What is the Service Leadership Index® Ticker?

What are the metrics being displayed?

The Ticker displays the financial performance of the Solution Providers who attained Best-in-Class ("BIC") profitability during the quarter. Best-in-Class is defined as the profitability which would put you into the top 25% most profitable Solution Providers that quarter. For example, if the BIC profitability is shown as 13.4%, then one fourth of all Solution Providers attained that profitability or higher.

In addition, Median performance and Bottom 1/4 performance are also shown. Median profitability is the performance level at which half the Solution Providers are more profitable and half are less profitable. Bottom 1/4 profitability is the performance level at which 75% of Solution Providers are more profitable.

Of the 41 critical operating metrics provided by the Service Leadership Index®, the Ticker displays six, explained in the table below:

Metric Description Value
EBITDA% Profitability, specifically, profits if the expenses associated with interest, taxes, depreciation and amortization are added back. This metric is chosen because it is commonly used in assessing the ability of the organization to produce cash flow for growth and safety, and is also a primary determiner of stock value.
Quarter/Quarter Revenue Change What is the increase (decrease) in overall revenue of the Best-in-Class profitability Solution Providers from the previous quarter? This number is the average revenue change of all the Solution Providers who attained BIC profitability. The metric is repeated for the Median profitability and Bottom 1/4 profitability Solution Providers. Is the top-line revenue of the Solution Provider population increasing or decreasing? Are the BIC profitability companies growing faster or slower than the Median and Bottom 1/4 profitability companies?
Product GM% What is the gross margin of the product sales of the Best-in-Class profitability Solution Providers? This number is the average Product GM% of all the Solution Providers who attained BIC profitability. The metric is repeated for the Median profitability and Bottom 1/4 profitability Solution Providers. What gross margin are the BIC profitability companies attaining on their product sales, and how does that compare to less profitable companies?
Services GM% What is the gross margin of the services of the Best-in-Class profitability Solution Providers? This number is the average Services GM% of all the Solution providers who attained BIC profitability. The metric is repeated for the Median profitability and Bottom 1/4 profitability Solution Providers. What gross margin are the BIC profitability companies attaining on their services sales, and how does that compare to less profitable companies?
SG&A % What are the Solution Providers who are attaining Best-in-Class profitability, spending on Sales, General and Administrative expenses? This number is the average SG&A% of all the Solution Providers who attained BIC profitability. The metric is repeated for the Median profitability and Bottom 1/4 profitability Solution Providers. How do top profitability companies spend on SG&A as compared to less profitable companies?
Headcount Change What is the increase (decrease) in overall headcount of the Best-in-Class profitability Solution Providers from the previous quarter? This number is the average headcount change of all the Solution Providers who attained BIC profitability. The metric is repeated for the Median profitability and Bottom 1/4 profitability Solution Providers. Is the headcount of the Solution Provider population increasing or decreasing? Are the BIC profitability companies adding or decreasing headcount faster or slower than the Median and Bottom 1/4 profitability companies?

So the Ticker is all Solution Providers lumped together. What about those who have my business model?

Subscribers to the Service Leadership Index® gain access to the 41 critical metrics for Solution Providers who have their specific business model. So the comparisons are directly applicable. Of course, subscribers also receive the same analysis for all Solution Providers (regardless of business model) so they can see how they compare to the general Solution Provider population at large.

What are the 41 critical operating metrics?

Subscribers to the Service Leadership Index® gain access to all 41 operating metrics which enable executives to diagnose profitability and growth problems based on objective analysis rather than guesswork. These are:

  • Overall Gross Margin
    • Overall Gross Margin %
    • Hardware Resell % of Gross Margin
    • Software Licenses (Resell) % Gross Margin
    • Software Licenses (Own Software) % Gross Margin
    • Services Gross Margin %
  • Services GM % by Line of Business
    • Infrastructure Technical Services GM %
    • Infrastructure Professional (Project) GM%
    • Infrastructure Managed Services GM%
    • Shared Infrastructure Services GM%
    • All Infrastructure GM%
    • Applications Technical Services GM%
    • Application Professional (Project) GM%
    • Application Managed Services GM%
    • All Applications Services GM%
  • Services Realization
    • Infrastructure Technical Services Professionals by Dollars
    • Infrastructure Professional Services Professionals by Dollars
    • Infrastructure Managed Services Professionals by Dollars
    • All Billable Infrastructure Professionals (multiple of W2)
    • Applications Technical Services Professionals by Dollars
    • Applications Professional Services Professionals by Dollars
    • Applications Managed Services Professionals by Dollars
    • All Billable Applications Professionals (multiple of W2)
    • Combined All Services Professionals (multiple of W2)
  • Expenses as a % of Revenue
    • Sales Department Compensation
    • Services Direct Labor Compensation % of Services Revenue (does not include admin)
    • Management and Administrative Compensation
    • Total Overall Compensation
    • Occupancy Expense
    • Internal Training Expense
    • Voluntary Employee Benefits
    • All Other Operating Expenses
    • Total Overall Operating Expenses
  • Balance Sheet Ratios
    • Return on Assets (ROA) Annualized
    • Accounts Receivable Days Sales Outstanding
    • Total Inventory Days
    • Debt to Equity
  • Performance Summary
    • Total Revenue $
    • Total Gross Margin $
    • EBITDA $
    • EBITDA as a % of Revenue

So what now? Once I see how I compare, how do I find out how to improve?

Improving performance is a three-step process:

  1. Diagnosis (benchmarking, such as this Ticker),
  2. Prescription (best practices, access to know-how),
  3. Treatment (execution, putting the best practices into action).

Subscribing to the Service Leadership Index® or becoming an S-L Index Group member delivers the benchmark analysis you need to diagnose financial and operating problems (Step 1, above), enabling you to objectively identify areas of improvement by comparing to Best-in-Class Solution Providers of the same business model.

To accomplish these steps, there are three levels of S-L Index membership:

Membership Level Step 1 – Benchmarking Step 2 – Best Practices Step 3 – Execution
S-L Index Educator© Subscriber Quarterly Self-Driven
(Optional Hourly Coaching)
Self-Driven
(Optional Hourly Coaching)
S-L Index Accelerator© Subscriber Quarterly 1.5 hours of one-on-one consulting time with an S-L senior advisor per quarter.
S-L Index Optimizer Group© Member Quarterly Three 1.5 day best practices sharing meetings per year in an S-L-facilitated peer group of up to ten similar but non-competing Solution Providers.

In addition, Service Leadership also provides two on-demand (i.e. no subscription necessary) benchmarks focusing on annual rather than quarterly results, for those companies who wish to benchmark but do not want to subscribe to a recurring service. The Profitability Comprehensive Diagnostic Report© provide nine pages of in-depth analysis of all aspects of a Solution Provider business, comparing the participant to all Solution Providers in the Service Leadership Index®, to just those Solution Providers with similar business models, and to those Solution Providers pursuing the same size customers. This report covers all major lines of business including Managed Services, but for those companies wishing an even deeper dive into their Managed Services operation, we specifically offer the Managed Services Comprehensive Diagnostic Report©.

On-Demand Benchmark Step 1 – Benchmarking Step 2 – Best Practices Step 3 – Execution
S-L Index Profitability Comprehensive Diagnostic Report© On-Demand
(Typically once per year.)
Self-Driven
(Optional Hourly Coaching)
Self-Driven
(Optional Hourly Coaching)
S-L Index Managed Services Comprehensive Diagnostic Report© On-Demand
(Typically once per year.)
Self-Driven
(Optional Hourly Coaching)
Self-Driven
(Optional Hourly Coaching)
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