GrowBizProgram, Copenhagen May 8th

Germany Market OverviewReinhold Säckl, Senior Management Consultant ICT

• Help Danish companies to enter the German

market successfully

• Help established Danish companies to expand

their business in Germany

• Promote Denmark as an innovative business

partner

• Raise the profile of Denmark as an important

trading partner of Germany

What are we doing?

The Trade Council of Denmark - Accompanying enterprises across the border

Evaluation Decision & Investment Strategy

Project Management Assistance

Location Consulting/Site Evaluation

Identification of project-specific location factors

Business opportunity

analysis and market research

Market entry

strategy support

Cost factor analysis

Project partner

identification and contact

Site preselection

Joint project management with regional development

agency

Site visit organization

Coordination and support of

negotiations with local authorities

Final site

decision support

Support Services

Identification of relevant tax and legal issues

Project-related

financing and incentives

consultancy

Organization of meetings with legal advisors and financial

partners

Administrative affairs support

Accompanying incentives

application and establishment

formalities

Example of services

Technology scoutingTrend spottingMatch-making R&D cooperation agreementsAccess to R&D, Innovation and networksMapping (i.e. funding/7FP)Innovation workshopsInvention advisory board

Technology/R&D partner searchIncubator facilitiesCapital connectionR&D recruitmentInnovation inspiration tours Network managementMedtech/Pharma/Biotech

Facts & Figures: Germany in Numbers

WIESBADEN

STUTTGART

SCHWERIN

SAARBRÜCKEN

POTSDAM

MUNICH

MAINZ

MAGDEBURG

KIEL

HANOVER

HAMBURG

ERFURT

DÜSSELDORFDRESDEN

BREMEN

BERLIN

BAVARIA

BADEN- WÜRTTEMBERG

SAARLAND

RHINELAND PALATINATE

HESSETHURINGIA

SAXONY

SAXONY-ANHALT

BRANDENBURG

NORTH RHINE-WESTPHALIA

LOWER SAXONY

SCHLESWIG-HOLSTEINMECKLENBURG- WESTERN

POMERANIA

HAMBURG

BERLINBREMEN

LEIPZIGHALLE

COLOGNEFRANKFURT

ROSTOCK

FLENSBURG

NUREMBERG

PL

CZ

AUT

CH

F

LUX

BE

NL

DKBALTIC SEA

NORTH SEA Form of Government – Federal Republic (16 states) Population 82 mio.

The largest economic power in Europe GDP of € 2.5 billion

Export-oriented Economy Decentralized Structures Economic Power Centers Large Manufacturing Base (Automobiles, Machinery)

A Typical German Company Technology driven SME business Privately Owend

The German Economy – The Headlines in 2011

GDP Growth YoY and Unemployment Rate in % (2010)

Sources: German Federal Statistical Office, Eurostat, OECD, International Monetary Fund (IMF)

The German Economy – Key Performance Indicators

20112.9%

6.8%

Germany as a Business Location

• Close to Denmark• Leading and stabile Economy• Secure Investment Environment• German Speaking Countries• Germany is looking at Denmark (IT for Renewable Energy Sector, School, Public

Services etc.) • Long term relationships with customers and suppliers

The place to be for high-tech businesses: international top managers choose Germany for quality and innovation

14%

choose Germany as the best future sourcing

location right after China, the USA, and India.

Future Sourcing

35% say that quality is the main reason for the decision, pointing out the country‘s global reputation for Made in Germany product and manufacturing excellence.

Quality

13% choose Germany for its potential for business,

leaving USA and India behind. Business

Note: The PwC 14th Annual Global CEO Survey asked 1,200 top managers and government officials about their corporate outlook and future decisions. Source: Pricewaterhouse Coopers (PwC) 2011

Germany as a Business Location

Source: Atlas Deutschland 2010; Federal Statistical Office 2010

1

2

3

4

5

7

8

9

6

Rhein / Ruhr Area(Cologne, Düsseldorf, Dortmund, Essen): 5.7 millioni.e. Telecommunication industry

Berlin:

4.2 millioni.e. Internet, healthcare

Stuttgart:

2.6 millioni.e. Mechanical engineering

Hamburg:

2.6 millioni.e. Logistics, media

Munich:

1.9 millioni.e. Automotive, mechanical engineering etc

Frankfurt a. M.:

1.9 millioni.e. Finance & banking

Nuremberg:

1.0 millioni.e.Embedded systems

Hanover:

1.0 millioni.e. Automotive

Leipzig:

0.6 millioni.e. Renewable energies, chemistry

1

2

3

4

5

9

7

8

6> 500 people/km2

> 200 people/km2

> 100 people/km2

> 50 people/km2

≤ 50 people/km2

> 1,000,00 people

> 500,000 people

≤ 500,000 people

Cities

Average population density: 231/km2

40.3 million (48.9%) of the German population live in metropolitan areas with more than 500 people/km2

Major metropolitan regions:

Economic Power Centres

ICT Companies, Clusters & Competence Networks

Competence Network Federal State

Baden-Württemberg: Connected Baden-Württemberg

GEOkomm networks Brandenburg

IT Saar Saarland

IT4work Hessen

medRegio Lübeck Schleswig-Holstein

Mobilfunk NRW

Mobile Solution Group Bremen

REGINA e.V. NRW

Virtual Dimension Center Baden-Württemberg

Source: BMWi – Kompetenznetze Deutschland (kompetenznetze.de), BITKOM/Roland Berger 2008, Bureau van Dijk 2008

