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Methodology and Segmentation

Latest update: September 2009

For any questions concerning our segmentation, please contact Axel Termenière ([email protected])

mailto:[email protected]

SITSI® – Software and IT Services Industry

© PAC 2009 Methodology & Segmentation page 2

TABLE OF CONTENTS

1. PACʼS APPROACH................................................................................................................. 3

2. PACʼS RESEARCH METHODOLOGY AND ANALYSIS......................................................... 5

3. PAC'S GEOGRAPHICAL MARKET STRUCTURE.................................................................. 7

4. PAC'S DEFINITION OF IT EXPENDITURE ............................................................................. 8

5. PAC'S SEGMENTATION OVERVIEW..................................................................................... 9

6. SYSTEMS INFRASTRUCTURE SOFTWARE SEGMENTATION.......................................... 12

7. TOOLS SEGMENTATION ..................................................................................................... 15

8. APPLICATION SOFTWARE PRODUCTS SEGMENTATION................................................ 19

9. HARDWARE MAINTENANCE SEGMENTATION ................................................................. 24

10. PROJECT SERVICES SEGMENTATION.............................................................................. 25

11. OUTSOURCING SEGMENTATION....................................................................................... 31

12. VERTICAL SECTORS SEGMENTATION ............................................................................. 35

13. ABOUT PIERRE AUDOIN CONSULTANTS ......................................................................... 38



1. PACʼS APPROACH

All SITSI® programs are based on PACʼs proven methodology, developed and refined over more

than 30 years. This methodology is built on six principles: face-to-face, coherency, bottom-up,

independence, experience, and three-in-one, as detailed below.

• Three-in-one: PAC Consultants are analysts, consultants, and salespersons in one. We

believe that the person who conducts field research, interviews the players, processes the

data and writes the reports is the best qualified to advise the client. The basis for everything

we do at PAC is our market research, and our in-depth knowledge in this field is a natural

link to the consulting services we offer. Without research and knowledge of the market,

consulting would not exist, and we believe the two are invariably related, which is

particularly important since the market itself is not transparent. Face-to-face interviews

enable us to understand all aspects of our customersʼ requirements and to offer them

customized services.

• Bottom-up: Regions and countries differ according to history, culture, and economic

situation, all of which affect the way companies conduct business. This is why we begin our

analyses at the local level and draw conclusions from local to national and from national to

international – from the bottom up.



• Face-to-Face: Research for all of PACʼs reports is mainly conducted through face-to-face

interviews with both IT suppliers and users. This is the only way to truly understand the

company and its offering as well as usersʼ responsibilities relating to IT spending. Each

PAC Consultant typically conducts in excess of 100 face-to-face interviews per year.

Besides high-quality face-to-face interviews, PAC conducts hundreds of telephone

interviews and uses secondary research.

• Experience: The experience we have gained during the many years we have been active

in this business (PAC was established in 1976) is of much help in this context. We

understand the mechanisms of the individual markets (countries, industry sectors,

technologies, services, etc.). Thus we consider most trends (at economic as well as

technological level) to be part of a long-term development scenario. We are also able to

identify cyclical patterns; many developments repeat themselves – with varying

characteristics and occurrence patterns. This is what prevents us from falling prey to hype.

• Independence: PAC Consultants are objective and critical when performing analyses.

PAC is a management-owned company with no financial interest in any of the companies

we follow, nor do they have a financial interest in us. Companies do not pay to appear in

our studies, to be profiled or to see their profiles. We select companies for our reports

based on their positioning and presence in the markets we cover. And we always do critical

analyses of the companies - whether or not they are our customers.

• Coherency: Through the face-to-face meetings, PAC Consultants gain a true

understanding of suppliersʼ offerings and can adapt companiesʼ figures to our unique

segmentation of the market by industries, products and services. This segmentation

allows for valid comparisons between companies or between individual companies and the

overall market.



2. PACʼS RESEARCH METHODOLOGY AND ANALYSIS

Since 1976, information from different sources and several research methods have formed the

basis for our PAC analyses:

Primary Research: Face-to-face interviews, telephone interviews and questionnaire

campaigns conducted either directly by PAC Consultants or in collaboration with

telemarketing firms and newspapers. At this stage we address IT users (primarily IT

executives and people in similar positions) as well as IT suppliers (primarily CEOs and the

heads of the sales and marketing departments).

