Trend Book

Trend Book Kai Goerlich Global Strategy & Business Development SAP Services 2010, Version 1.4

Preface This Trend Book covers economical, sociological and technological trends. It is an ongoing collection and will be updated regularly to stay in synchronization with the changing world. To make the Trend Book digestible, we condensed the trends as much as possible without corrupting the description and deductions. If you need further details, please do not hesitate contacting us. The trends and deductions are scenarios, which means that they give us more of a direction and less an exact description of the things coming up. Links Trend Book – Online version on SAP Portal The Future Research Group – The trend discussion group Trend Blog – Latest comments on trends Regards Kai

Content • Industry Trends 4.1 Overview • 4.2 Manufacturing • 4.3 Aerospace & Defense • 4.3 Automotive 4.4 Chemical 4.5Consumer Products 4.6Energy/Oil & Gas/Utilities 4.7 Banking 4.8 Insurance 4.9Logistics 4.10Public Sector 4.11 Health Care 4.12Retail 4.13Telecom 4.14 Professional Services • IT Market Trends 5.1 IT Market Overview 5.2 Spending Priorities 5.3 Value of IT 5.4 Emerging Technologies Abstand • Summary • Kondratieff Long Wave • Meta Trends 3.1 Top Trends 2010 – 2025 3.2 Top Technology Trends 3.3 Global Economy 3.4 Global Risks 3.5 Globalization 3.6 Ecology 3.7 Demographic Change 3.8 Migration 3.9 Urbanization 3.10 Quality of Life 3.11 Life Style 3.12 Consumerism 3.13 Job Creation 3.14 Research & Development 3.15 Open Innovation/Mass Customization 5.5 Green IT 5.6 Cloud Computing 5.7. IT Maturity • Software Market 6.1 Overview 6.2 ERP 6.3 Analytics • IT Services Market 7.1 Overview 7.2 Systems Integration 7.3 IT Outsourcing 7.4 IT Education & Training • Competitive Landscape 8.1 IT Vendors 8.2 Software 8.3 IT Services 8.4 SAP-related Services 8.5 IT Education & Services • Impressum

1. Summary While entering a new Kondratieff wave, companies and customers will increasingly feel the convergence of technologies and the increasingly networked world, diluting privacy and borders between enterprises and customers even more. Traditional sales channels, innovation and production processes will be altered and will be restructured by mass customization and open source. The business processes are fuelled by the convergence of IT and telekom, later in that period nanotech, biotech and robots will further accelerate the information & knowledge wave. The globalization grows less strong after the recession in 2008 and we might even see protective acts of some countries/regions to secure the market. Sustainability is a necessity and will be a major influencing trend. New values and life styles will increase the degree of liberty in the upcoming networked society to a former unknown level. We will have a nearly unlimited information pool at our hand, the phrase „conscious society“ has been coined to show the scope of overall change. As a result, companies will have to focus earlier and more on the customer, developing tailored products and services. The demographic change of the ageing societies will lead to a severe shortage of talent and labour pool. On the other hand new services and products will be developed to serve older citizens. IT has become an integral part of modern business processes. The hype is gone and the IT industry is now in its consolidation phase, growth is limited and some vendors will fade. Strong influence can be expected from disruptive delivery models such as Cloud, SaaS and On Demand and from open source models Mobile is the new platform on our way into a true virtualization. IT Services get increasingly productized and blended with products and will soon reach beyond pure IT.

Saturation Explosive growth New infrastructure Full market potential How to read the wave 2. At the Beginning of a New Kondratieff Long Wave Wave IVAge of Oil, the Automobile and Mass Production Wave IIndustrial Revolution Wave IIAge of Steam & Railway Wave IIIAge of Steel, Electricity and Heavy Enginnering Wave VAge of Information and Telecommunications Wave VIIAge of ? Wave VIAge of Entanglement, Nanomanipulation, Machine Autonomy Decoupling work/locus,production/distribution SAP, Apple, MS Convergencematerials, IT, nano, bio, cogno Arpanet (1969) Fortran/Cobol (1957) Technology Wave BASIC/PCs (1975) Energy Diversi-fication Mobile robots 3D-Printing Degree of diffusion of the technological revolution Semi-conductor industry(1955) CPU/MS-Dos/ Compuserve(1979) Quantum Computer CloudWeb 2.0 SaaS, On Demand GUI/RFID(1980) ISPs, Amazon, eBay, Yahoo(1995) Facebook, Twitter SSC by IBM(1948) MS Windows(1983) IBM-Harvard Mark I(1943) Second Life (2003) AOL/PCR(1985) Artificial Intelligence SOA(2000) WWW (1991) Z3 by Zuse(1941) Business Wave 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 DisruptiveRadar, Transistor, Microchips, PC DisruptiveInternet, Cellular, Robotics Nanotech, Biotech DisruptiveArtificial Intelligence, Nuclear Fusion CPU = Central Processing Unit; GUI = Graphical User Interfaces; PCR = Polymerase Chain Reaction The year 1990, the dawning of the World Wide Web, marks the beginning of a new wave, where information, knowledge, humans, machines, robots and products are increasingly entangled. Sources: DB Research, Global growth centres 2020, 2005, Germany 2020, 2007; BT, BT Technology Timeline, 2009; The Economist, „Catch the wave“, 02/1999; Kondratieff, N.D., "Die langen Wellen der Konjunktur", Archiv f. Sozialwissenschaften u. Sozialpolitik, Bd. 56 (1946 [1926]), 573-609; Gartner, Technological Revolutions: The Application of Kondratiev Waves to IT, 01/2007; Carlotta Perez, Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages, Edward Elgar Publishing, 2003; A History of Information Technology and Systems

3.1 Meta Trends - Top Trends 2010 - 2025 Deduction • At least 2009 and 2010 will show slow growth. • The advanced economies will be most affected by the downturn • The current version of capitalism might be already history. Analysts predicted for some years that the civilization has to come to a more balanced and sustainable way of making business. • Society/Economy • The Race for Genetic Enhancements Will Be What the Space Race Was in the 20th Century - Genetic therapies and biomedical enhancements will be a multibillion-dollar industry. New techniques will enable changes in your DNA to revitalize old or diseased organs, enhance your appearance, increase your athletic ability, or boost your intelligence. • By 2025, the Worldwide Average Life-Span Will Be Extended by One year Per Year—Only 15% of deaths worldwide will be due to naturally occurring infectious diseases (see Meta Trends - Demographic Change) • Bioviolence Becomes a Greater Threat - In the next decade, biological technologies that were once at the frontiers of science will become available to anyone with minimal scientific training. Emerging biotechnologies, such as genomics and nanotechnology, will allow bacteria and viruses to be altered to increase their lethality or make them more resistant. • Religion Growing in China while Secularism Grows in the Middle East - The skyrocketing economy and tumultuous changes are leading to a yearning among the Chinese for the stabilizing influences of religion. Meanwhile, surveys indicate that the Middle East may be starting to move away from fundamentalism, especially in politics. • The Millennial Generation Will Have Major Impacts on Society - The millennial generation, born between 1982 and 1998, will have a huge impact on every aspect of society in ways similar to their parents, the Baby Boomers. • Consumers Will Take Active Roles in Inventing New Products and Services (see Meta Trends - Open Innovation) • Virtual Education to Enter the Mainstream by 2015 - Only 10% of college education is now conducted online. But E-training accounts for 30% of corporate training, and will likely exceed 50% soon. The fact that 100 million Americans are taking continuing education suggests a healthy and growing market for online college courses. • In the design economy of the future, people will download and print their own products, including auto parts, jewelry, and even the kitchen sink - Rapid prototyping, or 3-D printing, and devices like the RepRap self-reproducing printer are allowing people to design, customize, and print objects from their home computers. In the future, cheaper versions of these devices could disrupt manufacturing business models. • Micronations built on artificial islands will dramatically shift the face of global politics - New forms of government and unusual political models will begin to emerge, including corporate nation-states, religious states, tax-free zones, single-function countries and cause-related countries. • Young people will read more, and the old will play more video games - According to the 2007 American Time Use Survey from the Bureau of Labor Statistics adults aged 75 and older spent nearly twice as much time playing video games (about 20 minutes) as they did in 2006. Teens aged 15–19 spent twice as much time reading as they did before (about 14 minutes) and less time using a computer for games or casual surfing Source: World Future Society, 2010

