Computing & Internet Software Global Report — 2010 This ......China 50 1,374 Germany 47 964 Source: Capital IQ, IMAP IMAP’s Computing & Internet Software Industry Global Report

An IMAPHIGH TECHNOLOGYReport

Computing & Internet Software Global Report — 2010

jeanna.walls

Typewritten Text

This industry report is provided to you courtesy of the IMAP office in COUNTRY (COMPANY). For more information about its contents or IMAP’s M&A services and expertise in the High Technology sector, please contact ADVISOR at [email protected].

We’ve got connectionsall around the world.You are all about connecting the world, and so are we. For more than 35 years, IMAP has been helping to bring computer technology companies together via strategic cross-border mergers and acquisitions. Our vast experience in your industry has taught us that building a stable platform is fundamental to completing a successful M&A transaction, as well as to establishing a successful computing network. When you need to expand, invest, divest or restructure, you need an advisory that both knows your business and

has the global connections to ensure every opportunity is within your

reach. As these recent closings demonstrate, IMAP is that

advisory.

IMAP consists of independent advisory operations working together to execute cross-border M&A projects. Each IMAP office is independently owned and operated.

IMAP’s Computing & Internet Software Industry Global Report — 2010: Page 3

C O M P U T I N G A N D I N T E R N E T S O F T W A R E G L O B A L R E P O R T — 2 0 1 0

Contents2009 M&A activity in computing and Internet software ............................. 4Computing and Internet software sector .......................................................... 4

Shifting from capex to opex ........................................................................................................... 5

Alternative delivery model — SaaS ........................................................................................... 5

Industry-specific capabilities ........................................................................................................6

Vendor consolidation ..........................................................................................................................7

IT spending by central governments ..........................................................................................7

Trends across industry verticals ...................................................................................................7

Trends: Investment opportunities ..........................................................8Mobile applications and computing ...........................................................................................8

Internet-based models ......................................................................................................................9

Computing and Internet software industry outlook ...................................... 1 1

Statistical Reference (Appendices)Appendix A: Global Overview ......................................................................................................A-i

Appendix B: Summary of M&A Deals .....................................................................................B-i

Appendix C: Growth Drivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-i

Appendix D: Niche Focus Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-i

HOT

An IMAPHIGH TECHNOLOGY

Report

IMAP, Inc. is a Delaware corporation. Its regional firms are independently operating in various jurisdictions under a variety of legal forms of organization. References to IMAP transactions, offices, locations and other similar associations should not imply any form of IMAP ownership or agency over the local firms or cause any liability between the local firms and IMAP whatsoever.


The software sector, which contributed around 25 percent to IT spending in 2009 and mainly consists of the enterprise application market and application development market, generated revenues of $382 billion USD in 2009. The top few players, such as Microsoft, SAP, Oracle and Nintendo, generated more than 75 percent of total revenues from the software business segment in 2009.

2009 saw a decline in application software spending in all regions except Asia-Pacific. Despite the economy showing signs of a recovery in 2010, all industry verticals are still witnessing lower spending compared to pre-recessionary levels due to flat budget growth in the year. Furthermore, according to Forrester’s Enterprise and SMB

Global enterprise application software market working through bad-economy bugs

Large transactions led the way in sluggish 2009 M&A activityThe economic slowdown had an adverse impact on M&A activity in the software sector. The sector saw 1,131 transactions valued at $27.42 billion USD in twelve months (LTM) ending 1Q 2010, witnessing a year-over-year decline of 25.4 percent in terms of transaction value ($36.75 billion USD during the previous period with 2,417 transactions). Dollar volume in this period included one major deal (Sun Microsystems/Oracle), which represented $8.34 billion USD or nearly 28.1 percent of total dollar volume in the period. Excluding this transaction, the dollar volume would have been down 48 percent. During the previous period, the largest deal was the acquisition of NDS Group by Permira Advisers for $1.7 billion USD.

In terms of business segment, Internet software and services accounted for 30 percent of total transaction value followed by computer hardware and applications, which formed nearly 28 percent of the total.

In terms of country, the US saw the highest transaction value of $12.34 billion USD with a total of 501 transactions in this twelve month period while Japan came in second with a value of $9.12 billion USD through 15 transactions. Among regions, North America was the clear leader at $12.54 billion USD.

M&A Activities at a GlanceLTM ending 1Q 2009 LTM ending 1Q 2010

Transaction value (USD million) 36,752 27,415

Top 5 transactions (%) 20.1% 46.7%

Segment No. of transactions Value (USD mn)

Computer Hardware & Applications 1 8,341

Internet Software & Services 18 7,583

Application Software 838 5,412

IT Consulting and Others 10 4,218

Systems Software 199 1,464

Top 5 regions No. of transactions Value (USD mn)

North America 553 12,538

Asia 128 10,755

Europe 356 3,620

South America 19 194

Middle East 14 169

Top 5 countries No. of transactions Value (USD mn)

US 501 12,342

Japan 15 9,123

UK 78 1,386

China 50 1,374

Germany 47 964

Source: Capital IQ, IMAP


Software Survey, North America and Europe, Q4 2009, IT budgets are expected to remain unchanged in 2010. Nevertheless, revenues are expected to reach $419 billion USD in 2010, growing 9.7 percent year-over-year. This increase would reverse a 7.4 percent decline in 2009.

With just a moderate increase in IT spending overall, the enterprise application software market still remains vulnerable and enterprises are uncertain about near-term business prospects. However, the bright spot in the recovering economy is small- and medium-sized business (SMBs). As the economy emerges from the recession, SMBs will look for small-business software to automate their operations and scale up growth. In addition, large software vendors such as SAP and Oracle will continue to focus on the SMB market to reinvigorate their revenue growth in software license sales. The SMB enterprise application market is expected to reach $80.31 billion USD by 2012, representing a 10.6 percent CAGR for the period 2008-12.

Enterprises shifting from capex to opex

CIOs and COOs are expected to experience continued pressure to prove that the amount of investment in ERP systems is justified and generates a solid return on investment. As a result, the market will have more deliberate spending, more phased rollouts, buying of licenses only when needed, and hesitancy to invest in more expensive advanced enterprise software modules.

Accordingly, companies are directing much of their software investments to areas where they will definitely be implemented effectively and get more out of their existing enterprise investments. The need to more

1 IDC forecast

effectively manage organizational and business risk will likely result in a continuation of this trend in 2010.

Given the current risk averse environment, companies are less likely to try entirely new products or risky upgrades. As a result, vendors are more likely to invest in incremental product enhancements and tighter integration between modules rather than major changes to their software: operating expenditures versus capital expenditures.

Thus, going forward, vendors are expected to seek smaller deals from existing customers via add-on products and business intelligence tools because most customers are not yet ready to fund major enhancements or expansions.

Emergence of an alternative delivery model — SaaS

As companies are shying away from large capital investments in IT systems, software as a service (SaaS) is receiving a boost. SaaS is also being driven by SMBs that are looking to adopt this model as they typically find it difficult to afford on-premise systems. Moreover, considering that the tight credit markets will take time to thaw entirely, many SMBs are looking at SaaS-based services to help them minimize upfront capital IT costs.

Revenue Growth Comparison in 2009SaaS Vendors Traditional VendorsSuccessFactors (+36.8%) Manhattan Associates (-26.8%)

Salesforce.com (+21.2%) QAD (-18.3%)

Concur (+14.9%) Lawson (-11.1%)

Descartes (+11.7%) SAP AG (-7.8%)

Ariba (+3.3%) Microsoft (Business Division) (-0.2%)

Source: Bloomberg

Global IT1 spending, which includes hardware, software and IT services, was estimated at $1.5 trillion USD in 2009, decreasing 8.9 percent compared to 2008. The decline turned out to be less than expected as the US market started recovering in 4Q 2009 while the Asia Pacific market, especially India, China and Australia, reported better performance. In 2010, it is expected to reach $1.6 trillion USD, indicating a year-over-year growth of 8.1 percent .2

1 Consists of spending on computer equipment, communication equipment, software, IT consulting and systems integration services, and IT sourcing

2 Forrester Research - US And Global IT Market Outlook: Q4 2009Source: Forrester Research, IMAP

Computer equipment Communications equipment

Software IT consulting services IT outsourcing

Global IT Spending, 2008-10 in USD Billions

1,750

1,500

1,250

1,000

750

500

250

02008

1,659

2009

1,512

2010

1,624


Considering these factors, most SaaS vendors reported better performance, with SaaS revenues overall growing 7.98 percent year-over-year in 2009. Deployment of SaaS increased in all areas from customer-relationship management (CRM) to human-capital management (HCM), as well as spend management. In fact, Salesforce.com posted revenues above $1.3 billion USD, which is a new high for the SaaS industry that was estimated to be $7.5 billion USD in 2009.

The increasing popularity of SaaS as a delivery model has not only led to increased revenues for SaaS vendors but also eaten into the revenue of traditional, on-premise vendors. However, the latter are still managing to maintain their operating margins as they rely on maintenance and support revenues, which are naturally recurring. For example, the ratio of maintenance revenue to new licenses of vendors such as CDC, Epicor, Exact, Lawson, Manhattan, Oracle, QAD and SAP increased as customers chose not to upgrade and purchase new licenses.

Industry-specific capabilities are crucial to remain competitive

In addition to preferring low-cost models such as SaaS, customers are expecting deeper industry expertise from their software providers to gain a more integrated application environment and end-to-end process automation. Hence, many companies have combined custom-built applications and customized industry packages to supplement their core software. This environment leads to a complex setup and ongoing integration challenges.

Large enterprise software vendors have added vertical depth and breadth. Both SAP and Oracle have invested heavily in industry solutions, each reportedly having capabilities in more than 20 verticals. This strategy to increase industry depth has driven many acquisitions, particularly for Oracle. SAP, on the other hand, is building industry functionality in-house but it has made several vertical acquisitions to accelerate time-to-market.

Second-tier software providers have found more success in offering deeper industry-specific functionalities compared with mega-vendors. Lawson, for example, has successfully targeted industries such as healthcare, food and fashion. Other vendors (e.g., Microsoft, Epicor and Sage) may choose to go down to sub-industry levels, often relying on partners to add the last mile of specialization.

Specialists focus on fewer or even single verticals. Some do not even provide the core accounting functionality, which is crucial to any ERP system. Nevertheless, these specialized plays are often compelling to customers and may also attract the attention of ERP vendors looking to partner or acquire. Specialist vendors offering comprehensive suites to particular verticals include Deltek (project-based businesses), Blackbaud (not-for-profit), Mincom (mining and asset-intensive businesses), QAD (manufacturing) and IBS (distribution). CGI Group gives ERP vendors stiff competition in the government sector, including US federal as well as state and local governments. Specialists dominate the lucrative healthcare market, particularly patient systems. Notable players include Cerner, Eclipsys, Epic Systems, McKesson and Siemens.

Source: Gartner Research, IMAP

Enterprise Application Market Spending by Region, 2009

Western Europe 30%

North America 46%

Asia/Pacific 9%

Japan 8%

Latin America 3%Eastern Europe 2%

Middle East & Africa 2%


Functional expansion leading to vendor consolidation

With customers expecting deeper industry expertise from their software providers, many companies are combining custom-built applications and customized industry packages to supplement their core software. This environment leads to a complex setup. To overcome this challenge, vendors are looking to consolidate by becoming a one-stop shop for all functions. This consolidation trend is also fuelled by the rising competition between vendors and lower market valuations of struggling vendors because of the downturn.

Oracle has been a key proponent of vertical acquisitions, and SAP as well, though to a lesser extent. Possible plays for some vendors include acquiring breadth in horizontal areas such as HR. Peer-to-peer acquisitions among ERP vendors appear less likely. Vendors may also acquire adjacent technologies, such as enterprise content management tools.

Public administration represents the largest IT spending by central governments

After the economic crisis, which saw governments announcing massive stimulus packages, tax payers are now demanding funding cuts in the public service arena. There will be increased attention on how money is being spent at all levels of government.

At the same time, telecommunications and the Internet are increasingly recognized as critical to economies and service delivery. Governments are thus expected to make efforts to move the majority of citizen services to an online delivery model to increase transparency

Active Acquirers

ORACLE

INFOR

THE SAGE GROUP

Agresso

Deltek

Lawson Software

Regional Players

IFS

Intacct

Vertical Players

IBS Software

QADEpicor

NetSuiteExact Software

Source: Forrester Research, IMAP

Vendor Consolidation

Potential Acquirers

MICROSOFT

SAP

IBM

PRIVATE EQUITY

and create value for their constituents. To this end, investment across a wide variety of departments, functions and systems will be made. This will sustain investment in IT by governments in 2010, when the focus will be on rightsizing, underscored by government transformation or modernization.

Furthermore, by 2012, up to one in five government processes is expected to rely on crowd-sourced data due to the increasing influence of communities, individuals and groups in shaping the direction of businesses and markets. Thus, social media are becoming increasingly important as sources of public information, making them mission-critical for governments.

Trends across industry verticals

Most industries witnessed significant declines in IT spending in 2009. A majority of these cutbacks in tech purchases were driven by the fear of recession. These fears were more intense in some industries, such as retail, wholesale, transportation and logistics, and financial services, leading to a sharp cutback in IT spending. Since the situation is now easing and prices are rebounding, the pent-up demand in these industries for IT goods and services should bounce back in 2010.

Retail: Gartner expects to see many Tier 1 retailers pursue an m-commerce strategy mainly to avoid lagging on this front. They expect, however, to see only 20 percent of retailers succeeding in their m-commerce initiative. As many retailers have discovered with the Web, cross-channel shopping requires more than just launching an m-commerce presence to enable direct selling.

Manufacturing: By the end of 2011, manufacturers that prioritize future software investments in operational technologies such as product life-cycle management (PLM), manufacturing process management (MPM), manufacturing operations management (MOM) and quality management software (QMS), instead of traditional IT and ERP, could achieve a tenfold return on their investment .1

Education: By 2015, most local education agencies are expected to cut school construction by 50 percent by using virtual learning environments to better utilize existing facilities.

1 Gartner Research


Investment opportunities in mobile apps and Internet-based models

TrendsHOT

1: Mobile applications and computing

Despite the recession, the mobile application1 landscape performed well in 2009. There was continuous consumer demand for Apple’s proprietary ecosystem; Google acquired the mobile ad network AdMob for $750 million USD; and Internet service providers (ISPs) entered the mobile market (Iliad’s acquisition of France’s fourth 3G license, as an example).