• Secondary Research: General economic information and reports (OECD, Federal

Statistical Office, IFO, etc.), industry-specific reports by associations (WITSA, ITAA, CSSA,

Syntec, GDV, VDEW, VDMA, etc.) as well as by consulting companies (McKinsey, Bain, AT

Kearney, Roland Berger, Steria Mummert Consulting, etc.) and by financial institutions

(Goldman Sachs, Morgan Stanley, etc.), newspapers (in the fields of IT and economy),

analysis of publications (company reports, press releases) by IT users and IT suppliers.

From this point, we develop our scenarios for the individual segments (industry sectors, services

and products) in the different countries. At this stage, we do not claim that our figures are always

100% exact; we primarily try to reach a high degree of coherence of all figures (initial situation as

well as the pace of growth) to provide our customers with an appropriate positioning. We establish

a valid coherence between the various IT market segments, between individual providers as well

as between providers and the market.

In this context we use a "Bottom-up-Bottom" method, that means we first assess the segments

(absolute size and development) according to our segmentation, then consolidate and compare the

results of our analysis according to this segmentation (relative size and development); finally, if

appropriate, we adjust the specific sub-segments.

We always try to reach a consensus between supplier data (often too optimistic), IT user data

(often too conservative) and our own scenarios.



In our analyses the similarities and differences between the individual segments are taken into

account (esp. countries and industry sectors).

We would like to emphasize that our figures are updated as soon as we gain new insights

(information or events).

All our figures (especially company figures) are examined with regard to plausibility and are

usually adapted to our segmentation. In this context, PAC's many years of experience are very

important. We always compare the latest figures with older ones and carefully try to find

appropriate explanations for possible discrepancies.



3. PAC'S GEOGRAPHICAL MARKET STRUCTURE

(1) Rest of WE incl. Luxemburg, Greece, Ireland, Liechtenstein, Malta & Iceland

(2) Rest of EE incl. Albania, Armenia, Azerbaijan, Belarus, Bosnia, Bulgaria, Croatia, Cyprus, Estonia, Georgia, Latvia, Lithuania,

Macedonia, Moldova, Serbia & Montenegro, Slovenia, Tajikistan, Turkey, Turkmenistan, Ukraine, Uzbekistan

(3) MEA incl. South Africa, Israel, Gulf States (Bahrain, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, United Arab Emirates), Algeria,

Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Cape Verde, Central African Republic, Chad, Comoros, Congo,

Democratic Republic of Congo, Republic of Cote d'Ivoire, Djibouti, Egypt, Equatorial Guinea, Eritrea, Ethiopia, Gabon, Gambia, Ghana,

Guinea, Guinea-Bissau, Iran, Jordan, Kenya, Lesotho, Liberia, Libya, Madagascar, Malawi, Mali, Mauritania, Mauritius, Morocco,

Mozambique, Namibia, Niger, Nigeria, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Sudan, Swaziland, Syria, Tanzania,

Togo, Tunisia, Uganda, Yemen, Zambia

(4) Rest of LATAM incl. Antigua and Barbuda, Argentina, Barbados, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominica,

Dominican Republic, Ecuador, El Salvador, Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama,

Paraguay, Peru, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, Trinidad and Tobago, Uruguay, Venezuela

(5) Rest of APAC incl. Afghanistan, Bangladesh, Bhutan, Brunei Darussalam, Cambodia, Fiji, Hong Kong, Indonesia, Kazakhstan,

Kiribati, Kyrgyz Republic, Lao, Malaysia, Maldives, Mongolia, Myanmar, Nepal, New Zealand, Pakistan, Papua New Guinea,

Philippines, Samoa, Seychelles, Singapore, Solomon Islands, Sri Lanka, Tajikistan, Thailand, Timor-Leste, Tonga, Turkmenistan,

Uzbekistan, Vanuatu, Vietnam



4. PAC'S DEFINITION OF IT EXPENDITURE

4.1. Personnel Expenditure

Includes all personnel-related costs (IT salaries and other staff costs).

4.2. Hardware Expenditure

• Amortization of all IT equipment (computers, peripherals, terminals, data communication,

etc.);

• Leasing and rental payments for hardware and other equipment.

4.3. Software and IT Services Expenditure

Cf. definitions on the following pages.

4.4. Other Expenditure

• Data-related telecom equipment and services (e.g. routers, leased lines, X25, etc.);

• Consumables;

• Energy;

• Offices, etc.



5. PAC'S SEGMENTATION OVERVIEW

5.1. PAC's Definition of the Software and IT Services (SITS) Market



5.2. Products & Services

Hardware

Systems InfrastructureSoftware

Tools

Application SoftwareProducts

Management Consulting

Project ServicesIT Consulting

Systems IntegrationIT Training

HardwareMaintenance

OutsourcingApplication Management

BPOAppli. Outsourcing

HostingInfra. Outsourcing

Complete Outsourcing

Technology

ProductsBusinessProcess Services



5.3. Vertical Sectors



6. SYSTEMS INFRASTRUCTURE SOFTWARE SEGMENTATION

6.1. Definition

According to PACʼs segmentation, it includes:

• Proprietary as well as open operating system and system-level software;

• Network, system, storage, and security management software for all types of

hardware (from mainframe to PC).

