IBM 2014, C-level Risk And Opportunity Alerts

SIMMETHOD
A New Way To Measure And Predict
Your Corporate Risk And
Performance
IBM
Tomorrow’s profit, hidden in today’s
Strategy & Execution Performance
Predictive Index and risk alerts.
7/24/2014 1
WWW.SIMMETHOD.BLOGSPOT.COM

SIMMETHOD
Risk and Opportunity Alerts
7/24/2014 WWW.SIMMETHOD.BLOGSPOT.COM 2

SIMMETHOD Strategy & Execution
Performance Predictive Index and Risk Alerts
On July 14, Steve Lohr wrote on the
New York Times:
“IBM in Tug of War Between Legacy and
the Leading Edge”
“For IBM, the challenge is to convert the
future of technology into an
opportunity rather than a threat”
7/24/2014
3

“The technology giant has taken big steps. It is
investing in cloud computing and in software to
help customers make sense of the flood of digital
data”.
“And this week IBM announced a big move in
mobile computing: a landmark alliance with Apple
to jointly develop smart software for the business
market delivered to IPhones and Ipads”.
7/24/2014
4

“But while the strategy looks promising, it has
yet to pay off. The company’s revenue has been
disappointing for more than a year, and
investors are watching for signs of progress”.
“IBM has managed to hit its profit targets largely
by cutting costs and buying back shares”.
7/24/2014
5

“There is a sort of tug of war going on inside
IBM, Mr. Milunovich an analyst with UBS said”.
“And the question is, can the company really
grow in the new technologies and still keep a
strong, steady business in the older
technologies”?
7/24/2014
6

“But looking at the lack of growth in IBM’s mainstay
software and services business as a whole, analysts
remain unconvinced”.
“The defining challenged for all the big, established
technology companies, says A.M. Sacconaghi, an
analyst at Bernstein Research, is to move successfully
from today’s technologies to tomorrow’s”.
7/24/2014
7

7/24/2014
8
• “IBM’s executive team recognizes the
difficulty of navigating that strategic decision.
In an interview in May , Ms Rometty (IBM’s
CEO) acknowledged that this was a “rocky
time”. But she said it was confident IBM was
taking the necessary steps to ensure the
company’s long term health”.

SIMMETHOD
• Is IBM’s future risk and
performance predictable based
on the SIMMETHOD Strategy
and Execution Performance
Predictive Index and risk and
opportunity alerts?
7/24/2014 9WWW.SIMMETHOD.BLOGSPOT.COM

The Way We Measure Corporate
Risk and Performance Is Broken
Why do
Businesses fail
or fail to
perform?
Blockbuster
Borders
Circuit City
Mervyns
Wachovia
Washington
Mutual
Linen n’
Things

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.

Disrupting the Way You Measure
Corporate Risk and Performance
There are three main problems:
• The lack of a single industry-agnostic
scale to measure and predict corporate
strategy & execution (competitive
advantage) leads to erroneous and
inconsistent C-level visibility
and decision-making

Performance Predictive Index
How to holistically
measure strategy and
execution and
competitive advantage?

• Silos-analytics and leading indicators
that lead to erroneous C-level decisions
based on many versions of the truth
unintegrated to business strategy and
objectives and the market forces that
will have a major impact on
your decisions

Silos Analytics Lead to Many Versions
of the Truth and Erroneous Decisions

• C-level risk and performance metrics
and ratios based on industrial-era
analytics that were not designed to
capture intangible values or the
dynamic relationships between
businesses and their value chains

Lack of Business and Value-Chain
Leading Indicators and Risk Alerts
Company
view
SIMMETHOD™
industry view
indicators &
alerts
SIMMETHOD™
value-chain
view, leading
performance
indicators &
alerts
SIMMETHOD™
global market
view leading
risk/
performance
indicators &
alerts database
Inward-
Looking
Analytics
Maximum
Risk,
Minimum
Visibility
Value-Chain and Market
Leading Indicators and Risk
Alerts
Minimum Risk and Maximum
Visibility

The Leading Indicators and Risk Alerts
of the Best-In-Class
Why do you need Industry Agnostic Leading
Indicators and Risk/Opportunities Alerts?
• In an interdependent market (like the planets
in the solar system) your current and future
risk and performance are impacted by an
ecosystem of constantly changing
competitors coming from inside
and outside your Industry.