The mobile application market was estimated to be $4.2 billion USD in 2009.2 The number of mobile application downloads was just over 7 billion in the same year. Going forward, the mobile application market is expected to reach $17.5 billion USD by 2012, representing an impressive three-year CAGR of 60.9 percent. The number of mobile application downloads is also estimated to grow to nearly 50 billion in 2012. This growth should be 1 A mobile application is a software application that runs in a handheld device such

as a smartphone. These applications are either pre-installed on phones during manufacture or downloaded by customers from app stores and other mobile software distribution platforms.

2 The GetJar study run by an independent consulting firm, Chetan Sharma Consulting

driven by increasing penetration of mobile Internet, more functionalities, rising adoption of smartphones, and increased and better integration of mobile hardware and software.

Within the mobile application segment, mobile enterprise application market is expected to be the next growth driver. Mobile enterprise applications are expected to see massive adoption in 2010 due to increased mobility of employees and demand for devices capable of these functionalities. Carriers and vendors are recognizing the enterprise as a high-value customer and actively working towards developing and promoting attractive mobile data solutions for enterprises.

The mobile enterprise application market was estimated to be $2.3 billion USD in North America in 2008.3 This market is made up of three types of vendors:

· Vendors focused on mobile operating systems that have developed broad mobile application development toolkits focused on a single platform (e.g. Microsoft, Apple and RIM)

3 http://www.cellular-news.com/story/38739.php

The economic slump had an adverse impact on most industries, including the software sector. Organizations shifted their IT spending from capital expenditure to operating expenditure to optimize costs. Various application markets such as enterprise resource planning (ERP), supply chain management (SCM) and customer relationship management (CRM) were badly hit in 2009. This gave an impetus to various Internet-based models such as Software-as-a-Service (SaaS), IT management, virtualization capabilities and open source software. Internet-based computing models in the enterprise software market requiring little or no implementation work on the customer side, are generally independent of operating systems and are offered on a subscription or pay-as-you-go basis. This translates into lower adoption barriers for new customers.

Mobile Application Market CAGR 60.9%

Source: GetJar Study, IMAP

Mobile Application Market in million USD

Europe North America South America Asia Middle East &South Africa

$10,000

$8,000

$6,000

$4,000

$2,000

$02009 2010 2011 2012


The worldwide market for IT services related to cloud computing and cloud services was worth almost $2.4 billion USD in 2009. By 2013, the market is expected to be worth almost $8.1 billion USD. By far, the largest component of the overall cloud service market is implementation, which represents 65 percent of the 2009 IT services market and is estimated to represent 64 percent by the end of 2013.

Smart computing — collaboration, unified communications and voice over IP:Smart computing is based on technologies such as service-oriented architecture, server and storage virtualization, cloud computing, and unified communications. It adds to existing technologies new capabilities of real-time situational awareness and automated analysis.

Smart computing will help companies optimize process results and returns from their balance sheets. Unlike the horizontal technologies of personal computing and network computing, smart computing will have a highly vertical industry focus.

Tech vendors have great growth opportunities in this new cycle but also big challenges in navigating the shift to smart computing. Accordingly, in the US alone, the share of the smart computing industry’s vertical solutions in the IT market will increase from 6 percent in 2008 to 23 percent in 2016.2 The market is expected to increase from $27 billion USD in 2009 to $213 billion USD in 2017 in the US.

Linux and open-source software (OSS):The phenomenon of OSS, which started 20 years back, has suddenly gained momentum as a possible alternative to expensive proprietary software. As the open source movement expands up the software stack, nearly all software markets are now being impacted in some way.

The OSS segment is experiencing slow but steady growth. The release of the open source Internet browser Firefox 3.0 by Mozilla in June 2008 was a major event for open source applications, with more than 8 million people downloading the new version of the software within the first 24 hours after its release. The Firefox browser has steadily been gaining market share, which had 24.2 percent of the overall browser market in February 2010 from 21.8 percent in February 2009.

2 Forrester Research: Smart Computing Drives The New Era Of IT Growth

· Mobile specialists with multichannel capability such as Sybase, IBM, Pyxis Mobile, Spring Wireless and Syclo

· Application suite vendors that have their own application suites, such as SAP and Oracle

Along with mobile ERP, enterprise mobile cloud applications (including thin clients and browser-based applications), SaaS, platform as a service (PaaS), and infrastructure as a service (IaaS) can fuel growth in this market. Going forward, the mobile enterprise application market in North America is estimated to reach $10.3 billion USD in 2013, a CAGR of 35 percent from 2008 to 2013.1

However, it should be noted that proving return on investment (ROI) is still a concern for vendors and service providers of mobile enterprise applications, because the market is in its nascent stages and customers are uncertain on whether they will fully obtain the potential benefits promised by these applications.

2) Internet-based models

Cloud-based application and infrastructure services:Cloud computing is currently emerging as a service offering that leverages Internet hosting capabilities and can be viewed as an evolution of SaaS. Cloud computing is generally regarded as IT infrastructure available on demand and it offers start-ups and SMBs flexible access to computing capabilities with minimum capital expenditure. Nevertheless, with Amazon.com’s spin-off Amazon Web Services (AWS) emerging as a leading provider of cloud computing services, cloud computing is expected to become more influential.


Cloud Computing Spending CAGR 35.8%

Source: Gartner Research, IMAP

IT Spending in Cloud Computing in USD millions

Consulting Implementation Management

2009 2010 2011 2012

5,000

4,000

3,000

2,000

1,000

0

6,000

2013


In a Forrester Research report on enterprise interest for OSS, two-thirds of the 1,017 respondents at North American and European enterprises expressed some interest in open source deployment.

Virtualization: PC, server, and storage virtualization is growing and is being supported by the relatively tough economic conditions worldwide. Virtualization is introducing new ways of packaging client computing applications and capabilities. As a result, the choice of a particular PC hardware platform, and eventually the OS platform, becomes less critical. Thus, enterprises are proactively building a five- to eight-year strategic client computing roadmap outlining an approach to ownership and support, operating system and application selection, deployment and update, and management and security plans to manage diversity in the virtualization arena.

Spending on virtualization software technologies is forecast to grow at a 33.6 percent CAGR from 2009 to 2013. Growth would be driven by organizations looking to lower the total cost of ownership and to increase overall IT effectiveness.1

Business intelligence (BI) and analytical software: BI and specialized analytical software such as data mining and predictive analytics, video image analysis, pattern recognition, and artificial intelligence algorithms help businesses or governments analyze patterns or anomalies on a real-time basis. These functions make BI important in economically challenging times. As a result,

1 Gartner Research

the BI market was much less affected by the economic crisis than most other software markets.

All the big sellers of BI software are either parts of larger software vendor or private companies with the exception of pure-play BI public companies such as MicroStrategy and Actuate.

New categories of advanced analytics, including business performance solutions, text analytics, predictive analytics, and complex event processing, are expected to merge into the core BI market, thereby further fueling growth. The BI market is expected to reach $14 billion USD by 2014.2

Social CRM: Social CRM (also known as CRM 2.0) is a business strategy supported by a system and designed to engage the customer in a collaborative interaction that provides mutually beneficial value in a trusted and transparent business environment.

The industry has many participants and includes different types of players such as traditional CRM vendors, community platform and social media players, as well as brand monitoring players. Most of the players provide on-demand subscription-based offerings in social CRM.

Social CRM is most likely to be the next big trend in the entire CRM industry. According to one Gartner report, social CRM is expected to see significant growth, as more than 80 percent of the enterprise use of social networking tools in 2010 will be driven by customer engagement projects. In addition, Forrester mentions that by 2013, businesses will be spending almost $4.6 billion USD on Web 2.0 tools, which include advanced Internet technology and applications such as blogs, wikis,

really simple syndication (RSS), and social bookmarking. In an April 2008 report, the research group forecast

43 percent annual growth in the social media market for the so-called Enterprise 2.0 as

organizations are investing heavily in social networks.

2 Forrester Research: Market Overview: The Business Intel-ligence Software Market


Software Market Outlook, Quarterly, 2008-2010Global software vendors’ revenues by category of software (percentage change from prior year)

2008 2009 20101Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q* 1Q* 2Q* 3Q* 4Q*

Operating systems 3% 9% 6% -7% -15% -21% -20% 11% 17% 23% 22% 16%

Middleware 14% 19% 12% 3% 4% -4% -2% 3% 5% 5% 7% 6%

Applications 14% 17% 12% -3% -12% -16% -13% 2% 10% 12% 12% 12%

TOTAL 11% 16% 11% -1% -5% -12% -9% 4% 9% 10% 11% 10%

US software vendors’ revenues by category of software (percentage change from prior year)2008 2009 2010

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q* 1Q* 2Q* 3Q* 4Q*

Operating systems -3% 3% 1% -7% -14% -23% -20% 8% 10% 16% 16% 14%

Middleware 8% 13% 9% 7% 10% -1% 1% 3% 4% 6% 6% 5%

Applications 5% 7% 4% -4% -11% -15% -13% 0% 6% 9% 9% 9%

TOTAL 6% 9% 7% 1% -1% -9% -8% 3% 6% 8% 8% 8%

Source: 2008 and Q1, Q2, and Q3 2009 quarterly financial reports of 18 large, global software vendors1

1 BEA Systems (prior to acquisition by Oracle), BMC, Business Objects (prior to acquisition by SAP), CA, Cognos (prior to acquisition by IBM), Fujitsu, Hyperion (prior to acquisition by Oracle), EMC, Hewlett-Packard, Hitachi, IBM, Mercury Interactive (prior to acquisition by Hewlett-Packard), Microsoft, NEC, Oracle, SAP, Sun (prior to acquisition by Oracle), and Symantec.

The enterprise software market underwent a tumultuous phase during the economic slowdown of 2008-2009 and the recession that ensued. The sector overall faced pressure in terms of prices which in turn hampered margins. This led to vendors making structural changes in their technology and business model to adapt to the changing software demand space.

Most companies locked in their IT budgets for 2010 with a marginal increase in overall IT spending expected for the year. While spending is nowhere close to the depressed levels during the recession, it will be some time before spending reaches pre-recessionary levels. A meaningful recovery in spending is expected only in the second half of 2010. With the recession still fresh, companies are looking to convert their enterprise software needs from capex to opex. This means vendors with SaaS, virtualization capabilities and open-source strategy are poised to benefit in the near future.

This is not to say large vendors with non-SaaS capabilities will be left behind. Due to their sheer size and geographic diversification, they can price their products aggressively and also bundle offerings to make packages more attractive. Moreover, as legacy operators, most of their contracts are maintenance based, making revenues recurring in nature. This is

Computing and Internet software industry outlookunlike vendors in only one market or those without a wide geographical presence, whose revenues are highly dependent on new contract wins.

Geographical presence, in particular, cannot be under-estimated because North America still accounts for 45 percent of all software revenue, which by any standard is a large chunk. While the share of emerging markets is expected to increase to 20% by 2013, it is still a small share compared with North America. Hence, any future weakness in the US markets could have a material im-pact on revenue. Nevertheless, emerging markets will play a huge role in balancing revenues in the years to come because of their growing demand potential and underpenetrated nature.

The software sector has always accounted for the largest number of all technology related M&A transactions, over 40%. And, the value received is very much a function of finding the buyer that can best exploit the acquired technology. This requires advisors to conduct a global search effort, even for sellers with modest revenues.Ron Klammer, IMAP technology advisor, Southport, Connecticut

IMAP’s Computing & Internet Software Industry Global Report — 2010: Appendix A-i

Appendix A: Global Overview of Computing & Internet Software (Enterprise Software Industry)

Value chain of the software marketAccording to IDC, the worldwide software market is composed of three primary software submarkets:

Software sector overview and trends

• System Infrastructure Software: System infrastructure software integrates a computer’s various capabilities but typically does not directly affect the performance of tasks that benefit end users. This market comes first in the value chain and operates as a foundation for the creation of various applications.

• Application Development and Deployment: AD&D is a process that includes the development of a software product, known as software life cycle. The AD&D market is second in the value chain; software development and deployment activity begins with system infrastructure as the base.

• Applications (Consumer and Enterprise): Application software, also known as software applications, is computer software designed to help the user perform a single or multiple tasks. This is one of the

biggest submarkets in the software industry; the applications market contributes roughly 60% to total software revenues. The applications market can be further classified as follows:

· enterprise application software, which includes content, communications and collaboration (CCC), customer relationship management (CRM), enterprise resource planning and supply chain management (ERP & SCM), office suites and digital content creation (DCC)

· enterprise infrastructure software such as middleware and databases

· information worker software · content access software · educational software · simulation software · media development software

Value chain of the enterprise application marketThe enterprise application market includes various secondary markets.

Sub-Applications Description

ERP

ERP integrates the data and processes of an organization on a cross-functional and enterprise-wide level into one single system. Usually ERP systems have many components including hardware and software to achieve integration. The two key components of an ERP system are a common database and a modular software design. Large ERP vendors include Oracle and SAP and middle-tier ERP vendors include Agresso, Epicor Software and Lawson Software.

SCM

SCM encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management. It also includes the crucial components of coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers.2 SCM also addresses issues related to distribution channels and inventory management. SAP, Oracle, Infor and Inspur are some of the large SCM vendors, while middle-tier vendors include 7Hills, Accellos, AdvanceWare Technologies, Fascor and Manhattan Associates.

CRM

CRM involves the use of technology to organize, automate and synchronize business processes—principally sales activities, but also those for marketing, customer service and technical support. CRM also helps in reducing the time required for sales cycles while hanging onto potential sales leads. Major CRM vendors include SAP and Oracle and midmarket-centric vendors include FrontRange Solutions, Maximizer Software and Sage Software. Salesforce.com and Netsuite are some software-as-a-service (SaaS)-based CRM application providers.

