Simmethod and the bvp cloud index, salesforce and linked in case studies

SIMMETHOD
Strategy & Execution Performance
Predictive Index And Risk Alerts
The SIMMETHOD Index And The
Bessemer Venture Partner Cloud Index
Salesforce And LinkedIn Case Studies
3/8/2015 1
www.simmethod.blogspot.com

SIMMETHOD
BVP Cloud Index And The SIMMETHOD Index
The following Salesforce and LinkedIn case studies
are based on the:
• Bessemer Venture Partners Cloud Index that
covers 42 publicly traded cloud companies and
the
• SIMMETHOD Strategy & Execution Performance
Predictive Index that uses holistic crowd-
sourced, financial and operational data
to measure and predict your future risk
and performance.
3/8/2015 2

SIMMETHOD
BVP Cloud Index And The SIMMETHOD Index
The following 3 graphs are based on
the Bessemer Venture Partners
Cloud Index and compare the
following companies against the
index average
• Salesforce
• LinkedIn
3/8/2015 3

SIMMETHOD
Salesforce And LinkedIn Vs. The BVP Cloud Index
Average
0
10
20
30
40
50
60
70
2013/2014
sales
growth %
2014/2015
sales
growth %
R&D spend
as % of
revenue
Sales &
marketing
spend % of
revenue
Enterprise
value
/EBITDA
2014
LinkedIn
Salesforce
BVP Cloud Index
Average
3/8/2015 4

SIMMETHOD
Salesforce Versus The BVP Cloud Index Average
Salesforce
2013-2014 sales
grew 20% slower
than the average
2014-2015 sales
grew 25% slower
than the average
R&D spend is
46% less than
the average
Sales &
marketing
expense 8%
over the
average
Enterprise
Value to EBITDA
41% above the
average
3/8/2015 5

SIMMETHOD
LinkedIn Versus The BVP Cloud Index Average
LinkedIn
2013 to 2014
sales grew 10%
above the
average
2014 to 2015
sales grew 21%
above the
average
R&D = to the
average
Sales &
marketing spend
33% lower than
the average
Enterprise value
to EBITDA 80%
above the
average
3/8/2015 6

SIMMETHOD
Salesforce And LinkedIn Vs. The BVP Cloud
Index Average
• Salesforce spends about half the
average on R&D and although
spends 8% more than the
average in sales & marketing, it
grew slower than the average in
the 2013-2015 period
3/8/2015
7

SIMMETHOD
Index Average
• LinkedIn R&D is equal to the
average and although spends
33% less than the average on
sales & marketing, it grew more
than the average in the
2013-2015 period
3/8/2015
8

SIMMETHOD
How Much Business Risk & Value-Add Is
Embedded In Your Products And Services?
• Cloud companies compete with their
products, balance sheets, income
statements, strategy/execution and
• Their business risk, their financial and
operational strengths and weaknesses
as well as their value-add are embedded
in their products and
services.
3/8/2015
9

SIMMETHOD
How Much Business Risk & Value-Add Is
Embedded In Your Products And Services?
• Therefore, as a cloud company, the real
measure of your products and services
is the business risk and value-add that
your products and services introduce to
your value chain and your
customers.
3/8/2015
10

SIMMETHOD
Threats And Opportunities For Cloud Companies
• Comparing a cloud company with another
cloud company is similar to comparing Circuit
City with Barnes & Nobles: Necessary but not
enough.
• As cloud companies disrupted the
established tech companies, they are likely to
be disrupted by new competitors from
different industries or with improved
business models and financial strength
3/8/2015
11

SIMMETHOD
Index Average
• In the examples above, the Bessemer
Venture Partner Cloud Index was used as a
source to compare ratio by ratio Salesforce
and LinkedIn between themselves and versus
the index average of cloud
companies
3/8/2015
12

The CEO Lament in the Business
Analytics Market
• We did not see it coming. All my
products and data analytics
pointed North while my business
as a whole (in comparison to
new competitors and the Best In
Class in multiple
industries) pointed South.
3/8/2015 13WWW.SIMMETHOD.BLOGSPOT.COM

SIMMETHOD
Strategy & Execution Performance Predictive Index
And Risk Alerts
• As can be seen in the following graphs, the
SIMMETHOD Index provides a holistic
representation of management’s ability to
execute against the Best in Class and fend off
new competitors coming from different
industries leveraging different business
models and financial or
operational strengths.
3/8/2015
14

SIMMETHOD Ranking Algorithm
SIMMETHOD, based on the 7 Laws of Growth, Best
Practices and Value Creation provides a holistic
view of each company based on their:
• Strategy and execution,
• Quality of decision-making,
• Business model profitability
• Ability to extract value from their assets
• Human capital and overhead management and
• Sales and marketing effectiveness and ability to
create business value.
3/8/2015
WWW.SIMMETHOD.BLOGSPOT.COM
15

SIMMETHOD
0
10
20
30
40
50
60
70
80
SIMMETHOD
Management
Controllable
Resources Index
SIMMETHOD
Strategy &
Execution
Performance
Predictive Index
3/8/2015 16

