Presentation on theme: "VP Publications Product Review Publications Committee 7 Jan 2010."— Presentation transcript:
VP Publications Product Review Publications Committee 7 Jan 2010
Current Environment Challenging budget development environment in FY10 and FY11 Easy revenue opportunities hard to find Expenses pressures rising due to: –AMS absorbed into FY10 budget –Rising medical and pension expenses –Strategic Plan initiatives planned to be absorbed in FY11 FY10 Operations budget balanced but relies on strict expense management and aggressive revenue targets FY11 Operations budget must address both revenue and expenses to balance
Our Challenge How do we absorb $1M in Operations in FY11 so that we can eliminate reliance on investment portfolio for ongoing operational expenses? What is the right mix of products and services to keep our business financials in balance and our members happy? Where will sustainable growth come? Expense management is not a growth strategy. Relying on vended and one-time events is a risky operational plan.
Product Review Process VP Product Reviews (June and July 2009): Drilled into VP Net Margin, showing financials for individual products on a total cost basis. Revenue sources/direct expenses category breakdowns were provided. Institute Product Review (August 2009): Review products and their relationship to each other within the context of the whole Institute to provide VPs with a total financial picture. VP Presentations (September-November 2009): Outline major program areas for each VP and their priorities
FY09 Revenue Breakdown by VP In FY09, Operations generated $21.7M in revenue.
FY09 Expense Breakdown by VP In FY09, operations required $23.5M in expenses, including $2.3M of Association Management System (AMS) implementation expenses.
AIAA Financial Terminology Direct Expenses Expenses specifically associated with a particular project, such as staff travel, printing, paper, promotion, food and beverage, audio visual (excludes labor) Direct Operating Margin Revenue less direct expenses Labor Manpower charged to a project based on time accounting system. Includes salaries, payroll taxes and fringe benefits Indirect Expenses Expenses necessary for general operations which cannot be readily assigned to a particular activity and are therefore allocated proportionately throughout programs –IT & AMS (Association Management System) –Office Services –General and Administrative (Executive, H/R, Accounting, Communications) –Support expenses such as Customer Service, Marketing, Business Development Net Margin Revenue less direct expenses, labor, and indirect expenses 7
Institute Operations Performance by VP VP Publications net margin for FY09 was $222K.