Good morning, and thank you for joining us at the New York Stock Exchange for Avnet's 2015.
No matter where in the world.
This marks our 55th year on the exchange, and in celebration, our management team will be ringing the closing bell. I know most of you in the room know me, but for those on the webcast, I'm Vince Keenan, Vice President and Director of Investor Relations. Before we get started, I would like to remind everybody that we are focused on today's presentations are focused on Avnet's long-term strategies, but just to take care of one housekeeping item, I will mention that we are on track for our June guidance at both operating groups. I would also like to quickly review Avnet's Safe Harbor Statement. This presentation contains certain forward-looking statements, which are statements addressing future financial and operating results of Avnet. Listed on this slide are several factors that could cause actual results to differ materially from those in the forward-looking statements.
More detailed information about these and other factors is set forth in Avnet's filings with the Securities and Exchange Commission. As you can see today, we have a very full agenda. We will open with a strategic overview from our CEO, Rick Hamada. Kevin Moriarty, our CFO, will follow with a financial update. After his presentation, we will take a 20-minute break. I ask that you be back in your seats promptly at 12:25, and we will hear from Gerry Fay, President of Electronics Marketing, followed by Patrick Zammit, President of Technology Solutions. Kevin will follow those presentations with a quick wrap-up of our financial model and goals, at which time we will have a 30-minute Q&A.
Since we are webcasting this event, I would ask that you wait for a mic to be brought over to you before you ask your question, and if you could limit yourself to one question in the interest of time, that would be appreciated. After the event is finished, we will have a reception from 2:30 P.M. to 3:30 P.M. I hope all of you can join us for that. In addition to the presenters, since we are ringing the closing bell, we've got other members of our leadership team joining us today. From corporate, we have MaryAnn Miller, Chief Human Resources Officer, Erin Lewin, our General Counsel, and Mike Buseman, the Head of Global Logistics. From the Electronics Marketing Group, we've got Ed Smith, heads up the Americas region, Stephen Wong is our leader in Asia, and Tom McCartney from our Japan business.
From Technology Solutions, we're joined by Jeff Bawol, who heads up our Americas region, Mike Hurst, Head of Avnet Services, and from the finance team, Cookie Serrano, the Global Finance Officer. Before we move to our first presentation, I would also like to thank you for joining us here at the exchange today. I know it's not as convenient as a midtown hotel, but we do save substantial money in my IR budget. So the good news is Kevin authorized or allowed me to spend more money on the giveaway this year, and so each of you received a Shine fitness device wearable from a company called Misfit. Although I do care about your health, the reason I really chose this product is it gives an excellent example of how we add value to the Supply Chain.
Eddie's FAE started working with the Shine development team four years ago, choosing the components. The Americas team helped pipeline product so they could hit the market quickly. As production ramped, that was handed off to Stephen's team in Asia with the assistance of Mike's team from Global Logistics. I could go on with the additional support we continue to provide, but I just think this is an excellent example of how we help new companies reach the market with innovative products in some of the higher growth areas that you'll be hearing about today. With that, let me introduce Rick Hamada, Avnet CEO.
Thank you, Vince. Good morning, everybody. I'll add my welcome as well. I've been looking forward to the day for a while. A lot of familiar faces in the room, and I really appreciate you taking the time to join us to let us get a chance to share our story. Before I cover and jump into my formal agenda, real quickly on top of my mind, I think I'd like to share what I think the key goals are for the day, and then a couple of themes I believe you will hear throughout the presentations. On the key goals, very simply, I think there's two of them. Number one, as Vince indicated, we've worked hard to try to stay to the longer-term trends and actions for Avnet, stay out of the quarterly grind just for a bit here, and try to talk about the bigger picture.
The second goal is really to provide clarity across the board on our story, our priorities, our plans, and our goals. We did do some formal investor perception study work in preparation for this particular event, and we've incorporated a lot of your feedback into the rest of the presentations you'll see today. As far as the key themes or messages I think you will see reflected throughout the presentations today, I put them into three major categories. Number one, I believe we are a well-positioned market leader with very broad exposure, both from a technology markets point of view as well as a geographic footprint point of view. As many of us have talked in the past, I mean, Avnet in and of itself is a very diversified technology portfolio play.
Second, I believe we are an innovative services provider with a track record and legacy of dealing with the very dynamic markets, particularly technology markets, for over 90 years. Our product is service, is the way I think about it. And since our inception, we have only remained relevant if we are adding value, and the definition of adding value has been dynamic for that 90-plus years. Third, third theme is discipline. A disciplined team with disciplined approaches to execution, optimization, profitable growth, and capital allocation. So when I spent all the time I could to prepare properly for this event and think about the way I'd like to tell the story from my perspective, it was those priorities and those themes that dominated my preparations. So now let's jump a little bit into today's Avnet. Vince covered a lot of the extended leadership team here today.
This is a representation, actually, of my full direct report team. We will be hearing from Kevin, Patrick, and Gerry formally later today. We only have so much time on the agenda, so it's impossible to try to cover the complete range and spectrum of strategies and contributions that make up the Avnet that you know and see today. But I did want to take a point not only to introduce and make sure and give exposure to the broader leadership team, but there's actually a couple of bullets per executive as to the types of contributions that they're leading that all add up to the types of performance and results that you not only see from Avnet today, but that are part and parcel of the expectations and the plans we have going forward. It is a total team effort.
As I said, we only have so much time in the day, but I would be remiss if I didn't take the opportunity to recognize and acknowledge the broad spectrum of contributions that actually contribute to the Avnet you know today. Our purpose and vision are meant to just really answer a couple of simple questions. First, why do we exist? And I really do believe it is to help technology make the world a better place. And then, what do we aspire to be? And I would just share that as we think about the decisions that we make and the priorities that we establish throughout our businesses, it's always a matter of balancing our customers, suppliers, employees, and shareholders.
It's a real easy decision if you've got win, win, win, win for all four, but very often we've got to work in the shorter term to be able to find sometimes two wins, sometimes three wins, and position Avnet for the long-term value creation journey that we think is so important. It's also making sure that we fully leverage our total scope of technology marketing, distribution resources, and services, all part and parcel of the Avnet that you've known and been able to follow here for the past many years. I threw this slide in in particular because we get nostalgic when we do come to New York.
Those that aren't familiar with the history, Avnet founded in 1921, actually very near where we're standing here today, off Canal Street in a portion of New York was known as Radio Row, founded by Charles Avnet, originally a family business. Avnet is a family name. Sometimes people think it's a clever play on Avnet or something like that. Nope. It was a family-founded business, family name, and went public in 1955 and listed on the New York Stock Exchange in 1960. We are also celebrating our 55th anniversary of being listed on the NYSE as part and parcel of this event today. But as I look through some of those pictures across this particular slide, it just reinforces that legacy of dealing with dynamic changes and disruptions throughout the technology business all the way back to the 1920s.
If we fast forward to just a quick snapshot today on Avnet, Inc. today, what we have here is just some fun facts regarding total scope and scale, total revenues, total employees, our global footprint, and some simple examples here of a variety of industry and business leadership recognitions that are attributed to us. Many of them, again, you just can't make quite a comprehensive list on one slide, but among them, being very proud of our inclusion on the world's most ethical company list by the Ethisphere Institute the last two years, the numbers continue to grow, the footprint continues to grow, and I believe the value continues to grow as we leverage these resources into the plans and strategies you will see later today.
I emphasized from the beginning that as I think about Avnet over the years, many of you know I'm now celebrating my 32nd year with Avnet, so I have some history there to call on, but I really do believe that when I think in terms of what is Avnet's product, our product is service, has been and always will be. Models change. The way we get compensated for that service, we need to be nimble and agile to be able to move with that, but the fundamental strategic flows that are important for us to always keep in mind are products and material information and financial flows.
Taking advantage of those in these two opportunities of our core businesses today, EM very much focused on the semiconductor electronic component marketplace, TS more positioned in the finished goods of IT solutions, particularly enterprise IT solutions, and each of the boxes that we have there expand a bit on the fundamental value propositions. Hopefully, you are familiar with EM on the emphasis around Design Chain and supply chain as a total part of the value proposition. For TS, demand creation, ecosystem enablement, helping technology get to market through a partner network, primarily VARs, but not exclusively VARs, as we provide the reach and coverage to the mid-market so important to many of our key OEM providers.
This slide, as we try to work and architect it, again, cannot be completely comprehensive with every possible avenue and arrow along the way, but I believe it does paint a very good picture about the fundamental areas of value creation and in this broad, broad technology world, the two key plays that we have today with our current structure and commitments to EM and TS. Now to just scan through at a very high level how we're looking at the environment, and you can consider these the basis upon which that we are building the majority of our expectations and plans going forward. Start with just a look at the latest estimates on what's going on with economic growth and global GDP. If we go back to the last couple of analyst days, I think this chart has all been very similar with a slight bias to the downward.
Right now, the global GDP through 2018 is expected to be somewhere in the 3.5%-4% range. The follow-up to now taking a very broad look at the semiconductor market in total, interesting congruence here as once again, these are not our forecasts. These are an aggregation of the forecasters that we integrate into our planning process, but right now, the three-year CAGR through 2018 would aggregate right around about a 3.4% CAGR. And then if you take a look at global IT spend, interestingly enough, 3.3%. We did not try to coordinate this or bring anything or converge to a certain mean. It just happens to be the way, again, the pundits and the experts are looking at the overall growth.
What's interesting about these and what you hear, I think, as we get into the group presentations later today is that despite if we use these growth rates as a tide, an indication of what's going on with the tide, it's great to have positive growth as a starting point. But as you'll see, many of our strategies try to decompose the overall growth into the sub-stories of winners and losers and making sure that we're aligning with areas of high growth. One of the key strategies for us to try to maintain a market growth rate ahead of what's going on with the overall served market metrics. Also interesting to note that in previous analyst day presentations, we've often made the point that we believe technology was growing at a multiple of GDP.
These three charts, at least for the next 3 years, would tend to indicate there's a convergence now for the broad-based indicators of our served markets. Again, global semiconductors, global IT spend all seem to be converging around a GDP-like growth rate. Once again, pay attention as you get to the group presentations later today as to some of the areas of opportunity that we're going to focus on that we believe offer above median growth rates here as represented in these overall charts. So now let's take a look a little more specifically, I believe, at Avnet's journey for the last 10 years. This helps set some context, I believe, for going forward and for some of the plans you'll be hearing about throughout the day. So the total chart will span from FY04 to FY14, a 10-year part of the journey.
We'll start with FY '04 through FY '08 up to the recession. By the way, all of these numbers are reported numbers. No adjustment, no constant currency, etc. So on a reported basis, we were running nearly a 15% sales CAGR, but because we had been embracing our value-based management journey, actually started in the early 2000s, but certainly from FY '04 to FY '08, continued to make progress as we moved our ROCE from single digit up to double digit. Our average cash flow from operations, about $337 million per year, average CapEx expenditure here, and average expenditure for M&A. This was kind of the picture that we had for that five-year period. Then we go through recession and recovery. So this includes the downturn of 2008, 2009, along with the V-shaped recovery of 2010 and 2011. We still maintain a very high CAGR on the revenue growth rate.
We were able to sustain a better return on capital performance. Due to the fact that we were able to sustain a better return on capital performance, we also had a little bit higher average cash flow from operations. A little bit of a downturn, by the way, with a countercyclical balance sheet helps bolster that number. CapEx stepped up a little bit as we continued to make sure we had the right infrastructure in place, and average M&A actually went up a bit. There were certainly some spikes in the M&A along the way, but if you just smooth it out over that four-year period, that's what the numbers came to.
What I would offer for consideration now is that since the V-shaped recovery of 2010 and 2011, we've been in more of a what I will call the new normal, and I'll highlight a little more detail around this. But that 1.2% CAGR, once again, no adjustment for currency, etc. This is a reported CAGR over the FY11 to FY14 timeframe, been able to maintain a more equitable level of ROCI in the double digits. Average cash flow from operations just up a bit. CapEx relatively flat. A little bit of slowdown in the pace of M&A, and I'm going to spend some more time on that to help understand there's been no conscious decision to try to do that.
But at the same time, we've also introduced some elements of return to shareholders during this new normal, both in the form of a systematic return in the form of a dividend, and as Kevin will cover in more detail specifically to our buyback approach and methodology, we have stepped up to about $178 million per year over that timeframe on a share buyback program along the way. So just taking a look at the last 10 years, putting it into three eras, so to speak, and some of the attributes and key metrics associated with what's going on in those eras. If I drill down a little more on how I would characterize what we're calling the new normal, I really believe there's four key highlights. Number one is the overall economic growth remains sluggish. We talked about that. I showed the global GDP chart along the way.