2 Definition by Council of Supply Chain Management Professionals (CSCMP)

1 IDC’s Software Taxonomy, 2010

• Global IT1 spending was estimated at $1.5 trillion USD in 2009, decreasing 8.9 percent compared to 2008. The decline, however, turned out to be less than expected as the US market started recovering in 4Q 2009 while the Asia-Pacific market, especially India, China and Australia, reported better performance in 2009. Global IT spending in 2010 is expected to reach $1.6 trillion USD, indicating a year-over-year growth of 8.1 percent.2

• Compared to pre-recessionary levels, all verticals have suffered from lower IT spending, which varies widely by region. The vast majority of enterprises are expected to continue experiencing almost flat budget growth in 2010. According to Forrester’s Enterprise and SMB Software

1 Consists of spending on computer equipment, communication equipment, software, IT consulting and systems integration services, and IT sourcing

2 Forrester Research - US And Global IT Market Outlook: 4Q 2009

Survey, North America and Europe, 4Q 2009, a high percentage of respondents expected to leave their IT budgets unchanged in 2010 and many enterprises remain vulnerable and are uncertain about near-term business prospects.3

• In terms of region, the strongest growth in 2010 should be in Western and Central Europe, where tech purchases are expected to rise 11.2 percent, boosted by the dollar’s decline against the euro. This would be followed by Canada at 9.9 percent, Asia-Pacific at 7.8 percent, and Latin America at 7.7 percent. Eastern Europe, the Middle East and Africa are expected to be the weakest market, rising by just 2.4 percent. With oil prices recovering from bottom levels but still below 2008 peak prices, oil-producing economies in the Middle East should perform slightly better, leading to a recovery in tech purchases in

3 Ovum Research

IMAP’s Computing & Internet Software Industry Global Report — 2010: Appendix A-ii

their local currencies. However, their currencies in several cases have actually weakened against the dollar, bringing down dollar-denominated growth.1

• Shifting from regions to countries, the US remains, by a wide margin, the largest of the top 15 markets for IT goods and services. Purchases of IT goods and services in 2010 are expected to reach $568 billion USD—almost four times more than second place Japan (at $142 billion). China follows as third at $120 billion USD.

• The global software industry, which mainly consists of the AD&D market, is a major contributor to the overall IT industry. From 24 percent in 2004 to 25 percent in 2008, the contribution is expected to reach 25.7 percent in 2010. The software market generated revenues of $382 billion USD in 2009 and is expected to reach $419 billion USD in 2010, growing 9.7 percent year-over-year. This increase would reverse the 7.4 percent decline in 2009 and bring back software purchases above 2008 levels.

• The top few players, such as Microsoft, SAP, Oracle, and Nintendo, generated more than 75 percent of total revenues from the software business segment in 2009.

• As per an enterprise and small and medium size business (SMB) software survey by Forrester, firms in North America and Europe, despite the hype surrounding new technologies that were introduced in the market, are still devoting most of their spending on already installed technologies.

• According to Gartner, the enterprise application market weathered the economic crisis much better in 2009 than in 2001-02. This is because the market has evolved to become a matured market with more penetration, confidence of consumers in IT applications, and a well-balanced geographical and vertical mix.2

• The ERP market, however, was badly hit in 2009, with vendors see-ing dramatic drop-offs in license revenues and professional services. Recent Forrester survey data shows that the majority (67 percent) of ERP customers have put their ERP spending plans on hold for 2010 as well. Nevertheless, 29 percent of customers are planning to upgrade or expand existing ERP implementations (22 percent) or undertake new implementations (7 percent) in 2010.

• The SCM application market remained diverse in 2009, ranging from large-scale suite providers to innovative companies with value-adding capabilities. Although growth slowed down in 2009 and is expected to remain moderate during 2010, the market is estimated to post a CAGR of 10.6 percent until 2012. Growth would be fueled by supply chain organizations focusing on investments in areas of high business value, notably applications that help reduce costs, drive business growth, improve customer service and increase efficiency.

• While many CRM technology projects were deferred/cancelled in 2009, this is expected to reverse in 2010. Major trends to watch for in 2010 include the evolution of extended CRM application ecosystems, SaaS as the default choice for CRM, and mobile CRM becoming a must-have capability. In social media monitoring, an emerging trend in the CRM space, companies are expected to spend around $4.6 billion USD by 2013.

• Regarding strategy, organizations are likely to shift their IT spending from capital expenditure to operating expenditure to optimize costs. This is giving an impetus to SaaS, IT management, virtualization capabilities and open source software. Internet-based computing models in the enterprise software market require little or no implementation work on the customer side, are generally independent of operating systems, and are offered on a subscription or pay-as-you-go basis. This translates into lower adoption barriers for new customers.

Trends across function and tier• Functional expansion: Software vendors are continuing to add new

functionality to their software and are working to become a one-stop shop for all functions. This change is being facilitated by product development as well as acquisitions. This has led to several new

1 Forrester Research

2 www.zdnetasia.com/gartner-enterprise-software-sales-to-drop-in-europe-62052707.html

developments and inclusion of functionalities such as CRM, HR/payroll, and e-commerce.

• Tier 1 Vendors Moving to the Mid-Market: Because the number of Fortune 500 companies is limited, and most of them already have an ERP system, Tier 1 vendors such as Oracle and SAP have been expanding their marketing efforts downward to penetrate the middle market. In doing so, they have modified their strategies by offering scaled down, pre-configured versions of their applications, trying new methods of implementation, pursuing new distribution channels to sell and implement their software, and acquiring mid-market software. Some examples are the acquisition of Dynamics and Navision by Microsoft, Top Tier by SAP, and Tekton and Emdeon by Sage Software.

• Tier 3 & 4 Vendors Moving Upward: Software vendors that have traditionally focused on smaller organizations are moving their products upward to the tier 1 and 2 enterprise markets. These vendors have significantly improved functionality and scalability, allowing smaller companies to grow without having to change systems.

• ISVs marketing themselves as SaaS vendors: Due to the increased popularity of SaaS, many independent software vendors (ISVs) are trying to reinvent themselves as SaaS companies, using virtualization schemes to simulate multi-tenancy and provide them with a quick time-to-market solution. However, to capture the full benefits of SaaS, ISVs need to modify their business model accordingly in terms of architecture.3

Trends across industry vertical2010 is expected to see changes in the enterprise software market as businesses confront the challenge of cutting costs while dealing with a fundamentally restructured economy. This will require new business models and technologies because companies will need systems specifically designed for competitive advantage in their vertical. Companies are concentrating on turning back to innovation, strategic initiatives and development of new business operations that map to market demands. However, such initiatives will need to be funded from savings elsewhere as only few organizations are expected to increase their IT budgets.4

• Retail: Gartner expects to see many Tier 1 retailers pursue an m-commerce strategy mainly to avoid lagging on this front. This new strategy, however, will see only 20 percent of retailers succeeding in their m-commerce initiative. As many retailers have discovered with the Web, cross-channel shopping requires more than just launching an m-commerce presence to enable direct selling.

• Manufacturing: By the end of 2011, manufacturers that prioritize future software investments in operational technologies such as product life cycle management, manufacturing process management, manufacturing operations management and quality management software, instead of traditional IT and ERP, would achieve a tenfold return on their investment.5

• Government: Currently, most governments worldwide are focusing on providing as much public data as possible online to increase transparency and create value for constituents. The components of society ― which comprise individuals, groups, communities, markets and firms ― play a large role in shaping the direction of society and business. Hence, they will become a key component in how government entities will operate; by 2012, up to one in five government processes will rely on crowd-sourced data.

• Education: By 2015, most local education agencies are expected to cut school construction by 50 percent by using virtual learning environments to better utilize existing facilities.

3 http://www.interwest.com/venture-capital-funding/software-as-a-service-saas.html

4 Gartner Research - Top Industry Predictions 2010: The Recession’s Aftermath Proves Challenging

5 Gartner Research

IMAP’s Computing & Internet Software Industry Global Report — 2010: Appendix A-iii

Thumbnail summaries of top 50 computing and internet software companies (enterprise software industry)

1: MICROSOFT CORP (US)

Brief description Developer cum manufacturer that licenses, sells and supports software products. Acquired Opalis Software Inc. in December 2009.

Products soldOperating systems for servers, computers and intelligent devices; server applications for distributed computing environments; information worker productivity applications; business solutions applications; computing applications; software development tools; video games.

Key brandsActive Accessibility, Active Desktop, ActiveMovie, ActiveStore, Azure, InfoPath, Inkseine, InPrivate, IntelliMirror, IntelliMorph, IntelliMouse, Microsoft Game Studios, MSN, Outlook, SQL Server, Visio, Visual Basic, Windows Media, Xbox 360

Markets covered Client, Server and Tools, Online Services Business, Microsoft Business Division, Entertainment and Devices

Geographic coverage (2009) US: 56.6%; Rest of world: 43.4%

Future plans Office 2010 Tech Guarantee program and YAHOO search partnership model to be launched in 2010

Financials (LTM)Revenue: 58.7 billion USD, year-over-year change: 3.3%Operating profit: 21.8 billion USD, year-over-year change: 8.0% Net income: 16.3 billion USD, year-over-year change: 17.6%

2: APPLE INC (US)

Brief description

Designs, manufactures and markets personal computers, mobile communication devices and portable digital music and video players. Also sells a variety of related software, services, peripherals and networking solutions. Sells its products worldwide through its online stores, retail stores, direct sales force and third-party wholesalers, resellers and value-added resellers. Acquired digital music service Lala in December 2009.

Products sold Portables, desktops, music-related products, software and services, iPhone, related products

Key brands AirTunes, Aperture, Apple, AppleCAT, AppleLink, Apple TV, Cocoa, iMovie, Inkwell, iPhone, iPhoto, Safari, Sand, WebScript, Xcode

Markets covered NA

Geographic coverage (2009) Americas: 44.1%; Europe: 27.5%; Rest of world: 28.4%

Future plans Focus on new product development and overcome challenges of the PC market

Financials (LTM)Revenue: 46.7 billion USD, year-over-year change: 14.4% Operating profit: 13.4 billion USD, year-over-year change: 41.0%Net income: 9.4 billion USD, year-over-year change: 34.6%

3: ORACLE CORP (US)

Brief description Develops, manufactures, markets, distributes and services database and middleware software as well as applications software. Acquired Silver Creek Systems and Sun Microsystems in January 2010.

Products soldSoftware business consists of two product segments: 1) new software licenses and 2) software license updates plus product support. Services business consists of three operating segments: consulting, on demand and education.

Key brandsApplications Unlimited, AutoVue, Case Exchange, JD Edwards EnterpriseOne, Oracle E-Business Suite, Oracle Enterprise Manager, Oracle Fusion, Oracle Transparent Gateway, Oracle Video Server, Oracleware, SQL Module

Markets covered Software and services represented 81% and 19% of its total revenues, respectively

Geographic coverage (2009) US: 43.8%; UK: 6.8%; Japan: 5.11%; Germany: 4.11% France: 3.6%; Canada: 3.17%; Rest of world: 33.3%

Future plans Plans to deliver a complete, open, integrated stack of hardware, software and business application solutions and optimize synergy benefits. Plans to form more attractive support plans.


IMAP’s Computing & Internet Software Industry Global Report — 2010: Appendix A-iv

4: RESEARCH IN MOTION INC. (Canada)

Brief description

Designs, manufactures and markets wireless solutions for the worldwide mobile communications market. Through the development of integrated hardware, software and services, RIM provides platforms and solutions for access to information, including e-mail, phone, SMS, Internet and intranet-based applications. Acquired Chalk Media Corp. and Certicom Corp in 2009.

Products sold Mobile applications and devices

Key brands BlackBerry

Markets covered Wireless business solutions

Geographic coverage (2009) US: 62.9%; Canada: 8.1%; UK: 6.4%; Rest of world: 22.6%

Future plans Build and operate strategies to handle the pricing pressures on mobile devices and other related services

Financials (LTM)Revenue: 14.95 billion USD, year-over-year change: 35.1% Operating profit: 3.1 billion USD, year-over-year change: NMNet income: 2.5 billion USD, year-over-year change: 29.8%

5: SAP AG (Germany)

Brief descriptionSells licenses for software solutions and related services; offers consulting, maintenance and training services for its software solutions. As of December 31, 2009, the company had more than 95,000 customers in over 120 countries and has 163 subsidiaries.

Products soldSAP Business Suite software and international corporations; SAP Business All-in-One solutions; SAP Business ByDesign solution; SAP Business One application for SMBs; SAP BusinessObjects portfolio which covers a variety of demands from small to large companies

Key brands NA

Markets covered Product, consulting and training

Geographic coverage (2009) EMEA: 52.9%; Americas: 33.9%; Asia Pacific: 13.2%

Future plans R&D focus on expanding on-demand offerings and mobility—delivering solutions on device; M&A focus is mainly on bolt-on acquisitions which will enhance its industry/technology product portfolios


6: COMPUTER ASSOCIATES (CA), INC. (US)

Brief descriptionIndependent IT management software company that develops and delivers software that help manage IT throughout complex computing environments. Addresses entire computing environment. Acquired Nimsoft, 3Tera, Inc., Cassatt, and Oblicore in 2010.

Products sold Products/services in mainframe and distributed environments spanning IT governance, management, security

Key brands Plans to acquire Nimsoft from which it would benefit from its strong presence with managed service providers (MSPs) and emerging enterprises solutions

Markets covered Infrastructure management, project and portfolio management, security management and data center automation and virtualization

Geographic coverage (2009) US: 58.7%; Europe: 26.4%; Rest of world: 14.9%

Future plans Restructuring efforts in Asia—shift in sales strategy from a direct sales force model to an indirect, partner-led model; plans to make acquisitions to achieve growth

Financials (LTM)Revenue: 4.3 billion USD, year-over-year change: 0.1% Operating profit: 1.3 billion USD, year-over-year change: 26.1% Net income: 742.0 million USD, year-over-year change: 38.8%

7: INTUIT INC (US)

Brief description Developer and marketer of business and financial management software solutions for SMBs, financial institutions, consumers and accounting professionals.

Products sold QuickBooks financial and business management software, payroll products for SMBs, merchant services, Lacerte and ProSeries professional tax products, outsourced online services

Key brandsBanknow, Checklock, Eclipse, Expensable, Intellicharge, Intuit, PC Access, Pocket Quicken, Pocket Quicken Connect, Proseries, Quickbooks Pro Quicken, Quickguide, Quickzoom, Tax Partner, The Tax Professional’s Choice, Turboforms

Markets covered Financial management solutions, employee management solutions, payments solutions, consumer tax solutions

Geographic coverage (2009) US: 100.0%

Future plans Focus on Mint.com (platform) rollout and reduce costs

Financials (LTM)Revenue: 3.2 billion USD, year-over-year change: 3.6% Operating profit: 718.5 million USD, year-over-year change: 5.5% Net income: 460.1 million USD, year-over-year change: 6.2%

IMAP’s Computing & Internet Software Industry Global Report — 2010: Appendix A-v

8: ADOBE SYSTEMS INC. (US)

Brief description

Diversified software company which offers creative, business, Web and mobile software and services used by creative professionals, knowledge workers, etc. for creating, managing, delivering and engaging with content and experiences across multiple operating systems, devices and media. Distributes products through a network of distributors, VARs, systems integrators, independent software vendors and OEMs, direct to end users and through its www.adobe.com. In 2009, it completed the acquisition of Omniture.

