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IEEE New Financial Model (NFM)

IEEE New Financial Model (NFM). Purpose of the NFM Actions Taken to Develop the NFM Current NFM Proposal NFM Impact on CPMT Status and Next Steps. Purpose of the NFM. Develop methodology for redistributing Infrastructure expenses Infrastructure expenses exceed offsetting revenues

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IEEE New Financial Model (NFM)

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  1. IEEE New Financial Model (NFM) • Purpose of the NFM • Actions Taken to Develop the NFM • Current NFM Proposal • NFM Impact on CPMT • Status and Next Steps

  2. Purpose of the NFM • Develop methodology for redistributing Infrastructure expenses • Infrastructure expenses exceed offsetting revenues • Overall IEEE is financially strong • However, per 1999 budget, “corporate” reserves will go negative this year • Improve business practices • Improve budget and funding practices and oversight • Reduce expenses or increase revenues

  3. Actions Taken to Develop the NFM • TAB NFM Ad Hoc committee • Disapproved original NFM; proposed alternate • Most TAB recommendations have been “accepted” • 3% improvement by all in 2000 budgeted net • “Pay by the Drink” charging for services • Eliminate allotments and entitlements • Zero-based budgeting, with oversight • “Scrub” Infrastructure expenses • Perform a Test Case to evaluate NFM impacts (vs. ANFM)

  4. NFM Actions Taken (continued) • TAB recommendations adopted (continued) • (Tentatively) Infrastructure cost distribution based on expenses, not including conferences expense. • Distribution within Major Boards up to each Board IEEE Blue Ribbon Task Force formed to review Infrastructure expenses • Blue Ribbon Committee • Review Infrastructure expenses; recommended specific reductions • Impacts Evaluated vs. 1999 Budgets

  5. Proposed NFM • Pay investments at the blended rate • Eliminate allotments, but fund RAB, EAB • Restructure the entire corporate budget • Surplus Centers (with & without reserves) • Cost Centers • “Pay-by-the-drink” for services received • Pay Infrastructure from dues; then Surplus Centers w/o reserves; finally Surplus Centers with Reserves • Phased implementation: 10%, 50%, 100% • New P&L presentation for Corporate Budget

  6. Test Case Results (1999 Budget) Infrastructure Expenses $39.90M Less Member Dues and Other - 17.59M Less Surplus Centers w/o Reserves - 1.15M To Surplus Centers w/ Reserves $21.16M TAB $17.97M Standards 1.82M IEEE-USA $1.37M

  7. NFM Impact to CPMT • Unknown, but Ugly!, at least in the near term • If nothing else changed from 1999 budgets, perhaps $300K in 2000 (=10%, + “share”) • TAB loses $1M allotment and gets $17.97M bill • Hopefully, lots will change • Actual bottom lines are usually better than budgets • Cost reduction and sunsetting efforts should help • 3% improvement by everyone; zero-based budgets • Visibility and oversight of finances

  8. What’s Next for NFM • IEEE Finance Committee Meeting 10/8/99 • TAB Discussions of how to share the pain • TAB Meetings in November • IEEE BoD Meetings in November • Decide regarding NFM recommendations (and regarding “Phantom Reserves”) • Initiate implementation • “The Devil is in the Details!”

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