There's continuing mixed signals out there on a variety of indicators, not just GDP. This is an example. I think it was last week or sometime in the last two weeks. I believe GDP in the U.S. for Q1 is now negative 0.7%. Other mixed signals of key indicators that are important to us, what's going on with PMIs, what's going on with manufacturing indices, sometimes what's going on with leading indicators like consumer confidence, etc. I think we all understand as we look through these numbers, you can make a case for half full or half empty just about any point in the cycle, so to speak. Don't see that changing anytime soon. Biggest issue right now is maybe what's going on with interest rates in the short to medium-term future.
We're dealing with evolving purchasing and consumption models on both businesses, not just an issue at TS from IT consumption, but also in our EM business. And then, again, as an observation I would offer with over 30 years in the business, we've always dealt with change. I can't imagine a CEO presenting on any business in any way, shape, or form without coming back to this theme of change is constant. But the pace of change these days is truly, I think, about the highest, the most rapid, and the most highest velocity that I remember seeing along the way. So in addition to the specific plans you will see, I wanted to take a point at this part of the agenda to talk about the CEO priorities in response to this new normal.
I'm going to drill down on each one of these along the way, but very quickly to cover these key four, focus on the optimization around the core, building our skills in organic growth management as a complement to our acquisition growth management, making sure we've got not only the tools but the capacity to be able to move with this new pace of change and change management and innovation, and then maintaining a very clear and consistent set of capital allocation priorities despite the volatility of the overall markets. When I speak about optimizing our core, I'm talking about disciplined approaches to the portfolio management, the way we break down the businesses both group, regionally, globally, and down to the business unit and sometimes at the country level.
Organic growth opportunities to continue to work on customer expansion strategies off of our core business, leveraging more fully our total global capabilities. As we've done our numerous number of acquisitions over the years, primarily driven by consolidation and geographic expansion, it makes sense for us to step back and make sure that we're leveraging that total footprint to the greatest extent possible to the benefits of all of our local businesses. At the same time, as you saw in the CapEx numbers, continuing to invest in the systems and tools as well as our people with training and development to be able to respond and take advantage of this new norm and this dynamic environment. Organic growth management has always been important to us.
I don't want to leave the wrong impression, but I do think as we move to the future in this slower growth environment, there's a premium on making sure that we exercise. If you're thinking about bodybuilding, if M&A is the left bicep and organic growth management is the right bicep and you spend 60% of the time on one and 40% on the other, it's time to strengthen and make sure we have a balanced complement to our growth via acquisition. I'm also fond of a saying one of our friends in the business, Dr. Michael Treacy, has on this topic, which says, "The best way to start growing is to stop shrinking." And again, with a slower growth environment, every customer, every transaction, every revenue stream is precious.
Making sure we build more customer centricity to reflect that, make sure that we align our investments where the areas for long-term growth are in the business, and making sure that we take advantage of the opportunity to optimize the core and balance out that strong growth via acquisition path that we've been on for the last 10 or 15 years. And again, not bankrupt in this area by any means, but I believe there are certain skills and certain resources that we can put in place to continue to build on our expertise in this as well as build on our accountability with new metrics such as Net Promoter Score and a commitment to the Supply Chain Operations Reference. Third dimension of CEO priorities, timely innovation and change management.
This includes taking advantage of the wonderful wealth of opportunities I believe are being created by forces of change in the marketplace today, driving more standard platforms and efficiencies across and through our business on a very timely basis, as well as keeping our well-ingrained commitment to continuous improvement across the entire business and customer base. Priority number four, reinforce clear and consistent capital allocation priorities. As you saw in the earlier chart, I believe our VBM journey has enabled us to establish more consistent cash flow. As many of you know, we have absolutely zero need to accumulate cash for a rainy day for a number of reasons, including a countercyclical balance sheet. We believe we're in very good position, and Kevin will elaborate on this, to capitalize on profitable growth plans today, both organic and inorganic.
We are proud of our commitment to incorporate a more balanced approach of returning cash to shareholders as part of our overall plans. Our high-level objectives remain: generate and sustain a return on capital in excess of our cost of capital, grow earnings faster than revenue, take advantage of the operating leverage available in our model, particularly through the SG&A, and grow economic profit dollars. To drill down just one more click on M&A, because I do know it has been an area of question and perhaps lack of clarity, I want to complete to reinforce that M&A remains an essential element of our overall profitable growth plans. If I was trying to provide a little bit of context for what I think the total picture is for M&A at Avnet today, I'd start with the fact that I believe we have evolved.
If you look at the drivers of M&A in our not too distant history, it's all about consolidation and geoexpansion. Neither one of those plays is 100% done, but perhaps less of those opportunities going forward. Now we're moving into priorities such as what can we do on make versus buy basis to accelerate our growth, our margin expansion, or perhaps move into certain adjacencies and provide some certain market expansion capabilities. We're really moving from the area of serial acquirer, I think, to much more selective and strategic acquirer. The context for the deals are really look at the clues you see today from our operating group leaders. It's our strongest intention to line up our future plans very close to what you hear as far as the growth plans from our businesses today.
In other words, as we communicate or bring news to the market around future M&A, the context around that particular transaction, the various skills, the value of those entities should come right back in line with the types of growth areas and strategies you're hearing from our businesses as part and parcel of the overall long-term agenda. It would not be our desire to have an M&A announcement in the future where any of you are wondering, "Okay, where did this come from and how does this fit into the plan?" Think about where we're going to communicate where we intend to put our resources, and I think those will be the most likely targets for us going forward as to where you should expect we would deploy our capital to accelerate the growth, the margin expansion, or accelerate and expand the certain markets.
We will retain and keep to our very well-known, hopefully, criteria around M&A, looking at the culture, the strategic fit, as well as the economics. We've actually enhanced our process to take a look at risk-adjusting our valuations and hurdle rates based on an assessment of either proximity versus distance from the core. We've done a lot of work on a lot of our recent transactions, tried to take the advantage of the lessons learned from those and make sure we're incorporating those into our acquisition activities going forward. Bottom line, the headline says it all to me. M&A remains an essential, a key element of our overall profitable growth plans. Now to set up a bit about at the enterprise level, our strategic framework, and then some of the key opportunities I think we do see out there today.
The five boxes on the left of this chart represent the areas of enterprise strategic framework that we've made the decision that Avnet doesn't need to try to do this on a decentralized or a multi-level basis overall. Our commitments to employee engagement, customer engagement, enterprise effectiveness, the Avnet brand management, and the priorities for capital allocation and structure we believe all are in the domain of the enterprise think level strategy work. Then in the operating groups, we really look to them to be market-led with the development of their growth strategies overall, focus on the customer, focus on that customer-centric development, organic growth management as well, and taking advantage and looking for opportunities for more localized productivity and efficiency.
Because there's obviously ways at Avnet you can look across the enterprise for those productivity and efficiency gains, but even within each group at the global level, you can look for those gains. And even on a regional basis, maybe both EM and TS in Europe can look for a scale across Europe for our European businesses overall. Those are some of the most important conversations that we have as part is making sure that we have a proper governance for what is Inc. level, what is group level, what is group global, what is group regional, and what needs to be decentralized or localized for the customer, given our commitment to being a market-led organization. Lots of debate and challenges along the way, and also some particular assets and resources which may move over time from one level to another.
That goes back to that timely innovation and making sure we're keeping pace with the marketplace along the way. How will we measure our success? Probably no surprise, we've got a balanced scorecard which lines up our key stakeholders with certain key performance measures assigned to each of them along the way. You'll hear some number specifically later in the day from Kevin along these lines, but that's how we take the strategic framework as a starting point and turn it into accountability at the enterprise level. Now to talk about just a couple of key areas of current opportunity that you will hear more about individually from both Patrick and Gerry.
The two I'm going to touch on here at the Avnet Inc. level, which I think represent tremendous opportunity for Avnet going forward, are the evolution of IT towards what IDC calls their Third Platform , and then the Internet of Things. In the case of the Third Platform, it's a multitude of technological change taking place that is allowing the adoption of new ways of consumption and new ways of utilization, new ways of virtualization that are creating more choice and more options for many of our customers. We're continuing to receive a lot of inquiries through our partner networks around putting them in a position to provide both the combination of physical and virtual assets, or let's say on-premise and off-premise resources to create these hybrid environments of the future, which are becoming the preferred building blocks of the data center for the 21st century.
Patrick will drill down more specifically later today on four key areas for TS that we believe are a very strong place for us going forward, those being converged infrastructure, security and networking, cloud, and big data and analytics. If we turn to the IoT, these particular charts just take a look from 2014 to 2020. There's an aggregate 30% CAGR, I think you can see at the very top of the chart. But within that, this particular chart breaks down this one's from Gartner. This one breaks down IoT into some major categories of consumer, automotive, industrial, and other.
So even within the story of 30% growth, which is certainly attractive in and of itself, we believe Avnet in particular very well positioned in more of the industrial segments there, call it automotive and industrial at 40% and 50%, that even within a great growth story such as this, believe that our positioning in some of those subsegments offer even above this market growth rate as an opportunity for us to take advantage of. And if you think about where Avnet sits today among the total amount of resources spanning from devices to data centers, from edge to the enterprise is the way we phrase it, taking advantage when I think of IoT, I really think of three major plays. I think of devices, I think of connectivity, and I think of the computing resources.
Think of the total spectrum of resources Avnet has today to be able to help those that are intending to be relevant and build value in the IoT world around taking that total spectrum of opportunity and turning it into specific solutions for our customers across both EM and TS and finding new ways to take advantage and create value going forward. Lots of answers yet to come, some answers in play and development today. Specifically for EM, you'll hear from Gerry on the specific opportunities that are in front of us today. But as we go forward and this continues to mature, I would expect more development, more announcements, and more perhaps new partnerships even for Avnet as we take advantage of the opportunities being created overall. No other way to say it in my phrase than I'll use a very American phrase.
I really do believe we are in the very early innings of exactly what IoT is going to mean for all of us. But put me in the camp that says that where we're going is that essentially every company is going to be a technology company. I buy that perspective very, very much. And I think that's, again, fundamental to some of the future opportunity being created specifically for Avnet as we embark on this wonderful new future. So with that, I will take a pause, turn things over to our CFO, Kevin Moriarty. Save your questions again for our Q&A coming up, but thanks again for your time and attention. Kevin.
Good morning, and thank you, Rick, and welcome everyone. As we thought about the day, as Rick commented on, we really wanted to focus our dialogue today with what are the critical key themes on our mind, and we want you to leave with what should be on your minds. When we think about how we're going to be focusing on our profitable growth, the operating group leaders will be spending more time later today, but we really are focusing on innovation and investments to help drive higher growth in the right segments. Think of that again about leveraging our capabilities to accelerate profitable growth. I'm going to spend time with you talking about margin improvement. Avnet's had a long legacy of enterprise effectiveness, but really focusing deeper on SG&A leverage.
I'm going to be introducing today, when you look at our financial targets and goals, the notion of an efficiency ratio and thinking about operating expense to gross profit dollars. That enterprise efficiency effectiveness is going to be supported by a program we're calling Avnet Advantage for the Long Run , and I'm going to spend more time on that later. I'm going to take you through our capital allocation and our strong cash flow generation. Underpinning everything you're going to hear today is that value-based management remains fundamental to our company's DNA. Our goal remains to drive returns above our cost of capital consistently and to create long-term shareholder value creation. Before I get into the strategies, let me just cover some of our recent financial performance, which continues to show continued progress.
As Vince commented upon, assuming the midpoint of our June guidance, we are on track for the fourth quarter, which would support our full fiscal year numbers. Despite the 1.2% Rick highlighted earlier and now in the upper left part of the chart, our sales over the last couple of years have continued to grow, particularly when you look at it in constant currency. In fiscal 2014, we grew 8%, and in fiscal 2015 in constant currency, we're growing 6.1% over and above the growth rates Rick highlighted earlier when you look at the market data. The growth rates then support, and you look at the operating margin performance, we've continued to make steady improvement and progress in our operating income and margin rate. You'll see progressing from 3.2% up to 3.52% in constant currency for fiscal year 2015, 35 basis points in a two-year span.
In the lower left, you'll see EPS grew double digits in fiscal year 2014, 4% in reported numbers for fiscal year 2015 is our estimate, but in constant currency, another double digit year performance of over 11%. The constant currency EPS number will be 4.71. On the lower right, you continue to notice we continue to execute above our cost of capital in terms of return on capital employed. Now turning more to our strategies. Again, you're going to hear more about our organic growth and where we're focused from Gerry and Patrick as we progress through the day. But when I think about optimize the core, I really think about how best do we allocate our resources to the right targets and the right opportunities. In addition, we've really been focused on creating more portfolio management drill-down capability from a financial reporting standpoint to support the businesses.
As I commented upon at our last investor day shortly after I joined the company, I really did feel we have very deep technical capabilities and resources that we can leverage in the new markets. Here, I'm specifically speaking to within the EM business, the engineering capability on the TS side, the certifications, the qualifications, and across the board, just the foundational element of our integration and logistics capabilities. I think we are well positioned and believe we really have many of the requirements to take advantage of the opportunities Rick highlighted earlier when you think about the Internet of Things, all of the new technologies coming out, leveraging more within the converged infrastructure space, securities, and systems that Patrick and Gerry will be spending more time on later.