3.1 Meta Trends - Top Trends 2010 - 2025 • Environment • Water Becomes the New Oil - Water desalination may soon become one of the world’s largest industries. By 2040, at least 3.5 billion people will run short of water - almost 10 times as many as in 1995. (see Meta Trends - Ecology) • Radical methods of altering the planet may be the only way to prevent the worst effects of climate change. Geoengineering may be inevitable because, even if humans could instantly end all greenhouse gas emissions, global temperatures would continue to increase for the next 20–30 years, triggering feedback loops and more warming. Potential megascale geo-engineering projects include sending space mirrors into orbit, sequestering carbon in the ground in biomass charcoal, and increasing the amount of carbon that the ocean can absorb by forcing plankton blooms in the seas. • New Oil from Old Wells - An innovative energy company has developed a unique microwave technology to extract oil from abandoned oil wells. The company says it can gain an extra 100 barrels per day and is in negotiations with one of the biggest oil services firms in the world to bring 10,000 of these wells back into production. • Algae may become the new oil. According to researchers at a Department of Energy plant in New Mexico, single-celled microalgae, grown in pond water, produce a biofuel that is lead-free and biodegradable, emits two-thirds less carbon dioxide and other pollutants than gasoline, and can run any modern diesel engine. Even better, algae require only a fraction of the land area of biofuel-producing crops • Breakthrough DOUBLES Solar Energy Output within 10 years • Ammonia may become the fuel of choice for cars by 2020. As a candidate source for hydrogen used in fuel cells, ammonia (comprising one nitrogen and three hydrogen atoms) is plentiful, easier to liquefy than methane, and emits nitrogen rather than carbon, thus having fewer negative impacts on the climate • Electric Cars Become Fully Practical by 2020 Source: World Future Society, 2010

3.1 Meta Trends - Top Trends 2010 - 2025 • Technology • Genetic Research May Soon Conquer Most Inherited Diseases • Nanotechnology May Alter the Value of Diamonds and Other Precious Commodities - Nanotechnology, the creation and manipulation of matter at the nanoscale (one billionth of a meter) is likely to make many finely made goods much less expensive. Breakthrough processes are creating laboratory-grown diamonds that are molecularly identical to natural diamonds, yet a fraction of the cost. As large inexpensive luxury diamonds become commonplace, consumers may turn to other things with more cachet. • Invention Becomes Automated - Tomorrow’s inventors won’t toil away in workshops painstakingly building, testing and refining their creations. Instead, the Edisons of the next decade will spend their days writing descriptions of the problems they want to solve, and then hand those descriptions to computers to work out the solutions. • WiMAX Networks Will Soon Create Country-Wide Wireless Internet Access - Often described as “Wi-Fi on steroids,” WiMAX (Worldwide Interoperability for Microwave Access) will cover entire countries with a vibrant, high-speed wireless communications network. Internet access and other data and video applications will be available anywhere with many applications for automobiles. • Holographic 3-D TV - Tomorrow’s 3-D televisions won’t require special glasses or even screens. Mathematicians in Finland have produced a blueprint for instruments that would project floating 3-D images by means of nanomaterials that bend light around objects. • The ‘Holy Grail’ of Computers Becomes a Reality - The advent of human-level artificial intelligence—a machine capable of the richness of expression and nuance of thought that we associate with humanity—promises to generate tremendous wealth for inventors and companies that develop it. Computers with artificial intelligence (AI) will be able to learn and think. They’ll be able to handle complex tasks such as navigating a car through traffic or diagnosing a complex illness. • Quantum Computers Revolutionalize Information Around 2021 Source: World Future Society, 2010

3.2 Meta Trends - Top Technology Trends Deduction • IT moves towards true virtual reality and the quantum computer • Manufacturing will see another move into smart manufacturing with smarter robots, nanotechnology and 3d printing • Our bodies will be cyborged with grown organs, life extensions and incorporated add-ons The chart includes the technology we can foresee now, i.e. we might see some surprises as well. Source: World Future Society, 2010

3.3 Meta Trends – Global Economy in Recovery Deduction • At least 2009 and 2010 will show slow growth. • GDP falls to the lowest level since 1970. • Emerging and Advanced economies drift further. • The risks around the projection are substantial. A main risk is consumer behavior. Financial conditions can still go either way and international imbalances can still impact exchange rates Emerging And Developing Economies World IT/GDP Ratio Advanced Economies Dot-com crisis Oil crisis Energy crisis US recession Source: IDC, Worldwide Black Book, 01/2010; and historical market data; IMF, World Economic Outlook Update, 05/2010; OECD, Economic Outllok, 05/2010; Forrester Research, 10/2009; McKinsey, Industry Trends In The Downturn: A snapshot, 01/2009; Advanced economies: North America, Euro Area, Japan; Emerging and developing economies: Africa, Asia: China, India; CEE: Russia, LA: Brazil, Mexico US recession

3.3 Meta Trends – Global EconomyFour Scenarios Long Adaptation Process Dirigiste Capitalism • The US economy drags down the world economy • The crisis is sharpened by a lack of alternative growth locomotives • China will not keep up its momentum due to the demographic development of the country • As a result, the world economy needs a long period of adaptations • The weakness of the mature markets leads to an increased importance of the emerging markets • The dirigiste economical model of Chinas, Russia and other will increasing influence in the world economy • In this scenario the USA would loose its cultural and military dominance Capitalist Blocks Bounce Back • As a reaction on the growing importance of the emerging countries, the mature countries might increase protectionism • There are signs of decreasing globalization, such as less cross-border payment transactions and less cash flows to emerging countries and disputes in trade issues within the WTO • The world might end up in trading blocs and a destabilization outside of these blocs • The fast reaction of the central bancs and the government laid the foundation for a rebound of the economy • In contrast to the economical crisis in 1930s, the amount of money increased in the US and the industrial production and consumer prices fell less in comparison • The grating of loans by banks has normalized already Early 2010 the signs look for the long adaptation process and dirigiste capitalism Source: Financial Crisis, Michael U. Klein, Vice President, The World Bank, and Chief Economist of the IFC, 2009

3.4 Meta Trends – Global Risks The Source: World Economic Forum, Global Risks 2010 A Global Risk Network Report Future Society, 2010, 01/2010 ; World Economic Forum, Risk Interconnection Map, 2010

3.3 Meta Trends – Global Risks • Fiscal crisis and unrest - Many countries are at risk of overextending unsustainable levels of debt, which, in turn, will exert strong upwards pressures on real interest rates. In the final instance, unsustainable debt levels could lead to full-fledged sovereign debt crises. Moves by many countries to introduce fiscal austerity measures in 2010-11 could spark social unrest, particularly in eastern Europe but also in the developed world. Especially Europe experiences a fiscal divergence with Greece, Ireland, Spain, Portugal, and Italy facing the biggest challenges. • Shaky foundation- The global economy remains unstable with risks of overheated market as in China and potential collapses as in Greece • Underinvestment in infrastructure, both new and existing - Vast segments of our water, energy or transport infrastructure are structurally deficient or functionally obsolete, requiring considerable annual investments to avoid catastrophic failure • Growth without jobs – The economy recovers but might not produces enough new jobs • Chronic diseases - As a consequence of profound socio-demographical transitions among large sections of the world population, changing physical and dietary habits, chronic diseases including cancer, diabetes, cardiovascular and chronic respiratory disease are continuing to spread rapidly throughout the developed and developing world, driving up health costs while reducing productivity and economic growth. • Transnational crime and corruption- Some experts estimate that global organized crime and illicit trade accounts for 10% of global GDP • Biodiversity loss - Approximately 60% of the earth’s recognized ecosystem services have been degraded in the last 50 years. The consequences of these ongoing losses will not only affect businesses dealing directly with natural resources, but will also touch the supply chains and growth objectives of most industry sectors in the developed and developing world. • Cybervulnerability - The consequences of these ongoing losses will not only affect businesses dealing directly with natural resources, but will also touch the supply chains and growth objectives of most industry sectors in the developed and developing world. In the absence of adapted models of governance and regulation it could also bring a new degree of vulnerability and systemic risk. • Preventing the next crisis - The process of reforming global financial regulation is well under way, but policymakers are reluctant to demand measures that could undermine the economic recovery • Sustainability and global carbon market - The UN climate-change summit in Copenhagen has ended in failure. It has produced a heavily diluted agreement that omits concrete targets and lacks unanimous support. The global carbon-trading market has not been setup yet. Sources: The Economist Intelligence Unit, Critical Isues, 01/2010; Eurasia Group, Top Risks of 2010, 01/2010; World Economic Forum, Global Risks 2010 - A Global Risk Network Report , 01/2010