Products sold Prepackaged software

Key brands FRAME

Markets covered Creative solutions, knowledge worker, enterprise, print and publishing, platform, mobile and device solutions

Geographic coverage (2009) Americas: 46.9%; EMEA: 31.5%; Asia: 21.5%

Future plans Launch CS5 (new product) to increase portfolio offerings and focus more on the US market

Financials (LTM)Revenue: 3.0 billion USD, year-over-year change: 17.7%Operating profit: 700.1 million USD, year-over-year change: 31.0%Net income: 357.2 million USD, year-over-year change: 55.5%

9: SAGE GROUP (UK)

Brief descriptionDevelopment, distribution and support of business management software and related products and services for SMBs. Operates in 24 countries. Acquired Aytos CPD, S.L. (Aytos) and disposed of the Tax Compliance Services division in 2008. Disposed of Sage Pro-Concept S.A. in October 2009.

Products sold NA

Key brands NA

Markets covered Accounting; industry-specific; human resource (HR) and payroll; customer relationship management (CRM); payment processing

Geographic coverage (2009) North America: 40.0%; Mainland Europe: 36.2%; UK & Ireland: 16.8%; Rest of world: 7.0%

Future plans Reduce the cost base along with measures to improve license income

Financials (LTM)Revenue: 2.2 billion USD, year-over-year change: 11.1%Operating profit: 430.9 million USD, year-over-year change: 4.0% Net income: 293.7 million USD, year-over-year change: 14.0%

10: BMC SOFTWARE INC (US)

Brief description

Provides management solutions for mainframe and distributed information technology systems. Portfolio of software solutions spans enterprise systems, applications, databases and IT process management. Acquired MQSoftware and Tideway Systems Limited in 2009. Acquired Phurnace Software, a developer of automation software in January 2010.

Products sold Mainframe and distributed systems, applications, databases and information technology process management functions

Key brands ACSM, Assuring Business Availability, BMC Software, Cellular Event Processing Architecture, Mastercell, Mastervision

Markets covered Enterprise service management and mainframe service management

Geographic coverage (2009) US: 62.1%; and Rest of world: 37.9%

Future plans Focus on transformation of sales force

Financials (LTM)Revenue: 1.9 billion USD, year-over-year change: 8.1% Operating profit: 523.0 million USD, year-over-year change: 20.0%Net income: 370.6 million USD, year-over-year change: 24.1%

11: FUJI SOFT INC (Japan)

Brief description Independent software developer specializing in communications and machine control software, business application software for bank and insurance companies, and operating system software.

Products sold Embedded software, operation software and other software

Key brands NA

Markets covered Software for control and operational systems, cost saving measures by cutting SG&A expenses, expanding global footprint through acquisitions, strengthening collaboration within the group

Geographic coverage (2009) Japan: 100%

Future plans Promote cloud computing and on-premise businesses


IMAP’s Computing & Internet Software Industry Global Report — 2010: Appendix A-vi

12: CITRIX SYSTEMS (US)

Brief descriptionDesigns, develops and markets technology solutions that enable IT services to be delivered through its virtual computing infrastructure on demand, independent of location, device or network. Citrix served over 230,000 customers and over 100 million users in more than 100 countries in 2009.

Products sold Desktop solutions and datacenter/cloud solutions

Key brands XenDesktop, XenApp, GoToMeeting, GoToTraining, GoToAssist and GoToMyPC, CitrixXenServer, Citrix Essentials

Markets covered NA

Geographic coverage (2009) Americas: 43.1%; EMEA: 29.8%; Asia-Pacific: 8.0%; Rest of world: 19.1%

Future plans Focus on expanding XenDesktop 4 offerings both as long term and near term trade opportunities


13: SUMISHO COMPUTER (Japan)

Brief description Develops a variety of computer software, including software for business applications, electronic commerce, development tools, internet and financial industries. Industrial solutions form a major portion of revenues.

Products sold Industrial solutions, ERP solutions and platform solutions

Key brands NA

Markets covered Packaged software, software development, information services

Geographic coverage (2009) Japan: 100.0%

Future plans Focus on projects in the insurance and banking industries; allocating management resources to clients’ IT infrastructure development and certain R&D solutions

Financials (LTM)Revenue: 1.4 billion USD, year-over-year change: 2.1%Operating profit: 83.8 million USD, year-over-year change: 12.4%Net income: 32.6 million USD, year-over-year change: 26.9%

14: SALESFORCE.COM (US)

Brief descriptionProvides enterprise cloud computing applications; provides a technology platform for customers and developers to build and run business applications; offerings can be deployed, customized and integrated with other software applications; markets its service to businesses on a subscription basis.

Products sold NA

Key brands NA

Markets covered Customer and collaboration relationship management (CRM)

Geographic coverage (2009) Americas: 70.8%; Europe: 17.8%; Asia-Pacific: 11.4%

Future plans Focus on capturing opportunities in the area of enterprise software and may look to make an acquisition


15: MISYS PLC (UK)

Brief description

Engaged in the development, management and licensing of a variety of software products and solutions to customers in the financial services and healthcare industries; develops and delivers open source technologies. The merger to form Allscripts-Misys Healthcare Solutions, Inc. (Allscripts) was completed in October 2008. Misys PLC acquired a 56.8% interest in Allscripts.

Products sold NA

Key brands BankFusion universal banking solution

Markets covered Software solutions to banking, treasury & capital markets, Allscripts healthcare, central services

Geographic coverage (2009) Americas: 60.8%; Europe: 19.1%; Asia-Pacific: 7.15%; UK: 5.68%; Rest of world: 7.38%

Future plans Focus on upgrading existing customers along with new customers by selling BankFusion software and creating suitable sales support for BankFusion


IMAP’s Computing & Internet Software Industry Global Report — 2010: Appendix A-vii

16: SOFTWARE AG (Germany)

Brief descriptionProvides business infrastructure software solutions; products include solutions for managing data, enabling service-oriented architecture (SOA) and improving business processes; has more than 80 locations in 70 countries worldwide.

Products sold Enterprise transaction systems include software such as Adabas SQL Gateway, Event Replicator, Natural Business Services, Natural Engineer. Other web methods include webMethods Suite and CentraSite

Key brands NA

Markets covered Professional services, maintenance, licenses

Geographic coverage (2008) US: 28.6%; Germany: 11.28%; Spain: 10.9%; Rest of world: 49.2%

Future plans Integrate IDS Scheer (new platform from acquisition) along with cross-selling opportunities; cost control


17: SYBASE INC (US)

Brief description Delivers enterprise software and services to manage, analyze and mobilize information; provides open, cross-platform solutions that deliver information anytime and anywhere, providing decision-ready information.

Products sold Enterprise class database servers, integration and development products, mobile database, mobile enterprise solutions

Key brands Adaptive Server Enterprise, EDI Server, Information Anywhere, Jaguar CTS, Navigation Server, SQL Server, Sybase, Ultralite.net, Warehouse Studio

Markets covered Infrastructure platform and global services for mobile messaging interoperability and the management and distribution of mobile content

Geographic coverage (2008) North America: 50.2%; EMEA: 35.3%; Asia Pacific and Latin America: 14.6%

Future plans Explore new database architecture and software to power mobile devices; expand offerings in the software and architecture areas through acquisition


18: CHECK POINT SOFT (Israel)

Brief description

Develops, markets, and supports a range of software and combined hardware and software products and services for IT security; solutions operate under a unified security architecture that enables total end-to-end security with a single line of unified security gateways and allows a single agent for all endpoint security. Acquired Nokia Corporation’s security appliance business in April 2009.

Products sold NA

Key brands NA

Markets covered Network and gateway security solutions, data and endpoint security solutions, management solutions

Geographic coverage (2008) EMEA: 44.6%; Americas: 43.2%; Japan: 12.2%

Future plans Focus on share buyback, major focus on product revenues in the data security segment rather than maintenance support

Financials (LTM)Revenue: 924.4 million USD, year-over-year change: 14.3% Operating profit: 424.1 million USD, year-over-year change: 19.0% Net income 357.5 million USD, year-over-year change: 10.4%

19: MICROS SYSTEMS INC (US)

Brief descriptionDesigner, manufacturer, marketer and servicer of enterprise information solutions for the global hospitality and specialty retail industries. Acquired Fry, Inc., an e-commerce design, development and managed services provider August 2008.

Products sold Software encompassing property-based management systems (PMS), related property-specific modules and applications, central systems including central reservation systems (CRS)

Key brands Fidelio

Markets covered Enterprise solutions: hotel information systems, restaurant information systems, specialty retail information systems


Future plans Focus on cost reduction and further improvement in margins

Financials (LTM)Revenue: 867.9 million USD, year-over-year change: 4.4% Operating profit: 145.3 million USD, year-over-year change: 3.2% Net income: 98.2 million USD, year-over-year change: 1.9%

IMAP’s Computing & Internet Software Industry Global Report — 2010: Appendix A-viii

20: OPEN TEXT CORPORATION (Canada)

Brief description

Provides enterprise content management (ECM) software solutions; Open Text ECM Suite enables corporations to manage traditional forms of content (images, office documents, graphics and drawings) as well as electronic content (Web pages, e-mail and video); offers solutions both as end-user standalone products and as fully integrated modules. Acquired Vizible Corporation and Vignette Corporation in 2009.

Products sold ECM software products

Key brands NA

Markets covered ECM software solutions

Geographic coverage (2009) North America: 50.4%; Europe: 42.6%; Others: 6.9%

Future plans Launch of a new series of products in mobile applications

Financials (LTM)Revenue: 854.6 million USD, year-over-year change: 8.3% Operating profit: 106.1 million USD, year-over-year change: 35.0%Net income: 64.5 million USD, year-over-year change: 7.4%

21: NOVELL INC (US)

Brief description Develops, sells and installs enterprise software positioned in the operating systems and infrastructure software layers of the IT industry worldwide.

Products soldSUSE Linux Enterprise Server, an open source server operating system; SUSE Linux Enterprise Desktop, a business desktop operating system; SUSE Studio that allows independent software vendors to build software appliances; SUSE Moblin, a Linux based open source operating system

Key brands Novell ZENworks and PlateSpin

Markets covered Linux and related solutions for enterprises; identity and security management; systems and resource management

Geographic coverage (2009) US: 49.3%; EMEA: 34.9%; Asia Pacific: 9.5%; Rest of world: 6.4%

Future plans Focus on improvement in top line in the next 12-18 months and improve fundamentals

Financials (LTM)Revenue: 849.7 million USD, year-over-year change: 9.9% Operating profit: 135.0 million USD, year-over-year change: 101.4% Net income: 203.0 million USD, year-over-year change: NM

22: RED HAT INC (US)

Brief description

Develops and provides open source software and services; offers information and news about open source software and provides an online community of open source software; collectively developed software is distributed under open source licenses, such as the GNU General Public License and GNU Lesser General Public License, permitting access to the human-readable software source code. Acquired Amentra, Inc., and Qumranet, Inc. in 2008.

Products sold Operating systems and software

Key brands Red Hat Linux operating system, JBoss Enterprise Middleware

Markets covered Core enterprise operating system platform, enterprise middleware platform and virtualization solutions

Geographic coverage (2009) Americas: 64.7%; EMEA: 21.7%; Asia Pacific: 13.6%

Future plans Focus on key go-to-market initiatives and achieve sustained earnings growth. In terms of technology strategy, it aims to promote Enterprise Linux 5.4 and virtualization

Financials (LTM)Revenue: 748.2 million USD, year-over-year change: 14.7% Operating profit: 109.1 million USD, year-over-year change: 32.2% Net income 87.3 million USD, year-over-year change: 10.8%

23: AUTONOMY CORP (UK)

Brief description

Developer cum manufacturer that licenses, sells and supports software products; also offers operating system software, server application software, business and consumer applications software, software development tools and Internet- based solutions. Acquired Interwoven, Inc. in March 2009 and MicroLink, LLC in February 2010.

Products sold Intelligence data operating layer (IDOL) server, IDOL platform, and IDOL protect products

Key brands TeamSite, LiveSite, Optimost, MediaBin, MetaTagger, OpenDeploy, ControlHub, Qfiniti Enterprise, Autonomy Explore

Markets covered Business solutions

Geographic coverage (2009) Americas: 69.9%; Rest of world: 30.1%

Future plans Expand through acquisition

Financials (LTM)Revenue: 739.7 million USD, year-over-year change: 47.0%Operating profit: 277.4 million USD, year-over-year change: 49.1% Net income 191.6 million USD, year-over-year change: 45.4%

IMAP’s Computing & Internet Software Industry Global Report — 2010: Appendix A-ix

24: LAWSON SOFTWARE (US)

Brief description

Provider of enterprise software, services and support targeting customers in specific industries, including equipment service management and rental, fashion, food and beverage, healthcare, manufacturing and distribution, public sector (US) and service industries, as well as the horizontal market for the strategic human capital management product line; provides software in 29 languages to more than 4,500 customers in 41 countries.

Products sold Software related to business processes, enterprise asset management, equipment service management, CRM, HCM

Key brands Business Begins With E, Drill Around, Lawson Ezupdate, Lawson Software, Lawson Suiteexpress Self-Evident Applications, The Information Office, Webtree

Markets covered Software applications and industry-specific solutions

Geographic coverage (2009) Americas: 58.1%; EMEA: 37.8%; Asia Pacific: 4.1%

Future plans Focus on expanding product portfolio, leveraging favorable spending trends in HCM, extending its products into the cloud computing application area


25: QUEST SOFTWARE (US)

Brief description

Designs, develops, markets, distributes and supports enterprise systems management software products. In addition to perpetual software licenses, it sells time-based software licenses wherein customers pay a single fee for the right to use the software and receive maintenance for a defined period of time. Acquired PacketTrap Networks, Inc. in December 2009.

Products sold Big Brother, Deploydirector, Epurposing, Imagevue, IT Dad, Livereorg, NBSpool, Smartalarm, Spotlight, SQlab Xpert, SQL Navigator, Vista Plus

Key brands Foglight, InTrust, JProbe, MessageStats, SQL Navigator, Benchmark Factory, PowerGUI

Markets covered Software solution for application management, database management, windows management and virtualization management

Geographic coverage (2009) US: 62.5%; UK: 9.3%; Rest of world: 28.9%

Future plans Focus on Microsoft’s unified communications strategy


26: ORACLE FINANCIAL (India)

Brief description Provides comprehensive IT solutions to the financial services industry worldwide; provides transaction processing and accounting software for banks, investment managers and mutual funds.

