Germany- ICT Opportunities & Business Analysis

GERMANYBUSINESS ANALYSIS

Agenda

• Germany’s ICT Market• Competition• ICT Opportunities • SWOT• Strategy• Recommendation

In the Heart of Europe• From Germany, nearly all

of Europe can be reached by air in 3 hours and by road in 24 hours (flight, truck, and railway hours from Berlin).

• A state-of-the-art transportation infrastructure and logistics capabilities able to serve all European markets

German ICT Market

German ICT companies are in a good mood.

Balance Of Turnover Expectations

IT Market Growth

IT Spending Growth

Main Forecast Scenario - Real GDP Growth

2012

2013

2014

2015

2016

2017

2018

2019

2020

0.7%

0.4%

1.8%

1.5%

1.6%

1.3%

1.4%

1.6%

1.8%

Main Forecast Scenario – IT Spending Growth

2012

2013

2014

2015

2016

2017

2018

2019

2020

2.1%

2.2%

2.6%

2.7%

2.8%

3.3%

3.6%

3.7%

3.7%

Source : IDC Europe

ICT Employment Market

• Employment• Overall 2012: 902,000 employees• Overall 2013: 917,000 Employees

• IT: 698,000 employees (76% of all ICT, plus 19,000)

• Telecom: 206,000 employees• Consumer Electronics: 13,000 employees

• Lack of IT Experts• 2012: 43,000• 2013: 39,000 (Double of 2009)

• 16,000 in core ICT industry (13,800 in SW & IT services)

• 23,000 in other IT related industries.

ICT Market Trends

SOA

Mobile Payment

Enterprise 2.0

Energy/Smart Grids

BP Management

IT Outsourcing

BI

Virtulization

Social Media

IT Security

Mobile

Cloud

0% 10% 20% 30% 40% 50% 60% 70%

Trends in German ICT Market

Agenda• Germany’s ICT Market• Competition• ICT Opportunities • SWOT• Strategy• Recommendation

• Big players such as IBM, Microsoft, Oracle, and SAP (one of the largest business software companies originally from Germany) are present on the German software market.

– However, the market is best characterized by the large number of dynamic and highly specialized SMEs

– Companies in the Mittelstand dominate Germany's economic and industrial landscape; creating a highly diversified SME environment of highly specialized hidden champions with a global market footprint.

– Simultaneously, these SMEs are also driving demand for software solutions - creating a significant customer base.

– As well as strong growth prospects, there are also promising opportunities for less established suppliers and market entrants.

– The most significant market potential exists for expert suppliers of industry-specific software products and services.

Competition

Agenda


Opportunities I :Cloud Computing

40% of German companies already use Cloud services

2000 & More Employees

500 - 1999 Employees

100 - 499 Employees

20 - 99 Employees

0% 10% 20% 30% 40% 50% 60% 70% 80%

Cloud computing users by company (2013)

• The German Mittelstand still needs to

catch up concerning cloud technologies• Integration of the megatrends

cloud computing, Big Data and mobile

• Cloud computing shapes the transformation towards digital business models Integration in existing processes Foundation for product, process and business model innovations

Opportunities I :Cloud Computing

Opportunities I :Cloud Computing• Cloud computing market in Germany is expected

to grow at a CAGR of 31.98% over the period of 2013 – 2018.ICT Skills for Cloud Computing

Private

Cloud

ICT Sector ICT User Sector

Public

Cloud

Skills to design, build,

optimize & manage cloud.

Skills to design & optimize

performance

integration & power efficiency of Cloud

data centers

Less maintenance skills required (cloud

automation level)

Skills to manage

external cloud services,

define strategy, mgmt of SLA

Less technical skills &

resources to

maintain apps and resource

s required

High level complex ICT

skills to design , maintain & customize

private Cloud

Private

Cloud

Opportunities II :Big Data / Datability

40% of German companies use or plan to use Big Data related solutions

• Only 9% are already making use of Big Data

• The demand for qualified Big Data solutions is growing

0.09

0.31

0.28

0.32

How relevant is Big data for your company

survey (2014)

Already usind Big DataPlanning to use Big DataNot sure yetDid not deal with Bid Data yet

• Most important implementation area is sales & marketing followed by accounting, finance and controlling

• 70% of companies perceive the lack of big data experts as the biggest obstacle for successful implementation




Big Data

Data Scientists – a combination of• Statistical and analytical skills• Business skills to assess the meaning of data – apply

to specific business environment• Communication skills to explain / persuade other

executives

Demand for similar skills applied to the

sector, Finance, Telecoms, large

Retail companies

Business analytics skills, Hadoop skills

(building, implement & management)

ICT Skills for Big Data / Datability

Opportunities II:Big Data Potential

Big Data Business Model Transformation Potential

IndustryData Volume Annual Data Volume

Growth2012 2020

Utilities 4 6 10 - 20%

Industrial 6 8 20 - 30%

Professional Services 5 8 25 - 35%

Finance & Insurance 8 10 30 - 40%

Government/Education 3 8 10 - 20%

Retail/Wholesale 2 7 20 - 30%

Healthcare 5 9 40 - 50%

Mobility & Logistics 4 9 40 - 50%

IT, Telco & Media 8 10 50 - 60%

Medium High Very High

1 = Low to 10 = High, Source: Experton Group 2012

Opportunities III :IT Security

Services

Web/Message/Data security

End Point Security

Network Security

Identity & Access Management

0 1000 2000 3000

2593

238

279

46

172

2469

227

261

44

158

Turnover Security Software and

Services (in EUR million)

2012 2013

• The demand for IT Security grew by 5% in Germany in 2013

• Most turnover is achieved with IT security services

• Developments such as advanced cloud services, virtualization, online payment, e-commerce etc. drive the need for IT security

Opportunities III :IT Security


ITSecurit

y• Design & implementation of IT security for social

media.• Design and management of end-to-end protection of

emerging smart networks ( smartgrids, smartcities, smart e-health ) & cyberinfrastructures.

