Software Industry Survey
• Run in Finland since 1997
• 2014 marks the 17th survey
• The longest running software
industry survey in the world
• Provides annual overview of the
industry
Survey in the 2014
• Data collection in early summer
• Covers the whole software industry
– Product and services firms
– In 2014, 293 full and 99 partial
responses this far
• Cooperating universities
– University of Jyväskylä and Aalto University
Summary of results 2014
26.6.2014, Eteläranta 10
Eetu Luoma, University of Jyväskylä Mikko Rönkkö, Aalto University
Contents
• Overview of the Finnish Software and IT Services Sector
• General Results of the Software Industry Survey 2014
– Growth curves for SMEs and large firms
– International revenues
– Platforms used in software development
• Changing research theme: Marketing and sales
Overview of the Finnish Software and
IT Services Sector
Eetu Luoma, Hanna Kinnunen, Marko Tanskanen University of Jyväskylä
World software markets
• The worldwide software market grew 5.5% in 2013 (IDC)
– Higher than 4.3% in 2012. Positive scenario continues.
• Key trends: Cloud computing and Software- as-a-Service (SaaS),
Data management and analytics, Collaboration and Content applications
• Consolidation of the industry continues, platforms and
The Finnish Software and IT services grew
11.4% in 2013
• Statistics Finland estimates
that the Finnish software and IT services sector grew 11.4% in 2013. • Trend continues: Q1 this year +15.4% • Estimate for GDP in 2013: -1.4% compared to 2012 7.9% -‐9.4% 4.4% 5.2% 8.4% 11.4% Growth of Finnish so7ware and IT services industry
Re ve nu e, B E ur o
IT services companies in Helsinki Stock
Exchange had varied results
Company Revenue 2013 Revenue
change Op. income change Changes in business
QPR 8,688,000 -‐6.8% -‐2.7% Increase in SaaS
Affecto 132,896,000 -‐0.4% -‐1.6% From projects to conGnuous services Solteq 38,100,000 -‐2.3% -‐1.4% From projects to conGnuous services SSH CommunicaGons Security 13,300,000 11.8% -‐7.7%
Elektrobit 199,281,000 14.6% 3.5% New profitable business: AutomoGve Basware 123,349,000 8.5% -‐4.6% Increase in SaaS
Comptel 82,668,000 0.3% 25.2% Growth from applicaGons
F-‐secure 155,100,000 -‐1.3% 4.6% Several new product releases: Cloud and SaaS.
Digia 99,740,000 -‐0.7% -‐3.7% From projects to products. Growth from Qt ecosystem Tieto 1,676,300,000 -‐8.2% 1.8% Sold BUs, Increase in Cloud and SaaS
Innofactor 32,685,000 73.7% 3.6% Growth from Microso7 ecosystem Tecnotree 73,900,000 0.7% 19.1% From projects to products
Ixonos 33,397,000 -‐41.3% 1.2% Reorganizes to serve selected segments
• Overall, the revenues decreased -4.6% from 2012
Games industry growing rapidly
Highlights • CAGR 2004-2013: 39.5% • Estimated 2200 employees in Finland• Most of the revenue is
exports Source: Neogames
Conclusions and interpretations
• Overall, the Finnish software and IT services industry grew
11.4% in 2013, driven by SMEs
• The public listed companies had varied results
– Reports on changes of customer demand, due to economic cycles
– Reports on reacting on changes in demand and trends
• Games industry growing rapidly
– Driven by a few star performers, Rapidly changing business
General Results of the Software
Industry Survey 2014
Eetu Luoma, University of Jyväskylä Mikko Rönkkö, Aalto University
Recap from last year:
Outlooks for 2013 are conservative
-5 0 5 10 15 20 G ro w th o f re ve n u e , % 2008 2009 2010 2011 2012 2013 Year Realized growth Revenue < 1Meur Revenue 1-10Meur Revenue >10Meur Expected growth Revenue < 1Meur Revenue 1-10Meur Revenue >10Meur
Firm level growth in decline. For SMEs,
growth rate matches the worldwide market
0 5 10 15 20 G ro w th o f re ve n u e , % 2010 2011 2012 2013 2014 Year Realized growth Revenue < 1Meur Revenue 1-10Meur Revenue >10Meur Expected growth Revenue < 1Meur Revenue 1-10Meur Revenue >10Meur
No changes in sources of revenue
3% 3% 3% 15% 15% 15% 2% 2% 2% 8% 8% 8% 33% 33% 33% 3% 3% 3% 11% 11% 11% 8% 8% 8% 6% 6% 6% 11% 11% 11%3rd party software licenses
3rd party software licenses 3rd party software licenses
ASP and SaaS
ASP and SaaS ASP and SaaS
Content and ads
Content and ads Content and ads
Deployment project Deployment project Deployment project Development project Development project Development project Hardware Hardware Hardware Maintenance Maintenance Maintenance
Not software related
Not software related Not software related
Other software related
Other software related Other software related
Own software licenses
Own software licenses Own software licenses
Sources of revenue Sources of revenue Sources of revenue N=321 N=321 N=321 Survey 2013: Survey 2014:
Over half of the firms have international
revenues; Growth has stabilized
20% 20% 20% 40% 40% 40% 60% 60% 60% 80% 80% 80% 100% 100% 100% 2008 2008 2008 2009 2009 2009 2010 2010 2010 2011 2011 2011 Year Year Year
Significant international revenue
Significant international revenue Significant international revenue
Minor international operations
Minor international operations Minor international operations
Plans to internationalize
Plans to internationalize Plans to internationalize
Not currently relevant
Not currently relevant Not currently relevant
Have previously had
Have previously had Have previously had
N=2216 N=2216 N=2216 20% 40% 60% 80% 100% 2010 2011 2012 2013 Year