PAC figures include only revenues from licenses and maintenance/ support. All related revenues

from implementation services (consulting, implementation/ customization, training) are booked

as project services revenues.

Please note that we consider highly verticalized Systems Infrastructure Software as Application

Software Products as they really are at the core of the respective applications. This, for instance,

applies to software products dedicated to the telecom sector in areas like billing, telecom network

management or platforms for enhanced services. Telecom network management clearly is an

application area for a telecom operator, while traditional systems and network management

software products are designed to help run an IT system and are as such considered as Systems

Infrastructure Software by PAC.



6.2. Segments & Sub-segments

Systems Infrastructure Software

Operating System Software

(OS)

Network, System, Storage, and

Security Management (N3SM)

Operating systems

and sub-systems

Networking software

System utilities

Network management

System management

Job scheduling

Output/Input management

Performance management

Incident, problem, change &

configuration and release management

Service level management, financial, capacity, IT continuity, availability

management

Storage management

Security & ID management

Virtualization engines & environment



6.3. Examples

Operating System Software (OS) Product / Supplier Examples

Operating systems & sub-systems IBM OS (system i, system z), Unix (AIX, HP UX, Sun

Solaris), Linux (Red Hat, Suse, Debian), Mac OS X, Palm OS, Windows OS, Symbian, etc.

Networking software

System utilities

IBM, Sun, HP, Dell, Fujitsu Siemens, EMC, Novell, Red Hat but also Alcatel, Ericsson, Nokia, Motorola, etc.

Network, System, Storage and Security

Management (N3SM) Product / Supplier Examples

Network management

System management

Job scheduling

Output/Input management

Performance management

Incident, problem, change & configuration and release management

Service level management, financial, capacity,

IT continuity, availability management

Virtualization engines & environment

Tivoli (IBM), Unicenter (CA), Patrol / BSM tools (BMC)

HP Software (former OpenView), Microsoft

LANDesk, Beta Systems, BDNA, ASG, NetIQ, Paragent,

Hyperic, Rocket Software, AdventNet, Novell, Red Hat, Netgear

Nokia, Alcatel, Cisco, etc.

Parallels, VMware (EMC), Novell, Citrix

Storage management EMC, Symantec, IBM, Sun, HP, Beta Systems, Hitachi,

etc.

Security & ID management Symantec, McAfee, Check Point Software, Novell, IBM,

Microsoft, CA, Sun, Panda Software, Arkoon, OpenTrust, Cryptolog, Bull Evidian etc.



7. TOOLS SEGMENTATION

7.1. Definition

According to PACʼs segmentation, it includes:

• Portals & Collaboration;

• Information Management;

• Modeling & Development Tools;

• Execution & Integration Platforms.

PAC figures include only revenues from licenses and maintenance/ support. All related revenues

from implementation services (consulting, implementation/ customization, training) are booked

as project services revenues.




Tools

Portals & Collaboration Information Management

Browsers

Document management

Messaging & groupware

Collaboration and exchange platforms

Workflow

Intranet & extranet

Portals

Search engines

Rich Internet platforms

Structured data engines and database engines (hierarchical, relational, object)

Unstructured data engines and content management tools

Business Intelligence tools: multi-dimensional analysis, statistics and technical data analysis,

data mining

Information integration tools: Extract, Transform Load (ETL) engines, Product Information

Management (PIM), Master Data Management (MDM) and Enterprise Information Integration

(EII)

Modeling & Development Tools Execution & Integration Platforms

Enterprise architecture tools

Analysis, modeling & design tools

Software engineering tools & environments (incl. 3GL, 4GL, XML, RAD, OO, etc.)

Code and application generators

Rules engines

Migration tools

Automated software quality, test tools and software configuration management

Portfolio and IT project management tools and platforms

BPM (Business Process Management) / BAM (Business Activity Monitoring) engines

Software & SOA components management tools (SOA governance tools, registry,

repository)

Application servers

Web services tools

Connectors, EAI, ESB

Message-oriented middleware

Transaction engines: EDI, FTP, distributed transaction processing middleware, business-

specific products, etc.



7.3. Examples

Portals & Collaboration Product / Supplier Examples

Browsers Internet Explorer, Mozilla Firefox, Opera etc.

