Simmethod and the 2016 silicon valley 150 index

SIMMETHOD
From Software As A Service To
Business Outcomes As A Service
The SIMMETHOD Strategy & Execution
Performance Predictive Index And Risk Alerts
And The 2016 Silicon Valley 150 Index
5/24/2016 1
www.simmethod.blogspot.com

SIMMETHOD
In the outcomes economy, where you
will need to deliver outcomes rather
than products and services, linking
your products and services to the
success metrics of your customers’
CFO, will be a key asset and
essential to your survival.
5/24/2016
2

SIMMETHOD
SV150 Index And The SIMMETHOD Index
The following case studies are based on the:
• Silicon Valley 150 Index that covers 150
Silicon Valley based 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.
5/24/2016 3

SIMMETHOD
SV150 Index And The SIMMETHOD Index
• In the following examples the
Silicon Valley 150 Index is used
as a source to compare ratio by
ratio a group of enterprises
versus peers and the index
average
5/24/2016
4

SIMMETHOD
SV150 Index R&D Per Employee
5/24/2016
5
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
R&D/employee (In millions)
R&D per employee versus peers and the SV150 Index average

SIMMETHOD
SV150 Index Debt Per Employee
5/24/2016
6
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
Debt/Employee (In millions)
Debt Per Employee versus peers and the SV150 Index
average

SIMMETHOD
SV150 Index Sales Per Employee
5/24/2016
7
0
0.5
1
1.5
2
2.5
Sales per employee (In millions)
Sales Per Employee versus peers and the SV150 average

SIMMETHOD
SV150 Index Cash Per Employee
5/24/2016
8
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
Cash per employee (In millions)
Cash Per Employee versus peers and the SV150
average

SIMMETHOD
SV150 Index Sales Per R&D
5/24/2016
9
0
5
10
15
20
25
30
35
40
45
Sales per R&D In millions)
R&D translated into sales dollars versus peers and the SV150
average

SIMMETHOD
SV150 Index Profit Margin For $1B+ In Sales
5/24/2016
10
-10
-5
0
5
10
15
20
25
30
Profit margin
Profit margin versus peers and the SV150 with $1B+
sales

SIMMETHOD
Correlation Between Your Business Risk And Your
Products And Services Risk
• As a cloud vendor, your
business risk is
embedded in your
products and services
and transferred to your
customers and value
chain
5/24/2016
11

SIMMETHOD
“(Salesforce) Creative Accounting, Slowing Growth And
Insider Selling Combine To Set Up For Huge
Disappointment (Vincent Groenewoud, Seeking
Alpha), Apr. 11, 2016
• Misleading performance metrics hide complete lack
of profitability.
• Growth is slowing with little hope for it to return to
previous levels.
• Valuation implies a highly unrealistic view of the
future.
• A drop of over 50% in the next 1-2 years is likely as
reality sets in and institutional owners bail.”
5/24/2016
12

SIMMETHOD
“Salesforce.com: Creative Accounting Or Conservative
Accounting? B. Hochfeld, Seeking Alpha, Apr.14, 2016
• Salesforce.com's non-GAAP accounting presentation
has received much attention and much negative
commentary from SA contributors in recent weeks.
• The company does enjoy a modest benefit from
excluding stock-based compensation from its earnings
presentation.
• The company pays a far larger penalty in using a
misbegotten methodology to account for the
economic value of what it is actually selling.”
5/24/2016
13

SIMMETHOD
• “Are Benioff's Crusades Hurting Shareholder
Value At Salesforce? Dana Blankenhorn, Seeking
Alpha, May 24, 2016.
• Since Benioff became a crusader, he hasn’t done
nearly as much for shareholders as before.
Shares in CRM are up just 9% in the last year,
and net income for the last four quarters,
including this April’s blowout quarter totals
minus-two cents per common share”.
• Does political risk also mean investment risk?”
5/24/2016
14

SIMMETHOD
Salesforce Versus The SV150 And BVP Index Average
Salesforce
As per BVP
Cloud Index,
retention is
below average
R&D per
employee is
less than half
the average
As per BVP Cloud
Index sales growth
is below average
Sales per
employee are
70% below
average
Sales per R&D
are 20%
below
average
5/24/2016 15

SIMMETHOD
Salesforce Versus The SV150 Index Average
Salesforce
Cash per
employee is
less than half
the average
Debt per
employee is
less than half
the average
Debt per employee
has decreased 70%
from last year
Cash per
employee has
increased
considerably
Profit margin
is negative
5/24/2016 16

SIMMETHOD
Why Salesforce Sales Index Is Negative?
In relation to the SIMMETHOD Best in Class Salesforce
Sales Index matches the following profile:
Unprofitable sales
Cost of sales is high
Needs high overheads to generate $1 of sales
Sales per employee are low
5/24/2016
www.SIMMETHOD.blogspot.com
17