SIMMETHOD
-10
-5
0
5
10
15
20
25
30
35
SIMMETHOD
Management
Controllable
Resources Index
SIMMETHOD
Strategy &
Execution
Performance
Predictive Index
3/8/2015 17
Although LinkedIn’s Strategy & Execution Performance
Predictive Index is positive, its Management
Controllable Resources Index is close to zero pointing
to a high level of resource utilization to create
business value

SIMMETHOD
-30
-25
-20
-15
-10
-5
0
SIMMETHOD
Management
Controllable Resources
Index
SIMMETHOD Strategy
& Execution
Performance Predictive
Index
3/8/2015 18
Salesforce negative Management Controllable
Resources Index is having a negative impact on
its Strategy & Execution Performance
Predictive Index pointing to a high level of
business risk in relation to the B-I-C

SIMMETHOD
-60
-50
-40
-30
-20
-10
0
AT&T
Atos
ThomasCook
Adecco
GrupoTelevisa
FidelityNational…
ComputerSciences
Sodexco
Verizoncomm
AmericanExpress
TimeWarnerCable
CompalElecronics
HP
Expedia
Capgemini
Comcast
Libertyinteractive
Telefonica
VeriskAnalytics
Cablevision
Centurylink
Innolux
SIMMETHOD Management
Controllable Resources Index
SIMMETHOD Strategy &
Execution Performance
Predictive Index
3/8/2015 19

SIMMETHOD
Trends against the SIMMETHOD Best In Class
-20
-10
0
10
20
30
40
2012 2013 2014
Average B-I-C SIMMETHOD
Strategy/ Execution
Index
Salesforce SIMMETHOD
Strategy/ Execution
Index
The gap between Salesforce and the
2014 SIMMETHOD Best In Class is
widening indicating an increased
level of competitive risk

SIMMETHOD
-20
-15
-10
-5
0
5
10
15
20
2012 2013 2014
Avg. B-I-C SIMMETHOD
Management
Index
Salesforce SIMMETHOD
Management
index
Widening gap between
Salesforce and the 2014
SIMMETHOD Best In Class
Management Controllable
Resources Index
An ever increasing level of
resources are necessary to compete
and create value vs. the B-I-C

SIMMETHOD
0
5
10
15
20
25
30
35
2012 2013 2014
Average B-I-C
SIMMETHOD Strategy/
Execution Performance
Predictive Index
LinkedIn SIMMETHOD
Strategy/ Execution
index
3/8/2015 22
Although LinkedIn is
trending up, in 2013-2014
the Best In Class are
improving at a faster rate

SIMMETHOD
0
2
4
6
8
10
12
14
16
2012 2013 2014
Avg. B-I-C SIMMETHOD
Resources Index
LinkedIn SIMMETHOD
Resources Index
3/8/2015 23
LinkedIn’s widening gap to the 2014
Management Controllable Resources
Index Best In Class

SIMMETHOD
C-Level Competitive Intelligence
3/8/2015 WWW.SIMMETHOD.BLOGSPOT.COM 24
-20
-10
0
10
20
30
40
50
Average B-I-C
SIMMETHOD
Strategy/
Execution
Performance
Predictive Index
LinkedIn
SIMMETHOD
Strategy/
Execution
Performance
Predictive Index
Vmware
SIMMETHOD
Strategy/
Execution
Performance
Predictive Index
IBM SIMMETHOD
Strategy/
Execution
Performance
Predictive index
Salesforce
SIMMETHOD
Strategy/
Execution
Performance
Predictive Index
2012
2013
2014
Salesforce & LinkedIn
Strategy & Execution
Index vs. peers and the
SIMMETHOD Best In Class

SIMMETHOD’s Disclaimer
• The purpose of the SIMMETHOD
Strategy/Execution Performance Predictive
Index and C-Level Risk/Opportunities Alerts
is not to make a business right or wrong but
rather contribute towards the understanding
of management actions in comparison to
industry’s peers and the SIMMETHOD
Best In Class.

• SIMMETHOD’s Strategy & Execution
Performance Predictive Index and C-Level
Risk and Opportunities Alerts do not seek to
be exact but rather serve as a conduit to ask
better questions and seek better answers in
the performance improvement, risk
minimization and value
creation journey.

• Sometimes, the value of a metric in itself
does not provide the greatest of insights, but
valuable actionable knowledge is gained
from its ability to provide a trend or a
common comparison yardstick with other
businesses across a range of
industries.

• This Presentation is for informational
purpose only and SIMMETHOD shall not be
liable for the contents of the Presentation or
for any damage incurred or alleged to be
incurred to any of the businesses included in
the Presentation as a result of its content.

SIMMETHOD
2015 Industry and Business Trends
• SIMMETHOD’s strategy & execution
performance predictive indices and trends
are not deterministic.
• Businesses that act on their SIMMETHOD
leading indicators and risk alerts can improve
their 2015 performance to
Best In Class levels.

Jorge Oscar Tabacman
jtabacman@gmail.com
Twitter ID: SIMMETHOD
SIMMETHOD
A new way to measure and predict
the risk and performance of your
business and alert you of new threats
and opportunities

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