As Rick commented upon on the right-hand side of the chart, M&A remains a core tenet of our profitable growth strategies, and we really are fundamentally deeply aligned with how the groups will be positioning it and aligned with their strategies. As Rick commented upon, it really will be a make versus buy decision, but really trying to expand our capabilities. While growth is a key component of progressing toward our financial goals, it is not the only strategy we as a management team are relying on. Please review this chart left to right. So when you think about our historical perspective, SG&A leverage in the core business has always been a core tenet of Avnet. The concept of drop-through.
Now, as we're progressing, and you're going to hear more today left to right, the operating groups are really spending time thinking through how do we continue to increase our gross profit percentage, focusing more on solutions and services that the market will clearly provide more value. And as an example of this, when Jerry presents, think about embedded. Embedded really moves EM up deeper on the value chain. Now, the third quadrant is, while we've always been focused on efficiency, as Rick commented upon the new normal, we really have stepped back over the last year and a half and have really spent time thinking through a more holistic type program.
The program that we're going to be announcing today and launching and have been working on to drive further efficiencies and productivity, and it's really a more strategic approach on how we've looked at it, is something called Avnet Advantage for the long run. In addition, the takeaway, the notion of an efficiency ratio of operating expense to gross profit dollars of 66%-68%. You'll see this later on when I talk about the model. Avnet Advantage is a key support item in support of that broader metric. Now, before I go deep into what Avnet Advantage is, I want to provide some context and background for why now.
Organic growth coupled with our acquisitions and think of the supply chain globalization that has occurred over the last 10-15 years and our revenue-based movement to Asia, coupled with 57 acquisitions relatively evenly spread across the three regions, are expanding into 16 emerging markets. We have historically done a very good job integrating synergistically a lot of the core consolidation plays that we've had. This is really an opportunity now for us to step back and really think about how do we evaluate activities across the company and across the enterprise. You'll see we've grown 150% to $28 billion over this decade. While we've integrated a lot of the core type transactions, we've never really stepped back and really thought about how best to drive an efficiency program across Avnet. So that brings me to the specifics of Avnet Advantage for the long run.
As I commented upon, it's our first enterprise-wide strategic, and it's a systematic effort that really looked across analyzing our functional spend, not only from a back office standpoint, but front office to logistics, and really looking at each of our respective regions. We did some third-party benchmark work, which included distributors who deal in markets other than technology, as well as our peer companies, and view it not only as another cost-cutting play. We really took an extensive look across our operations to see what we can streamline and potentially centralize. Another example I like to offer is when you think about indirect buy and really leveraging more of the global Avnet power or our regional power as we look at indirect buy and spending decisions. There's a lot more leverage that we're going to be able to get by being more coordinated and centralizing more of this activity.
So we're continuing to focus on how do we streamline our processes, how do we continue to look at not only the back office functions, and as Rick commented upon, continuing to invest in our tools and our capabilities. And the key point I want to leave you with is that this efficiency and this program and how we're viewing the effort that began last year and as we're going to continue through is it really is a supporting approach to our broader operating expense to GP ratio goal, and we're targeting savings of $100 million-$125 million over the next three years. Now, I'm going to turn over now to cash flow, segue into cash flow. And those of you that are familiar with Avnet know of our countercyclical balance sheet.
In periods of growth, we invest in working capital, and in a reduced growth period, we generate significant cash flow. As an example, if you look at the recession of 2009, we generated over $1 billion from cash flow from operations. During periods of growth, we invest in working capital. But as Rick highlighted earlier, as a larger company and with our higher return profile, our cash flow profile has continued to improve. We've averaged over the last four fiscal years, $400 million-$500 million of cash flow from operations. In addition, I also want to point out in the upper right, we continuously have steadily improved EBITDA during the new normal to over $1.1 billion. This strong operating cash flow performance, coupled with our strong balance sheet, provides ample liquidity to fund growth initiatives without impacting our ability to return cash to shareholders.
We remain committed to investment-grade profile. Last year, we were able to increase our short-term facilities by over $300 million, and our coverage and leverage metrics are well within the profile for the investment-grade rating. If market conditions were to improve or the pace of acquisitions were to pick up, we would expect to have ample flexibility and liquidity to execute our strategies. I'm now going to take you through our capital allocation priorities, along with how that has played out over the past four years. Number one, as Rick commented upon, you're going to hear more later on today, we are focused on investing in organic growth. The dividend is still our highest priority, but it does not inhibit our ability to fund growth initiatives and also provides ample room for M&A.
Rick touched upon our approach to M&A, and you'll hear more from the operating groups, but it really remains a core tenet of our capital allocation priorities. Our priorities also include a disciplined share buyback program as another avenue to return cash to shareholders. I will now spend some time taking you through our return to shareholders. This slide provides a simple overview of our track record of returning cash to shareholders. We were pleased to initiate a dividend in fiscal year 2014, which we increased by 7% in fiscal year 2015. As I highlighted earlier, our targeted payout ratio is at or below 20% of cash flow from operations, and we would expect to grow the dividend with earnings and cash flow over time. The second half of the chart details our disciplined buyback approach.
While it's difficult to predict, as we are always looking for a compelling value relative to the market price, what you need to know is we are committed to support the program. Since its inception in fiscal year 2012, our board has increased the program from $500 million to $1 billion. During this period of time, we have reduced our share count by 13%, and we still have remaining $320 million on the program. In total, since fiscal year 2012, we have returned $850 million to shareholders. Now, I know there are many points of view on the right approach to a buyback program. What we have heard and what we pride ourselves on is our systematic and proven methodology to the share buyback program. I'm going to share with you right now how we decide what price and how much to buy.
We use multiple factors to determine price, and three of them are listed here. Each quarter, Rick and I with our board triangulate on the entry point. As you can see from the graph, we've done a pretty good job buying our shares below market price. So if you look at the blue and then the red X, that would say when we would get in or how we get in over the recent past. The next build really highlights when it comes to volume. Our buying quantity is pretty modest and increases as the price of our shares moves closer to book value. As you can see by the line on the right scale, which represents shares repurchased as a % of outstanding, we have stepped up our buying activity when the stock has pulled back, and we would expect to do so going forward.
When I look at the chart, the overall results speak for themselves as we have realized a 42% return to date with the program. So in summary, as I will be back later to spend time on the financial model for Avnet and our financial goals and targets, I will now take just a brief opportunity to do a summary. What I think you will hear today and what you have heard thus far is an enhanced focus on our organic growth management. How do we leverage our capabilities, our engineering capability, our certifications, qualifications to really be aligned to where the market's going, and how do we continue to leverage that? We are committed to accelerate our operating income growth and margin expansion. Avnet Advantage, as well as the renewed focus on the efficiency ratio, we feel really supports that objective in driving our margin expansion.
We continue to have strong cash flow, and we expect to do so going forward, and we will continue to be disciplined in our approach to allocating capital. As Rick and I will continue to share, the focus on returns over our cost of capital over the long run, we believe will continue to generate significant shareholder value. I think we're right now we're on schedule, and we're going to take a 20-minute break. And if you'd please come back at 12:20, and we'll have Gerry begin with the EM.
Ready? Good. Well, welcome back, everybody. We're going to get started. Welcome back to Avnet Investor Day 2015. I'm Gerry Fay, the President of Electronics Marketing, and I'm very happy to be here today to talk to you about the EM business and our plans going forward.
Although Vince mentioned them before, I'd like to point out three key members of my management team that I have here with me today: Ed Smith, the President of the Americas, Stephen Wong, the President of Asia, and Tom McCartney, who's currently the President of Japan, who's going to come back to the U.S. and run our Avnet United and Avnet Velocity teams, which I'll talk a little bit more about today. I hope you get a chance to talk to them today and spend some time with them. They're some of the finest executives we have in our industry, and they're a big part of why EM has been successful so far. So what you're going to hear from me today is, first, I'm going to do an overview about the market that we serve and our role in the electronics supply chain.
We believe our market is a very dynamic one, but if you look back over the last couple of years, it was low single-digit growth. Based on some of the projections I'm going to show you today from analysts, they're projecting low single-digit, mid-single-digit growth going forward. It's a very large market, and we believe we have opportunities still to grow within the market, both from an organic perspective and an acquisition perspective. We remain competitive in our space due to our fiscal discipline and our strong management execution culture. We believe we're differentiated from most of our competitors due to our unique design chain and supply chain solutions and our global scale and scope. I'll talk about some of our key strategies today that we think will continue to differentiate us in the minds of our customers and our suppliers. Our mission has not changed.
Avnet Electronics Marketing will be the most successful electronics component distributor in the world. We measure success by being the number one revenue and operating income dollar-generating company in our space. We hold that lead today, and we think through our fiscal discipline and continued execution, we'll be a leader in our space for some time to come. So now let's talk about an overview of the marketplace in which we serve. Starting from the left to the right, looking at our supplier base, because of our demand creation history, our revenues are heavily focused in the semiconductor component space, and you can see 78% of our revenues derive from there. If you look at interconnect, passives, and electromechanical, we do a lot of that sell as pull-through when we do demand creation solutions.
I think from the last time we did an investor show, it's gone from 10%-12%. We continue to focus on this space as it does drive enhanced margins for our business. And the smallest piece, but a very important and growing piece for us, is in the embedded component space. If you think about what we do from a demand creation specific performance, what we do in demand creation, customers expect us to do system-level designs with them. Think about a chip-down design. Think of that as make. But now, because of the complexity in the products that we sell and the higher levels of integration in the products we sell, customers are looking to reduce that complexity and speed their time to market. And so we're selling things anywhere from systems on modules to embedded computing boards.
In some cases today, we're helping customers with their data acquisition and data analytics strategy by selling them finished IT equipment. So I'll go more into the space a little further on in my presentation. If we move to the center and talk about our customer base, from the largest EMS companies in the world to the smallest startup OEMs and companies of all sizes in between, we service over 75,000 customers globally, and they leverage our unique design chain and supply chain solutions, plus our global scale and scope to get their innovative products out into the market and to their end customers. Because of their innovations, that allows us to call on many verticals. So if you think about energy, automotive, industrial, mil, aero, and telecom, we have over 500 suppliers on our line card today that we service around the world.
As Jim Cramer at Mad Money likes to say, "Avnet is the electronics supermarket." And here at EM, we're helping technology make the world a better place to live, work, and play. So let's now talk about some of the worldwide market forces we see that are shaping our strategies. If we look at the EM Served TAM, you can see this year it's projected to be $316 billion, up 4% from last year. You can see it was $303 billion the year before. So we've been in kind of a low- to mid-single-digit growth cycle in our Served TAM. And then our business intelligence group, who looks at a lot of what the analysts are projecting for the future, has come up with growth rates in the mid-single digits for the next three years out.
It is a very large market, and when I go through the competitive landscape in a little while, you'll see how much of the DTAM is part of that. So we still have room to grow organically. But if you then look at the worldwide mix, you can see today 62% of the Served TAM is in Asia. And while the Avnet mix does not match the worldwide mix, we are the Western distributor with the largest percentage of our business in Asia today. We think our Asia team does a great job of finding those indigenous market opportunities to go after that provide the right returns to Avnet. What they also allow us to do is they help manage the migration business that starts in the West, either from demand creation or supply chain.
As those customers migrate around the world, they're able to help capture that business through our business migration team, which starts out at higher margins in Asia. Our Asia team has embraced our Value-Based Management culture, and I think this is best evidenced by the fact that in the first nine months of this fiscal year, EM has improved our economic profit by 42%, 30% of that 42% coming from our Asia region. While the industry continues to be one of cautious optimism, even in single-digit growth markets, Avnet creates considerable drop-through even with low growth. Why do we think this single-digit low growth environment, as Rick likes to call it, the new normal is going to continue? Well, here's another cut of the data that shows semiconductor demand by end segment.
If you roll up the compound annual growth rate here from all the segments from 2014 to 2019, it matches Rick's 3.4% in total. As you can see, the industrial and automotive segments continue to be strong relative to other segments. We have regional strategies, and we have been deeply embedded in the industrial market for quite some time. You can see it's projected to grow 6%. Then automotive, we have deep businesses in both our European business and our Asia business around tier two and tier three automotive. It also has opportunities there to grow, and you can see it's projected to grow about 10%. We also have a global team that services our biggest tier two and tier three automotive customers around the world. We think we still have opportunities in our core business to grow faster than the market.
So now let's look at the competitive landscape. The top 20 component distributors' revenues equal about $70 billion. So if you think about that against the $316 billion in the Served TAM, it's about 22%. We are the industry leader when it comes to revenues in our space, but you can see based on 22% of the total Served TAM, we still have lots of opportunities for organic growth. For the first time ever, World Peace has overtaken Arrow to the number two revenue position. Their business is still primarily Asian-based. And if you go past Arrow, you can see there's many other distributors that make up the top 20.
