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An introduction to Piercing View's IoE Score™ Serge Ugarte January 2016
An introduction to Piercing View's IoE Score™
Serge Ugarte
January 2016
Copyright 2016 2
Contents
IoE industry journey evolution: our point of view ........................................................................................... 3
Approach and methodology ...............................................................................................................................8
Industry details and IoE Pivot Categorization ............................................................................................ 15
Exhibits
Additional Material
Additional Material 1: Industry Focus ............................................................................................................... 15
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IoE industry journey evolution: our point of view
Before diving into the details of IoE Score View, let's set the stage. Specifically, which industries and which
companies should be in focus, and why? Where should Piercing View focus its resources to evaluate
companies?
The key questions that guided our thinking were:
� Across industries, sub-industries, and emerging themes, is there an IoE Evolution that compels us to
focus on one industry before another. In other words, who do we want to look at first; who second?
� How do we prioritize and categorize? What are the levers at an industry level that can help assess
where in the industry business processes and models the IoE impact will be most pronounced?
� Are there 'themes' that embody trends within and across industries that we should pay attention to?
This is our stake in the ground. We will refine and adjust our thinking as we observe empirical results across the
sectors. Our point of view can be synthesized in the following four points, explained in Exhibit 1.1 and explored
in more detail in the ‘analysis in focus’ and ‘approach and methodology’ sections below.
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Exhibit 1.1: Our point of view
What emerges from our analysis is that there are a series of sub industries that will be affected in the first wave
of developments. Of the 156 sub-industries in the S&P 500, we project that about 25% (38 total) sub-industries
will be in the eye of the storm for IoE disruption in the next three years. So, by 2018, companies that inhabit
these industries will be responding to a significant disruption across the majority of their value components,
their business processes, and possibly within their business models.
Of the four InFocus Industries, our analysis points to 29 sub-industries that are in immediate focus. In addition,
we have identified seven further sub-industries that demand this immediate response. The Exhibit below
shows sub-industries where we anticipate the highest impact, in order of intensity and timeframe. This subset
is a result of filtering to isolate industries that fall in the 'top right' quadrant of depth of impact and timeframe
of disruption beginning by 2018. These sub-industries need to start their IoE journey now.
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Analysis in Focus
Exhibit 1.2: IoE Pivots
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Exhibit 1.3: IoE Timing
Efficiency
Air Freight & Logis cs
Efficiency
Integrated Oil & Gas
Oil & Gas Explora on &
Produc on
Trucking
Renewable Electricity
Efficiency
Health Care Facili es
Wave 4 Wave 3 Wave 2 Wave 1
Product Oil & Gas Equipment & Services
Aerospace & Defense
Construc on Machinery & Heavy
Trucks
Automobile Manufacturers
Consumer Electronics
Household Appliances
Leisure Products
Auto Parts & Equipment
Health Care Equipment
Technology Peripherals
Product Heavy Electrical Equipment
Agricultural & Farm Machinery
Industrial Machinery
Product Electrical Components &
Equipment
Building Products
Homebuilding
Footwear Property & Casualty Insurance
Product Health Care Supplies
Service
Security & Alarm Services
Service
Oil & Gas Drilling
Construc on & Engineering
Industrial Conglomerates
Environmental & Facili es
Services
Service
Service
Efficiency
Railroads
Distributors
Food Distributors
Agricultural Products
REITs
Water U li es
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Exhibit 1.4: IoE Themes
Wave 4 Wave 3 Wave 2 Wave 1
Product
Health Care Equipment
Product
Product
Product
Health Care Supplies
Service
Service
Service
Service
Efficiency
Efficiency
Health Care Facili; es
Efficiency
Efficiency
Connected
big health
3% of
S&P 500
Wave 4 Wave 3 Wave 2 Wave 1
Product
Consumer Electronics
Household Appliances
Leisure Products
Technology Hardware,
Storage & Peripherals
Product
Product
Building Products
Footwear
Homebuilding
Product
Service
Security & Alarm Services
Service
Service
Service
Efficiency
Efficiency
Efficiency
Efficiency
Connected
Personal
Environment
(home, house,
health)
0.5% to
3% of
S&P 500
Wave 4 Wave 3 Wave 2 Wave 1
Product
Construc, on Machinery &
Heavy Trucks
Product
Heavy Electrical Equipment
Agricultural & Farm
Machinery
Industrial Machinery
Product
Electrical Components &
Equipment
Product
Service
Service
Service
Service
Efficiency
Efficiency
Efficiency
Efficiency
Connected
industrial
machines
2% of
S&P 500
Wave 4 Wave 3 Wave 2 Wave 1
Product
Product
Product
Product
Service
Service
Service
Service
Efficiency
Air Freight & Logis8cs
Efficiency
Efficiency
Railroads
Food Distributors
Efficiency
Trucking
Connected
logis8cs/
transporta8on
2% of
S&P 500
Wave 4 Wave 3 Wave 2 Wave 1
Product
Oil & Gas Equipment &
Services
Product
Product
Product
Service
Service
Oil & Gas Drilling
Construc; on & Engineering
Industrial Conglomerates
Environmental & Facili; es
Services
Service
Service
Efficiency
Efficiency
Efficiency
Efficiency
Integrated Oil & Gas
Oil & Gas Explora; on &
Produc; on
Connected
oil & gas
up to 9%
of S&P
500
Wave 4 Wave 3 Wave 2 Wave 1
Product
Automobile Manufacturers
Auto Parts & Equipment
Technology Peripherals
Product
Product
Property & Casualty Insurance
Product
Service
Service
Service
Service
Efficiency
Efficiency
Efficiency
Efficiency
Connected
Car
2-4% of
S&P 500
Wave 4 Wave 3 Wave 2 Wave 1
Product
Aerospace & Defense
Product
Product
Product
Service
Service
Service
Service
Efficiency
Efficiency
Efficiency
Efficiency
Connected
aerospace
2.6% of
S&P 500
Wave 4 Wave 3 Wave 2 Wave 1
Product
Product
Product
Product
Service
Service
Service
Service
Efficiency
Efficiency
Efficiency
REITs
Efficiency
Connected
buildings
2.3% of
S&P 500
Connected Health Connected Life
Connected Supply Chain Connected Machines
Connected Energy Connected Car
Connected Assets – Buildings Connected Space & Military
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Approach and methodology
Important Methodology Note
Piercing View uses the Global Industry Classification Standard (GICS®) as its categorization structure of sectors,
industry groups, industries, and sub industries. It is a widely accepted classification to aggregate peers within
industries and, as importantly, it is used as a methodology for S&P sectors & indices performance.
