VERN: Well welcome. With me today is Tracy Porter, CFO. Longtime CFO, can I say that Tracy? TRACY: Yes you can. VERN: Twenty-five years, is that right? TRACY: Just hit 25. VERN: Just hit 25 years, that's a milestone. And so Tracy we're doing a series of podcasts and the first one we released to the employees just kind of told them about some of the activity that happened at the board meeting at our strategic planning session. And I said in the podcast, and I truly believe that it was pivotal for NISC. I mean we are going down the path of a very aggressive plan with iVUE Connect, unifying our telephone and electric platforms, a lot of activity in the marketplace, Lot of excitement with Connect the demand is high. We're having great success in the marketplace bring in new members on so you add that all together in about 18 months ago and we are putting this budget together and we're fairly conservative but fairly optimistic also. And you know 12 months into this Tracy we're looking at this and we're seeing all these changes in the marketplace, and we're seeing strong margins from NISC, and it really caused the VP group to go in to this board meeting, this strategic planning session, with kind of an extraordinary strategy something we've never done before. We went into the board and said look we've got some great opportunities. We need to make some strategic investments in our people, the development of our people. We need to add additional resources in certain areas. We need to make substantial investments in infrastructure, our cloud infrastructure, the NISC network all of that takes money and you hold the purse strings to NISC and you were also here in 2000, 2002, 2003 when we were rolling out iVUE, and we were in a little different financial shape at that point which made that project a lot more challenging. Can you talk about that, Tracy? I mean it's such a great story the way you have followed this organization and the way you have guided this organization, financially, through some pretty tough times to where we are today. TRACY: Absolutely. When you look back to the early years of NISC, and we were not in a financial position to do a lot of things we were, you know, begging and borrowing to get the capital that we needed to produce the products that we knew are going to make a significant impact on our membership, but we weren't in a position to be able to do a lot of those things ourselves, so in the early days of NISC with the plan to develop iVUE, we ended up creating a member loan program where we were borrowing money from our members. We were borrowing money from CFC and using those dollars to fund software development. And today as we look at this we're coming off our five best years ever as NISC. Fiscal year 18 is going to be our sixth best year ever. As we continue to show really strong financial position and as we sit here today and talk about bringing connect to the market faster and better than what we think we can. It's an investment in our future, it's an investment in those products, and it's an investment for our membership. And today we have the financial ability to do that. VERN: It's just a whole different environment isn't it? I mean I know we were wringing our hands a lot back in the early 2000s because we knew the urgency to get iVUE to market but we just didn't have the resources to do it as quickly as we needed to. Today it's different. You know when we talk about this acceleration program that we proposed to our board of directors, I mean the price tag on that, over and above the financial forecast that we've already submitted and they've already approved and that financial forecast includes about 50 new employees a year over and above that, this acceleration plan is going to be in the 5 Million Dollar neighborhood, an additional 50 employees over the next 18 months over and above what was called for in the financial forecast. A lot of investment in the cloud. We just approved half a million dollar investment in the cloud at this board meeting. That's real money Tracy and to be in a position where we can fund that ourselves out of our own funds. What does that do for the CFO of NISC? TRACY: Well it's a great position to be in, and we don't take that lightly. We know that our members count on us and we know that in the position that we're in today we always look to have about a 5 percent margin on the bottom line. That's kind of always been our goal. And with that goal, that puts us in a margin range of you know six to eight million. And what we're saying, you know the investment that you talked about with 50 people and basically equating that to about five million dollars that means our margin potentially could be in that 1 to 3 million range. And what a great position for us to be and to be able to make this investment and still have a nice bottom line that we can contribute back to our members who are earning the patronage that they want from the software services that they get from us. VERN: You know Tracy and the thing that just is so exciting for me is as we talked about this and got our strategy together as a vice president group and we basically looked at every one of those vice presidents and said we've got a great opportunity here. What do you need to seize that opportunity? What do you need to carpe diem? And I think it gave them a whole different view of their responsibilities saying OK if we're going to step up implementation, if we're going to step up support, if we're going to step up development, what do we need? What kind of resources? And we didn't give them, you know, just an open checkbook but we gave them more latitude than perhaps they've ever had and they were just excited, going into the boardroom, and you know to have our Board say "We trust you, Go ahead, Go for it, Be aggressive in the marketplace, invest in your employees, invest in improving our support, invest in improving our capacity, and implementation, invest in our ability to deliver great software quicker." I mean all of that was just a rallying cry. I came away, as I said in my blog, I came away as invigorated as I've ever been. TRACY: You know we talk about what a great place to work as a cooperative and our mission is to serve, and our mission is to take care of our members. You know, this decision that we're making right now in iVUE Connect, in a for-profit software company, it might not be a decision that gets approved because if you look at that just the true bottom line return on investment on this I don't think we can say this is going to make NISC more money. I think what we can say is this is going to take care of our current 800 members that are already using our products, it's going to bring better service to them, but it's also going to open up some market doors for us, that's going to allow us to grow our future because our financial plan for the last eight years has been to grow our membership base instead of growing our rates. We haven't had a rate increase. How many software companies can say they haven't had a rate increase in eight years? We can say that because we're growing our membership base, so this is a win on both sides, it's a win for our current members, It's a win for our markets that we're going to try and get better penetration in, And I think this is a win for our employees. VERN: So Tracy over the last 25 years, as I said, you have done an amazing job of kind of guiding us. You've been our conscience, right? In the decisions, we've made and helping us understand how far we can push in terms of growing this organization based on our capabilities with our balance sheet. So when you look at the opportunities you sit in those VP meetings, you listen to the marketing reports, you listen to Dan, and research and development. You know some of the challenges where we have to improve this organization. And so when you look at NISC financial situation and I know you're a fairly conservative guy, can I say that? We go back to the question that we ask ourselves all the time, Tracy, if this were your company if NISC was your company would you move forward with the acceleration program? TRACY: Absolutely. I think in the markets that we serve, the co-operative space, the rural and independent telecom space, and growing public power space. I absolutely think this is the right move for us. VERN: Well there you heard it. You heard it directly from NISC CFO, and you know the old saying "if there is no margin there is no mission," and we are focused on this mission of serving our members and developing our employees. The cool thing is, Tracy, we've got the margin to do it. So the acceleration program is a go. We want our employees to be informed about this. And you'll hear more in a series of podcasts with the other vice presidents. Tracy, thank you very much for taking some time to be with me today and thank you for twenty-five years of amazing stewardship to this organization and friendship appreciate that a lot. TRACY: Thank you.