So we look at the distributors, and if you look at them outside of Digi-Key and Future that are on here, which are catalog distributors and a large distributor out of Canada, we still have opportunities to do acquisitions in the market where we find companies that either provide us a technology or a product solution set that we don't have, and we can find our ways to either grow our margin or our market share there. So we are still open for M&A, but we need to find the right opportunities that are going to add ac cretive growth to our overall revenues. When it comes to operating income, we continue to increase our lead here over our competitors. I think, again, we're focused on the right growth regions, and we are growing in Asia.
We believe today we're the industry leader in both revenues and profits, and we think our strategies going forward are going to continue to keep our leadership position in this space. So now let's talk about our specialized customer support model. One of the things we do is we really segment our customer base and provide value to the customer based on their value back to Avnet. So if we look at the top of the pyramid, about $2 billion, this is where we provide supply chain solutions and logistics for some of the largest EMS companies and large OEM companies around the world. For those OEM companies, we generally aren't doing the demand creation. They're either called on direct or have their own engineers, but they need somebody with Avnet scale and scope to be able to manage their supply chain around the world.
We created our Avnet United model to focus on this customer base. We have global business managers that are responsible for the overall execution and relationship with that account, and we have regionally centralized teams around the world that create a lower-cost model for us to be able to service this customer base and create adequate returns for Avnet. The other thing that happens toward the top of the pyramid is this is where supply chain innovation occurs. If you think about our Avnet Velocity team or our supply chain innovation team, they help customers at the top of the pyramid solve problems, and then what they do is they productize those solutions, and we replicate them throughout the core so we can continue to drive a return on investment on our investments at the top of the pyramid for supply chain.
As we move into the middle of the stack, this is where we provide most of our services, Design Chain and supply chain solutions, integration and manufacturing services, and this is where we generate most of our revenue and our profit dollars. You can see we've created customized servicing for each of our regional businesses, and that's based on the realities of what customers and suppliers are asking us to do in the marketplace. We continue to look for ways to rationalize this portfolio to make sure our portfolio is continuing to add value. So as an example, this year, we took our Internix and our Unidux businesses in Japan and combined them into one.
The reason we did that is because it increased the overall number of salespeople that sold our line card in Japan, and we're looking to penetrate the mass market customer base in Japan that are not assigned by suppliers. I don't know how many of you are familiar with the Japanese market, but it's different than most places. The mass market customer base for us in Japan offers higher margin opportunities for us, so we put that together and we centralized our technical functions into semiconductors, interconnect, passives, and electromechanical, and embedded. So we continue to look at our portfolio to continue to find ways to add value. For our smallest customers, we continue to put more and more value out on the web so they get a great customer experience even when an Avnet salesperson isn't calling on them.
We continue to add to our capabilities here because what our customers are telling us is they want that kind of same B2C experience they get at home in their B2B life. I'll talk about what we're doing to digitally transform our business, but we're going to create the opportunity for our customers to do anything they can do with us live today to move that online. This way, they can create the omnichannel experience they want to have with Avnet online and offline. I'll talk more about that in a little while. We believe between our specialized customer support model, our go-to-market strategies, and our vast scale and scope, we are well-positioned to continue to grow share in the established and emerging markets going forward. Now let me take you through some of our key strategies.
We have six strategies for continued success in EM. The first one is our evergreen strategy about continuing to be the leader in demand creation and supply chain solutions. We continue to make investments both in our regional businesses here and globally because we think this is a key differentiator between us and our competitors. We're going to look to provide a differentiating online customer experience. We're currently building our new website today, and we plan on launching that as a pilot with our Silica Speedboat in Europe this calendar year. I'll talk more about that in detail in a little while also. We want to optimize the value-added embedded business we have today globally.
It's providing growth and value-added opportunities for us for margin expansion and growth expansion, and we think this is a huge opportunity for us to not only expand both from an organic perspective but from an acquisition perspective where we can find companies that provide us capabilities we don't have today. We want to expand our capabilities to capture the opportunities of IoT. I like to say Avnet was in IoT before IoT was cool. If you look at the three main building blocks of IoT when it comes to sensors, processing devices, MCUs, and communication devices, we've been selling those for a long time, so we think we're poised to capture the uplift that presents itself in the market. But we also think that by teaming with our TS group, that we have value between ourselves together that we don't have separately.
We want to continue to engage our customers and our suppliers to be their preferred partner of choice, and we continue to measure how we're doing through our Net Promoter Score process. Last but certainly not least, we want to invigorate our culture and employee engagement through effective branding. We want Avnet to be a place that they're proud to work, and how we do that is by creating line of sight to our strategies. Kevin touched upon earlier our Avnet Advantage initiative, which is really a systemic way of reviewing our structure and looking for efficiencies. We've created many projects for Avnet Advantage that are in flight today, and we're keeping our employees on that line of sight to see how they're going to help us with that project.
So I'm going to spend most of the rest of my time today talking about the first four strategies. We believe because of our history of both organic and acquisitive growth, we have new opportunities to meet the needs of our customers and suppliers. We are the world's largest electronic component distributor, and we continue to find strength in our scale and scope. We have three big differentiators between us and most of our competitors. One is we're in every region of the world. Two is we have vast scale and scope. And three, we have the continued ability to invest both organically and through acquisitions when we see opportunities in the market. We will maintain our focus on demand creation, which I'll talk about in a little while.
As we look at our portfolio, we continue to find ways to extract value from the portfolio, and if we have businesses that are not meeting our return metrics, we will work to fix those or even look to exit those businesses. A creative acquisition, there are a few exceptions to this rule. As the market continues to consolidate, we are looking for companies that offer EM either a unique skill or products that enhances our overall margins and our market position. I think our MSC acquisition that we did last year is a great example of that. Thank you, Patrick. Patrick led that when he was running our European business. It did two things for us. One, it allowed us to roll up part of the market from a components perspective, which we've integrated into our business, which was a creative in the year we bought it.
Secondarily, it's given us new capabilities around custom embedded computing boards and touch panel displays. Those are the type of acquisitions you'll be seeing us doing in the future. As I talk about the strategies today, you'll see that the acquisitions that we do will match our strategies. Lastly, all companies need to continue to find ways to be productive and efficient, and we think that what we're doing around Avnet Advantage for the long run will help us continue to do that. Why does demand creation continue to be so important to EM? Well, first of all, our suppliers expect us to get their complex solutions into the hands of the mass market customers. When we do that, we command higher margins. Our mass market customers expect us to help them in design to accelerate their time to market.
This year, we continue to focus on Design Chain, and we generated over 45,000 design wins this year by providing 30,000-plus customers with annual design support. We continue to make investments in both our technical capabilities and our technical resources, and I think the 1,000-plus FAEs we have deployed globally is a great example of that. Properly servicing the mass market in the design and process requires a number of efforts. It is important to understand the difference between what we do and what we deliver. Our approach offers system-level solutions where we provide customers core design support that enable attached solutions that are focused on applications and markets. So what does that mean? Customers are looking for us to help us with the core of the design so they can focus on the part of the design where they're adding value, what their secret sauce is.
That's where they generate revenue. In some cases, we're able to provide design support to our customer base that they can't even get direct from the supplier because of our broad line card. We're able to bring different suppliers' technologies to solve a problem for a customer that not even our suppliers could do on their own because of the limitations of the products that they sell and their toolset. Our global resources of design support, FAE support, our sales team, and even our design chain teams help our customers to be successful in the new product introduction process. When we help our customers be successful, our suppliers succeed also. No matter what the customer needs from chips to boards, Avnet EM can satisfy those needs. I think a great example of our prowess in design chain is our world-class X-Fest event.
We started this event 13 years ago where we helped bring Xilinx's technology to the market by doing technical roadshows in cities around the world, and we have expanded that. This last year, we had 25 supplier partners pay to be part of our event. So this event actually cost us nothing. The suppliers completely pay for it. We did an over 30-city roadshow where we did technical seminars focused on different applications in different markets where we could demonstrate the technical capabilities of the supplier's products and some of the Avnet products that we've created where we have our own IP. We had 6,600 attendees attend our X-fest event. 74% of those were engineers. We tracked the tools that those engineers bought, and we found that 56% of the engineers that came to our event started new designs with us.
And we have 80+ customer attributes that we measure to make sure we're doing everything we can with the supplier's help to close on those opportunities. Last year, that produced a $750 million design win pipeline for Avnet, over 8,000 new design opportunities, and you can see across many vertical markets. So we think this is a great example of what we're doing in the space. There's no other distributor doing anything like this, and we think this is one of the reasons that since 2008, when our suppliers, I know a big question is what's happening with the consolidation in our space, when our suppliers looked at channel reduction, 12 different opportunities for channel reduction occurred. Not once did they downselect Avnet. There's not another major distributor that can say that today.
So to keep true on our promise to help customers design anywhere and build anywhere, we need to continue to leverage the scale and scope we've invested in around the world to help customers be able to design in one region and build in other regions of the world. We have deployed resources dedicated globally in each of our regions around the world to help us with supply chain. I talked to you a little bit about our Avnet United and our Avnet Velocity teams. We also have a business migration team whose role it is to manage every bill of materials where we have a customer where we've done design chain and supply chain work for.
As that customer either moves from doing their own manufacturing to an EMS provider in the region or moves outside the region, our business migration team acts as the glue that works between our sales forces in each of the regions to transition that customer's supply chain around the world. Why is that important? For one, as customers move from the west to the east, when that business comes east, Stephen realizes higher margins, which is important. Secondarily, the more of the business we can capture as it transitions, the more return on investment we get from our initial design chain and supply chain solutions. So it's very important. We have provided 45% of our customers with tailored supply chain support, and we are executing complex supply chain models globally on their behalf.
So it's one thing to say we're a leader in supply chain, but it's great when other people say that we're a leader in supply chain. Gartner last year named Avnet as one of their top 10 high-tech companies in supply chain. We're the only distributor to ever receive this award. What's really great about this award is you can't apply for it. The Gartner analysts have to seek you out. In a lot of cases, the reason they came to Avnet was they heard from some of our major customers, some of the largest OEMs in the world, that we were powering portions of their supply chain. Now, when you look at the Gartner analysts and how they do their analytics around the scoring, it's heavily weighted to financials.
While I think EM does a great job of providing shareholder returns, if you look at our gross margins compared to a Cisco or Apple, they're a bit different. The reason we got the award is because even though we might have been a little weak against some of those companies there, when it came to the Gartner analysts, they gave us very high marks.
And when we asked them why, they said, "We're one of the few companies that could take both virtual supply chain assets, think about supply chain brains in our company, people who help customers design their supply chain networks, and then we have physical assets to be able to move their supply chains around the world." And there's companies out there you can hire a consultant to help you come in or your own supply chain people to do a network map, but can you execute it? And then there's companies like a UPS or FedEx that have a lot of physical infrastructure but aren't going to create a bespoke supply chain for you. And what the Gartner analyst said about us is when we talk to a customer, we can tell them how to do it, we can do it with them, or we can do it for them.
That was a key differentiator. If we look at the reason why we continue to make investments in our scale and scope to be able to pull this off. If you look at, we have almost 4 million sq ft of warehousing value-added space under roof, 4,500 dedicated supply chain personnel around the world. That allowed us to ship almost 90 billion units last year. We stock over 2 million part numbers, 6 million orders processed, almost 450,000 systems integrated, and 280 million devices programmed. We are the world's largest programming company. Many of you have devices either in your pocket or your bags today where we did the programming. So if we're able to create supply chains for some of the biggest consumer companies in the world, we think we can service the mass market and why we think we have leadership in this space.
So now let's talk about our new digital experience. We really have four strategies within our digital transformation strategy. The first is we want to make it easy for customers to do business with us. Any transaction that our customers do offline today, we want them to be able to do online. Next, what we want to do is make it easy for them to purchase. So when the customer finds a part they want to buy, not only do we want to make it easy for them to move to the checkout basket, but we also want to, based on researches they've done, the products they're buying, we know other products that go around that, we want to recommend other products to buy, which will increase our share of wallet. Next, we want to provide targeted digital marketing.
Today, when customers come to many websites, they get barraged with different types of marketing not pertinent to them. Based on the searches, when our engineering customers come to our site or our supply chain customers, based on the products that they're looking at, our customers will also be able to create a desktop on our website where they can store searches, and we'll use this data to provide targeted marketing to them on products that they're interested in both when they come to our site and when they're off our site. And last but certainly not least, we're going to move more of our engineering resources online. First of all, when it comes to design exploration, we want to be an active participant in the engineer's vision. We want to be a rich source of research, articles, documentations, and tools for the engineers.
We want to create an idea exchange forum that when an engineer runs into a problem with their design, there's other design engineers they can reach out to for help. When it comes to part selection, we want to be a true partner in the engineer's success. We're going to have millions of product specifications for electronic components on our site. But more importantly than that, not only do we want to help them choose the right product from a technical perspective, but we want to tell them where it is in the end of life cycle and also particularly how many suppliers can supply that part so they don't run afoul of their supply chain and manufacturing people as they move on. This will help them do much more and make much more intelligent decisions around the design process.