DMS, archive messaging, groupware Exchange (Microsoft), Lotus Notes (IBM), Gmail, etc.

Human and document workflow IBM, Microsoft, W4, Global 360, Savvion, iflow (Fujitsu),

Open Text, Docubase, Doc@post, etc.

Portals Vignette, IBM, BEA, Liferay, Microsoft SharePoint, etc.

Search engines Google, Autonomy, Microsoft (Fast), Exalead, etc.

Rich Internet platforms Google, BlueWiki, Adobeʼs Flex, Microsoftʼs Silverlight,

Adobe AIR, Interwoven, etc.

Information Management Product / Supplier Examples

Structured data engines and databases Oracle 11g, DB2 (IBM), SQL Server (Microsoft), Sybase,

Adabas (Software AG), Teradata, Tamino (Software AG), Caché (Intersystems), Sun (MySQL), Ingres, etc.

Unstructured data engines and content management tools

IBM, Open Text, Microsoft, Vignette, Oracle, Alfresco, Nuxeo, Jalios, Red Hat, Sun, ASG, Beta Systems,

Mimosa Systems, etc.

Business Intelligence tools: Multi-dimensional

analysis, statistics and technical data analysis tools, data mining

Oracle, SAP, SAS, IBM, Microsoft, Informatica,

Information Builders, Fair Isaac, SPSS, Tibco, JasperSoft, Pentaho, SpagoBI, etc.

Information integration tools: Extract, Transform Load (ETL) engines, Product Information

Management (PIM), Master Data Management (MDM) and Enterprise Information Integration

(EII)

IBM, Informatica, Oracle, SAP, Talend, Teradata, Fair Isaac, Siperian, Composite Software, Orchestra

Networks, Tibco, Sybase, ASG, etc.



Modeling & Development Tools Product / Supplier Examples

Enterprise architecture tools

Analysis, modeling & design

IBM, Microsoft, Sybase, Borland, MEGA, IDS Scheer, Casewise

Software engineering tools & environments (incl.

3GL, 4GL, RAD, OO, etc.)

Code and application generators

Microsoft, IBM, Oracle, Sybase, Progress, Magic

Software, Borland, Eclipse, NetBeans, 4D, Netfective, Serena, Micro Focus, etc.

Rules engines Ilog, Fair Isaac, Corticon, Pegasystems, IBM, Tibco, etc.

Migration tools Micro Focus, MetaWare, Ateras, Mia-Software

Automated software quality, test tools and configuration management

IBM, Serena, HP, ASG, Compuware, CA, Borland, Perforce, Axios Systems, McCabe Software, AccuRev

Portfolio and IT project management tools and platforms Microsoft, IBM, CA, HP, Planview, Primavera

Integration Platforms Product / Supplier Examples

BPM (Business Process Management) / BAM (Business Activity Monitoring) engines

BEA, IBM, Tibco, SoftwareAG, Intalio, Lombardi, Pegasystems, Systar, SAP, Metastorm, etc.

Application servers BEA WebLogic, IBM WebSphere, Sun, Oracle, Tomcat,

Red Hat, SAP, etc.

Software & SOA components management tools AmberPoint, SOA Software, IBM, Software AG, HP

Connectors, EAI, ESB IBM, Tibco, Software AG, Sun, PolarLake, Vitria, Axway,

Red Hat, Iona, iWay Software, Fiorano Software,

MuleSource, Microsoft, Oracle, SAP

Message-oriented middleware IBM, Tibco, Progress, Microsoft

Transaction engines: EDI, FTP, distributed

transaction processing middleware, business-specific products, etc.

BEA, IBM, Axway, Sterling Commerce, Seeburger,

Edicom, Indra, Trading Metrics, Aneo, Cisco, Aleri, Reuters, etc.



8. APPLICATION SOFTWARE PRODUCTS SEGMENTATION

8.1. Definition

PACʼs application software products figures include only revenues generated from application

software licenses and maintenance/ support fees.

Please note that SaaS (Software as a Service) revenues such as those from providers like

Salesforce.com, NetSuite, and Workday are not included in PACʼs application software products

segmentation as these companies bill on a subscription basis and do not license actual software.

Such revenues are included in the outsourcing/ processing segment.

Includes office automation, business applications and technical applications.

Business applications are process-oriented applications that include horizontal applications such

as financials, HRM, CRM, SCM as well as industry-specific solutions such as billing (telecom,

utilities), core banking systems, etc.

Technical applications include graphical software, and other technical software.

