Operating Income per Employee 2017, The Softletter Benchmark 53

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Operating Income per Employee 2017, The Softletter Benchmark 53

About the Softletter Benchmark 53

We have completely revamped our Benchmark 50, now the Benchmark 53, to reflect the profound changes the software industry has undergone over the last several years. The profiled are now broken into eight segments that provide a representative overview of industry trends and performance. The Softletter Benchmark 53¬†are all publicly-held companies and most of our basic business metrics are derived from documents these companies are legally required to provide to investors. When we believe circumstances warrant it, we do adjust these numbers to reflect financial reality. Please note that in June we will begin to update these numbers to include the 2015 numbers. The reason for not posting these numbers before is that a) a significant number of companies revise their initial 10-Ks soon after their release and b) because of fiscal year considerations, some 10-Ks are not available at the end of the calendar year. Operating Income per Employee¬†(OIE) is a derivative metric designed to measure how efficiently a company runs itself. The numbers are most valuable when comparing companies of a similar type or peer group, something the Benchmark 53 is designed to do. High-tech companies have traditionally relied on automation and brain power to drive revenues. Predictive analytics and “AI” are also becoming increasing drivers of increased OIE. By contrast, a major grocery chain such as Wegman’s or retailer like Wal-Mart is very labor-intensive operation and executes on a huge number of manual processes (which will be sharply reduced in the coming years as politicians push through “minimum wage” regulations and drive the “robotization” of physical store infrastructure). Softletter subscribers will note the strong correlation between OI and OIE. If you’re not profitable on an overall basis, the efficiency of your workforce cannot make up for this.

Operating Income Benchmark 53

Operating Income per Employee Analysis OIE standouts in this report begin with Apple, which at $566K is very impressive, particularly when you factor in the company’s retail sales force and the fact that Apple sells a great many things, always a challenge to OIE efficiency. In SaaS Sales and Marketing, Constant Contact squeezed out an OIE of $19K and 41K per employee. As we said in our operating income report, this is a tough category. SaaS Enterprise is likewise rocky terrain, with only Veeva posting positive numbers. Note the ability of the company to increase OIE while increasing headcount, a feat LogMeIn has been unable to replicate. On Premise is unremarkable except in the case of Nuance. A combined OIE $1,257 for a company in a sector in which no effective desktop or server-based competition exists is a surprising outlier. Complete analysis of the Benchmark 53 companies is available to Softletter subscribers.

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