Products sold Product licenses and related activities (products); IT solutions and consulting services (services)

Key brands Flexcube suite, Reveleus, MicroBanker

Markets covered Financial services

Geographic coverage (2009) Europe: 34.2%; US: 29.1%; Asia Pacific: 19.9%; Middle East, India and Africa: 14.8%; Latin America and Caribbean: 2.1%

Future plans Improve its KPO business, which is currently a small part of revenues, and increase margins of maintenance services in light of the tough business climate


27: NEUSOFT CORP (China)

Brief descriptionProvides software products such as HR management systems, group financial management systems, learning management systems, security operations centers, office management systems, network application monitoring and management systems, CRM systems; domestic and overseas markets.

Products sold NA

Key brands TalentBase, MPC, SkillBase, NetEye, UniOffice, NetPatrol

Markets covered Telecommunication, government, electric power, enterprise and electronic commerce, finance, education, traffic, medical equipment and health services

Geographic coverage (2008) China: 66.8%; Rest of world: 33.2%

Future plans Focus on outsourcing business


IMAP’s Computing & Internet Software Industry Global Report — 2010: Appendix A-x

28: UNIT 4 AGRESSO NV (The Netherlands)

Brief description

Provides integrated business management software and internet and security solutions; provides information and communications technology products and services such as the design of e-commerce websites, implementation of security products (including anti-virus products, firewalls and e-mail content filters), ERP solutions and outsourcing of IT network management.

Products sold NA

Key brands NA

Markets coveredFinancial administration applications, applications for logistics and wholesale distribution, software to support production processes, project costing and invoicing systems, as well as software for information management and reporting

Geographic coverage (2009) Benelux: 32.9%; UK: 18.8%; Sweden: 13.5%; Spain: 10.6%; Norway: 8.0%; Germany: 4.5%; Rest of world: 11.7%

Future plans Focus on pipeline development and organic license sales


29: TOTVS SA (Brazil)

Brief descriptionDevelops and markets software solutions including ERP software, CRM software and SCM software. Offers performance consulting; outsourcing of administrative processes, technology, and infrastructure; and distance education.

Products sold ERP software, CRM software, business intelligence software, SCM software

Key brands Logocenter, Totvs, Microsiga, RM Sistemas, TOTVS BMI

Markets covered NA

Geographic coverage (2009) Brazil: 100%

Future plans Focus on diversification of industry verticals to balance out seasonal effects, increase penetration in Brazil


30: PROGRESS SOFTWARE CORPORATION (US)

Brief descriptionSupplier of application infrastructure software and services for the development, deployment, integration and management of business applications; develops, markets and distributes its products to businesses, industries and governments worldwide. Acquired Savvion, Inc. in January 2010.

Products sold Software solutions and services

Key brands OpenEdge, Orbix, ObjectStore, Apama, Sonic, Progress Actional and FUSE products, DataDirect Connect, DataDirect Shadow, DataXtend

Markets covered Application development platforms, enterprise business solutions, enterprise data solutions

Geographic coverage (2009) North America: 44.8%; EMEA: 42.1%; Latin America: 6.7%; Asia Pacific: 6.3%

Future plans Integrate disparate product lines through new product releases and following a go-to-market strategy


31: INFORMATICA CORP (US)

Brief descriptionProvides data integration software and services allowing clients to access, integrate and trust all their information assets; infrastructure software categories include data integration and cloud computing. Acquired 29West Inc. in March 2010

Products sold Enterprise data integration, data quality, master data management, B2B data exchange, application information lifecycle management, complex event processing, cloud data integration

Key brands Informatica, Openbridge, Powerbridge, Powercapture, Powerplug, Superglue

Markets covered NA

Geographic coverage (2009) North America: 63.0%; Europe: 27.4%; Rest of world: 9.6%

Future plans Market broadening—diversification and growth through acquisitions


IMAP’s Computing & Internet Software Industry Global Report — 2010: Appendix A-xi

32: COMPUTER ENGINEERING & CONSULTING (Japan)

Brief descriptionIndependent software development company which installs, manages and provides maintenance services for network systems; operates in two business segments—software development and information system services.

Products sold Software solutions and services

Key brands NA

Markets covered Software development and information system services


Future plans NA

Financials (LTM)Revenue: 458.9 million USD, year-over-year change: 21.0% Operating profit: 6.6 million USD, year-over-year change: NM Net income: 14.9 million USD, year-over-year change: NM

33: NSD CO LTD (Japan)

Brief descriptionIndependent software development company that offers operating systems, business software for the financial industry and process control systems; provides system solution services and information processing services in addition to operation and management of computer labs.

Products sold Packaged software along with support

Key brands NA

Markets covered Software development


Future plans NA


34: EPICOR SOFTWARE (US)

Brief description Designs, develops, markets and supports enterprise application software solutions and services primarily for use by midsized companies and the divisions and subsidiaries of Global 1000 enterprises.

Products sold Back office applications for production management, SCM, retail management and financial accounting, as well as front office CRM and service management.

Key brands NA

Markets covered

Solutions for the manufacturing, distribution, services, retail, and hospitality industries as well as a range of industries and vertical markets within these sectors, including financial services, professional services, industrial machinery, instrumentation/controls, medical device, consumer goods, automotive, aerospace, hotels, general merchandise, specialty retail

Geographic coverage (2009) US: 67.4%; Europe: 20.1%; Oceania: 3.9%; Asia: 3.7%; Rest of world: 4.9%

Future plans To improve a back-end loaded revenue model in order to compete with larger and better funded ERP vendors


35: RIVERBED TECHNOLOGY, INC. (US)

Brief description

Develops solutions for fundamental problems associated with IT performance across wide area networks; sells its products and support to end users directly through its sales force and indirectly through channel partners, including value-added distributors, VARs, systems integrators and service providers. Acquired Mazu Networks, Inc. in 2009.

Products sold Steelhead Mobile 3.0, Riverbed services platform

Key brands Riverbed

Markets covered WAN optimization solutions and wide-area data service (WDS) solutions

Geographic coverage (2009) US: 56.1%; EMEA: 26.6%; Rest of world: 17.2%

Future plans Focus on new product development


IMAP’s Computing & Internet Software Industry Global Report — 2010: Appendix A-xii

36: JDA SOFTWARE GRP (US)

Brief description

Provides enterprise software solutions for manufacturers, wholesalers and distributors, and retailers as well as government and aerospace defense contractors; provides pricing, yield management and demand management software solutions for travel, transportation, hospitality and media organizations. Purchased a 49.1% interest in Strategix Enterprise Technology GMBH and Strategix Enterprise Technology sp.z.o.o. in July 2009; Acquired i2 Technologies, Inc. (i2) in January 2010.

Products sold NA

Key brands JDA Portfolio, Open Database Merchandising System, Retail Ideas

Markets covered Retail, manufacturing, and distribution; service industries

Geographic coverage (2009) Americas: 70.0%; Europe: 21.4%; Asia Pacific: 8.6%

Future plans To implement price optimization strategies in a recovering economy, improve end-to-end efficiencies

Financials (LTM)Revenue: 385.8 million USD, year-over-year change: 1.2% Operating profit: 51.5 million USD, year-over-year change: 4.2% Net income: 26.3 million USD, year-over-year change: NM

37: MICROSTRATEGY INC (US)

Brief description

Worldwide provider of business intelligence software; provides analytical performance to business users in a format that suits them—from high-level dashboards to custom reports and advanced analysis via e-mail, Web, fax, wireless and voice communication channels; web-based architecture provides reporting, security, performance and standards that are critical for web deployment.

Products sold BI software

Key brands DSS Agent, DSS Broadcaster Server, DSSServer, DSSWeb, Microstrategy, The Intelligence Company

Markets covered Enterprise solutions

Geographic coverage (2009) North America: 60.0%; EMEA: 31.2%; Rest of world: 8.9%

Future plans Focus on development of new products


38: BLACKBOARD INC. (US)

Brief descriptionProvides enterprise software applications and related services to the education industry. Acquired Angel Learning, Inc and Terriblyclever Design, LLC in 2009. Acquired Saf-T-Net, Inc., which offers AlertNow, a messaging and mass notification solution, in 2010.

Products soldWeb-based teaching and learning platforms, on- and off-campus commerce management, online e-commerce and payment management, meal plan administration, vending and laundry services, and communications and notification system solutions

Key brands Blackboard Learn, Blackboard Transact, Blackboard Connect, Blackboard Mobile

Markets covered Software solutions for the educational market


Future plans Promote acquisition based growth strategy

Financials (LTM)Revenue: 377.0 million USD, year-over-year change: 20.8% Operating profit: 85.6 million USD, year-over-year change: NMNet income: 7.9 million USD, year-over-year change: NM

39: TEMENOS GROUP AG (Switzerland)

Brief descriptionProvider of banking software which covers financial functions such as deposit-taking, lending and Internet banking; offers banks with an overview of clients across the enterprise, enabling them to maximize returns while streamlining costs.

Products sold Temenos T24 (application providing server support to a high number of users), Temenos Corebanking (scalable mainframe retail banking application serving high volume banks and bank outsourcing centers)

Key brands Temenos T24, Temenos Corebanking

Markets covered Banking software solution systems to the retail, corporate and correspondent, universal, private, Islamic as well as microfinance and community banking markets

Geographic coverage (2008) EMEA: 63.5%; Americas: 18.5%; Asia: 18.1%

Future plans Focus on margin improvement and cash conversion

Financials (LTM)Revenue: 370.3 million USD, year-over-year change: 9.9%Operating profit: 75.7 million USD, year-over-year change: NMNet income: 68.6 million USD, year-over-year change: 6.0%

IMAP’s Computing & Internet Software Industry Global Report — 2010: Appendix A-xiii

40: CEGID GROUP SA (France)

Brief description

Develops business management software packages and offers solutions and services to certified public accountants, retail businesses and the industrial sector as well as fashion, hospitality, services, trade, construction and transport industries; operates through several subsidiaries including, among others, Cegid SA, Quadratus and Civitas.

Products soldGeneric business software, business-specific solutions, finance and accounting solutions, payroll/human resources management solutions, business management solutions, business intelligence solutions, small business solutions, e-commerce solutions

Key brands NA

Markets covered Enterprise management software solutions for companies and certified accounting firms

Geographic coverage (2009) France: 100.0%

Future plans Focus on retail businesses, which are defensive in the recessionary environment

Financials (LTM)Revenue: 346.7 million USD, year-over-year change: NM Operating profit: 37.0 million USD, year-over-year change: NM Net income: 25.0 million USD, year-over-year change: 3.0%

41: INDUSTRIAL AND FINANCIAL SYSTEMS - IFS AB (Sweden)

Brief description

Provides component-based business software; principal offering, IFS Applications, is an ERP solution which supports the business processes of organizations of various sizes; provides extended ERP functionality, including CRM, SCM, PLM, corporate performance management (CPM), enterprise asset management (EAM) as well as maintenance, repair and overhaul (MRO) capabilities. Company operates in approximately 50 countries through subsidiaries, joint ventures and partners.

Products sold IFS Applications

Key brands NA

Markets coveredERP solutions focusing on aerospace and defense; automotive; manufacturing; process industries; construction, contracting and service management; retail and wholesale distribution; and utilities and telecommunications

Geographic coverage (2009) Europe: 76.1%; Americas: 14.5%; Rest of world: 9.4%

Future plans Focus on CRM and SCM applications


42: ARIBA INC. (US)

Brief description Provides on-demand spend management solutions; solutions combine on-demand software and services to help companies automate the procurement process.

Products sold Spend management solutions

Key brands NA

Markets covered NA

Geographic coverage (2009) North America: 67.5%; EMEA: 25.8%; Asia Pacific: 6.71%

Future plans Focus on strategic acquisitions in the network area

Financials (LTM)Revenue: 338.6 million USD, year-over-year change: 3.3% Operating profit: 17.8 million USD, year-over-year change: NM Net income: 7.0 million USD, year-over-year change: NM

43: MICRO FOCUS INTERNATIONAL PLC (UK)

Brief description

Provides enterprise application management solutions and (through its subsidiaries) develops, sells and supports software. Acquired Relativity Technologies, Inc. in January 2009; application testing/automated software quality business of Compuware Corporation (together being the Compuware Testing and ASQ Business) in June 2009; and Borland Software Corporation in July 2009.

Products sold Application portfolio management (APM), application modernization, application development, application testing and software quality, application life cycle management

Key brands NA

Markets covered Enterprise application software solutions

Geographic coverage (2009) North America: 45.2%; EMEA: 41.2%; Rest of world: 13.7%

Future plans Streamline operations of the recently acquired companies


IMAP’s Computing & Internet Software Industry Global Report — 2010: Appendix A-xiv

44: UFIDA SOFTWARE COMPANY LIMITED (China)

Brief description

Principally engaged in the development and distribution of ERP, HRM, office automation, CRM, PLM, product data management and collaborative product development software as well as unified application platform and enterprise asset management products; also provides SaaS and technology training services in addition to distribution of software related products.

Products sold EPR solutions

Key brands NA

Markets covered NA

Geographic coverage (2009) China: 100.0%

Future plans Expansion through M&A and better product mix along with a sound marketing model


45: REALDOLMEN NV (Belgium)

Brief descriptionICT company whose portfolio includes business intelligence, CRM and e-business applications as well as IT support such as the migration and integration of system applications; provides computer aided design, geographical information systems, ERP and SCM applications and other related products and services.

Products sold NA

Key brands NA

Markets covered Solutions for private banking, retail, wholesale, telecommunications, logistics, and distribution

Geographic coverage (2008) Belgium: 46.8%; France: 37.9%; Luxembourg: 15.3%

Future plans Focus on CRM

Financials (LTM)Revenue: 333.2 million USD, year-over-year change: NM Operating profit: 16.4 million USD, year-over-year change: NM Net income: 19.2 million USD, year-over-year change: NM

46: SHANGHAI BAOSIGHT SOFTWARE COMPANY LIMITED (China)

Brief description

Principally engaged in software engineering, software development, outsourcing services, system integration, intelligent traffic systems and engineering designing; provides enterprise equipment management systems, solutions in mineral industry, software management solutions for corporation management and control, purchase supply chain management system, enterprise construction project management information solutions, comprehensive supervision and control system of metro and pumping stations, and automation supervisory systems.