The SIMMETHOD Algorithm
SIMMETHOD
Strategy &
Execution
Performance
Predictive Index
Stockholders
valuation and
management’s
rating
C-level strategy
& execution
Business model
Management’s ability
to strategize & execute
against competitors and
the Best In Class
Competitors’
strategy &
execution

SIMMETHOD Strategy and Execution
• What is IBM’s position within the
2014 SIMMETHOD Strategy &
Execution Performance
Predictive Index
League Table?
7/24/2014 20

SIMMETHOD’s C-Level Trends 2012-2014
IBM and the Best-In-Class
The following C-Level indices show
IBM’s ability to:
• Strategize and execute against the
SIMMETHOD Best-In-Class,
• Compete against the Best-In-Class, current
and future competitors
and are leading indicators of future business
opportunities, risk and performance.

SIMMETHOD
Strategy & Execution Performance Predictive Index
0
10
20
30
40
50
60
70
80
SIMMETHOD
Management
Controllable
Resources Index
SIMMETHOD
Strategy &
Execution
Performance
Predictive Index
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SIMMETHOD
-10
-5
0
5
10
15
20
25
30
35
SIMMETHOD
Management
Controllable
Resources Index
SIMMETHOD
Strategy &
Execution
Performance
Predictive Index
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SIMMETHOD
-30
-25
-20
-15
-10
-5
0
SIMMETHOD
Management
Controllable Resources
Index
SIMMETHOD Strategy
& Execution
Performance Predictive
Index
7/24/2014 24
IBM’s negative Management
Controllable Resources Index is
having a negative impact on its
2014 Strategy & Execution

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 &
Predictive Index
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SIMMETHOD
IBM’s 2012 to 2014 trend across the indices of
the SIMMETHOD Best In Class showing:
• Competitive strengths,
• Competitive weaknesses,
• Risk levels and
• Opportunities for improvement in order to
become Best In Class and fend off current
and future competitors
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SIMMETHOD
2012 to 2014 Business and Industry Trends
7/24/2014
27
-6
-4
-2
0
2
4
6
8
10
12
IBM 2012
IBM 2013
IBM 2014
Positive results in the Assets, Overheads
and Cash/Debt indices are all positive
signs offset by negative trends in the
SIMMETHOD Sales and HR indices

SIMMETHOD
2012 to 2014 Business and Industry Trends
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28
-6
-4
-2
0
2
4
6
8
10
12
IBM 2012
IBM 2013
IBM 2014

SIMMETHOD
Trends against the SIMMETHOD Best In Class
Your level of risk increases when:
• Your data points North and the SIMMETHOD
indices point South, or
• Your gap to your peers and the Best In Class is
widening or
• The score of your Strategy & Execution
Performance Predictive Index is not
supported by all the other indices
under management control.
7/24/2014
29

SIMMETHOD’s C-Level Trends 2012-2014
IBM and the Best-In-Class
• When the Best-In-Class and your
SIMMETHOD C-Level indices are
moving in opposite directions, your
ability to compete weakens in
proportion to your widening
gap to the Best-In-Class.

SIMMETHOD
7/24/2014
31
-5
0
5
10
15
20
25
30
35
2012 2013 2014
Average B-I-C SIMMETHOD
Strategy/ Execution Performance
Predictive Index
IBM SIMMETHOD Strategy/
Execution Performance Predictive
index

SIMMETHOD
7/24/2014
32
-5
0
5
10
15
20
25
30
35
2012 2013 2014
Average B-I-C SIMMETHOD
Strategy/ Execution
IBM SIMMETHOD Strategy/
Predictive index
The gap between IBM and the
2014 SIMMETHOD Best In Class is
widening indicating an increased
level of competitive risk

SIMMETHOD
7/24/2014
33
-4
-2
0
2
4
6
8
10
12
14
16
2012 2013 2014
Avg. B-I-C SIMMETHOD
Management Controllable
Resources Index
IBM SIMMETHOD Management