Since we're helping them in design and we see what they're doing, we're going to be able to, much early on, help their manufacturing and supply chain people start to build their supply chain, and we'll be able to start pipelining products much earlier than we do today when it's bifurcated between other suppliers and us from an engineering perspective and speed their time to market. We think with our vast supply chain knowledge and expertise, we can become a trusted advisor, enabling customers to bring products to the market faster and more efficiently. This will help accelerate their time-to-market decisions and results.
So when we look at our global scale and scope at Avnet and the capabilities we're bringing online, we think we're one of the few distributors that can help a customer get to NPI all the way through end of life and provide a differentiated digital experience from design chain through supply chain globally. So now let's talk about our opportunity around embedded. We have been working hard over the last five years to grow this business since the Bell acquisition. Today, we're approximating about $2 billion in embedded sales. If you think about what we do today when we sell components and sell services around design chain and supply chain, we do a design at an OEM. That OEM may then take that project and send it to an ODM.
We then have to try to win back part of the bill of material because remember before I said we're doing demand creation on semiconductors, which usually gives us a registration and a preferred margin, but there's lots of other attach we do around interconnect passives and electromechanical and other products. We have to constantly win that bill of material as it moves through the supply chain. When it comes to selling an embedded solution, we're going to keep 100% of what we have on the bill of materials because we're selling a solution to the customer. If you think about an embedded computing board. And then as we integrate that embedded computing board into other products, we have the opportunity for continued growth from a revenue perspective and margin upsell. So that's one of the reasons why embedded is so important to us.
60% of our business today is value-add, which drives higher margin. We have 2,500 customers globally we're doing business with today, and we think if we look at the market where we're servicing today, by 2017, there's a $95 billion Served TAM opportunity there. So we believe today when it comes to electronic component distribution, we're a leader in delivering embedded solutions globally. What I'd like to do now is show you a short video that talks about our embedded capabilities and the markets we serve.
Avnet is a leader in embedded solutions. Marshaling all of our resources, Avnet delivers the most comprehensive and embedded solutions, addressing the changing needs of our day's market. From the early design phase to developing complex integrated solutions, we deliver. We are the premium embedded solution provider with comprehensive expertise in development and production.
At Avnet, we help our customers provide cost-effective solutions to market fast and to production, nearly doubling our sales growth in the last five years. We help our customers cost-effectively get their solutions to market fast. We are connecting the technologies of today, nearly doubling our sales growth in the last five years.
So that gives you an idea of the markets we're servicing and some of the products that we're bringing to market. We continue to be very excited about this. For today, tomorrow, we're going to continue to make organic investments here that are built into our budgets today, but we're also going to look at acquiring companies that help round out our capabilities in this space as we go forward. So that's a nice segue into IoT. We believe today we're perfectly positioned for the Internet of Things.
If you look at the 2014-2020 compound annual growth rate that IDC has projected for the three main product sets that we support in IoT, which are sensors, processing, MCUs, and communication protocol devices, that is a very large market opportunity growth for us. And when we go back and look at IDC's numbers from 2010 to 2014, on processing and communications, we actually grew a little faster than they showed, and when it comes to sensors, a bit less, but you can imagine a lot of sensor sales today are being driven by tier one automotive. So we think this is a huge growth opportunity for us as we continue to support as we have today, taking customers to the gateway. But we think there's a huge opportunity here to leverage the strength of one Avnet.
If you think about us being able to take customers up to the gateway and then our TS team being able to take customers through their data acquisition and data analytics strategies, if we could put the two groups together and do something in a marketplace, we think working together is better than some of ourselves separately. So we're actually going to put on a technical roadshow very similar to X-fest in calendar year 2016. We're calling Edge to the Enterprise. We're going to ask both EM and TS suppliers to participate to help engineers and other folks inside of our customer base to understand how to design products for IoT and then help them with their data analytics and data acquisition strategy.
We believe we're one of the few distributors that can do this in the marketplace, and with our X-fest history, nobody else is doing that in our space today. So we think this is a huge opportunity to drive awareness and growth for Avnet. And based on the fact that connected devices will exceed 25 billion by 2020, we again will look to make organic growth decisions in the space and also look for companies that help further our efforts in this space from a technical perspective. So let's talk about EM's commitment to success. Our number one commitment to success is getting back to our long-term profit targets. If you look at the progress we have made over the last three years, FY13, 4.2%; FY14, 4.5%; and this year we're forecasting to close at 4.6%.
If you compared FY15 to what the FX currency rates were at FY14, we would be closer to 4.75%. We believe, looking at our overall market, when we look at our served percentages around the world today, if you look at the buy region, what our mix is, we don't see any significant change to our mix over the next three years. Again, we can't predict what's going to happen with FX, but we don't see a change to our mix. So our current mix, we think, will be pretty stable over the next couple of years. And based on the plans we have for growth, we believe we'll create operating leverage that will add 10-20 basis points to optimize our core.
We think with the investments we've talked about today that are bearing fruit around embedded, digital, and IoT, there's another 20-30 basis points opportunity for growth there. Then we think our Avnet Advantage systematic approach to driving more efficiency in our business around the world will add another 10-20 basis points. So we can see our way back to 5%-5.5%. We believe, based on our three-year budgets today, we'll get to over 5% in the back half of next fiscal year and then in the two years out from there for the full year at 5%. So what are some of the key takeaways I'd like to leave you with today? The first is, if you look at our served market, it's a very dynamic market, but it's a very large market.
And although when you look at what the served TAM growth is projected to be, mid-single digits, because of the size of the market and the small size of the DTAM, we think we have opportunities for both organic growth and continued acquisition in our space. We're going to continue our disciplined portfolio management, continuing to look at our go-to-market strategies around the world, and continue to feed and seed those that are providing the right returns and to fix or weed those that aren't. Our Avnet Advantage systematic approach to continued efficiency and effectiveness projects around the world, we believe, will create new opportunities for drop-through for us at EM. I'm going to capitalize on the growth opportunities that exist in both embedded and IoT.
As I said through most of my presentation, where we find the right opportunities for accretion, we're going to continue to accelerate our growth through M&A. So with that, that's the end of my presentation today. I thank you for your time. And next, I'd like to call up my good friend Patrick Zammit, the president of Technology Solutions.
So thank you, Gerry. Good afternoon. So rapidly, so my name is Patrick Zammit. I'm now 22 years with Avnet, and except for the last 5 months, I've been at EM. So for me, quite a change to move into the IT distribution space. So the topics I would like to address with you today, first thing is, again, to reposition TS in the IT market.
The IT market is a very interesting market for us because it's a market going through a profound transformation, moving from a Second Platform to the Third platform and creating, because of that, some nice opportunities for the TS organization. So with the team, we've reviewed our competitive environment, the market opportunities, our strengths and weaknesses, and we've decided to focus on a limited number of strategies, but to be really focused, and I want to share that with you today. Executing well on those strategies should enable us to deliver the financial or to meet the financial targets, which are expected by our shareholders, and this will be the last topic I will address with you. So TS in the IT supply chain, we really sit at the heart of the IT supply chain.
Contrary to EM, which sells directly to the end customers, we don't sell to the end customers directly. We sell through a set of partners. Historically, we've done it through the VAR community, okay, but we have some new customer segments emerging and developing fast, which I will address later. What we sell? Hardware, software, and services. Just to give you a feeling, hardware today represents roughly 50% of our business, software approximately 35%, services 15%. Our partner community then sells to the end markets, okay, public sector, the large enterprises, but also the mid-market. Very important in the IT space, you need to have vertical segment know-how. So we have partners aligned by vertical segments. By the way, at TS, we've developed some special programs to help our partners address specific verticals. We have two business models. One is we call TS, strictly TS.
That's where we sell hardware, software, and services through our partner community to the end customers. That's roughly 91% of our business. And then we have AGCC, and basically, they distribute computer components to the market. The rest of my presentation is really going to be focused on technology solutions. So I just want to take a few minutes to rapidly share with you what we've done on AGCC. So I know that in the past, there has been some volatility in the results, okay, and we have addressed it. So what we've done is an in-depth review of the portfolio of AGCC. We looked at the product lines, we looked at the technologies, we even looked at some of the customer segments, and we've decided or we have selected, okay, the product segments, the lines, and the customer segments we wanted to play in.
The main driver for making the decision was a financial decision. Are we going to be able or not to meet our return targets for the long run? The outcome of that, and we are at 70% of the execution of the plan, okay, the last 30% will be executed in fiscal year 2016. The result of that is a focused business unit going after the higher profitability and higher return product lines and customer segments. Today, we are very confident that we are going to meet our financial targets with AGCC, okay, latest in fiscal year 2017, maybe in fiscal year 2016. Early impressions after five months in the business. TS has a lot of strengths. It starts with a very skilled and engaged workforce. We're a service company as a distributor. You first differentiate thanks to your workforce.
If you have the right workforce, you can win in the market. I am very confident we have the right team to succeed in the market. The second thing, and this also we have in common with EM, we are not a pure fulfillment distributor. We are really solutions and service-oriented. And what does it mean solution-oriented for us? It's bundling hardware, software, and services to deliver a differentiated value proposition through the partners to the end market. Third, we have a long-term and trusted relationship with our partners and also with our suppliers. Again, as a distributor, this makes a big difference that differentiates you in the market. We have that. We have global scale and scope. We are the only solution distributor today who is present in all the regions. We're in Latin America, we're in Asia, EMEA, and North America.
Again, it's going to give us a competitive advantage in the future. And then we have integration capabilities. I will talk a little bit later on converged infrastructures. You need to have integration capabilities to be successful there. We have an extraordinary position in the market there, our capabilities in that market. So with that strength, okay, so that gives us very solid foundations. We can go after the market opportunities. On the second platform, okay, our market share is relatively low. You have some very nice pockets of profitable business still in the second platform, which we'll go after. The third platform is creating for us some very exciting opportunities for growth, and I will address it in a few minutes.
Then if you look at the regions and the countries, I can say that, and this is a little bit of learning also from the EM, I can see many opportunities for us to improve our efficiency and our productivity. And that's what the team, by the way, is already working on, is identifying the opportunities to, okay, as Kevin was mentioning before, how can we improve our operating expense as a percent of GP? Then that's interesting. TS of the IT world is still a very regional or even country-driven market, where on the EM side, I mean, all the manufacturers are already thinking global. So that's an opportunity for us. As we are the only solution distributor with a global scale and scope, how do we sell it better to our suppliers to take advantage of this differentiation?
On the other side, if you look at the customer base, for the moment, we have a customer base who is really more acting on a local, sometimes regional base. I think things would change. We see some of the customer segments starting to ask for global support. Again, with our global scale and scope, we have an advantage here. And we have a very large customer base, 20,000 customers. We have an incredible opportunity to sell deeper in that customer base. So let's look at the market opportunities. As I was mentioning, the IT market is going through a profound transformation, moving from the second platform to the third platform. Any change is disruptive. We see it differently at TS. We see that as a very nice opportunity for us to become the leader in that space.
If you look at the growth prospects for the Third Platform, okay, it's double-digit. So IDC forecast that the CAGR for that market is going to be around 12%, so double-digit, very interesting. We believe, based on our strengths and our market positioning, that where we have the biggest opportunity to succeed is in looking at cloud in general, private and public, its security, and its big data and analytics. And of course, those market dynamics are impacting all the markets in the world. In addition, what we have is different dynamics by regions. Latin America and Asia, for example, are going to offer higher growth rates than maybe North America and Europe. The good news, again, is when you look at our split of our revenue by region, we are very well positioned to take advantage of all the market opportunities in the world.
We are today serving 20,000 customers in more than 80 countries. So again, our global scale and scope is a differentiator, and we can take advantage of those market changes and the market growth opportunities. When you look at the customer base here, again, we see a shift. So where historically we've been 100% focused on the VAR community, okay, and our focus is not going to change, what we see is some of the VARs looking for more value-added services are moving into new spaces. Some of them are moving into the system integrator space. Some of them are even moving into the managed service space. That's a big opportunity for us because those new segments require some differentiated value propositions. So what we are doing at the moment, so we have our overall value proposition.
We are fine-tuning our value proposition by customer segments to take full advantage of those changes. IDC quoted that they believe that by 2020, 60% of the market will go through system integrators, independent software vendors, and service providers. So we have a new technology, the Third Platform technology, as an opportunity. We have, on the second platform, the opportunity to gain share. We have a customer base which is evolving, requires some new value propositions, some new support. Is TS well positioned to take advantage of those market opportunities? The answer is absolutely. It starts with our value proposition. So as I said, we, of course, provide the basics of a distributor, so logistics support, okay, but this is just a small portion of what we can offer to the market. Integration is a clear differentiator for us.
