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Software AG GB 2013. englisch

to optimize cost structures. All service activities continue to be led under uniform management. The risks associated with services were given risk category and risk level 2 at the end of 2013. Personnel risks Employees are the most important asset for an innovative company like Software AG. Therefore, one of the central challenges is having a sufficient number of highly qualified employees at all relevant sites at all times. Software AG’s growth strategy is based on broadening our staff coverage in sales. The demographic trend in some countries is result- ing in a reduction in potential growth due to a shortage of qualified human resources. This risk is reduced through expansion and enhancement of: • Our positive image as a preferred employer • Our presence in social media, such as Linkedin and Facebook • Staff development • Compensation systems • High potential programs for the development of managers In addition, we are working on balancing high and low-cost locations. All in all Software AG is in a position to recruit highly qualified and motivated employees at all locations. The strategic risks associated with personnel were rated at risk category 1 and risk level 2 as of December 31, 2013. Financial risks Exchange rate risks The Software AG Group is exposed to exchange rate risks through our global business activities. Our sales organiza- tions operate in the currency of the countries in which the sales are transacted. This can result in currency risks and opportunities for Group revenue. The sales-related expenses are in the same currency as the sales themselves, however. This natural hedging relationship is further strengthened in the U.S. due to the fact that parts of our Research and De- velopment as well as global Marketing are based in the U.S. and will continue to be expanded. We further utilize deriv- ative financial instruments to mitigate the effects of ex- change rate fluctuations on Group results. Our hedging • Continuation of development of standardized partner programs and uniform contracts • Continuation of investments in the establishment of a global and local partner sales organization • Global rollout of a partner code of conduct In addition, investments were made in partner ecosystems, technology training for partner organizations, IT-based pro- cess automation and OEM partnerships. The risks associated with partnerships were rated at risk category 1 and risk level 2 as of December 31, 2013. Service risks Price is often a key factor in winning projects in the area of project services. This results in the risk of accepting orders at prices below cost. Furthermore, the actual costs can ex- ceed budgeted costs. Successful product implementation is a prerequisite for earning satisfied reference customers, which fuel Software AG’s momentum for further business. Reference customers also build up our reputation as a pro- vider of high-quality software. The Group-wide standardized and automated approval pro- cess (Global Deal Desk) and Software AG’s project controlling guarantee that adequate risk-adjusted profit margins are taken into account and continuously monitored. All projects are subject to an ongoing monitoring process that is ampli- fied for projects greater than €250 thousand. In order to process orders effectively and efficiently, the Prime uniform implementation methodology was intro- duced worldwide, and the flow of information between Sales, Product Marketing, R&D and Global Consulting Ser- vices (GCS) was optimized. Furthermore, training for GCS consultants was enhanced. Too few specialists are available in specific submarkets for our multitude of complex products. To reduce this risk, spe- cialist teams are being established for entire regions. Smaller country subsidiaries are focusing on specific sections of our product portfolio, and market positioning in the various sub- markets is being realigned depending on the size of the country subsidiaries. The proportion of offshore/nearshore resources could be increased for presenting efficient cost structures. We are currently developing them to increase our pool of available specialists around the world as well as Software AG | Annual Report 2013 104 Letter from the Management Board Software AG ShareAbout Software AG Highlights 2013