SIMMETHOD
Salesforce Sales Index
5/24/2016
18
-5
-4
-3
-2
-1
0
1
2
3
2012 2013 2014 2015
Avg. B-I-C
SIMMETHOD Sales
Index
Salesforce
SIMMETHOD Sales
Index

SIMMETHOD
Why Salesforce HR Index Is Negative?
In relation to the SIMMETHOD Best in Class Salesforce
HR Index matches the following profile:
Unprofitable human capital
Business value creation is low
Overheads per employee are high
Sales and cash per employee are low
5/24/2016
19

SIMMETHOD
Salesforce HR Index
5/24/2016
20
-5
-4
-3
-2
-1
0
1
2
3
4
2012 2013 2014 2015
Avg. B-I-C
SIMMETHOD HR
Index
Salesforce
SIMMETHOD HR
Index

SIMMETHOD
“LinkedIn: Share Price In A Stock-Based
Compensation Trap? Frank Isaksen, Seeking
Alpha, May 23, 2016.
• Financial headlines better than the reality.
• Stock-based compensation is limiting share
price appreciation.
• An attractive market that unfortunately
attracts competitors.”
5/24/2016
21

SIMMETHOD
LinkedIn Versus The SV150 Index Average
LinkedIn
Cash per employee
has decreased 70%
from last year
Although R&D per
employee has
increased from last
year, is still below
average
Profit margin is
negative
Sales per
employee are less
than half the
average
Sales per employee
versus the average
have deteriorated
from last year
5/24/2016 22

SIMMETHOD
LinkedIn Versus The SV150 Index Average
LinkedIn
Cash per
employee is less
than average
Debt per
employee is
increasing
Debt per employee
is better than
average
Sales per R&D
Have not
increased from
last year
Sales per R&D
are less than half
the average
5/24/2016 23

SIMMETHOD
LinkedIn Performance Trend 2012-2015
5/24/2016
24
-20
-15
-10
-5
0
5
10
15
20
25
LinkedIn
2012
LinkedIn
2013
LinkedIn
2014
LinkedIn
2015
LinkedIn Strategy & Execution
Performance Predictive Index
versus the B-I-C
Is it an HR trend?

SIMMETHOD
LinkedIn Risk & Performance Trend 2012-2015
5/24/2016
25
-6
-4
-2
0
2
4
6
8
2014 2015
Average
SIMMETHOD
B-I-C Risk Index
LinkedIn
SIMMETHOD
Risk Index
LinkedIn SIMMETHOD Risk Index
versus the Best in Class has
considerably increased highlighting
the higher risk of its business model
and strategy & execution

SIMMETHOD
Twitter Versus The SV150 Index Average
Twitter
Cash per employee
is 2.5x higher than
average
R&D per employee is
about double the
average
Profit margin is negative
and debt per employee is
almost 3x worse than the
average
Sales per employee
have doubled from
last year and are
now better than
average
Although sales per
R&D have doubled
they are well below
average
5/24/2016 26

Twitter Strategy & Execution Indices Versus The
SIMMETHOD B-I-C
5/24/2016
27
-15
-10
-5
0
5
10
15
20
25
30
35
SIMMETHOD
Best in Class
avg
Twitter
Except for the SIMMETHOD Assets, HR
and Cash/Debt Index, Twitter’s 2015
performance is below Best In Class levels.
On a positive side, its SIMMETHOD
Strategy & Execution Performance
Predictive Index is improving

Twitter SIMMETHOD Risk & Performance Summary
Index Value Index
trend
Index trend
vs. B-I-C
7 Laws
compliance
Sales - - - -
Overheads - - - -
HR + + + +
Cash/Debt + + + +
Management
Controllable Resources
+ + + +
Minimum Company
Business Model
- + - -
Value Creation + + + +
Strategy/execution
Performance Predictive
+ + + +
5/24/2016
WWW.SIMMETHOD.BLOGSPOT.COM
28

SIMMETHOD
Workday Versus The SV150 Index Average
Workday
Although cash per
employee has
decreased, is still
above average
R&D per employee
has increased and
is on par with the
average
Although profit margin
is still negative, debt
per employee has
been halved
Although sales
per employee
have increased
they are about
half the average
Sales per R&D
have not increased
and are well
below average
5/24/2016 29

SIMMETHOD
VMware Versus The SV150 Index Average
VMware
Cash per
employee is
slightly higher
than average
R&D per
employee is
about 25% less
than the average
Profit margin is 3x better
than average and debt
per employee is half the
average
Sales per
employee are
about 70%
lower than
average
Sales per R&D are
55 % below
average
5/24/2016 30