3.4 Meta Trends – Global Risks • US-China relations – There are several structural pressures, such as environment, Tibet, Chinas dirigiste economical model with might lead to a trade war, demanding more international leadership from China. • Iran - The country faces pressure from three sides: At home, the regime has had a tough time since last June’s presidential election, regionally, Tehran has lost considerable influence and globally, Iran faces a considerably tougher sanctions regime over its nuclear program . • Japan – The country is in zero-party mode , after the ruling party lost power in the one-party state. The new Democratic Party of Japan’s (DPJ) efforts to limit the influence of bureaucrats and industrialists are creating higher policy risk . • Brazil - Brazil’s newfound economic abundance will lead to a drop in the quality of economic policymaking 2010 will be marked by growing investor concern on both macro and sectoral policy as the October presidential election draws near. • India-Pakistan - There’s a broader south Asia risk developing this year. The decision by Pakistan to go after terrorists provides Islamic extremists with powerful reasons to expand asymmetric attacks on Pakistan’s This means that the likelihood of attacks in India and against Indian targets in the region is increasing, Indian-Pakistani relations, which had been quietly improving during the final years of the Musharraf regime, have already deteriorated somewhat. • Turkey - Trends in Turkey are sufficiently worrisome Domestically, an increasingly unpopular Justice and Development Party (AKP), facing popular fallout from the economic downturn, is embroiled in intractable and increasingly interlinked fights with the judiciary, industrialists, and the military. Sources: The Economist Intelligence Unit, Critical Isues, 01/2010; Eurasia Group, Top Risks of 2010, 01/2010; World Economic Forum, Global Risks 2010 - A Global Risk Network Report , 01/2010

3.5 Meta Trends – Globalization Deduction • Globalization will in-crease further, resulting in an increased net-worked economy • Governments will have to find new and better ways to deal with an increasing mobile society • Companies have to adopt their working and compensation models. • Cost pressure will lead to ongoing job shifting overseas • Companies will go on establishing overseas branches • The global economy gets increasingly vulnerable with a rising degree of connectivity Between 1995 and 2007, trade-to-GDP ratios for the OECD as a whole increased by 9 percentage points, and the EU15 increased by 13 points. Substantial increases in trade-to-GDP ratios were recorded for Luxembourg, Hungary and the Slovak Republic. • International sales make up nearly half of all revenues for the S&P 500 companies. International revenues growth has outpaced domestic growth since 2003 • Growth of e-commerce enables companies to shop globally • Small companies can compete with giants due to the Internet • Risks of quality control and fraud increases • The Internet has creaetd „e-preneuers“ whose business exists largely on the Internet Globalization is (still) and ongoing trend. Source: OECD, Fact Book, 2009; The Futurists, May-June 2010

3.6 Meta Trends – Ecology Ecological Footprint and Biocapacity by Region Deduction • Energy saving technologies and water technologies will be in strong demand • By 2025 more than 3 billion people could be living in water-stressed countries. Water shortage is believed to be one of the main risks for war. • Loss of biodiversity will increase significantly, leading to severe problems in ecology and food security. Number of Endangered Species Worldwide n = species endangered Sustainability will influence much of the politics and economics in the next centuries. Sources: OECD, Fact Book, 2009; Shell , Energy Scenarios to 2050, 2010; IUCN, Red List, 2010

3.7 Meta Trends - Demographic Change Population Grows And Gets Older World Population Forecast* Deduction • Ressource-saving production • Energy-saving systems • Health Care • Recycling • Farming and food production • Special serices • The global population continues to grow. In recent years, however, the rate of growth has slowed down, increases are increasingly confined to the developing countries. • In most industrialised countries, populations are falling. In the coming years, this trend will accelerate further, in many cases offsetting considerable immigration. • The growing number of people inhabiting the earth is increasing the pressure on resources (water, food, raw materials, energy). • We will see a growing global migration • In all countries, populations aged 65 years and over have dramatically increased over the last 30 years, both in size and as a percentage of total population. The trend leads to an overall redesign of how we live our lives and how we work. It will create tensions between rich and poor countries, booming and shrinking regions, as well as between young and old. Sources: *Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2008 Revision, http://esa.un.org/unpp; OECD Factbook 2009: Economic, Environmental and Social Statistics

3.8 Meta Trends - Migration Deduction • More people will move, • Social tensions will increase as the cultural, religious and ethnic diversity ioncreases • Countries might react with tightened immigration laws • Nearly all countries are affected, migration is still increasing, immigrants compensate the decreasing population in Europe and fill gaps in the labor force. • Main target is US, main countries of origin are China, India and Philippines. Migration is still increasing on a global scale, but with regional foci Source: OECD, Fact Book, 2009; The Futurists, May-June 2010

3.9 Meta Trend - Urbanization Deduction • Cities will struggle with demand for healthcare, energy, fresh waterand safety • Rural areas struggle with insufficient health care, migration of the youth and an overall decreasing infrastructure Rural population Rural population • The global proportion of urban population will rise from currently 50% to about 60% in 2030, which translates into an equivalent of 33 new cities of more than 2 million people per year • Mega cities of > 20 million people will arise: Tokyo first, then Mumbai, Delhi, Mexico City (by 2010), Sao Paulo, New York, Dhaka, Jakarta and Lagos (by 2020) • In parallel the population living in slums will grow to 1.5 billion in 2020 More people choose an urban life, accelerating problems such as crime, energy and water demand, growing slums etc. Source: United Nations, 2010

3.10 Meta Trends – Quality Of LifeLarge Differences Remain Deduction • Even in a globalized world, pockets of diversity and inequality remain On a global scale, the quality of life improves but huge differences remain with potential risks. Sources: Z-Punkt, 2010

3.11 Meta Trends – Life StyleLife Is Complex Societies get increasingly polarized • The social polarisation grows globally, poor and rich drift further apart • Increasing social differences among people make absolutely clear that the danger of disintegration increases. • From large to small family units, increase in single person households, increasingly differentiated forms of cohabitatio, • Income increasingly subject to fluctuations and shifts • Sinking savings ratios, fewer inheritances, and growing danger of debt • In the public view, poltiics seems to be increasingly unable to cope with the problems More Diverse Lifestyles, More Speed, More Choice • Values change rapidly away from classical industrialization values to a self-reliance and cooperation models • Time and privacy are becoming precious commodities • Life gets speedier, decisions get more complex – many people wish a more slowed-down and basic life • Working from anywhere is the trend, but e-mail and instant messaging absorb increasingly time • The physical-culture and personal-health movement remains very strong, health improves, smoking is in decline, obesity remains a problem. • Traditional families dissolve further into various life styles • Societies move from uniform social groups to differentiated environments and scenes • Consumption patterns become more differentiated and contradictory Deduction • More niche, less mass • More ethnical, ethical, religious, and value oriented products and services • Suppliers wil try to bypassi retail, getting in direct touch with the customer • Personalized, context based services in retail will get important • Customers get integrated into the innovation process People now have more freedom to choose their life styles, which leads to highly differentiated populations, new values and diverse customer expectations. As a counter trend we will see more conservative values and belief systems with potential conflicts. Sources: Z-Punkt Trend Data Base, 2009; World Future Society, The Futurist, May-June 2010; OECD, Fact Book, 2010

