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The Dutch software sector
Survey 2010
Commissioned by:
ICT~Office
Project:
2010.002
Publication number:
2010.002-1018
Date:
October 18, 2010
Authors:
Robbin te Velde
Jaap Veldkamp
Marijn Plomp
Val Kidd (translation)
Dialogic innovatie ● interactie 3
Contents
Summary .................................................................................................... 5
1 Introduction.......................................................................................... 7
1.1 Reasons and aims of this study................................................................... 7
1.2 The software sector in the Netherlands ........................................................ 7
2 Economic indicators .............................................................................. 9
2.1 Scope of the software sector ...................................................................... 9
2.2 Sources of revenue ..................................................................................14
2.3 Division of labour .....................................................................................18
3 Types of products................................................................................ 21
3.1 Differences between product and tailor-made software .................................21
3.2 Number of software products.....................................................................22
3.3 Characteristics of software products and services.........................................22
3.4 Share of SaaS .........................................................................................25
3.5 Open source & hybrid software ..................................................................25
4 Innovation .......................................................................................... 29
4.1 WBSO scheme .........................................................................................29
4.2 New products ..........................................................................................31
5 International context .......................................................................... 33
5.1 Export ....................................................................................................33
5.2 Nearshoring & offshoring software developments .........................................34
6 The software sector from a wider perspective .................................... 37
6.1 Software outside SBI 62*..........................................................................37
7 Method................................................................................................ 39
7.1 Motivation...............................................................................................39
7.2 Population and sample..............................................................................39
7.3 Procedure for conducting the survey...........................................................41
7.4 Response ................................................................................................41
Bijlage I | Online questionnaire EN........................................................... 43
Bijlage II | Letter to respondents ............................................................. 47
Dialogic innovatie ● interactie 5
Summary
The software sector - Facts and Figures
 The software sector1
is a fully-fledged and significant economic sector in the Netherlands, with a
turnover of 25 billion2
euros and gross added value of 17.3 billion euros. The sector contributes
to 2.8% of the Netherlands‟ economy (GNP). This added value is at least as high as most key
areas defined by the Innovation Platform as strategic sectors in which the Netherlands excels at
international level both in knowledge and in commercial activities.
 The value of software sales is in fact even higher because a great deal of software is developed
and sold by companies that formally do not come under the definition of software sector as
applied by CBS (Netherlands Statistics). If these activities are included in the calculation, the
extent of added value could rise to 24.3 billion euros. That would account for a 3.9%
contribution to the national economy (GNP).
 Companies in the Netherlands achieve a turnover of 10.2 billion euros from selling software
developed in-house. We are talking about product and tailor-made software (9.4 billion) as well
as embedded software (0.8 billion). Programming for third parties accounts for another 4.0
billion euros. Implementation, testing, management, and maintenance contribute 3.8 billion
euros to the total sales.
 These are the main activities focused on by companies that generate revenue especially from
the development and sales of software. Although software consultancy seems to be strongly
linked with the production of software, the production of software is not interwoven with
consultancy.
 The software sector has 192,000 full-time employees, of whom 68,000 are employed full-time
in software development and 14,000 in research and development (R&D). The proportion of
R&D is highest among software producers, at 8 to 9 percent.
Characteristics of software products
 It is often thought that the Netherlands develops mainly tailor-made software. The annual
turnover in this sector is 5.5 billion euros. However, sales of product software in this country
also amount to 3.9 billion euro. The larger the company, the higher its share of product
software.
 Based on the number of companies in the software sector producing software, it is estimated
that in 2010 there are between 30,000 and 35,000 software products on the Dutch market.
 At least three-quarters of all software is developed or commissioned by the companies
themselves. The remaining quarter is made up of components developed by third parties and
embedded in their own software. Of the external components, 54% come from closed source
licences and 46% from open source licences.
1
This study refers to the software sector as businesses in the CBS (Netherlands Statistics) category
„service activities in the field of information technology‟ (SBI category 62), with the exception of those
managing computer facilities (SBI 6203).
2
One billion is 109
or 1,000,000,000.
Dialogic innovatie ● interactie6
 A quarter of the companies in the software sector has end products or services which are
partially or entirely open source. Many companies that provide open source products also offer
tailor-made services included.
 Currently the services supplied by SaaS (Software-as-a-Service) account for 15% of software
sales.
Innovation
 The software sector is R&D-intensive as illustrated by the percentage of labour capacity devoted
to research and development (software producers = 9%) and by the percentage of applications
for innovation subsidies under the WBSO R&D Promotion Act (13.5% of the total). Companies
that use a relatively large amount of open source software carry out more research and
development than others.
 The innovativeness of the software sector is demonstrated by the fact that 23% of the turnover
of companies in this sector is generated by new or improved products. The general average in
the Netherlands is 10%.
 There is still much potential for growth in the software sector through innovation subsidies: in
fact smaller SMEs and open source businesses make relatively little use of the fiscal support
provided by the WBSO scheme.
 Companies that derive a relatively large proportion of their revenue from new products use
much of their capacity for R&D; they make profit mainly by selling software developed in-house;
they supply software products and make relatively frequent use of SaaS constructions.
International context
 The Dutch software sector is strongly focused on the domestic market. Alongside this, export
generates revenues of 1.93 billion euros from abroad. The largest share of this amount is
contributed by product software companies.
 Two-thirds of the total software sector exports go to Western Europe and more than 20% is
exported to North America.
 Of all the software developed by companies in the Netherlands, 7.9% is produced abroad, half
of which (4%) in their own subsidiaries. Offshoring plays a rather insignificant role in the
expansion of Dutch software, accounting for only 2.6% of total software development.
Software from a wider perspective
 The „virtualisation‟ of physical products (which contain increasingly more software) and selling of
standardized services as software products are trends which will increase the proportion of
software-intensive companies outside the sector. However these are not included in the official
statistics on software production in the Netherlands.
 Throughout the economy we can see other organizations that create software products or
services for internal use. The importance of software in and for the Dutch economy is many
times greater than the scale of the software sector itself.
 Further research is required to analyze the economic value of this software from a wider
perspective. Such studies should aim to map the software intensity in other sectors than the
software sector in order to provide insight into the actual contribution software makes to the
economy.
Dialogic innovatie ● interactie 7
1 Introduction
1.1 Reasons and aims of this study
In its 2008 report on the Dutch software product sector, the trade association ICT Office
stated that it is difficult to ascertain the added value of the software sector in the
Netherlands due to the lack of validated data.3
CBS figures provide further insight into the
scope of the Dutch ICT sector, with fewer details of its structure. The data required to assess
the specifically significant contribution of software development, sales and services to the
Dutch economy is not available. CBS has neither the capacity nor the means to conduct
more in-depth research on this topic.
For this reason ICT~Office contracted consultancy firm Dialogic to initiate a study of the
scope and economic significance of the software sector for the Netherlands, also looking at
how the various software activities are organized. This would also give additional depth to
the basic data collated by CBS.
In Finland annual surveys have been carried out for some time to determine the impact of
the development and sales of software and its services on the Finnish economy.4
These
surveys also formed the basis for the questionnaires used in the Dutch study.
1.2 The software sector in the Netherlands
It is important to distinguish the various sectors within the ICT industry. They range from
companies providing hardware and office technology, software and services, to telecommu-
nication. The scope of the hardware industry is relatively limited in the Netherlands, certainly
in comparison with countries such as Finland, South Korea and Japan. On the other hand,
Finland‟s software sector is small compared to its hardware industry. Comparisons between
international ICT sectors such as those carried out by OECD do not reveal the huge
differences that exist between various countries. 5
This is one of the reasons why we
concentrate specifically on the software sector in this report.
Outside the ICT industry, software is produced by very many companies in a number of
sectors of industry. Some of these are controlled by the businesses themselves (for example
financial institutions and logistics companies) while for others, selling software or services is
a side-line. Therefore it is important to indicate clearly which companies do and which
companies do not belong to the software sector.
For the purposes of this study, our use of the term „software sector‟ is confined to: all the
organizations which are classified in the category defined by CBS as providing service
activities in the field of information technology, with the exception of managing computer
facilities. In terms of the standard CBS codes, this applies to all businesses in the category
SBI 62*, but excluding SBI 6203. Table 1 provides a detailed overview of all the categories
included in this study. The figures in the graphs and tables presented in the following
3
ICT~Office (2008). See report highlighting great software opportunities „Software als product: grote
kansen voor een klein land‟.
4
Helsinki University of Technology, National Software Survey 2009, http://www.sbl.tkk.fi/oskari.
5
See e.g. the OECD Key ICT Indicators (Share of ICT value added in the business sector 1995 & 2006).
Dialogic innovatie ● interactie8
sections refer to the SBI codes shown in Table 1. Our definition is confined to covering
businesses which are active in software and services. This study does not take into account
hardware, office technology, and telecommunication or organizations that produce software
but are not registered as information technology companies.
Table 1. Codes for the main ICT activities based on SBI 2008
Description SBI code
Service activities in the field of information technology 62*
Develop, produce and market software 6201
Develop, produce and market standard (product) software 620101
Develop and produce tailor-made software 620102
Information technology consultancy 6202
Hardware consultancy 620201
Software consultancy 620202
Other service activities in information technology 6209
Implementation of software 620901
Other services in information technology 620909
Before the start of this study, details of the scope and economic value of the software sector
in the Netherlands were only available at aggregate level. There was no information on the
type of activities and how these are organized. In order to obtain this information, Dialogic
conducted a survey aimed directly at individual companies. The aggregated data enabled us
to assess not only the scope and value of the software sector but also how it is structured.
The method employed is described in detail in Chapter 7.
Dialogic innovatie ● interactie 9
2 Economic indicators
2.1 Scope of the software sector
Every organization which conducts commercial activities in the Netherlands has to be registered with
the Dutch Chamber of Commerce. The register uses the same classification as CBS. In principle it is
possible to identify directly the number of companies operating in the software sector (SBI code
62*). Once the source files were cleaned and the list of ICT~Office members added, this resulted in a
total of 24,370 companies.6
These companies are spread all over the Netherlands.7
The figure below plots on the map of the
Netherlands all the companies in the (representative) sample. The colour of the dots illustrates the
number of companies established in each area - the darker the dot, the higher the concentration.
The higher concentrations are especially found around (technical) universities. Another remarkable
observation is the high concentration running along the border between the provinces of Utrecht and
Gelderland. This is a legacy of the Baan empire.
6
The addresses extracted from the Chamber of Commerce data base were restricted to the head offices of
companies actively operating in the sector (thus no associations or foundations). An additional random survey
(n=250) of the latter dimension was conducted in order to check if the company in question had an operational
website or could be found in any way on-line (for example via LinkedIn-profiles). This proved to be the case for
80% of the companies. That is why the results have been multiplied by the factor 0.8.
7
A closer look at the distribution of companies in each central economic activity reveals hardly any clustering.
Thus companies who mainly sell software developed in-house (SBI 6201*) are located throughout the country.
However it is remarkable that companies whose core activity is “selling the products they have developed with
substantial embedded software” are mostly located in the North-East of the Netherlands. It should however be
borne in mind that this group of companies is relatively small (n=20) and for the purposes of this study, we
were not able to verify how this represents the overall distribution of companies throughout the Netherlands.
