1. Division IV Report to NPS-S AdCom Peter Staecker Division IV Director May 31, 2002

2. 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.

3. Finances

4. Some IEEE Financial History

5. 2002 IEEE Operating Budget Revenue $220.4M Expense $220.2M Net from Operations $0.2M Continuing Initiatives ($4.0M) 2002 Dividends & Interest $4.6M IEEE Net $0.8M

6. Membership More is better, right?

7. Membership Climbed to Record High! 2001 Membership Total = 377,342

8. 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?

9. IEEE Opportunities Principles 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

10. 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

11. 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

12. 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

13. Principle 3: Optional Pricing for non- IEEE Members Guideline: Price for optional publications = 2/3 market average of competition.

14. 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

15. Principle 4: Simplify customer categories IEEE member Reduced rate member Low-income Unemployed Student Life Member Sister Society member Non-IEEE member

16. Min/Reduced Feature Membership (annual savings/1-time implementation costs) Feature One price for dues & assessments Simplify recent graduate dues option Standardize all discounts Eliminate permanent membership option One price for society publications. Only check or credit card payments Reduce additional data capture Produce web renewal only (eliminate paper bill, brochure) Eliminate membership card subtotal Automatic Renewal Save ($K/yr) 122 134 163 13 257 134 102 1395 408 2728 319 ownr R R,T T R R,T R Cost($K) 182 273 27 0 792 910

17. 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”