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RIPE NCC Expenditure Planning 1995

Dear contributors,

pelase find below the report on "RIPE NCC Expenditure Planning 1995".
It proposes amendments to the RIPE NCC expenditure budget for 1995.
TERENA agrees to these ammendments and has authorised the NCC to 
start implementing them, assuming the Contributors Committee agrees
at least to the increase in staff resources and the additional
expenditure for new local IRs.

A PostScript version follows the ASCII.

If you have any comments or questions, please do not hesitate to contact me.


Daniel Karrenberg
RIPE NCC Manager

                                  RIPE NCC Expenditure Planning 1995

                                                           June 1995

                   RIPE NCC Expenditure Planning 1995

                           Daniel Karrenberg
                                RIPE NCC


                This  memorandum proposes amendments to the RIPE NCC
                expenditure budget for 1995.  The companion document
                "RIPE  NCC  Revenue  in  1995"  provides information
                about the revenue situation.


                The growth rate of the European Internet seems to be
                increasing.   This  can  be  seen in a number of key
                figures like the RIPE DNS hostcount:

               |                                                   |
       1.3e+06++                                              A    |
               |                                             *     |
       1.2e+06++                                            *      |
               |                                           *       |
       1.1e+06++                                          *        |
               |                                         *         |
         1e+06++                                       *A          |
               |                                     **            |
        900000++                                   **              |
               |                                 *A                |
               |                              ***                  |
        800000++                           *A*                     |
               |                         **                        |
        700000++                       **                          |
               |                     *A                            |
        600000++                  ***                              |
               |               *A*                                 |
        500000++            ***                                    |
               |       ***A*                                       |
                     Q2/93 Q3/93 Q4/93 Q1/94 Q2/94 Q3/94 Q4/94 Q1/95

                ncc-exp.txt                                   Page 1
                                  RIPE NCC Expenditure Planning 1995

                                                           June 1995

                The current workload of the RIPE NCC is also greater
                than  expected  as  the  number  of local registries
                grows somewhat faster than predicted:

               |                                                   |
           180++                                              A    |
               |                                             *     |
               |                                            *      |
           160++                                           *       |
               |                                          *        |
               |                                         *         |
           140++                                       *A          |
               |                                    ***            |
               |                                 *A*               |
           120++                              ***                  |
               |                           *A*                     |
               |                         **                        |
               |                       **                          |
           100++                     *A                            |
               |                  ***                              |
               |               *A*                                 |
            80++            ***                                    |
               |         *A*                                       |
               |      ***                                          |
                     Q2/93 Q3/93 Q4/93 Q1/94 Q2/94 Q3/94 Q4/94 Q1/95

                Normally the sharp increase caused by the data point
                for Q1/95, would not be cause  for  revised  projec-
                tions  by  itself.   However the currently available
                data indicate that the growth rate has  persistently
                increased and other indicators such as the hostcount
                mentioned above follow the same trend.

                ncc-exp.txt                                   Page 2
                                  RIPE NCC Expenditure Planning 1995

                                                           June 1995

                Indicators for NCC workload such as  the  number  of
                incoming  e-mail  messages and faxes to the registry
                functions of the NCC look quite similar too:

               |                                                   |
               |                                              A    |
          3000++                                             *     |
               |                                           **      |
               |                                          *        |
          2500++                                         *         |
               |                                       *A          |
               |                                    ***            |
          2000++                                 *A*               |
               |                              ***                  |
               |                           *A*                     |
          1500++                        ***                        |
               |                     *A*                           |
               |                   **                              |
          1000++                 **                                |
               |             ***A                                  |
               |         *A**                                      |
           500++      ***                                          |
               |    A*                                             |
               |                                                   |
                     Q2/93 Q3/93 Q4/93 Q1/94 Q2/94 Q3/94 Q4/94 Q1/95

                Due  to  the sound funding model, the growth in reg-
                istries also leads to a growth in  available  finan-
                cial  resources; see the accompanying revenue report
                for details.