Dialogic innovatie ● interactie10
Figure 1: Distribution of software companies in the Netherlands (SBI 62*, n=721)
Based on the results of our study, the total turnover in the Dutch software sector can be estimated
at 26 billion euros. Compare this to CBS, who in 2008 came up with a total turnover of 23.1 billion
euros from 22,560 companies; and to Finland, where as previously stated the ICT industry
contributes significantly to the national economy, the total turnover for 2008 amounted to 3.1 billion
euros. In terms of GNP values, this boils down to 9.4 billion euros – still just 40% of the turnover in
the Netherlands.
The total number of persons employed full-time in the software sector is 192,068. That number is
higher than the total figure provided by CBS – 162,300 fte. This is due to the fact that the number of
small and medium sized enterprises (5-50 persons) is over-represented in our sample.
The overall distribution of employment in companies is highly skewed. Two-thirds of the companies
have only one full-time employee. Together they account for 7.9% of employment.8
The companies
with 500 fte or more account for 29.3%. This skewed distribution can also be interpreted differently:
considering the large number of very small companies, there is still a great deal of potential for
growth.
8
The break-down according to size of company is based on CBS figures (2009). The CBS total (22,560) is
therefore the equivalent of 1.19 fte per company. The average is higher than 1.0 fte because CBS does not
include very small businesses (<0.5 fte) in their total figure.
Dialogic innovatie ● interactie 11
The added value can be calculated based on turnover. The gross added value is turnover minus
purchasing costs (including sourcing external staff) and is a measure of how much a sector of
industry contributes to the national economy. Because the other costs stated by CBS reflect a
relatively higher percentage of turnover compared to that of the respondents in Dialogic‟s survey -
and the net added value is almost equal – the gross added value according to CBS is lower than
Dialogic. The total amounts are respectively 12.8 and 17.3 billion, or 2.2% versus 2.8% of gross
national product.
11.4%
10.5%
44.1%
58.4% 9.2%
44.5%
21.8%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
CBS
Dialogic Net added value
Costs of employee
Sourcingexternal staff
Other
Figure 2: Division of turnover and costs, SBI 6201, 6202 & 6209, Dialogic (2010) and CBS (2008)
Table 2. Overview of the software sector’s contribution to the Dutch economy
Dialogic
(2010)
SBI 2008
CBS
(2008)
SBI 1993
Turnover (million euro) 25,024 23,137
Number of companies 24,370 22,5609
Jobs (fte) 192,068 162,300
Turnover per employee (euro) 130,287 142,,54
Gross added value 17,267 12.837
Gross added value (% GNP) 2.8% 2.2%
Net added value (% turnover) 10.5% 11.4%
9
The latest SBI classification of companies is available already as is the 2009 data. The total number of
companies in category SBI 62* (excluding SBI 6203) is 22,560. CBS does not count one-man companies with
less than 1 fte (4.2% of the total jobs). If we do include these companies (and keep the average estimate at
0.5 fte), this adds another 1,895 companies. The total number of companies then amounts to 24,445 (versus
Dialogic‟s 24,370).
Further comparison of CBS and Dialogic data
There are variations between the aggregate figures in this study and those provided by CBS.
These can be largely explained by the slightly different structure of the sample whereby the
calculations lead to a different final result. Moreover the CBS figures are based on the
previous classification of companies in the SBI category 72* (SBI-1993). There was no
comparable CBS data available yet for the new category 62* (in the new SBI-2008
classification) investigated by Dialogic.
The distribution applied in the graphs and tables in the following chapters is based on
turnover. Dialogic and CBS estimates for total turnover are almost parallel, which validates
the results of this study. Dialogic‟s turnover figures are applied in the rest of the report.
Dialogic innovatie ● interactie12
Software is therefore not just significant because it is used in very many sectors of industry, but it
also makes a considerable contribution to the Dutch economy as a sector of industry in its own right.
Its significance becomes even more apparent if we weigh up the added value of software against the
added value of a number of key areas. These are strategic sectors in which the Netherlands excels
internationally in knowledge and business activities according to the Innovation Platform.10
10
For innovation proposals, see Tilburg, R. van, and Bekkers, F. (2004). Voorstellen Sleutelgebieden-aanpak.
Ambitie, excellentie en actie. Van dijkgraaf tot art director: voorstellen tot actie van het Innovatieplatform. The
Hague : Innovatieplatform.
Dialogic innovatie ● interactie 13
Table 3. Overview of the software sector’s contribution to the Dutch economy compared to other sectors
Sector Year as % GNP
Software sector (Dialogic) 2010 2.8%
Key Area:11
Chemical industry 2008 2.0-2.5%
Creative industry 2008 >3.0%
Food & Horticulture 2008 2.5-3.0%
Hightech systems & materials 2008 >3.0%
Pensions & insurance 2008 2.0-2.5%
Water 2008 <1.5%
The software sector can be further subdivided into a number of specific sectors. We can distinguish
three categories at the highest level: the core groups of companies that produce their own software
(SBI 6201), companies that offer consultancy services (SBI 6202), and companies that implement
software and provide other ICT services (SIB 6209).
Table 4. Turnover, gross added value, and fte per SBI group (million euros)
Label SBI
Dialogic
(2010)
%
Turnover
Software production 6201 € 17,025 68.0%
Consultancy 6202 € 6,526 26.1%
Other ICT services 6209 € 1,473 5.9%
Added value (gross)
Software production 6201 € 11,746 68.0%
Consultancy 6202 € 4,630 26.8%
Other ICT services 6209 € 891 5.2%
Fte
Software production 6201 116,429 60.6%
Consultancy 6202 62,210 32.4%
Other ICTservices 6209 13,429 7.0%
11
See http://www.innovatieplatform.nl/projecten/Nederland%20in%20de%20Wereld/sleutelgebieden/foto.pdf.
A broader perspective
When looking at the figures for the software sector, we should bear in mind that the
majority of companies are ICT companies but have not been classified in SBI category
62*. They do in fact belong in this category – we will consider this point in more detail
in chapter 6. If we include these companies in the original group, the total added value
will prove to be much higher. This value is then estimated at 24.3 billion euros or 3.9%
GNP.
Dialogic innovatie ● interactie14
Software producing companies (SBI 6201) are by far the largest group. In terms of turnover (17.0
billion euros) and gross added value (11.7 billion euros), this group contributes two-thirds of the
total. Compared to turnover and added value (both 68%), the relatively small proportion of
employment is lower (61%). The remaining category of „other ICT services‟ is much smaller than the
two other categories, but proportionally it makes a large contribution to employment.
68.0%
26.1%
5.9%
Verdelingomzet obv CBS
6201
6202
6209
Figure 3: Division of turnover
68.0%
26.8%
5.2%
Verdeling TW obv omzetverdeling
CBS
6201
6202
6209
Figure 4: Division of added value
(gross)12
60.6%
32.4%
7.0%
VerdelingFTE obv omzetverdeling
CBS
6201
6202
6209
Figure 5: Division of fte13
45,7%
36,0%
18,3%
Omzet
6201
6202
6209
2.2 Sources of revenue
CBS‟s SBI categories distinguish software production, consultancy and implementation. In practice,
however, it is not so easy to define in which category an activity belongs. This means that companies
in various categories often conduct more activities simultaneously. Software producers can for
example derive revenue from consultancy and vice versa. Table 5 and Figure 6 illustrate the division
of revenue from nine different sources.
Table 5. Division of nine different sources of income SBI 62* (million euros)
Dialogic
(2010)
%
Sales of own software (product or tailor-made software)14
€ 9,392 37.5%
Sales of products developed in house with substantial embedded software € 803 3.2%
Programming for third parties (sourced) € 3,986 15.9%
Implementation and/or testing software € 1,533 6.1%
Support and/or management and/or (corrective) maintenance of software applications € 2,231 8.9%
Other consultancy related to software € 2,225 8.9%
Sales of third parties‟ software (Software reseller) € 437 1.7%
Other products or services related to the software sector € 1,780 7.1%
Other activities not related to the software sector € 2,638 10.5%
Total € 25,024 100%
12
The division of added value is based on the relationship between turnover and added value in the survey, and
applied to CBS added value data.
13
The division of fte is based on the relationship between turnover and fte in the survey, applied to CBS fte data.
14
The are various labels being used for the two categories of software. Product software (SBI 620101) is also
called „standard software‟ or „commercial software‟. Note that the latter excludes open source software
whereas it can be included in the other two definitions. Tailor-made software (SBI 620102) is also called
„custom made software‟ or „bespoke software‟. See also Xu, L., & Brinkkemper, S. (2007). Concepts for
product software. European Journal of Information Systems, 16(5), 531-541.
Dialogic innovatie ● interactie 15
38.8%
3.3%
16.7%
6.0%
8.8%
8.3%
1.5%6.6%
9.9%
1,Verkoop van door uzelf gerealiseerde
software (product- of
maatwerksoftware)
2,Verkoop van door uzelf ontwikkelde
producten die een substantiële
softwarecomponent bevatten
(embedded software)
3,Programmeerwerk voor derden
(inhuur)
4,Implementatie en/of testen van
software
5,Support en/of beheer en/of
(correctief) onderhoud van
softwareapplicaties
6,Overige consultancy met betrekking
tot software
7,Verkoop van software van derden
(software reseller)
8,Overige, aan de software-industrie
gerelateerde producten of diensten
9,Overige, niet aan de software-
industrie gerelateerde activiteiten
Sales of software realised in-house (product or tailor-made software)
Sales of products developed in-house which contain substantial software components (embedded software)
Programming for third parties (hiring)
Implementation and/or testing software
Support and/or management and/or (corrective) maintenance of software applications
Other software-related consultancy
Sales of third parties‟ software (software reseller)
Other software sector related products or services
Other activities not related to the software sector
Figure 6: Subdivision of nine various sources of revenue (SBI 62*)
You can see from table 5 that the total software sales in the Netherlands amount to 10.2 billion euros
or 41% of the sector‟s total turnover (from the sale of products, tailor-made and embedded
software). That is much lower than the software producing sector‟s share (SBI 6201) as shown in
figure 5 (68%). It means that software production has a significant economic knock-on effect. In
other words, software production forms the basis on which other activities such as consultancy and
implementation are founded. Without this basis, such related activities would not exist and the scope
of the software sector would be much smaller.
Revenues from production are of course much higher in the software production subsector (SBI
6201) than in consultancy (SBI 6202). The opposite naturally applies to revenue from consultancy
although this revenue is more diversified than for software production. There the emphasis on core
activities such as the production of embedded software is relatively strong. However even the
software producers‟ share (SBI 6201) is no more than 51% and once again this underlines the wider
implications of software production.
Table 6. Nine different sources of revenue divided into software production (SBI 6201) and consultancy (SBI 6202) (million euros)
Revenue % Revenue %
Software production
(6201)
Consultancy (6202)
Sales of software realised in-house (product or tailor-made software) € 7,934 46.6% € 1,207 18.5%
Sales of products developed in-house which contain substantial software
components (embedded software)
€ 715 4,2% € 46 0.7%
Programming for third parties (hiring) € 3,252 19.1% € 679 10.4%
Implementation and/or testing software € 970 5.7% € 437 6.7%
Support and/or management and/or (corrective) maintenance of software
applications
€ 1,209 7.1% € 881 13.5%
Other software-related consultancy € 596 3.5% € 1,364 20.9%
Sales of third parties‟ software (software reseller) € 119 0.7% € 241 3.7%
Other software sector related products or services € 970 5.7% € 594 9.1%
Other activities not related to the software sector € 1,260 7.4% € 1,077 16.5%
Total € 17,025 100% € 6,526 100%
Programming: product or service?