The office automation software market is generally dominated in all segments by Microsoft with

Office, including word-processing, data spreadsheet, and presentation software. Other major

productivity software applications are WordPerfect Office (Corel), for instance, as well as open-

source initiatives such as OpenOffice.org and StarOffice (SUN).

Application software products can be either out-of-the-box solutions, such as most productivity

software products and business applications for the small office/ home office market, or more

complex/ process-oriented solutions that require implementation and customizing services, such as

business applications for the mid-market and for large enterprises.

Application software products are often sold as packaged solutions including hardware and

services, e.g. implementation services. The value of the hardware and services resold is excluded

if it can be determined. All related revenues from implementation services (consulting,

implementation/ customization, training) are booked as project services revenues.



Please note that we consider highly verticalized Systems Infrastructure Software and Tools in

some industries as Application Software Products, as they really are at the core of the respective

applications. This applies in particular to software products dedicated to the telecom sector in

areas like billing, telecom network management or platforms for enhanced services. For example,

telecom network management clearly is an application area for a telecom operator, while traditional

systems and network management software products are designed to help run an IT system and

as such are considered as Systems Infrastructure Software by PAC.

Please note that PAC does not consider gaming/ entertainment software as part of Application

Software Products.




Application Software Products

Office

Automation

Business Applications Technical Applications

Horizontal Business Applications:

Accounting & Finance

Supply Chain Management, Distribution & Purchasing

Human Resources Management

CRM / Sales Management / Sales Force Automation

Supplier Relationship Management, Procurement

Product Lifecycle Management, Enterprise Asset Management

BI Reporting and Decisional Tools (front-end)

Vertical Business Applications:

All industries need specific Vertical Business Applications. Below you find some examples:

Manufacturing: Material Requirements Planning, Quality Management, Manufacturing Execution Systems

Banking: Account Management, Payment Transactions, Credit Management Systems

Insurance: Policy and Product Management, Claims Management, Commissions and Partner Management

Public: Tax & Revenue Management, Grant Management, Clinicals, Patient Management

Telecom/Utilities: Billing/Metering, Network Maintenance Management

Retail & Wholesale: Point of Sales, Merchandising

Services: Services Automation

Transport: Booking Systems, Traffic Control Systems

CAD / CAM

GIS

Network Control Systems

Visualization and Simulation Systems

Graphical Software



8.3. Examples

Office Automation Supplier Examples

Office automation Microsoft, Corel

Horizontal Business Applications Supplier Examples

Accounting & Finance SAP, Oracle, Sage, Microsoft, Lawson

Supply Chain Management, Logistics,

Distribution & Purchasing

SAP, Oracle, Infor Global Solutions, Manhattan

Associates, i2

Human Resources Management SAP, Oracle, Sage, Meta4

CRM / Sales Management / Sales Force Automation

Oracle, SAP

Material Requirements Planning SAP, Oracle, Infor Global Solutions, QAD

Supplier Relationship Management, Procurement

SAP, Oracle, Ariba

Product Lifecycle Management Siemens/UGS, SAP, Dassault, PTC

BI Reporting and Decisional Tools (front-end) SAS, IBM/Cognos, SAP/Business Objects,

Oracle/Hyperion



Vertical Business Applications Supplier Examples

Process Manufacturing SAP, Aspen Tech

Discrete Manufacturing SAP, Infor Global Solutions, Oracle, QAD

Banking Sungard, Oracle, S1

Insurance Misys, TietoEnator

Healthcare Siemens Medical, Cerner, McKesson

Government SAP, Oracle, local players

Telecom Amdocs (Cramer), Convergys, Oracle (Portal Software),

Comverse, HP, LHS

Utilities SAP, Oracle, local players

Retail & Wholesale SAP, Oracle, Aldata, Wincor Nixdorf, JDA

Transportation Amadeus, local players

Other Applications Supplier examples

CAD / CAM Dassault, Siemens/UGS, PTC, Autodesk

GIS Aspen Tech, ESRI

Network Control Systems Siemens, ABB, PSI

Visualization and Simulation Systems MSC, Thales

Graphical Software Adobe, Quark



9. HARDWARE MAINTENANCE SEGMENTATION

9.1. Definition

Includes hardware & system software installation, repair and support for all types of hardware

(from mainframe to PC) and related system software (proprietary or open systems).

Please note that our figures do not include maintenance services within the framework of an

outsourcing contract.

9.2. Examples

Some suppliers: all hardware manufacturers, third-party maintenance (TPM) vendors, and large

resellers like Computacenter or Getronics.



10. PROJECT SERVICES SEGMENTATION

10.1. Definition

This category includes professional services, which can be categorized as:

• IT Consulting;

• System Integration;

• IT Training.

