The Top 100 European Software vendors

The European software industry ranking.

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2010


Editorials

                                                                                                           

    Neelie Kroes

    Neelie Kroes

    In these difficult economic times, and in the face of very difficult social challenges, it is critical that we acknowledge the role of ICT innovation in addressing our problems.

    We see great software ideas and products coming from European sources, but we don't see enough of them developing into high growth companies. There is a lot of money, but we don't always use it in smart ways to support innovators. We have 500 million consumers, but still are not able to service them in one digital market.

    The Digital Agenda for Europe aims to create a better environment for ICT development and investments, by supporting roll out of high speed broadband, strengthening the digital internal market, investing in ICT R&D and innovation, supporting more open standards and interoperability, and strengthening online trust and security. But this action plan will also attempt to develop the public markets where ICT plays an essential role in dealing with the policy challenges of our time, like energy efficiency, affordable quality health care, smart mobility and so on. All of these create opportunities for the development of new software applications, services and businesses.

    To achieve these objectives we need to work in partnership with all relevant stakeholders. The private sector plays a pivotal role as the provider of the infrastructure, the services, the software, the capital and most importantly the many of the new ideas. But the Digital Agenda also depends critically on the EU Member States' governments, regional and municipal authorities, health care providers, educators, and others to embrace a new mind set, and acknowledge that ICT and especially the Internet will fundamentally change the way we work and live.

    Together, by investments in research and innovation, investments in new software products and by creating enabling environments for deploying, we can make the economic transformations required of us in the coming years. The transformation from dumb grids to smart grids, from high carbon to a low carbon economy, to a sustainable healthcare system, to investing in industries that create the most high-paying jobs.

    In part we will be relying on the entrepreneurship of the Truffle 100 and the future members of the Truffle 100. I will do my share and am determined to do everything in my power to give you fertile ground to plough.

    Neelie Kroes
    EU Commissioner for Information Society & Media

    Karl-Heinz Streibich

    Karl-Heinz Streibich

    This latest edition of the Truffle 100 highlights the dynamism of the European software industry in a tough economic climate. Dynamism in terms of creating high value employment and dynamism in maintaining high levels of investment in research and development. This performance underscores the contribution the software industry can make to building a stronger Europe. To fully capitalize on this potential, the European Union must develop an innovative software industry policy as part of overall economic strategy.

    The European software industry can make further contributions to the development of Europe. Software today drives innovation across all industries: from smart grid technologies through lean-carbon logistics to eHealth initiatives. Software today drives sustainable economic development through increased productivity and efficiency gains. This presents a huge opportunity for Europe to play a leading role in developing software solutions that address the major environmental, economic and knowledge-based employment issues of our times.

    In grasping this opportunity the software industry itself must take the lead.

    To this effect, Software AG, alongside SAP AG and IDS Scheer AG, has been instrumental in establishing the Rhein-Main-Neckar region in south-west Germany as a cluster of business software excellence. One concrete result is that the German Federal Government, together with the companies in the region, will invest ??80 million in developing the next generation of business process technologies.

    But as an industry we do not operate in isolation. We call on the European Union to focus on the development of the software industry as central to its “Digital Agenda 2015”. To establish eSkills as central to the education system from the earliest level onwards, to foster the collaboration of industry and thirdlevel educational institutes and to implement tax policies to promote research and development.

    These would be major steps in establishing Europe as the centre of the knowledge-based society, of securing higher levels of employment and in strengthening European industry to the benefit of all.

    Karl-Heinz Streibich
    CEO, Software AG

    Bernard-Louis Roques

    Bernard-Louis Roques

    This 5th edition of the Truffle 100 emphasizes the impressive dynamism and exceptional resilience of the European software industry. In a challenging environment, software vendors have demonstrated their ability to bounce back quickly (with 8,4% year-on-year growth) and remain profitable (€3.7 billion), while maintaining a heavy level of investment in R&D (€3.8 billion).

    With over 54,000 highly qualified R&D jobs, software vendors constitute a strategic industry that is absolutely critical for employment & GDP growth in Europe.

    With cloud computing and "software as a service" bound to radically transform the industry in the coming years, Europe's software vendors are on the verge of a major paradigm shift and deserve a lot more attention.

    European governments must accentuate supporting measures so that more money is poured into R&D and thousands of added-value jobs are created.

    The Truffle 100 reveals that software vendors are clamouring for the implementation of R&D tax incentives (with the effect of leveraging investment in R&D), a European Small Business Act (whereby a fraction of public procurement is systematically allocated to small businesses) and publicly-funded R&D programmes with facilitated access and simplified procedures for SMEs.