We have associations for most vertical IT sectorsNational and federal

The German ICT Market

ICT Industry Market Volume (2010)

705

221

187

135

USA Japan China Germany UK

800

700

600

500

400

300

200

Market Value (billions of Euro)

100

0

Note*: figures rounded Source: EITO Report 2011

08.05.2012 – German ICT Market – Business Opportunities | 8

Germany‘s ICT industry is ranked 4th in worldwide comparison of market volume

144 135

33.000 companies and 832,500 full time employees work directly in the ICT sector

Employees in the German ICT sector (2010)

Source: BITKOM, 2011

IT Hardware;

2.8%

TC Services;

21.4%

TC Hardware;

6.1%

Software and IT

Services; 69.7%

The German ICT Market

• Another 650.000 ICT specialitst work in other industries , i.e. automotive, finance, etc.

• Within the ICT sector a total number of 18.600 new highly qualified jobs were created in 2011

• Most of the new workplaces were created in medium-sized enterprises in the software an IT-industry

• The software and IT-service sectors are one of the job motors of the German Industry

• Challenges 2012 Qualified People Salaries

17

22

26

26

27

29

35

37

38

41

46

48

51

Government IT

Smart Home

Green IT

IT Systems in the Health Sector

Web-based Services and Trade

Softw are-based Products

Virtualization

Smart Grids

Location-based Services

Broadband Internet Access

Embedded Systems

IT Security

Cloud Computing

The most important IT trends and challenges 2012

The German IT Market

Source: VDI, March 2011

IT Services – Cloud Computing

Cloud Computing Sales in Germany (in EUR billion)

4

9

8

6

0

7

5

3

2

1

2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5

1.1

1.9

3.1

4.5

6.5

8.2

• 10% of total IT spending will go into Cloud Computing technologies in 2015

• Cloud Services (turnover):

EUR 550 million in 2011

EUR 4.8 million in 2015 (+ 773 %)

• Cloud Infrastructures

EUR 400 million in 2011

EUR 2.6 billion in 2015 (+ 550 %)

• Cloud enabling services incl. consulting services (turnover):

EUR 200 million in 2011 EUR 800 million in 2015 (+300%)

Telecommunications

The telecommunications sales volume in Germany is forecast to consolidate at EUR 66.0 billion in 2012

Sales in the German Telecommunications Market (in EUR bn)

Trends in the German Telecommunications Market

80

Segment 2010 2011 2012

66.1

65.7

66.0

Mobile data services +18.2% +14.0% +10.0%

60

Fixed data services +0.9% +1.2% +1.2%

40

Mobile voice services -2.3% -6.5% -3.5%

Fixed voice services -8.0% -7.5% -7.5%

20

0

2010 2011 2012 Source: BITKOM, 2012

The market for IT security (products and services) is growing due to steadily increasing risk potential

Sales of German IT Security Market by Segments (in € million)

Source: IDC, 2011

Sales of German IT security reached EUR 490 billion in 2012

In international comparison German users show a high need for security

1124

5 181

1317

127 168

1816

2114

Network security

Equipment security

Information security

Web security

Data security

Permission management

Services

4500

4000

3500

3000

2500

2000

1500

1000

500

0

1548

2008 2009 2010e 2011e 2012e

233

413

385 361

359 331

181 95

305 158 174

139 149 84 196

449

396

205 107

203

215

493

438

229 119

234

IT -Security

2008 2009 2010 2011 2012

• Germans have a reputation for being thorough, exact and direct • clear, direct communication, concise presentation important – come to the

point!• Germans are direct in expressing views and opinions (no hidden language or

reading between the lines) • English language skills• Formal and business culture (language and dress code) • Just in time…..• Forward thinking / Anticipation of potential problems • What is being said will be taken seriously, promises made are held and small

talk is withheld • Germans are impressed with quality, reliability and reputation

=> show that you are prepared and confident (Market & Meeting Partner Knowledge, Competition, Translations etc.• They aim for long-term business relationships!

Doing business with Germans – cultural tendencies…

• Blue vs Red Ocean• Understand your target market AND your product!

- Value Proposition- - Competitors

Who are current competitors?Local or global players?What are their positions, goals, strategies and USPs?Who are their investors?

- How does your product/ service/ provide value compared to competitors?

- What is the value for the potential partner, reseller, distributor, direct account?- Customer Segmentation (Beachhead, Lighthouse, etc.)- Channel Partner Modell

Profile and the criteria? (number of employees, national/ regional coverage? After sales support y/n?

• Bring it all together in a Go-To-Market Strategy!• Be present in the market (local phone, address, contact details!)• Be creative!

A successful market entry is down to preparation

Recent project: Digital Case Management

• Company focused on Digital Case Management and Paperless Workflow• 6 Ministries in DK• Partner with Focus on Public Sector, good network, national coverage• 15 potential companies have been identified• ZERO interest!• New strategy:

• Forget partners for now • Find organizations on a science level consulting the Public Sector• Meeting at Ministry Level

• Science Partner “Fraunhofer Institute” FRAUNHOFER• Meeting at the Embassy in Berlin between

Jacob Heinzen, PS Ministry of Transportation DKCornelia Grothe, PS Ministry of Transportation GER + Head of CIO-GroupAmbassador, the client

Recent project: Digital Case Management

Outcome so far:• Pilot at the Fraunhofer FOKUS Institut, focused on solutions for the Public Sector• Pilot at the Ministry of Transportation

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