3 05 Interim Management Report 16 interim Financial Statements 24 Notes to the Interim Financial Statements 36 Service GENERAL TRENDS IN THE IT INDUSTRY 3 Due to the global proliferation of these megatrends and increasingly shorter innovation cycles, software companies currently face the challenges of overhauling their business models, working more closely with other vendors and adapting to the quickly changing needs of customers. The industry’s transition also offers major opportunities for inno- vative companies to position themselves in the market. Software AG recognized the changed requirements early, incorporated them into the development of its product port- folio and is gearing its activities strongly toward the new technology megatrends that are revolutionizing the IT industry. To this end, Software AG is: • Expanding its presence in specific markets, such as North America. • Investing in research and development for new products that will improve its competitive position. • Focusing on the big data market in order to generate significant additional growth stimulus. • Developing solutions that help customers adapt to exter- nal changes faster, more flexibly and more efficiently. The software sector is currently undergoing a long-term period of upheaval, influenced by the convergence of four megatrends in this industry: cloud, mobile, social collabora- tion and big data. Companies are increasingly outsourcing data and applica- tions to external providers and paying for IT resources based on usage (Software as a Service). Moreover, cloud comput- ing services (the shift of data and applications to the Inter- net) offer major savings potential, because organizations no longer need to maintain the cost-intensive computing capacities that were necessary in the past. All the while, the growing popularity of smart phones and tablet PCs is placing new demands on developers of mobile solutions. The trend of social collaboration is also impacting the soft- ware industry. As in private social networks, the intensified use of social networks for interactive collaboration at a pro- fessional level is enabling greater accessibility of informa- tion, which facilitates the utilization of existing knowledge and efficient processes. Big data is another current IT trend. Big data refers to the processing and analysis of the growing amounts of data constantly being produced by companies, websites, social networks, etc. Conventional methods and tools can no lon- ger handle these vast volumes efficiently. But new in-mem- ory technology alleviates this with efficient management of large and, above all, unstructured data. This technology enables direct access to data stored in the main memory (cache). That accelerates data access by up to 1,000 times faster than with databases. Organizations using this technology therefore gain a clear competitive advantage.