3.11 Meta Trends – Life StyleLife Is Virtual Deduction • Be prepared to meet happy and unhappy custmers online • The borders between real and virtual life dissolve • The millenium generation will have significant influence on the way we work and live, they are more business oriented than their Generation X counterparts and highly networked • Facebook claims that 50% of active users log into the site each day. This would mean at least 175m users every 24 hours. A considerable increase from the previous 120m. The site has currently has in excess of 350 million active users on global basis. Six months ago, this was 250m… meaning around a 40% increase of users in less than half a year. More than 35m Facebook users update their status each day. There are more than 70 translations available on Facebook. Mobile is even bigger than before for Facebook, with more than 65m users accessing the site through mobile-based devices. In six months, this is over 100% increase. (Previously 30m). As before, users who access Facebook through mobile devices are almost 50% more active than those who don’t. • Twitter now has 75m user accounts, but only around 15m are active users on a regular basis. It’s still a fair increase from the estimated 6-10m global users from a few months ago. • LinkedInhas over 50m members worldwide. This means an increase of around 1m members month-on-month since July/August last year. • Flickr now hosts more than 4bn images. A massive jump from the previous 3.6bn I wrote about. • Wikipedia currently has in excess of 14m articles, i.e. 85,000 contributors have written nearly a million new posts in six months. We are moving fast into virtuality with potential benefits and risks. Internet/Mobile goes on to change our society. Sources: Internetwordlstats.com, 2010; Econsultancy.com, 2010

3.12 Meta Trend - Consumerism Best Global Brands Coca Cola Microsoft IBM GE Intel Nokia Toyota Disney McDonalds MercedesBenz Citi Marlboro Hewlett-Packard American Express BMW Gilette Louis Vuitton Cisco Honda Samsung 24. Google 29. Oracle 31. Nike 34. SAP Source: Interbrand, 2010 Deduction • Shorter products cycles and a reduced sales mix to counter complexity • Business-on-demand: Manufactureres and suppliers have to cope with real-time services • Pressure to optimize the value chain • Total After Sales Services: Companies will try to engage the customer in the complete product life cycle • Customers expect 24h and high transparency as well as high quality and product guarantees • Suppliers have to deal with real-time delivery and production • Renaissance of the specialized retail • Smart assistant (products explain themselves and order automatically) • A networked society is a consumerist society. Children in US become shoppers as young as age six and become brand aware as young as two to three. The millenium generation is becoming increasingly prone to complusive spending • In a highly competitive and global economy the focus will move away from the product to the customer and offer solutions instead of single products. • Global brands become stronger, domincance of US brands fades as European and Chinese brands get increasingly known. Internet-related brands are very influential and grow very strong. • Consumers are getting older and more experienced. They demand quality and orientation without loosing the emotional aspect of buying. Customer will be engaged in innovation processes and drive innovations by themselves. • Consumer advocacy agencies and organizations will proliferate, warning notices, nutrition labels on TV, Internet and in restaurants will increase. • Shopping will be changed by new consumer behaviour, favouring rating over brand • Europe, Japan and China will get „wallmarted“, smaller niche players will die out. This is in part balanced out by slow food, loclal production and loyality with the home market • Companies increasingly serve customer interests outside the mainstream – see the long tail Consumers react on globalization, product diversity, media overflow and always-on with increased demands or bypassing strategies (e.g. slow food, lean consumption). Sources: Forrester research, Predictions 2010: Consumer Mobile Strategies, 01/2010; Interbrand, 2010; WFS, The Futurist, May-June 2010; Z-Punkt, 2010; www.marketingprofis.com, 2010

3.13 Meta Trend - Job Creation - Heading For A Project-Based Society • The US and other developed countries might become essentially jobless societies within the lifetime of today‘s younger adults, according to some futurists. Other are not that pessimistic. • Automation leads to function loss, if to job loss is less clear. Most productivity gains in the industry have come from reworking business processes to incorporate computers and automation. Althoguh automation plays a role, average work weeks seem not to have changed much (see right). • Human labor will be increasingly replaced. Technological advances are causing a widening gap between skilled and unskilled workers. In 10 years computers will take over any work that does not need actual human hands. Deduction • The jobs-for-wages model of the Industrial Revolution is loosing ist ability to get us into the future • Changes in the job structure strongly influence societies with high risk potentail Workweeks in the US got steadily shorter – see dark blue dots – and automation was expected to further reduce it. But the trend seems to have ended or at least slowed down significantly. The various colored dots are from historical sources, the solid lines are from the US Bureau of Labor Statitstics • The millenium generation will have significant influence on the way we work, they are more business oriented than their Generation X counterparts • Specialization continues to spread through industries and professions, life-long learning is the norm • Modern information-based society incresingly organizes itself around projects and less along hierarchies • The traditional age of retirement is loosing ist significance, poeple will move in and out of jobs/projects • Second and third careers are becoming common, more peole make mid-life changes • The traditional work ethics vanishes, employers must nurture the employees, pay them well and make them feel appreciated The way we work will fundamentally change in developed countries, speed and impact are difficult to assess. Sources: Word Future Society, The Futurist, May-June 2010; The American Scientist, Automation on the Job, 2009; Deutsche Bank Research, Beat the crisis with a project-economy approach to further education, 2009

3.14 Meta Trend - Research & Development Deduction • Investing in its own research ecosystem with Universities, schools and long-life learning is an important factor to remain competitive for companies in developed countries • R&D spending by the world‘s 1000 largest companies has been expanding at a CAGR 7.1% for the last five years (Booz & Company) • More than 60% of the automobile companies cut spending, while 80% of Internet and software firms raised theirs • China is second R&D spending, US and Japan cut R&D in the last years, the EU expanded • A growing fraction of R&D from developed countries is outsourced to China, India and Russia • Demand of scientist, engineers and technicians is rising • Today‘s specialists from emerging countries lern in the wets and return to their country The trend towards outsourcing of R&D accelerates the technological change, developed countries risk their leading innovation role. Sources: McKinsey, R&D after the crisis, 04/2010; World Future Society, The Futurist, May-June 2010

3.15 Meta Trends – Open Innovation / Mass Customization Deduction • Open innovation is the superior method in strongly user influenced products and will change the design process • 3D printing might change supply chains • Users suppliers and externals will be routinely involved in the creation of new products • Information goods such as software and editorial content are ripe for this kind of decentralized innovation • Companies will have less control over innovation and the intellectual property and they will have to compete for the attention and the time of the best contributors • Early adoptors report higher product revenues, reduced costs, faster delivery and higher quality (Aberdeen Group) • Together with 3D design and manufacturing processes might move away from large scale plants to small and flexible around-the-corner production Open innovation and mass customization will be change the product development. Sources: http://www.open-innovation.com, 2010; http://www.mass-customization.de; OECD, Open Innovation In Global Networks, 2008

4.1 Industry Trends – Overview Top 10 Industry Predictions Smart Cities Will Emerge as Proving Grounds for the Intelligent Economy Financial Institutions Will Begin Consolidating Risk Management Data Warehouses 2010 Will Be the Year of EMR for Healthcare Analytics Will Proliferate Across Healthcare Payer Organizations Manufacturing IT Organizations Will Invest in Variable IT Cost Structures Retailers Will Launch Aggressive Technology Investment Programs Life Science Companies Will Outsource Major Facets of Their Business North American Utilities Will Begin Spending $18 Billion on Intelligent Grid Projects in 2010 The American Recovery and Reinvestment Act Will Create a $1.5 Billion IT Spending Windfall Oil and Gas Will Tackle Information Management in 2010 Deduction • The recent development in sustainability, regulations and the pressure from globalization will increase the need for modern IT particularly in Manufacturing, Energy and Transport. • The economy and its industries will be shaped by: • Sustainability rules see Ecology, Demographic and Urbanization • Gas, oil, water, raw materials, wood, fish...all natural products saeem to be overused or will be in the near future. • Companies have to face stronger and in many cases rigid regulations • Transport costs will rise • Production sites will be under inspection • Consumers will demand more ecofriendly production • Social responsibility vs. capitalism see Social Responsibility • The crisis has shown that we need more responsibility and ethical control in the global economy • Companies have to publish what they do and who will get the money • It will be cheap versus ethics Free market vs. Dirigistic Capitalism see 4 Global Scenarios • China is now worldwide No1 exporting nation, Russia seesm to have lost some ovement due to the crisis • Companies on the global market have to face different systems and various modes of open and hidden corruption • Governments might set up new regulations to protect their national interests Customers move see Life Styles, Customer Focus, Open Innovation • Customers develop increasingly different and differentiated life styles, driven by online media and globalozation. As a backlash traditinalists will have a word. • Companies have to adapt their portfolio to fast changing and regional/local needs • We are networked now: one bad comment in the online world and the reputation is spoiled • Customers need to be involved in the innovation process Industries have to adapt to the financial crisis, the end of the turbo capitalism and a new aera of sustainability. Source: IDC, Top 10 Industry Predictions, 01/2010; Shell Scenarios, 2009

