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
• Germany’s ICT Market• Competition• ICT Opportunities • SWOT• Strategy• Recommendation
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
Opportunities II :Big Data / Datability
Opportunities II :Big Data / Datability
ICT Sector ICT User Sector
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
ICT Sector ICT User Sector
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
ICT Sector ICT User Sector
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
ICT Sector ICT User Sector
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
• Germany’s ICT Market• Competition• ICT Opportunities • SWOT• Strategy• Recommendation
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
• Germany’s ICT Market• Competition• ICT Opportunities • SWOT• Strategy• Recommendation
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