The 1500 largest (market cap) US publicly traded companies are categorized according to GICS sectors;
S&P500, S&P400, S&P600.
GICS is the foundational architecture for the IoE Score View database, tool kit, and reporting analytics. Each
industry sector is mirrored precisely in our methodology and each company represented in the S&P 1500 is
categorized within one of the sub industries.
We accept the definitions and company categorization at face value, but might in some cases cross-reference a
company across multiple sub segments for reporting and scoring comparison purposes.
The GICS industry sectors shown in Exhibit 1.5:
Exhibit 1.5: Sector breakdown, based on GICS sectors
These are used as the basis for all IoE Score View frameworks.
Source:
Source: S&P Dow Jones Indices
McGraw Hill Finance, Equity S&P 500
http://www.spindices.com/index-
finder/
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We perform a two-step filtering process to determine our InScope and InFocus industries as represented
above. Step 1 helps us identify the InScope sub-industries and their primary IoE Pivot. Step 2 further refines
the list to generate 'waves of IoE adoption' for each sub-industry and its possible impact and timing; this helps
focus Piercing View's industry and company coverage.
Step 1. This step determines which of the 155+ sub-segments should be In Scope for IoE Disruption analysis
and aligns with POV#1 and #2 (see Exhibit 1.1).
To achieve this, we filter industry sub-segments
according to its IoE Pivot: or where, across the value
chain of the sub-industry, the primary point of IoE
disruption is located.
There three primary pivots identified in POV2 above –
disruptive products, disruptive services, disruptive
efficiencies – are applied alongside whether the
industry is a technology enable, or IoE Stack (category
4). Finally, we assess whether none of these are
applicable, leaving that sub-industry outside of the
first phase of IoE disruption (category 5).
Whatever is selected does not mean that the other
pivots are not in scope, simply that competitive
pressures will be concentrated in that pivot.
Exhibit 1.6: Determining InScope sub-industries
For the first wave of IoE analysis, we focus on industries that have the highest potential for disruption and we
do not evaluate the ‘enablers’ of IoE transformation, such as infrastructure and telecommunications industries.
If the sub-industry falls into category 4 or 5, we set aside companies included in those sub-industries and do
not endeavor to track or score them at this time.
Categorize industries across 3 IoE opportunity “pivots”
Filter and rank order according to IoE impact and ming
Evaluate IoE themes – cross sec on of priority
industry sectors
Define Target Companies &
Industry Sectors
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This proves to be an important exercise in selecting companies to focus on, and in what order. It can also assist
us in understanding better what type of IoE initiatives were are looking for primarily: which business processes
are more important than others. Finally, it allows us to generate a list of industry peers we will be comparing
each company to.
There is certainly room for refinement and changes in categorization, especially for those deemed out of scope.
We are open to suggestions and change requests especially if you would like to pre-order an IoE Score report
generated for specific sub-industries and companies not in our current scope or priority.
Results: Of the 155 sub-industries, 68 remain, captured within their Pivot in Exhibit 1.7, below. For a detailed
elaboration of each of the 155 sub-industries, its definition as developed by GICS/S&P and its categorization,
please refer to Additional Material 1: Industry details.
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Exhibit 1.7: IoE Disruption in InScope sub-industries
Step 2. This step isolations and prioritizes the industry IoE InFocus areas which have the highest potential
depth of disruption and which will be exhibited vigorously in the next 3-5 years, aligning with POV #3 (see
Exhibit 1.1).
Since Piercing View is at its core a scoring and strategic thinking group, we, of course, used a scoring exercise to
assist us. An example of our scoring criteria from 1-5 for each sub-industry is below. For the purposes of this
document we are sharing the results of the Opportunity/ Depth of Disruption analysis, the left part of the
criteria. The go to market considerations are additive and simply interesting; since we weighted the first two
criteria heavily, it did not substantially change the results.