According to the regular SBI classification, programming for third parties is considered an activity
and as such falls into the category SBI 6202 not SBI 6101. This activity does create a product in
the form of software and therefore should come under SBI 6101. In that case, the importance of
software production as activity increases from 42% to 59%. This also applies to software
production in the category SBI 6201. If we include programming for third parties in software
production, its share rises from 51% to 70%.
Dialogic innovatie ● interactie16
46,6%
4,2%
19,1%
5,7%
7,1%
3,5%
0,7% 5,7%
7,4%
1,Verkoop van door uzelf gerealiseerde
software (product- of
maatwerksoftware)
2,Verkoop van door uzelf ontwikkelde
producten die een substantiële
softwarecomponent bevatten
(embedded software)
3,Programmeerwerk voor derden
(inhuur)
4,Implementatie en/of testen van
software
5,Support en/of beheer en/of
(correctief) onderhoud van
softwareapplicaties
6,Overige consultancy met betrekking
tot software
7,Verkoop van software van derden
(software reseller)
8,Overige, aan de software-industrie
gerelateerde producten of diensten
9,Overige, niet aan de software-
industrie gerelateerde activiteiten
Figure 7: Subdivision into nine different sources of revenue
| software production (SBI 6201)
18.5%
0.7%
10.4%
6.7%
13.5%20.9%
3.7%
9.1%
16.5%
1,Verkoop van door uze
software (product- of m
2,Verkoop van door uze
producten die een subs
softwarecomponent be
software)
3,Programmeerwerk vo
4,Implementatie en/of
5,Support en/of behee
onderhoud van softwar
6,Overige consultancy
software
7,Verkoop van software
(software reseller)
8,Overige, aan de softw
gerelateerde producten
9,Overige, niet aan de
gerelateerde activiteite
Figure 8: Subdivision into nine different sources of revenue
| consultancy (SBI 6202)
If we further subdivide the three main categories, this brings to light a number of differences that
would otherwise go unnoticed. Alongside software sales, other significant sources of revenue for
producers of product software (SBI 620101) are implementation and testing (12%), and especially
support (16%). Revenue from sourcing programming for third parties is the main source of
secondary income (20%) for producers of tailor-made software (SBI 620102). Certain consultancy
companies‟ activities are distorted because hardware consultancy companies are included in the
grand total of 6202. This has resulted in the importance of software production, support and
management in that subcategory being slightly undervalued and software consultancy along with
other services related to software actually being slightly overvalued.
The difference in company profile is highlighted even more in the following charts. Companies are not
grouped according to their SBI code, but on the basis of the activity that yields their highest
revenue. In general the main activity‟s share is extremely large. For example, in (1) Sales of
software, this share is 88%, which means that companies whose main activity is „software sales‟
derive 88% of their revenue from this activity. The shares of (6) Other consultancy (65%) and
especially (5) Support and management (54%) and (4) Implementation and/or testing (51%) are
lower. This corresponds with the earlier observation that the distribution of consultancy activities is
relatively high. It is remarkable that in all three types of activities the revenue from software sales is
also relatively high (respectively 11%, 17% and 13%).15
Thus consultancy appears to be strongly
linked with the production of software but this does not apply the other way round. Software
production hardly ever goes hand in hand with consultancy (or for that matter with any other activity
at all).
15
CBS ranks (4) “Software implementation and/or testing” in the category SBI 6209 (other services) because
these are conducted activities not advice (SBI 6202). Conceptually this is a correct classification but in practice
it is not always so straightforward to distinguish between conducting activities and advising. The profiles (4) in
Table 6 and Figure 9, however match SBI 6102 better than SBI 6209.
Dialogic innovatie ● interactie 17
1: Sales of self-realised software
(product or tailor-made)
2: Sales of products developed in-
house with substantial embedded
software
3: Programming for third parties
(sourcing)
4: Implementation and/or testing
software
5: Support and/or management
and/or (corrective) maintenance of
software applications
6: Other consultancy related to
software
7: Sales of software to third parties
(software reselling)
8: Other products or services related
to the software sector
9: Other activities not related to the
software sector
Figure 9: Nine different sources of revenue, divided according to the activity which organizations say generates the
most revenue
(7) Software reselling is an interesting category as it accommodates the most hybrid group of
companies. Its core activity – selling third parties‟ software – accounts proportionately for less than
half of its total revenue (43%). Support and management (14%) are also the main sources of
revenue in this category, and to a lesser extent other services related to software (11%).
Dialogic innovatie ● interactie18
2.3 Division of labour
In order to generate the revenues mentioned in the previous section, companies must obviously first
carry out activities to provide products and/or services. This is the input or expenditure side and has
been determined for the survey by asking companies what proportion of their labour capacity is
devoted to the six activities listed in Table 7. Expenditure is expressed in number of fte not jobs. The
major activity is software development, which provides a total of 67,888 fte in the Netherlands.
Together with implementation (46,612 fte) and support (26,908 fte), the core activities account for
nearly three-quarters (74%) of employment.16
Table 7. Division of labour (fte) over six types of activities (SBI 62*)
CBS
(2008)
Dialogic
(2010)
%
Software development 57,367 67,888 35.%
Implementation 39,388 46,612 24.3%
Support 22,737 26,908 14.0%
Sales and/or Marketing 15,901 18,818 9.8%
R&D 12,063 14,276 7.4%
Other 14,843 17,566 9.1%
Total 162,300 192,069 100%
35.3%
24.3%
14.0%
9.8%
7.4% 9.1%
6201-02-09
Software development
Implementation
Support
Sales and/or marketing
R&D
Other
Figure 10: Subdivision of labour capacity in six types of activities (SBI 6201, 6202, 6209)
The major activity of companies producing software (SBI 620101 and 620102) is of course software
development. However the proportion is lower than one would initially expect. This is because
implementation and support (especially with standard software) are also important activities
underpinning software sales. Naturally implementation is the main input activity for companies in the
category implementation (SBI 620901). The same also applies to consultancies. Once again other
ICT services (SBI 620909) are the most hybrid category. Their support activity is relatively
significant.
16
The number of employees involved in software development (68,000) is in sharp contrast with the number of
IT students joining the sector every year (ca. 5,000). This is 7% of the total – scarcely enough to meet
replacement demand.
Dialogic innovatie ● interactie 19
Table 8. Labour capacity divided over six activities (expressed in percentages)
Software production Consultancy Other services
standard tailor-made hardware software implementation other
620101 620102 620201 620202 620901 620902
Software development 44.8% 51.4% 26.6% 24.6% 23.9% 22.7%
Implementation 14.1% 13.3% 37.5% 32.6% 32.2% 27.5%
Support 15.3% 10.1% 13.9% 16.7% 11.7% 17.2%
Sales and/or marketing 10.% 8.7% 14.3% 9.5% 13.9% 11.0%
R & D 8.4% 9.4% 3.9% 6.3% 6.5% 5.5%
Other 7.0% 7.1% 3.7% 10.2% 11.9% 16.0%
Software development and R&D are quite close. R&D‟s share is indeed highest (8-9%) in software
production (SBI 6201). This scarcely differs from the other categories. In any case it appears that
software producers themselves are definitely able to differentiate clearly between software
development and R&D. As anticipated beforehand, the highest percentage of R&D was found in
tailor-made software (SBI 620102) and here too there are only slight differences.17
According to data provided by CBS, the percentage of in-house R&D staff compared to total staff
numbers (expressed in fte) is 3.3%.18
This is much lower than the 7.3% for sector 62* in this study
due to the fact that the CBS figures differentiate between staff whereas Dialogic makes a
differentiation in time. Only a handful of companies employ fulltime (dedicated) researchers and this
is usually reserved for large firms. That does not mean that other companies are not carrying out
research. It forms part of their regular invoiceable activities, some of which are reserved for non-
R&D activities. Dialogic has included these hours whereas CBS has not.
In chapter 4 we look in more detail at how the various sectors differ in their R&D and scope of
innovation.
17
The Finnish study showed that R&D‟s share among software producers is much higher (27.0%) than in the
other categories (software product contracting: 11.5% and consulting firms: 7.7%). What are noticeable are
the very high percentages. In this study R&D is expressed as percentage of turnover (not percentage of labour
capacity) but this only partially explains the difference.
18
CBS only has comparable figures based on the old SBI (1993) classification which applied to service activities in
information technology, SBI 72*.
Dialogic innovatie ● interactie 21
3 Types of products
3.1 Differences between product and tailor-made software
In 2005 the Dutch innovation platform (Innovatieplatform) stated in its report on the pivotal role of
ICT in innovation 19
that it is generally recognized that software is playing a more and more
significant role in a large number of industries. A less well known fact is that the Netherlands‟
software sector is also a significant and wide-scale industry in its own right, as was shown in the
previous chapter. In as much as software is developed in the Netherlands, people tend to think that
it is only tailor-made software.
Software sales account for 9.4 billion of the 10.2 billion euros turnover in software. Contrary to
general opinion, Table 9 shows that this turnover is not only achieved thanks to tailor-made
software. Of the 9.4 billion euros worth of software sold in the Netherlands, product software
accounts for 3.9 billion (42%).20
It is undisputable that software producers (SBI 6201) have the
lion‟s share: 3.2 billion euros (83% of all product software). Consultancy companies obviously
achieve in absolute terms a much lower turnover in product software (0.59 billion euros), but it is
remarkable that the division within SBI 6202 is almost exactly the same for product software and
tailor-made software.
Table 9. Distribution of product and tailor-made software in software production (SBI 6201), consultancy (SBI 6202) and other
services (SBI 6209). Turnover in million euros.
Product software Tailor-made software
SBI Turnover % Turnover %
62* € 3,921 100% € 5,471 100%
6201 € 3,237 82.6% € 4,704 86.0%
6202 € 594 15.1% € 615 11.2%
6209 € 90 2.3% € 152 2.8%
41.7%
40.8%
49.1%
37.2%
58.3%
59.2%
50.9%
62.8%
€ 0
€ 1.000
€ 2.000
€ 3.000
€ 4.000
€ 5.000
€ 6.000
€ 7.000
€ 8.000
€ 9.000
€ 10.000
62* 6201* 6202* 6209*
Tailor-made software
Productsoftware
Figure 11: Share of product compared to tailor-made software in each SBI group
19
Innovatieplatform report (2005) on ICT‟s opportunities “ICT als innovatie-as: kansen pakken met ICT”.
20
The questionnaire asked to distinguish between product and tailor-made software but not each sector‟s share of
turnover. The sales figures in this paragraph were calculated by means of several interim steps.
