Total Profit Solutions for IT Companies®
Service Leadership Index®
- Product GM% - BIC Profit SPs: Q2-12 27.6% Q3-12 26.8% Q4-12 29.0% Q1-13 23.6%
- Product GM% - Median Profitability SPs: Q2-12 24.0% Q3-12 20.2% Q4-12 21.9% Q1-13 20.8%
- Product GM% - Bottom 1/4 Profitability SPs: Q2-12 12.0% Q3-12 22.3% Q4-12 15.0% Q1-13 6.4%
- Services GM% - BIC Profitability SPs: Q2-12 53.7% Q3-12 57.6% Q4-12 54.9% Q1-13 53.1%
- Services GM% - Median Profitability SPs: Q2-12 47.7% Q3-12 47.5% Q4-12 46.9% Q1-13 44.0%
- Services GM% - Bottom 1/4 Profitability SPs: Q2-12 41.0% Q3-12 37.8% Q4-12 36.8% Q1-13 32.7%
- SG&A% - BIC Profitability SPs: Q2-12 27.2% Q3-12 26.3% Q4-12 27.3% Q1-13 28.5%
- SG&A% - Median Profitability SPs: Q2-12 29.6% Q3-12 28.8% Q4-12 29.8% Q1-13 29.7%
- SG&A% - Bottom 1/4 Profitability SPs: Q2-12 32.0% Q3-12 34.7% Q4-12 37.3% Q1-13 35.7%
- EBITDA% - BIC Profitability SPs: Q2-12 18.4% Q3-12 23.7% Q4-12 21.5% Q1-13 17.2%
- EBITDA% - Median Profitability SPs: Q2-12 8.6% Q3-12 10.3% Q4-12 8.5% Q1-13 6.3%
- EBITDA% - Bottom 1/4 Profitability SPs: Q2-12 −0.3% Q3-12 −2.4% Q4-12 −6.7% Q1-13 −5.2%
Quarterly Solution Provider Performance
The Service Leadership Predominant Business Model Gateway for Vendors
Why do some best practices work with some Solution Providers, and others don't? A key reason is that the Solution Provider community is made up of differing business models—ten to be exact. Each has unique characteristics which govern how relevant and how usable a given best practice might be. The same is true for benchmarks of Solution Providers: if you don't know their specific business model, benchmark comparisons are inaccurate, or worse, misleading.
The Service Leadership Index® is the industry's leading method of categorizing Solution Providers to ensure benchmark and best practice relevance and applicability. It starts with the foundational Normalized Solution Provider Chart of Accounts© which enables all Solution Providers to classify and report their revenue and costs in a standardized way. This enables both optimal internal financial management as well as identification of core business model for benchmarking and best practices purposes. Then, the Predominant Business Model© construct defines ten business models into which all Solution Providers can be categorized. While no Solution Provider fits any model exactly, this approach sufficiently recognizes the operating realities which drive Solution Provider business intention, capability, execution and results in the ways particular to each Predominant Business Model. Once the Solution Provider's Predominant Business Model is identified, it is considerably easier to define best practices which are more applicable, engaging and straightforward for them to implement. In addition, categorizing benchmark participants by Predominant Business Model increases the accuracy, relevance and safety of the results.
Now, for the first time, Service Leadership is providing these two foundational components—the Normalized Solution Provider Chart of Accounts© and the Predominant Business Model© construct—at no cost to the Solution Provider community and its vendors, associations and best practices consultants. These are available for free use on an unrestricted license basis.
We are doing this as part of our over-arching mission to improve Solution Provider profitability. The community expends a great deal of money, effort and good intentions to bring best practices and measure results, yet it does so in inefficient ways, because of the lack of precision around types of Solution Provider business models and a standard way to measure gross margin and profit. Much can be gained by everyone once the standards are adopted because these efforts can then be targeted precisely enough to greatly increase their effectiveness. These are ideas whose time has come if the industry is to mature to the next level.
All we ask is that you remember where you got them.
The links below provide vendors, associations and industry consultants with the tools to determine the Predominant Business Models of their Solution Provider constituencies.