• Advanced Security management skills

• Management of IT security for media

• Security for BYOD & Mobility

• Security for Cloud

• Advanced security management skills

• Identity & access mngmt solution

skills• IT security for

SCADA or PCS System in

Manufacturing.

ICT Skills for IT Security

Opportunities IV: Business Software

Germany’s software market shows continuous growth rates of around

5% per year.

2011 2012 2013 2014 2015 20160

5

10

15

20

25

0

1

2

3

4

5

6

7

8

9

Germany software market value

forecast (EUR billion)

EUR Bn % Growth

EU

R

Bn

%

Gro

wth • Classics such as

CRM & ERP programs are in demand

• Solutions applicable for SME’s & non IT specialists

• New platforms for mobile & tablet require tailor made solutions

Opportunities IV: Business Software


Software/

Internet of

Things

• IT management skills for IoT

networks• Development for

new business models, products

and services• SW & IoT governance to

guarantee trust, security and

identity.

• Architecture design, object identification,

virtualization & decentralization

• IT security for the information life

cycle• SW development

supporting data flows from sensing

devices• Design & development of

smart sensors and other enabling

devices

ICT Skills for Business Software

Opportunities V: Mobile/Mobility

The app economy in Germany is growing at a fast pace

2010 20130

100

200

300

400

500

600

700

Turnover with mobile apps in Germany ( in EUR million)

App Sales Revenue from Ads

100

523

176

12

112

700

+625%

• Turnover with mobile apps is expected to have reached 700 million in 2013

• Most revenues come from direct app sales followed by income generated by ads

• German mobile data use increased in 2013 to 267 million gigabytes – a growth of 71 percent on 2012

Opportunities V: Mobile/Mobility

ICT Skills for Mobility and Consumerisation


Mobility

• Redesign of business marketing

strategies• Design of new

products and services based on

mobility

• Integration of mobile and traditional apps

• Enhanced security skills

• Developing components for mobile devices

Comsumerisati

on

• Mobile apps development skills, including customistaion to match companies processes

• Complexity of internal IT support, broader technical

skill set required• Asset management challenge + governance

issues• Security for corporate and

consumer environments

Opportunities VI: E Commerce

Almost every German internet user shops online

• Total turnover of E-Commerce was 39 Bn EUR 2013

• 94% of German internet users bought things online in 2013

• Most internet shoppers (65%) buy goods online at least several times per month

• Germany has most digital buyers in Europe

Opportunities VII: Payment Systems

Traditional payment systems are still dominating; Modern systems are gaining importance

• For purchasing goods online, Germans mostly make use of payment systems like PayPal and payment by bill Credit cards are not as widely spread as in other countries

• Trustworthy and secure payment

systems are highly demanded • Germans are traditionally

cash payers

Opportunities VIII: Outsourcing• The German market for outsourcing services is the

most dynamic segment with an anti-cyclical growth pattern ensuring stable growth for the next few years.

• Outsourcing market is assessed at EUR 19.4 Bn with an increase of 4.3% (est 2013)

• IT / software development outsourcing remain largest segmented value at EUR 13 Bn

CountryICT Workforce

Demand in 2015ICT Workforce Supply in 2015

Deficit

United Kingdom 1,150,000 1,095,000 55,000

Germany 930,000 855,000 75,000

France 485,000 460,000 25,000

Spain 500,000 460,000 40,000

Italy 470,000 415,000 55,000

Agenda• Germany’s ICT Market• Competition• ICT Opportunities • SWOT• Strategy• Recommendation

SWOT Analysis

Strengths

Increasing consumer consumption

Efficient and educated workforce

Largest European market

Weakness

High tax rates

Slow negotiations

Demanding employees

Opportunities

Location

Tax Incentives

Introduction to European market

Threats

Mature market

Competition

Global MNC's

SWOT

Positive InfluencesE

xtern

al E

xam

Inte

rnal

Exa

m

Negative Influences

Agenda


Strategy – Market Screening

• Core ICT Industry- Which IT Companies Are Hiring:– 75% SW Development– 24% Consulting– 23% Marketing and Sales– 20% System Administration & Application Support– 8% Project Management– 7% IT Security Experts

• IT SME’s (1 – 50 Million Turnover)– 2012 : 14,500 (80% out of 18,000)– 94% search for SW developers– 50% companies confirm lack of IT experts, same

number expected to change in the future

Strategy – Market Screening

Demand for IT Experts by IT Companies

IT Service Manager

Project Manager

Web Designer

Marketing Manager

IT Consultant

Quality Manager/Tester

Application Developer

Software Developer

0% 10% 20% 30% 40% 50% 60% 70% 80%

4%

4%

6%

16%

16%

25%

31%

72%

Agenda


Recommendation

• Focus business practices in Eastern and Southern Germany• Growing opportunities in Eastern Germany.• Higher unemployment.• Possible and easy tax incentives.• Lower labor cost.

• Use Germany as a starting point for European business• Germany is the key to successfully enter the

European market.• Concentrate on niche skills set.• Specific target market• Paying attention to market patterns.

• Be aware of advancements in technology• Avoid hidden entry.• Boast company identity through marketing.

THANK YOUAuthor: Rahil Pathan

Contact – 0091 9004492862

Technology

Germany- ICT Opportunities & Business Analysis