PAC Webinar - The French IT market is changing. Are You?

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The French IT market is changing. Are You? The Software & IT Services Market in France - Key Trends, Growth Drivers and Opportunities Tuesday, September 17, 2013

2013

PAC Webinar

© PAC 2013

Today’s presenters

Your questions are welcome!!

Vincent Gélineau Principal Consultant IT Services PAC France

Franck Nassah SVP Operations PAC France

Olivier Rafal Principal Consultant Software Markets PAC France

2

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Economic and IT Environment

IT Challenges for Users

Trends & Impact on the IT Market

Vendor Landscape

Conclusion

Agenda

2013 3

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Economic and IT Environment

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Economic Situation Europe: GDP Growth in 2013

GDP Growth forecast 2013

2013 5

Source: OECD, IMF, 2013

0,3%

0,7%

1,5%

-1,8% -1,6% -2,0%

0,0%

2,0%

France Germany United Kingdom

Italy Spain

© PAC 2013!

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Software and IT Services – France compared to Western Europe in 2013

2013

Source: SITS® – Global Datamart – Western Europe, 2013

CAGR 13/17

Market Share 2013

CAGR = 2,7%

CAGR = 3,5%

CAGR = 3,5%

CAGR = 2,2%

CAGR = 3,5%

Western Europe •  Volume in 2013 = €230,580m •  CAGR 13/17 = 3.3%

6

CAGR = 3,2%

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IT Challenges for Users

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Challenges of the IT management User Survey 2013

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Cost reduction and efficiency pressure

in IT operation Active contribution

of IT to optimize business processes

Smooth and secure IT operation

Active contribution of IT to promote

business innovation

Optimization of end user experience

Shortage of skilled professionals

Efficient organization of IT sourcing processes

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0 100 0 100

France Worldwide

Big challenge Minor challengeNo challenge Do not know

Share in percentage of the responding companies, n = 139/1,577

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Use

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What are the current IT relatedchallenges for your company?

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Evolution of IT budgets User Survey 2013


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Decreased stronglyDecreased considerablyDecreased slightly

Increased stronglyIncreased considerablyIncreased slightly

Compared with the previous year 2012, how much hasthe size of the company’s IT budget increased

or decreased in 2013?

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Evolution of spending in Application areas User Survey 2013


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IT security/ cyber security

Mobile device management/ mobile applications

Customer relationship management (CRM)

Business intelligence (BI)

Unified communication & collaboration (UCC)

Social media/ social collaboration

Supply chain management (SCM)

Enterprise content management (ECM)

Finance management (FM)

Human resources management (HRM) Supplier relationship management (SRM)

Product lifecycle management (PLM)

................................................

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Spend less Spend more


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Considering the following application areas, doesyour company intend to spend more, about the same or

less in the next two years?

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France: Software market – Size and growth in 2013 (by Subsegment)

2013

Source: SITS® – Market SITS, 2013

Total Software Products Market •  Volume in 2013 = €10,317m

•  CAGR 13/17 = 3.0%

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France: IT Services market – Size and growth in 2013 (by Subsegment)

2013

Source: SITS® – Market SITS, 2013

Total IT Services Market •  Volume in 2013 = €26,945m

•  CAGR 13/17 = 2.5%

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Insurance!

Public (incl. Health & Social)!

Telecom!

Utilities!

Retail & Wholesale!

Services (incl. Media)!

Transport!

Banking!

France: Analysis by Vertical Software & IT Services market

Manufacturing (incl. Oil, Chemicals)"

Volume 2013! Growth drivers!Consolidation ERP, AM, CRM, Embedded

CAGR 13/17!

Compliance, Multichannel, Mobile Banking, AM

Modernization, Compliance, SaaS, Multichannel, BI

AM, BI, Software Packages, E-government

Cloud Computing , Next Gen Network, Global Sourcing

Smart Grid, Security, AM, Open Source

Big Data, Multichannel, CRM 2.0, Mobility, SCM

E-commerce, SaaS, Mobility, HR, Enterprise Social Networks

Cloud Computing, CRM, Testing

Very strong Strong Very weak weak Average

Competition!

2013

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Trends & Impact on the IT Market

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Changes on the Demand Side!

Opportunities & challenges for suppliers

Opportunities & Challenges for Suppliers!

2013

IT becomes commodity

Added value moving from IT towards business/ IT alignment

Buying power moving from CIO to business users involvement of general management in IT decisions

Business users look for a business service, not for a technology platform

Business services mean higher verticalization

Customer expectation: from innovation & added value in IT towards innovation & added value through IT

Reducing number of IT suppliers

Standardization & demand for pre-customized solutions

Ongoing price pressure especially on T&M projects and through increasing offshoring

Need for stronger positioning in real process consulting

Increasing importance of customer relationship outside the IT department

Need to position solutions via functionality and process support

Increasing focus on vertical portfolio & go-to-market. Need for vertical center of excellence

Need to demonstrate the business value of services and solutions

Ability to deliver end-to-end services & take care of the “integrator role”

Need to develop solutions based on packaged solutions and SaaS solutions

Internationalization & investments in foreign countries, including emerging countries

Need to increase international capabilities to accompany customers

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IT spending: Major Drivers & Inhibitors

•  SaaS

•  Cloud

•  BI/ Big Data

•  Social Enterprise

•  Enterprise Mobility

•  (Cyber) Security

•  ‘Customer-centric’ strategies

DRIVERS

•  Ongoing budget pressure

•  Application Services

•  AM

•  Infrastructure Outsourcing & Hosting

•  Cloud Computing

•  Consolidation of IT environments

•  Strong price competition

INHIBITORS

2013 16

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Top 100 IT Spenders in France