4.2 Industry Trends – Manufacturing • Innovation is key, SCM and PLM converge, SCM is top priority • More customer-centric business models • Empowered customers and consumers - Raising Web 2.0 online communities, blogs, user forums, social networking sites • Improving sales and enhancing customer services with CRM • Supply Chains will be redesigned to match supply and demand • Technology investment priorities support increased through collaboration with suppliers • Industrial enterprises will return to their manufacturing roots • Factories are the bottleneck of supply chain • Replacement of outdated MES • Tighter integration between ERP and shop floor • Better manufacturing intelligence and visibility across multiple global plants • Process improvement initiatives: lean six sigma • Increasing outsourcing/offshore of SCM results in enhanced risk management • Transportation capacity will tighten • Smart services and intelligent • Enterprises will move beyond mere compliance and embrace green business Deduction • Manufacturing is under pressure • Cost cutting, sustainability, customer centricity and innovation are the main topics • Matching supply and demand is key in the global economy Manufacturing is under pressure from sustainability and cost issues. Source: IDC, Worldwide Manufacturing 2010 Top 10 Predictions, 01/2010; IDC, Worldwide Supply Chain 2010 Top 10 Predictions, 12/2009; Informationweek, 12/2009

4.2 Industry Trends – Manufacturing Deduction • ERP is still a hot topic • Still a high percentage of custom apps. Top 10 Predictions Companies Will Transform Business Models to Better Meet the Needs of Increasingly Demanding Customers. IT Organizations Will Look for Cost Structures That Are More Variable as They Assist in Making Technology a Focal Point of Business Strategies. Manufacturing Companies Will Begin the Process of Fundamentally Rethinking Their Supply Chain Structures, Evolving from a Fixed-Cost-Driven Supply Network to a Variable-Cost-Driven Value Network. "Dynamic Optimization" Will Dominate Capability Investment to Support Redefining the Supply Chain. Manufacturers Will Look to Better Align Innovation with Business Strategy. Manufacturing Companies Will Become More Mature in Their Use of Enterprise PLM Applications. Manufacturing Companies Will See Factory Assets as Part of a Fulfillment Capabilities Network. Firms Will Create Intelligent Fulfillment Capabilities Networks. Smart Services and the Need for Persistent Assets Will Create the Inflection Point for RFID, Sensors, and M2M. Armed with Metrics, Manufacturers Will Move from Sustainability Reporting to Intelligence. Demand/Supply, smart services and re-engineering teh supply-chain are key topics Source: IDC, Worldwide Manufacturing 2010 Top 10 Predictions, 01/2010; IDC, Worldwide Supply Chain 2010 Top 10 Predictions, 12/2009; Informationweek, 12/2009

4.5 Industry Trends – Defense and Aerospace Market Predictions&Assumptions: • Public Affairs & Governmental Relations • Future budgets are more depending on political will and therefore less predictable. External crisis are consuming huge amounts of budgets which can’t be spend for innovations. • Bigger and expensive projects are less likely. Only goods which have direct impact on the ongoing missions have a high selling chance. • Not the best process provider nor the cost efficiency wins, but the vendor with better Public Affairs and Governmental Relations. • It’s getting harder for Europe to sell to US and vice versa. Knock out criteria and used arguments are security risks and national job market. • Situation of the D&A manufactures • Due to the downgrading of contracts the warehouses of the manufactures are full without any chance of selling. • Single military production programs or projects are less likely (Airbus 400M) • Increasing amount of dual use projects to shrink the risks of dependence on the military market only. • Long Term trends in the Arms Industry • Three main changes of the arms industry are evident: • Structural, Technological and Compositional Changes are happening, only one area of continuity can be found. • Structural Changes: The arms industry becomes increasingly concentrated, the Top 5 companies are owning 43% of all sales (compared to 22% in 1990). • Technological Changes: The increased importance of IT and electronics have led to two major outcomes. First – mainly former civil companies (IT..) are moving into the military markets and are becoming part of the military supply chain. Second – the former spin off – knowledge transfer from military to civilian industry becomes more to a “spin in”. Major Weapon System are now part of COTS Products, produced by companies which would not consider themselves as part of the military supply chain. • Deduction: • Public Affairs are getting more important • More Dual Use Goods • Three Trends in Armament Industry: • StructuralChanges • Technological Changes • CompostionalChanges • Major military manufactures are becoming System integrators. • Compositional: Privatization and outsourcing are attracting new suppliers. Next to the provision of security (“Blackwater”) is the military focus industry a growing area. Topics are Logistics, Training, Maintenance Overhaul etc…. This services were normally provided by traditional equipment providers, but are also taken over by civil companies. • Home market and home government support are remaining vital to arms producing companies. „Public Affairsand Home Market wins“ The industry reacts with structural changes on modern military demand ; the former strict borders to the civil industry fall Source: MoD UK, SIPRI, OECD, US DoD, FT US; by SAP industry expert Heinrich Pfriemer

4.5 Industry Trends – Defense and Aerospace Market • Deduction: • US is gaining more advantage in military matters • Europe is spending less, booming markets are former Soviet Countries andAsia • High Tech Products are less likely sold compared to items, which have an impact on ongoing missions. • “Do more with less” – streamline the back office, supply chain • Transparency of costs, partners an production Predictions&Assumptions: • Situation of the Forces: • US Forces are consuming 41% of all global military spending. Ongoing missions are exhausting the US Forces. • “IN” in future are UAV, better equipment and “Do more with less” • “OUT” are high end weapon platforms with missing use cases • Western European Forces Budgets are and will be heavily hit by budget reduction due the economic situation. Fastest growing military markets were the Eastern Europe (174%), followed by the former Russian Federation (94%) and Asia (56%). • Most western armies are under transformation processes • Outsourcing of parts of IT and Logistics processes is still ongoing over by civil companies. • The EDA (European Defense Agency) is still without political support, but keeps up a vision of standardization for European Forces. Europe is still lacking strategic means of transportation • Also here the major trends are similar to the US trends: • “IN” in future are UAV, better equipment and “Do more with less” • “OUT” are high end weapon platforms with missing use cases • The manufacturers are still riding the wave of full books due to long lasting production programs and projects. But new sales of typical military High End Equipment becomes more unlikely. Except it’s directly fostering the own economy. The industry reacts with structural changes on modern military demand ; the former strict borders to the civil industry fall Source: MoD UK, SIPRI, OECD, US DoD, FT US; by SAP industry expert Heinrich Pfriemer

4.4 Industry Trends - Automotive Deduction • The automotive supply-chain will be re-organized to match shited demand and get a better handling on costs • The balance of power will shift towards Tier 1 • The aftermarket will become more important General Trends • The aftermarket will be the next battle ground with new services and offers • Successful companies leveraged lean manufacturing methods and tapped into technology to enable collaboration with suppliers and customers, as well as to provide customers with a unique experience. • Centralizing and standardizing IT • Integrating the entire supply chain – even the fragmented aftermarket – to share information, make decisions collaboratively and manage in real time. • Analytics: Relying more on advanced analytics, simulation and modeling tools to evaluate increasingly complex and dynamic risks and constraints and act on better insight. • Digital manufacturing will be pushed even more to cut costs • Using sensors and “smart” devices to gain greater visibility across the network, mitigate risk, reduce cost and manage rising complexity. Top trends are 1. Cost cutting 2. Customer-centric strategies 3. Globalization of operations Sources: Capgemini, The Aftermarket in the Automotive Industry, 2010;Capgemini, Managing Through the Downturn, 2009; IBM, The smarter supply-chain of the future, 2009

