Presentation on current status of the German ICT market. The slides provide data and statistics on trends and opportunities for domestic and foreign companies interested in doing business there. Second part deals with possible strategies to enter the German market and what challenges are to be expected. The slides are part of a lecture held at a technology and entrepreneurship conference in Belgrade, Serbia.

1. 2nd ICT Net Conference
“Technology and Entrepreneurship”
Overview of International Markets Challenges and Opportunities in German, French and Dutch markets:
The German IT Market
Jürgen Kappenmann, Consultant
Esslingen, Belgrade
Falkensteiner Hotel, Beograd, 30th Oct., 2013
1

2. INTRO
Opportunities and Challenges in the German IT Market
Creating Opportunities and Tackling Challenges in the
German IT Market
Opportunities
The German IT Market: Challenges and Opportunities
Challenges
2
Strategy

3. GERMAN IT MARKET KEY FIGURES

ICT Market Volume
 € 151,9 billion turnover in 2012
Source: BITKOM
The German IT Market: Challenges and Opportunities
3

4. GERMAN IT MARKET KEY FIGURES

ICT Market Segments: IT, Telecommunication, CE
Source: BITKOM
The German IT Market: Challenges and Opportunities
4

5. GERMAN IT MARKET KEY FIGURES

ICT Market Segments
Source: BITKOM
The German IT Market: Challenges and Opportunities
5

6. GERMAN IT MARKET KEY FIGURES

Market Growth by Segments
Source: BITKOM
The German IT Market: Challenges and Opportunities
6

7. GERMAN IT MARKET KEY FIGURES

Employment
 Overall 2012: 902.000 employees
 Overall 2013: 917.000 employees (expected)
 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 (doubled since 2009)
 16.000 in core ICT industry (13.800 in SW and IT services)
 23.000 in other industries
Source: BITKOM
The German IT Market: Challenges and Opportunities
7

8. OPPORTUNITIES TRENDS
Opportunities
The German IT Market: Challenges and Opportunities
Challenges
8
Strategy

9. OPPORTUNITIES TRENDS

High-Tech Strategy for Germany 2020
 Objectives

CO2-neutral, energy-efficient and climate-adapted cities

Renewable biomaterials as an alternative to oil

Intelligent restructuring of energy supply

Treating diseases more effectively with personalized medicine

Better health through targeted prevention and an optimised diet

Living an independent life well into old age

Sustainable mobility

Web-based services for businesses

Industry 4.0

Secure identities
The German IT Market: Challenges and Opportunities
9

10. OPPORTUNITIES TRENDS

High-Tech Strategy for Germany 2020
 Fields of Action





Climate and Energy
Health and Nutrition
Mobility
Security
Communication
 Key Technologies






ICT
Services
Micro System Technologies
Automotive and Traffic
Production Technologies
…
The German IT Market: Challenges and Opportunities
10

11. OPPORTUNITIES TREND: INDUSTRY 4.0

Core Idea
The German IT Market: Challenges and Opportunities
11

12. OPPORTUNITIES TREND: INDUSTRY 4.0
 Core Concept
 Future Project of the High-Tech Strategy 2020 which promotes the
computerization of traditional industries such as manufacturing (goal:
Smart Factory)
 Technology basis: cyber-physical systems and Internet of Things
Combination of computational and software components with
mechanical and electronic parts (embedded systems) which
communicate via a wired or wireless data infrastructure (e.g. internet)
 Applications
 Medical devices, age-based assistance systems, IT traffic steering and
logistic systems, inter-linked security and drive assistance for cars,
industrial process steering and automation, infrastructure systems for
communication
The German IT Market: Challenges and Opportunities
12

13. OPPORTUNITIES TREND: SMART GRIDS & METERING
 Core Concept
 Study of German Federal Ministry of Economics & Technology
 Oct. 2013: German smart metering concept successfully passes EU
notification process
 Objectives
 By 2020 30% of power needs covered by renewable energy
 Switch from „consumption-oriented generation“ to „generation-optimized
consumption“
 By 2022 two-thirds of all German households use smart meters
 12 million households use smart meters with access to smart grids (Smart
Meter Gateways)
 Applications
 energy supply management systems, smart houses
The German IT Market: Challenges and Opportunities
13

14. OPPORTUNITIES TRENDS

Cross-Innovation






Cloud Computing
Smart Cities
Electro Mobility
Connected Car
Smart Grids
Energy Efficiency
The German IT Market: Challenges and Opportunities
14