Dialogic innovatie ● interactie22
The relationship between product software and tailor-made software is determined by various
factors. The first influential factor is the size of the company: it seems that the larger the company,
the greater the share of product software.21
0% 20% 40% 60% 80% 100%
1-10 fte
10-100 fte
100+ fte
Productsoftware
Tailor-made software
Figure 12: Share of product and tailor-made software related to the size of company
Besides size, a company‟s economic activities also have an impact on the relationship between tailor-
made and product software. The larger the proportion of sales of in-house developed software, the
greater the proportion of product software. We see the very opposite in revenue from programming
for third parties as such activities involve a relatively lower amount of product software. This is
logical because programming for third parties is more linked with tailor-made than product software.
3.2 Number of software products
We asked all the companies how many software products they are currently selling on the Dutch
market. Product lines/families are treated as one product. Based on the number of companies, we
can estimate that the total number of software products currently on the Dutch market is between
30,000 and 35,000.
Of the companies in the software producers category (SBI 6201), 31% do not have any software
products on the market. This means these companies purely concentrate on tailor-made software. Of
the consultancies (SBI 6202), 63% have no software products on the market. Conversely, a
remarkably high percentage (37%) does bring software products on the market and here we are still
talking about more than 2,500 companies and about 6,000 software products.
0
2000
4000
6000
8000
10000
12000
14000
16000
None 1 2 or 3 4 or more
0
2000
4000
6000
8000
10000
12000
14000
16000
None 1 2 or 3 4 or more
0
2000
4000
6000
8000
10000
12000
14000
16000
None 1 2 or 3 4 or more
Figure 13: Distribution of number of
companies with # software products and
lines (SBI 62*)
Figure 14: Distribution of number of
companies with # software products and
lines (SBI 6201)
Figure 15: Distribution of number of
companies with # software products and
lines (SBI 6202)
3.3 Characteristics of software products and services
The companies were given a large number of statements describing their main type of products and
services. These included topics such as tailor-made, pricing policy, SaaS (software-as-a-service), and
open source. An overview of their responses is shown in Figure 16.
21
r= +0.11. The significance level of this relationship is indeed low (0.061). In all subsequent correlations it will
be ≤0.05.
Dialogic innovatie ● interactie 23
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Our end products/services areusedvia a (generic) webbrowser
Our end products/service areopen source
Our end products/services requirespecialist installation and
integration
The price ofour end products/services is basedon actual useof
the product
Our end products are based on SaaS (Software as a Service)
construction
There is an online user community related to our end
products/services
We deliver tailor-madefor everyclient
Our end products/services contain softwarethat wehaveto
install at the client’s premises
27%
65%
46%
34%
16%
58%
12%
24%
5%
10%
8%
18%
17%
14%
16%
19%
18%
14%
23%
28%
30%
15%
30%
27%
16%
4%
11%
10%
20%
6%
26%
16%
34%
7%
12%
10%
18%
6%
16%
14%
Not applicable Hardly applicable Partly applicable Broadly applicable Fully Applicable
Figure 16: Statements describing the characteristics of main products and services (SBI 62*)
A number of categories is interlinked, that is to say the responses to the statements have a
significant correlation. This cannot be concluded directly from Figure 16 but as a result of further
analysis. The following consecutive interrelationships were found in response to the eight
statements:
1.Products with software that has to be installed at the client‟s premises require both specialist
(r=+0.52) as well as tailor-made (r=+0.20) installation. At the same time, products often
cannot be used via a web browser (r=-0.29) and are often not based on SaaS (r=-0.35).
2.Tailor-made products mostly require specialist installation and integration (r=0.12), usually do
not use a SaaS construction (r=-0.18), and their price is not based on actual product utiliza-
tion (r=-0.12).
3.With products used through a (generic) web browser (r=0.21) and open source (r=0.22),
online user communities are used more often than average. Products that have to be installed
at a client‟s premises score slightly under the average (r=-0.14).
4.SaaS constructions require both tailor-made (r=0.19) as well as installation at the client
(r=0.52). Regarding the latter, this requires a local client in order to be able to run the SaaS
software. SaaS is already so well developed that relatively little specialist installation and
integration are required (r=-0.24).
5.Pricing a product or service based on actual usage is relatively commonly used with SaaS
constructions (r=0.29) – “software per minute” – and relatively little with tailor-made products
(r=-0.12).
6.SaaS products can be used via a specific client (see 4) or (generic) web browser (r=0.53). At
the moment both options are equally popular. The specific clients are so generic that they do
not require any specialist installation (r=-0.24) or tailor-made (r=-0.18).
Dialogic innovatie ● interactie24
7.End products which are open source are often used via a (generic) web browser (r=0.24), are
generally based on a SaaS construction (r=0.11), are mostly tailor-made (r=0.18), and make
relatively little use of an online user community (r=0.28).
8.Software products that are used through a (generic) web browser are relatively mostly SaaS
products (r=0.53) and have relatively often an online user community (r=0.21). Both types
were discussed above.
Besides these, there are remarkably few differences between the responses from the software
producers (6201) and the consultancies (6202). The only exception is the open source category
(which will be discussed in more detail in section 3.5). Software producers see their products and
services as more open source than consultancies do. It should be noted the main difference is found
in the category „hardly applicable‟ which does not have a significant effect on the weighted average
(see Table 10).
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Our end products/services areusedvia a (generic) webbrowser
Our end products/service areopen source
Our end products/services requirespecialist installation and
integration
The price ofour end products/services is basedon actual useof
the product
Our end products are based on SaaS (Software as a Service)
construction
There is an online user community related to our end
products/services
We deliver tailor-madefor everyclient
Our end products/services contain softwarethat wehaveto
install at the client’s premises
27%
65%
46%
34%
16%
58%
12%
24%
5%
10%
8%
18%
17%
14%
16%
19%
18%
14%
23%
28%
30%
15%
30%
27%
16%
4%
11%
10%
20%
6%
26%
16%
34%
7%
12%
10%
18%
6%
16%
14%
Not applicable Hardly applicable Partly applicable Broadly applicable Fully Applicable
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Onze eindproducten/dienstenwordengebruikt via een
(generieke)webbrowser
Onze eindproducten/dienstenzijn opensource
Onze eindproducten/dienstenzijn gebaseerdop een
Software as a Service (SaaS)-constructie
De prijs van onze eindproducten/dienstenis gebaseerd op
het feitelijkegebruikvan hetproduct
Onze eindproducten/dienstenvereisen specialistische
installatieen integratie
Er is een onlineusercommunity gerelateerd aan onze
eindproducten/diensten
Voor iedereklantleveren wijmaatwerk
Onze eindproducten/dienstenbevatten software diedoor
ons geïnstalleerd moetwordenop locatievan de klant
29%
61%
46%
35%
18%
58%
10%
27%
3%
13%
11%
17%
17%
13%
16%
21%
17%
15%
22%
26%
29%
16%
26%
23%
17%
4%
11%
13%
21%
7%
29%
16%
34%
7%
10%
8%
15%
7%
20%
13%
Niet van toepassing Nauwelijks van toepassing Deelsvan toepassing
Grotendeelsvan toepassing Volledig van toepassing
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Onze eindproducten/dienstenwordengebruikt via een
(generieke)webbrowser
Onze eindproducten/dienstenzijn opensource
Onze eindproducten/dienstenzijn gebaseerdop een
Software as a Service (SaaS)-constructie
De prijs van onze eindproducten/dienstenis gebaseerd op
het feitelijkegebruikvan hetproduct
Onze eindproducten/dienstenvereisen specialistische
installatieen integratie
Er is een onlineusercommunity gerelateerd aan onze
eindproducten/diensten
Voor iedereklantleveren wijmaatwerk
Onze eindproducten/dienstenbevatten software diedoor
ons geïnstalleerd moetwordenop locatievan de klant
24%
73%
44%
32%
11%
59%
18%
23%
5%
5%
3%
19%
15%
16%
15%
12%
18%
13%
23%
29%
31%
13%
33%
33%
18%
3%
15%
6%
20%
5%
22%
18%
36%
6%
16%
14%
23%
6%
12%
14%
Niet van toepassing Nauwelijks van toepassing Deelsvan toepassing
Grotendeelsvan toepassing Volledig van toepassing
Figure 17: Characteristics of main
products & services (software production)
Figure 18: Characteristics of main
products and services (consultancy)
To provide an overview, the responses to the statements have been calculated as a report figure in
table 10 based on the weighted average, that is to say with a value on a scale of 0 (not applicable)
to 10 (fully applicable). If we start with this figure, the differences also remain small. This means
that the responses to the statements are consistent and therefore the differences between the
statements are more robust.
Table 10. Weighted averages (on a scale of 0 to 10) of the statements - total (62*) and divided into software production (6101)
and consultancy (6202)
Statement 62* 6201 6202
Our end products/services contain software that we have to install at the
client‟s premises 4.5 4.3 4.8
We deliver tailor-made for every client 5.5 5.8 5.0
There is an online user community related to our end products/services 2.3 2.3 2.0
Our end products are based on SaaS (Software as a Service) construction 3.5 3.3 4.0
The price of our end products/services is based on actual use of the product 3.8 3.5 3.8
Our end products/services require specialist installation and integration 5.3 5.0 5.8
Our end products/service are open source 2.0 2.0 1.5
Our end products/services are used via a (generic) web browser 5.8 5.5 6.0
Dialogic innovatie ● interactie 25
3.4 Share of SaaS
Based on Figure 16, the total turnover from SaaS (or ASP) services can be estimated at 13%. In
order to verify this, companies were approached directly to find out what percentage of their revenue
comes from SaaS services. This gave a much higher percentage, namely 38%. The most likely
reason for the variation is that the respondents interpreted the question as the percentage of
software turnover (not the total turnover) coming from SaaS. If we change this to percentage of
software, the total figure is 15%. This is indeed closer to the 13% that we previously calculated. In
absolute terms, this is equivalent to a turnover value of 1.26 (13%) to 1.45 (15%) billion euros. In
comparison: it was 17% in the Finnish study (figures from 2008).22
As the market in SaaS is
developing rapidly at the moment, we emphasize that we are talking about a snapshot here. SaaS‟s
market share is expected to continue to rise considerably in the coming years.23
Table 11. Share of revenue from SaaS, per subsector
62* 6201 6202 6209
Share of revenue from SaaS 15.0% 19.1% 6.4% 5.2%
SaaS is used above all by companies that offer product software (r=0.22). It is notable that those
companies whose business model is SaaS, make less use of open source components than other
companies (r=-0.16). Finally the size of a company (in fte) bears no relation to the use of SaaS –
there is no or hardly any difference between small (<10 fte), medium (10-100 fte) and large (>100
fte) companies.
3.5 Open source & hybrid software
To what extent a certain software product is considered open source, is determined on the basis of
which software licence is chosen for that product. Businesses, governments and online communities
are all familiar with the open source software licences approved and issued by the Open Source
Initiative.24
The open source nature of software products is seen from a mostly technical licensing
perspective. It is also possible for a software product to use many open source components or
components which people have released as part of an open source licence while the (end) product
has not been given an open source licence. Moreover, a software product can be supplied under
various licences and in this way, the same software product can be both open source as well as
closed source. From a technical licensing point of view, this approach provides only limited insight
into the use of open source in software products.
22
Apart from this, the study defined another intermediate form, namely „web based solutions‟. This is a very
large category: 53% of the total. The category „little or no SaaS‟ is therefore much lower (30%) than in the
Netherlands.
