SIDN's COMMENTS ON ICANN'S FY2012 OPERATIONAL PLAN FRAMEWORK

[Roelof Meijer <Roelof.Meijer@xxxxxxx>]

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 
successful ccTLDs.
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.

General

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.

Core Operations
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

Projects
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 gTLDs

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 
contingency fund.

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.


Best regards,


Roelof A. Meijer
CEO

SIDN | Utrechtseweg 310 | 6812 AR | P.O.Box 5022 | 6802 EA | ARNHEM | The 
Netherlands
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/>