15. OPPORTUNITIES TRENDS
 Open Source
 IT Security
 New dynamic: NSA scandal
 Topics: data protection, industrial espionage, mobile security, e-payment
 eBusiness, eCommerce
 eGovernment
The German IT Market: Challenges and Opportunities
15

16. OPPORTUNITIES TREND: MOBILE
 Less PCs and Desktops, More Tablets
 Tablets: (48% growth in 2013)
Turnover
billion EUR
Turnover
billion EUR
Source: BITKOM
The German IT Market: Challenges and Opportunities
16

17. OPPORTUNITIES TREND: MOBILE
 Booming Smart Phone Market
Turnover
billion EUR
Sales
in million
Source: BITKOM
The German IT Market: Challenges and Opportunities
17

18. OPPORTUNITIES TREND: MOBILE
 Mobile Phones as Permanent Companions
 2011: 62%
 2013: 75%, i.e. almost 50 Mio. Germans
 14% of all Germans consider using Mobile Wallets
 Continuing growth in mobile data services market (€ 9,1 billion, +5%)
Source: BITKOM
The German IT Market: Challenges and Opportunities
18

19. OPPORTUNITIES TREND: WEB
 Companies with Websites (min. 10 employees): 82%
 Companies with < 10 employees: 45%
The German IT Market: Challenges and Opportunities
19

20. OPPORTUNITIES OUTSOURCING TRENDS
 Covered Fields

Web, Entreprise 2.0, Mobile Development, Embedded, SaaS/Cloud
 Results & Trends







Higher acceptance with SMEs
Reasons: reduce costs, focus on core competencies, access to resources outside
Germany, speed up time-to-market
Critical: poor communication with vendor´s team, CM, cultural difference, PM
Prefered: nearshore, small providers via fixed-price/time-and-material models,
short and focused contracts
Outsourcing processes are increasingly globalized
Focus on long-term added value
More business process outsourcing (BPO)
 Serbia as a outsourcing location
 see Challenges section
Source: Europ. IT Outsourcing Intelligence Report 2011: Germany
The German IT Market: Challenges and Opportunities
20

21. OPPORTUNITIES OUTSOURCING TRENDS
 Outsourcing Industries
Source: Europ. IT Outsourcing Intelligence Report 2011: Germany
The German IT Market: Challenges and Opportunities
21

22. OPPORTUNITIES OUTSOURCING PROCESS
SW or System Development
Local (National) Sub-Supplier
Development Steps
International Sub-Supplier
Guided
Cooperation
Responsible
Demand:
- Vertical & horizontal market
knowledge
- technical know-how
Supply:
- (Basic) vertical & horizontal market
knowledge
- technical know-how
- project/quality management skills
Starting point: SW testing
Deepened Industry/technology know-how
building
- Development of
• project management,
• quality management and
• process & maturity model skills
Source: policultancy.eu
The German IT Market: Challenges and Opportunities
22

23. CHALLENGES STATUS QUO
Opportunities
The German IT Market: Challenges and Opportunities
Challenges
23
Strategy

24. CHALLENGES ITBD ROAD SHOW
Berlin
Hessen /
RPF
Bavaria
BadenWürttemberg
The German IT Market: Challenges and Opportunities
24

25. CHALLENGES ITBD ROAD SHOW FINDINGS
German stakeholders strongly interested in the Serbian market but have limited
/ no experience and knowledge
Currently order books are full but… pressure and need to internationalize
From a German perspective the Serbian market is interesting but limited
in size
Market knowledge and intelligence on both sides is low
need for development of joint B2B models, events, joint platforms etc.
demand and supply mappings to be developed, usage of “ICT at a Glance”
Entrance to German market is often connected to confidence-building
measures like success stories with German clients, language skills,
involvement of German experts ...
The German IT Market: Challenges and Opportunities
25

26. CHALLENGES STATUS QUO
 Key Features
 Visibility of Serbian IT industry
 Hardly known as an IT location, no rep offices in Germany
 Publication ICT at a Glance only comprehensive market study
 Limited (industry-specific) experience & language
 Expectations
 SW development like in Germany but with less costs
 Quality Management
 Process of cooperation key to success
 Trust building
 It always depends on single company: no specific legal, tax etc. barriers
The German IT Market: Challenges and Opportunities
26

27. OPPORTUNITIES TRENDS
Opportunities
The German IT Market: Challenges and Opportunities
Challenges
27
Strategy

28. STRATEGY KEY ELEMENTS
 Define your Strategy: Do it properly
 Key Elements for Success
 Focus
 Specialization
 Quality & Cooperation
 Contracting
 Market Screening
 Presentation
 Profile, references, methodologies…
The German IT Market: Challenges and Opportunities
28