23
Compare the results of two recent Gartner surveys on http://www.gartner.com/it/page.jsp?id= 1062512
(2009) and http://www.mis-asia.com/news/articles/gartner-saas-adoption-on-the-rise (2010).
24
See http://www.opensource.org.
Dialogic innovatie ● interactie26
Another notion of open source software in software products is the input/output approach. This looks
at both the input (using open source as „commodity‟) as well as the output (revenue from open
source products and services). These two dimensions are indeed greatly interdependent.25
With a
number of frequently used forms of licensing such as GPL, the use of an open source component of a
product (input) will for example result in the product having to be also offered (output) when
companies decide to distribute the software.
Composite software products – and that is the bulk of the software – are a group unlike the above
mentioned in that certain product components can be open source while others are not. This makes
it difficult to determine to what extent a product is entirely open source software. Nevertheless,
companies were approached directly with the statements in Figure 16 to say to what extent „our end
products/services are open source‟ applies to their products/services - 65% of the companies said
this statement does not apply to their products at all; 11% said it was broadly or fully applicable.
Consultancies‟ percentage is a little lower (9%) than the average.
It is easier to measure the proportion of open source on the input side. Firstly we asked what
proportion of software is developed internally; then of the remainder („external‟), what percentage is
purchased under (proprietary) licences, and which part is obtained as open source. These questions
revealed percentages comparable to the input side: 11.5% for the total and software producers, and
10.3% for the consultancies.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
62* 6201* 6202*
75.2% 79.7%
70.0%
13.4% 8.7%
19.7%
11.4% 11.6% 10.3%
External: open source
External: licences
Internal
Figure 19: Comparison of input in software development, software production (SBI 6201) and consultancy (SBI 6202).
The percentage in the Finnish study was considerably higher (19%). On the other hand, the Finnish
definition was less precise (“product contains a lot of open source software”). The figures do not
reveal how much of the software developed internally can actually be defined as open source but
some of it can probably be classed as such. The estimate of an 11% share in the Netherlands is
therefore possibly rather low.
25
r=0.55.
Dialogic innovatie ● interactie 27
In theory the dichotomy between closed source and open source is very much the same as that
between products and services. That is to say that companies who offer their products completely
open source will not generate revenue from selling their software. Current practice shows that
companies who acquire a significant part of their software as open source, combine it with their own
(proprietary) software and consequently bring their software product on the market as a closed
source software product. Thus there are more business models that utilize open source software and
to which the theoretical dichotomy between open and closed source does not apply.
For example there seems to be a positive correlation between open source and tailor-made software.
This refers to a group of companies who offer tailor-made services over and above an open source
product. Due to these hybrid forms, it is hard to consider companies as entirely open or closed
source, as we will attempt to explain in the box below.
Apart from the appearance of hybrid forms, it is a remarkable fact that companies who use a
relatively large amount of open source, seem to carry out more than average research and
development (R&D).26
Note that this is only a weak relationship, possibly influenced by the hazy
boundary between software development and R&D. It is a fact that companies who use open source
relatively often, are the ones who do a relatively large amount of software development. This is not
an illogical relationship but its consequences are unknown. It is possible that the use of open source
leads to more R&D. It is also possible that companies who do a relatively large amount of R&D make
more than average use of open source. The latter relationship is not illogical either, considering the
popularity of open source in the academic community.
26
This is a significant but weak relationship: r=0.12.
Dialogic innovatie ● interactie28
Explaining „open source‟ and „closed source‟ companies – an exercise
The available data enables us to define whether companies are open source, closed source or even
hybrid. This exercise can be done based on either an input (how much open source is employed to
develop software) or output approach (the amount of end products/services that are open source).
You do come across mixed forms but there is not yet a large amount of these. Although the two
approaches show patterns that are strongly linked, there are still considerable differences in
proportions between the various forms.
The input approach showed that 0.6% of all companies are mixed form. These are the 145
companies who not only generate a significant amount of their revenue from software sales but
also state that the title „open source‟ in any case partially applies to their products – on the bottom
left of Table 3.5A*** 1.2% of all software companies (290) can be considered „true‟ open source
companies (much open source, little revenue from software sales) – on the top right of the table,
31.4% of the companies (7,650) use the closed source model (high revenue from software sales).
Table 3.5A. Percentage of open source compared to revenue from sales of self-realised software (input approach)
Revenue from software sales
Low Average High
% Open
Source
Low 38.2% 18.0% 31.4%
Average 6.2% 1.9% 2.2%
High 1.2% 0.3% 0.6%
The output approach shows a shift in favour of open source. The percentage of hybrid companies
increases from 0.6% to 3.6% (875) and the percentage of „true‟ open source companies from
1.2% to 5.5% (1,340). Closed model companies‟ share drops to 26.1% (6,360).
Table 3.5B Comparison of statement “our products are open source software” to % revenue from self-realised software
(output approach)
Revenue from software sales
Low Average High
Statement
“Open
Source”
Low 34.0% 15.5% 26.1%
Average 7.0% 3.0% 4.0%
High 5.5% 1.2% 3.6%
________
*** A few companies even indicated to generating all their revenue from software sales and at the
same time state that their products are 100% open source. From a legal point of view, this is not
possible. One possible explanation is that subscriptions received from open source users are also
considered as software sales.
Dialogic innovatie ● interactie 29
4 Innovation
The intensity of companies‟ R&D activities has already been discussed in section 2.3. The percentage
of labour capacity devoted to R&D lies between 9% (software producers) and 6% (consultancy and
other ICT service providers).
4.1 WBSO scheme
Another method of determining the software sector‟s R&D intensity is by examining the extent to
which the sector makes use of innovation subsidies under WBSO (R&D Promotion Act). Through this
scheme, companies can receive subsidies for the salaries of employees working on R&D projects. The
Act was extended on 1 January 2009 and under certain conditions allows the development of
software to be also considered as R&D.27
Since this extension, the proportion of ICT and telecom companies has risen spectacularly. The
proportion of R&D working years has raised the total from 10.4% in 2008 to 13.5% in 2009.28
As far
as number of applications is concerned, the sector can now compare with – or is even ahead of –
other R&D intensive sectors such as the machinery and equipment, electro-technical, and chemical
industries.
Figure 20: Absolute number of WBSO applications in 2009 x growth in R&D hours 2008-2009. Source: Agentschap NL (2010)
27
SenterNovem (2009). For the impact of extending the WBSO Act, see „Diensteninnovatie en de WBSO: Effect
van de verruiming in 2009‟. The Hague: Ministry of Economic Affairs.
28
Focus on R&D and use of the WBSO scheme „FOCUS op speur- en ontwikkelingswerk. Het gebruik van de WBSO
in 2009‟. Agentschap NL (2009, 2010).
Dialogic innovatie ● interactie30
In our survey a total of 14% of the companies say they make use of the WBSO scheme.29
Software
producers make twice as much use of the scheme (20%) as consultancies (10%). Among the
software developers, the scheme is again more popular with product software companies (SBI
620101) than with tailor-made software companies (SBI 620102). Companies with many open
source components (input approach) make relatively little use of the scheme. This is remarkable
because these companies are in fact the most relatively R&D intensive (see previous chapter). It
would seem that this group of companies has not yet been able to find its way to the WBSO.
The geographical spread of software producers (the blue dots in the figure below) shows a large
overlap with the geographical distribution of WBSO applications for software projects (the red areas).
Figure 21: Geographical distribution of software producers SBI 6201 (blue dots) and WBSO applications for software projects (red
areas)
Qualitatively speaking, there is a significant difference. In general it is especially SMEs (fewer than
250 employees) that make use of the scheme. In 2008 two-thirds (68%) of the WBSO subsidies
went to SMEs.30
The Agentschap NL figures show that the rise in number of applications in 2009 is
thanks to small companies (<10 employers) in the Netherlands. Our sample showed that especially
larger companies make use of the WBSO scheme.31
Thus there still seems to be great potential for
growth in the software sector.
Table 12. Which companies use the WBSO scheme
<10 fte 10-100 fte 100+ fte
WBSO
Yes 9.75% 55.81% 87.50%
No 90.25% 44.19% 12.50%
29
If we exclude companies with only one employee, this percentage rises to 30%.
30
SenterNovem (2009). For focus on R&D see, “Focus op speur- en ontwikkelwerk: Het gebruik van de WBSO in
2008”. Zwolle: SenterNovem.
31
Companies that make use of the WBSO scheme have an average fte of 110.3 compared to 4.9 fte in companies
that do not use the scheme.
Dialogic innovatie ● interactie 31
4.2 New products
Alongside the percentage of labour capacity for R&D and utilization of the WBSO scheme, the third
and final way to measure the level of innovation in the Dutch software sector is by making use of
standard European CIS (Community Innovation Survey) items.32
The CIS survey has two different
items relating to the number of products (in terms of turnover share) new to the market and the
number of products new to the company. The former type of innovation is more radical than the
latter, which is why the former usually scores lower than the latter.33
In our study the scores for
these two items were almost the same, but at respectively 23% and 24%, are higher than in the
European survey. Further analysis of the underlying figures does reveal obvious differences. While
the scores for „products new to the market‟ are hardly or not related to certain company characteris-
tics, this does apply to the scores for „products new to the company‟. Companies that derive a
relatively large part of their turnover from products that are new for them, have the following
characteristics:
 A relatively large part of their work capacity is devoted to R&D (r=0.23);
 They derive their turnover mainly from sales of software developed in-house (r=0.25) or
from products developed in-house with substantial embedded software (r=0.19);
 They supply mainly product software instead of tailor-made software (r=0,.7);
 They make relatively frequent use of SaaS constructions (r=0.23).
In the literature it is often assumed that innovative companies are small. However, we found no
significant correlation between the size of a company and the share of new products in its turnover.
32
See http://epp.eurostat.ec.europa.eu/portal/page/portal/science_technology_innovation/data/database.
33
The European CIS survey showed that the average for all Dutch companies is respectively 10% (new to the
market) and 14% (new to the company). It also showed the same averages for the ICT industry in the
Netherlands (computer and related activities, thus a wider definition of the software sector) to be above the
national average, respectively 15% and 19%.
Dialogic innovatie ● interactie 33
5 International context
5.1 Export
The software sector in the Netherlands is strongly focused on the domestic market while 7.7% of this
sector‟s revenue (still 1.93 billion euros) comes from abroad. More than two-thirds of that 7.7%
comes in turn from neighbouring West European countries. Outside Europe, the USA is the major
export market.
92.3%
4.9%
0.3%
1.4% 0.2%
0.2%
0.2%
0.2%
0.1%
0.2%
7.7%
NL W-EU E-EU USA Canada SM America Middle East Asia Austria Africa
Figure 22: Share of markets in total turnover at home and abroad, per destination, for the entire software sector (62*)
The 7.7 average percentage disguises large differences between subsectors and between companies.
Export is greatly concentrated in a few large product software companies. Export accounts for more
than half of their profit. These high percentages, however, disappear in the total figure. It is true that
the export percentage in the subsector product software (620101) is nearly twice as high as the
average, which means product software companies claim the clear majority of the total export.34
In
addition, the export portfolio is also more varied: almost half (49%) of the exports are beyond
Western Europe. The percentage for the entire software sector (62*) is much lower, namely 33%.