Financial services, we will talk about it more when we speak about the cloud opportunity. Moving from CapEx to OpEx, you need a financial model or financial services to support the partner community to move to there. We have it today. Our suppliers are counting on us and our partners to help them move to the third platform. That's about enabling and training them to be able to be competitive in the market, support the end customers to implement those new technologies. Here again, we have a strong history in the market. We are very good at doing it as a solution distributor. And we even are in a position today on certain technologies to offer differentiated tools and offer consulting services. Again, we want to deliver it through our partner community. So basically, in the past, we were really focused on delivering technology solutions.
More and more, we are moving into delivering business solutions. So that's about the value proposition. Second major differentiator for us is the line card. Okay, when you look at our line card, we today deal with 40 of the top IT suppliers in the world. If you look at it by technology, we work with 8 out of the 10 top software vendors, 5 out of the top 5 storage vendors, 4 out of the 5 top server vendors, and 4 out of the 6 infrastructure cloud vendors. So we have a very solid line card today to be able to address the needs of the market, to offer to partners one-stop shop for them then to deliver the right solutions to their end markets.
To deliver those products, those software, and the services, we can rely on more than 1,100 technicians or technical specialists, and we have a sales force today of 300 salespeople supporting the partners. So again, in summary, the market is offering to us some very nice opportunities to grow. Second Platform, Third Platform, customer base. We have the differentiators to be able to support and to take advantage of those opportunities. I'm not going to share with you the strategies we have selected in order to win in the market. So we have identified five strategies. Okay, four are technology/product-driven. It's converged infrastructure, security, analytics, and cloud. And one is evergreen. Okay, I'm going to focus in the next minutes on the four technologies. But on the fifth one, I just want to rapidly, again, put it in perspective.
So we are a distributor, and as a distributor, okay, what differentiates us is first the quality and the engagement of the team. So we have a program at Avnet who ensures that we are monitoring how well the team feels and making sure that we constantly improve our working environment so that the employees stay engaged. Because the philosophy is that if you have engaged employees, then you will be able to serve your customers well. Again, one of the strengths of TS is long-term and trusted relationships with our customers. So customer experience is key to us. We have a program which is monitoring on a quarterly basis how we deliver, what's the experience of our customers, gives us the indications of what we need to improve, and we act on it to make sure that we maintain a very high level of engagement.
Of course, if you have happy customers, then the suppliers will be happy because we're able to bring to the market their solutions. Let me go back into more the technology-driven strategies, and I will start with converged infrastructure. Today, in the market, the end customers are looking for technical solutions who are going to be easy to implement, cheaper to buy, cheaper to maintain, scalable, flexible. Converged infrastructure is a very nice technology to meet those requirements. According to IDC, this is a $47 billion market or will be a $47 billion market in 2020 with a CAGR of roughly 20%, so double-digit growth. We have today at TS 8 of the 10 leading converged infrastructure in our portfolio. We have 20 years of integration capabilities. Again, integration is key for you to succeed in that market. We have that expertise.
We have 150,000 sq ft of integration space, and we are global. So we have integration centers in all the regions to meet our customers' expectations. We rely on 400+ partners to deliver those solutions. And as you can imagine, we have a program which aims at increasing the number of partners able to deliver those converged solutions to the market. And we are supporting our partners through more than 200 engineers who have today more than 800 certifications. Okay, so we have a sense that we delivered or we will deliver in fiscal year 2015 roughly $1 billion of converged solutions. So we believe we are one of the leaders, if not the leader, in that market today. And this is a very fast-growing business for us. Second opportunity is security and networking. So we read it in the press.
On one hand, okay, we have today access to our data wherever we are. Okay, internet is making our life very easy. Unfortunately, on the other hand, it's giving a lot of ideas to bad guys to steal or destroy data. So security is going to be a permanent issue in the market. We have a lot of suppliers today working on improving security. This is a complex technology which requires a lot of support. So again, for us as a distributor, a value distributor, a nice opportunity to differentiate in the market. So we have today 100 security specialists, and we will increase our number of resources in that space because of the demand growing very nicely. And on top of it, this is also like for converged where integration is a differentiator. Security requires a lot of services.
Our partners are asking for specific support to help them assess where the end customer is in his security setup and help them in some cases also to deliver the solutions. From a supplier standpoint, okay, today we have a solid line card, but this is a very innovative market, and we believe there are some good opportunities for us to add some interesting franchises to our line card. The third one is analytics and big data. Data today is a strategic asset for the companies. Thanks to technology, hardware, but also software, I mean, the end customers in the market want to take advantage of all those data which are available. By the way, we have suppliers today who are even providing the ability to bundle internal data with external data.
And as Gerry has explained on IoT, the amount of data available to be analyzed is not going to decrease. It's going to explode thanks to IoT, as you will have more and more devices being connected. So again, a market with exponential growth. Today, the size of the market is assessed at $137 billion, growing 16%. We have 60 analytics specialists today to support our partner base. And this is also a space where we found out that it's possible for us to develop some IP. So based on the support we've provided, okay, we have identified some tools required by our partner community, which we then can deliver to them to standardize or to standardize so that they can easier deliver analytic tools to their end customers. Last is cloud. So cloud is an interesting debate. It reminds me when in 2001 I started in Europe running EBV.
We had at the time a major debate when suddenly a lot of production at EM moved to the subcontractor space. Looks a little bit familiar here with the cloud. Okay, one of the concerns or one of the trends is how much of the workloads today at customers is going to move to the public cloud. At Avnet, we see it a little bit differently. What we think is the future is hybrid cloud. So basically a combination between private, on-premise, off-premise, and public cloud. For sure, this is going to create for us a lot of opportunities again because this is not an easy technology, and our partners need support and tools in order for them to support their end customers.
So we have developed a series of tools, and we are going to show you a quick video which is going to explain to you what value proposition we are delivering to the market today. Can you run the video? Cloud video? Yes.
The cloud is changing the way people buy, sell, and use the cloud. It's changing the way people buy, sell, and use technology. Data is no longer confined to one zone data center. It's changing the way people buy, sell, and use technology. Data is no longer confined to one zone data center. And compute power has no bounds. It can be available when and where and how it's needed. And apps are redefining everything. Companies have choices they've never had before. They need expert guidance to simplify their options and achieve the best business outcomes. Avnet Cloud Solutions is answering the call.
Avnet Cloud Solutions comprises an exceptional mix of in-house capabilities, market-leading partnerships, and the world's best technology products. Our portfolio of services, portfolio of financial programs, intellectual property programs with our intellectual property allow us to deliver solutions that solve customers' business problems and prepare them for the future anywhere they choose to do business. These solutions involve designing and migrating on-premise infrastructures to the virtual or public environment they choose to do business. They are integrating and managing high-volume cloud environments, designing and migrating on-premise or defined data centers to virtualized or public environments. We've helped customers deploy and manage more than 900,000 workloads in the past two years and implemented software-defined data centers in more than 80 countries. In fact, more than a third of customers' top 100 companies on the Fortune 500 have 900,000 Avnet Cloud IPs.
Our public, private, and hybrid solutions are simply unmatched, and they will continue to be. The Avnet Cloud Center of Competency manages our portfolio with more than a third of the top 100 companies and companies for next-generation technology platforms. Using Avnet Cloud IP, social, public, and big data innovation, hybrid solutions are simply co-developed solutions and will continue to exist. We help companies monetize their existing infrastructures and transition to a service delivery roadmap to ensure we're preparing to deliver hybrid cloud technology for all the financial and operational benefits of cloud computing, either within a customer's data center or in a managed environment. We help the national development solutions build an on-premise private cloud.
We help companies monetize existing developers as they transition to a service delivery model, making the exchange of vital information and delivers hybrid cloud solutions that provide all the public cloud offering combines our cloud and service partnership. When the workload-specific integrated cloud solution is within a customer's management and building data centers or in a managed environment, customer and partner experience, we help the national experience they can get nowhere else. We build an Avnet-based private cloud approach to solving the challenges companies face in adopting cloud. We offer finance developers that build technology investment from capital to operational, making the exchange of enabling faster cloud adoption.
As companies look to the cloud, experts who can help them develop and implement cloud strategies are a great opportunity for us.
And again, so we have customers who are going to be confronted to what do I put in my private cloud? What do I put into the public cloud? When I expand in the world, okay, do I start with public cloud to be able to bring it back into private? So lots of opportunities for them, and basically they need a lot of support so that they can move easily from private to public and vice versa. For our partners, in addition, what we need to deliver to them is the ability to invoice their end customers. So we have a marketplace which is going to facilitate that. We have also this marketplace is going also to enable them to monitor, okay, consumption from our customers because the other dimension of cloud, besides flexibility and scalability, is going to be the financial model moving from CapEx to OpEx.
We have today financial services to support that. So the combination, and we have also the opportunity for we will enable our partners to invoice exactly the end customers based on consumption. So we are well advanced on our cloud value proposition. We are continuing to fine-tune it as we speak. Kevin Johnson is in the room today. He is our cloud specialist. He runs our cloud center of competency. So if you want to talk to him about his vision of the market, good opportunity today. He is really our expert. But again, if you look at the size of the market, we are talking about $250 billion-plus market growing at 14%. We have today already 100 dedicated specialists to help our partners deliver the solutions to the market. Okay, only in so we invoiced in fiscal year 2015 roughly $200 million.
$200 million only refers to public cloud services and some of the business we delivered, some hardware delivered to service providers. So it doesn't include any of the private cloud implementations we have delivered. But this is a very fast-growing market for us. So when you look at those four strategies, sorry, at those four strategies, they have a few things in common. The first one is when you look at the market, they will offer to us a very nice opportunity for double-digit growth. In addition, because it's innovative, our partners will require a lot of support. They will require presale support. They will require tools. And again, this is historically this has been historically the strength of TS to deliver value-add to the partner base and not only fulfilling hardware or selling licenses.
The last thing I would like to mention is that both four areas, so that's four areas of focus. When we will look at our acquisition strategy, obviously we want the targets or the potential targets to fit into that strategy. So again, we want to grow first organically, but if we have the opportunity to buy a company, we will first look at companies who are going to accelerate our success in both four spaces. So this is our commitment to meeting the financial targets of Avnet and meeting expectations from the shareholders. So we should close this fiscal year at roughly 3% operating income, and we have a road to get to between 3.4%-3.9%. The first one is going to be portfolio management. I shared with you what we've done at AGCC.
Okay, we are applying at the moment the same discipline, the same analysis, the same approach to all the business units at TS, every country, every region. So portfolio management is going to be key. Again, we look at our activities, and we want to focus where we believe medium-term we can get to our returns. If we see that the market dynamics, our scale, our competitive position is not strong enough to get us there, then it's better for us to disengage. So we have identified a limited number of product lines where we still need to disengage. We will execute in fiscal year 2016, at the beginning of fiscal year 2016, and that should drive improvements in our operating income percent. The second dimension of our financial improvement plan is, of course, organic growth.
Okay, by executing on the four strategies I've just presented to you, gaining share, gaining profitable share in the second platform market. Again, we are going to generate some additional profitability at higher operating income %. And then, as I mentioned at the very beginning, we have today in every region and in every country some nice opportunities to improve efficiency and productivity. So the teams, again, are going through their go-to-market strategies today, their organizations, okay, to identify what in every region should be centralized, what should stay decentralized, and when it stays decentralized, what type of productivity ratios we should assign to the various functions in the company. Again, this is a two-year journey. We call it a transformation journey. We expect already to see some improvements in the next fiscal year, but basically we've given ourselves two years to deliver that.
So the sum of all that should take us from 3% today to between 3.4%-3.9%. If the market is good with us, we should be closer to the 3.9%. But we are very confident that today we have the plans, we have the strategy, and we have the teams to deliver that. So some key takeaways. Again, disciplined portfolio management. We have today a business with a lot of strengths. Nevertheless, we are addressing the pockets of weaknesses, and that includes divesting or deselecting if needed. Otherwise, it's about investing to accelerate our success where we have today a competitive advantage. Second, it's going to be on executing on our growth strategies, which I've just shared with you. Continue to work on efficiency and productivity by region and by country.
And again, if we have the opportunity via M&A to accelerate our success or accelerate our positioning in a given technology, in a given market, we will look at it. Conditions are exactly aligned with what Rick presented to you. First, so again, we need to have a strategic fit. Second, the acquisition needs to be accretive to our GP GM percent and operating income percent. And third, from a cultural standpoint, we need to make sure that culturally the two companies are compatible to maximize the chances of success of the integration and take full benefit of the acquisition. So with that, I'm going to turn it back to Kevin. Thank you, Patrick. So I'm now going to take you through the financial framework, our goal set. And for those of you that are familiar with the company, our financial targets, our goals remain intact.
So we're very consistent to what we have shared historically. What we've worked to do today is to provide deeper clarity on the EM and TS margin goal and how we plan to achieve those goals. Because those two business operating group performances really are the key benefits when we think about how do we accelerate our progress on our return hold rates. So it's really the fundamental performance within the operating groups that are really going to benefit our return profile. In addition, today, we've introduced a deeper concept to our model around an expense-to-gross profit ratio. This is really, and you'll see here the continued progress we've been making over the last three fiscal years on the ratio, but our main goal is to really get within the 66%-68% of operating expense-to-gross profit ratio, again, as another metric to really support our financial framework.
