Research and Development.

Structure and focus; core data.

Research and development are crucially important to Wincor Nixdorf as a technology company.

The new and upgraded systems and solutions that we supply have a significant impact on the future performance of our customers' processes. In turn, Wincor Nixdorf's own capacity to meet its customers' needs with a range of outstanding services is a key determinant of its future success and viability.

With this in mind, we set ourselves the goal of developing leading technologies and solutions – especially at the interface between our clients and their customers. We want our clients to prosper in this dynamic era of digitalization and to be in a position to break into new business areas and markets with the help of our innovative solutions. Our conceptual and technical support should also give them the means to leverage further process efficiency gains.

One of the Group's core fields of expertise is high-end automation technology based in large part on state-of-the-art hardware and software. Integrated solutions comprising systems, software, and IT services play a key role in the ongoing trend towards digitalization that characterizes the business operations of banks and retailers, above all with regard to new omni-channel concepts, branch and store transformation projects, the wide-ranging automation of cash processes, and the introduction and handling of new cashless payment systems based on cards and cellphones.

Regional concentration of R&D resources.

At the end of the year under review, the Group R&D headcount stood at 740. The corresponding figure at the end of the previous fiscal year was 720. As part of our restructuring program, the number of R&D employees in Germany was reduced by 5 (down 1%) to 502. The total R&D headcount outside Germany rose by 25 (up +12 %) to 238.

We made further changes to our international R&D structure, involving a series of new measures to concentrate our resources at fewer locations. Our main goal here was to bring together our R&D staff for software development, support, and testing at dedicated sites in the Czech Republic and Poland as part of our nearshoring strategy. In addition to Germany, we have research and development facilities in Poland, the Czech Republic, Singapore, and Switzerland. The total number of active property rights was 1,783 (2012/2013: 1,678).

R&D expense increases slightly year on year.

Research and development costs totaled €95 million (2014/2015: €90 million), which corresponds to a year-on-year increase in investment of €5 million or around 6%. The R&D ratio, including restructuring expenses and transaction expenses of €1.2 million in fiscal 2015/2016, stood at 3.7% – unchanged year on year (2014/2015: 3.7%).

Development of R&D expenditure
with integrated R&D ratio.

€ million

Development of R&D expenditure with integrated R&D ratio (bar chart) Development of R&D expenditure with integrated R&D ratio (bar chart)

Key aspects of development work.

Banking software focused on omni-channel integration and branch transformation.

To ensure that customers are presented with the same positive experience whichever sales channel they decide to use, the information and quality of service provided by banks has to be consistent across all of those channels. In response to changing patterns of consumer behavior, banks are prioritizing investment in the integration of mobile technologies. Accordingly, our software development activities are also focused on this area. During the year under review, we made significant improvements to our Netcentric Retail Banking Solution Suite.

One example of the expansion of our Software Suite is the combination of self-service and smartphone functionality across all sales channels. Instead of needing a bank card, customers can make cash transactions using their smartphone and even prepare them in advance on the way to the ATM. We have also upgraded our software to allow for the integration of tablets that enable bank staff to act as mobile advisers with permanent access to relevant customer information.

Our newly enhanced Software Suite can be used as a transactions platform for processing financial transactions such as cashless payments and transfers. It can be connected to international networks and protocols through standard interfaces (APIs). These developments support the implementation of international rules such as the European Payment Services Directive (PSD2). In addition, we have been working hard to make all our Software Suite solutions available as cloud-based services.

Upgraded multivendor software used for designing touch- and multi-touch-based user interfaces.

By developing new tools and applying standards we have reduced our project implementation costs and the corresponding time to market.

With a view to further increasing the availability of our installed systems, we invested a considerable amount in management software dedicated to the online monitoring and remote maintenance of self-service systems. In this context, we now evaluate operational information using big data management systems. The results can be used as the basis for continuous improvement.

We also refined our software solutions in the areas of cash management optimization, ATM security, and video monitoring.

Retail software: streamlined innovation cycles.

During the year under review, the main focus of our development work in the field of retail industry software was on enhancements that allow retailers to improve the service they provide to their own customers across all their sales channels. With requirements changing faster than ever, we have cut our innovation cycle by a substantial margin. Thanks to the introduction of a new platform concept, we can now integrate additional functions into our software much more rapidly. In turn, this means that retailers can implement innovative strategies more quickly at the point of sale.

We also invested in development work to refine our standardized, web technology-based architecture and created a new application programming interface (API) so that our customers can quickly and easily integrate additional touchpoints such as tablets, smartphones, and social media.

Key product partnership with Intershop.

The aim of this partnership is to offer a fully integrated omni-channel solution. It is now common practice in the retail world to order or reserve goods online and then pick them up from the store. It is equally common to find customers ordering items online while they are actually in the branch outlet. To reproduce processes such as these in our systems, we pooled the expertise of both companies and integrated their respective solutions.

For the first time, we now offer a cloud-based POS application through our business partners and intend to make further improvements to the software over the next few years.

Investing in cashless payment software.

In response to rapid growth in the global market for cashless payment solutions we constantly strive to extend our portfolio of solutions in this field. In the year under review we invested primarily in the development of new applications for our B-to-B software marketplace.

Banking hardware: new services in support of branch transformation.

Branch transformation projects involve redefining the role of the branch as well as its size and technical resources. This process creates a variety of branch formats, each with its own requirements of the bank's self-service systems. In response, we introduced a number of enhancements to our systems so that they can make various services and functions available on a self-service basis and support the branch's new customer-driven role.

For the target group comprising digital natives we developed an ATM that allows end users to withdraw cash by smartphone or by means of an NFC card. The transaction works without a card reader, and the PIN is entered using the touchscreen. The system won a Red Dot Design Award from Germany's NRW Design Center.

Security is a very important element of any cash handling solution. In order to tighten up even further on security, we made a number of improvements to our system technologies and components, e.g., encryption methods and our own anti-skimming solution. We also developed an anti-theft system for use when transporting large amounts of cash in ATM cassettes. The notes inside the cassette are stained with indelible security ink if an attempt is made to steal or break open the cassette using force.

For mail service operators we developed a modular kiosk that integrates a wide range of services into a self-service system that can be rapidly configured to comply with the diverse requirements of international mail organizations while also meeting international standards in terms of ergonomics.

We designed an automated cash handling solution for casinos that pays out winnings on presentation of barcode tickets. The system is equipped with an ambient lighting mechanism that allows the device to be adapted to its immediate surroundings. This project also involved providing the corresponding software.

Retail hardware: new systems for multifaceted media concepts.

During the year under review, the ongoing development of our Hardware portfolio for retailers focused on improvements in user friendliness and adaptation to a huge variety of retail formats.

For example, we made a number of improvements to our self-checkout systems in terms of design and ease of component integration, e.g., to facilitate the automation of cash handling. In addition, these systems can now be switched very easily between operated and self-service mode.

We launched a series of new checkout systems equipped with automated cash handling components that can be easily integrated into checkout environments.

We now offer a mobile checkout solution for retailers who want to serve their customers at any point in the store. Tablets can be integrated into the branch's existing IT infrastructure through the software platform and can provide every single checkout function. Store employees can use their tablets to find additional product and price information. The solution is aimed primarily at specialist retail outlets where there is greater demand for in-store advice.

We also added a low-cost model to our family of kiosk solutions.