IEEE State of Affairs
As the new year dawns, Ken Dawson, the NPS Newsletter Editor (NPS is my society) reminds me that I have been just a tad worse than Peter Staecker, our past Div IV Director, was in communicating with you. Each of us has our strengths and weaknesses, and I guess we now know one of the latter. So, although a bit tardy, let me tell you a little about myself and about what is going on in IEEE.
I come from the Nuclear and Plasma Sciences Society. I am a Fellow of the IEEE for my work in radiation effects on electronics and materials. I retired in 2001 after 35 years with Raytheon Company and now have a small consulting practice that revolves around ensuring success through a team approach for time constrained, large, complex, technical projects. I was NPS President in 1989-1990, and have had a variety of TAB jobs and Chairmanships since then. For 2000-2002 I served as TAB Treasurer. Peter Staecker preceded me as Division IV Director and succeeded me as TAB Treasurer.
Where we are today: Many of the IEEE Directors have more than one job in IEEE. I remain on the TAB FinCom as past Treasurer and I am the Financial Chair of NPS. I also serve on several committees by appointment of our IEEE President, Art Winston. Over the last several years I have been intimately involved in changing the way we work to ensure that we continue to enjoy a fiscally sound IEEE, and one with less of some of the burdening expenses many of you as volunteers have seen in the recent past. I think our restructuring of the past few years has resulted in an IEEE that is today working to sound financial policies. Our budgeting each year is now done with the requirement that we not have deficit budgeting, and investment returns are excluded from consideration in achieving this budget goal. So as happened in 2003, an upswing in the investment market has given us a substantial increase in our reserves. Our reserves are important to us. Certainly they protect us against drops in our investment market, as happened over the last few years. Perhaps more importantly they permit us to borrow money, for both normal business cash flow and long term projects,, at very low rates. Our good fiscal performance has been aided by excellent management of our spending in all of IEEE, producing annual end-of-the-year actuals/budgets for many years for income and expense substantially in the black, in spite of the advertising market being a bit off, our conferences not quite earning what we expected because of the marketplace and higher than expected decreases in our paper publications products income.
On the good side our electronic product, IEL (IEEE Electronic Library) is booming and growing much faster than any loses due to libraries, companies and universities shifting away from paper product. Not only is it more space-friendly, but also the search mechanisms built into the product make it much more functional. Now one can, from oneís own PC/Mac, access any product to which you, your company/university has subscribed. No more walking to the library or shuffling through the shelves.
So where we are is that we are members of the largest professional society in the world. We are a worldwide society with 40% of our members from outside of the United States. We provide over 350 technical conferences each year; successful technical conferences open to all, member or not. Our more than 200 technical publications are highly cited in their fields, and are sought by all. We have a fiscal policy that is now conservative in all regards, and will remain so into the future. We are successful and will continue to be so because of our current business policies.
IEEE as a professional society: IEEE membership is a valued resource to all of our members. Those who read these newsletter offerings are part of the only 60% of IEEE members who belong to societies. That means that 40% of all IEEE members donít belong to societies! Why are they too IEEE members? It is because of the professional activities IEEE offers. Please note that I said professional society, not scientific society. There are scientific societies that offer only involvement in conferences and publications, but a professional society is much more. IEEE has many different kinds of Regional activities, Educational Activities, Award Activities, Standards activities, and the many other things that IEEE does because our members value them. Many of these activities are without sources of income, yet collectively "we" believe they need to be supported. IEEE, the largest professional organization in the world, is so because of the inclusion of such diversity of interests. So 40% of our membership participates in ways that don't directly include societies! IEEE is the whole and must be supported by the parts of the whole that earn money. Like any business or non-profit organization.
So what are the financial issues we have been hearing about over the last few years? Within IEEE there are 5 sources of income (in good years there are 6 as our investments provide a return but I wonít consider that here as these returns are not part of the budgeting process):
Publications income (over 95% are society pubs)
Conference income (perhaps 97% are society sponsored conferences)
IEEE Dues are pretty well fixed by the marketplace. We are now in a process of raising them annually to keep up with inflation, but even if all 350,000 members paid full dues thatís only 20% of our over $200M budget. Most societies, bless our little hearts, don't even break even on dues. As TAB Treasurer I had a study done to see what the incremental costs of membership were. Almost no society was break-even on dues. We're all changing that now, and next year a good number of societies will break even on dues. Thankfully, this only amounts to a small loss. Our printed society member subscriptions lose a lot more. These cost $60/sub on-average to deliver, and we're offering them at an average of $15. Multiply by the number of pubs, times the number of societies, times the number of subscribers. We are generous to our members, but at quite a cost to our budget.
The Standards Association has been earning 3.5M roughly each year, a slowly climbing number, but still small compared to the overall IEEE budget.
That means that society publications sales and conference income provides more than 75% of IEEE income.
So what does this mean to us? IEEE has begun a new era in which we are running a zero deficit (or better) budget each year, without considering investment returns. This is a change of paradigm from when annual double-digit investment returns made us all feel like Superman with enough money for every conceivable idea to be supported. On one end of the budgeting equation, we have been decreasing the costs of operation. On the expense side, over the last few years perhaps $20M of infrastructure costs have been eliminated, and we have identified future savings of millions more that are in process. Each of the entities, like RAB, TAB, EAB, etc. have had their budgets increasingly scrutinized and cut. On the up side, we are focusing on increasing all of our income sources. Standards Association has shown a steady increase in income due to improving business practices and price increases. IEEE dues are on a steadily increasing schedule. Pub prices, non-member print and electronic pricing have been increasing at a rate that marketing believes is maximized while still under the for-profit pricing schedule. All of the societies are decreasing losses associated with member dues and member pubs by raising prices, unbundling subs from dues and offering electronic-only member subscriptions.
Last letís consider our conferences. Our societies price our conference registration fees based on basically past performance and how much we need to break even. Most of us also add an x% return-to-the-society as a requirement to let us build our reserves. Perhaps there are also a few other incremental factors like the direction of the late-Dec. 1890 Nebraska snowstorm., but we basically price our conferences based on the expenses we have to recover. I donít think that companies can survive when they price according to what they need to stay in the black rather than to the marketplace. Our IEEE Marketing department has been trying to determine how our conference pricing compares to other similar conferences. People involved in conference planning have already begun getting this information. We hope you will pay heed to the differences and help us close the pricing gap.
We collectively have a professional society to run (IEEE). We do a lot of beneficial things for our members and for society. To do these things we need to earn money, not only enough to equal annual expenses, but enough to build up a reserve so we can weather the contingencies of life, like the market of the last 3 years. Conferences are one of our big two businesses (along with pubs). It has been the last to be addressed because of the number of people involved, ergo the number of opinions involved. We need to increase the income from conferences to continue our good work for all.
Harold L. Flescher Go Top
Division IV Director