Products sold Baosight manufacturing execution system (MES), iQualityView, eCop

Key brands NA

Markets covered Software solutions in modern service and mineral industry

Geographic coverage (2009) China: 97.9%; Rest of world: 2.1%

Future plans Focus on sales and marketing efforts to increase revenues by capitalizing on growing demand for software solutions


47: EXACT HOLDING NV (The Netherlands)

Brief descriptionIntegrated business software solutions consist of traditional ERP and related software solutions such as HRM, CRM, corporate performance management, project management and electronic workflow; activity is divided into three categories: software licenses, services and maintenance.

Products sold ERP and eBusiness solutions

Key brands NA

Markets covered SMBs

Geographic coverage (2008) The Netherlands: 42.3%; North America: 25.8%; Rest of world: 31.9%

Future plans To avail of synergy benefits from the recent acquisition of Longview

Financials (LTM)Revenue: 324.2 million USD, year-over-year change: 10.9% Operating profit: 63.8 million USD, year-over-year change: NM Net income: 46.9 million USD, year-over-year change: 7.7%

IMAP’s Computing & Internet Software Industry Global Report — 2010: Appendix A-xv

48: ADVENT SOFTWARE, INC. (US)

Brief description

Offers software and services that automate workflows and data across investment management organizations as well as information flows between an investment management organization and external parties. Completed the sale of subsidiary, MicroEdge, Inc., to Vista Equity Partners in October 2009. In March 2010, the company’s wholly owned subsidiary, Advent Norway AS, acquired Goya AS.

Products sold Software products, hosting services, data interfaces, and related maintenance and services

Key brands Advent Portfolio Exchange (APX), Advent Warehouse, AXYS, Geneva, Moxy, Rex, WealthLine, Advent custodial data, Advent corporate actions, Advent wealth service, and Advent market data

Markets covered Software solutions to investment management institutions and service providers


Future plans Strategy to improve the sales pipeline and increase efficiency of capital expenditure


49: IBS AB (Sweden)

Brief description

Provides business systems and supply chain management solutions including software solutions within business intelligence, CRM, distribution, enterprise application integration, ERP, financials, manufacturing, procurement, supply chain management and warehouse management; also provides services within consulting, financing, hardware, implementation and methodology.

Products sold Supply chain management and industry-specific software solutions and other services

Key brands NA

Markets covered Distribution, demand-driven manufacturing, financial, and business intelligence

Geographic coverage (2009) Rest of Europe: 44.9%; Nordic Region: 34.8%; Americas: 11.8%; Asia Pacific: 8.4%

Future plans Focus on turnaround cum restructuring along with margin improvement


50: CONCUR TECHNOLOGIES, INC (US)

Brief description

Global provider of an on-demand employee spend management solutions that unite online travel procurement with automated expense reporting, streamline corporate event management and optimize process of managing vendor payments, employee check requests and direct reimbursements; solutions and services are sold primarily on a subscription basis and delivered on-demand. Acquired Etap-On-Line, a provider of business travel and expense management solutions, in August 2009.

Products sold NA

Key brands NA

Markets covered Employee spend management solutions

Geographic coverage (2009) US: 89.9%; Europe: 5.9%; Rest of world: 4.3%

Future plans Focus on partnership with American Express and maintain status as SaaS leaders


Source: Bloomberg, Capital IQ, Factiva, companies’ websites, and presentations

IMAP’s Computing & Internet Software Industry Global Report — 2010: Appendix A-xvi

Thumbnail summaries of software and related activities in various regions

1: NORTH AMERICABrief description Largest contributor to IT spending with 38.1% share in 2009

IT Spending in 20091 $576 billion USD

Number of listed software companies 247

Top 5 domestic companies based on revenues

Microsoft Corp – $58.7 billion USDOracle Corp – $24.2 billion USDCa Inc – $4.3 billion USDIntuit Inc. – $3.2 billion USDAdobe Sys Inc – $3.0 billion USD

Current scenario and outlook

· Global economic problems have impacted IT budgets; however, the IT industry has not seen the dramatic reductions that were seen during the dot.com bust.

· Spending was down to the extent of 9% on a Y-o-Y basis in 2009.· Going forward, the gradual economic recovery will enable many US organizations to relieve some of the pent-up demand for system and network upgrades following last year’s spending cuts. But spending will continue to be cautious and, in contrast to emerging markets, the SMB sector will struggle to fund new IT initiatives.

· In Canada, a subdued market is forecast to recover from the decline of 2009 and produce growth of 6-8% in IT spending this year.2

2: WESTERN AND CENTRAL EUROPEBrief description Second largest contributor to IT spending at 27.1 percent




SAP AG – $14.9 billion USDSage Group – $2.2 billion USDMisys PLC Inc – $1.2 billion USDSoftware AG – $1.2 billion USDAutonomy Corp. – $740 million USD


· After Latin America, Western Europe was the worst affected by the economic crisis, IT spending declining 12.1% in 2009.

· France and Italy have seen declines, and growth in the UK and Germany has been more or less flat.· Following the worst-ever decline in 2009 on a constant currency basis, IT spending in Western Europe is forecast to be effectively flat in 2010. A few market segments are expected to return to positive growth but market sentiment across the region remains weak.

3: ASIA PACIFICBrief description One of the high growth region in IT spending




IT Holdings Corp – $3.4 billion USDNihon Unisys – $3.0 billion USDFuji Soft Inc – $1.6 billion USDSumisho Computer – $1.4 billion USDOracle Corp. Japan – $1.2 billion USD


· The region is expected to experience 6-8% growth in IT spending in constant currency terms, following a 3% decline in 2009. However, China and India are both expected to witness double-digit growth this year. Hardware spending would experience solid gains this year, driven by pent-up demand and new infrastructure deployment. Following a decline of 8% last year, no IT spending growth is forecast for Japan this year.

· The strongest growth in software spending will be seen in four vertical industries—manufacturing, financial services, communications, and government. These four verticals should account for 60% of total software spending in Asia Pacific.



IMAP’s Computing & Internet Software Industry Global Report — 2010: Appendix A-xvii

4: EASTERN EUROPE, THE MIDDLE EAST AND AFRICABrief description Emerging region




Check Point Software – $924 million USDUCS Group Ltd – $168 million USDRetalix Ltd – $158 million USDOne Software Tec – $131 million USD Vizrt Ltd – $106 million USD


· The Middle East and North Africa (Mena) enterprise application software (EAS) market largely escaped the worst effects of the global economic crisis; however, the crisis has a profound impact on the market’s figures for 2009. Enterprise resource management (ERM) remains the key focus of EAS investment, CRM and SCM. Saudi Arabia is the largest market in the Middle East for enterprise application (EA), offering vast potential for EA implementation.

· In Central and Eastern Europe, the 20% spending crash of 2009 is likely to be followed by 9% growth in 2010. IT spending in the Middle East and Africa is also expected to return to 12% at constant currency this year after a 2.5% decline last year (according to IDC’s Worldwide Black Book).

· The midmarket remains a major growth avenue for enterprise application software, especially in the emerging markets. Beyond the US and Western European markets, the majority of companies would be SMBs.

5: LATIN AMERICABrief description Contributes 4.6% to global spending



Top 5 domestic company based on revenues TOTVS SA – $501 million USD


· Latin America was hit the hardest in 2009 with a Y-o-Y decline of 17.1 percent. · IT spending in Latin America should be up by 5-7% in 2010. Overall spending is expected to gradually accelerate in line with the recovery in business and consumer confidence.

· Increasing market maturity in some sectors will contribute to price competition as some buyers gravitate towards low cost solutions.

· The key market of Brazil is likely to return to a more robust level of growth by 2011.

6: BRICBrief description Emerging economies with high growth prospects

IT Spending in 2009 NA



TOTVS SA – $501 million USDBeijing Teamsu – $429 million USDUFIDA Software – $334 million USDShanghai Baosight – $330 million USDChinasoft International – $142 million USD


· Brazil, Russia, India, and China (BRIC) region have maintained their momentum, with their growth outpacing North America and Western Europe. Russia lags with weaker demand than its counterparts.2

· China is the fastest growing enterprise software market and is predicted to achieve a CAGR of 14.6% from 2008 to 2013.3

· Increasing focus on SMBs has translated into ERP vendors concentrating on more verticals such as insurance, power, and food and beverage in this region.

· Spending across the infrastructure and application software segments is expected to increase in 2010; infrastructure software is estimated to be double that of application software through 2013, with priority spending in ERP, office suites, operating systems, and database management systems.

Source: Bloomberg, Forrester, Gartner, Factiva, companies’ websites and presentations


2 The Global Enterprise Applications Software Market Forecast Update, 2009-2010 Monday, December 21, 2009

3 http://www.zdnetasia.com/china-fastest-growing-enterprise-software-market-62061982.htm\

IMAP’s Computing & Internet Software Industry Global Report — 2010: Appendix B-i

Appendix B: Summary of M&A Deals1 in the Software Sector

The software sector saw 1,131 deals valued at $27.4 billion USD in LTM ending 1Q 2010, witnessing a decline of 25.4 percent in terms of deal value ($36.8 billion USD during the previous period with 2,417 deals). Dollar volume in this period included one major deal (Sun Microsystems/Oracle), which represented $8.3 billion USD or nearly 28.1 percent of total dollar volume in the period. Excluding this deal, the dollar volume would have been down 48.0 percent. During the previous period, the largest deal was the acquisition of NDS Group by Permira Advisers for $1.7 billion USD.

Particulars LTM ending 1Q 2009 LTM ending 1Q 2010Total number of deals2 2,417 1,131

Deals with available transaction value 878 403

Total transaction value 36,752 (USD mn) $27,415 (USD mn)

Largest deal Acquisition of NDS Group by Permira Advisers for $1.7 billion USD

Acquisition of Sun Microsystems by Oracle for $8.3 billion USD

Top 5 deals as a % of total deal value 20.1% 46.7%

In terms of business segment, Internet Software & Services accounts for 30 percent, followed by Computer Hardware & Applications, which formed nearly 28 percent of total value.

Top Five Segments No. of transactions Value (USD mn)Computer Hardware & Applications 1 8,341.5

Internet Software & Services 18 7583.9

Application Software 838 5,412.3

IT Consulting and Other Services 10 4,218.6

Systems Software 199 1,464.3

In terms of country, the US saw the highest transaction value of $12.34 billion USD with a total of 501 transactions in this twelve month period while Japan came in second with a value of $9.12 billion USD through 15 transactions. Among regions, North America was the clear leader at $12.54 billion USD.

Top Five Countries No. of transactions Value (USD mn)US 501 12,341.8

Japan 15 9,122.6

UK 78 1,386.3

China 50 1,373.8

Germany 47 963.6

Top Five Regions No. of transactions Value (USD mn)North America 553 12,537.9

Asia 128 10,755.2

Europe 356 3,620.1

South America 19 193.5

Middle East 14 169.0

1 Only mergers and acquisitions have been considered.

2 Source: Capital IQ

IMAP’s Computing & Internet Software Industry Global Report — 2010: Appendix B-ii

Summary of Transactions in the Software Sector in LTM ending 1Q 2010, by Country

Country

United States 503 14,585.4 2.2 20.4 26.4

Japan 15 9,122.6 0.9 8.2 30.1

United Kingdom 78 1,386.3 4.0 9.9 12.0

China 50 1,373.8 4.7 13.4 9.4

Germany 47 963.6 2.7 21.5 27.0

Sweden 20 246.1 2.7 6.9 8.1

Czech Republic 1 200.0 5.7 - -

Canada 52 196.2 1.4 5.6 21.2

Israel 12 169.0 1.0 12.5 24.2

India 25 168.9 1.2 - -

France 65 155.9 1.1 6.0 7.5

Chile 4 105.0 0.6 6.8 12.8

Italy 19 99.3 0.8 3.9 9.7

Australia 29 93.9 0.8 - -

Switzerland 16 83.3 1.8 10.2 6.8

Belgium 7 74.7 1.2 12.1 16.3

Finland 14 73.8 0.7 8.6 -

Norway 11 71.6 0.7 5.6 6.6

Spain 11 70.7 2.1 - -

Brazil 10 62.6 1.1 - -

Netherlands 15 59.1 4.9 - -

Austria 13 39.8 1.7 - -

Ireland 10 37.5 - - -

South Africa 15 36.3 0.6 - -

Cayman Islands 1 30.4 - - -

Sri Lanka 1 29.7 0.9 - -

Hong Kong 5 23.9 - - -

South Korea 6 20.6 32.1 15.7 17.1

Denmark 9 15.3 69.8 - -

Country

Hungary 3 11.9 3.0 - -

Poland 1 9.3 - - -

British Virgin Islands 1 8.8 - - -

Greece 3 7.8 10.2 24.5 26.6

Thailand 7 7.2 2.5 116.0 -

Malaysia 11 4.8 - - -

New Zealand 6 4.4 0.3 - -

Portugal 1 3.7 3.7 - -

Taiwan 1 2.6 - - -

Romania 1 1.7 - - -

Turkey 4 1.1 - - -

Singapore 3 1.0 0.0 - -

Indonesia 1 0.2 - - -

Russia 3 - - - -

Argentina 2 - - - -

Croatia 2 - - - -

Estonia 2 - - - -

Philippines 2 - - - -

Cape Verde 1 - - - -

Colombia 1 - - - -

Costa Rica 1 - - - -

Egypt 1 - - - -

Liechtenstein 1 - - - -

Malta 1 - - - -

Slovakia 1 - - - -

Ukraine 1 - - - -

United Arab Emirates 1 - - - -

Uruguay 1 - - - -

TOTAL 1,128 29,660 2.8 17.1 19.2

Tran

sact

ions

in

200

9

Tota

l Tra

nsac

tion

Valu

e (U

SD m

n)

Aver

age

EV/

Rev

enue

(x)

Aver

age

EV/

EBIT

DA

(x)

Aver

age

EV/

EBIT

(x)

Tran

sact

ions

in

200

9

Tota

l Tra

nsac

tion

Valu

e (U

SD m

n)

Aver

age

EV/

Rev

enue

(x)

Aver

age

EV/

EBIT

DA

(x)

Aver

age

EV/

EBIT

(x)

IMAP’s Computing & Internet Software Industry Global Report — 2010: Appendix B-iii

Top 15 transactions in the Software Sector in LTM

1: Oracle/Sun Microosystems Announced/Initial Filing Date: 04/19/2009 COMMENTS:

The acquisition enables Oracle to better compete against IBM and HP as it is now both a hardware vendor and operating system supplier while controlling Java and Solaris.