2013

22 Top IT spenders budget IT > €500m

43 Large IT spenders budget IT = €150-500m

35 Mid-large IT spenders budget IT = €50-150m

17 Top IT spenders budget IT > €500m

43 Large IT spenders budget IT = €150-500m

40 Mid-large IT spenders budget IT = €50-150m

2006 2012

Source: Top 100 IT Spenders in France, July 2013

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Evolution of the Top 100 IT Spenders’ Budgets By budget line

2013

Source: Top 100 IT Spenders in France, July 2013

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Vendor Landscape

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France: IT Service providers consolidation in 2001-2012

41%

12% 14%

33%

Market shares of top players in 2006

Top 10 +10/Top 20

+30/Top 50 Rest of the market

41%

12% 18%

29%


Top 10 +10/Top 20


28%

10% 11%

51%


Top 10 +10/Top 20


2013

•  A wave of consolidation during the years 2001-2006, with major mergers (Atos/SEMA, Sogeti/Transitiel, Unilog/Logica, etc.)

•  The market shares of the top 20 ITS remained stable between 06 and 11.

•  The consolidation was more significant among the Tier 2 companies (top 20 to 50) due to mid size acquisitions strategies and the emergence of some Indian companies.

Source: SITSI® IT Services – Market View – 2002/2007/2013 20

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IT Services: Top 10 Providers in France

2013

Source: SITSI® IT Services – Market View – France, 2013

IBM Capgemini

Atos

HP

Orange Business Services

CGI

Accenture

Sopra Group Steria

CSC

0%

1%

2%

3%

4%

5%

6%

7%

8%

0% 20% 40% 60% 80% 100%

Mar

ket S

hare

201

2 in

%

IT Services Revenue in % of Total Revenue

21

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Microsoft

Oracle

IBM

SAP

Sage EMC HP

Dassault Systemes Symantec

Adobe Systems 0%

5%

10%

15%

20%

0% 20% 40% 60% 80% 100%

Mar

ket S

hare

201

2 in

%

Software Revenue in % of Total Revenue

Software: Top 10 Providers in France

2013

Source: SITSI® Software – Market View – France, 2013

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The IT Ecosystem is Changing

Business Users

Business Consultants Technology

Suppliers

CIO Organization

Application Services Suppliers

Infrastructure Services Suppliers

Telcos

Offshore

Business Services Suppliers

New Players

Existing Position

Future Position

Legend:

2013 23

Application Software Vendors

SaaS Vendors

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Key Takeaways

Market Opportunities

Market Challenges Standardization & demand for pre-

customized solutions

Reducing number of IT suppliers

Customer intimacy/ increase added value

The market provides plenty of opportunities for those suppliers able to offer innovative and value-based solutions

Business users look for a business service and gain budget

IP/ software investments

Consulting competencies

IT becomes commodity

Broad portfolio

2013

Digitalization of the economy New value proposition and ecosystem

25

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From strategy to execution, PAC delivers focused and objective responses to the growth challenges of Information and Communication Technology (ICT) players. Founded in 1976, PAC is a privately held research & consulting firm for the software and ICT services market. PAC helps ICT vendors to optimize their strategies by providing quantitative and qualitative market analysis as well as operational and strategic consulting. We advise CIOs and financial investors in evaluating ICT vendors and solutions and support their investment decisions. Public institutions and organizations also rely on our key analyses to develop and shape their ICT policies. For more information, please visit: www.pac-online.com PAC’s latest news: http://blog.pac-online.com""

About us!

2013

Franck Nassah SVP Operations PAC France M: +33 7 78 81 59 60 E: [email protected]

Vincent Gélineau Principal Consultant IT Services PAC France M: +33 7 63 23 01 80 E: [email protected]

Olivier Rafal Principal Consultant Software Markets PAC France M: +33 7 63 23 01 84 E: [email protected]

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PAC at a glance

The specialist for the Software and IT Services industry: providing support to IT Services and Software suppliers, IT users, influencers and investors."

The only European Group with Global coverage: strong local competences and global response covering 35 countries continuously and 100+ on an ad-hoc basis."

An integrated approach covering the totality of your market insight needs: Business development, Strategic consulting, Marketing communications."

Over 35 years of success serving all major Software and IT Services players globally.

2013

Supports ICT vendors in optimizing their strategies;

Advises CIOs and financial investors in evaluating ICT vendors and solutions;

Helps Public institutions and organizations to shape their ICT policies.

> 95% client loyalty

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North America!Canada"USA!!Latin America!Brazil"Mexico"Rest of Latin America"!!

Eastern Europe!Czech Republic"Hungary"Poland"Romania"Russia"Slovakia"Turkey"Rest of Eastern Europe"""

Asia Pacific!Australia"China"India"Japan"Rest of Asia Pacific ""Middle East & Africa!South Africa"Middle East"Rest of Africa""

SITSI® Market Research – Geographic Coverage!

2013 30

Western Europe!Austria"Belgium"Denmark"Finland"France"Germany"Italy"Netherland"Norway"Portugal"Spain"Sweden"Switzerland"UK"Rest of Western Europe"

SITSI® provides detailed market figures, vendor rankings and reports on 35+ countries and regions – covering 93 percent of the worldwide IT spending.

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SITSI® RESEARCH on France

•  SITSI® France •  Market Reports (IT Services, Software, Manufacturing, Banking, etc.)

•  Market Figures (Software and IT Services, Cloud Computing, Verticals, etc.)

•  Vendor Rankings (IT Services, Software, Manufacturing, Banking, etc.)

•  SAP Services Program •  Specific Reports •  IT Services Rates Database •  Multi-Client Studies (MCS) (Managed Security Services, Social Collaboration, etc.)

2013

Your contact for more information: Stéphane Maton [email protected]

+33 6 34 23 55 22

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PAC Webinar - The French IT market is changing. Are You?

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