs

Principle 2: Optional Pub Pricing for IEEE Members

Guideline:

• Price for optional publications for members covers their variable costs: • Printing & paper

• mailing & processing

• Xplore processing and access

• Subsidized (reduced rate) members

Principle 3: Optional Pricing for non-IEEE Members

•Guideline:•Price for optional publications = 2/3

market average of competition.

Simplified Optional Pubs Pricing

Reduced rate includes: low income, unemployed, retired, student, recent grad, life member

X is set by Society based on meeting variable cost elements

Y is set by Society based on comparable market values.

Multiplier for each category set by TAB/RAB

IEEE Member Price Reduced Rate PricePrint e-copy Both Print e-copy Both

X X 1.25X X/2 X/2 .625X

Sister Society Price Non-Member PricePrint e-copy Both Print e-copy Both

2X 2X 2.5X Y Y 1.25Y

Optional Publication

Name

Principle 4: Simplify customer categories

• IEEE member

• Reduced rate member • Low-income

• Unemployed

• Student

• Life Member

• Sister Society member

• Non-IEEE member

Min/Reduced Feature Membership (annual savings/1-time implementation costs)

FeatureOne price for dues & assessmentsSimplify recent graduate dues optionStandardize all discountsEliminate permanent membership

optionOne price for society publications.Only check or credit card paymentsReduce additional data captureProduce web renewal only (eliminate

paper bill, brochure) Eliminate membership cardsubtotalAutomatic Renewal

Save ($K/yr)12213416313

257134102

1395

4082728319

ownrRR,TR,TTTRR,TR

R

R

Cost($K)1822732732727000

0792910

Summary

• IEEE 2002 operating budget balanced. Cost structure, revenue-generation challenges identified.

• Membership is presently a cost-center, but with focus, can become revenue-neutral

• S/C and TAB actions in • Simplifying business rules (reduce costs) and• Pricing product to recover costs

will lead to viable membership “business”