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Software AG GB 2013. englisch

GroupManagementReport infrastructures and thus lower costs substantially. This, in turn, secures our broad customer base over the long term. Our customers’ return-on-investment times are typically 12 to 24 months and thus extremely short. Hence, our new products are a logical way to cope with market-related cost pressures even in weak economic periods. The overwhelm- ing majority of our customers use our software for busi- ness-critical applications that are difficult to be replaced. Therefore, our revenue flow is stable, especially from main- tenance services. Innovative products and new technology trends in our product portfolio will ensure further growth. The Company expects to see additional product revenue growth in the future on the basis of the opportunities dis- cussed here. Debt crisis The debt crisis in individual eurozone countries that has been escalating since 2010 has had only a limited impact on Software AG’s primary business. Software AG earned only 3.9 percent (2012: 3.7 percent) of its profitable prod- uct revenue in countries hit particularly hard by the debt crisis (Greece, Italy, Ireland, Portugal and Spain) in fiscal year 2013. Business risks Product risks As a high-tech industry, the software sector in general is particularly susceptible to being negatively affected by the innovation risk of new competitor products. Ongoing invest- ments in research and development are therefore necessary to stay on top of the technological state of the art. Current trends require constant enhancements as well as acquired technologies and new go-to market models. Competition intensified through the emergence of newcomers to the market, especially in the big data and cloud computing seg- ments. Close collaboration between Sales, Product Market- ing, Product Management and Research and Development (R&D) makes it possible for the development of new prod- ucts to be market-driven and thus market-relevant. In fiscal 2013 we shortened our product-release cycle to six months. One of the greatest challenges of our industry is to optimally allocate R&D resources. based on this uniform risk matrix. All Group managers are responsible for reporting newly identified strategic risks to the central corporate team. The team then informs the Manage- ment Board for advice on possible strategies for handling them. The corporate team reports to the Management Board regularly about the ongoing development of the identified risks. The Management Board regularly presents the risk man- agement system to the Audit Committee of the Supervisory Board and discusses with it the level of the identified risks. Ensuring the effectiveness of the risk man- agement system and internal control system Internal Audit regularly reviews the effectiveness of the risk management system and the internal control system. If necessary, suggestions for improvement are developed, which are then introduced centrally or their introduction is monitored centrally. Corporate Finance and Corporate Con- trolling regularly conduct an internal review of account- ing-relevant control processes and modifies them for new developments. Specific risks In the following section we will describe key risk areas and individual risks discerned from the totality of risks identified through the risk and opportunity management system. Environment and sector risks Market risks Among other things, market risks are related to the different economic developments in individual countries or regions. The technological evolution of the individual sectors of the IT industry can adversely impact the business potential of the individual business lines. The balanced revenue mix at Software AG reduces dependence on a single geographical or professional IT submarket. Software AG markets technol- ogies that are not specific to certain industries, ruling out a concentration on individual customers. Thanks to our tech- nological innovations, ongoing R&D investments and pur- chase of new technologies as part of our technology-driven acquisitions, we significantly expanded our product port- folio and will continue to do so in the future. In this manner, we facilitate the flexibility of customers’ existing IT 101 Corporate Governance Report of the Supervisory Board Consolidated Financial Statements Notes Additional Information Group Management Report Business and General Conditions Economic Report Events after the Balance Sheet Date Risk and Opportunity Report Remuneration Report Forecast Takeover-Related Disclosures Statement on Corporate Governance