SIDN's COMMENTS ON ICANN'S FY2012 OPERATIONAL PLAN FRAMEWORK
- To: "op-budget-fy2012@xxxxxxxxx" <op-budget-fy2012@xxxxxxxxx>
- Subject: SIDN's COMMENTS ON ICANN'S FY2012 OPERATIONAL PLAN FRAMEWORK
- From: Roelof Meijer <Roelof.Meijer@xxxxxxx>
- Date: Sun, 3 Apr 2011 20:16:37 +0000
SIDN's COMMENTS ON ICANN'S FY2012 OPERATIONAL PLAN FRAMEWORK
SIDN is the registry for the .nl country-code top level domain, which, with
close to 4.5 million registered domains, is one of the world's largest and most
SIDN welcomes the opportunity to provide comments on ICANN's FY12 Operational
Plan and Budget Framework.
As a ccNSO member, we would like to confirm that we fully support the comments
submitted by the ccNSO's Strategic and Operational Planning Working Group. You
will probably note that this submission is derived from the SOP WG's comments.
We are concerned about the lack of clarity of the strategic and budget process
this year. As a not for profit organization managing resources for the benefit
of the public, ICANN should be exemplary in the way it plans, operates and
spends its budget. Both the strategic planning process and FY12 budget
Framework do not meet our expectations in many aspects.
The level of detail between the text of the Framework and the budget seems
unbalanced; at the session with ICANN financial staff during the ccNSO meeting
in San Francisco, staff present indicated there is more information
(explanation) behind the financial figures, than is provided in the plan.
Without that information, it is quite difficult for the community to provide
meaningful, constructive feed-back. We urge ICANN to provide the information
that is used to compile -and thus explain- the budget.
For each of the listed projects/operations/logistics, we recommend the
inclusion of measurable goals and targets in the Operating Plan it self,
bearing in mind they can be either or both be qualitative and quantitative.
IANA function: it is not clear what kinds of actions are foreseen to improve
efficiency and improve accountability to the community.
IDN Fast Track: we believe that the efforts for enhancing IDNs and therefore,
supporting multilingualism on the Internet should not be limited to the IDN
Fast Track. The FY 2011 Operating Framework heading "IDN implementation"
provided a much better and coherent overview of the activities related to IDN's.
Security, Stability and Resiliency: We recommend the inclusion of enhanced
partnerships with other organization as well as a careful and measurable review
of ICANN role and activities in this area.
ICANN Public Meetings: We are concerned about the spiraling meetings budget,
for which no explanation is provided. An in-depth review of the meetings budget
is highly recommended to contain expenses
Lack of detail on Projects: In the FY 2012 Framework nine projects are proposed
without any further explanation about the goals and milestones of these
projects. It is also unclear how the total of the anticipated expenses of USD
17,900,000 is allocated to the projects. Without an understanding of the goals,
potential value of the proposed projects and allocated budget for each project,
an informed comment is not possible.
New gTLD Contingency: According to the FY 2012 Framework the estimated revenue
for the new gTLD process is USD 92,5000,000 (based on 500 applications). The
"New gTLD Contingency" seems over-budgeted. At USD 30,000,000 it is
approximately 85 % of the budgeted operating expenses for the FY 2012 new gTLD
round (USD 35,970,000). The Framework contains no explanation of the foreseen
risks to be mitigated i.e. which costs are supposed to be covered out of this
Non-budgeted Revenues: Part of the new gTLD program is an objection process
whereby each party filing an objection has to pay a fee for its objection. The
expected revenue, if any, resulting from the objection process is not included
in the FY 2012 Framework. According to the new gTLD process strings will be
auctioned when multiple eligible applications are filed for the same string. No
revenues are budgeted for this.
Transparency multiyear cost allocations: Part of the expected new gTLD revenues
in FY 2012 (totaling USD 92.5 Mio) will be cost recovery of recent years as
well as prepayments for anticipated costs incurred over the next year(s). In
our view, a clear calculation and allocation of those costs should be included
in the FY 2012 budget
Budget& Finance general aspects
Operational loss budgeted: The budget (without gTLD launch) shows a deficit of
USD 2.9 Mio, representing 4.2% of revenues. A clear case of over-spending, as
ICANN can and should operate at a positive net result.
Diverging increase in revenue and expenses: The 2012 revenues show a +5%
increase as compared to FY 2011, while the operational costs show a 15%
increase (as compared to FY 2011 budget and forecast), a clear indication that
costs are spiraling out of control.
Deficit and Strategic Fund objective: According to ICANN's Strategic Plan
ICANN's Reserve Fund should be set at a minimum of one year of operating
expenses. Without the launch of the new gTLDs process, operating expenses for
FY 2012 are budgeted at USD 69.8 Mio. The current balance of the Reserve Fund
is USD 50.2 Mio. In order to achieve its minimal set goal over FY 2012, USD
19.6 Mio should be added to the Fund. However, if the proposed budget for FY
2012 would be adopted, the Fund will not reach its targeted volume, but -on the
contrary - will slowly but surely diverge from the set strategic goal.
Average Employee costs: Personnel costs for FY 2012 are budgeted at USD 28.5
Mio. Details on the number of FTE's for FY 2012 are not provided. We note that
for FY 2011 personnel costs are forecasted at USD 25.9 Mio for 135 FTE's which
would amount to an inexplicably high average of USD 192K per FTE. We suggest
that it would be useful, if it has not been done already, to benchmark the
remunerations for each job/function. In addition to (or better: before the
execution of) a benchmark on remunerations, it also seems relevant to evaluate
the relation between job/function description and the actual tasks performed.
We trust that ICANN's Board and CEO understand the necessity of actions needed
in this area, especially in the context of the discussion of the financial
contributions of ccTLDs (with ICANN) and the associated ICANN expenses
attributable to ccTLDs.
Professional Services costs: According to the FY 2012 Framework, ICANN expects
to be spending USD 17.2 Mio (an increase of 15% over the FY 2011 budget) on
professional services. Without any further explanation, this amount is
considered to be very high. Secondly, given the number of experts involved
compared to FTE's, it is generally a real challenge to manage the activities
and costs associated. If the new gTLD will be launched during FY 2012, the FY
2012 Framework suggests this amount will increase to USD 50.2 Mio,
approximately 50% of the total budget. ICANN is not structured to cope with the
management challenges involved, and as a result the services provided will
either not meet the expectations and/or can costs not be contained.
Roelof A. Meijer
SIDN | Utrechtseweg 310 | 6812 AR | P.O.Box 5022 | 6802 EA | ARNHEM | The
T +31 26 352 55 00 | M +31 6 11 39 57 75| F +31 26 352 55 05
roelof.meijer@xxxxxxx | www.sidn.nl<http://www.sidn.nl/>