                However, the NCC has just barely passed the staffing
                level  that  was  necessary  already  in 1994 and is
                still  lagging  behind  this  development  in  staff

                ncc-exp.txt                                   Page 3
                                  RIPE NCC Expenditure Planning 1995

                                                           June 1995

    Proposed 1995 Budget Amendments

                To  cope  with the increased workload and the neces-
                sity to put resources  onto  support  for  new  reg-
                istries  we propose to amend the 1995 expenditure as

           |  Budget by Cost    |     1995            1995         delta |
           |                    | budgeted     %   revised     %         |
           |                    |                                        |
           |          Personnel |      296    73       347    66      51 |
           |     Office Running |       53    13        66    12      13 |
           |Contracted Services |        0     0        40     8      40 |
           |             Travel |       35     9        35     7       0 |
           |          Computing |       23     6        41     8      18 |
           |                    |                                        |
           |       TOTAL (kECU) |      407   100       529   100     122 |

                These  figures  are presented in terms of the budget
                lines traditionally used in  NCC  budgeting.   These
                lines  represent  cost  classes  and do not show the
                relation of  the  expenditure  to  activities.   The
                original  lines "Rent&Office", "TERENA Services" and
                "Recruitment" have been combined into  "Office  Run-
                ning".  The line "Unforeseen" has been absorbed into
                the other lines.

                The new line "Contracted  Services"  represents  NCC
                activities  and  services which are not performed by
                NCC staff but contracted out.  This concerns support
                for  new  registries  in  the  form of tutorials and
                other  documentation.   Besides  this   the   budget
                increase  represents  three additional staff for the
                second part of 1995: two junior  hostmasters  and  a
                deputy manager.  This will bring the total number of
                junior hostmasters joining the team this  summer  to
                three  which  will provide a serious relief from the
                current overload situation in registration services.

                The  deputy  manager  is  needed in order to provide
                room for proactive thinking in management and to re-
                start the regular reporting which has been suffering
                severely from the overload.

                The absolute increase in  1995  of  the  "Personnel"
                budget  line  is rather modest as it is based on the
                junior people working for 6 months  and  the  deputy
                ncc-exp.txt                                   Page 4
                                  RIPE NCC Expenditure Planning 1995

                                                           June 1995

                manager for 3 months of the year.  Assuming one year
                contracts  for  all  new staff this brings the total
                staff commitment for 1996  to  380kECU.   To  employ
                this  staff for the whole of 1996 will cost slightly
                more than 500kECU.

                In view of the urgency of this relief we are already
                in  the  process of recruiting and hiring the junior
                hostmasters.  It is  expected  that  the  additional
                staff can be hired quickly and the contract work for
                the support of new registries can also start reason-
                ably quickly.  The NCC will be able to cope with the
                increased load and slowly start proactive activities
                again before the end of 1995.

    1995 Budget by Activities

                In  order  to  offer  a clearer view on relationship
                between expenditure and activities we also present a
                different  way  of  budgeting.   There are four main
                budget lines closely related to the  Activity  Plan:
                "Administration  &  Reporting",  "Registration  Ser-
                vices", "New Activities" and "Other Activities".

           | Budget by Activity   |   1995            1995         delta |
           |                      | actual     %   revised     %         |
           |                      |                                      |
           |    Admin & Reporting |     62    15        78    15      16 |
           |Registration Services |    303    74       358    68      55 |
           |       New Activities |      9     2        22     4      13 |
           |     Other Activities |     33     8        71    13      38 |
           |                      |                                      |
           |         TOTAL (kECU) |    407   100       529   100     122 |

                The "Administration & Reporting" budget line  repre-
                sents  activities  6.1-6.4 of the activity plan, the
                formal procedures concerned  with  billing  and  the
                administration  of  the NCC computing systems.  This
                currently represents 15% of  the  global  costs  and
                shall be proportionally kept at 15%.