SIMMETHOD
Oracle Versus The SV150 Index Average
Oracle
Cash per
employee is
about 10% higher
than average
R&D per
employee is
about half the
average
Profit margin is over 4x
better than average and
debt per employee is
about twice the average
Sales per
employee are
about half the
average
Sales per R&D
have decreased
and are 25%
lower than avg.
5/24/2016 31

SIMMETHOD
Why Oracle HR Index Is Best In Class?
In relation to the SIMMETHOD Best in Class and
peers Oracle HR Index matches the following profile:
For every $3.5 of sales, Oracle’s employees generate
$1 profit
To achieve $1 of sales, Oracle needs to spend 3x less
in overheads than Salesforce
Oracle’s employees generate 10x more cash than
Salesforce’s employees
5/24/2016
32

SIMMETHOD
Oracle Risk Index
5/24/2016
33
5.4
5.6
5.8
6
6.2
6.4
6.6
6.8
7
7.2
2014 2015
Avg. B-I-C
SIMMETHOD Risk
Index
Oracle
SIMMETHOD Risk
Index
Oracle’s Risk Index
is at Best in Class
levels , very
important for a
cloud vendor

SIMMETHOD
Competitive Intelligence
5/24/2016
34
-30
-20
-10
0
10
20
30
40
Average B-I-C
SIMMETHOD
Strategy/
Execution
Performance
Predictive
Index
Oracle
SIMMETHOD
Strategy/
Execution
Performance
Predictive
index
SAP
SIMMETHOD
Strategy/
Execution
Performance
Predictive
index
Microsoft
SIMMETHOD
Strategy/
Execution
Performance
Predictive
index
IBM
SIMMETHOD
Strategy/
Execution
Performance
Predictive
index
Salesforce
SIMMETHOD
Strategy/
Execution
Performance
Predictive
Index
2012
2013
2014
2015
Although Salesforce’s
strategy & Execution
Performance
Predictive Index is still
negative, it has
improved in 2015

SIMMETHOD
5/24/2016
35
-12
-10
-8
-6
-4
-2
0
2
4
6
8
10
Avg. B-I-C
SIMMETHOD
Risk Index
Oracle
SIMMETHOD
Risk Index
SAP
SIMMETHOD
Risk Index
Microsoft
SIMMETHOD
Risk Index
IBM
SIMMETHOD
Risk Index
Salesforce
SIMMETHOD
Risk Index
2014
2015
As a cloud vendor, what is the risk that you
are transferring to your value chain?
Oracle & Microsoft Risk
Index are at B-I-C levels
and SAP’s Risk Index has
improved to positive
territory

SIMMETHOD
NetSuite Versus The SV150 Index Average
NetSuite
Cash per
employee is
about a quarter
of the average
R&D per
employee is one
third of the
average
Profit margin is
negative and debt per
employee is about 3x
lower than average
Sales per
employee are
about one third
of the average
Sales per R&D
are about 40%
below average
5/24/2016 36

SIMMETHOD
Cisco Versus The SV150 Index Average
Cisco
Cash per
employee is
about double the
average
R&D per
employee is
about the same
as the average
Profit margin is 4x better
than average and debt
per employee is about
twice the average
Sales per
employee are
about 40%
better than
average
Sales per R&D are
about same as
average
5/24/2016 37

SIMMETHOD
•SIMMETHOD
Crowd-Sourced
Analytics
5/24/2016 www.SIMMETHOD.blogspot.com 38

SIMMETHOD Strategy & Execution
Performance Predictive Tools
How to holistically
measure and predict
the outcome of your
strategy & execution
in the new digital
economy?

The SIMMETHOD Algorithms And The
7 Laws Of Growth And Value Creation
• “The real measure of your
products and services is the
value they add to your
customers”. SIMMETHOD

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.
5/24/2016
41

SIMMETHOD Ranking Algorithm
SIMMETHOD, based on the 7 Laws of Growth 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.
5/24/2016
WWW.SIMMETHOD.BLOGSPOT.COM
42

SIMMETHOD
Correlation between the Risk Index And The
5/24/2016
43
-10
0
10
20
30
40
50
60
70
80
SIMMETHOD
Risk Index
(The higher
the score the
less risk)
SIMMETHOD
Strategy &
Execution
Performance
Predictive
Index

2015 SIMMETHOD Strategy & Execution
Performance Predictive Index (Top 25%)
The market
values the
employees of
SIMMETHOD’s
top 25% 8x more
than the bottom
25%
5/24/2016
44

Employees of
SIMMETHOD’s
top 25% are 5x
more profitable
than the
bottom 25%
5/24/2016
45

SIMMETHOD
5/24/2016
46
-10
-5
0
5
10
15
20
25
30
35
SIMMETHOD
Risk Index
(The higher
the score the
less risk)
SIMMETHOD
Strategy &
Execution
Performance
Predictive
Index