10.2. Sub-segments

10.2.1. IT Consulting

Planning, specification, and design of information systems

IT-related process consulting

According to PACʼs segmentation, it includes purely IT-related services (audit of the information

system, design, selection of technologies and products, etc.), but also the "process consulting"

(Business Process Reengineering – BPR, change management and similar services) part of IT

projects, such as ERP implementation projects.

PAC divides the IT consulting market into two main segments:

Process- & Application-related IT Consulting

• In terms of technology, application-related services relate to:

o Application software products (custom development or packaged software);

o Application-related tools: BI, development tools, integration platforms, workflow, content

management, etc.

• In terms of services, application-related IT consulting includes:



o Consulting on the organization of information systems: all preliminary services, such as

studies prior to the development and/or implementation of new applications, overhaul of

processes and procedures involving information technology, preparation of changes in

application systems, etc;

o Consulting on the selection/ implementation of application software and packages: it

covers consulting on horizontal application software products, such as enterprise

resource planning (ERP), customer relationship management (CRM), supply chain

management (SCM), human resources management (HRM), etc; and vertical

application software products, such as point of sales, core banking systems, etc;

o Assistance in miscellaneous project management tasks: support for all projects

involving vertical or horizontal applications, change management, governance, IT

suppliers relationship management, etc;

o Also includes process- and application-related consulting services in industrial

information systems, control/ command/ supervision, simulation, and embedded

software in the areas of defense, transport, energy, telecommunications, etc.

Infrastructure-related IT Consulting

• In terms of technology, infrastructure-related services relate to:

o Infrastructure-related tools: DBMS, groupware, messaging;

o Systems infrastructure software;

o Hardware products and IT equipment.

• In terms of services, infrastructure-related IT consulting includes:

o Consulting on the architecture of information systems: all services related to the

architecture of equipment, systems, networks, and, more generally, the technological

design of information systems;

o Consulting on the selection/ implementation of technology and technical packages: All

services (selection of solutions, design, implementation, benchmarking, evaluation,

preliminary studies, audits, etc.) related to the preparation and implementation of systems

infrastructure software and tools, such as OS, middleware technologies, etc;



o Consulting on technical and miscellaneous project management: services for managing

and supporting infrastructure-related projects;

o Also includes infrastructure-related consulting services in industrial information systems,

control/ command/ supervision, simulation, and embedded software in the areas of

defense, transport, energy, telecommunications etc.

Some IT consulting suppliers: consultancies like Accenture, IT services companies like

Capgemini, and most hardware and software products suppliers.

10.2.2. System Integration

This segment includes the following services:

Custom software development;

Packaged software implementation;

Infrastructure deployment;

Integration of applications and infrastructure products.

Important: this category includes both types of IT services invoiced on a time & material (also

known as T&M, contract staff, staff augmentation, body shopping, etc.) basis as well as fixed-

time/fixed-price basis.

PAC divides the system integration market into two main segments:

Application-related System Integration

• In terms of technology, application-related services relate to:

o Application software products (custom development or packaged software);

o Application-related tools: BI, development tools, integration platforms, workflow, content

management, etc.



• In terms of services, application-related system integration includes:

o Design/ development of customized management information systems or applications;

o Design/ development/ implementation of packaged-based information systems or

applications (ERP, CRM, etc.);

o Maintenance of applications (customized or package-based) on time & material

contracts;

o Integration projects for customized and package-based applications;

o Also includes application-related system integration services in industrial information

systems, control/ command/ supervision, simulation, and embedded software in the

areas of defense, transport, energy, telecommunications etc.

Infrastructure-related System Integration

• In terms of technology, infrastructure-related services relate to:

o Infrastructure-related tools: DBMS, groupware, messaging;

o Systems infrastructure software;

o Hardware products and IT equipment.

• In terms of services, infrastructure-related system integration includes:

o Assistance regarding the architecture of information systems;

o Assistance in the selection/ implementation of IT equipment, systems infrastructure

software and tools;

o Deployment and integration of distributed systems (workstations, PCs, LANs);

o Fixed-price support services for computer operations and users;

o Integration of telecom networks and systems;

o Integration of corporate networks and systems;

o Integration/ projects for the design/ development/ deployment of infrastructures;

o Also includes application related system integration services in industrial information

systems, control/ command/ supervision, simulation, and embedded software in the

areas of defense, transport, energy, telecommunications etc.