Products Services Efficiencies
Oil & Gas Equipment & Services Oil & Gas Drilling Integrated Oil & Gas
Oil & Gas Exploration & Production
Oil & Gas Refining & Marketing
Oil & Gas Storage & Transportation
Aerospace & Defense Construction & Engineering Air Freight & Logistics
Building Products Industrial Conglomerates Airlines
Electrical Components & Equipment Environmental & Facilities Services Marine
Heavy Electrical Equipment Security & Alarm Services Railroads
Construction Machinery & Heavy Trucks Trucking
Agricultural & Farm Machinery
Industrial Machinery
Auto Parts & Equipment Casinos & Gaming
Tires & Rubber Hotels, Resorts & Cruise Lines
Automobile Manufacturers Leisure Facilities
Motorcycle Manufacturers Distributors
Consumer Electronics Internet Retail
Homebuilding Department Stores
Household Appliances General Merchandise Stores
Leisure Products Apparel Retail
Apparel, Accessories & Luxury Goods Computer & Electronics Retail
Footwear Home Improvement Retail
Specialty Stores
Homefurnishing Retail
Household Products Drug Retail
Personal Products Food Distributors
Food Retail
Hypermarkets & Super Centers
Agricultural Products
Health Care Equipment Health Care Services Health Care Facilities
Health Care Supplies Managed Health Care
Pharmaceuticals
Financials Property & Casualty Insurance REITs
Internet Software & Services IT Consulting & Other Services
Data Processing & Outsourced Services
Electric Utiliies
Gas Utilities
Multi-Utilities
Independent Power Producers & Energy Traders
Water Utilities
Renewable Electricity
Utilities
Energy
Industrials
Consumer Discretionary
Consumer Staples
Health Care
Information Technology
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Exhibit 1.8: IoE Disruption Scoring Template
Results: After scoring each of the 68 sub-industries, 37 remain. Given that we are at the starting line of the IoE
journey, the objective is to narrow the InScope sub-industries to focus Piercing View assets and resources. We
term these the InFocus sub-industries that form the basis of our production activities and company coverage.
That said, InScope sub-industries continue to be on our radar for evaluation as opportunities present
themselves.
Using the scoring template in the previous exhibit, the results guide a prioritization matrix, captured in Exhibit
1.9. The results are reflected in POV #3. Exhibit 1.10 captures our scoring inputs, which can and will be
adjusted over time.
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Exhibit 1.9: InFocus Waves 1-4 scoring criteria
5
Wave 4 Wave 2 Wave 1
4
Wave 3 Wave 2
Depth of
Impact
within
Industry
3
2
1
1 2 3 4 5
Time to Broad Impact
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Exhibit 1.10: IoE Pivot Prioritization
Sub Industrydepth of
impact
time
frameWave Sub Industry
depth of
impact
time
frameWave Sub Industry
depth of
impact
time
frameWave
1
Oil & Gas
Equipment &
Services
4 4 1 Oil & Gas Drilling 4 3 2 Integrated Oil & Gas
4 3 4
2Aerospace &
Defense5 4 1
Construction &
Engineering4 3 2
Oil & Gas Exploration
& Production 4 3 4
3 Building Products 3 3 3Industrial
Conglomerates4 3 2
Oil & Gas Refining &
Marketing 2 2
4
Electrical
Components &
Equipment
3 3 3Environmental &
Facilities Services4 3 2
Oil & Gas Storage &
Transportation3 4
5Heavy Electrical
Equipment4 3 2
Security & Alarm
Services4 4 1 Air Freight & Logistics
4 4 1
6
Construction
Machinery &
Heavy Trucks
4 4 1 Health Care Services 2 2 Airlines
1 2
7Agricultural &
Farm Machinery4 3 2
Managed Health
Care2 1 Marine
2 1
8Industrial
Machinery 4 3 2
IT Consulting &
Other Services3 4 Railroads
3 3 3
9Auto Parts &
Equipment4 4 1
Data Processing &
Outsourced Services1 1 Trucking
4 1 4
10 Tires & Rubber 2 2 Casinos & Gaming 1 1
11Automobile
Manufacturers5 4 1
Hotels, Resorts &
Cruise Lines 2 2
12Motorcycle
Manufacturers2 2 Leisure Facilities
2 2
13Consumer
Electronics5 4 1 Distributors
3 3 3
14 Homebuilding 3 2 3 Internet Retail 2 2
15Household
Appliances4 4 1 Department Stores
1 1
16 Leisure Products 4 4 1General Merchandise
Stores 1 1
17
Apparel,
Accessories &
Luxury Goods
2 2 Apparel Retail
1 1
18 Footwear 3 3 3Computer &
Electronics Retail 1 1
19Household
Products1 1
Home Improvement
Retail 1 1
20 Personal Products 1 1 Specialty Stores 1 1
21Health Care
Equipment5 4 1 Homefurnishing Retail
1 1
22Health Care
Supplies2 4 4 Drug Retail
2 2
23 Pharmaceuticals 4 3 Food Distributors 3 3 3
24Property &
Casualty Insurance3 2 3 Food Retail
1 1
25Internet Software
& Services3 3
Hypermarkets &
Super Centers 1 1
26Technology
Peripherals4 2 1 Agricultural Products
3 3 3
Health Care Facilities 3 4 2
REITs 3 3 3
Electric Utilities 3 2
Gas Utilities 1 1
Multi-Utilities 2 2
Independent Power
Producers & Energy
Traders 1 1
Water Utilities 3 3 3
Renewable Electricity 4 2 4
EfficiencyServicesProducts
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Additional Material 1: Industry Focus
Industry details and IoE Pivot Categorization
All sub-industries are included in this analysis. To recap, each is categorized into one of five categories. If any
category is not shown within an industry sector, this means that no sub-industry has been slotted into that
category.
The five categories are:
1. disruptive products; value primarily generated from new/reinvented products
2. disruptive services; value primarily from new/reinvented services to end customers/industry
3. disruptive efficiencies; value primarily from internal productivity/efficiencies
4. IoE Stack – technology enabler
5. None of the above: Not a natural 1st
phase “fit”
We explore each of the industries below.
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1. Energy Sector 9.2% S&P500 Market Cap (as of Nov 2014)
This sector includes companies engaged in exploration and production, refining and marketing and storage and
transportation of oil, gas, coal and consumable fuels. It also includes companies that offer oil and gas
equipment and services.
Copyright 2016 17
2. Materials Sector 3.1% S&P500 Market Cap (as of Nov 2014)
Sector includes companies that manufacture chemicals, construction materials, glass, paper, forest products
and related packaging products; and metals, minerals and mining companies, including producers of steel.