This is really what I view to be kind of the primary goal. It will be supported by the Avnet Advantage program we shared throughout today, but our real North Star metric is the expense-to-GP ratio. To help on the modeling, we've put in the documents and preparation materials, our revenue seasonality. And this is really how our sequential revenue builds throughout a fiscal year. I would point to September and June, minimal impact from what we have shared historically. The more significant impact is in the December and March quarters, whereby historically, at the enterprise level, our Avnet midpoint of growth would have been around 10%. Given what we've seen with the calendar close on our technology solution side, as well as our regional mix shift within the EM, we're now going to give a midpoint of the December quarter as a 12% number.
That now changes then the March sequential change, which historically was down 5%-5.5%, but now as we see the year unfolding, we're now going to be referencing a midpoint number of down 7%. So again, not much change in the September and June quarters, more change as you look at the December and March quarter. I also have to caveat with what's on the lower right part of the chart. We will continue to update you with each of our earnings calls as we go through the fiscal year because there's obviously a few things that impacted, be it economic, our M&A activity, end of the quarter, and in addition, coupled with foreign exchange. But again, these will be our kind of new seasonality metrics as we look at the sequential change of the portfolio.
Two other topics I want to highlight as we look at next year's fiscal year modeling. The first is 2016 is our 53-week year. What that means is we actually have an additional week in our March quarter, September quarter, sorry, September quarter. But the other key point I want to highlight is now our new fiscal year close will align much more favorably with our suppliers' and customers' calendar. Historically, we would close, say, the Saturday before the calendar. Now we will close after the calendar close. So that should really help from some of the modeling. The last point, we do transact in multiple currencies, so we have some foreign exchange sensitivity. The primary currencies are the euro, the pound, and the Japanese yen. The euro is by far the most significant, which represents close to 20%-25% of our annualized revenue.
I highlighted this on a couple of calls ago, but just for your modeling, just to know that every 2-point movement in the euro, over a quarter a weighted average, up or down, equates to approximately $0.01 earnings per share. Now, a lot of that is predicated in terms of that quarter seasonality mix, but directionally, that's the way to think about it for modeling. So the last chart I want to share with you today is the enterprise operating income margin. And you'll see here the continued progress we've been making and the commitment of the Avnet management team to continue our progress to get to our targeted range. Patrick and Gerry both spoke to the core, the investments we've been making in the organic side of the business, and the concept of enterprise effectiveness driving with Avnet Advantage the incremental benefit from a margin plan standpoint.
In my opinion, the plan embraces what Rick highlighted earlier, the new normal, as we have continued to heighten a more strategic and greater focus on operational efficiency, balanced with consistent organic growth to accelerate our progress to our long-range goals. It's important to note we did not include M&A in any of the numbers here shown today, so all of that would be incremental. I know I speak on behalf of the entire Avnet management team when I tell you we are committed to these goals and believe that these are the right plans, trajectory on how we plan to achieve our operating income margin performance. And with that, I'd like to now invite Rick, Patrick, and Gerry up for Q&A.
Thank you, and thanks for a very informative day today. It's Jim Suva from Citigroup.
On the topic of M&A, as you look back, can you just help us understand a little bit about your criteria? Do you feel like your criteria is too tight and you need to loosen it, or the industry and competition has a more looser or lower hurdle rate? Because it's been over a year without acquisitions, and we're at a time period where interest rates are probably not going to go lower, and the foreign exchange makes things even more discounted or favorable to make acquisitions. So it seems like many of these variables in the future year or years ahead are going to change a little bit. And just help us understand a little bit about what you think is happening and your lack of pulling in and closing deals.
Yeah, Jim, this is Rick. I'll start. Maybe Kevin can weigh in as well.
My first response is that just like our buyback program, I would say that our approach to M&A is very value-based. We have three criteria: culture, strategic fit, as well as the economics. But at the end of the day, we're planning for investments for the long run. For example, you talked about low interest rates today. That wouldn't necessarily be an encouragement. I think it happens to be a benefit of the current environment, as opposed to we would look at our deals differently because capital is relatively cheap today, as an example. So think of our approach as value-based. And this recent hiatus in activity is nothing more than a function of we have not found enough opportunities that have met that criteria that have caused us to lead to transactions that have added to the overall portfolio.
What I didn't want misunderstood, and hopefully we've clarified today, is that that relatively recent lull in the activity is in no way, shape, or form a strategic shift on our part consciously to say we don't want to do it. It's just a matter of we haven't found one that has met all of the criteria that we prescribe that are necessary. The last point is that has our criteria gotten more restrictive? I wouldn't say it's gotten more restrictive, but I'd say it's gotten smarter.
Because obviously, one of the benefits of being a serial acquirer for a number of years has been to take advantage of the lessons learned over that track record to find out where we had the best success, where we had the best set of returns, where we perhaps learned a few lessons of things after integration that we can tighten up our due diligence on deals on the next round. There are new risk-adjusted rates to our modeling and process that take into account our relative assessment of relative proximity or extension of our core, getting out of our comfort zone or getting out of our immediate neighborhood of core business today and leveraging the core companies and skills we have.
We have introduced some more elements of discrimination based on those lessons learned, but I wouldn't overall characterize that it's gotten tighter because that would also the other side of that coin was, were we too loose or not tight enough as we were going on? And what I would tell you, what we have learned, it was a matter of taking unconscious incompetence, turning it now into conscious competence, and making sure that we integrate it, as opposed to we've decided to tighten up and restrict M&A due to any other strategic objective. I don't know, Kevin, if you want to add.
And I think what we really tried to highlight today is really the strategic cores where we're going to be looking through both operating groups.
I think the point Rick brought up around the hurdle rates, I do believe we have gotten smarter on looking at how do you tighten when it's either in your core where you can build synergies versus when it's outside your core, and what should you think about from a risk-adjusted return rate. So those are some of the key changes we have weaved into the process, but the pipeline remains active. We really, as I tried to point to earlier, we really start from a local-led, market-led perspective. We're continuing those processes with our regional presidents. So the pipeline is active. It's just in the short term, we have not concluded on a transaction, but it does remain a core tenet of what we are trying to do to grow the company.
I think my phrase on the last call, Jim, was we remain open for business for M&A.
Hi, it's Will Stein from SunTrust here. If I could just follow up on that, I think the way that many investors are looking at your M&A activity today is that if you have the, let's say, different hurdles or a different way of looking at M&A today, slightly different, but you're still open for business, perhaps you're fishing in a different pond or looking in different areas. And if you're not, and you're looking in the same areas that you've historically looked at, and your primary competitors completed, I don't know, about 5 transactions in the last 5 quarters, and you've completed none, if this persists over time, we could envision the same result and no acquisitions.
Are you looking more actively in different areas, more extensions to the portfolio, something that could perhaps even be transformative, or are you looking in the same space that you've traditionally played in?
Yeah, Will, the way I'd characterize that is certainly if you step back and historically look at the drivers from 2000 to 2012, consolidation and geo-expansion were two big drivers of the M&A activity. Neither one of those is 100% done, but I think they're going to be less impactful on a magnitude basis going forward for us. We are turning more of our attention towards being more strategic and selective about make versus buy decisions in support of our key growth strategies.
So we were trying to leave the very distinct impression that as we come out with our future announcements of M&A, that they'll fit within a strategic framework, which hopefully has been very well communicated and articulated for you today and will be reinforced over future communications so that there aren't any surprises to what we end up acquiring to add to the equation. But the consolidation play, which was very evident in the early 2000s, I think made a lot of sense, and there was a certain calculus to extracting a lot of cost synergies out of those deals that was part of our approach and value creation.
Going forward on this more selective strategic basis to do make versus buy decisions in embedded systems or in cloud computing, we're not going to have the same calculus associated with how we create value out of those types of transactions. That makes sense? So we're still strategic acquirer, but the calculus of how we get there has changed. And you can always remain assured that we remain steadfastly committed to making sure all three of our criteria are met, including our expectation for equitable and sustained returns in excess of our cost of capital in the long run.
If I can just do one quick follow-up. There's been more discussion today on margins and relatively less on returns compared to what we've seen from Avnet in the past. I think there also may have been a change in the way management's compensated around margin targets.
So maybe you can talk about any shift that might have occurred relative to the way management's thinking about the most important of its financial targets. Thank you.
Yeah, yeah, sure, Will. So I believe our fundamental senior exec short-term incentive strategy is always looking to balance incentivizing growth versus incentivizing returns. And you're right, there was a change recently made. Our growth metric is net income after tax, and we went from a strict ROSI calculation recently to looking at margin and on-margin expansion as one of the key levers. We have found that two things have happened. In our evolution, we are now out of single-digit ROSI territory, at least into double digits. So think of it as got our head above water. But as you saw on the chart, we want to continue to progress back to that 14%-16% range.
So we have our eyes squarely on the ball, I would say, to continue to do that. But at the same time, we think margin expansion is a very key contributor towards increased returns. In other words, we have generally noticed in our history a high degree of correlation around margin expansion and return growth. So for the time being, we're focusing more on the numerator than the denominator, but that doesn't mean we have forgotten about the denominator. It's just today's version of balancing incentivizing growth and incentivizing returns because it's the two pedals we continue to want to press and have a nice healthy tension in between because it's not our goal to have the highest return on the smallest possible distribution company, right?
What I would offer is Value-Based Management, as I tried to highlight at the beginning, still remains a core tenet of how we manage the company day in and day out. But as Rick highlighted, if you think about the math to how we will get to the return on capital, it really does come from deeper performance and improvement on our operating income margin dollars. And that's really the fundamental focus we're driving. VBM still is alive and well throughout the company, I assure you.
Thanks very much for the presentation today. It's Mark Delaney from Goldman Sachs. I had a question on the Avnet Advantage program for OpEx savings that you talked about in the presentations today. Of the $100-$125 million of cost savings that you expect to realize over three years, when should we start to see some of those savings hitting the model?
Should we expect to see those hitting pretty evenly over the course of the three years, or are there going to be periods where there's large cost downs that we should be looking for? Thank you.
Sure. Thanks, Mark. What I'm going to comment upon is when you think about, one, starting with the efficiency metric, the efficiency ratio supported by Avnet Advantage. So if you think about that $100 million-$125 million, think of it rolling out 30%, 30%, 40% over the next three years. And I would point to when you look at the operating group walks and what Patrick's addressing within TS, 60% of it will come through the TS business, and the remainder will come through the EM part of the portfolio.
Yeah, thanks.
Matt Sheerin with Stifel. First question for Gerry and then a quick one for Patrick.
Gerry, in the semiconductor space, we've seen a ton of consolidation from a lot of your suppliers. Together, I think they represent a big chunk of your revenue. What impact do you see from this consolidation? I guess one concern is that we'll see a repeat of what TI has done post the National acquisition, which is taking more demand creation business on a direct basis.
Great question. What I would say is it really varies by the acquisition. So there are pros and cons to these things. I can't really speculate on the ones that have just happened because we don't know where they go. But if you think about the types of acquisitions that happen, so think about a big company buying a smaller company. A lot of times those smaller companies had a lot more distributors. When the bigger company buys them, they usually rationalize the channel.
And we're usually a beneficiary of when they buy them, they reduce their channel partners, and we gain revenue that way. If you think about larger deals where you've got, let's say, an NXP and a Freescale, they've kind of had served two different portions of the market: Freescale, heavily high-end MCU automotive; NXP, kind of on the lower end. They've already got their direct accounts in place, so they still need us to call on the mass market customers to get their products designed in. And so what I would say is I see a lot less of the TI happening in the future and a lot more of what we've seen so far, which is they rationalize their channel partners, and that historically has been good for us.
Okay, thanks.
Patrick, regarding your efforts to improve the profitability of the computer components business, you talked about deselecting, focus on more profitable business. Looking a year or two out, what do you see the contribution? You're at 9% of revenue now. Do you see that going down, or are we going to see chunks of revenue fall off as you basically deselect some of that business?
I would say that most probably the weight of AGCC in our total revenue will go slightly down, okay? Not so much because we are deselecting business, because on the other hand, we have also some, at the moment in the market, an inventory issue in Asia. And normally when that is fixed, okay, on a specific technology, when that is fixed, we should see a bounce back and some accelerated growth there.
But more because I think that TS Core is going to grow faster than AGCC because of, okay, my reference to the Third Platform opportunities, gaining more share, and because also we have, okay, the scale and scope of TS should generate a higher growth going forward than AGCC.
Okay, thanks.
Thanks. Steve Fox with Cross Research. So, Rick, I was wondering if you can maybe decompose why the company has sort of fallen short of the margin goals by roughly 50 basis points over the last couple of years. Obviously, there's been some improvement, but what would you mainly attribute the difference between these goals and where you're at right now to, and how did that contribute to how you're sort of rejiggering some of the tactics to get there going forward?
