Increasingly, Wincor Nixdorf’s business involves combining hardware, software and related support services. In order to provide greater reporting transparency, we have divided our business activities into Products (Hardware) and Software/Services.
Net sales from the Product business was up 8% at €1,254 million (2005/2006: €1,157 million). This corresponds to a share of 58% in total net sales for the period under review (2005/2006: 59%).
The overall sales volume attributable to hardware, such as ATMs and ePOS (Glossary) systems, showed a marked rise compared with the previous year, allowing us to achieve substantial economies of scale in production. At the same time, we recorded above-average growth in unit sales of high-end systems, such as multifunctional ATMs.
Once again, we extended our international manufacturing network to help us produce flexibly and more competitively. All of our major production sites were expanded and adapted to meet the challenges of the future:
In Germany, at our Paderborn location, we invested in a new spray-painting facility that is designed to meet the latest environmental and manufacturing standards. For this reason, we exceed current environmental requirements for painting processes by an exemplary margin. At the same time, we are boosting throughput and our capacity to respond flexibly to individual customer requests and increase the range of colors available. Our German production sites (Paderborn, Ilmenau) form a key element of our global manufacturing network. Paderborn acts as a high-tech supplier of mechatronics components as well as recycling and deposit systems – in addition to providing logistical support for the European market. At Ilmenau, which concentrates on reverse vending systems for the retail (Glossary) industry, we have laid the foundations for a new operating facility that will combine hardware and software development, system manufacturing, sales management, customer support and after-sales service, activities that were previously spread across several sites. This reorganization will allow us to respond faster and more directly to market requirements and push forward more efficiently with the internationalization of our business.
In Asia, we increased our production capacity in order to achieve even greater economies of scale with our global production network. We made further investments to support growth in the Asia/Pacific/Africa region by setting up our sites as decentralized manufacturing facilities that allow us to supply customers more quickly. We intend to adhere to this principle of “local for local”.
At our Singapore location, which acts as a hub for all our operations in the Asia/Pacific/Africa region, we expanded the production of banking (Glossary) systems. At the same time, to mark the 25th anniversary of the site in September 2007, we began production of a new range of ATMs, which has predominantly been developed at this facility.
The factory in Shanghai also increased its capacity and now covers 15,000 m2 – three times the previous production area. We also set up a new software competence center to help us introduce innovations more rapidly to the Chinese market, and respond more flexibly to local requirements. As a component in our global software development network, the Shanghai site improves our ability to integrate and adapt international software. Thus, it contributes to the expansion of our Software/Services business in the region.
For an international production network to operate effectively, all processes must be covered by standardized IT systems – from market rollout (Glossary) to product delivery and quality management. As a result, our uniform IT platform was expanded and improved for all our production facilities during the year under review. Standardized key performance indicators (KPIs) improve process controlling and enhance manufacturing efficiency. As the next step, we intend to optimize the management of global suppliers and put in place a Group-wide system for the planning and control of customer requirements, and of capacity at individual sites.
Net sales from Software/Services rose by 13% to €891 million (2005/2006: €791 million).
The Software/Services business includes all the Group’s service-related operations. This covers the sale of software licenses, the provision of consulting services in relation to new solutions, on-site implementation and integration (Professional Services) and the full range of other service activities whose aim is to ensure the cost-efficient and smooth running of IT systems installed at customer facilities.
Thanks to positive growth rates in this area, revenue from Software/Services made up 42% of total net sales for the year under review, slightly up on the percentage figure for 2005/2006 (41%). This represents a continuation of the trend established in previous years. Wincor Nixdorf’s long-term goal is to generate half of net sales for the Group from Software/Services.
The Software business was boosted by sales to the banking industry of our ProClassic/Enterprise software. This provides banks with a platform from which to offer customized client services spanning the full range of sales channels. It also contributes towards the standardization of IT processes and their underlying infrastructure throughout the organization. In the retail industry, there was a considerable increase in demand for our TP.net software, which allows multinational groups to standardize the software solutions (Glossary) they use across different countries. Thanks to targeted investment in recent years and a commitment to development, Wincor Nixdorf has succeeded in establishing itself as a leading innovator in both fields.
Growth in the IT Consulting business was also very encouraging. There was particularly strong demand for integration and implementation services. We aim to expand the area of Professional Services significantly over the next few years. In Germany, this business is concentrated in two separate subsidiaries – Wincor Nixdorf Banking Consulting GmbH and Wincor Nixdorf Retail Consulting GmbH.
Wincor Nixdorf’s Services business continued the rapid growth of recent years, a trend that is primarily attributable to orders from the banking (Glossary) industry.
Product-related services form an integral part of our portfolio within this area. In many cases, these are multi-year packages that include installation, maintenance and repair of customer systems. We also take over individual tasks in the form of Managed Services (Glossary) , thus easing pressure on the customer’s operation of its systems. Our most comprehensive service involves the partial or complete operation of the IT infrastructure and applications of banks and retailers as part of an outsourcing (Glossary) agreement (see also chapter "Strategy" ).
These product-related services account for the largest part of our Services business. They cover all the services we provide as part of the process chain, from the planning and roll-out of IT systems through to on-site services, including IMAC/R (Install, Move, Add, Change, Remove) and the supply of spare parts and consumables.
Sales of standardized service and repair packages are also buoyant. Our service desk attempts to clear up any problems remotely and directs a service team to the site if necessary.
During the year under review, our operations in the field of high-end services were expanded by several new customer projects. In the case of Managed Services, our success was due, above all, to providing services involving the operation of installed systems, including, for example, network-supported (remote) monitoring, inventorization and software distribution. Demand was also up for managed cash services, the aim of which is to optimize the supply of cash and ensure the maximum availability of ATMs. We also attracted new customers for our Outsourcing business, with even more high-profile companies placing the operation of their entire branch IT infrastructures in our hands.
Fiscal 2006/2007 brought further geographical expansion of the Group’s worldwide service network. We strengthened our network of partners in each region and built up our own resources.
The technical basis for the control and delivery of our entire service portfolio is provided by the “eServices Platform”, to which we connected both customer systems and our own service resources in additional countries around the globe. The “eServices Platform” is at the heart of the remote monitoring and control of customer systems and devices. It automatically records any disruption at the customer initiates the appropriate action and resolves the issue following a standardized procedure.
Naturally, the best form of customer support begins with properly equipped and configured IT systems, which is why we build capabilities and functions into all our own products that facilitate pro-active maintenance by means of a remote connection.
During the year under review, we set up a remarketing service for the return and recycling of used products as part of our logistics portfolio, and can already report initial success both in the German market and internationally.Net Sales Split: Products and Software/Services. €m