In the first full year, management believes this acquisition will raise earnings by at least 15 cents and operating profit by over $1.5 USD billion

Target/Issuer: Sun Microsystems Inc.Total Transaction Value ($mm USD) 8,341.51

Buyers/Investors: Oracle Corp. (NasdaqGS:ORCL)Percent Sought (%): 100.0

Implied Enterprise Value ($mm USD): 5,638.51Implied Enterprise Value/Revenues: 0.45

Implied Enterprise Value/EBITDA: 8.21Implied Enterprise Value/EBIT: -

Headquarters-Country: JapanPrimary Industry: Computer Hardware

2: Adobe/Omniture Announced/Initial Filing Date: 09/15/2009 COMMENTS:

Adobe will combine its content creation tools and ubiquitous clients with Omniture’s web analytics, measurement, and optimization technologies, thus changing the e-commerce landscape across all digital content, platforms, and devices.

The new entity would help marketers in realizing the full value of their digital assets.

Target/Issuer: Omniture Inc. (Nasdaq: OMTR)Total Transaction Value ($mm USD) 1,675.72

Buyers/Investors: Adobe Systems Inc. (NasdaqGS:ADBE)Percent Sought (%): 100.0



Headquarters-Country: United StatesPrimary Industry: Internet Software and Services

3: IBM/SPSS Announced/Initial Filing Date: 07/27/2009 COMMENTS:

This deal is expected to expand IBM’s information-on-demand software portfolio and business analytics capabilities.

IBM is expected to build a compelling joint portfolio only when the deal closes which is after a year. This will give its competitors time to devise their own strategies to compete with IBM.

Target/Issuer: SPSS Inc.Total Transaction Value ($mm USD) 1,121.61

Buyers/Investors: International Business Machines Corp. (NYSE:IBM)

Percent Sought (%): 100.0Implied Enterprise Value ($mm USD): 783.73

Implied Enterprise Value/Revenues: 2.7Implied Enterprise Value/EBITDA: 9.96

Implied Enterprise Value/EBIT: 13.19Headquarters-Country: United States

Primary Industry: IT Consulting and Other Services

4: Intel/Wind River Systems Announced/Initial Filing Date: 06/04/2009 COMMENTS:

Intel will gain stronger software capabilities in embedded systems and mobile devices including smartphones, mobile Internet devices, and other consumer electronics devices and networking equipment as well as devices in the aerospace, defense and energy sectors. Moreover, Wind River has thousands of customers in a diverse range of markets, strengthening Intel’s market reach.

Target/Issuer: Wind River Systems, Inc.Total Transaction Value ($mm USD) 884.39

Buyers/Investors: Intel Corporation (NasdaqGS:INTC)Percent Sought (%): 100.0

Implied Enterprise Value ($mm USD): 793.4Implied Enterprise Value/Revenues: 2.24

Implied Enterprise Value/EBITDA: 20.84Implied Enterprise Value/EBIT: 32.19


IMAP’s Computing & Internet Software Industry Global Report — 2010: Appendix B-iv

5: Autonomy/Interwoven Inc. Announced/Initial Filing Date: 01/22/2009 COMMENTS:

Autonomy’s clientele includes over 1,200 of the top law firms and 11 of the top 30 accounting firms. The acquisition increase Autonomy’s customer base to over 20,000 and provides cross-selling opportunities. Autonomy expects to save around $40 USD million in the first year as a result of these synergies.

Target/Issuer: Interwoven Inc.Total Transaction Value ($mm USD) 767.57

Buyers/Investors: Autonomy Corp. plc (LSE:AU.)Percent Sought (%): 100.0




6: JDA Software/12 Technologies Announced/Initial Filing Date: 11/04/2009 COMMENTS:

The acquisition of i2 Technologies, which has more than 6,000 customers, will help increase JDA’s market to include discrete manufacturing and transportation. The combined organization reported annual revenues of roughly $617 USD million and will have better operating leverage. The operating synergies would produce annual cost savings of approximately $20 USD million.

Target/Issuer: I2 Technologies, Inc. (NasdaqGS: ITWO)Total Transaction Value ($mm USD) 746.94

Buyers/Investors: JDA Software Group Inc. (NasdaqGS:JDAS)Percent Sought (%): 100.0



Headquarters-Country: United StatesPrimary Industry: IT Consulting and Other Services

7: AsiaInfo/Linkage Technologies Announced/Initial Filing Date: 12/04/2009 COMMENTS:

The combined company will be called AsiaInfo-Linkage Inc. when the transaction is completed. The new entity will become the world’s second-largest telecom software provider and have over 8,000 employees. The combined company will also have 34 patents and an additional 27 patents pending approval in China and the US.

Target/Issuer: Linkage Technologies International Holdings Ltd.Total Transaction Value ($mm USD) 731.89

Buyers/Investors: AsiaInfo Holdings Inc. (NasdaqGS:ASIA)Percent Sought (%): 100.0

Implied Enterprise Value ($mm USD): 731.89Implied Enterprise Value/Revenues: -

Implied Enterprise Value/EBITDA: -Implied Enterprise Value/EBIT: -

Headquarters-Country: ChinaPrimary Industry: Internet Software and Services

8: Software AG/IDS Scheer Announced/Initial Filing Date: 07/13/2009 COMMENTS:

The acquisition will increase the combined entity’s competitive position, especially in infrastructure software and business process management. The new entity is expected to be accretive to Software AG’s earnings per share from the first year itself as and increase the customer base to 7,500.

Target/Issuer: IDS Scheer AG (XTRA:IDS)Total Transaction Value ($mm USD) 719.92

Buyers/Investors: Software AG (XTRA:SOW)Percent Sought (%): 100.0



Headquarters-Country: GermanyPrimary Industry: IT Consulting and Other Services

IMAP’s Computing & Internet Software Industry Global Report — 2010: Appendix B-v

9: VMware/SpringSource Announced/Initial Filing Date: 08/07/2009 COMMENTS:

This combination will help simplify enterprise IT and make customer environments more efficient, scalable and easier to manage. This new entity will continue focusing on providing developers and customers the best experience for developing enterprise and web applications on all platforms.

Target/Issuer: SpringSource, Inc.Total Transaction Value ($mm USD) 446.0

Buyers/Investors: VMware, Inc. (NYSE:VMW)Percent Sought (%): 100.0




10: Electronic Arts Nederland/Playfish Announced/Initial Filing Date: 11/09/2009 COMMENTS:

The social gaming industry is expected to undergo significant consolidation. Electronic Arts, a traditional gaming company, can now enter the social gaming arena through the acquisition of Playfish, which develops and publishes video games for social networks. Playfish designs games for Facebook, MySpace, Bebo, Yahoo! and iPhone.

Target/Issuer: Playfish LimitedTotal Transaction Value ($mm USD) 391.26

Buyers/Investors: Electronic Arts Nederland B.V.Percent Sought (%): 100.0



Headquarters-Country: United KingdomPrimary Industry: Internet Software and Services

11: Symphony Technology/MSC Software Announced/Initial Filing Date: 07/07/2009 COMMENTS:

This transaction will allow Symphony Technology to continue focusing on delivering leading simulation solutions. Symphony Technology now has access to MSC’s market leading simulation solutions.

MSC is also known for its continuous innovation in the design simulation space across industries.

Target/Issuer: MSC Software CorporationTotal Transaction Value ($mm USD) 386.68

Buyers/Investors: Symphony Technology Group; Elliott GroupPercent Sought (%): 100.0




12: CA, Inc./Nimsoft Announced/Initial Filing Date: 03/10/2010 COMMENTS:

CA, traditionally known for managing large mainframe-based systems, will gain access to SMBs through the acquisition. The transaction will also extend CA’s leadership position in the service assurance market by helping it offer one of the most comprehensive suites in IT monitoring and management solutions.

Target/Issuer: Nimsoft, Inc.Total Transaction Value ($mm USD) 350.0

Buyers/Investors: CA, Inc. (NasdaqGS:CA)Percent Sought (%): 100.0



Headquarters-Country: United StatesPrimary Industry: IT Consulting and Other Services

IMAP’s Computing & Internet Software Industry Global Report — 2010: Appendix C-i

13: Raytheon Network Centric Systems/BBN Technologies Announced/Initial Filing Date: 09/01/2009 COMMENTS:

This acquisition is expected to strengthen Raytheon’s position in networking, communications and video surveillance and advanced sensing applications.

Target/Issuer: BBN Technologies Corp.Total Transaction Value ($mm USD) 350.0

Buyers/Investors: Raytheon’s Network Centric SystemsPercent Sought (%): 100.0




14: IT Holding Corp./Sorun Corp. Announced/Initial Filing Date: 11/10/2009 COMMENTS:

This merger will benefit both ITHD and Sorun as the independent system integrators will help diversify risks and stabilize performance under certain business environments. In the medium term, the combination is expected to generate synergies through sharing of technologies and know-how, economies of scale and increased corporate value.

Target/Issuer: Sorun Corp.Total Transaction Value ($mm USD) 260.9

Buyers/Investors: IT Holding Corp. (TSE:3626)Percent Sought (%): 100.0



Headquarters-Country: JapanPrimary Industry: IT Consulting and Other Services

15: CPP Investment Board and KKR/Aricent, Inc. Announced/Initial Filing Date: 09/16/2009 COMMENTS:

Kohlberg Kravis Roberts & Co. (KKR) has increased its investment in Aricent. The latter reported its highest annual revenue so far and continues to grow its customer base.

Target/Issuer: Aricent, Inc.Total Transaction Value ($mm USD) 255.0

Buyers/Investors: CPP Investment Board and KKRPercent Sought (%): 15.0




Source: Capital IQOnly Mergers and Acquistions have been considered

Appendix C: Growth Drivers of Computing and Internet Software sector (Enterprise Software Industry)

Growth Drivers of the Global Software MarketStabilization of the global software market started during Q409 with recovery and single-digit growth anticipated through 2010 with accelerating growth in 2011. This recovery has led to changes in market conditions and business models. Vendors that adapt to these changes are expected to drive growth in the coming years.• Horizontal-to-vertical solutions: In an increasingly competitive

software environment, vertically aligned and geographically spaced out specialized vendors are expected to drive demand to create a competitive edge over local players.

• Licensing and alternative delivery models: Subscription based

models are expected to drive demand in the future compared with perpetual license based models. Alternative licensing models including SaaS, cloud-based services, and term contracts are expected to be catalysts to growth in the software market.

Growth Drivers of the Global Computing and Internet Software Market• SMBs to support the software market: The bright spot in the

recovering economy is SMBs. As the economy emerges from the recession, SMBs will look for small-business software to automate

IMAP’s Computing & Internet Software Industry Global Report — 2010: Appendix C-ii

their operations and scale up growth. In addition, large software vendors such as SAP and Oracle will continue to focus on the SMB market to reinvigorate their revenue growth in software license sales.

· While SMBs are likely to lead the charge in small-business software investments, it may be difficult for them to make the necessary investments. Considering that the tight credit markets will take time to thaw entirely, many SMBs are looking at SaaS based services to help them minimize upfront capital IT costs.

• Technology innovation adds flexibility and usability: The pace of technology innovation has continued unabated during the recession. Better client usability, faster and more accessible analytics, and process/configuration flexibility are becoming more evident in the latest and future releases (e.g. Epicor 9, Oracle Fusion applications) of software products that are expected to be the growth catalyst in 2010 and beyond.

Major Themes in the Enterprise Software Market1

The year 2009 closed with depressed IT spending levels, revenue contraction among many ERP vendors, and uncertainty about the future. The industry is expected to experience the following trends in 2010.

• Focus on getting benefits of ERP software and ROI: CIOs and COOs are expected to continue facing pressure to prove that the amount of investment in ERP systems is justified and generates a solid return on investment. As a result, the market will have more deliberate spending, more phased rollouts, buying of licenses only as when needed, and hesitancy to invest in more expensive advanced enterprise software modules.

· Companies are directing much of their ERP software investments to areas where they will definitely be implemented effectively and get more out of their existing enterprise investments. The need to more effectively manage organizational and business risk will likely result in a continuation of this trend in 2010.

· Given corporate aversion to risk, companies are less likely to try entirely new products or risky upgrades. As a result, vendors are more likely to invest in incremental product enhancements and tighter integration between modules rather than major changes to their software.

· Thus, going forward, vendors are expected to seek smaller deals from existing customers via add-on products and business intelligence tools because most customers are not yet ready to fund major enhancements or expansions.

• ERP SaaS in huge demand, but not suitable for large organizations: Though larger companies are likely to consider SaaS options, they are much less likely than their SMB counterparts to adopt these models. As software vendors expand hybrid solutions combining the benefits of SaaS with the flexibility of traditional ERP (e.g., Oracle’s On Demand and SAP’s Business ByDesign offerings), larger organizations will continue opting for non-SaaS ERP options that more commonly reduce cost and risk while maximizing business benefits in the long term. They will, however, be more inclined to leverage SaaS for some niche applications such as document management software (DMS), human resource management (HRM), PLM, and CRM. That said, an exception is GE which implemented a SaaS SCM to manage $55 billion USD worth of corporate spending among 500,000 suppliers in 100 countries.

· Though SaaS applications are increasing in popularity, the actual adoption of core ERP SaaS is expected to remain at less than 5% of the overall ERP market in terms of revenues in 2010.2

• Customer is king—it’s a buyers’ market: Even in the most optimistic scenario, overall enterprise software spending in 2010 is not expected to return to pre-recession levels. Hence, aggressive software pricing and shared benefit implementation models would continue to be in practice, thereby benefiting the buyer. A case in point is Epicor.

• Increasing focus on industry-specific capabilities and markets:

1 http://panorama-consulting.com/top-ten-erp-software-predictions-for-2010/

2 Forrester Research: Trends 2010: ERP Applications

Customers expect deeper industry expertise from their software providers to gain a more integrated application environment and end-to-end process automation. Hence, many companies combine custom-built applications and customized industry packages to supplement the core software. This environment leads to a complex setup and integration challenges.

· Large enterprise software vendors have added vertical depth and breadth. Both SAP and Oracle have invested heavily in industry solutions, each reportedly having capabilities in more than 20 verticals. This strategy to increase industry depth has driven many acquisitions, particularly for Oracle. SAP, on the other hand, builds industry functionality in house but it has made several vertical acquisitions to accelerate time-to-market.