    I am convinced that Europe's industrial future, economic growth and technological independence rely on its ability to develop a sustainable, perennial software industry.

    I wish to thank IDC, CXP and the national trade associations for their commitment to and support for the Truffle 100.

    With increasing awareness and a growing, targeted audience of over 30,000 unique visitors per month, the Truffle 100 ranks and analyzes the top 100 software vendors in Europe and sheds valuable light on the industry's status.

    The research is freely available on www.truffle100.com.

    Bernard-Louis Roques
    General Partner & co-Founder, Truffle Capital

European Clusters


Map of European Clusters

Clusters: Software revenues

Truffle 100 R&D Software Revenue Concentration Survey 2009 for EU 27 + Norway and Switzerland (per region)

Download the pdf version

Map of European Clusters

Clusters: R&D Headcount

Truffle 100 R&D Headcount 2009 for EU 27 + Norway and Switzerland (per region)

Download the pdf version

Map of European Clusters

Countries: Software revenues

Truffle 100 R&D Software Revenue Concentration Survey 2009 for EU 27 + Norway and Switzerland (per country)

Download the pdf version

Rank Region Country Software
Revenues
Number of Companies R&D Headcount 2008
1   Rhine-Main-Neckar   Germany   11,707   4   15,981   
2   South East England*   United Kingdom   3,064   20   7,283   
3   Île de France   France   2,613   16   6,451   
4   North East England   United Kingdom   1,614   1   2,248   
5   East England   United Kingdom   1,124   3   1,153   
6   Zuid-Holland   Netherlands   703   2   1,318   
7   Eastern Norway   Norway   673   4   1,038   
8   Waals Brabant   Belgium   605   2   723   
9   Bavaria   Germany   579   3   2,020   
10   Southern Finland   Finland   518   6   1,364   
11   Podkarpackie   Poland   455   1   5,355   
12   Geneva   Switzerland   350   2   728   
13   Uppland   Sweden   314   4   477   
14   Rheinland   Germany   293   1   1,086   
15   Rhône-Alpes   France   291   3   868   
16   Lombardia   Italy   195   2   575   
17   Piemonte   Italy   193   1   525   
18   Berlin   Germany   190   2   204   
19   Hovedstaden    Denmark   175   1   275   
20   Nord-Pas-de-Calais   France   166   3   402   
21   South Moravian Region   Czech Republic   145   1   125   
22   Oster-Gotland   Sweden   114   1   526   
23   Biscay (Bilbao)   Spain   114   1   200   
24   Nordwestschweiz   Switzerland   94   1   511   
25   Yorkshire   United Kingdom   81   1   120   
26   Lazio   Italy   66   1   250   
27   Noord-Holland   Netherlands   64   1   1,400   
28   Western Norway   Norway   62   1   122   
29   Southwest England   United Kingdom   59   1   62   
30   Skane   Sweden   58   1   76   
31   Veneto   Italy   54   1   120   
32   Utrecht   Netherlands   44   1   60   
33   Lower Austria   Austria   39   1   52   
34   Zurich   Switzerland   38   1   50   
35   Vaster-Gotland   Sweden   38   1   96   
36   Western Midlands   United Kingdom   36   1   157   
37   Northern Norway   Norway   32   1   50   
38   Vienna   Austria   31   1   93   
39   Rhineland-Palatinate   Germany   29   1   36   

(*) including Greater London



Interview

Bernard-Louis Roques: General policy on IT The latest data from the Truffle 100 show European IT, and particularly the software industry, is lagging way behind its US counterpart, and shows no tangible sign of catching up.While US software vendors are recovering form the global crisis and have the financial strength to become predators again, it is getting more and more difficult for their European counterparts to keep up with the challenges.

Software vendors are not considered a priority industry, which is all the more so regrettable that they are one of the most efficient, profitable and powerful engine for qualified job creation.

As the new European IT Commissioner, do you have a plan to curb the trend and promote European software vendors? Any short term plans to channel more resources into European IT research and development?

Neelie Kroes - EU Commissioner for Information Society & Media

Neelie Kroes: Yes! I am pushing very hard for a significant, but affordable, increase in the European Commission ICT R&D spend. Now is not the time to cut back on these sorts of very efficient investments. Why? Because investing in ICT research is one of the most fundamental ways we can continue to increase our standard of living and keep the economy in good health. ICT innovation boosts productivity in all sectors. But the answers are not always about more money. And the money we do spend need shouldn’t necessarily come from government, especially not the kind of money that leads to subsidy dependency.We have seen the effects of that in some other industries. I believe that the European software sector is better off on a different path.