We will not focus on any companies within the Materials sector for now.
Copyright 2016 18
3. Industrials Sector 10.27% S&P500 Market Cap (as of Nov 2014)
Sector includes manufacturers and distributors of capital goods such as aerospace and defense, building
products, electrical equipment and machinery; and companies that offer construction and engineering services.
It also includes providers of commercial and professional services including printing, environmental and
facilities services, office services and supplies, security and alarm services, human resource and employment
services, transportation services, and research and consulting services. Some sub industries remain out of
scope for Phase 1.
IoE Products % of S&P
500
IoE Services % of S&P
500
IoE Efficiencies % of S&P
500
Aerospace & Defense Construction & Engineering Air Freight & Logistics
Manufacturers of civil or military aerospace and defense
equipment, parts or products. Includes defense
electronics and space equipment.
Companies engaged in primarily non-residential
construction. Includes civil engineering companies and
large-scale contractors. Excludes companies classified in
the Homebuilding Sub-Industry.
Companies providing air freight transportation, courier and logistics
services, including package and mail delivery and customs agents.
Excludes those companies classified in the Airlines, Marine or
Trucking Sub-Industries.
Building Products Industrial Conglomerates Airlines
Manufacturers of building components and home
improvement products and equipment. Excludes lumber
and plywood classified under Forest Products and
cement and other materials classified in the
Construction Materials Sub-Industry.
Diversified industrial companies with business activities
in three or more sectors, none of which contributes a
majority of revenues. Stakes held are predominantly of
a controlling nature and stake holders maintain an
operational interest in the running of the subsidiaries.
Companies providing primarily passenger air transportation.
Electrical Components & Equipment Environmental & Facilities Services Marine
Companies that produce electric cables and wires,
electrical components or equipment not classified in the
Heavy Electrical Equipment Sub-Industry.
Companies providing environmental and facilities
maintenance services. Includes waste management,
facilities management and pollution control services.
Excludes large-scale water treatment systems classified
in the Water Utilities Sub-Industry.
Companies providing goods or passenger maritime transportation.
Excludes cruise-ships classified in the Hotels, Resorts & Cruise Lines
Sub-Industry.
Heavy Electrical Equipment Security & Alarm Services Railroads
Manufacturers of power-generating equipment and
other heavy electrical equipment, including power
turbines, heavy electrical machinery intended for fixed-
use and large electrical systems. Excludes cables and
wires, classified in the Electrical Components &
Equipment Sub-Industry.
Companies providing security and protection services to
business and governments. Includes companies
providing services such as correctional facilities, security
& alarm services, armored transportation & guarding.
Excludes companies providing security software
classified under the Systems Software Sub-Industry and
home security services classified under the Specialized
Consumer Services Sub-Industry. Also excludes
companies manufacturing security system equipment
classified under the Electronic Equipment & Instruments
Sub-Industry.
Companies providing primarily goods and passenger rail
transportation.
Construction Machinery & Heavy Trucks Trucking
Manufacturers of heavy duty trucks, rolling machinery,
earth-moving and construction equipment, and
manufacturers of related parts. Includes non-military
shipbuilding.
Companies providing primarily goods and passenger land
transportation. Includes vehicle rental and taxi companies.
Agricultural & Farm Machinery Airport Services
Companies manufacturing agricultural machinery, farm
machinery, and their related parts. Includes machinery
used for the production of crops and agricultural
livestock, agricultural tractors, planting and fertilizing
machinery, fertilizer and chemical application
equipment, and grain dryers and blowers.
Operators of airports and companies providing related services.
Industrial Machinery Highways & Railtracks
Manufacturers of industrial machinery and industrial
components. Includes companies that manufacture
presses, machine tools, compressors, pollution control
equipment, elevators, escalators, insulators, pumps,
roller bearings and other metal fabrications.
Owners and operators of roads, tunnels and railtracks.
Office Services & Supplies Marine Ports & Services
Providers of office services and manufacturers of office
supplies and equipment not classified elsewhere.
Owners and operators of marine ports and related services.
0.77 0
0.03 0
0.64 0.03
0.18 0
0.58 0.23 0
0 0.14 1.04
2.64 0.14 0.76
0.07 2.3 0.3
Copyright 2016 19
IoE Insufficient Phase 1 Impact
Trading Companies & Distributors
Trading companies and other distributors of industrial equipment and products.
Commercial Printing
Companies providing commercial printing services. Includes printers primarily serving the
media industry.
Diversified Support Services
Companies primarily providing labor oriented support services to businesses and
governments. Includes commercial cleaning services, dining & catering services, equipment
repair services, industrial maintenance services, industrial auctioneers, storage &
warehousing, transaction services, uniform rental services, and other business support
services.
Human Resource & Employment Services
Companies providing business support services relating to human capital management.
Includes employment agencies, employee training, payroll & benefit support services,
retirement support services and temporary agencies.
Research & Consulting Services
Companies primarily providing research and consulting services to businesses and
governments not classified elsewhere. Includes companies involved in management
consulting services, architectural design, business information or scientific research,
marketing, and testing & certification services. Excludes companies providing information
technology consulting services classified in the IT Consulting & Other Services Sub-Industry.
Copyright 2016 20
4. Consumer Discretionary Sector 11.75% S&P500 Market Cap (as of Nov 2014)
Businesses in this sector tend to be the most sensitive to economic cycles. Its manufacturing segment includes
automotive, household durable goods, leisure equipment, and textiles and apparel. The services segment
includes hotels, restaurants and other leisure facilities; media production and services; and consumer retailing
and services.
Again, some sub-industries are out of scope.
