Subject: [vmeet] financial question

From: Michael Richardson <[email-masked]>
Date: Thu, 19 Jan 2012 15:55:07 -0500

>   o  If the tools make regular IETF meetings and interim meetings much
>      more effective, the IETF might be able to reduce the number of
>      regular meetings each year from three to two.  This would
>      significantly reduce the impact of travel on regular IETF
>      participants and make meeting planning much easier, but would
>      significantly reduce the amount of income for the IETF and also
>      reduce the amount of side-meeting value per year for participants.

Paul, it would be useful if the document could indicate what portion of
the IETF meeting revenue goes to support non-meeting activities.

Specifically, how much of the meeting cost is variable (more attendees
means more costs), how much is fixed (so, 2 meetings a year might reduce
that cost).  

We have no historically put these kinds of things into IDs, but I think
that maybe having it here would help the discussion move forward with
facts.  I know that much of this information is likely in an ISOC report
to the IAB somewhere, but I would need spend a few hours to even figure
out where to look. (of course, someone will post that URL here, which
will make be feel stupid, but at least I'm reading the ID...)

-- 
]       He who is tired of Weird Al is tired of life!           |  firewalls  [
]   Michael Richardson, Sandelman Software Works, Ottawa, ON    |net architect[
] [email-masked] http://www.sandelman.ottawa.on.ca/ |device driver[
   Kyoto Plus: watch the video <http://www.youtube.com/watch?v=kzx1ycLXQSE>
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---

From: Russ Housley <[email-masked]>
Date: Thu, 19 Jan 2012 16:17:35 -0500

> will make be feel stupid, but at least I'm reading the ID...)

I do not see this as the kind of information that we want in the functional description that Paul was tasked to write.

The IAOC reports on meeting revenue and expenses each plenary.  The numbers are in the proceedings.

Russ

---

From: Dave CROCKER <[email-masked]>
Date: Thu, 19 Jan 2012 13:25:34 -0800

> means more costs), how much is fixed (so, 2 meetings a year might reduce

      <http://iaoc.ietf.org/budget.html>

Let me know what information you believe is missing from this set.

(I am on the IAOC and am supposed to pay attention to such things...)

d/

-- 

   Dave Crocker
   Brandenburg InternetWorking
   bbiw.net

---

From: Ray Pelletier <[email-masked]>
Date: Thu, 19 Jan 2012 16:50:25 -0500

> The IAOC reports on meeting revenue and expenses each plenary.  The numbers are in the proceedings.

Also see:  http://iaoc.ietf.org/mfstatement_detail.html

Ray

> 
> Russ
> _______________________________________________
> NOTE WELL: This list operates according to
> http://mipassoc.org/dkim/ietf-list-rules.html.
> https://www.ietf.org/mailman/listinfo/vmeet

---

From: Paul Hoffman <[email-masked]>
Date: Thu, 19 Jan 2012 14:05:57 -0800

> the IETF meeting revenue goes to support non-meeting activities.

Three IAOC members have weighed in on why I don't want to do that in the draft. So, now I need to ask: why did you think it was useful? After you look at the numbers pointed to by the IAOC folks, how would that affect what you would or would not want to see in this document?

--Paul Hoffman

---

From: Marshall Eubanks <[email-masked]>
Date: Thu, 19 Jan 2012 22:10:51 -0500

>> it would be useful if the document could indicate what portion of

I fully agree with what Russ, Dave and Ray have said, the numbers are
out there, and shouldn't be in Paul's document. Here, however, is a
VERY high level answer to your question, based on the #s for 2011
(available here
http://iaoc.ietf.org/documents/IETF-Budget-2011-2013-Final.pdf ).

Wearing no hats and claiming no authority, except for a certain
familiarity with the budget, this is my take on things. I am NOT
trying to be perfect here, just to unpack the numbers in such a way
that they can be dealt with at a high level.

The IETF's revenues rests on three legs, registration fees,
sponsorship and the ISOC contribution. (ISOC's contribution is of
course in also a sponsorship, but it is different in many ways and it
helps to keep it separate.)

In the 2011 budget, these were $2.132 million, $ 1.105 million and $
1.686 million,  respectively. (I am ignoring "tools development, as
that is a capital improvement expense, and I am lumping hotel
commissions into sponsorship.)

The biggest expenses by far are meeting expenses and RFC publishing.