29. STRATEGY FOCUS
The German IT Market: Challenges and Opportunities
29

30. STRATEGY FOCUS: CLUSTERS & ASSOCIATIONS
 Cluster Platforms & Regional Clusters









Bavarian ICT Cluster
Bwcon
Cyberforum Karlsruhe
ICT & Digital Business Association Berlin – Brandenburg (SIBB)
ICT NRW
IT-Mitteldeutschland
Software-Cluster „Rhein-Main-Cluster“
Softwarezentrum Böblingen/Sindelfingen
Open Source Cluster Berlin
The German IT Market: Challenges and Opportunities
30

31. STRATEGY MARKET SCREENING
- Gaming
- Open Source
- Media
-…
- eGovernment
- Creative Industries
- Open Source
- Media
-…
- Business SW &
Applications
- ERP
- Cloud
-…
- Energy Efficiciency
- Solar Energy
- IT HW
-…
Southwest:
- Automotive
- Embedded
- eHealth
- Creative Industries
- Smart Energy
- Smart Grids
- Open Source
-…
The German IT Market: Challenges and Opportunities
- Medical
- eHealth
- Automotive
- BioTech
-…
31

32. STRATEGY MARKET SCREENING

Core ICT Industry – Which IT Companies Are Hiring:







75% SW Development
24% IT Consulting
23% Marketing and Sales
20% System Administrators & Application Support
8% Project Management
7% IT Security Experts
IT SMEs (1-50 million tunrover)
 2012: 14.500 (80% out of 18.000)
 94% search for SW developers
 50% of companies confirm lack of IT experts, same # expect no change in
near future
Source: BITKOM
The German IT Market: Challenges and Opportunities
32

33. STRATEGY MARKET SCREENING

For Which Fields Are IT Companies Searching
Source: BITKOM
The German IT Market: Challenges and Opportunities
33

34. STRATEGY MARKET SCREENING

Demand for IT Experts by IT Companies
Source: BITKOM
The German IT Market: Challenges and Opportunities
34

35. STRATEGY MARKET SCREENING

Demand for IT Experts by Non-IT Companies
Source: BITKOM
The German IT Market: Challenges and Opportunities
35

36. STRATEGY MARKET SCREENING

Labour Costs
 General
 ICT industry full-time employment: € 59.000 (gross)
 Positions
 SW developer: € 5.000/month (average wage)
 SW developer start (gross): € 31.000-44.000/y. (av. € 40.300)
 SW developer experienced (gross): € 39.000-56.800/y. (av. € 52.000)
 Computer scientist start: € 45.000/y. (gross)
 Geographic
 Hessen/BW/BAY/HAM: high
 Eastern States: low
The German IT Market: Challenges and Opportunities
36

37. STRATEGY MARKET SCREENING

German Investments in Serbia (2010/11)
Comapny
Industry
Investment in Mio. €
Bosch
Clean-Tech
Automotive Supplies
Pharmaceuticals
71,0
1,0
Continental
Automotive
8,0
Dräxlmaier-2
Automotive
10,0
Dunkermotoren
Electronics
1,0
Eko-Theman Group
Food (Processing)
2,5
Fresenius Medical Care
Medical
24,0
Grammer System
Automotive Supplies
5,2
Gruner
Electronics/Electrics
4,0
IGB Bauerhin
Automotive Supplies
4,0
Leoni
Automotive Supplies
7,4
Meggle
Food (Processing)
4,0
Metro
Retail
21,0
Mühlbauer
IT
4,0
Norma Group
Manufacturing
11,2
Siemens
Electrics
20,0
Vossloh-Schwabe Panasonik
Electrics
2,0
Source: AHK BG
The German IT Market: Challenges and Opportunities
37

38. STRATEGY BROKERAGE
 EU-Wide
 KET Brokerage: http://www.b2match.eu/kets2014/pages/home
 IT Fairs
 CeBIT, Embedded World…
 see event calendar on cluster and association websites
 Clusters & Associations
 For specific events see cluster websites
 EEN
 Business Cooperation Database
 Brokerage
 …
The German IT Market: Challenges and Opportunities
38

39. Pitanja
&
Hvala na pažnji
Jürgen Kappenmann, Ass. iur., M.A.
Consultant
Esslingen, Belgrade
+381-69-197 47 30
juergen.kappenmann@karer.com
Skype: juergen.kappenmann
The German IT Market: Challenges and Opportunities
39