Copyright 2016 21
IoE Products % of
S&P 500
IoE Services % of
S&P 500
IoE Efficiencies % of
S&P
Auto Parts & Equipment Casinos & Gaming
Manufacturers of parts and accessories for automobiles and
motorcycles. Excludes companies classified in the Tires & Rubber Sub-
Industry.
Owners and operators of casinos and gaming facilities. Includes
companies providing lottery and betting services.
Tires & Rubber Hotels, Resorts & Cruise Lines
Manufacturers of tires and rubber. Owners and operators of hotels, resorts and cruise-ships. Includes
travel agencies, tour operators and related services not classified
elsewhere . Excludes casino-hotels classified in the Casinos & Gaming
Sub-Industry.
Automobile Manufacturers Leisure Facilities
Companies that produce mainly passenger automobiles and light
trucks. Excludes companies producing mainly motorcycles and three-
wheelers classified in the Motorcycle Manufacturers Sub-Industry and
heavy duty trucks classified in the Construction Machinery & Heavy
Trucks Sub-Industry
Owners and operators of leisure facilities, including sport and fitness
centers, stadiums, golf courses and amusement parks not classified in
the Movies & Entertainment Sub-Industry.
Motorcycle Manufacturers Distributors
Companies that produce motorcycles, scooters or three-wheelers.
Excludes bicycles classified in the Leisure Products Sub-Industry.
Distributors and wholesalers of general merchandise not classified
elsewhere. Includes vehicle distributors.
Consumer Electronics Internet Retail
Manufacturers of consumer electronics products including TVs, home
audio equipment, game consoles, digital cameras, and related
products. Excludes personal home computer manufacturers classified
in the Technology Hardware, Storage & Peripherals Sub-Industry, and
electric household appliances classified in the Household Appliances
Sub-Industry.
Companies providing retail services primarily on the internet, not
classified elsewhere.
Homebuilding Department Stores
Residential construction companies. Includes manufacturers of
prefabricated houses and semi-fixed manufactured homes.
Owners and operators of department stores.
Household Appliances General Merchandise Stores
Manufacturers of electric household appliances and related products.
Includes manufacturers of power and hand tools, including garden
improvement tools. Excludes TVs and other audio and video products
classified in the Consumer Electronics Sub-Industry and personal
computers classified in the Technology Hardware, Storage &
Peripherals Sub-Industry.
Owners and operators of stores offering diversified general
merchandise. Excludes hypermarkets and large-scale super centers
classified in the Hypermarkets & Super Centers Sub-Industry.
Leisure Products Apparel Retail
Manufacturers of leisure products and equipment including sports
equipment, bicycles and toys.
Retailers specialized mainly in apparel and accessories.
Apparel, Accessories & Luxury Goods Computer & Electronics Retail
Manufacturers of apparel, accessories & luxury goods. Includes
companies primarily producing designer handbags, wallets, luggage,
jewelry and watches. Excludes shoes classified in the Footwear Sub-
Industry.
Owners and operators of consumer electronics, computers, video and
related products retail stores.
Footwear Home Improvement Retail
Manufacturers of footwear. Includes sport and leather shoes. Owners and operators of home and garden improvement retail stores.
Includes stores offering building materials and supplies.
Specialty Stores
Owners and operators of specialty retail stores not classified
elsewhere. Includes jewelry stores, toy stores, office supply stores,
health & vision care stores, and book & entertainment stores.
Automotive Retail
Owners and operators of stores specializing in automotive retail.
Includes auto dealers, gas stations, and retailers of auto accessories,
motorcycles & parts, automotive glass, and automotive equipment &
parts.
Homefurnishing Retail
Owners and operators of furniture and home furnishings retail stores.
Includes residential furniture, homefurnishings, housewares, and
interior design. Excludes home and garden improvement stores,
classified in the Home Improvement Retail Sub-Industry.
Broadcasting
Owners and operators of television or radio broadcasting systems,
including programming. Includes, radio and television broadcasting,
radio networks, and radio stations.
Cable & Satellite
Providers of cable or satellite television services. Includes cable
networks and program distribution.
Movies & Entertainment
Companies that engage in producing and selling entertainment
products and services, including companies engaged in the production,
distribution and screening of movies and television shows, producers
and distributors of music, entertainment theaters and sports teams.
1.28
1.7
0.08
0.28
0.19
0.27
0.47 0.08
0.37 1.03
0.07 0.44
0.09 0.52
0.08 1.25
0.12 0.24
0.57 0.1
0.08 0.08
0.35 NONE 0.09
0.03 0.32
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IoE Insufficient Phase 1 Impact
Home Furnishings
Manufacturers of soft home furnishings or furniture, including upholstery, carpets and wall-coverings.
Housewares & Specialties
Manufacturers of durable household products, including cutlery, cookware, glassware, crystal,
silverware, utensils, kitchenware and consumer specialties not classified elsewhere.
Textiles
Manufacturers of textile and related products not classified in the Apparel, Accessories & Luxury Goods,
Footwear or Home Furnishings Sub-Industries.
Restaurants
Owners and operators of restaurants, bars, pubs, fast-food or take-out facilities. Includes companies that
provide food catering services.
Education Services
Companies providing educational services, either on-line or through conventional teaching methods.
Includes, private universities, correspondence teaching, providers of educational seminars, educational
materials and technical education. Excludes companies providing employee education programs
classified in the Human Resources & Employment Services Sub-Industry
Specialized Consumer Services
Companies providing consumer services not classified elsewhere. Includes residential services, home
security, legal services, personal services, renovation & interior design services, consumer auctions and
wedding & funeral services.
Advertising
Companies providing advertising, marketing or public relations services.
Broadcasting
Owners and operators of television or radio broadcasting systems, including programming. Includes,
radio and television broadcasting, radio networks, and radio stations.
Cable & Satellite
Providers of cable or satellite television services. Includes cable networks and program distribution.