RFC services were $0.887 million, meeting expenses (treating the
Secretariat as a meeting expense) were $ 3.380 million and everything
else was $ 0.736 million. The "everything else" is mostly overhead,
such as IESG expenses, and thus really could be mostly broken into
indirect meetings costs and indirect RFC costs. For those following
along, ISOC G&A are costs passed through to, and paid by, ISOC; I am
ignoring this small detail.

So, let's divide the everything else into halves, and put half into
RFC expenses & half into meeting expenses . (That is VERY rough, but
there are some Secretariat expenses that are more RFC than meeting
related, so I think that is a better approximation than pro-rating
it.) That gives, VERY roughly,

$ 3.7 million for meetings
$ 1.3 million for RFC publishing.

Now, compare with revenue (after rounding)

$ 2.1 million registration
$ 1.1 million sponsorship
$ 1.7 million ISOC contribution.

If you cut out one meeting per year, you will cut revenue (assuming no
compensations, such as changes in registration fees) by

~ $ 0.7 million from registration and  $ 0.4 million from sponsorship,
or $ 1.1 million in all.

You will reduce expenses by (VERY roughly) by $ 1.2 million.

At this rough level, dropping a meeting seems like a wash. However,
this estimate assumes  a 1/3 reduction in the  annual Secretariat
cost. This is probably not realistic; if there was _no_ reduction in
the cost of the Secretariat, there would be a $ 0.6 million shortfall.
My prediction is that a more realistic dive into these numbers, with
more realistic models for cost reductions and expense changes across
the board, would lead to something like half that, i.e.,  a $ 0.3
million / year shortfall. This could be made up by, for example,
raising meeting fees in the two remaining meetings by ~ $ 150 each,
although that should be regarded as a very rough estimate and it might
be too optimistic.

I hope that this analysis is useful. Again, this is just my take on
things, and I am solely responsible for any errors. If you want to
poke and prod the numbers, I would be glad to discuss this further, on
this list (if the Chair approves), or off.

Regards
Marshall

---

From: Yoav Nir <[email-masked]>
Date: Fri, 20 Jan 2012 13:41:26 +0200

> this list (if the Chair approves), or off.

It's useful for some discussions that keep popping up on the IETF mailing list, but not so much for Paul's work.

There is a financial question that I think is relevant, though. What is the budget for this? But requirements that may seem reasonable if your budget is $100,000 per meeting would not if your budget is $10,000 per meeting.

---

From: Marshall Eubanks <[email-masked]>
Date: Fri, 20 Jan 2012 07:05:16 -0500

>From an IAOC perspective, I think that one desired goal for this
exercise is to determine what "this" is, so that it can be properly
budgeted.  I will try and get you a number on what is presently spent
on remote meeting services, but it is going to be incomplete because
there is a lot of in-kind sponsorship and volunteer work supporting
remote meeting services, not all of which is even visible to the IAOC.

Regards
Marshall

---

From: Paul Hoffman <[email-masked]>
Date: Fri, 20 Jan 2012 07:15:03 -0800

> There is a financial question that I think is relevant, though. What is the budget for this? But requirements that may seem reasonable if your budget is $100,000 per meeting would not if your budge…

I'm not sure that is correct. The purpose of this document is to set out requirements for much more effective remote participation. If some of those cannot be met because they are too expensive, they are still requirements for much more effective remote participation, but we will only get somewhat more effective remote participation instead.

--Paul Hoffman

---

From: Dave CROCKER <[email-masked]>
Date: Fri, 20 Jan 2012 07:58:45 -0800

> There is a financial question that I think is relevant, though. What is the budget for this? But requirements that may seem reasonable if your budget is $100,000 per meeting would not if your budge…

There are perhaps four different axes that determine what we can deploy:

    1.  State of the industry in terms of products
        What range of capabilities is available or will be shortly?

    2.  Functional desires of our community
        What specific services match our needs, desires and style?

    3.  Operational constraints
        What are the venue and staffing capabilities?

    4.  Funding
        How much can we spend?

The current project formally targets #2.

Functional choices are, of course, entirely constrained by what products are 
available, unless we want to start doing product research and development, which 
is a risky and expensive path.

Venue constraints include the mundane, such as plugging the remote participation 
system into the room public address system.  Clearly we should not target 
functions that are restricted to products that cannot be used in the places we go...