                The  "Registration  Services" budget line represents
                the basic NCC activities related to the NCC being  a
                Regional  Internet  Registry,  such  as  handling of
                incoming requests, assignment and allocation of net-
                work   numbers   and  the  coordination  with  other
                ncc-exp.txt                                   Page 5
                                  RIPE NCC Expenditure Planning 1995

                                                           June 1995

                organisations.   In  addition  are  included in this
                chapter the activities related to  the  support  and
                the  training  required to secure a proper start out
                of new registries, which will eventually lead  to  a
                reduction  of the load on the RIPE-NCC.  In relation
                to the Activity Plan these are 3.1,  3.2(66%),  3.4,
                3.8,  and  4.1(50%).  Although in absolute value the
                main change proposed is  within  this  chapter,  the
                total  fraction  will  reduce  from 76% to 68%, thus
                confirming a better and more  balanced  distribution
                of activities.

                The  "New Activities" line represents the participa-
                tion in special projects approved by the RIPE commu-
                nity,  as  defined  in  the  RIPE-NCC  activity plan
                (4.4). Almost non existent today, shall represent 4%
                of our activities in the future.  The planned activ-
                ities in 1995 are exclusively related to IPv6 track-
                ing and testing.

                The  "Other  Activities"  line  encompasses  all the
                remaining activities In particular  the  maintenance
                of  the  Routing  Registry  as  well  as other tools
                developed at the RIPE-NCC, such as PRIDE, the update
                of  the  Database  management tools, and the mainte-
                nance of RIPE related documents and meetings organi-
                sation.  This  activities  represent about 8% of the
                total and shall be proportionally increased to  13%.

                It  is important to note that the "1995 Actual" col-
                umn represents roughly how resources are being  used
                currently  out  of necessity, not how they should be
                used according to the Activity Plan.   The  lack  of
                personnel  has forced us to concentrate resources on
                the Registration Services, thus neglecting the other
                activities  defined  in the Activity Plan.  This has
                serious effects on both the progress of those activ-
                ities  and staff morale.  The current staff were not
                hired and are ill suited to spend  the  majority  of
                their  time  doing  registration  services.  The new
                junior staff will explicitly be hired and suited  to
                spend  the majority of their time doing registration
                services, freeing some time of the current staff for
                the remaining activities.

                As   this   budgeting   model  clearly  shows  where
                resources are going w.r.t. the activities,  we  pro-
                pose  to adopt it as the main tool for NCC budgeting
                in the future.

                ncc-exp.txt                                   Page 6
                                  RIPE NCC Expenditure Planning 1995

                                                           June 1995

    Support for New Registries

                The  total  expenditure  on  activities for new reg-
                istries in the revised budget  is  ECU  117k.   This
                represents  approximately  two  thirds  of the funds
                that are earmarked for these activities.  It is  not
                possible  to use more resources in a useful way this

    Building Reserves

                Reserves accumulated so far (ECU 51k) will  probably
                have  to be used to cover for the 1994 revenue prob-
                lems, which shall leave us almost with  no  reserves
                at all.

                It is therefore necessary to build prudent reserves,
                equal to at least half the yearly operating cost  of
                the  NCC,  as  TERENA  members require that no costs
                associated with an unexpected discontinuation of the
                NCC be borne by TERENA.

                Thanks  to  a  growth, even faster than expected, of
                the  NCC  customers  there  was  a  healthy  surplus
                expected  in  1995,  which amounts to 344Kecu. It is
                proposed  that  this  amount   be   transferred   to
                reserves,  which  will provide about half of what is
                deemed necessary.


                The  European  Internet  is  growing   faster   than

                The  1995  expenditure  needs  to  be  increased  by
                112kECU in order to catch up to present needs and to
                cope  with  the  increasing growth rate of the work-

                We cannot spend all the unexpected signup  fee  rev-
                enue  of  ECU  174k  on  new registry support effec-
                tively, but max. 66% of that amount.

                A substantial part of 1995 revenue should be used to
                build reserves.

                ncc-exp.txt                                   Page 7

Attachment: ps00001.ps
Description: PostScript document

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