SIMMETHOD
7/24/2014
34
-4
-2
0
2
4
6
8
10
12
14
16
2012 2013 2014
Resources Index
IBM SIMMETHOD Management
IBM’s peers and the Best In Class are able
to extract more value from their assets
negatively impacting IBM’s Strategy &
Execution Performance Predictive Index
and competitive advantage

SIMMETHOD
7/24/2014
35
0
2
4
6
8
10
12
14
16
18
2012 2013 2014
Avg. B-I-C SIMMETHOD Value
Creation Index
IBM SIMMETHOD Value Creation
Index

SIMMETHOD
7/24/2014
36
0
2
4
6
8
10
12
14
16
18
2012 2013 2014
Avg. B-I-C SIMMETHOD Value
Creation Index
IBM SIMMETHOD Value
Creation Index
IBM’s Value Creation Index is moving
in opposite direction to the Best In
Class thus increasing its level of risk
and weakening its competitive
advantage

Is there a disconnect between your raw
data and your SIMMETHOD indices?
• When your raw data (such as
your sales) is trending up and
your corresponding SIMMETHOD
Sales Index is trending down,
your level of risk is
increasing. Why?

Is there a disconnect between your raw data
and your SIMMETHOD indices?
Unlike raw data (e.g. sales), the SIMMETHOD
Sales Index holistically measures:
The resources necessary to deliver $1 of sales
in relation to peers and the Best In Class and
The contribution of your sales to the health
and value of your business in relation to your
peers and the Best In Class
7/24/2014
38

SIMMETHOD
7/24/2014
39
-3
-2
-2
-1
-1
0
1
1
2
2
3
2012 2013 2014
Sales Index
IBM SIMMETHOD Sales
Index

SIMMETHOD
7/24/2014
40
-3
-2
-2
-1
-1
0
1
1
2
2
3
2012 2013 2014
Sales Index
IBM SIMMETHOD Sales
Index
In comparison to the
B-I-C, IBM needs to sell
more each period in
order to create each
dollar of business value
IBM’s weakening SIMMETHOD
Sales Index

SIMMETHOD
IBM’s Gap to the Best In Class Average
The average
sales per
employee of
the B-I-C is
2.3x higher
7/24/2014
41

SIMMETHOD
The average
profit per
employee of
the B-I-C is
3.5x higher
7/24/2014
42

SIMMETHOD
On average, the
market values
the employees
of the B-I-C 8x
higher
7/24/2014
43

SIMMETHOD
7/24/2014
44
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
2012 2013 2014
Avg. B-I-C Overheads
Index
IBM SIMMETHOD
Overheads Index

SIMMETHOD
7/24/2014
45
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
2012 2013 2014
Avg. B-I-C Overheads
Index
IBM SIMMETHOD
Overheads Index
IBM’s Overheads Index has markedly
improved vs. peers and Best In Class.
This positive trend will improve its

SIMMETHOD
7/24/2014
46
-6
-5
-4
-3
-2
-1
0
1
2
3
4
2012 2013 2014
Avg. B-I-C SIMMETHOD HR
Index
IBM SIMMETHOD HR Index

SIMMETHOD
7/24/2014
47
-6
-5
-4
-3
-2
-1
0
1
2
3
4
2012 2013 2014
Avg. B-I-C SIMMETHOD HR
Index
IBM SIMMETHOD HR Index
IBM’s HR Index shows that its HR
contribution to business value vs.
peers and the B-I-C is diminishing

SIMMETHOD
7/24/2014
48
-6
-4
-2
0
2
4
6
8
2012 2013 2014
Cash/Debt Index
IBM SIMMETHOD Cash/
Debt Index

SIMMETHOD
7/24/2014
49
-6
-4
-2
0
2
4
6
8
2012 2013 2014
Cash/Debt Index
IBM SIMMETHOD Cash/ Debt
Index
Improved Cash/Debt Index vs.
peers and the B-I-C is a very
positive leading indicator

SIMMETHOD
Competitive Intelligence
Competitive Intelligence showing:
• Strengths,
• Weaknesses and
• Ability to compete with existing
businesses and potential new
competitors with new business
models, cost structures, distribution
channels and products.
7/24/2014 50

