Businessmodel of Software AG

Customer Segments

Software AG has a mass market business model, with no significant differentiation between customer segments. The company targets its offerings at businesses of all industries and sizes that want to build their own digital applications.

Value Proposition

Software AG offers three primary value propositions: performance, innovation, and brand/status.

The company has demonstrated strong performance through tangible results for clients. High-profile examples of these outcomes include the following:

• Nissan Europe used Software AG’s Service-Oriented Architecture (SOA) technology to evolve its mainframe environment, resulting in overall vehicle inventory reduction of 35% over three years
• Flughafen Zürich AG used Software AG’s webMethods suite to achieve service ROI within one year, generating more than 100,000 CHF in savings
• Cargolux Airlines used Software AG’s ARIS products to find inefficiencies in its organizational processes, in the process identifying 180 areas for improvement
• CERN used Software AG’s BigMemory Max solution to reduce overall system response times, increase throughput, and reduce the number and cost of maintenance repair incidents
• ING used Software AG’s Apama Analytics & Decisions Platform and consulting services to achieve faster initial solution delivery – three months instead of 18 months The company places a high priority on innovation. It is heavily involved with Software Innovation for the Digital Enterprise, a program managed by Germany’s Federal Ministry of Education and Research that creates partnerships between the business and scientific communities. It also participates in many projects funded by the European Commission for the research of new technologies.

The company has established a strong brand as a result of its success. It is the second largest software provider in Germany and the seventh largest such firm in Europe. It serves more than 10,000 enterprise customers in more than 70 countries. It claims to have developed the world‘s first end-to-end digital business platform. Lastly, it has won many honors, including recognition as the top vendor in the Streaming Analytics report by Bloor (2016), as a leader in the Big Data Streaming Analytics report by Forrester Research (2016), and as a leader in several Garner Magic Quadrants.

Channels

Software AG’s main channel is its direct sales team. The company promotes its offering through its website, social media pages, webinars, live online demos, advertising, road shows, and conferences.

Customer Relationships

Software AG’s customer relationship is primarily of a personal assistance nature. The company assists customers in the following ways:

Support Services - The company offers the following paid services:

• Enterprise Active Support – Provides 24/7 phone support, prioritization of incident help requests with 2x faster response times, and a resolution plan within the first four hours
• Enterprise Premium Services – Provides access to Technical Engineers, who offer go-live support, after-business hours support, and operational readiness checks for new customers; Customer Success Managers, single points of contact who provide proactive management of support requests; and Dedicated Engineers, who provide complementary support for existing staff Training Services – The company offers comprehensive instructor-led product training through public, on-site classroom, and remote formats, as well as a certification program.

Despite this orientation, there is also a self-service component. The company’s website offers an eLearning program for self-directed learning. It also features a “Resource Center” that includes analyst reports, books, brochures, videos, fact sheets, financial reports, free trial software, tutorials, newsletters, two-minute overviews, webinars, and white papers. Other parts of the site have case studies, product documentation, and answers to frequently asked questions. Lastly, there is a community element in the form of various forums where customers can interact with peers.

Key Activities

Software AG’s business model entails designing and developing its software and related services for customers.

Key Partners

Software AG maintains the PowerUp Partner Program, which includes over 300 members. Specific partner types include OEM Partners, Sales Partners, Service Partners, Value-Added Resellers, and Technology Partners. They do one or more of the following:

• Implement - Help deploy the company‘s technology for customers, while also advising and consulting with them
• Sell – Resell part or all of the Digital Business Platform as a solution
• Build – Create joint solutions with the company or incorporate its products into their own offerings to extend offering capabilities and create additional value for their customers Program members receive benefits such as product documentation, training, sales and marketing support, invitations to customer-facing events, a presence on the company’s website, and access to the Partner Business Portal.

Specific Technology Partners include Braintribe, Connx, Fujitsu, HP, IBM, Lanner, Microsoft, Oracle, Progress Software, RXP, and Zementis. Specific Service Partners include Accenture, Amazon Web Services, Capgemini, CGI, Cognizant, Deloitte, HCL, Infosys, PwC, Tata Consulting Services, Tech Mahindra, and Wipro.

Beyond this program, Software AG maintains alliances with universities, research institutes, and government institutions for the purposes of collaborative research.

Key Resources

Software AG’s main resource is its proprietary software platform, which serves over 10,000 customers.

It also depends on its human resources in the form of technology staff to maintain and enhance the platform, sales/marketing staff to promote and sell it, training/consulting staff to provide instruction, and customer service staff to provide support.

Cost Structure

Software AG has a value-driven structure, aiming to provide a premium proposition through significant personal service. Its biggest cost driver is sales/marketing expenses, a fixed cost.

Other major drivers are in the areas of research/development, a fixed cost, and cost of sales, a variable expense that includes all production-related full costs, such as labor costs for consulting projects.

Revenue Streams

Software AG has four revenue streams: fees paid for software licenses (perpetual and temporary), charges for maintenance contracts, charges for service contracts, and fees for other services.