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INTERNET SOCIETY BOARD OF TRUSTEES PRESIDENT’S REPORT

INTERNET SOCIETY BOARD OF TRUSTEES PRESIDENT’S REPORT. November 8- 9, 2003 Minneapolis, MN. Agenda. 2003 Review 2001- 2003 Board Direction 2003 Major Initiatives Planning Process & Program Review 2003 Budget and End of Year Review 2003 Key Operating Goals Review INET’04 Review

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INTERNET SOCIETY BOARD OF TRUSTEES PRESIDENT’S REPORT

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  1. INTERNET SOCIETY BOARD OF TRUSTEESPRESIDENT’S REPORT November 8- 9, 2003 Minneapolis, MN

  2. Agenda • 2003 Review • 2001- 2003 Board Direction • 2003 Major Initiatives • Planning Process & Program Review • 2003 Budget and End of Year Review • 2003 Key Operating Goals Review • INET’04 Review • 2004 Financial Preview BoT Pres. Rpt Nov03.ppt

  3. Board Direction - 2001 - 2003 On Plan Plans focused on driving progress in 4 key areas: • Financials - - Good, steady progress & expected to continue • Stabilize short-term • Strengthen long-term • Strengthen ISOC governance model - Progressing well, now in 3rd and final stage. • Significantly increase activities in: Standards, Public Policy, Education & Publications - 1st phase well underway, and long-term program plans being developed • Clarify & strengthen value proposition for ISOC, for Organization Members, IM’s and Chapters - Significant advances in IM and Chapters, (IM) Member Proposal developed and will significantly strengthen Value Proposition for all members BoT Pres. Rpt Nov03.ppt

  4. 2003 ReviewMajor Initiatives - I Q1 & Q2 2003: • Launched PIR, significant support during start-up • Completed negotiations -Verisign $5M Endowment • Operating processes agreed - ISOC & PIR • .org Program funds begin flowing - $300K in April • European Chapter Coordination Council MOU • INET’04 successfully negotiated • AfNoG workshop held • Resources: ISOC FTE’s = 6.5, plus 5 volunteer VP’s !! Red = not foreseen in 2003 budget and/or staff activities BoT Pres. Rpt Nov03.ppt

  5. 2003 ReviewMajor Initiatives - II Q3 & Q4 2003: • New Platinum members - Sida (Educ), Afilias (Pub Pol) • More .org Program Funds - $800K in August • WALC (Latin American NTW) • SeINIT - EU Security Initiative • Workshop Portal • WSIS Support (significantly increased support) • PIR Board elections • (IM) Membership Proposal • IETF ADVCOMM • Note: ISOC FTE’s = 8.5, plus 5 volunteer VP’s (today = 2) Red= not foreseen in 2003 budget and/or staff activities BoT Pres. Rpt Nov03.ppt

  6. 2003 ReviewPlanning Process & Program Review

  7. 2003 Program Planning ProcessPhased Approach • May - July: 1st phase ISOC’s Planning Process • Phase I: Q3/Q4 ‘03 - Programs =Bid-defined and infrastructure building (largely based on existing plans) • Directional statements prepared by ExComm, ISOC staff, VP’s, etc. • Input and reviews with PIR Chair, PIR President and PIR Board to enable both orgs. to begin funding programs. • ISOC BoT Review - July 2003 • Phase II: 2004 & beyond = strategic planning process began June, on-going • Note: Funding expected from multiple sources: .org, existing Platinums and new Platinums: Sida, Afilias, etc. BoT Pres. Rpt Nov03.ppt

  8. 2003 Program Funding: A Recap • ISOC’s 2003 budget (dev’d prior to start of PIR operations) expected total available for programs of $422K. Net cont’n. from PIR (after dir. exp.) of $170K. • In April, PIR donated $200K to ISOC for Open (RFC) Standards activities and $100K for Education Program Dev’t. • Educ. Grant enabled ISOC to hire 2 prog. Mgrs (per budget) • In July PIR resolved to contribute an add’l.$800K to ISOC for program development, bringing total to $1.1M! • New Platinum members also aided program efforts: Sida, Afilias BoT Pres. Rpt Nov03.ppt

  9. Program Planning Process Key Programs - Q3/Q4’03 Italics = Phase II BoT Pres. Rpt Nov03.ppt

  10. Annualized Forecast - Sept. 032003 Program Fund Disposition - K$ .ORG & All ‘Program’ Funding - $1.7M .ORG Funds $1.1M $200K $420K $513K $620K $503K $603K BoT Pres. Rpt Nov03.ppt

