Significant Events During the Reporting Period

Software AG programmed for high growth

In February, we began the most ambitious expansion program in the 38-year history of the Company: We plan to more than double Software AG revenues to €1 billion within the next five years. We intend to increase the growth rate of 14 percent projected for 2007 to an average of 15 percent per year from 2008 to 2011, while continuing to improve operating earnings through higher sales per employee, faster growth in the high-margin licensing business, and strict cost management. We also plan to increase our EBIT margin to 25 to 30 percent in the medium term.

In addition to rebranding Software AG, the first steps in the Company's growth strategy consisted of participation at CeBIT and the acquisition of SPL Software. We also restructured the Executive Board and introduced two innovative new products.

  • New corporate image for Software AG

    In February 2007, we introduced our new brand image to the public for the first time. This was an important step in our new growth strategy and will supplement our technology marketing by increasing awareness of our name and tap into new growth potential.

    Creation of the new corporate image involved repositioning the Company, changing the Software AG logo, redesigning our website, and finding innovative ways to acquire new customers.

  • Software AG meets with success at CeBIT

    After a three-year absence, Software AG returned to CeBIT - the world's largest ICT trade fair - with great success. This year's booth focused on four key topics: information management, legacy modernization, SOA governance, and optimizing business processes. In addition, we presented new methods and procedures for managing Service-Oriented Architectures with our market-leading Crossvision product portfolio.

    We also initiated what we have called "The World of SOA" at the CeBIT. This included a convention forum along with the partner booths of leading providers of products and solutions in the field of Service-Oriented Architectures. Numerous visitors were provided with information on how to make their IT systems more flexible and modern as well as how to manage their SOA-based IT landscapes more efficiently.

  • Takeover of SPL Software

    In March, Software AG announced the takeover of 80 percent of the shares in its Israeli sales partner, SPL Software. This is firm evidence of the Company's active M&A strategy. The acquisition represents another step toward increasing customer proximity allowing Software AG to implement individual SOA solutions even more effectively. Close customer relationships combined with outstanding products are key elements for modernizing existing programs and applications successfully and for using Service-Oriented Architectures to integrate business processes. SPL Software is positioned excellently in the Israeli market, particularly in the area of financial services - a sector in which major growth is expected in 2007. The company will be included in the financial statements of the Software AG Group starting on April 1, 2007.

  • New executive area of responsibility: Enterprise Transaction Systems (ETS)

    Since January 8, 2007, the ETS business line has been represented directly in the boardroom. The Supervisory Board appointed David Broadbent to Software AG's Executive Board as part of our strategic restructuring. Mr. Broadbent is responsible for product management and marketing as well as research and development in the ETS business line. ETS, like Crossvision, is now the second business line to be represented directly in the boardroom.

  • New products

    Active Governance Framework We have developed a new approach to managing SOA projects that we call the "Active Governance Framework." Efficient management of Service-Oriented Architectures is crucial to successful SOA implementation. Our active SOA governance offers a foundation for optimally adapting all IT systems to match corporate strategy. Active Governance Framework enables monitoring of the entire SOA lifecycle and automated rule conformance. Our CentraSite products help to convert any changes in guidelines and agreements at the business level into policies and service level agreements at the IT level. These products also ensure that the rules are actually adhered to when implementing IT projects with Crossvision components or products from other software producers. As a result, SOA is implemented precisely as called for by corporate strategy. This allows for the best possible corporate benefits to be achieved.

    SOA Value Assessment We also presented our SOA Value Assessment system at CeBIT. This system was developed by leading IT analysts and enables companies to make a comprehensive analysis and assessment of the benefits of SOA. SOA Value Assessment involves a detailed analysis of each aspect of SOA, including productivity increases, process efficiency, infrastructure optimization, and agility making it possible to calculate the specific benefits of each of these aspects. In this way, SOA Value Assessment brings IT departments and business divisions even closer together to develop an individual strategy for utilizing SOA. SOA Value Assessment produces an individual, comprehensive report on the benefits of SOA for the company. Such reports are useful to chief technical officers in calculating the profitability of implementing SOA projects and show company managers how advantageous SOA can be. In short, we support companies in using IT to their advantage.

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