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Software AG GB 2012, englisch

SOFTWARE AG | ANNUAL REPORT 2012 76 conclusion. One of our most important goals is the ongoing improvement of sales efficiency, which we achieve through more highly qualified employees and larger projects. Our interregional sales and service structure offers significant additional potential. Cost management All cost items in the Group are subject to stringent budget control. On a monthly basis we review all profit and cost centers to determine whether budgets were adhered to and to ascertain how forecast costs have evolved. We use a dynamic budget model, ensuring that the cost budget remains flexible in relation to sales growth for all key com- ponents. We adjust the cost budget dynamically throughout the year in order to achieve or surpass our profit targets. Management of research and development Our long-term business success as a software product pro- vider is based on technology acquisitions, research and development (R&D) and the resulting innovations. We there- fore continuously develop our portfolio by considering the needs of our customers and business. To this end, we cal- culate the profit contribution of our products on an ongoing basis. We optimize our utilization of resources by combining purchases of technology with in-house development and by striving to maintain a balanced mix of high-wage and low- wage product development centers. VALUE-ORIENTED CONTROL In order to increase our enterprise value for the long term, we must continue growing profitably and increasing the financial strength of our Group. We use an internal informa- tion system to control these strategic goals. Based on IFRS reporting, we consider relevant key indicators such as revenue, earnings before interest and taxes (EBIT), earnings per share and cash flow. As with most other com- panies in the software industry, capital-oriented financial indicators play a minor role for us. This is due to the fact that our business model’s commitment of capital is low, and personnel expenses make up the largest expense block in our business. Revenue and earnings monitoring We continuously monitor revenue and costs in the areas of licenses, maintenance and services. License revenue is the key growth driver of maintenance and service revenue. For this reason, the development of license revenues over time is closely watched by all levels of management. We also employ a multidimensional matrix structure to con- tinuously monitor changes in EBITA for every profit and/or cost center. The matrix is divided according to business lines, revenue types and regional structures within the business lines. Furthermore, we constantly observe the operating income of our service business with respect to specific proj- ects, from the time a quote is prepared through to project

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