34
We see a similar picture in the Finnish study: ‘Software product firms’ export one and a half to twice as much
as the other subsectors.
Dialogic innovatie ● interactie34
86.6%
6,9%
0.5%
3.2%
0.5%
0.5%
0.3%
0.8%
0.7%
0.1%
13.4%
NL W-EU E-EU USA Canada SM America Middle East Asia Austria Africa
Figure 23: Share of markets in total turnover(%) home and abroad, to destination, product software (620101)
Exporting companies certainly do not do better or worse than companies that only focus on the
domestic market. Their turnover for example hardly differs from the average. We can, however, say
that companies who only target the Dutch market are less innovative.35
5.2 Nearshoring & offshoring software developments
The doomsday scenario that jobs in ICT are moving (far) abroad, has been a hotly debated topic for
years, especially in the United States. Although it is not a wide-scale problem in practice,36
it is still
important to consider the situation in the Netherlands.
The Netherlands develops 92.1 % of its software, figures that reflect the same picture in the USA. Of
the remaining 7.9%, slightly more than half (4.0%) is produced in Dutch subsidiaries abroad. Only
3.9% is outsourced to foreign companies abroad.
87.7%
4.3%
2.9% 1.3%
0.5% 0.6%
0.6%
2.0%
Netherlands
Netherlands - outsourcing
Western Europe - subsidiary
Western Europe - outsourcing
Eastern Europe - subsidiary
Eastern Europe - outsourcing
Far East - subsidiary
Far East - outsourcing
Figure 24: Software production locations showing proportions of outsourcing (SBI 62*)
35
r=-0.21.
36
See for example Head, K., Mayer, T. & Ries, J. (2009). "How remote is the offshoring threat?", European
Economic Review, Elsevier, 53(4), 429-444.
Dialogic innovatie ● interactie 35
Offshoring, or outsourcing work to remote low-wage countries (especially India) plays an insignificant
role, just as in the USA. It accounts for 2.6% of the total software development and three-quarters
of this takes place via outsourcing. The percentage of work in remote low-wage countries is only
higher (5.0%) in the subsector implementation of software (SBI 620901). And that percentage is
entirely outsourced to foreign companies.
The extent of nearshoring, outsourcing work to near-shore low-wage countries (especially Eastern
Europe), is even lower with a total of 1.1%. In a third of the cases, subsidiaries of the company are
used in those countries. The subsector product software (SBI 620101) has more an average amount
of software developed in near-shore low-wage countries (1.9%) and thereby usually utilizes its own
subsidiaries abroad (1.4%).
Contrary to popular belief, the majority of the work that is outsourced abroad takes place in nearby
wealthy countries. That share (4.2%) is larger than offshoring and nearshoring put together. There is
a great difference between the subsectors. The percentages for most service provider subsectors
(SBI 620201: 12.5%; 620901: 19.5%; 620909: 13.3%) are much higher than in other sectors.
These are mostly companies‟ own subsidiaries abroad. The logical explanation is that the provision of
services is more localized than production.
The following table provides another overview of these percentages. We can clearly see that the
proportion of outsourcing increases the further the location is from the Netherlands. In other words,
distance matters when setting up (and managing) subsidiaries abroad.
Table 13. Overview of each part of the world’s share in software development
%
Of which
outsourced
In the Netherlands 92.1% 4.3% (5%)
In Western Europe 4.2% 1.3% (32%)
In Eastern Europe 1.1% 0.6% (51%)
In the Far East 2.6% 2.0% (76%)
Large companies do not outsource significantly more work abroad than smaller companies. If this is
corrected for small companies (to exclude all companies with one employee), the percentage
increases slightly (to 9.7%) but there is really no significant difference. Where we can see an entirely
different amount is in outsourcing to Eastern Europe: 3.1% compared to 0.8% in total. A relatively
large amount of the work is now done in companies‟ subsidiaries: 52% (compared to the 27% total).
Dialogic innovatie ● interactie 37
6 The software sector from a wider
perspective
6.1 Software outside SBI 62*
The previous chapters focused solely on the software sector in the Netherlands (SBI 62*). In chapter
2 this sector‟s total turnover was estimated at 25 billion euros and the gross added value - its
contribution to the Dutch economy – at 2.8%.
The ICT industry in the Netherlands is much broader than this software sector. It encompasses the
production of computers and types of hardware (SBI 26* and 46*), as well as telecom equipment
and services (SBI 61*). Some companies in these subsectors derive a significant proportion of their
revenue from sales of software products and services. It is difficult to determine the exact number of
such companies. Our survey was conducted among companies in the three previously mentioned
sectors, however the response rate was too low to enable further calculations. This is because the
division is very skew. Most of the companies do not derive much of their turnover from sales of
software products and services. But a number of companies does get at least as much revenue from
software as the average company in the core sector SBI 62*. All things considered, these companies
should be reckoned as part of the software sector. On the other hand, there are currently several
companies that come under category SBI 62* but on the basis of their profile, do not belong (any
more) in that category. These are the companies that derive the greater part of their revenue (80%
or more) from the last activity mentioned in Table 5 - “other activities not related to the software
sector”. This is 6% of all the companies.
The extent of the first group, companies that could be classed as SBI 62*, is more difficult to define.
We can make a rough estimate based on the combination of the ICT~Office‟s list of members and the
responses to the survey. All the ICT~Office members were approached to take part in the survey;
40% of those who responded are from outside SBI 62*. On the basis of self selection we can
therefore assume that these are very software-intensive companies and that this is the group we are
looking for. This means that the software sector – in the broadest sense of the word – is one and a
half times bigger than the core category 62*. If we take off the 6% of companies that do not belong
to SBI 62*, this results in an increased percentage of 41%. 37
Thus the total turnover of the
Netherlands‟ software sector is now estimated at 35.2 billion euros (instead of 25.0 billion), bringing
its contribution to the Dutch economy up to 3.9% (instead of 2.8%).
37
The calculation is as follows: 60%/40% = 1.5. (100% - 6.1%) x 1.5 = 140.9%.
Dialogic innovatie ● interactie38
Examples of software-intensive companies outside SBI 62*
One of the larger companies in the sample (575 fte, 200 million euros turnover) produces medical
electronics. All things considered, this is the production of hardware not software. The proportion of
software components embedded in products is increasing especially in advanced electronics such as
the medical devices produced by this company. At least 76% of their revenue comes from embedded
software. Besides this a small part (2%) comes directly from sales of tailor-made software developed
in-house.
A similar case is a small automation company (25 fte, 2 million euros turnover) operating in the
transport sector. It is classified as SBI code 4651 (wholesale trade in computers, peripheral
equipment and software) but achieves its entire turnover from software related activities: 20%
comes from sales of tailor-made software developed in-house, 30% from implementing that
software, and 20% from support and management. Another 10% of the turnover comes from sales
of third parties‟ software and the remaining 20% is generated by activities related to the software
sector.
A third, medium sized company (120 fte, 11 million euros turnover) also belongs to sector 4651 but
provides business services. Its main focus is developing software to improve business processes.
More than half of its revenue (55%) comes from sales of tailor-made software developed in-house,
42% from the implementation of this software, and the rest (3%) from related software consultancy.
In the first and third example we see opposite shifts which in both cases have led to greater
intensification of software components. In the first case it is all about the „virtualisation‟ of a physical
product (that is increasingly becoming more of a software product – think of the continuously
growing role of software in controlling cars). In the third case, service „productivisation‟ – provides
services which are being more and more coded and standardized in software.38
We see this reflected
in our sample where we encountered for example organisation consultancy firms and stockbrokers.
These companies have literally converted part of their services into software products.
Both product virtualisations as well as service productivisation are continuing trends which still have
a long way to go. This means that the share of software-intensive companies outside the SBI 62*
core group can only increase. Companies that were originally outside SBI 62* are gradually
becoming more a part of the core group.
Note that we are still talking about companies that derive a significant part of their revenue directly
from software or activities related to software. Right across the entire economy there are companies
delivering software products for internal use or services. Think of financial institutions, large
retailers, energy and transport companies. The significance of software in and for the Dutch economy
– ICT as innovation axis – is much, much greater than the scope of the software sector in the
Netherlands. In itself it already represents an economic force of considerable magnitude. The
estimate of 35.2 billion and 3.9% of GNP is probably conservative to say the least.
38
See also P den Hertog (UvA) „Managing Service Innovation‟, to be published in October 2010.
Dialogic innovatie ● interactie 39
7 Method
7.1 Motivation
Before the start of this study, only general aggregate level figures existed on the scope and
economic value of the Netherlands‟ software sector. Data on the type of activities conducted by
Dutch companies was not available. In order to obtain this information, Dialogic has collated data
directly at micro level (individual companies) by carrying out an online survey and subsequently
aggregating this data. You could say we that we chose to put a thermometer in the sector itself
rather than assemble something based on general statistics such as CBS data.
As this is the first time such a study has been carried out in the Netherlands, the emphasis is on
comparisons between SBI codes, types of company activities etc. Only once a consistent study has
been carried out over a certain period of time can meaningful statements be made on the progress of
developments. This current study can pave the way.
7.2 Population and sample
What was important for this study was to map out the sector distinctly beforehand. In this way it
would be clear which companies had to be approached and about which group of companies
statements could be made. We made use of CBS standard SBI39
categories as all Dutch companies
are divided into one or more SBI codes according to their core economic activity.
In collaboration with ICT~Office it was determined which activities come under software activities.
The table below shows companies‟ main activities:
Table 14. Codes for main economic activities based on SBI 2008
Description SBI
Develop, produce, and deliver standard software 620101
Develop and produce tailor-made software 620102
Hardware consultancy 620201
Software consultancy 620202
Implementaion of software 620901
Other service activities in IT 620909
In other words: this study focuses on all the organisations in the category provide service activities
in information technology (SBI 62*), with the exception of management of computer facilities (SBI
6203).
39
SBI is based on the EU classification Nomenclature statistique des activités économiques dans la Communauté
Européenne (NACE) and on the United Nations International Standard Industrial Classification of All Economic
Activity (ISIC).
Dialogic innovatie ● interactie40
Contact details of companies in one of these categories were then requested from the Chamber of
Commerce (KvK). In order to determine the sample, all companies were included with a minimum of
100 fte workers, and based on a reliability level of 95% and a reliability interval of 1.0, the scope of
the sample was determined for companies with fewer than 100 fte. The address database was
further cleaned up by including only head offices of economically active firms (thus no associations or
foundations registered with the Chamber of Commerce).
