1. Robotics and Automation Society Business Plan Report

2. Outline Background context Issues and business plan principles Business process Alternatives under consideration Some specific suggestions being considered

3. Background Context

4. Current RAS Business Divisions Four current business divisions Publications Conferences Administration Investments/Reserves

5. Annual Operating Surplus/ Loss Reserves Surplus/ Loss Current Financial Flow Publications Member Fees ASPP/IEL Non-member Fees Conferences Surplus Book Broker Administrative Travel, Awards Tech. Comm, IEEE Market Gain Market Loss Minimum per TAB 50% Op Expense Reserves Margin Reserves Publications Surplus /Loss Approved Initiatives Income Expenses

6. Recent Financial History* * All numbers in thousands Stan. Dev. 1997 Actuals 1998 Actuals 1999 Actuals 2000 Actuals 2001 Actuals 2002 Actuals 2003 Actuals 2004 Budget Op Net70.5243.2382.8380.4321.9333.3460.3415.752.3 Market Chg239.070.859.4160.5(14.7)(99.0)(382.8)396.20.0 IEEE Tax(235.8)(631.7) Adjustments(4.1)(39.1)59.3(10.1)(34.1)(216.7)174.3 Net Surplus473.1309.9403.1600.261.3(431.5)(139.2)986.2 Reserves786.91,190.01,790.21,851.51,420.01,280.82,267.0 Watch List Exp930.91,049.61,110.31,125.62,005.01,545.21,199.21,811.4

7. IEEE TAB Rules Operating Fund/Watch List rule Negative operations in 2 consecutive years => Watch List Reserves Watch List rule Reserve/Expenses Watch List Reserves can only be budgeted for initiatives in accordance with TAB rules Cannot be budgeted for operations IEEE TAB must approve society budgets

8. Secondary IEEE Factors New ASPP/IEL formula will cost RAS ~$100k per year unless we can force more Xplore usage or more articles IEEE recommends non-member rates and has penalized rates below recommended IEEE recommends that member rates cover variable publication costs IEEE Administration costs have been highly variable

9. Financial Controls Direct controls Member fees (only $110k out of $2.2 mil.)* Non-member subscription rates ($170k) Member subscription rate ($22k) Page charge rate ($38k) Advertising rates ($27K) Conference budget approval & direction *Numbers are 2003 actuals

10. Financial Controls Direct controls Some expenses (travel, awards, distinguished lecturer, member activities, long range planning, technical activities) ($60k) Page counts Editorial reimbursed expenses ($105k)

11. Financial Controls Indirect controls ASPP/IEL ($400k) Depends on number of Xplore hits and # articles Book broker policy Which conference proceedings are included # subscriptions – subscription drive Form of subscriptions – encourage change Electronic subscriptions avoid expense IEEE services used

12. Current RAS Unbudgeted Expense Process Unbudgeted expense request brought to the Financial Activities Board prior to AdCom VP for Finance presents the financial impact on the budget to the AdCom The AdCom votes on funding the program

13. Current Unbudgeted Expense Input Required Program title Name of the proposer (responsible for annual report) Starting and ending dates Amount requested Funds administered by (committee, etc.) Brief description Expected benefit to Society

14. Recent Approved Initiatives T-ASE startup$300k Member Activities -- Virtual Communities$ 3k RAS Chapter of the Year Award$ 1k/yr RAS Technical Activities initiatives$ 10k Long Range Planning Committee initiative$ 5k IEEE Field Award $ 10k+/yr Distinguished Service Awards$ 3k/yr EdCom initiatives$ 12k Distinguished Lecturers Program$ 9k/yr Archiving pre-1988 publications$ 35k Note: Recurring expenses must transition to operating budget

15. Business Plan Issues Many categories of expense do not have directly related income streams IEEE changes having large impact Limited review of initiative proposals No review of initiatives after initial approval Criteria for setting subscription rates No planning for optimizing wrt IEEE rules How to utilize and control reserves Correlating activity to member desires

16. Some Observations Standard deviation of operating net was $208k IEEE Tax part of operating budget since 2002 Excluding effects of IEEE Tax, the operating surplus could be reduced without much danger of going on Watch List The largest market reduction in reserves was $383k TAB reserve requirement: $720k - $925k

17. Business Principles

18. Business Plan Principles There shall be a process to annually review business divisions and set operating and reserves goals Our reserves shall Be maintained at or above the TAB specified minimum plus a safety term Be the basis for establishing new initiatives Target limiting growth to planned levels Suggest TAB min + 50% worst market loss + initiative capacity

19. Business Plan Principles Operating budget shall surplus shall be targeted to manage reserves While initiatives are encouraged when resources are available, strong proposals are expected. Reserves should not be spent simply because the excess reserves are substantial Consideration may be given to reducing member costs as well as to new initiatives

20. Business Plan Principles Non-member income should support member services An initiative process shall consider One time vs. ongoing initiatives Regular review and sunset plan Income sources and budget impact Expenses (to members) of carrying out society business shall be reimbursed

21. Business Plan Principles Members should not normally be paid for society activities Major business activities should be led by member volunteers but supported by professional services, either inside or outside the IEEE As a volunteer-run Society, consideration should continually be given to business simplification

22. Business Process

23. Annual Business Process Benefit/cost review of selected activities Divide new initiatives into two categories Fixed duration Secondary impact on budget, use reserve funds Ongoing expenses Possible initial reserve funding Assess long term operating budget impact Obtain LRPC input on desired annual initiative capacity Make initiative/activity decisions; set rates & budget surplus goal to achieve reserve level, while avoiding Watch List problems.

24. Business Process AdCom Review & Decisions FAB Financial Analysis Activity Review Initiative Requests Initiative Capacity request Rates Conference Goals Financial Status Reserve Goals Anticipated External Factors Budget DecisionsInitiative Decisions ExCom Review

25. Some Alternatives and Specific Suggestions under Consideration

26. Possible Strategies Create three financial subunits with responsibility for income/expense in their units Publications Conferences Member Services, Administrative, Industrial Activities, Technical Activities Tax non-member income of financial subunits for activities without income stream Centralized control of budget (current scheme). Base initiatives on percentage of reserves, e.g., 5% FEEDBACK DESIRED!

27. Business Plan Details Set the Reserve safety term = half the worst case market loss Target an Initiative Capacity = 5% - 10% of reserves Initially, our excess reserves are much larger than this A challenge to reduce them to this level Should we take occasional one year budget risks to limit reserves growth? Establish review period for each ongoing initiative when established

28. Business Plan Details Our pricing structure should have non- members subsidize services for members Student and "other" (retired, out of work, life member, etc.) fees should be substantially below (e.g., 50% of) regular member fees Except as noted, service costs should be borne, to a reasonable extent, by those benefiting

29. Specific Recommendations Member publication subscription rates = variable cost Non-member subscription rate => 2/3 market value Consider reducing ICRA & IROS conference fees FAB should initialize the review intervals for existing activities There should be FAB representatives on PAB and CAB to help with financial analysis All conferences should have a net positive budget

30. Specific Recommendations PAB and FAB should review co-sponsored pubs finances FAB and LRPC should establish a joint sub- committee to develop plans to address IEEE changes Determine what publications really cost per page Establish a web site initiative Move toward all electronic publications