Some suppliers: IT equipment manufacturers like IBM, consultancies like Accenture, IT services

companies like Capgemini, software vendors like SAP or Oracle on their "captive markets" plus

specialized contract staff companies especially in the UK, such as Spring; as well as specialized

integrators – often subsidiaries of equipment goods manufacturers – like Alcatel Lucent, Thales

Group, or Siemens. Besides the leaders, there is a significant number of local players.

10.2.3. IT Training

IT training can focus on either end users or IT professionals, and includes two types of delivery:

• Standard training, including all multi-customer seminars;

• Customized training, including on a one-on-one basis.

The IT training market is broken down into two segments:

• Technical IT training;

• Professional IT training.

10.2.3.1 Technical IT Training

• Training on programming languages (Java, C++, COBOL, etc.);

• Training on architectures (client/server, host, etc.);

• Training on software products (Oracle, SAP, Microsoft, etc.);

• Training on hardware.

10.2.3.2 Professional IT Training

• Training on methodologies (ITIL, OO, BPO, etc.);

• Training on qualifications (project manager, CIO, etc.).



Some IT training suppliers: product-related companies such as SAP, Microsoft, or IBM, large

suppliers of project services, such as Accenture and CSC, or specialized players, such as Cegos,

Unilog Integrata Training, or Learning Tree.



11. OUTSOURCING SEGMENTATION

11.1. Definition

PAC segments the outsourcing market as follows:

Outsourcing

Complete

Outsourcing

Infrastructure

Outsourcing Hosting

Application

Outsourcing

Application

Management (AM)

Business

Process

Outsourcing (BPO)

Data Center

Management

Desktop Outsourcing

Other Infrastructure-

related

Application

Hosting

Web

Hosting

Application

Outsourcing

ASP / SaaS

According to PACʼs segmentation, outsourcing is characterized by:

• Long-term contracts (3 to 10 years or even more);

• Often takeover of the outsourcing customerʼs assets (human resources and/or

infrastructure) by the outsourcer;

• Takeover of responsibility by the supplier: performance of defined services, fulfillment of

defined service level agreements – not only provision of staff and/or infrastructure;

• Payment: still very often on a fixed-price basis, but modular in order to respond to the

changes in customers' requirements. Payment conditions are increasingly variable, e.g.

dependent on the degree of utilization (keyword: "outsourcing on demand"). Additionally,

the price may also be based on non-IT measurements ("business metrics").



However, these criteria do not necessarily apply to all kinds of outsourcing services. Exceptions

are, e.g., managed services / outtasking (normally no transfer of assets and/or staff), Web hosting

or application service providing (ASP) / software as a service (SaaS) (often at short notice, no

transfer of assets and/or staff, payment often based on a "pay-per-use" model).

11.2. Sub-segments

11.2.1. Complete Outsourcing

Outsourcing of a companyʼs "central infrastructure & central application management" including the

data center as well as the operating and software development staff.

Suppliers are mainly large outsourcers like EDS, IBM, CSC, etc.

11.2.2. Infrastructure Outsourcing

• Data Center Management – outsourcing of the data center (in mainframe and/or

client/server environments), in most cases including the transfer of both human resources

and infrastructure assets.

Most of the leading outsourcers provide data center management: IBM, EDS, T-Systems,

SBS/SIS, CSC, HP, etc;

• Desktop Outsourcing – outsourcing of mostly large PC installations and PC networks,

incl. operation, help desk, software distribution, etc.

Most of the leading outsourcers provide desktop outsourcing: IBM, EDS, T-Systems, CSC,

HP, etc;

• Other Infrastructure-related Outsourcing – incl. backup, storage, print services, ATMs

(Automatic Teller Machines)/ cash dispensers, collocation and "Other Infrastructure-related

Services".

11.2.3. Application Outsourcing

Application Service Providing (ASP) / Software as a Service (SaaS) – software

distribution model in which an application is hosted by a vendor or service provider and



made available to several customers ("one-to-many model") over a network, typically the

Internet.

• Application Outsourcing – outsourcing of an application chain, incl. server and basic

system operation, as well as application management. Here, typical applications are SAP,

CAD/CAM, payroll, accounting, billing, etc.

Some suppliers: outsourcers like IBM, EDS, T-Systems, SBS/SIS, CSC, HP, etc.

11.2.4. Hosting

• Application Hosting – hosting of an application, including server / mainframe and basic

system operation, but excluding application management.

• Web Hosting – Hosting of a customerʼs web site.

Some suppliers: traditional outsourcers like HP, IBM, EDS, T-Systems, but also ISPs (Internet

Services Providers).

11.2.5. Application Management

Application management (AM) describes the maintenance and enhancement of existing

applications (custom development and/or customized software products), sometimes even their

initial development, under a long-term (multi-year) contract with a commitment to fulfilling pre-

defined service level agreements (SLAs) on a fixed-price basis. Often, staff is transferred.