· Second-tier software providers have found more success in offering deeper industry-specific functionalities compared with mega-vendors. Lawson, for example, has successfully targeted industries such as healthcare, food, and fashion. Other vendors (e.g., Microsoft, Epicor, and Sage) may choose to go down to sub-industry levels, often relying on partners to add the last mile of specialization.

· Specialists focus on fewer or even single verticals. Some do not even provide the core accounting functionality which is crucial to any ERP system. Nevertheless, these specialized plays are often compelling to customers and may also attract the attention of ERP vendors looking to partner or acquire. Specialist vendors offering comprehensive suites to particular verticals include Deltek (project-based businesses), Blackbaud (not-for-profit), Mincom (mining and asset-intensive businesses), QAD (manufacturing), and IBS (distribution). CGI Group gives ERP vendors stiff competition in the government sector, including US federal as well as state and local governments. Specialists dominate the lucrative healthcare market, particularly patient systems. Notable players include Cerner, Eclipsys, Epic Systems, McKesson, and Siemens.

• Vendor consolidation: Vendor competition was fierce before the recession and is even more so now. Dozens of smaller vendors are starved for cash and unable to fuel R&D and other product innovations without capital injections. Larger vendors, however, have cash and some have grown successfully via acquisitions (e.g., Oracle and Infor). Continued vendor consolidation thus looks inevitable.

· The economic downturn has created more acquisition opportunities by lowering market valuations of struggling vendors. For customers, vendor consolidation reduces choices, but it also can provide a measure of stability where vendor viability is a risk.

· Vendor acquisition is expected to be vertically focused. The key driver of acquisitions in 2010 will be gaining depth and share in specific industry verticals. Oracle has been a key proponent of vertical acquisitions, and SAP as well, though to a lesser extent. Possible plays for some vendors include acquiring breadth in horizontal areas such as HR. Peer-to-peer acquisitions among ERP vendors appear less likely. Vendors may also acquire adjacent technologies, such as enterprise content management tools.

Government Role in the IndustryPublic administration represents the largest IT spending by central governments.

After the economic crisis, which saw governments announcing massive stimulus packages, tax payers are now demanding funding cuts in the public service arena. There will be increased attention on how money is being spent at all levels of government.

At the same time, telecommunications and the Internet are being increasingly recognized as critical to the economy and service delivery. Governments are thus expected to make efforts to move the majority of citizen services to an online delivery model to increase transparency and create value for their constituents. To this end, investment across a wide variety of departments, functions, and systems will be made. This will sustain investment in IT by governments in 2010 where the focus will be on rightsizing, underscored by government transformation or modernization. In addition to rightsizing, social media are becoming increasingly important as sources of public information, making them mission-critical for governments.

IMAP’s Computing & Internet Software Industry Global Report — 2010: Appendix D-i

Appendix D: Niche Focus AreasThe current market conditions are shaping the following niche areas which are expected to become major technology forces in the long run.

Mobile enterprise applications and computing• A mobile application is a software application that runs in a handheld

device such as a smartphone. These applications are either pre-installed on phones during manufacture or downloaded by customers from app stores and other mobile software distribution platforms.

• Despite the recession, the mobile landscape performed well in 2009. A growing number of brands launched a mobile presence, leveraging the increasing consumer awareness of the potential of mobile services. There was continuous consumer demand for Apple’s proprietary ecosystem; Google acquired mobile ad network AdMob for a significant USD750 million; and Internet service providers (ISPs) entered the mobile market (Iliad’s acquisition of France’s fourth 3G license).

• The mobile application market was estimated to be $4.2 billion USD in 2009. Further, the number of mobile application downloads were just over 7 billion in 2009.1

• Going forward, the mobile application market is expected to reach $17.5 billion USD by 2012, representing a CAGR of 60.9% from 2009 to 2012, while the number of mobile application downloads is estimated to grow to nearly 50 billion in 2012. This growth would be driven by increasing penetration of mobile internet, more functionalities, rising adoption of smartphones, and increased and better integration of mobile hardware and software.

• Mobile applications can be primarily divided into two categories: · Consumer applications: These include messaging such as short

message service (SMS) or multimedia message service (MMS); mobile Web; and native/rich applications.

· Enterprise applications: A mobile enterprise (mobile ERP) application is a web-based mobile cloud computing business solution, leveraging the Internet to deliver software as a service to businesses. This type includes all business modules such as ERP, CRM, SCM, and HRM as well as basic utilities such as corporate calendars, address books, bulletin boards, notes and internal messaging. It also includes field sales force automation and mobile field asset management.

• The year 2010 is expected to witness massive adoption of mobile enterprise applications. Carriers and vendors are recognizing the enterprise as a high-value customer and actively working towards developing and promoting attractive mobile data solutions for enterprises. The mobile enterprise application market in North America is estimated to reach $10.3 billion USD in 2013 from $2.3 billion USD in 2008.2 According to Gartner Research, by year-end 2010, 1.2 billion people will carry handsets capable of mobile commerce, providing a rich environment for the convergence of mobility and the Web.

• Along with mobile ERP, enterprise mobile cloud applications including

1 The GetJar study run by an independent consulting firm, Chetan Sharma Consulting


thin clients and browser based applications as well as opportunities within SaaS, platform as a service (PaaS), and infrastructure as a service (IaaS) can fuel growth in this market. However, it should be noted that proving ROI is still a concern for vendors and service providers of mobile enterprise applications because the market is in its nascent stages and there is uncertainty on whether the potential benefits promised by these applications will be obtained.

Trends to Look Out For In Mobile Application Market:• Mobile technologies, which are likely to impact short-term mobile

strategies and policies, include Bluetooth (3 and 4), mobile Web, mobile widgets, platform-independent mobile application development tools, application stores, enhanced location awareness, cellular broadband, touchscreens, mobile to mobile (M2M), and device-independent security.

• Application stores3 would continue to flourish, and the number of stores is estimated to grow from 8 to 38 during 2009-12. However, none are expected to replicate Apple’s success in 2010 because of its dominating market share and a strong pipeline. Apple’s iTunes store has been the leading store with a reported 150,000 mobile apps and 3 billion downloads to date (99.4% of global mobile application sales in 2009)4. Google is likely to be the main competitor to Apple in 2010 through its Android project.5 The major challenge for players such as Google will be to integrate hardware and software to promote a compelling user experience and to successfully manage a network of developers.

• Location-based services (LBS) are expected to have a high impact within the next two years. These services are not only useful by themselves but also can be integrated with other applications such as mobile advertising, search, and social networking to make those services more relevant to the end user. The increasing penetration of GPS in mobile phones and availability of LBS applications (iPhone’s Application Store had about 2,500 LBS applications in April 2009, up from about 200 in August 2008) is expected to bring about faster user adoption of LBS within the coming years.

Cloud-based application and infrastructure services • Cloud computing is currently emerging as a service offering which

leverages internet hosting capabilities and can be viewed as an evolution of SaaS. Currently, cloud computing is generally regarded as IT infrastructure available on-demand and offers start-ups and

3 Application stores are web sites from which free and paid applications can be down-loaded on to smartphones.

4 The GetJar Study, Paid Content and TechCrunch database

5 Android is a software stack for mobile devices that includes an operating system, middle-ware, and key applications.

Global Mobile Application Spending In USD Million, Region Wise, 2009-2012 Region 2009 2010 2011 2012 CAGREurope 1,500 2,700 4,600 8,500 78.3%

North America 2,100 3,000 5,100 6,700 47.2%

South America 100 120 150 500 71.0%

Asia 460 500 750 1,350 43.2%

Middle East & South Africa 40 80 200 450 124.1%

GLOBAL TOTAL 4,200 6,400 10,800 17,500 60.9%

Source: GetJar

IMAP’s Computing & Internet Software Industry Global Report — 2010: Appendix D-ii

List of Vendors - Mobile Application Store Company Online Application Store Free Vs. Paid Application Price Store Size Store Growth

Free App Paid App Average Price for Paid App

No. of App Dec 2009

New App Addition Dec 2009

Apple iTune App Store 25% 75% $3.62 150,998 13,865

Blackberry Blackberry Application World 24% 76% $8.26 4,746 501

Android Google Android Market 57% 43% $3.27 19,897 3,005

Nokia Nokia Ovi Store 15% 85% $3.47 6,118 734

Palm Palm App Catalog 32% 68% $2.53 1,452 NA

Windows Windows Marketplace for Mobile 22% 78% $6.99 693 NA

Source: Distimo Research: http://www.readwriteweb.com/archives/the_truth_about_mobile_application_stores.php

SMBs flexible access to computing capabilities with minimum capital expenditure. Nevertheless, with Amazon.com’s spin-off Amazon Web Services (AWS) emerging as a leading provider of cloud computing services, cloud computing is expected to become more influential.

• The worldwide market for IT services related to cloud computing and cloud services was worth almost $2.4 billion USD in 2009. By 2013, the market is expected to be worth almost $8.1 billion USD. By far, the largest component of the overall cloud service market is implementation, which represents 65% of the 2009 IT services market and will represent 64% by the end of 2013.

Smart computing ― Collaboration, unified communications, and voice over IP • Smart computing will help companies optimize process results and

returns from their balance sheets. Unlike the horizontal technologies of personal computing and network computing, smart computing will have a highly vertical industry focus. Vertical solutions will differ significantly from vertical offerings in the past—thus the advent of verticals 3.0. Tech vendors will have great growth opportunities in this new cycle but also big challenges in navigating the shift to smart computing. Accordingly, in the US alone, the smart computing industry’s vertical solutions will increase their share in the IT market from 6% in 2008 to 23% in 2016.1 Having said that, this solution market is expected to increase from $27 billion USD in 2009 to $213 billion USD in 2017 in the US.

• Smart computing is based on technologies such as service-oriented architecture, server and storage virtualization, cloud computing, and unified communications. It adds to existing technologies new capabilities of real-time situational awareness and automated analysis.

Linux and open-source software (OSS) • The phenomenon of OSS which started 20 years back has suddenly

gained momentum as a possible alternative to expensive proprietary software. As the open source movement expands up the software stack, nearly all software markets are now being impacted in some way.

• The OSS segment is experiencing slow but steady growth. The release of the open source internet browser Firefox 3.0 by Mozilla in June 2008 is seen as a landmark event for open source applications with more than 8 million people downloading the new version of the software within the first 24 hours after its release. The Firefox browser has steadily been gaining market share, which had 24.23% of the overall browser market in February 2010 from 21.8% February 2009.

• In a Forrester Research report on enterprise interest for OSS, two-thirds of the 1,017 respondents at North American and European enterprises expressed some interest in open source deployment.

Virtualization • PC, server and storage virtualization is growing in use and will be

fostered by the tough economy. Virtualization is bringing new ways of

1 Forrester Research: Smart Computing Drives The New Era Of IT Growth

packaging client computing applications and capabilities. As a result, the choice of a particular PC hardware platform, and eventually the OS platform, becomes less critical. Thus, enterprises are proactively building a five- to eight-year strategic client computing roadmap outlining an approach to ownership and support, operating system and application selection, deployment and update, and management and security plans to manage diversity in the virtualization arena.

• Spending on x86 server and desktop virtualization software technologies is forecast to grow at a 33.6% CAGR through 2013. The market is driven by organizations looking to lower the total cost of ownership and to increase overall IT effectiveness.2

Business Intelligence (BI) and Analytical Software • BI and specialized analytical software such as data mining and

predictive analytics, video image analysis, pattern recognition, and artificial intelligence algorithms on a real-time basis help businesses or governments analyze patterns or anomalies.

• BI provides in-depth data analysis, which makes it important in economically challenging times. As a result, the BI market was much less affected by the economic crisis than most other software markets and will continue to grow to $14 billion USD by 2014.3 New categories of advanced analytics will fuel growth and merge into the core BI market, including business performance solutions, text analytics, predictive analytics, and complex event processing.

• All the big sellers of BI software are either parts of larger software vendor or private companies with the exception of pure-play BI public companies such as MicroStrategy and Actuate.

Social CRM • Social CRM (also known CRM 2.0) is a business strategy supported

by a system and designed to engage the customer in a collaborative interaction that provides mutually beneficial value in a trusted and transparent business environment.

• The industry has many participants and includes different types of players such as traditional CRM vendors, community platform and social media players, and brand monitoring players. Most of the players provide on-demand subscription based offerings in social CRM.

• Social CRM is most likely to be the next big trend in the entire CRM industry. As per a Gartner report, social CRM is expected to see significant growth as over 80% of enterprise use of social networking tools in 2010 will be driven by customer engagement projects. In addition, Forrester says that by 2013, businesses will be spending almost $4.6 billion USD on Web 2.0 tools which includes advanced Internet technology and applications such as blogs, wikis, RSS, and social bookmarking. In an April 2008 report, the research group forecast 43% annual growth in the social media market for the so-called Enterprise 2.0 as organizations are investing heavily in social networks.

2 Gartner Research

3 Forrester Research: Market Overview: The Business Intelligence Software Market


IMAP’s High Technology Team

For a comprehensive list of IMAP advisors and to discover how IMAP can help you with your M&A transaction, go to www.imap.com.

Belgium Peter De Waele [email protected]

Denmark Lars Ehlig [email protected]

Stig Madsen [email protected]

Finland Mikko Sistonen [email protected]

France Pascal Riviere [email protected]

GermanyMartin Schmitt [email protected]

India Shyam Shenthar [email protected]

Adam Larkey [email protected]

Spain David Serra [email protected]

United Kingdom Dan Bowtell [email protected]

Carl Houghton [email protected]

Nick [email protected]

Emma Leathley [email protected]

United States Sandeep [email protected]

Richard Juarez [email protected]

Gene Ramirez [email protected]


Cross-border M&A requires local knowledge and experience. IMAP advisors located around the world have successfully completed thousands of M&A transactions. Let IMAP help you with your M&A project in 2010.

Other industry reports available from IMAP: Automotive & Components Global Report, 2010 Alternative Energy Global Report, 2010 Food & Beverage Industry Global Report, 2010

For copies, visit the “Industries” page of www.imap.com.

www.imap.com© COPYRIGHT 2010 IMAP, INC. THIS REPORT AND THE INFORMATION HEREIN IS THE EXCLUSIVE DOMAIN OF IMAP AND MAY NOT BE USED OR REPRINTED WITHOUT PERMISSION. CONTACT [email protected].

Documents

Computing & Internet Software Global Report — 2010 This ......China 50 1,374 Germany 47 964 Source: Capital IQ, IMAP IMAP’s Computing & Internet Software Industry Global Report