Software AG is wellpositioned for the future. Our strengths include

 

A stable customer base

We have ensured that our successful turnaround in 2004 will be sustained. In the turnaround phase from 2003 to 2006, we stabilized and broadened our customer base. According to a customer survey concerning the use of our Enterprise Transaction Systems (ETS) products Natural and Adabas, 72 percent of our customers use our products for business-critical applications. Service-oriented architecture (SOA) and Web Enablement represent further outstanding opportunities for developing our customer base.

 

Improved margins

Growth in sales and efficiency increases contributed equally to the improvement of our margin. In 2006, we achieved a record 23 percent return on sales. We aim to increase this figure to 25 percent. We also succeeded in accelerating growth with an increase in sales revenues of 10 percent. We owe our positive image to our technological expertise. Experts from Forrester confirm our market leadership, which also extends to our new business unit, Crossvision. Our new corporate image and new marketing strategy contribute to our positive image development.

Enhanced strategy and portfolio

We have recognized the increasing significance of SOA infrastructures as a global market trend. By expanding our portfolio to include the first complete SOA suite, Crossvision, we have successfully taken advantage of the trend and continued our success story. Software AG sets itself apart as a first mover in IT trends. Proof of this can be seen in our product innovations Adabas for mainframes, Natural for PCs and servers, EntireX for standard business applications, and Tamino for Internet infrastructures.

We also clearly defined and built on our competitive advantages in 2006. These include:

 

International technological leadership in SOA

Our intensive customer focus is a major competitive advantage for us. This focus enables us to offer individual, customized SOA structures as opposed to a one-size-fits-all version for all customers. In 2006, we intensified our customer focus even further:

• Our innovation process starts with the customer. Research and development at Software AG actively incorporates customer needs and delivers products consistent with demand.
• We have established the International IT Leadership Committee at the executive level in order to deepen customer contact and proximity to customers. The committee enables our top international customers to tell us directly what type of IT they will need tomorrow for optimal business success.

Our strategic orientation is comprised of business with regular customers and new customers: Powerful databases for business-critical applications (ETS) for existing customers as well as modernization of business- critical applications (legacy modernization) and service-oriented architecture for existing and new customers.

Our SOA offers key customer benefits:

• Agility: To react faster to changing demands
• Orientation: To bring IT closer to the operating department
• Reuse: To take advantage of existing functions
• Technology neutrality: To utilize services independent of implementation
• Standardization: To support open standards
• Modernization: To provide legacy applications with web-based interfaces
• Cost savings: To implement new functions more quickly

SOA is our market for the future. In 2007, more than 50 percent of all business-critical applications and business-related processes will be based on SOA. According to industry association BITKOM, this number will rise to more than 80 percent by 2010. By 2011, 80 percent of all productive applications in use today will have been partially or completely reengineered and will use SOA. Moreover, an SOA-compatible version will be available for 65 percent of all standard applications by 2011.

 

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