Please note: PAC considers only "stand-alone application management". AM embedded in

complete or application outsourcing deals is included in the respective segments.

Some AM suppliers: traditional services suppliers (outsourcing providers as well as system

integrators) like IBM, EDS, CSC, Accenture, or Capgemini, increasingly also offshore companies.

11.2.6. Business Process Outsourcing (BPO)

Takeover of responsibility for an entire business process (or parts of it), also including specialized

administrators besides the related infrastructure and application management. In most cases,

assets and/or staff are taken over.



BPO also includes processing services such as payroll, card or transaction processing.

Note: PAC only considers processes that are to a significant degree supported by IT (e.g.

accounting, human resources, logistics, billing, card processing, etc.).

11.2.7. Captive IT Outsourcing

All activities of IT suppliers with their parent or sister companies.

Note: if not stated otherwise, PAC considers exclusively non-captive revenues in rankings and

market figures. Captive revenues are booked as internal IT expenditure (mainly personnel and

hardware).

Some suppliers: T-Systems and Deutsche Telekom; SBS/SIS and Siemens; Swisscom IT Services

and Swisscom; Euriware and Areva Group.



12. VERTICAL SECTORS SEGMENTATION

12.1. Manufacturing

• Automotive & Discrete Manufacturing (incl. aerospace & defense, high tech & electrical

engineering, mechanical & plant engineering, construction);

• Process Manufacturing (incl. metal, chemical, pharmaceutical, oil & gas, food & beverages,

tobacco, textile, paper, agriculture, etc.).

12.2. Banking

Incl. payments (debit cards, credit cards, checks, etc.), leasing companies, corporate banking,

retail banking, private banking, capital markets).

12.3. Insurance

• Life & Pension;

• Property & Casualty;

• Private Health;

• Reinsurance.

12.4. Public Sector

• Government (incl. federal, regional, and local administration, education, etc.);

• Health and Social Services (incl. public health and social insurance, hospitals, churches,

etc.);

• Defense.



12.5. Telecommunications

Incl. fixed carriers, mobile carriers, service providers, and ISPs.

12.6. Utilities

Incl. electricity, water, gas, waste disposal, heat, etc.

12.7. Retail & Wholesale

• Wholesale;

• Retail (food);

• Retail (non-food).

12.8. Services & Consumers

The Services segment comprises:

• Media;

• Professional Services;

• Facility Management;

• Tourism;

• Others (incl. sports and leisure, laundry services, etc.).

The Consumers segment refers to the use of IT in households (contrary to professional

organizations - enterprises, institutions, etc.). It covers individual consumers, usually in a multi-

person environment (e.g. a family), with a possibly differentiated use of IT products and services

(e-mailing/ social networking, information gathering, e-shopping, education, personal development,

household book keeping, home office, etc.). This segment does not include games (consoles and

software).



12.9. Transport

• Rail and Public Transport;

• Freight;

• Aviation;

• Postal Services.



13. ABOUT PIERRE AUDOIN CONSULTANTS

Pierre Audoin Consultants (PAC) is the leading market research and strategic planning firm for the Software and IT Services Industry (SITSI). We advise IT companies on developing successful end-to-end growth strategies in Europe and in the U.S. through planning, development, implementation, and ongoing support. With over 30 years of experience in IT, we have established key contacts with our clients and developed solid, long-standing relationships with them through numerous face-to-face interviews. PAC publishes a wide range of off-the-shelf and client-specific market reports including our best selling SITSI® program, available online at http://www.sitsi.com. Through the research obtained while producing these reports, our analysts are able to offer a wide range of consulting services, from operational and tactical projects through long-term strategic planning.

For more information:

http://www.pac-online.com

http://www.pac-online.fr

http://www.pac-online.de

For any questions:


Copyright

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Violation of Pierre Audoin Consultantsʼ copyright may permit Pierre Audoin Consultants to recover actual damages, statutory damages, punitive damages and attorneysʼ fees through actions in international courts. Pierre Audoin Consultants will prosecute violators.

No part of this publication may be reproduced or transmitted for external use and commercial and communication purpose in any form or by any means, electronic or mechanical including photocopy, recording or by storage in any information storage or retrieval system, without permission in writing from Pierre Audoin Consultants.

Whilst every effort has been made to ensure accuracy, Pierre Audoin Consultants cannot be held responsible for any errors or omissions. Readers should independently verify any information before taking any action that could result in financial loss.

Copyright Pierre Audoin Consultants, 2009. All rights reserved.

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