SIMMETHOD
-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
IBM’s SIMMETHOD
Strategy & Execution
Index vs. peers and the
SIMMETHOD B-I-C

SIMMETHOD
7/24/2014
52
-20
-10
0
10
20
30
40
Average B-I-C
SIMMETHOD
Strategy/
Execution
Performance
Predictive Index
SAP SIMMETHOD
Strategy/
Execution
Performance
Predictive index
Microsoft
SIMMETHOD
Strategy/
Execution
Performance
Predictive index
Oracle
SIMMETHOD
Strategy/
Execution
Performance
Predictive index
IBM SIMMETHOD
Strategy/
Execution
Performance
Predictive index
Salesforce
SIMMETHOD
Strategy/
Execution
Performance
Predictive Index
2012
2013
2014
IBM’s Strategy &
Predictive Index trend
vs. peers and
SIMMETHOD’s Best In
Class average

SIMMETHOD
7/24/2014
53
-20
-15
-10
-5
0
5
10
15
20
Avg. B-I-C
SIMMETHOD
Management
Controllable
Resources Index
SAP SIMMETHOD
Management
Controllable
Resources index
Microsoft
SIMMETHOD
Management
Controllable
Resources index
Oracle
SIMMETHOD
Management
Controllable
Resources Index
IBM SIMMETHOD
Management
Controllable
Resources Index
Salesforce
SIMMETHOD
Management
Controllable
Resources index
2012
2013
2014
IBM’s negative trend and the gap to the
B-I-C indicates that IBM could be
vulnerable to competitors with more
efficient management of resources

SIMMETHOD
7/24/2014
54
0
2
4
6
8
10
12
14
16
18
20
Avg. B-I-C
SIMMETHOD
Value Creation
Index
SAP SIMMETHOD
Value Creation
Index
Microsoft
SIMMETHOD
Value Creation
Index
Oracle
SIMMETHOD
Value Creation
Index
IBM SIMMETHOD
Value Creation
Index
Salesforce
SIMMETHOD
Value Creation
Index
2012
2013
2014
IBM’s Value Creation Index is
below peers and the average
Best In Class and its trend is
negative

SIMMETHOD
7/24/2014
55
-20 -10 0 10 20 30 40
2014 Aveg. B-I-C
SAP
Microsoft
Oracle
IBM
Salesforce
B-I-C SIMMETHOD
Minimum Company
Business Model Index
B-I-C SIMMETHOD Value
Creation Index
B-I-C SIMMETHOD
Resources Index
B-I-C SIMMETHOD Strategy/
Predictive Index
IBM’s gap to the B-I-C across the
Minimum Company Business Model,
Resources & Value Creation indices
shows IBM’s challenges ahead

SIMMETHOD’s Disclaimer
• The purpose of the SIMMETHOD
Strategy/Execution Performance Predictive
Index and 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 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.

In summary, are the:
• Strategy & Execution Performance
Predictive Indices,
• Risk and opportunity alerts and
• 7 Laws of Growth and Value Creation
good leading indicators of IBM’s
threats, opportunities, risk and
performance?

IBM’s 2014 SIMMETHOD Risk and Performance
Summary Table
Index Value Index trend Trend vs. B-I-C 7 Laws compliance
Sales - - - -
Assets + - - -
Overheads + + + +
HR - - - -
Cash/Debt + + + +
Management
Controllable Resources
- - - -
Minimum Company
Business Model
- - - -
Value Creation + - - -
Strategy & Execution
- - - -
7/24/2014
61

The SIMMETHOD Algorithm and the 7
Laws of Growth and Value Creation
SIMMETHOD
7 Laws
Integration
/alignment
Benchmarking
inside/outside
your industry
Growth &
value
creation
Resource
contribution
to objectives
Predictive
performance
& risk
Averages &
positive
trends
Minimum
company
/business
model
7/24/2014
62

SIMMETHOD
2014 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 2014 performance to
Best In Class levels.

SIMMETHOD
Risk and Opportunities Alerts
SIMMETHOD is in the top
1% of most viewed on
Slideshare and has been
“Hot” on LinkedIn,
Twitter and Facebook 50
times.

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

IBM 2014, C-level Risk And Opportunity Alerts

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