What we do need is more partnerships to share risk. We do need better and more innovation-friendly public procurement to boost fledgling markets. We do need the EU to help make collaboration easier and to ensure SME can participate in our programmes without going through administrative hell.

In other words - people can't expect the EU to do everything, we are never going to match either at national or EU level the sorts of money the US puts into defence research. But we can be smarter, by pooling our resources with Member States and by procuring research in new, more competitive ways.

Bernard-Louis Roques: R&D Programs The Truffle 100 is highly representative of the European software industry. All but 3 top 100 vendors have revenues below €1bn. 80% of the Truffle 100 have revenues below €250m. This is an industry of SMEs, that are creating value and thousands of qualified jobs year after. They invest massively in R&D, mostly in their home markets

R&D Programs are considered to be one of the key drivers for growth. Increases in commitments to ICT under FP7 have been announced (from €1.1 billion in 2010 to €1.7 billion in 2013). What is your program in this regard and what actions do you intend to take? Can you give a few figures?

Neelie Kroes: We have to take concrete action that is what I am pushing for, and the standard I should be held accountable to. As someone who has been involved in small businesses my entire life - either working or teaching or regulating in the field - this is something I take very seriously.

Our first concrete action is to pilot a new “light and fast” access scheme for SMEs in the 2011 FP7 funding call, totalling some 780 million euros. And we will be investing hundreds of millions in the next generation network and service infrastructures, in robotic systems to help with ageing, in electronic and photonic components, and in digital content technologies. There is funding for pressing socio-economic challenges too.

In the longer term our actions must be about supporting a better ecosystem for ICT entrepreneurship. Our first piece of work must be in improving the attractiveness for venture capitalists to invest in European SMEs. Our SMEs can do brilliantly - 7 of the 25 firms that went public or were acquired for over US$1bn since 2004 are European. They also tend to be more efficient in using the capital they do attract. But not enough capital is on offer and sometimes it is not available at the most important stages. The guys at Skype went to 26 different European VC firms and couldn't even get €1.5m. So we can't pretend this isn't a known problem.

Second, we need to build new linkages between finance and SMEs. Those offering grants, Business Angel / Venture Capital support, loans and public procurers need to communicate better. Without more coherent support we won't get enough SMEs going global. They will die or hit national ceilings.

Bernard-Louis Roques: Simplification of processes Unlike their US counterparts, the vast majority of SMEs find it too difficult and complicated to access the European R&D programs. They have very limited resources to dedicate. They are reluctant to get involved in the process because they think the administrative workload is too heavy. The process is considered too lengthy, while the chances of getting through are extremely low. There has been very little increase in the participation of the SMEs until now.

What set of actions could you take so as to redirect more of the R&D to the small vendors who need it the most and who represent the most efficient use of funds? Any short term plans measures for simplifying the implementation of the EU R&D Framework Programs?

Neelie Kroes: I agree that the EU paperwork is currently too much. We want the paperwork to be lighter and that is starting as of 2011. But in trying to improve we also have to remember recent progress.We already have set amounts of the money reserved for SMEs. In FP7 SMEs can claim 75% of costs for a given project, up from 50%. And in state aids provided by national governments, there are now dozens of categories of aid that do not require pre-approval from the Commission. These range from consultancies to participation in fairs, from industrial property rights costs to costs of adapting to environmental standards and support for start-ups run by female entrepreneurs.

In trying to change the system to better exploit our ICT potential, we need close cooperation with the research community. There must be an understanding that in the current economic climate all public investments will continue to require clear justification. Essentially, I am arguing for increases in spending at a time when most other budgets are being cut. We won't win that funding without a strong case, and no-one should expect miracles.

Bernard-Louis Roques: Small Business Act Year after year the Truffle 100 reveals that the vendors view the Small Business Act ('SBA') as the 1st set of public measures that could stimulate the software industry. The competition with US vendors is unfair because they have been boosted by a very efficient SBA framework for 60 years. Until now the role of the Commission has been limited to inviting Member States to consider local legislation, or issuing a Communication on the pre-commercial procurements.

What are your views on the matter, and what are your intentions and plans?

Neelie Kroes: It is absolutely true that many of the actions most helpful to SMEs are in the hands of the Member States. I don’t have the powers to change labour or tax laws, for example. I can only flag the issues, which - I have to admit - can be frustrating.

But what I have always done - when at DG Competition and now with the Digital Agenda - is try to make access to state aids and other public funding as flexible and open to SMEs as possible. I also acknowledge that software is one of Europe's relative weaknesses and I have observed that administrative burdens and differences in legal systems can contribute to holding European SMEs back. This means that the public sector carries a clear responsibility for making the changes required to allow the EU software industry to breathe and grow.