4.3 Industry Trends - Chemical Deduction • Updating old plants and upgrading IT • Optimization of production • Public and regulative pressure increases • Trends • New competition and capacity in the Middle East and Asia/China, Middle East capacity growth will continue at 9% to 10% annually for the next decade. • Unprofitable factories will be rationalized, KPMG estimates that European petrochemical capacity may decline dramatically in the coming years , US chemical producers are likely to be similarly impacted • Innovation and maintaining a technological advantage is key to survival • Strengthening customer relationships beyond trading is beneficial • Leverage its long-standing customer relationships to develop more specialized, higher-performance solutions • Earnings and growth pressure - Companies have already played the cost-savings card to rationalize excess capacity, overhead cost, and inventory in support of 2009 quarterly earnings. • Regulatory uncertainty - Implementation of REACH legislation in Europe • New strategic ventures and partnerships to be expected • New product innovation and ramp-to-volume manufacturing • Determining where and how to produce existing products most profitably • Complying with increased regulations and reporting requirements • Risk caused by complexity emerges as top concern for chemical manufacturers EU/US fight the new competition, new vendors will try to bridge the technology gap. Sources: AMR Research, Findings: Risk Caused by Complexity Emerges as Top Concern for Chemical Manufacturers , 6/2010; AMR Research, The 2010 Chemicals Market Outlook: Demand Orchestration Required, 01/2010; The 2010 Chemicals Market Outlook: Demand Orchestration Required ; KPMG, The Future of the European Chemical Industry, 01/2010

4.5 Industry Trends – Consumer Products General Trends • Economic climate is the major challenge for the industry • Sustainability: Manufacturers will continue to look at packaging improvements to improve the sustainability of products and improve the efficiency of transporting them • Supply chain. Continued focus around collaboration, • Demand intelligence: Shared demand intelligence between retailer and suppliersAdvanced category management: collaborative advanced category management will be embraced as standard operating practice by retailers and suppliers • Innovation: Collaborative innovation is a challenge due to the preception of risks in sharing sensible data but the benefits would outweight the risks. • It is a battle of building retail chain loyalty versus consumer product brand loyalty • Inventory levels continue to increase, highlighting poor planning and unpredictable demand • Many CP companies still operate with a „make to inventory“ strategy as opposed to a „make to demand“ strategy Deduction • Sustainanility is first a matter of cost • In the near future CP will probably use sustainability as a product differentiator • Everything that helps to introduce products faster and with a greater variety , helps IT Priorities • Collaboration applications • Packaged process applications • Demand signal repositories (DSRs) • Systems for demand execution and sales forecasting • Demand visibility • Demand shaping response curve modeling • Front-office analytics The industry moves towards a customer-centric view, products will be increasingly be personalized Sources: Forrester Research, Industry Essential: Consumer Packaged Goods Industry, 12/2009; IDC, Worldwide Manufacturing 2009 Top 1o Predictions, 12/2008; IDC, Asset-oriented Value Chains Industry Outlook and 2009 Budget Guide, 1022009;IDC, Engineering-oriented Value Chains Industry Outlook and 2009 Budget Guide, 11/2008; IDC, Brand-oriented Value Chains 2009 Industry Outlook and Budget Guide,10/2008

4.6 Industry Trends – Energy IndustryOil & Gas, Utilities Deduction • Smart grid and meetering • Reliability and sustainability will dominate the media attention • Public and regulative pressure increases • Oil &Gas • The exploration and production of conventional oil will require more work with less return • Global demand for oil will continue to put pressure on supply. • Refinery capacity is still an issue in North America • Focus on climate change will spawn investments in energy and information technologies • Pipeline improvements and rationalization of networks • Geologic, technical, and economic factors drive innovation in reserves mgmt • Utilities • Electric system reliability has become an increasing concern in both North America and Europe – a parallel issue exists in the natural gas market. • Demand response - sensing technologies will drive a shift to real-time sense-and-respond • Grid technology – driven by ageing assets and reliability concerns will drive the intelligent grid • Distributed energy - energy storage and distribution, Photovoltaic • Smart metering, smart devices • Energy trading focus will shift to intraday visibility, liquidity, and market behavior • Risk management • Generators will focus on managing and reducing carbon emissions • Electrical cars will challenge the energy industry with new technical challenges and new competitors • Web Portals to enable active consumer energy mgmt Climate change and renewable energies are the top trends for the foreseeable future. Sources: Datamonitor, Utilities Technology Business Trends, 09/2009; DC, Worlwide Oil and Gas Industry 2009 Top 10 Predictions; 01/2009; IDC, EMEA Utilities Industry 2009 Top 10 Predictions, 01/2009; IDC, North America Utility Industry 2009 Top 10 Predictions, 01/2009

4.7 Industry Trends - Banking Trends • Regulations will probably come and the ongoing political discussion will keep the banking industry in the public debate • Banks have to work on their shaky reputation while improving their margins • Fees are under siege and banks will probably revamp their offerings • The private customer is in the focus (again) and we will see new or revamped services • Winning banks will focus on delivering information back to the user • Second- and Third-Tier capital market firms will rise in importance and sophistication. • Banks will move into mobile business Deduction • New markets and restoring trust is key • Anything that improves performance and keeps customers happy • The emerging markets are targets for the Western banks, mainly China • Attention will turn to peer-to-peer (P2P) payments, the first banks partnered with Paypal already. • Managing finances gets social, personal financial management (PFM) tools are rising, i.e. online resources geared toward helping consumers and small businesses manage their finances. They could one day prove to be fierce competitors to classical banks Top priority is to rebuild the trust in banking organizations. Transparency is key, focus on the private customer. Sources: IDC, Worldwide Financial Services 2010, Top 10 Predictions: Where to Next?, 01/2010; McKinsey, Overhauling banks’ IT systems, 03/2010; Banktech, 01/2010; Ovum, North American Retail Banking Technology Spending Strategies 2010 (Customer Focus), 12/2009

4.7 Industry Trends - Banking Deduction • Business process optimization • Compliance and risk • CRM/BI • New markets • Mobile banking • IT Trends • Alignment with business goals is top objective • Standardising infrastructure technologies and systems simplification are the major strategic IT goals • TCO/ROI are main arguments to sell IT • Mobile has finally reached the banks • Outsourcing will surge – but price negotiations will be tougher; in EU and APA transaction processing outsourcing will grow • Customer centric initiatives are top - traditional CRM, incentives, data warehouse, analytics • 64% of surveyed banks are planning to make technology investments to combat payment fraud Spending objectives and strategic goals • 61% of banks are increasing their IT investment in compliance and risk management as regulatory requirements tighten • Identity and access management , security software and virtualization are the top technology areas where banks invest in Banks finally get rid of their legacy and move into the mobile world Sources: IDC, Worldwide Financial Services 2010, Top 10 Predictions: Where to Next?, 01/2010; McKinsey, Overhauling banks’ IT systems, 03/2010; Banktech, 01/2010; Ovum, North American Retail Banking Technology Spending Strategies 2010 (Customer Focus), 12/2009

4.8 Industry Trends - Insurance Deduction • Risk and assessments drive the industry • Customers get increasingly online and compare more than in the past General Trends • Online comparison sites create price transparency • Customers are becoming increasingly multichannel, social, and mobile • Small insurers lean more heavily on increasing revenues whereas large insurers place greater emphasis on cutting costs. • Increasing industrialization of internal processes • Reformation of product development: faster and more flexible adoption of insurances to general risks and customer demand • Risk assessment: threats due to piracy, mega-events, climate, long-tail business • Customer retention is key • Renewed focus on the value of agents who need IT support • Risk trading will become a new business opportuniity • Multi-distribution is a powerful growth model, especially in mature markets, but distributors have conflicting views about network cooperation Network focus • Segmentation of the network according customer needs • Adopt the network to optimize the insurer‘s economic model, cost and revenue targets New risks in the global world, efficiency, product flexibility, risk and retaining customers drive the industry Sources: Forrester Research, Trends 2010: North American Insurance eBusiness And Channel Strategy, 03/2010; Forrester Research, Trends 2010: North American Insurance eBusiness And Channel Strategy , 03/2010; Munich Re Group, Trends & Innovation, 2009; Trendbarometer Versicherungen, 2009; Ovum, Business Trends: Global Insurance Technology Trends, 2009 (Customer Focus) , 06/2009; Capgemini, World Insurance Report, 2009