And then just secondly, on the top line, I know you talked about sort of a more subdued top line environment, but I thought you also were talking about maybe outgrowing that environment. You mentioned a bunch of adjacencies and things like that. So how much faster than market do you expect to grow maybe over the next couple of years? Thanks.
Okay, Steve. So let me start with the second question first, then I'll back into the performance issue. What I would say is I would say our fundamental strategies for outgrowing that 3%-4% serve market growth rate would be, number one, aligning ourselves to the higher growth segments underneath the story.
I told you the tide may be going up 3 or 4, but as you saw today, there are some very exciting segments underneath there that positioning properly in those segments should grow faster than the main. Secondly, we also very selectively will add new technologies and partners to help us have a broader portfolio to offer. I think we've seen some evidence of that at TS here over the past couple of years where some of the new disruptive technology partners have come in to allow us to maintain, I think, some growth rates in at least some of our regions a little ahead of what I think the industry average is. And then, of course, third, proper leverage of our global scale and scope should give us an opportunity for some share gains as well.
So I would say three possible paths to exceeding the aggregate TAM market growth overall. Back to the performance issues and short of the goals here to forth. First of all, you're looking at the guy who owns that 100%, all right? And I will tell you there's a combination of execution, timely execution, let's say, that contributes to that. And there have been a couple of secular trends that have worked against us as well. If I think about the core businesses on both sides, TS has been more of a performance story, TS EME A in particular being in the spotlight for quite a while, making the final decisions in the commodity mix and the AGCC business overall.
I'm very pleased not only to see the progress here to date, but the focus and sense of urgency Patrick is now bringing to TS for that part of that particular part of the margin gap and resolution overall. On a more secular basis, for EM, I would tell you it's been Asia mix has been a little bit ahead of what we expected. And then the real wildcard this year was the volatility in the currency. Just that over 20% decline in the euro/dollar exchange rate took 10-15 basis points out of Gerry's global margin just on translation. So there have been a variety of factors. At the end of the day, we own it, full stop. And hopefully you saw a tremendous amount of focus and urgency on those areas that we can control.
Now this new addition of Avnet Advantage for an unprecedented look at enterprise productivity and efficiency, which should help all of our businesses find a way to help close those gaps. I feel good about where we sit here today. Would have been prouder to talk about more rapid progress than you saw on the charts there, but it is what it is. We're starting from here with these plans and commitments, as you see on the agenda today.
Hi, Sherri Scribner from Deutsche Bank. Just thinking about the Avnet Advantage program and the operating margin targets, it sounds like the Avnet Advantage plan will take out costs over three years. I think when you were talking about the waterfalls, each of the segments, EM and TS, it sounded like there was some potential to hit the low end of those targets exiting fiscal 2016.
So I wanted to make sure that was right. And what should we judge you on in terms of hitting those operating margin targets? When's the goal to reach the low end of that range?
Yeah. Go ahead. What I would speak to, Sherri, is I think Gerry highlighted on the EM side of his business the back half of next fiscal year, but from an annualized run rate, more likely fiscal year 2017. And for Patrick, same type of I would frame it in the same kind of light. We do believe towards the end of next year on an annualized basis, we'll be in the 3-4 lower end of his range and progressing through 2017 into 2018, getting to the real firmness in that range.
Okay, thanks. That's helpful. And then the other component of the waterfall was the revenue leverage.
We're in an obviously slow growth environment, and you highlighted that. What type of revenue growth do you need to get that 10-20 basis points operating leverage or revenue leverage?
Thanks. I'll start, and then I'm going to ask Gerry and Patrick maybe to speak to some of the things that they are clearly looking at. I think when you look at the broader market of, say, 3%-5%, that's really what I think we will need to have that drop-through aspect as you look at our margin profile. As we've prepared for today and as we've talked about today, there are clearly markets that we think we're going to be able to grow faster in and just a lot of the strategies that were shared.
But I would come back to the 3%-5% really being the key kind of backdrop for that performance.
Okay, thank you, Louis Miscioscia, CLSA. I guess, Kevin, it was great that you gave us some more details on the buyback. Maybe you could just help summarize that. Do you think you're going to end up being more aggressive given that your share price is well above book value? And obviously, it wouldn't be that helpful going forward if you're waiting.
Yeah. I think what I would point to is historically we've been referenced as when you get closer as we're at book, we're much more aggressive. The way that we have really outlined the program and taking the price metrics and the triangulations we work with to come up with the price, volumes clearly get impacted based on where the stock price is performing.
And I think we get in at an entry point north of book value, but clearly as it comes back closer to book, we will really accelerate and support the stock. And I think what I also tried to highlight today is the countercyclical nature of our balance sheet so that if there was a lower growth environment, that then triangles to when we would be generating more cash, which would then be another opportune time for us to be investing in the share price because more likely than not, that would be a down equity market as well. So we really are going to remain disciplined and continue our approach in terms of how we approach it, but think about as it's slightly north of book, we get in, but much more aggressive as it comes closer to book.
Okay, great. And then a follow-up, I guess, for Patrick.
From the cloud standpoint, maybe you could talk a little bit more detail if you're seeing any kind of cannibalistic nature of some of maybe programs shifting away as maybe they're going to the SaaS vendors or to the cloud in general. And then maybe talk about you did talk about this as a big opportunity. How difficult is it in hiring, and what does the competition look like there?
So about the cannibalization, okay, so I go back to my example of what happened at EM in 2001 when business moved to subcontractors. That was exactly the same concern. At the end, it didn't happen. The reason is because customers are going to segment their needs. And in fact, at the end, it created more opportunities for EM than it killed opportunities.
The other thing also for us in the cloud space is that, and I'm thinking specifically about the service providers, they're going to continue to invest in hardware and software to support off-premise cloud solutions for the customers. And again, for us, we see that as a nice opportunity for us to grow. So cannibalization, I know on paper, so the risk seems to be there. We believe in hybrid cloud. And in that environment, we don't think the risk is that high. By the way, at the moment, we don't see it. I mean, we see more opportunities than threats.
Okay, thank you.
Hi, it's Shawn Harrison at Longbow. Had a couple of follow-ups. Just to Lou's first question on the buyback and total cash return, is there a percentage of the cash flow you generate you're looking to return to shareholders?
Because if this margin expansion plan works, you're not going to get hopefully closer to book value, and so you won't have the opportunity to come back. And the cash return will be solely growing the dividend, which it's nice, but it would be maybe a 10% free cash flow return to shareholders. And I think investors may be looking for more than that. So is there a target percentage? Is the question of just cash flow return to shareholders?
Yeah, Shawn, I think I'll speak for both Kevin and I. The only planning parameter around percentage of cash flow has been, as we instituted the dividend, reinstituted the dividend, we felt it was a perpetual commitment.
And from a planning perspective, we targeted a commitment that was going to be, we believe, at or below, say, 20% of normalized cash flow over what we expected in our future financial plans. That was to hopefully continue to encourage and support the perception that over 80% of that cash flow is available for reinvesting and growth in the business, both organically and inorganically. And beyond that, trying to be more prescriptive about how much goes to buyback or how much goes to M&A, etc., just hasn't been integrated into our planning process as a functional parameter, I guess I would say, regarding our expectations of sources and uses of cash.
I think obviously the first priority that I highlight is, again, the organic side.
How do we continue to invest in the earnings and cash flow through the organic side of the business coupled with M&A? Obviously, the dividend is our top priority, but we tried to peg that to a much lower threshold. I think we would keep doors open over time if cash was to accumulate and we weren't investing in the business. But the stated goal of a percentage is not something we have committed to. Okay. The second follow-up is just the $100-$125 million. Is that a net number or a gross number? Because as I'm running my math, it seems like that's a gross number, not the full number that would fall to the bottom line. It's directly a net number. There's not a lot of investment. If you think about inflation, there's inflation elements. There's going to be costs to incur to execute the program.
So that's what we have as a net number.
Okay. Also, as a follow-up to that, I'd like to highlight, and I think Kevin did this as well, we're tracking Avnet Advantage both on an absolute and a relative basis or ratio basis. So the 1 to 125 is an absolute number that we're scheduling out and taking a look and tracking by project. But at the same time, should the business grow aggressively from here, our overall gross expense has got to go up to support that, right? So in addition to convincing ourselves that we have the accountability on an absolute number, that's where that expense ratio, operating expenses, % net GP comes in.
So should we experience more robust growth going forward, our overall expenses will be going up, but keep an eye on what's going on with that ratio, which is why we're trying to balance and make sure we look at this from two different lenses regarding the accountability to this commitment.
Okay. Okay. And finally, just more of a short-term question around currency and some of the volatility, price increases, some inventory being added in the supply chain. If you could just give us an update as we're here into June now, if you've seen any effect on demand, both better demand, weaker demand, the pricing dynamics, etc., just from the FX volatility we've seen here today.
Yeah. Gerry, Patrick?
Sure. Sure. I can answer that from the EM side.
So from an inventory build perspective, no, we don't see anything outside what we would normally be building to support our business. I would say today, based on what we measure in our business, book-to-bill ratios, things like that, we're not seeing anything abnormal outside from a seasonality perspective. So the question is really around, did our customers buy inventory ahead of price changes, and is that going to slow growth down? We don't see that today in our numbers. So I would say today, as we sit here, it hasn't been any kind of huge impact either from an inventory perspective or a revenue potential hit perspective.
Patrick? So same thing for us. So we discussed it on the last analyst call, and we checked, and we don't think that our customers are changing behaviors because of that. So not yet.
Yeah.
I just wanted to ask if you could talk about the multi-year ERP IT system implementation that's been going on. I know you're in the later stages. Just give us an update where you are there. In terms from a CapEx and an OpEx standpoint, do you see any costs rolling off as you complete that?
Yeah. That's a big question, Matt. I would tell you that our commitment to standardizing platforms all across Avnet, not just ERP, remains an important part of our long-term productivity and efficiency goal plans. By the way, some specific projects are part of Avnet Advantage as well. So it transcends ERP. We're doing the same thing in HRIS. We're doing the same thing with CRM. We're doing the same thing with warehouse management systems.
Avnet, as an IT user today, we have over 30 cloud applications in our 300 production application portfolio, as an example. So think of platform standardization as a core tenet of what we're trying to do from an overall productivity and efficiency point of view. When it comes to ERP specifically here, I believe we'll be in a position to report that we will basically now have the majority of our operations running on an SAP platform sometime during FY16. So there's a variety of chapters of that story. The most recent completed chapters were our TS Americas business and TS EMEA business. We've got a few outliers still to transition, and we'll keep you posted on those journeys. But I also just don't want to overly focus on our ERP.
That's a big part of it, but there are multiple opportunities for us to drive more standardization of platforms that will be beneficial to our overall results.
Okay. Tha nk you.
All right. I think that's the end of Q&A, but I'll step over and try to wrap things up here today before we break for some refreshments. All right. I have the pleasure. I have one slide, and I have the pleasure of trying to put a bow around the day's communications and activities overall. I would start with maybe some of the points you heard me express at the beginning of the presentation overall. I do believe that we have a strong industry leadership position with very broad exposure, both from a technology and geographic point of view, that creates competitive advantage for us. We are an innovative services provider.
We have been for over 90 years, and I think that the DNA that we have in this space puts us in a very good position to take advantage of the opportunities being created, the multiple opportunities being created by the current trends in the marketplace. We spent a lot of time focusing on IoT and cloud today, but the Third Platform in and of itself, a lot of our core extension activities and services that have been part of the portfolio for a long time still offer, I think, some great opportunities. Highlighted some key ones today, but there's a variety of them available to us overall. I could not be prouder of this leadership team, and hopefully, as you heard, reinforced throughout the day, very well-versed in Value-Based Management.
I would also tell you that in addition to the overall experience that that group brings to bear, I also feel some momentum building for the Avnet senior leadership team because many of the executives are now in their second and third years in the role. Obviously, Patrick, the newest member of the team, just coming up on his first six months, but Gerry now heading into third fiscal year in the role of EM, Kevin now just heading into his third year with us here, Mike Buseman, our Chief Logistics Operations Officer, coming into second year, I think, second full year with us overall.
There's a very interesting, I think, positive momentum building as these executives really start to take advantage of deeper understanding of our business and building the momentum with their individual teams, all of which contribute to that total team effort I talked about when I illustrated the team to get things kicked off today. Very, very interesting element of momentum I'm very excited about. Disciplined team with disciplined approaches to profitable growth, driving increased operational excellence, and commitment to very clear and consistent priorities for capital allocation. Hopefully, you heard a lot of that today. I'm very proud of Avnet's track record of financial strength and stability through cycles, both industry and economic. The real punchline is our number one goal remains value creation for the long run.
So with that, I would like to say thank you to all of you both here and on the webcast today. We'll now break for refreshments here in New York. Thank you all for your time and attention and for your interest in Avnet.