It is important to the bear in mind the “virtuous circle” I am trying to stimulate across all digital markets, and not just software. Better networks drive demand and create new opportunities for software use. A real digital single market opens new doors for the software industry. New content and new services, such as software, drive the other forces. And the field of software is expanding well beyond the traditional packages - the world of apps is fascinating and exciting and I hope entrepreneurs use their initiative to lead those trends.

Bernard-Louis Roques: Venture Capital Most European vendors are too small also because they are undercapitalized. They need more Venture Capital and bank financing. This is an area where today's dominant world leaders,mostly American, were start-ups financed by Venture Capital less than a generation ago.

In the past the commission has developed specific “financial instruments” under the CIP to support equity investment. The 2007-13 CIP has several schemes and a budget of over €1billion to facilitate access to loans and equity finance for SMEs Are there any plans to bolster Venture Capital?

Neelie Kroes: As you say, the Commission is working hard to develop innovative financing solutions including ways to support venture capital. I must stress that the process of improving the venture capital environment is a long one. It's a cultural issue as well as a policy issue, and here as well we find fragmentation and an absence of a true internal market. The VC industry itself may also need to develop more specific expertise in the ICT markets. I recently spoke to SMEs and start ups in the area of healthcare, eHealth and Ambient Assisted Living. They complained of the difficulty to get funding and the shortage of specific knowledge of their market among VC firms. I hope this is not a widespread problem, but I suspect it might be.

We can't go on with our firms getting less than 1/3 of the funding that similar firms in the in US, but we also need to find ways to ensure European firms remain more efficient that US and other firms in using the capital they do get offered. We are more efficient now, and that is an advantage we can't afford to lose. And we also need European firms to think bigger - they should have global ambitions. If we scale up the vision and offer those visionaries more cultural support, the pitch becomes more attractive to investors.



Figures

  • Revenues 27.1 bn€ (up from 25 bn€ last year)

    Total revenues for the Truffle 100 are 37.242 bn€

    A concentrated industry : 79 % of revenues come from the top 25 vendors(70%last year)

     

    % Revenues 2008 2009

    SAP

    42 % 40 %
    TOP 3 55 % 50 %
    TOP 5  59 % 56 %
    TOP 10 67 % 65 %
    TOP 50 91 % 91 %

    47 vendors have revenues > 100 m€
    they account for 96 % of Truffle 100 revenues

    European, 100 million euro vendors, 2010

    72 vendors have revenues > 50 m€
    they account for 96.2 % of Truffle 100 revenues

    European, 50 million euro vendors, 2010

    All Truffle 100 have revenues > 25 m€


  • World-class national champions
    Vendor Country Revenues (m€) % of
    Truffle 100
    SAP DE 10 672 39.7 %

    Sage

    UK 1 614 6.0 %

    Dassault Systemes

    FR 1 251 4.7 %

    Software AG

    DE 847 3.2 %
    Autonomy UK 820 3.0 %
  • Facing global competition

    European, software vendors growth, 2010

  • Growth

    … Growth and Resilience

    Revenues growth year on year:+7%
    Despite increased global competition




  • Dependant on capital markets

    74 % of the Truffle 100 are listed on a stockexchange. They account for:


    88.9% of revenues,
    88.7% of R&D investments,
    … and 95.6% of profits

Revenues > 27.1 bn€

Total revenues for the Truffle 100 are 37.242 bn€
A concentrated industry : 79 % of revenues come from the top 25 vendors(70%last year)

 

% Revenues 2008 2009

SAP

42 % 40 %
TOP 3 55 % 50 %
TOP 5  59 % 56 %
TOP 10 67 % 65 %
TOP 50 91 % 91 %

47 vendors have revenues > 100 m€
they account for 96 % of Truffle 100 revenues

European, 100 million euro vendors, 2010

72 vendors have revenues > 50 m€
they account for 96.2 % of Truffle 100 revenues

European, 50 million euro vendors, 2010

All Truffle 100 have revenues > 25 m€

World-class national champions

Vendor Country Revenues (m€) % of
Truffle 100
SAP DE 10 672 39.7 %

Sage

UK 1 614 6.0 %

Dassault Systemes

FR 1 251 4.7 %

Software AG

DE 847 3.2 %
Autonomy UK 820 3.0 %

Facing global competition

European, software vendors growth, 2010

Consistent profits

3.7 bn€ aggregated net profits, up from 3.6 bn€ last year

Profits bn€ 2005 2006 2007 2008 2009
  2.8 2.8 3.2 3.6 3.7

  % of revenues % of profits
  Truffle 100 2009 2008 2007 2006
SAP 40% 46% 51% 60% 67%
TOP 3 50% 58% 62% 73% 83%
TOP 5 57% 66% 67% 75% 90%
TOP 50 91% 91% 92% 95% 97%