Movies & Entertainment
Companies that engage in producing and selling entertainment products and services, including
companies engaged in the production, distribution and screening of movies and television shows,
producers and distributors of music, entertainment theaters and sports teams.
Publishing
Publishers of newspapers, magazines and books, and providers of information in print or electronic
formats.
Catalog Retail
Mail order and TV home shopping retailers. Includes companies that provide door-to-door retail.
Copyright 2016 23
5. Consumer Staples Sector 9.82% S&P500 Market Cap (as of Nov 2014)
This sector includes companies whose businesses are less sensitive to economic cycles. It includes
manufacturers and distributors of food, beverages and tobacco; and producers of non-durable household
goods and personal products. It also includes food and drug retailing companies as well as hypermarkets and
consumer super centers.
IoE Products % of
S&P 500
IoE Services % of
S&P 500
IoE Efficiencies % of
S&P 500
Household Products Drug Retail
Producers of non-durable household products,
including detergents, soaps, diapers and other tissue
and household paper products not classified in the
Paper Products
Owners and operators of primarily drug retail stores
and pharmacies.
Personal Products Food Distributors
Manufacturers of personal and beauty care products,
including cosmetics and perfumes.
Distributors of food products to other companies and
not directly to the consumer.
Food Retail
Owners and operators of primarily food retail stores.
Motorcycle Manufacturers Hypermarkets & Super Centers
Companies that produce motorcycles, scooters or three-
wheelers. Excludes bicycles classified in the Leisure
Products Sub-Industry.
Owners and operators of hypermarkets and super
centers selling food and a wide-range of consumer
staple products. Excludes Food and Drug Retailers
classified in the Food Retail and Drug Retail Sub-
Industries, respectively.
Consumer Electronics Agricultural Products
Manufacturers of consumer electronics products
including TVs, home audio equipment, game consoles,
digital cameras, and related products. Excludes
personal home computer manufacturers classified in
the Technology Hardware, Storage & Peripherals Sub-
Industry, and electric household appliances classified in
the Household Appliances Sub-Industry.
Producers of agricultural products. Includes crop
growers, owners of plantations and companies that
produce and process foods but do not package and
market them. Excludes companies classified in the
Forest Products Sub-Industry and those that package
and market the food products classified in the
Packaged Foods Sub-Industry.
Homebuilding Packaged Foods & Meats
Residential construction companies. Includes
manufacturers of prefabricated houses and semi-fixed
manufactured homes.
Producers of packaged foods including dairy
products, fruit juices, meats, poultry, fish and pet
foods.
0.08 0.17
0.12 1.44
0.27
0.08 1.02
1.98 NONE 0.86
0.12 0.12
IoE Insufficient Phase 1 Impact
Brewers
Producers of beer and malt liquors. Includes breweries not classified in the
Restaurants Sub-Industry.
Distillers & Vintners
Distillers, vintners and producers of alcoholic beverages not classified in the Brewers
Sub-Industry.
Soft Drinks
Producers of non-alcoholic beverages including mineral waters. Excludes producers of
milk classified in the Packaged Foods Sub-Industry.
Tobacco
Manufacturers of cigarettes and other tobacco products.
Copyright 2016 24
6. Health Care Sector 13.85% S&P500 Market Cap (as of Nov 2014)
The health care sector includes providers and services that manufacture and distribute health care equipment
and supplies, and healthcare technology companies. It also includes companies involved in the research,
development, production and marketing of pharmaceuticals and biotechnology products
IoE Products % of S&P
500
IoE Services % of S&P
500
IoE Efficiencies % of S&P
500
Health Care Equipment Health Care Services Health Care Facilities
Manufacturers of health care equipment and devices.
Includes medical instruments, drug delivery systems,
cardiovascular & orthopedic devices, and diagnostic
equipment.
Providers of patient health care services not
classified elsewhere. Includes dialysis centers,
lab testing services, and pharmacy
management services. Also includes
companies providing business support
services to health care providers, such as
clerical support services, collection agency
services, staffing services and outsourced
sales & marketing services
Owners and operators of health care
facilities, including hospitals, nursing homes,
rehabilitation centers and animal hospitals.
Health Care Supplies Managed Health Care Biotechnology
Manufacturers of health care supplies and medical products
not classified elsewhere. Includes eye care products, hospital
supplies, and safety needle & syringe devices.
Owners and operators of Health Maintenance
Organizations (HMOs) and other managed
plans.
Companies primarily engaged in the research,
development, manufacturing and/or
marketing of products based on genetic
analysis and genetic engineering. Includes
companies specializing in protein-based
therapeutics to treat human diseases.
Excludes companies manufacturing products
using biotechnology but without a health
care application.
Health Care Distributors
Distributors and wholesalers of health care
products not classified elsewhere.
0.53
2.08 0.49 0.08
0.03 1.11 2.87
IoE Technology Stack
Health Care Technology
Companies providing information technology services primarily to
health care providers. Includes companies providing application,
systems and/or data processing software, internet-based tools, and IT
consulting services to doctors, hospitals or businesses operating
primarily in the Health Care Sector
Life Sciences Tools & Services
Companies enabling the drug discovery, development and production
continuum by providing analytical tools, instruments, consumables &
supplies, clinical trial services and contract research services. Includes
firms primarily servicing the pharmaceutical and biotechnology
industries.
Copyright 2016 25
7. Financial 16.36% S&P500 Market Cap (as of Nov 2014)
This sector includes companies involved in banking, thrifts and mortgage finance, specialized finance,
consumer finance, asset management and custody banks, investment banking and brokerage and insurance.
The sector also includes real estate companies and REITs, although this will be broken out during 2016.