Importance for the IT investment strategy Life Non-life Multi-line Overall Average Improve supplier relationships 2.29 Meet internal service level agreements 2.77 Deliver new functionality to business users 2.80 Increase revenues 2.89 2.96 Use IT to support revenue growth, new products Cut costs 3.01 Achieve / maintain regulatory compliance 3.03 Raise efficiency 3.10 3.23 Align IT w/ overall business goals Increase customer satisfaction 3.23 1.0 1.5 2.0 2.5 3.0 3.5 4.0 Scale 1-4, 4 being top priority 4.8 Industry Trends - Insurance Deduction • IT still need good arguments to be sold to insurers • Analytics and CRM • System Integration IT Priorities • Overall, the industry remains focused on improving customer satisfaction. Life insurers, which have additional exposure to securities and money laundering regulations, are heavily focused on compliance. • Insurer invest in IT security • Improving IT efficiency continues to be the dominant theme. • Web architectures and web tools to integrate customers • Enterprise data warehouses, analytics and customer intelligence tools for market segmentation and real-time business decision-making • Next generation CRM – for collaborative networks on a global scale • System integration and SOA – real-time flow of information, seamless integration of various systems, bridging legacy • Intensity for systems consolidation and integration is the highest outside North America, more emphasis will be on legacy replacement • Horizontal solutions (BPM/ECM) emerge as preferred strategy for improving data and workflow-intensive claims processes • Business Intelligence, although regarded to be a mission-critical application, is more favored in Europe but still 30% are not interested, esp. life insurers Data flow, analysis and sharing is key. Sources: Forrester Research, Trends 2009: Insurance eBusiness And Channel Strategy, 01/2009; Munich Re Group, Trends & Innovation, 2009; Capgemini, World Insurance Report, 2009; Datamonitor, Business Trends: Global Insurance Technology Trends, 2009 (Customer Focus), 2009

4.9 Industry Trends – Logistics Trends • Ongoing fuel price volatility • The growing role of politics (e.g., infrastructure, taxes, free trade) • Green initiatives • Transport demand dropped by >20% in 2009 , sings of improvement in early 2010 with passenger demand gains of 6.5% and 11.0% in APA and Latin America • Shift of demand, limited capacity, and profit pressure shape the industry (increase of container transport by 40% between 2006 and 2011 according Global Insight) • Logistics services provider are squeezed between high quality services and costs optimization • Rising fuel prices and current environmental concerns • Freight transshipment at nodal logistic points is one of the main bottlenecks of multimodal transport • Track and trace regulations and recycling processes are challenging logistics providers • Growing demand for freight transportation is driving maximization of transportation assets utilization • Turning inflexible operational chains into responsive and adaptive supply networks • Mobile workforce optimization is a main need • Improved collaborative workflows • Full visibility of business performance • Enhancing the recycling process as well as reverse logistics efficiencies • Enabling new business models and revenue-generating services to achieve long-term business transformation strategies. • European track and trace regulations are impacting supply chain and product information management systems Deduction • Anything that reduces fuel prices and general costs • SCM, CRM, mobile solutions and agile IT are the main topics Air transport • Fuel will account for 23% of operating costs in the airline industry • In 2009 the IATA expects cargo traffic to fall 13%, passenger traffic down 5.7% and airline revenues to decline by 12% or $63 billion. • Fuel hedging together with recent changes to accounting rules has produced a complex and potentially confusing impact on reported net profits in 2008. • Consolidation within political borders (including Air France-KLM, Lufthansa-Swiss, Delta-Northwest, Cathay Pacific-Dragonair) has created stronger players. • Profitability optimization, productivity improvements, and customer service innovation. Sales and marketing, customer service, and business performance management Railways • Enhancing business performance management and quality of service • Implementation of new customer facing strategies Logistics • Operational excellence, flexibility, and reliability while avoiding any waste of resources, are key competitive factors. IT Priorities • New dynamic and responsive IT systems • Customer service enhancements • Supply chain efficiency improvements • IT organization responsiveness and improvement The crisis hits the industry. Rising fuel prices, the need for cost optimization, green initiatives and regulations shape the industry Sources: Capgemini, Transport Market Monitor, 03/2010; IATA, Forecast 06/2009; IATA, 03/2010; DC, 2009

4.10 Industry Trends – Public Sector Hype Cycle for Government Transformation, 2009 Deduction • The value of IT is one of the main drivers • The market is extremely heterogenous, with strong differences between countries and organizations • Green is on the agenda IT Priorities • Improving organizational efficiency is the most common goal • Modernization of IT, cconsolidating existing systems and implementing enterprise-wide systems • IT security, mission-critical operations • Automating workflow, information exchange, e-medical reports • IT asset management: procuring certified "green" ICT solutions, virtualization, cooling etc. • Improving ICT product life cycle • Adopting eco-sustainable product end-of-life management • Advanced scientific computing and services • Energy efficiency and renewables • Telecommutation of employees (high in Europe) • Trends • By 2012, as many as one in five government processes will rely on "crowdsourced" data. • Governments worldwide are focusing on providing as much public data as possible online to increase transparency and create value • Social media is becoming increasingly important • Enterprise information management (EIM) efforts in government don't typically address how to access, analyze and validate external information • By 2013, more than 60% of existing IT shared services that do not revise their current governance model will not be able to achieve the benefits expected • By 2011, more than 25% of governments will integrate video surveillance and access control into a single command-and-control interface Improving the efficiency und cost restrictions and opening up to citizens are the major trends. Sources: Gartner, The Future of Government Is No Government, 04/2009; Gartner, Predicts 2010: Information Management, Governance and Security Issues Will Challenge Governments, 12/2009; Gartner, Hype Cycle for Government Transformation, 2009, 07/2009; IDC, Perspective: Western Europe Government Sector Pulse, July.September 2008, 03/2009; Capgemini, Are governments keeping up with the times?, 2009

4.11 Industry Trends – Healthcare Deduction • Value of IT and integration are main issues • Enabling customers to more online General Trends • Many governements are developing regional or national electronic health record programs • Governments encouraging a broader use of IT • Dropping IT staffing levels as a result of cost-cutting measures. • Skill shortages are critical in many Western European nations. • Hospitals are currently consuming 75% of the healthcare IT spending • Patients want "telehealth" programs that keep them at home longer or speed their return to home following clinical procedures. • Improve quality of care and reduce medical error through data sharing • Improve convenience of care delivery and respond to increased patient demand for choice. • Eliminate waste (such as back-office processing) and fraud • Enable patients to manage their own health online. • Improve public health reporting to monitor and control diseases. • Reduce the overall cost of delivering current care levels. • Engage with an increasingly mobile populous. IT Priorities • Commercial electronic data capture (EDC) solutions • Improving patient compliance through telehealth solutions • Digital imaging: reducing medical error and improving diagnostics; • Consumerism in healthcare: personal health records and electronic health records. • Cost-cutting strategies • End-user consolidation, either domestically or cross-border • Customer-centric strategies of end users • Globalization and global delivery model The Healthcare industry is one of the top IT spending industries, driven by cost-cutting and electronic health record. Sources: Ovum, Business Trends: Healthcare Technology – Understanding Your Healthcare Technology Customer 2009, 10/2009 ; PwC, Behind the numbers – medical cost trends for 2010, 2009; various online sources