Whatever the current funding is for remote participation, it seems likely that 
it will change, with changes in the functionality we decide to provide.

In an exercise like the current project, there is a tension between paying too 
much attention to mundane constraints and too little attention.  Too little 
produces a specification that can't be realized.  Too much distracts from 
producing /any/ specification or produces one that is far too limited.

I suggest that the group has not yet worked far enough on specifying the desired 
functionality to need to need to focus on either operations or funding.

d/
-- 

   Dave Crocker

---

From: Michael Richardson <[email-masked]>
Date: Fri, 20 Jan 2012 12:14:19 -0500

>>>>> "Ray" == Ray Pelletier <[email-masked]> writes:

    Ray> Also see: http://iaoc.ietf.org/mfstatement_detail.html

Thank you, this is the page I wanted.

Quebec generated $316,608 towards operations, roughly 37% of the
proceeds. Prague $502K, 42%.

Looking at the 2010 and 2009 statements, the meetings generated $1M
towards IETF operations.  There is significant variation in different
meetings as to how much profit there is.

Looking at:
        http://iaoc.ietf.org/documents/December-IETF-Statement.pdf
(no year in the document filename, but it's 2010), at the year to date
numbers, I see that while meetings generated $2M in revenue, and that we
had another approx. $1M in revenue, as far as I can see, $410 was in the
form of NOC sponsorship, so this is a meeting related cost/revenue.

The meetings costed $1.7M in 2010, plus secretariat costed $1.5M, some
of which was meeting costs. (I assume the cost of having people travel
to the meetings, do stuff there, and arrange the meetings).

So my question is again, what is the real variable costs of each
meeting?  Consider that the ISOC seemed to have thrown in $1.5M towards
operations, which appears *to me* to exceed the non-meeting related
costs associated with running the IETF.

In the end, I'm questioning whether the meeting fees actually subsidize
IETF non-meeting operating costs.  What I see in the financial summary
of the meetings it that the meetings have a profit margin which is used
in operations, such of which are themselves number-of-meeting dependant
variable costs.  (but may be independant of number of attendees)

---

From: Peter Saint-Andre <[email-masked]>
Date: Fri, 20 Jan 2012 10:15:51 -0700

Is this thread at all related to vmeet? Is there a better venue for such
discussions?

/psa

---

From: Michael Richardson <[email-masked]>
Date: Fri, 20 Jan 2012 12:23:19 -0500

>>>>> "Paul" == Paul Hoffman <[email-masked]> writes:
    >> Paul, it would be useful if the document could indicate what
    >> portion of the IETF meeting revenue goes to support non-meeting
    >> activities.

    Paul> Three IAOC members have weighed in on why I don't want to do
    Paul> that in the draft. So, now I need to ask: why did you think it
    Paul> was useful? After you look at the numbers pointed to by the
    Paul> IAOC folks, how would that affect what you would or would not
    Paul> want to see in this document?

It affects the comment in the document as to the scale of the subsidy
From meeting fees into non-meeting related operational expenses.  

If in fact the meetings provide an operational subsidy to overal
operations, then it would be good to know the scale.   Based upon a
naive examination of the financial statements, in 2010, the meetings
generated $2.5M in direct revenues, while costing $1.7M to put on.

That's a profit margin of $0.8M.  Total naive-non-meeting expenses were 
$4.6M-$1.7M = $2.9M.  So naively, meetings contributed 27% towards the
non-meeting operations of the IETF.

Then, looking deeper, one sees that the secretariat has a cost of $1.5M,
some portion of this is costs related to how many meetings we have a year. 
There is no doubt a cliff, wherein if we had no meetings at all, there
is money we just won't have to spend at all, and I suspect that the
secretariat could be more efficient if we had MORE meetings in a year.

But, if the marginal cost of a meeting is above $260K, then it would
appear to me that meetings actually break-even, and it doesn't matter
how many meetings we have.  If the incremental cost was significantly
higher than $260K, then there would be an economic argument to having
fewer meetings.

---

From: Wes Beebee <[email-masked]>
Date: Fri, 20 Jan 2012 12:25:36 -0500

Peter -

I thought that the point was to determine whether the IETF is financially
incentivized to facilitate remote participation or whether the bar for
enhancing remote participation was something other than technological or
social.