IoE Products % of S&P
500
IoE Services % of S&P
500
IoE Efficiencies % of S&P
500
Property & Casualty Insurance NONE Diversified REITs
Companies providing primarily property and casualty
insurance.
A company or Trust with significantly
diversified operations across two or more
property types.
Real Estate Development Industrial REITs
Companies that develop real estate and sell the properties
after development. Excludes companies classified in the
Homebuilding Sub-Industry.
Companies or Trusts engaged in the
acquisition, development, ownership, leasing,
management and operation of industrial
properties. Includes companies operating
industrial warehouses and distribution
properties.
Hotel & Resort REITs
Companies or Trusts engaged in the
acquisition, development, ownership, leasing,
management and operation of hotel and
resort properties.
0.09
Office REITs
Companies or Trusts engaged in the
acquisition, development, ownership, leasing,
management and operation of office
properties.
Health Care REITs
Companies or Trusts engaged in the
acquisition, development, ownership, leasing,
management and operation of properties
serving the health care industry, including
hospitals, nursing homes, and assisted living
properties.
Residential REITs
Companies or Trusts engaged in the
acquisition, development, ownership, leasing,
management and operation of residential
properties including multifamily homes,
apartments, manufactured homes and
student housing properties
Retail REITs
Companies or Trusts engaged in the
acquisition, development, ownership, leasing,
management and operation of shopping
malls, outlet malls, neighborhood and
community shopping centers.
Specialized REITs
Companies or Trusts engaged in the
acquisition, development, ownership, leasing,
management and operation of properties not
classified elsewhere. Includes trusts that
operate and invest in storage properties. It
also includes REITs that do not generate a
majority of their revenues and income from
real estate rental and leasing operations.
Real Estate Operating Companies
Companies engaged in operating real estate
properties for the purpose of leasing &
management.
0.71
0
0.35
0.51
0.36
0.1
0.85 0.1
0 0.11
Copyright 2016 26
Diversified Banks Investment Banking & Brokerage
Large, geographically diverse banks with a national footprint whose
revenues are derived primarily from conventional banking operations,
have significant business activity in retail banking and small and medium
corporate lending, and provide a diverse range of financial services.
Excludes banks classified in the Regional Banks and Thrifts & Mortgage
Finance Sub-Industries. Also excludes investment banks classified in the
Investment Banking & Brokerage Sub-Industry.
Financial institutions primarily engaged in investment banking &
brokerage services, including equity and debt underwriting, mergers and
acquisitions, securities lending and advisory services. Excludes banks and
other financial institutions primarily involved in commercial lending,
asset management and specialized financial activities.
Regional Banks Diversified Capital Markets
Commercial banks whose businesses are derived primarily from
conventional banking operations and have significant business activity in
retail banking and small and medium corporate lending. Regional banks
tend to operate in limited geographic regions. Excludes companies
classified in the Diversified Banks and Thrifts & Mortgage Banks sub-
industries. Also excludes investment banks classified in the Investment
Banking & Brokerage Sub-Industry.
Financial institutions primarily engaged in diversified capital markets
activities, including a significant presence in at least two of the following
area: large/major corporate lending, investment banking, brokerage and
asset management. Excludes less diversified companies classified in the
Asset Management & Custody Banks or Investment Banking &
Brokerage sub-industries. Also excludes companies classified in the
Banks or Insurance industry groups or the Consumer Finance Sub-
Industry.
Thrifts & Mortgage Finance Insurance Brokers
Financial institutions providing mortgage and mortgage related services.
These include financial institutions whose assets are primarily mortgage
related, savings & loans, mortgage lending institutions, building societies
and companies providing insurance to mortgage banks.
Insurance and reinsurance brokerage firms.
Other Diversified Financial Services Life & Health Insurance
Providers of a diverse range of financial services and/or with some
interest in a wide range of financial services including banking, insurance
and capital markets, but with no dominant business line. Excludes
companies classified in the Regional Banks and Diversified Banks Sub-
Industries.
Companies providing primarily life, disability, indemnity or supplemental
health insurance. Excludes managed care companies classified in the
Managed Health Care Sub-Industry.
Multi-Sector Holdings Multi-line Insurance
A company with significantly diversified holdings across three or more
sectors, none of which contributes a majority of profit and/or sales.
Stakes held are predominantly of a non-controlling nature. Includes
diversified financial companies where stakes held are of a controlling
nature. Excludes other diversified companies classified in the Industrials
Conglomerates Sub-Industry.
Insurance companies with diversified interests in life, health and
property and casualty insurance.
Specialized Finance Reinsurance
Providers of specialized financial services. Includes credit agencies, stock
exchanges and specialty boutiques. Companies in this Sub-Industry derive
a majority of revenue from one, specialized line of business.
Companies providing primarily reinsurance.
Consumer Finance Mortgage REITs
Providers of consumer finance services, including personal credit, credit
cards, lease financing, travel-related money services and pawn shops.
Excludes mortgage lenders classified in the Thrifts & Mortgage Finance
Sub-Industry.
Companies or Trusts that service, originate, purchase and/or securitize
residential and/or commercial mortgage loans. Includes trusts that
invest in mortgage-backed securities and other mortgage related assets.
Asset Management & Custody Banks Diversified Real Estate Activities
Financial institutions primarily engaged in investment management
and/or related custody and securities fee-based services. Includes
companies operating mutual funds, closed-end funds and unit investment
trusts. Excludes banks and other financial institutions primarily involved in
commercial lending, investment banking, brokerage and other specialized
financial activities.
Companies engaged in a diverse spectrum of real estate activities
including real estate development & sales, real estate management, or
real estate services, but with no dominant business line.
Real Estate Services
Real estate service providers such as real estate agents, brokers & real
estate appraisers.
