US Companies to continue to dominate European Software Markets

January 21, 2009 - European software associations (ESA, AFDEL, BASTA) and PricewaterhouseCoopers have launched the list of Europe’s top 100 software companies.

The US software vendors feature highly in the ranking and have considerably strengthened their position in the European market mainly through acquisitions. The top three software vendors listed generate revenues of more than €55,000 million worldwide, the equivalent of the entire European software market. US software suppliers make up 75 per cent of companies in the top 20 listed and 48 per cent of the top 100.

In 2008, the European market represented approximately 30 per cent of the overall worldwide software market generating revenues of approximately €56,000 million.

EuroSoftware100 – top 10 ranked companies

Top of the European ranking is SAP (German-based) followed by Sage (UK-based) and Dassault Systemes (France-based). These three companies have combined revenues of €8.5 billion for 2007.

EuroSoftware100 – top 10 ranked European companies

The European Software market

Trends emerging from the survey are:

Consolidation: Many players have already taken advantage of the opportunities for consolidation and this relative saturation could curb the ambitions of some of the American vendors. However, the smaller European software companies are likely to still find themselves the object of a merger approach enabling them to gain critical mass in the marketplace and the potential to emerge as bigger players in the marketplace.

New Business Models: SaaS (Software-as-a-Service) business models will become increasingly important and widespread in the longer-term and will have a profound impact. This, together with the adoption of SOA (Service Oriented Architecture) platforms, will increasingly complement existing on-premise software with on-line services. With the proliferation of online service offerings and the embedding of software into product offerings by industries such as telecommunications and engineering, the competition will be fierce for dominant market share. Green IT will become an increasingly prominent factor in product development in the coming years and environmental awareness will need to be addressed by the software sector.

Management of Software: with the current economic climate, pressure on operating margins will continue. Increasingly so in the next few years as fierce price pressures hit and as users compare the value propositions of different software vendors. In the long-term however, adoption of new technologies should help in recovering high operating margins. Talent management will remain a priority as companies seek to retain and attract the best talent be it engineers, marketing or product development teams. Offshoring will continue to develop but not purely as a cost cutting measure, but also to manage difficulties in recruiting and retaining talent.

Pierre Marty, European Software Leader, PricewaterhouseCoopers said:

“These are challenging times for the European software industry. European companies who seize the opportunities provided by technological shifts, which innovate and remain agile, will emerge stronger as the market reshapes itself.”

Tomáš Návrat, an expert on IT sector, PricewaterhouseCoopers Czech Republic, added:

"In connection with the emerging economic crisis in the Czech Republic, it is expected that IT companies, that are linked to companies and investors that have gotten into business troubles, will likely deal with the lack of finance in particular. They will have to respond to this situation with changes in the supply of software and providing consultation and support thereof.

To cope with the more challenging market environment and pricing pressures, IT companies will need to think about how to improve their business models that are very often targeted at particular market segments. A package of more complex solutions will need to be offered to the customers. In this respect we already see efforts by key market players, who have mastered their services in their particular areas, to team up with other partners from the industry (also via acquisitions) and diversify their product portfolio and becoming general/strategic suppliers of complex solutions to customers.”

END

Notes to Editor:

1. Complete list of EuroSoftware100 contact
   
   
   
2. The following countries are covered in the analysis of the Top European software vendors: Austria, Belgium, Denmark, Finland, Netherlands, Norway, Spain, Sweden, Portugal, Switzerland, Germany, Italy, France, UK, Luxemburg, Greece, Ireland, Liechtenstein, Malta and Iceland.

   “Software revenue” is defined as: license maintenance and support revenue   (excluding consulting and integration services). For SaaS and Open Software vendors, subscription revenues are included within software revenue.

   PAC (Pierre Audoin Consluting) has conducted analysis of the European software industry since 1992. Both central and country-level databases are updated all year long through:

   • Surveys of more than 1,000 software suppliers and diverse companies with software activity in Europe
     
     
   • When appropriate PAC has relied on estimates according to worldwide/European /country revenue
     
     
   • Market analysis and benchmarks

   PAC cannot be held responsible for potential errors or omissions.

   
   
   
3. About ESA
   Created in October 2005, the European Software Association is the voice of the European Independent Software Vendor (ISV) community. ISV members of the association work with EU policy makers and other European stakeholders to foster an environment that supports innovation and competitiveness within the European software industry, and that supports the needs of other European business communities.

   Current members include: Acresso Software, Albany Software, 1C, Cegid, CODA, Dassault Systemes, Fenestrae BV, Future Route, Hogia, Lexware GMBH & Co KG, Logo Yazilim, Mamut ASA, Microsoft EMEA, Northgate Information Solutions, OpenTrust, Oracle, SAP, SkyRecon, Trimble, Unicorn, Unit4Agresso, Update Software AG

   
   
   

4. About AFDEL
   Created in October 2005, AFDEL is the French association of Software editors. With 160 members, AFDEL aims to represent the whole industry from big firms to SME’s (80%).

   
   
   

5. About BASDA
   BASDA is the Business Application Software Developers’ Association, a member-driven not-for-profit organisation where members benefit by sharing knowledge and expertise and working effectively as one voice to address strategic issues and evolving legal, political and technical influences that affect the business software industry.
   
   

6. PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 155,000 people in 153 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice.
   
   “PricewaterhouseCoopers” refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.
   
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