The market
values the
employees of
SIMMETHOD’s
top 50% 4x more
than the bottom
50%
5/24/2016
47

Employees of
SIMMETHOD’s
top 50% are 3x
more profitable
than the
bottom 50%
5/24/2016
48

SIMMETHOD
5/24/2016
49
-25
-20
-15
-10
-5
0
5
10
SIMMETHOD
Risk Index
(The higher
the score the
less risk)
SIMMETHOD
Strategy &
Execution
Performance
Predictive
Index

SIMMETHOD
5/24/2016
50
-70
-60
-50
-40
-30
-20
-10
0
10
Humana
QuantaComputer
IBM
Anthem
Cigna
UnitedHealthGroup
Verizoncomm
Aetna
Adecco
WalMart
GE
Comcast
Sodexco
GrupoTelevisa
WellCareHealthPlans
Brambles
ComputerSciences
TimeWarnerCable
AmericanExpress
Innolux
JPMorganChase
Metlife
HP
AT&T
Libertyinteractive
Cablevision
Centurylink
Telefonica
Orange
DeutscheTelekom
SIMMETHOD
Risk Index
(The higher
the score the
less risk)
SIMMETHOD
Strategy &
Execution
Performance
Predictive
Index

SIMMETHOD
Link Between The Risk Index, the Strategy &
Execution Index And Your Future Performance
5/24/2016
51
-50
-40
-30
-20
-10
0
10
20
30
40
SIMMETHOD
Top 25%
SIMMETHOD
Top 50%
SIMMETHOD
Bottom 50%
SIMMETHOD
Bottom 25%
SIMMETHOD Risk Index
(The higher the score the
less risk)
SIMMETHOD Strategy &
Execution Performance
Predictive Index
Margin
Your SIMMETHOD Risk Index as
predictor of your future performance
and margins

SIMMETHOD
Link Between The Risk Index, The Strategy &
5/24/2016
52
-60
-40
-20
0
20
40
60
80
100
120
140
SIMMETHOD
Top 25%
SIMMETHOD
Top 50%
SIMMETHOD
Bottom 50%
SIMMETHOD
Bottom 25%
SIMMETHOD Risk
Index (The higher the
score the less risk)
SIMMETHOD
Strategy & Execution
Performance
Predictive Index
Average market value
in $B
predictor of your future performance
and market value

SIMMETHOD
Link Between The Risk Index, The Strategy &
5/24/2016
53
-50
-40
-30
-20
-10
0
10
20
30
SIMMETHOD
Top 25%
SIMMETHOD
Top 50%
SIMMETHOD
Bottom 50%
SIMMETHOD
Bottom 25%
SIMMETHOD Risk
Index (The higher
the score the less
risk)
SIMMETHOD
Strategy &
Execution
Performance
Predictive Index
Value per
employee in $B
Your SIMMETHOD Risk Index
as predictor of your future
performance and value per
employee

SIMMETHOD
Link Between The Risk Index And Your Future
Performance
5/24/2016
54
-50
-40
-30
-20
-10
0
10
20
30
SIMMETHOD
Top 25%
SIMMETHOD
Top 50%
SIMMETHOD
Bottom 50%
SIMMETHOD
Bottom 25%
SIMMETHOD
Risk Index (The
higher the score
the less risk)
SIMMETHOD
Strategy &
Execution
Performance
Predictive Index
Debt to generate
$1 of cash
predictor of your future Debt to
generate $1 of cash and performance

Why Do Businesses Succeed Or Fail?
SIMMETHOD Premise
SIMMETHOD
premise is simple:
Businesses fail primarily due to
internal decision-making based on
outdated industrial-era risk &
performance metrics, rather than
external circumstances beyond
management control.

SIMMETHOD
Crowd-Sourced Competitive Intelligence
SIMMETHOD’s Strategy
& Execution
Performance Predictive
Indices and Risk Profiles
are not deterministic.
Businesses that act
on their
SIMMETHOD
leading indicators
and risk alerts will
improve their 2016
performance.
5/24/2016 WWW.SIMMETHOD.BLOGSPOT.COM 56

SIMMETHOD’s Disclaimer
• The purpose of the SIMMETHOD Strategy &
Execution Performance Predictive Index and
risk and 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.
5/24/2016 www.simmethod.blogspot.com 57

• SIMMETHOD’s Global 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.

SIMMETHOD
Makes Your Risk And Performance More Predictable
SIMMETHOD makes your risk and performance
more predictable by aligning your strategy
and execution to the:
• Market forces where the most value is being
created and
• Success metrics of your customers in order to
directly contribute to their results
5/24/2016 WWW.SIMMETHOD.BLOGSPOT.COM 61

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
5/24/2016 62www.simmethod.blogspot.com

Simmethod and the 2016 silicon valley 150 index

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