IoE Insufficient Phase 1 Impact
Copyright 2016 27
8. Information Technology 19.24% S&P500 Market Cap (as of Nov 2014)
The Information Technology sectors comprises companies that offer software and information technology
services, manufacturers and distributors of technology hardware and equipment such as communications
equipment, cellular phones, computers and peripherals, electronic equipment and related instruments and
semiconductors.
IoE Products % of S&P
500
IoE Services % of S&P
500
IoE Efficiencies % of S&P
500
Internet Software & Services IT Consulting & Other Services NONE
Companies developing and marketing internet software
and/or providing internet services including online databases
and interactive services, as well as companies deriving a
majority of their revenues from online advertising. Excludes
companies classified in the Internet Retail Sub-Industry.
Providers of information technology and systems
integration services not classified in the Data
Processing & Outsourced Services or Internet
Software & Services Sub-Industries. Includes
information technology consulting and
information management services.
Home Entertainment Software Data Processing & Outsourced Services
Manufacturers of home entertainment software and
educational software used primarily in the home.
Providers of commercial electronic data
processing and/or business process outsourcing
services. Includes companies that provide
services for back-office automation.
3.26 1.49
0.06 1.8
Copyright 2016 28
IoE Technology Stack IoE Insufficient Phase 1 Impact
Application Software Technology Distributors
Companies engaged in developing and producing software designed for
specialized applications for the business or consumer market. Includes
enterprise and technical software. Excludes companies classified in the
Home Entertainment Software Sub-Industry. Also excludes companies
producing systems or database management software classified in the
Systems Software Sub-Industry.
Distributors of technology hardware and equipment. Includes
distributors of communications equipment, computers &
peripherals, semiconductors, and electronic equipment and
components.
Systems Software Semiconductor Equipment
Companies engaged in developing and producing systems and database
management software.
Manufacturers of semiconductor equipment, including
manufacturers of the raw material and equipment used in the
solar power industry.
Communications Equipment
Manufacturers of communication equipment and products, including
LANs, WANs, routers, telephones, switchboards and exchanges. Excludes
cellular phone manufacturers classified in the Technology Hardware,
Storage & Peripherals Sub-Industry.
Technology Hardware, Storage & Peripherals
Manufacturers of cellular phones, personal computers, servers, electronic
computer components and peripherals. Includes data storage
components, motherboards, audio and video cards, monitors, keyboards,
printers, and other peripherals. Excludes semiconductors classified in the
Semiconductors Sub-Industry.
Electronic Equipment & Instruments
Manufacturers of electronic equipment and instruments including
analytical, electronic test and measurement instruments,
scanner/barcode products, lasers, display screens, point-of-sales
machines, and security system equipment.
Electronic Components
Manufacturers of electronic components. Includes electronic
components, connection devices, electron tubes, electronic capacitors
and resistors, electronic coil, printed circuit board, transformer and other
inductors, signal processing technology/components.
Electronic Manufacturing Services
Producers of electronic equipment mainly for the OEM (Original
Equipment Manufacturers) markets.
Semiconductors
Manufacturers of semiconductors and related products, including
manufacturers of solar modules and cells.
Copyright 2016 29
9. Telecommunications 2.45% S&P500 Market Cap (as of Nov 2014)
This sector includes companies that provide communications services primarily through a fixed-line, cellular or
wireless, high bandwidth and/ or fiber optic cable network.
IoE Technology Stack
Alternative Carriers
Providers of communications and high-density data transmission services
primarily through a high bandwidth/fiber-optic cable network.
Integrated Telecommunication Services
Operators of primarily fixed-line telecommunications networks and companies
providing both wireless and fixed-line telecommunications services not
classified elsewhere.
Wireless Telecommunication Services
Providers of primarily cellular or wireless telecommunication services,
including paging services.
Copyright 2016 30
10. Utilities 3.19% S&P500 Market Cap (as of Nov 2014)
The sector includes utility companies such as electric, gas and water utilities. It also includes independent
power producers and energy traders, and companies that engage in generation and distribution of electricity
using renewable sources.
IoE Products % of S&P
500
IoE Services % of S&P
500
IoE Efficiencies % of S&P
500
NONE NONE Electric Utilities
Companies that produce or distribute electricity. Includes
both nuclear and non-nuclear facilities.
Gas Utilities
Companies whose main charter is to distribute and transmit
natural and manufactured gas. Excludes companies
primarily involved in gas exploration or production classified
in the Oil & Gas Exploration & Production Sub-Industry. Also
excludes diversified midstream natural gas companies
classified in the Oil & Gas Storage & Transportation Sub-
Industry.
Multi-Utilities 1.21
Utility companies with significantly diversified activities in
addition to core Electric Utility, Gas Utility and/or Water
Utility operations.
Water Utilities 0
Companies that purchase and redistribute water to the end-
consumer. Includes large-scale water treatment systems.
Independent Power Producers & Energy Traders 0.11
Companies that operate as Independent Power Producers
(IPPs), Gas & Power Marketing & Trading Specialists and/or
Integrated Energy Merchants. Excludes producers of
electricity using renewable sources, such as solar power,
hydropower, and wind power. Also excludes electric
transmission companies and utility distribution companies
classified in the Electric Utilities Sub-Industry.
Renewable Electricity 0
Companies that engage in the generation and distribution of
electricity using renewable sources, including, but not
limited to, companies that produce electricity using
biomass, geothermal energy, solar energy, hydropower, and
wind power. Excludes companies manufacturing capital
equipment used to generate electricity using renewable
sources, such as manufacturers of solar power systems,
installers of photovoltaic cells, and companies involved in
the provision of technology, components, and services
mainly to this market.
1.83
0.04
Copyright 2016 31