  11. Recap: .ORG Division of Responsibilities • PIR: • manage registry, set registry policy, develop new products & services, registrar relations, marketing, communications, Advisory Council, etc. • ISOC: • program dev’t. & marketing outreach building on ISOC’s established knowledge, credibility and channels • Afilias: • back-end service provider Source: ISOC President’s Report: ISOC - PIR Joint Board meeting November 2002 BoT Pres. Rpt Nov03.ppt

  12. 2003 Key changes: Program Funding vs. Budget • In October PIR President and Chair indicated they expect an add’l $700K to be available in December ‘03 • Assuming PIR Board approval, ISOC will recognize this additional revenue in 2003 as a donation (due to now common understanding on roles). • Projected Program Funding in 2003: • Platinums: $ 0.5M • .org : $ 1.8M (from $422k in budget) • Note: 2003 = start-up year for PIR and additional .org funding VERY welcome but has made planning and operating to original budget more difficult BoT Pres. Rpt Nov03.ppt

  13. 2003 Key Changes Operating Model • With increased funding, comes increased deliverables and increased expectations. • With significant injection of funds, (many) programs and new resources (internal & external), all ISOC processes and systems under pressure to evolve (while delivering). • Volunteer model is, not at all unexpectedly, under some pressure - mainly affecting VP structure. • ISOC must move to a more business-like structure. Altogether transition is working well, but not w/o some start-up problems. • 2004 Budget = critical review of infra-structure reqmt’s. BoT Pres. Rpt Nov03.ppt

  14. Internet Society Board of Trustees2003Financial Review 8 November 2003 BoT Meeting/ Minneapolis, MN

  15. 2003 Year End Forecastfrom July ‘03 BoT • Revenues • Organizations: challenging target, today’s running rate = $0.8M vs.budget of $1.3M. Reminder - at a P&L level this means we need to bring in approx. $1.5M in new org. member revenues before year end, unless Platinum • Platinum revenue: expect to meet or exceed budget • Program revenues expected to offset any organizational member shortfall and will have significant added benefit of increasing ISOC’s visibility, thereby aiding future org. member recruitment efforts • Nov. ‘03 Update = Commentary above still valid today, and .org revenues continue to increase significantly BoT Pres. Rpt Nov03.ppt

  16. 2003 Year End Forecast (cont’d)from July ‘03 BoT • Expenses • Non .org Expenses are on track (in fact are under budget), but .org expenses will be higher given higher level of surplus avail. for programs - however they will also be net positive • Revenue recognition tied to expenses • ISOC’s PIR governance - related expenses to be recouped • Cost savings budget of $126K on track (and better than original target of $100K) • Nov. ‘03 Update:PIR’s contributions to be donations and recognized immediately given (now) common understanding of model. All else consistent w/ above. BoT Pres. Rpt Nov03.ppt

  17. 2003 Year End Forecast (cont’d)from July ‘03 BoT • Summary • Org. Revenues continues to be very aggressive given economic and world conditions, therefore actively positioning .org surplus/programs to better and more broadly position ISOC & PIR for the future. • Fully expect to meet budgeted surplus. • Working to further diversify our revenue stream: Seinit (thanks to Latif Ladid ), US Cybersecurity & EU security efforts, etc. • Nov ‘03 Update: Commentary above still valid today. BoT Pres. Rpt Nov03.ppt

  18. Going forwardfrom July ‘03 BoT • Board support/commitment • Suggest I contact each board member individually to see how they can support fundraising, how staff can help, etc. • Goal is additional $50K min. per Trustee. Success here would mean another $750,000 and would make an ENORMOUS difference in operations. • Continue relentless focus on Costs and Revenues • Identify and pursue new creative revenue streams and roles for ISOC consistent with our values & purposes • Success of .org initiative shows potential for such opportunities • Nov ‘03 Update: Fundraising efforts in Point 1 above seriously behind. All others still valid today. BoT Pres. Rpt Nov03.ppt

  19. 2003 Budget vs. Forecast K$ YTD YTD YTD EOY EOY EOY Budget Actuals Variance Bud F/C Variance REVENUES Plat Rev - 185 +185 250 635 +385 Org Rev 975 462 (513) 1,300 725 (575) PIR Prog/Gov/Grant 386 600 +214 422 1,400** +978 IM & Misc Rev 95 211 +116 100 215 +115 Total Rev 1,456 1,458 + 2 2,072 2,975 +903 EXPENSES Dir.exps.- Standards 657 618 +39 870 850 +20 Dir.exps.-E & T 143 332 (189) 164 456 (292) Dir.exps.- Pub Pol 124 148 (24) 165 326 (161) Dir.exps.- PIR 208 77 131 208 76 +132 G&A/Gov 368 373 ( 5) 467 497 (30) Total Exp 1,500 1,548 (48) 1,874 2,205 (331) Net Surplus(loss)(44) ( 90) (46) 198 770 572 *Strong likelihood this will increase to $1.8 bringing surplus to approx. $1.1M. BoT Pres. Rpt Nov03.ppt

