The global downturn in the supply of ATMs and EPOS systems led to a significant fall in Hardware sales at Wincor Nixdorf. Accordingly, the Company found itself confronted by additional pressure on its prices and a corresponding reduction of its margins. Unfortunately, it was not possible to exploit economies of scale on the same level as the previous year.
Overall revenue from the Hardware business declined 9% in the year under review to €1,224 million (2007/2008: €1,346 million). As a result, the contribution to total Group sales made by the Hardware business ended the fiscal year down at 54% (2007/2008: 58%).
During the reporting period, we made continuous developments to our hardware portfolio in the light of changes in the nature of our banking and retail customers’ IT processes. One particular area affecting both segments is the introduction of automated cash handling technology, which enables banks and retailers to exploit further potential for rationalization. In both segments, we drove ahead with our initiatives and programs aimed at reducing manufacturing costs, starting as early as the system development stage, in order to alleviate pressure on margins and ensure that we remain competitive.
Software/Services (Glossary) performed well in the year under review, underlining its importance as part of our growth strategy. This business stream covers all the service-oriented elements of the Company’s portfolio. These comprise the sale of software licenses, the provision of advice to customers and on-site implementation and integration (“Professional Services” (Glossary) ). They also include the full range of services, such as Managed Services (Glossary) and Outsourcing (Glossary) , whose purpose is to ensure the efficient operation of our customers’ IT systems.
Total net sales for Software/Services in the reporting year rose 5% to €1,026 million (2007/2008: €973 million), reflecting the importance of this business stream, especially in the current financial crisis, as a stable foundation for generating Group revenue. At the same time, this success feeds into the implementation of our corporate strategy, which provides for the continuous expansion of these activities.
In the reporting year, the Software/Services business increased its contribution to total Group sales to 46% (2007/2008: 42%). We also maintained our efforts in the field of software development with a view to expanding our existing portfolio to include a number of new functions.
Wincor Nixdorf’s ProClassic / Enterprise Retail Banking Solution (Glossary) Suite (“PC/E Suite”) provides its users with a platform that makes it possible to integrate and comprehensively manage the full spectrum of sales channels and key customer-oriented processes (Sales and Marketing / Service and Support). This ensures, for example, that data is used in a consistent way so that each sales channel can be used not only to perform a specific task for the bank’s customers, but also to market additional services based on the same information. The service-oriented architecture also simplifies IT integration and updating, thus contributing to the reduction of IT operating costs. In addition, the platform is regularly expanded to provide greater functionality in response to new requirements, e.g., integration of the mobile banking sales channel.
For retailers, Wincor Nixdorf’s TP Application Suite (Glossary) can be used to manage the entire range of branch and related processes. The software can also be amended to accommodate company- or country-specific additions or adaptations. This is particularly useful for global retail groups that wish to standardize their IT and process infrastructure around the world. This makes it possible, for example, to standardize business processes throughout the value chain across national boundaries – from enterprise resource planning to checkout operations.
During the reporting year, we took steps to further expand our portfolio of Professional Services, e.g., in the field of software integration and adaptation, as well as our capacity with regards to consulting (Glossary) services. In doing so, Wincor Nixdorf was vigorously pursuing its strategic aim of generating further growth in these high-margin, high-growth areas, even in the present difficult economic situation. At Group level, around 700 people were employed within the area of Professional Services in the period under review.
In the field of IT Services, we achieved further growth in Product Related Services, Managed Services and Outsourcing. As well as benefiting from the relative stability of this business during the crisis, since most service agreements with our customers run over several years, we were able to make further improvements in our competitiveness and therefore attract a number of new customers.
Product Related Services continue to form the lion’s share of our portfolio of IT Services. Generally speaking, they involve contracts to install, maintain and repair customer systems. These contracts are sometimes marketed in the form of new services such as “Support Packs,” standardized services that we offer at a fixed price. We also proved ourselves in a number of large rollout (Glossary) projects that we were able to implement successfully even on very tight schedules. In terms of performance by region, Services saw particular growth in the Americas, where we expanded our network comprising our own resources and those of our regional partners.
There was also an encouraging level of growth in Managed Services, where we gained several new customers. This involves taking over the operation of their branch IT infrastructure in the form of standardized and scalable services. These have been designed with a modular structure and can simply be incorporated by the customer as needed. For the first time, we are also taking over the running of software applications for some customers. During the year under review, we expanded the geographical range of our Managed Services portfolio to cover the United States, Spain and Portugal.
In fiscal 2008/2009, we expanded our Outsourcing business in a number of West European countries, and in others we prepared the ground for their future launch. We offer tailored management concepts and operating models to suit the specific requirements of our customers. For banks in particular, we can take over the partial or complete operation of branch IT infrastructures and applications, including self-service appliances and networks.
The technical basis for managing and providing all our services is Wincor Nixdorf’s eServices Platform, which was regularly updated during the reporting year to meet even more demanding requirements. This platform acts as the nerve centre for the remote monitoring and control of customer systems.
Net Sales Split: Hardware and Software/Services. €m