Significant international revenue Minor international operations Plans to internationalize Not currently relevant Have previously had
N=1502
Nordic Countries and Western Europe
remains important areas for exports
89 89 89 86 86 86 48 48 48 47 47 47 12 12 12 26 26 26 10 10 10 13 13 13 11 11 11 8 8 8 0 0 0 20 20 20 40 40 40 60 60 60 80 80 80 100 100 100 Number of firms N umb er of f irms Number of firms Nordic Countries Nordic Countries Nordic Countries West Europe West Europe West Europe
East Europe and Russia
East Europe and Russia East Europe and Russia
North America
North America North America
Mid and South America
Mid and South America Mid and South America
East Asia East Asia East Asia South Asia South Asia South Asia South Pasific South Pasific South Pasific Middle East Middle East Middle East Africa Africa Africa N=169 N=169 N=169 85 73 40 40 10 20 7 13 11 7 0 20 40 60 80 N u mb e r o f firms Nordic Countries West Europe
East Europe and Russia North America
Mid and South America East Asia South Asia South Pasific Middle East Africa N=135 Survey 2013: Survey 2014:
Conclusions and interpretations
• Survey results in line with official statistics; confirm that SMEs
drive the growth of the industry
– Growth rates are generally down
– Outlooks for 2014 conservative, but stable.
• Large number of companies capable of attaining international
revenue, but the growth has stabilized
– Internationalization is a slow process for “traditional” software businesses
Cloud practically as important for software
development as traditional server platforms*
• Finnish software firms adopt
cloud computing platforms for software development with an accelerated pace**
• Use of social media platforms
(like Facebook) for software development decreased from 13.5% in 2012.
• (Use of mobile platforms
incomparable to previous years).
* We emphasize, that this does not include use of a platform for other purposes. For example, a software firm may have a cloud-based email service, but it does not necessarily develop software for cloud platforms.
Cloud is used both for cost efficiency and new
business opportunities
• SaaS firms exploit new
business opportunities.
• Development service firms
use cloud, most likely, to decrease operational costs.
• Comprehensive and complex
cloud offering demand for new capabilities and roles,
such as “cloud brokers”.
2% 19% 2% 9% 31% 1% 11% 8% 5%
14% 3rd party software licenses
ASP and SaaS Content and ads Deployment project Development project Hardware
Maintenance Not software related Other software related Own software licenses
N=152
Sources of revenue by companies developing so7ware with cloud pla`orms:
Mobile is a close race of three major
platforms, Windows Phone slowly closing iOS
• Android, iOS and Windows
Phone all grew, no change in order*
• Former Nokia platforms
Symbian and Meego
discontinued; Qt platform now developed by Digia still live and well.**
* Figures for 2012 are 20.0% (Android), 18.5% (iOS) and 14.8% (Windows Phone) ** Digia reports increase in revenues from Qt business to be up by 25% globally in 2013.
Conclusions and interpretations
• Mobile is a game of three (Android, iOS, Windows Phone). This
reduces the multi-homing costs for Finnish app developers.
– Application store sales keep increasing, which attracts more developers
• Finnish software firms have adopted cloud computing platforms
quickly. Cloud is used for cost efficiency and new business opportunities.
• Also, more than one third (38%) of respondents offer platform or
Focus on software firms’ flexibility
Why flexibility?
• Research has demonstrated positive impact of flexibility to
company performance under economic cycles.
• Wildly successful firms like Apple and Amazon have been able to
enter adjacent market or create new markets. Applying existing resources to new purposes and organizing to new activities
Finnish software companies assess themselves
as flexible in resources and adaptability
Our products/services are easily modifiable
We are very fast in creating new
Modifying our products/services to new
We are unable to utilize the resources of our
We are able to organize into new activities
We can organize into new activities with our markets creates significant costs.
to new markets.
quickly.
company fast enough to respond to products/services to new segments.
partners quickly. 2% 10% 13% 45% 29% 4% 24% 19% 36% 16% 13% 44% 21% 17% 5% 13% 49% 26% 10% 2% 2% 9% 17% 53% 20% 1% 9% 15% 53% 23%
Flexibility is associated with platforms and
experimenting approach
We experiment with different business models
We collect information about the customer needs often We use cloud computing for software development
We offer platform or interface to other companies for software development We offer standardized products
We are a new / young as a company
✔
✖ ✔✔
✔✔
✖ Not associated with flexibility ✔ To some extent associated Highly associated
Conclusions and interpretations
• The software companies which provide platforms or interfaces to
other firms for software development report more flexibility than companies on average.
• The software companies which embrace experimenting approach
to developing business report more flexibility than companies on average.
Contact information
• http://www.softwareindustrysurvey.fi
•
Eetu Luoma, University of Jyväskylä
eetu.luoma@jyu.fi; +358 40 805 4291