Size matters but small vendors are catching up
Profits grow exponentially with size
The bigger, the richer


Profitability m€ % of revenues
TOP 3 2.172 16.0 %
TOP 50 3.417 10.7 %
LAST 50 350 6.8 %
LAST 25 87 8.6 %

Strategic R&D firepower ~ 3.8 bn€ invested in 2009

Total R&D investments 3 829 m€


Over 54 000 R&D jobs

Truffle 100 total R&D headcount 54 180

Countries Number R&D employees % of total R&D investment (m€) % of total
Germany   19 395   35.80%   1860   49%  
UK   11 104   20.50%   727   19%  
France   7 721   14.30%   591   15%  
Netherlands   2 778   5.10%   87   2%  
Sweden   1 495   2.80%   80   2%  
Norway   984   1.80%   46   1%  
Finland   1 364   2.50%   83   2%  
Italy   1 470   2.70%   58   1.50%  
Switzerland   1 289   2.40%   67   1.80%  
Belgium   480   0.90%   79   2.10%  
Poland   5 355   9.90%   76   2.00%  
Denmark   275   0.50%   19   0.50%  
Czech Republic   125   0.20%   24   0.60%  
Spain   200   0.40%   19   0.50%  
Austria   145   0.30%   13   0.30%  

Breakdown by country

Countries Software revenues (€ millions) % of total # Software companies
Germany   12 839   47.60%   12  
UK   6 037   22.30%   26  
France   3 070   11.40%   22  
Netherlands   811   3.00%   4  
Sweden   709   2.60%   5  
Norway   616   2.30%   8  
Finland   518   1.90%   4  
Italy   508   1.90%   1  
Switzerland   482   1.80%   4  
Belgium   472   1.70%   1  
Poland   455   1.70%   1  
Denmark   175   0.60%   1  
Czech Republic   145   0.50%   1  
Spain   114   0.40%   1  
Austria   70   0.30%   2  


Measures: Tax breaks and SBA needed

What measures should be adopted to serve the cause of european software industry?
(multiple answers possible)



Ranking 2010

Rank Region Country Software
Revenues
Number of Companies R&D Headcount 2008
1   Rhine-Main-Neckar   Germany   11,707   4   15,981   
2   South East England*   United Kingdom   3,064   20   7,283   
3   Île de France   France   2,613   16   6,451   
4   North East England   United Kingdom   1,614   1   2,248   
5   East England   United Kingdom   1,124   3   1,153   
6   Zuid-Holland   Netherlands   703   2   1,318   
7   Eastern Norway   Norway   673   4   1,038   
8   Waals Brabant   Belgium   605   2   723   
9   Bavaria   Germany   579   3   2,020   
10   Southern Finland   Finland   518   6   1,364   
11   Podkarpackie   Poland   455   1   5,355   
12   Geneva   Switzerland   350   2   728   
13   Uppland   Sweden   314   4   477   
14   Rheinland   Germany   293   1   1,086   
15   Rhône-Alpes   France   291   3   868   
16   Lombardia   Italy   195   2   575   
17   Piemonte   Italy   193   1   525   
18   Berlin   Germany   190   2   204   
19   Hovedstaden    Denmark   175   1   275   
20   Nord-Pas-de-Calais   France   166   3   402   
21   South Moravian Region   Czech Republic   145   1   125   
22   Oster-Gotland   Sweden   114   1   526   
23   Biscay (Bilbao)   Spain   114   1   200   
24   Nordwestschweiz   Switzerland   94   1   511   
25   Yorkshire   United Kingdom   81   1   120   
26   Lazio   Italy   66   1   250   
27   Noord-Holland   Netherlands   64   1   1,400   
28   Western Norway   Norway   62   1   122   
29   Southwest England   United Kingdom   59   1   62   
30   Skane   Sweden   58   1   76   
31   Veneto   Italy   54   1   120   
32   Utrecht   Netherlands   44   1   60   
33   Lower Austria   Austria   39   1   52   
34   Zurich   Switzerland   38   1   50   
35   Vaster-Gotland   Sweden   38   1   96   
36   Western Midlands   United Kingdom   36   1   157   
37   Northern Norway   Norway   32   1   50   
38   Vienna   Austria   31   1   93   
39   Rhineland-Palatinate   Germany   29   1   36   

(*) including Greater London