4.12 Industry Trends – Retail Deduction • PLM is in focus • Sustainability will be key topic • Downstream data analysis IT Priorities • Retail IT integration will one of the priorities • Adoption of new PLM is key to the necessary changes • Software investments will focus on information standardization, legacy replacements, PLM and SCM • Improved IT integration and modularity for higher business flexibility • Applications to improve the on-shelf availability of product including perpetual inventory tracking, computer-generated ordering (CGO), and demand forecasting • RFID, with trials and implementations mostly focused on reducing the occurrence of merchandise out-of-stock situations, achieving supply chain efficiency improvements and reduction of excess inventory and enhancing the consumer experience General Trends • Retailers have to reinvent themselves to cope with rapidly changing socioeconomic and technological realities • Retailer will look for the “total shopping experience” • Regional responses will vary considerably • Inventory and demand-driven performance is key with optimized workflows and enhanced logistics • Precision retailing: using the brand to target specific consumers, downstream data get increasingly important • The confluence of the social Web, analytics, mobility, and context-aware applications and services enable quicker sensing of market patterns The industry is in performance improving mode. In parallel retail gets more customer-centric. Sources: AMR Research, AMR Supply Chain Executive Conference: Three Square Meals Full of Knowledge for Retailers, 05/2010; AMR Research, A Retailer’s Successful PLM Extension Brings Design Staff Into the Fold, 05/2010; IDC, Worldwide Retail Industry 2009 Top 10 Predictions, 01/2009; AMR Research, Retailers Guarded but Staying the Course With IT Projects Through Economic Storm, 11/2008; Capgemini, Future Channel Shopping, 2009

4.12 Industry Trends – Retail The Shopping Experience Deduction • Bundling • Tagging the physica product with virtual information • Tagging the virtual infrmation with physical locations • Tagging products with ratings • Offering services before, during and after the shopping Physical shopping experience • The entire world will be treated as a store, online merges with physical stores. Customers use both worlds in parallel • Ambient in-store interaction, engagement, entertainment; more flexible in-store environments • The evolution of the fitting room: augmented reality browsing and customization • Shopping is a social activity, we will see concepts to increase the social shopping experience • Local and cultural aspects get important for retailers, giving shoppers a feeling of “shopping in my quarter” • Brands need to take part in the dialogue between online and physical world • Brands will increasingly introduce likeminded products and services for each of their shopped products • More tools to empower customers to make an informed purchase Online shopping • More “hero pages with spectacular product image shots, less home page filled with thumb-nail product images. See Coach. • Content becomes the interface - The navigation is driven through the content. See Gucci • Customer empowerment & guidance - Letting customers decide what and how much information they see, customized faceted search in which the shopper can select search criteria (color, size, style) and add or delete it to find the products they are most interested in seeing. See Puma, Nike ID, Moosejaw • Social shopping - Social shopping and the “wisdom of crowds”, customers become the new tastemakers. See Polyvore.com Retailers • Every store has to be a flagship with unique shopping experience • Decors and interiors will be made more flexible in order to make the shopping experience more unique • Products and services need to be branded and positioned as standalone, each one needs a branded story behind • Providing a richer product experience through RFID, shotcodes and augmented reality • The store will be taken to the customer, getting in a constant dialogue with mobile services, e.g. shopping lists • More personalized offerings in both worlds • The retail personal has to become more shopping experts than shelf organizing • Complimentary services will be added to the stores • Social media will be added to the retail side • Communities will be included to improve services Shopping crosses the worlds between the physical and virtual store. The individual consumer is in the center. Sources: Doug Mack, CEO One Kings Lane, Remixed: The customer experience, 2010; PSFK, Future of Retail , 2010

4.12 Industry Trends – Retail Category Management Deduction • Taste changes even faster • Cosumers are increasingly well informed • Shoppers expect not the whol world but the right offers in their stores • Balancing demand and supply gets more elaborate • Overcapacity and demand for personalization • Retailers increasingly identify shopper personas but don’t have the necessary category management in place • Retailers need store/cluster-specific assortments based on their shopper definitions, they need to analyze the range of their products, pricing and promotions • House brands and private labels grow • Retailers are pushing for branded suppliers to rationalize portfolio items, but less than 5% of CP companies have the effectively rationalized items on the item master. • In 2008, 64% of CP companies increased the number of products in their portfolios, with only 18% reducing the number of products sold. A stetch between an overflow of products and not the right ones for the individuals. Sources: AMR Research, Rethinking Category Management: The Three Big Hurdles to Success, 03/2009; AMR Research, Retail Assortment Management Leaders and Contenders—Evaluation Insights Revealed, 02/2010

4.13 Industry Trends – Telecom Deduction • IT landscape optimization and customer-centric IT are main IT trends • Billing systems • CRM/BI Hype Cycle for the Telecom Industry, 2009 General Trends • As the economy recovers, the focus will shift to expand capacity • Telcos need to find new revenues to replace falling fees • Commoditization pressure on the lower network layers - As fiber transport gets cheaper, the value of running fiber directly to points of traffic concentration increases. • Wireless transformation to data services. • Explosion in provider consumption of vendor professional services, driven by the increased integration of information technology components (software, storage and servers) into services and the increased complexity of modern service ecosystems • Business model transformation focus on the service layer • Data communication will be key driver • The surging growth in wired and mobile data traffic will put pressure on existing capacity, which will lead to infrastructure investments • IP equipment and IP-based services will drive growth, migration to 4G will speed up wireless, the 700 MHz spectrum will be used for advanced wireless applications and rural areas • Government investments in broadband will stimulate growth • The traditional industry cascade supply chain model is no longer sustainable, new services will be introduced • Consumer expect connectivity any time, at any place, with any device, in any network, and they want more than calls and lines • IT Priorities • Merging network and IT infrastructure into a common cloud. • Reducing the high share of custom-developed legacy systems in the core telecom application segments, standardization (investments in standard application software packages rather than custom developments) is a clear trend in all application segments • Projects aiming at optimizing legacy systems and reducing operational cost (mainly in the OSS and BSS space) • Integrationto to coordinate component-based architectures and to install the much-discussed service-oriented architectures (SOA), where technology is transparent to business processes • The consolidated, ultra-competitive environment is driving spending on CRM, BI, and other applications involved in customer retention • Billing systems are still largely custom developments Convergence and customer centricity are main drivers. The telecom industry has to expand its classical market. Sources: Gartner, Hype Cycle for the Telecommunications Industry, 2009^, 07/2009;SearchTelecom.com, Top five telecom industry trends for 2010: Market transformation ahead, 03/2009; Forrester Research, Farewell To The Traditional Telecom Ecosystem, 05/2009;, TIA, 2010 Policy Playbook, 2010

4.14 Industry Trends – Professional Services • Tax, auditing • The corporate share of the overall tax burden is likely to remain acute and consultancies will focus on services coping with it • Much lower interest rates will need deeper analysis of borrowing costs and services across the whole value chain • Real-time will become even more important to increase certainty for future tax decisions, especially transfer pricing. • Simpler stuctures, legal entity rationalization • Integrated corporate reporting will include the company’s performance for a comprehensive set of factors – economic as well as social, environmental, governance and other relevant ‘business-impacting’ factors. • Internal auditing focuses on critical risks and issues, aligning internal audit’s value proposition with stakeholder expectations, matches the talent model to the value proposition and assesses the areas that have the most room for improvement from a performance perspective. • Customer segmentation changes from large corporations to more SMBs Deduction • Tax needs far more analytics • Facility Mgmt becomes largely an IT industry • Real Estate needs analytics, climate modellling and models to predict prices • Facility Mgmt • Ongoing consolidation of the big players but parallel highly specialized service providers • Complete management from planning, construction, use and deconstruction • IT plays crucial role, the job gets increasingly automated • Service providers struggle to show added value versus internal organizations, sales is inefficient • Security and intelligent management of the buildings, saving energy, roofing • Real Estate • Worst time in history in US, tense in developed countries. Painful writedowns, defaults, and workouts • Job loss and rising cost put further pressure on owners; rising vacancies and declining rents • Surviving is the key issue for the next 2 years: Cash flow analysis, risk management („Early is the new wrong”) • Developing is nearly dead - re-use and modernization • Property assessment. Focus is on quality • Global gateways are prime (coastal cities, airports…) • More joint ventures of real estate companies and banks In all services, the focus is on the customer and will remain there. Sources: KPMG, Froniters in tax, 06/2009; KPMG, Integrated reporting, 2010; PriceWEaterhouseCoopers, A future rich in opportunity, Internal audit must seize opportunities to enhance its relevancy , 2010; GEFMA, Trends im Facility Management, 2010

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