Annual Report 2007
7. Presentation of the business segments
1/6 forward
7.1 ETS
- Operating* revenues increased by 12 percent to €384.6 million
- Acquisitions also strengthen ETS business
- Market position expanded
- Focus on continued growth
7.1.1 Business activities and strategy
Our Enterprise Transaction Systems (ETS) business division is well-established in the IT landscapes of companies and government agencies worldwide. Software AG is their preferred partner for mainframe modernization and we therefore ensure the long-term protection of customers' investments. In Adabas, we offer our customers a highperformance database that is capable of processing 300,000 transactions per second. For decades, the development environment Natural has been the basis for hundreds of thousands of software applications that make up the technical backbone of business-critical core processes of large companies and government agencies. Today, customers modernize their business systems with our help by optimizing their performance and opening up these business-critical systems to new environments such as Web and E-business. The technologies in the ETS business division include database management, application development and application modernization. As of the end of the fiscal year, we changed the name of the modernization of mainframe applications from "legacy modernization" to "application modernization."
We plan to continue to expand our traditional business in ETS, for which reason Software AG will continue to invest in organic growth. Our products will be further developed to meet the expectations of our customers. The development activities include technologies for archiving databases, for database search engines and new product suites. In addition, we will continue to move ahead with our global geographic expansion. After a successful start in Japan, we will begin to introduce our products in Brazil in 2008.
In addition, we will support the growth of the webMethods business division. webMethods will in turn extend the life of our customers' investments in ETS.
7.1.2 Sales markets and competition
Software AG has held a leading position in traditional data management for 39 years. Our products in the ETS business division can be assigned to various markets.
a) Application Development
This market includes instruments that adapt applications to a production environment for their entire life cycle. The trend is in the direction of web-based technologies. In Natural 2006, Software AG has a competitive development environment for corporate-wide applications, Internet applications based on AJAX technologies and SOA-capable Web services. This makes it possible to adapt the IT more rapidly to different business requirements. Our primary rivals in this market are Java, COBOL and programming languages such as JavaScript, Perl or Ruby. The competitive advantages of Software AG products lie in their user friendliness, compatibility with other platforms (Linux, UNIX, Windows), fast development as well as lower complexity and simpler development of corporate-wide applications and Web services.
b) Database Management System
This market is defined by a set of software programs that controls the organization, archiving, management and retrieval of data. Software AG's Adabas 2006 is a highly scalable, robust transaction database that operates on the mainframe and open systems. Adabas makes high reliability and data reproduction possible. Standardized SQL and SOA interfaces make it possible for developers and end users to use Adabas for their business applications. Our competitors in this area include DB2, Oracle and SQL Server. Our products are attractive due to their reliability, compatibility with different platforms and their highperformance, which is manifested by immense capacity and minimal requirements.
c) Application Modernization
The market for application modernization includes instruments and solutions that companies can use to make their IT suitable for new IT environments and modern IT architectures as well as SOA, for example. Software AG's Application Modernization Suite enables customers to make their core systems Internet-compatible by modernizing existing user interfaces, using their core systems in a SOA environment and integrating their corporate-wide data into existing and new environments without difficulty. Our competitors in this area include Attachmate, GT Software, IBM, Microsoft, Progress Software and Seagull Software. Our products are leading because of their comprehensive functionality and performance. In addition, Software AG is attractive due to its independence from suppliers and platforms, its expertise in legacy and modern architectures such as SOA and BPM, its global presence and international products as well as its own strength in a consolidating market.
* operating values not including recognition of effects from the purchase price allocation
