German Software Industry Too Provincial

Germany has the second largest market for software in the world, with $75 billion spent on sofware and related services in 2012.  So why, with the notable exception of SAP, are there so few German software brands with a global presence?  In fact, of the 250 largest software companies in the world, only 5 are from Germany.

The odd thing is, Germany is a global leader in exporting:  think automobiles, hardware, chemical products, etx. – consistently running huge trade surpluses.

But not in software. For software firms, export is a "Fremdwort".

The consulting group TBconsult looked into this and found the following:

• Lack of funding (capital) is not the issue (this is breaking news and we will return to this in a later post)
• Lack of qualified staff is not the issue (this is breaking news and we will return to this in a later post)
• The somewhat technical product focus»  of German software companies is not the issue
• The German software companies develop their product primarily for the German market and that is an issue.
• The German software companies do not even consider international markets and that is an issue.
• People in the German software industry have little personal network outside Germany and that is an issue. (Thank you XING!)
• Relationship to and/or location in a “cluster” ecosystem makes no
  difference (this is breaking news and we will return to this in a later
  post)

A recent conference on the German Software Industry in Berlin concluded that the German market was large enough to sustain software producers and they basically lacked the will to tackle international markets (conference proceedings can be downloaded here). Globalization, the confrerees concluded, must be built into the software in the design stage:

Die Expertendiskussion zeigte Kriterien für eine erfolgreiche Internationalisierung auf. Die
heimische Software- und Digitalwirtschaft konzentriert sich mit ihren Produkten und Diensten zu oft allein auf die Märkte des deutschen Sprachraums. Dagegen sollten die globalen Märkte von vornherein – also bereits bei der Planung und Gründung von Unternehmen und neuen Produkten – berücksichtigt werden.

(The expert participants came up with criteria for successful globalization. The domestic software and digitial economy focuses its products and services all too often just on the German-speaking region.  But global markets need to be considered from the very beginning – already in the start-up and planning of the firms and with the new products.)

 

As a first step, you might consider deleting your XING account and switching to LinkedIn.