  20. ISOC Total Revenues, Expenses and Net Asset Trends - Good Progress 2003 F/C Source: Mike Conn’s Treasurer Report BoT Pres. Rpt Nov03.ppt

  21. 2003 Budget by Pillar TOTAL PUBLIC POLICY STDS EDUC PIR Org.rev 1,190 165 195 - 1,550 Total Revs 1,290 255 247 280 2,072 Expenses-Dir 870 164 164 209 1,407 Expenses-G&A 288 54 56 69 467 Total Expenses 1,158 218 220 278 1,874 Budgeted Surplus132 37 27 2 198 EOY F/C Surplus 281 286 201 2 770** ** could be as high as $1.1M depending upon .org surplus and programs BoT Pres. Rpt Nov03.ppt

  22. 2003 YTD Budget vs. Sept. Actual - Revenue REVENUES: • ORG. Revenues = ($513K) • Platinum Rev. = +$185K * • PIR Prog/Gov/Grant = +$214K • NDSS’03 = +$36K • IM & Misc. rev. = +$80K • Total revenue impact = +$2K * Afilias upgraded to Platinum - Public Policy Sida became a Platinum Education member BoT Pres. Rpt Nov03.ppt

  23. 2003 YTD Budget vs. Sept. Actual - Expense • Direct EXPENSES= ($43K) : • E & T • Educ & Trng. programs, etc. =($170K) • Public Policy • IM/Chapter support = ($15K) • Publications = ($10K) increased effort to improve visibility. • Re-classification of salaries into projects = +133K • G&A = ($5K) • Legal=($15K) sublease documentation & CEO contract • BoT teleconferences=($10K) • Deprec.=+$20K inventory revealed obsolete asset Total Expense Impact = ($48K) BoT Pres. Rpt Nov03.ppt

  24. 2003 YTD Actuals By Pillar STDS EDUC PUBLIC POLICY PIR TOTAL Org. Revenues Total Revenues Expenses-Direct Expenses-G&A Total Expenses Actual Surplus(loss) YTD Variance 370 108 169 647 685 396 277 100 1,458 618 332 148 77 1,175 232 67 51 23 373 850 399 199 100 1,548 (166)(2) 78 - (90) (136) 45 47 (2)(46) BoT Pres. Rpt Nov03.ppt

  25. Note: Assumes $300K from PIR in December 2003 not $700K. BoT Pres. Rpt Nov03.ppt

  26. Barcelona INET/IGC’04 Update • April’03 ExComm expressed concern re; progress of INET’04 Board committee. CEO tasked to prepare proposal. • LOI successfully concluded with IGC in July 2003 • BoT Approved 7/03 - met all BoT conditions, incl. Financials • After slow start and w/ significant effort by ISOC staff, two Board members and VP Public Policy, INET/IGC’04 now back on track • Call for Papers to be issued week 2 Nov’03, automated web-based process • Relationship solid between IGC and ISOC • Program Committee Chair and Organizing Committee Chair appointed. • PC Chair: Artur Serra (key individual behind ISOC/IGC collaboration) • OC Chair: Rosa Delgado • More in tomorrow’s session BoT Pres. Rpt Nov03.ppt

  27. Key Operating Goals 2003 President’s Operational Goals • Cash reserves >= 2 mos. Op. Expenses - on track • Revenues and Surplus >= Budget - challenge in Org. revs. but overall surplus will be met • With VP’s, build effective Pub Pol Init. - on track • CEO executes effective review for PIR - on track • Effectively involve Trustees in fund-raising - needs moreinvolvement/depends on all of us • Plan/decision for INET 2004 by Sept. ‘03 - done & back on track • With VP’s, ISOC participation in min. of 2 regional conferences -WALC, AfNog, (almost Tunis) • Individual Members and Chapters - on track BoT Pres. Rpt Nov03.ppt

  28. Internet Society Board of Trustees2004Financial PREview 8 November 2003 BoT Meeting/ Minneapolis, MN

  29. 2004 FINANCIAL PREVIEW • Still too many unknowns to create budget: • .ORG Contributions could be $1.4M - $1.9M but won’t be confirmed by new PIR BoT until mid-December at the earliest • Individual Member Assumptions not yet built in • New opportunities to work with IETF on Publications and/or Knowledge extraction but model not yet known • Need to complete infrastructure and resource evaluations BoT Pres. Rpt Nov03.ppt

  30. 2004 Budget PREVIEW BoT Pres. Rpt Nov03.ppt

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