- Wes

---

From: Michael Richardson <[email-masked]>
Date: Fri, 20 Jan 2012 12:27:55 -0500

>>>>> "Marshall" == Marshall Eubanks <[email-masked]> writes:
    Marshall> If you cut out one meeting per year, you will cut revenue
...
    Marshall> ... $ 1.1 million in all.

    Marshall> You will reduce expenses by (VERY roughly) by $ 1.2
    Marshall> million.

Thank you for this analysis.
It is precisely this result that I think should be in a document
(along with the statement that the secretariat has some variable meeting
related expenses) 

The reason is belongs there is so that people can understand
the statement about the subsidy.  My opinion is that actually, there isn't
any subsidy of IETF operations from meeting fees.  It's just important
to remember that IETF operations includes running the meetings!

---

From: Peter Saint-Andre <[email-masked]>
Date: Fri, 20 Jan 2012 10:37:17 -0700

Ah, I thought it was more about technology. Carry on. :)

---

From: Dave CROCKER <[email-masked]>
Date: Fri, 20 Jan 2012 09:40:49 -0800

> enhancing remote participation was something other than technological or

Except that that isn't in scope for the current project.

d/

-- 

   Dave Crocker

---

From: Paul Hoffman <[email-masked]>
Date: Fri, 20 Jan 2012 10:01:50 -0800

> Except that that isn't in scope for the current project.

+1. The motivation is that knowing the requirements for much better remote participation will greatly help then determining what we want to do about remote participation. Different people will have different incentives for doing that.

--Paul Hoffman

---

From: Michael Richardson <[email-masked]>
Date: Fri, 20 Jan 2012 13:04:41 -0500

>>>>> "Wes" == Wes Beebee <[email-masked]> writes:
    Wes> I thought that the point was to determine whether the IETF is
    Wes> financially incentivized to facilitate remote participation or
    Wes> whether the bar for enhancing remote participation was
    Wes> something other than technological or social.

Exactly.
I didn't put:

>      SIGNIFICANTLY REDUCE THE AMOUNT OF INCOME for the IETF and also

into the document.  I started asking the question about "SIGNIFICANTLY".
I don't have a problem paying a moderate fee for remote participation.

If such a fee were to offset this "reduction", then the push towards RPS
might be revenue neutral, or even positive, and that would help remove
some of the hurdles.

---

From: Wes Beebee <[email-masked]>
Date: Fri, 20 Jan 2012 13:22:09 -0500

> +1. The motivation is that knowing the requirements for much better remote
> participation will greatly help then determining what we want to do about
> remote participation. Different people will have different incentives for
> doing that.
> 

My experience (gained from working on IPv6 for many years) is that you can
write technology requirement documents all day long and unless the right
parties are financial incentivized to do something about it - nothing will
happen for decades...

On the other hand, if $$$ appears - then all sorts of things are possible in
a shorter time frame than you might expect.  That's why the $$$ discussion
often precedes the technology discussion on "real" projects.

- Wes

---

From: Paul Hoffman <[email-masked]>
Date: Fri, 20 Jan 2012 10:23:14 -0800

> into the document.  I started asking the question about "SIGNIFICANTLY".

Ah, I see the issue (and I hate to admit that your conversion to all caps helped). For the -02, I will change this to "but could significantly change the finances for the IETF...". We don't know which direction that would be without knowing how/if we would change the fee structure and the cost structure for the IETF Secretariat.

> I don't have a problem paying a moderate fee for remote participation.

Good, but irrelevant for this document. (For the record, I say "good" because Michael is active in the WG that I co-chair and would like to see him remain so even though he doesn't come to many regular meetings.)

> might be revenue neutral, or even positive, and that would help remove

There are no hurdles here: there is a listing of requirements. Identification of hurdles should come after this work is finished and during evaluation of proposed systems that meet the requirements.

--Paul Hoffman

---

From: Dave CROCKER <[email-masked]>
Date: Fri, 20 Jan 2012 10:23:13 -0800

Michael,

> might be revenue neutral, or even positive, and that would help remove

Hmmm.  Since Paul concurs with my assessment that the current thread on IETF 
financials is out of scope and since you are continuing the topic, I think I'm 
going to put on my vmeet list administrator hat right now.

<admin formal>

Please terminate this topic.

There might be some legitimate cost-related discussion that is relevant to the 
current project, at some point, but this isn't it and this isn't the time.

</admin>

d/
-- 

   Dave Crocker