Table 15. Scope of the sample of companies registered with the Chamber of Commerce (KvK)
SBI
Total
sample >100 fte <101 fte Description
Total at
KvK
620101 739 10**
733*
Develop/produce/publish standard software 2,275
620102 5,292 21**
5,283*
Develop/produce tailor-made software 14,125
620201 667 3**
664*
Hardware consultancy 1,369
620202 5,363 29**
5,344*
Software consultancy 10,582
620901 668 3**
665**
Implementation of software 668
620909 1,442 6**
1,436**
Other services related to IT 1,442
*
**
Sample
Including all organisations
Alongside these, more than 1,000 companies were approached who do not come under the main
activities described in Table 15 and who possibly carry out activities related to software. These
companies are not included in the main analysis but have been used to gain qualitative insight into
work related to software alongside the SBI 62* group. These additional categories are:
Table 16. Codes for additional firms’ main economic activities based on SBI (2008)
Description SBI
Production of computers and peripheral equipment 2620
Production of alarm systems 263001
Production of communication equipment (not alarm systems) 263002
Production of consumer electronics 2640
Production of measuring, navigation and control equipment 2651
Production of timepieces 2652
Wholesale trade in computers, peripheral equipment and software 4651
Other telecommunication 6190
In addition, all the companies who are members of ICT~Office were approached. It was checked
whether these members were already included in the sample obtained through the Chamber of
Commerce. If this was the case, the ICT~Office contact details were used to approach them. Any
members who did not appear in the sample were added to it. There were 363 members of
ICT~Office who were not in the Chamber of Commerce‟s sample. A total of 14,560 companies were
approached with the request to fill in the survey.
Dialogic innovatie ● interactie 41
7.3 Procedure for conducting the survey
Dialogic set up the survey after a dialogue with ICT~Office. The “National Software Industry Survey
2009”40
carried out by Helsinki University of Technology was used as starting point and refined. Thus
it was possible to use some of the data in this survey to compare the results in the Netherlands with
Finland.
Companies were informed about the study by letter. This explained the reasons for the study and
gave a brief description of which topics would be covered. The letter was signed by Henk Broeders,
chairman of ICT~Office, Sylvia Roelofs, director of ICT~Office, Bernhard van Oranje (chairman of
Raad van Advies Software~VOC (software advisory board), and Sjaak Brinkkemper (professor at
Utrecht University) to emphasize the importance of the study.
The letter provided unique login codes to enable online access to the questionnaire. At the request of
companies that were not included in the sample but did want to fill in the questionnaire, an „open‟
questionnaire was also issued. In this way companies could fill in the questionnaire even without
login codes. These companies had heard about the study for example through other media
announcements. Afterwards we looked at: (i) whether these companies also appear on the list of
companies that received the letter, and (ii) under which main economic activity these companies are
classified. This is because a few companies that come under the categories as shown in Table 15 are
included in this study. The questionnaire was issued in a Dutch version as well as in English. You can
read the letter and the questionnaires in the appendices.
7.4 Response
The questionnaire was available from 27 April till 7 June. On 9 May ICT~Office sent a reminder to all
its members who had not yet completed the questionnaire. A fortnight later it was checked if the
response was representative of the population. It appeared that especially companies with more than
100 fte were under-represented. Consequently ICT~Office began approaching companies directly in
order to bridge this gap. A total of 803 companies completed the survey.41
The majority, 721
respondents, belong to the SBI 62* group. The proportion of companies larger than 100 fte is 1.4%,
compared to 0.6% in the CBS data. Large companies are therefore more likely to be over-
represented than under-represented.
Based on the number of letters sent, this gave a response rate of 5.14%. However, the data
obtained through the Chamber of Commerce appeared to be more inaccurate than assumed. The
first sign of this was the fact that more than 100 letters were returned. As we can assume that only a
small number of letters was returned due to incorrect contact details, the amount of undeliverable
mail is therefore (much) higher. Another reason why we can assume that the Chamber of
Commerce‟s data is inaccurate, came to light during the analysis. The profile of the Chamber of
Commerce‟s population appeared to differ greatly from the survey data and ICT~Office data (list of
members). There is a correlation of nearly 1 between the number of fte for the companies included
in the survey and ICT~Office‟s list of members. The correlation between these data and the Chamber
of Commerce‟s is however much lower.
40
For more information see: http://www.sbl.tkk.fi/oskari/.
41
When designing the survey, a deliberate decision was made not to insist on answering all the questions, to
ensure fewer people would close down the questionnaire before completing it. This means that we do not have
803 responses to every question.
Dialogic innovatie ● interactie42
Table 17. Correlation between the number of fte in companies in the KvK (Chamber of Commerce), ICT~Office and survey data
sets
Correlation Significance
KvK x ICT~Office 0.321 0.04
KvK x Survey 0.186 0.00
Survey x ICT~Office 0.989 0.00
This was the reason why we also tried to find out the exact size of the population. We did this by
searching on the internet for hundreds of companies in the SBI 62* group, thereby assuming that
software related companies have their own website or can be found online in some other way (for
example via LinkedIn profiles). This sample showed that 80% of the companies were active online.
Thus the actual population referred to in this study is 4/5 of the Chamber of Commerce population.
This resulted in an actual response rate of 6.35%. The reliability interval is 3.35 (at a reliability level
of 95%). The reliability interval of just the SBI 6209 group is however too high to enable valid
statements. Therefore this group was not included separately in the study (apart from a few
exceptions).
Table 18. Response rate and reliability interval of the sample
SBI code Number
Response
rate
Reliability
interval
62* 721 6.35% 3.35
6201 317 6.57% 5.32
6202 317 6.57% 5.32
6209 87 5.15% 10.24
Dialogic innovatie ● interactie 43
Bijlage I | Online questionnaire EN
Introduction
The purpose of this questionnaire is to get a better overview of the Dutch ICT sector. The results will
be published in statistics and tables that will not reveal individual companies. By responding to this
questionnaire, you are helping us to collect valuable information about the current state of software
business in The Netherlands.
The questionnaire is conducted by Dialogic (www.dialogic.nl). Our contact person is research
manager Robbin te Velde, telephone 030 215 05 80, email tevelde@dialogic.nl.
Survey
Which of the following products and/or services best describes your firm‟s main source of revenue in
The Netherlands?
The actual delivery of the product and/or service (e.g., whether a SaaS−construction is being used
or not) is not relevant to this question.
( ) Sales of in−house realised software (product or tailor-made software)
( ) Sales of in−house developed products with a major software component (embedded software)
( ) Programming activities for third parties (contract or freelance)
( ) Implementation and/or testing of software
( ) Support and/or administration and/or maintenance of software applications
( ) Other consultancy activities related to software
( ) Sales of third−party software (reselling)
( ) Other software−related products or services
( ) Other activities that are not related to the software industry
Could you please indicate how the revenues of your firm in The Netherlands are distributed between
the following products and/or services (should add up to 100%)?
The actual delivery of the product and/or service (e.g., whether a SaaS−construction is being used
or not) is not relevant to this question.
Sales of in−house realised software (product or tailor-made software) ____________ %
Sales of in−house developed products with a major software component
(embedded software)
____________ %
Programming activities for third parties (contract or freelance) ____________ %
Implementation and/or testing of software ____________ %
Support and/or administration and/or maintenance of software applications ____________ %
Other consultancy activities related to software ____________ %
Sales of third−party software (reselling) ____________ %
Other software−related products or services ____________ %
Other activities that are not related to the software industry ____________ %
Sum 100 %
Which percentage of the software that is in−house realised by your firm is being sold as product
software/software package? I.e., sold on the basis of the price of the product itself, not on the basis
of the efforts (manhours, lines of code) that have been made developing the product. _________ %
What is the size of your firm in The Netherlands in fte (Full Time Equivalent)? Please estimate when
necessary. __________ fte
Dialogic innovatie ● interactie44
How is the revenue of your firm in The Netherlands distributed between the following geographic
areas? (in total 100%)
The Netherlands _____ %
Western Europe (excluding The Netherlands) _____ %
Eastern Europe (including Russia) _____ %
United States _____ %
Canada _____ %
South and Central America _____ %
Middle East _____ %
Asia _____ %
Australia and New Zealand _____ %
Africa _____ %
Sum 100 %
How many different software products or software product families does your firm sell on the Dutch
market? Note: a software product family/line should be regarded as one product.
( ) None
( ) 1
( ) 2-3
( ) 4 or more
How well do the following statements describe your final products and/or services?
Notapplicable
Hardlyapplicable
Partlyapplicable
Broadlyapplicable
Fullyapplicable
Our final products/services are used through a (generic) web browser ( ) ( ) ( ) ( ) ( )
Our final products/services are open source ( ) ( ) ( ) ( ) ( )
Our final products/services are sold as Software as a Service (SaaS) ( ) ( ) ( ) ( ) ( )
The pricing of our final products/services is based on actual usage ( ) ( ) ( ) ( ) ( )
Our final products/services require special(ist) installation and integration ( ) ( ) ( ) ( ) ( )
There is an online user community related to our final products/services ( ) ( ) ( ) ( ) ( )
Our final products/services are tailor−made for each of our clients ( ) ( ) ( ) ( ) ( )
Our final products/services have software that needs to be installed by us
at the premises of the client
( ) ( ) ( ) ( ) ( )
What part of the revenues of your firm in The Netherlands is derived from the sales of SaaS− or
ASP−services? ________ %
Software can be completely developed within your own firm, but can also (partly) be based on
components developed by third parties. Please indicate the general composition of your product(s).
(total is 100%)
Internal: own software development _____ %
External: licensing (bought or otherwise) _____ %
External: open source _____ %
Dialogic innovatie ● interactie 45
Possibly, not all your software development activities take place in your own firm in The Netherlands.
Perhaps your firm owns subsidiaries abroad and/or outsources work abroad.
Where does the software development of your firm take place and on what base?
Note that the total does not necessarily have to be 100% since there are other modes to develop
software (next to the two ones mentioned), such as joint software development.
Part of own
firm
Based on
contracts
(outsourcing)
In The Netherlands __________ __________ %
In the Western world (other than The Netherlands) __________ __________ %
In nearshore countries (e.g. Eastern European states and Russia) __________ __________ %
In offshore countries (e.g. India or China) __________ __________ %
What percentage of the total labour capacity of your firm in The Netherlands is aimed at the following
activities? (total should add up to 100%)
Software development and/or programming and/or testing _____ %
Implementation and/or consulting and/or training services _____ %
Support and/or maintenance services _____ %
Sales and/or marketing _____ %
Research and/or development (R&D) _____ %
Other (e.g. procurement, administration) _____ %
Which part of your firms turnover is based on new or significantly improved goods or services that in
the last three years were ...
... introduced onto your market before your competitors did (it may have already been available in
other markets)? __________ %
... new to your firm, but that were already available from competitors in your market? _________ %
Does your firm make use of the WBSO−act?
WBSO provides a fiscal facility for companies, knowledge centers and self−employed persons who
perform R&D work. In this context, R&D means technical/scientific research, the development of
technically new physical products or physical production processes (or parts thereof) and the
development of technologically new software (or parts thereof). Under the Act, a contribution is paid
towards the wage costs of employees directly involved in R&D.
( ) Yes
( ) No
( ) Do not know
What is the total turnover of your firm (in The Netherlands) in 2009?
If possible, please answer this question only for the Dutch turnover. If you
are not able to provide the turnover for The Netherlands alone, please give
the overall (consolidated) figures.
____________ euro
Which share of your firm‟s turnover in 2009 is spent on ...
0%<5%
5%<10%
10%<20%
20%<30%
30%<40%
40%<50%
50%<60%
60%<70%
70%<80%
80%<90%
90%-100%
staff? ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( )
hiring external staff? ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( )
other costs (equipment, rent, energy, et
cetera)?
( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( )
Dialogic innovatie ● interactie46
Do your answers on the previous two questions on turnover and costs also refer to subsidiaries
outside The Netherlands?
( ) Yes
( ) No
Which part of your firm‟s turnover in 2009 originates from The Netherlands?
( ) 0% < 5%
( ) 5% < 10%
( ) 10% < 20%
( ) 20% < 30%
( ) 30% < 40%
( ) 40% < 50%
( ) 50% < 60%
( ) 60% < 70%
( ) 70% < 80%
( ) 80% < 90%
( ) 90% - 100%
On which of the following levels do you serve in your company? Choose the best option.
( ) Board of directors
( ) Management team
( ) Other upper management
( ) Middle management
( ) Other
If you are interested in receiving a summary of the results of this study, please provide an e−mail
address. The entered e−mail address will only be used for this study.
E-mail address: ________________________________________________________________
Dialogic innovatie ● interactie 47
Bijlage II | Letter to respondents
<handelsnaam>
<contactpersoon>
<adres>
<postcode en plaats>
Gebruikersnaam: <gebruikersnaam>
Wachtwoord: <wachtwoord>
Woerden, 23 april 2010
Zeventien vragen over software in Nederland
<aanhef>,
Software vormt het centrale zenuwstelsel van de moderne samenleving. Het zorgt voor hoogwaardi-
ge en duurzame werkgelegenheid. De ontwikkeling van softwareproducten en de dienstverlening
rond software maken ons land kennisintensiever en economisch sterker. Het succesvol doorontwikke-
len van onze software-industrie is medebepalend voor de kansen van Nederland als kenniseconomie
en motor voor nieuwe producten, diensten en werkgelegenheid, ook in andere economische sectoren.
U bent als bedrijf of ZZP‟er zelf natuurlijk allang doordrongen van het belang van de software-
industrie voor de Nederlandse economie. Elders wordt dat belang echter vaak sterk onderschat.
ICT~Office, de brancheorganisatie voor ICT-bedrijven in Nederland, heeft daarom het onderzoeksbu-
reau Dialogic gevraagd om de economische bijdrage van de software-industrie in Nederland te
meten. Het ministerie van Economische Zaken onderschrijft het belang van dit onderzoek. De
resultaten worden ook gebruikt om de gegevens van het CBS aan te vullen en te verbeteren.
We willen graag uw medewerking als deskundige bij de uitvoering van dit belangrijke onderzoek.
Onderaan deze brief vindt u een overzicht van de onderwerpen van de vragenlijst. Gemiddeld zal het
minder dan 10 minuten kosten om de lijst in te vullen. In de rechterbovenhoek van deze brief staan
een gebruikersnaam en wachtwoord waarmee u toegang krijgt tot de online vragenlijst. Deze vindt u
op www.dialogic.nl/softwareonderzoek en kunt u invullen tot en met 14 mei 2010. Bij het
verwerken van de data hanteren we de strenge privacynormen van het CBS. Al uw gegevens worden
onder strikte geheimhouding verwerkt en geanalyseerd tot algemene economische statistieken. Uit
de informatie die wij uiteindelijk publiceren, zijn nooit herkenbare gegevens over een afzonderlijk
bedrijf af te leiden.
Dialogic is een strikt onafhankelijk onderzoeksbureau. De kwaliteit van het onderzoek wordt verder
geborgd door een begeleidingscommissie. Hierin zitten vertegenwoordigers van zowel „open source‟
als „closed source‟ bedrijven, evenals de Universiteit Utrecht.
The questionnaire on the Dutch software industry is also available in English at
www.dialogic.nl/softwareonderzoek.
2010.002 1018-02
2010.002 1018-02

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2010.002 1018-02

  • 1. The Dutch software sector Survey 2010 Commissioned by: ICT~Office Project: 2010.002 Publication number: 2010.002-1018 Date: October 18, 2010 Authors: Robbin te Velde Jaap Veldkamp Marijn Plomp Val Kidd (translation)
  • 2.
  • 3. Dialogic innovatie ● interactie 3 Contents Summary .................................................................................................... 5 1 Introduction.......................................................................................... 7 1.1 Reasons and aims of this study................................................................... 7 1.2 The software sector in the Netherlands ........................................................ 7 2 Economic indicators .............................................................................. 9 2.1 Scope of the software sector ...................................................................... 9 2.2 Sources of revenue ..................................................................................14 2.3 Division of labour .....................................................................................18 3 Types of products................................................................................ 21 3.1 Differences between product and tailor-made software .................................21 3.2 Number of software products.....................................................................22 3.3 Characteristics of software products and services.........................................22 3.4 Share of SaaS .........................................................................................25 3.5 Open source & hybrid software ..................................................................25 4 Innovation .......................................................................................... 29 4.1 WBSO scheme .........................................................................................29 4.2 New products ..........................................................................................31 5 International context .......................................................................... 33 5.1 Export ....................................................................................................33 5.2 Nearshoring & offshoring software developments .........................................34 6 The software sector from a wider perspective .................................... 37 6.1 Software outside SBI 62*..........................................................................37 7 Method................................................................................................ 39 7.1 Motivation...............................................................................................39 7.2 Population and sample..............................................................................39 7.3 Procedure for conducting the survey...........................................................41 7.4 Response ................................................................................................41 Bijlage I | Online questionnaire EN........................................................... 43 Bijlage II | Letter to respondents ............................................................. 47
  • 4.
  • 5. Dialogic innovatie ● interactie 5 Summary The software sector - Facts and Figures  The software sector1 is a fully-fledged and significant economic sector in the Netherlands, with a turnover of 25 billion2 euros and gross added value of 17.3 billion euros. The sector contributes to 2.8% of the Netherlands‟ economy (GNP). This added value is at least as high as most key areas defined by the Innovation Platform as strategic sectors in which the Netherlands excels at international level both in knowledge and in commercial activities.  The value of software sales is in fact even higher because a great deal of software is developed and sold by companies that formally do not come under the definition of software sector as applied by CBS (Netherlands Statistics). If these activities are included in the calculation, the extent of added value could rise to 24.3 billion euros. That would account for a 3.9% contribution to the national economy (GNP).  Companies in the Netherlands achieve a turnover of 10.2 billion euros from selling software developed in-house. We are talking about product and tailor-made software (9.4 billion) as well as embedded software (0.8 billion). Programming for third parties accounts for another 4.0 billion euros. Implementation, testing, management, and maintenance contribute 3.8 billion euros to the total sales.  These are the main activities focused on by companies that generate revenue especially from the development and sales of software. Although software consultancy seems to be strongly linked with the production of software, the production of software is not interwoven with consultancy.  The software sector has 192,000 full-time employees, of whom 68,000 are employed full-time in software development and 14,000 in research and development (R&D). The proportion of R&D is highest among software producers, at 8 to 9 percent. Characteristics of software products  It is often thought that the Netherlands develops mainly tailor-made software. The annual turnover in this sector is 5.5 billion euros. However, sales of product software in this country also amount to 3.9 billion euro. The larger the company, the higher its share of product software.  Based on the number of companies in the software sector producing software, it is estimated that in 2010 there are between 30,000 and 35,000 software products on the Dutch market.  At least three-quarters of all software is developed or commissioned by the companies themselves. The remaining quarter is made up of components developed by third parties and embedded in their own software. Of the external components, 54% come from closed source licences and 46% from open source licences. 1 This study refers to the software sector as businesses in the CBS (Netherlands Statistics) category „service activities in the field of information technology‟ (SBI category 62), with the exception of those managing computer facilities (SBI 6203). 2 One billion is 109 or 1,000,000,000.
  • 6. Dialogic innovatie ● interactie6  A quarter of the companies in the software sector has end products or services which are partially or entirely open source. Many companies that provide open source products also offer tailor-made services included.  Currently the services supplied by SaaS (Software-as-a-Service) account for 15% of software sales. Innovation  The software sector is R&D-intensive as illustrated by the percentage of labour capacity devoted to research and development (software producers = 9%) and by the percentage of applications for innovation subsidies under the WBSO R&D Promotion Act (13.5% of the total). Companies that use a relatively large amount of open source software carry out more research and development than others.  The innovativeness of the software sector is demonstrated by the fact that 23% of the turnover of companies in this sector is generated by new or improved products. The general average in the Netherlands is 10%.  There is still much potential for growth in the software sector through innovation subsidies: in fact smaller SMEs and open source businesses make relatively little use of the fiscal support provided by the WBSO scheme.  Companies that derive a relatively large proportion of their revenue from new products use much of their capacity for R&D; they make profit mainly by selling software developed in-house; they supply software products and make relatively frequent use of SaaS constructions. International context  The Dutch software sector is strongly focused on the domestic market. Alongside this, export generates revenues of 1.93 billion euros from abroad. The largest share of this amount is contributed by product software companies.  Two-thirds of the total software sector exports go to Western Europe and more than 20% is exported to North America.  Of all the software developed by companies in the Netherlands, 7.9% is produced abroad, half of which (4%) in their own subsidiaries. Offshoring plays a rather insignificant role in the expansion of Dutch software, accounting for only 2.6% of total software development. Software from a wider perspective  The „virtualisation‟ of physical products (which contain increasingly more software) and selling of standardized services as software products are trends which will increase the proportion of software-intensive companies outside the sector. However these are not included in the official statistics on software production in the Netherlands.  Throughout the economy we can see other organizations that create software products or services for internal use. The importance of software in and for the Dutch economy is many times greater than the scale of the software sector itself.  Further research is required to analyze the economic value of this software from a wider perspective. Such studies should aim to map the software intensity in other sectors than the software sector in order to provide insight into the actual contribution software makes to the economy.
  • 7. Dialogic innovatie ● interactie 7 1 Introduction 1.1 Reasons and aims of this study In its 2008 report on the Dutch software product sector, the trade association ICT Office stated that it is difficult to ascertain the added value of the software sector in the Netherlands due to the lack of validated data.3 CBS figures provide further insight into the scope of the Dutch ICT sector, with fewer details of its structure. The data required to assess the specifically significant contribution of software development, sales and services to the Dutch economy is not available. CBS has neither the capacity nor the means to conduct more in-depth research on this topic. For this reason ICT~Office contracted consultancy firm Dialogic to initiate a study of the scope and economic significance of the software sector for the Netherlands, also looking at how the various software activities are organized. This would also give additional depth to the basic data collated by CBS. In Finland annual surveys have been carried out for some time to determine the impact of the development and sales of software and its services on the Finnish economy.4 These surveys also formed the basis for the questionnaires used in the Dutch study. 1.2 The software sector in the Netherlands It is important to distinguish the various sectors within the ICT industry. They range from companies providing hardware and office technology, software and services, to telecommu- nication. The scope of the hardware industry is relatively limited in the Netherlands, certainly in comparison with countries such as Finland, South Korea and Japan. On the other hand, Finland‟s software sector is small compared to its hardware industry. Comparisons between international ICT sectors such as those carried out by OECD do not reveal the huge differences that exist between various countries. 5 This is one of the reasons why we concentrate specifically on the software sector in this report. Outside the ICT industry, software is produced by very many companies in a number of sectors of industry. Some of these are controlled by the businesses themselves (for example financial institutions and logistics companies) while for others, selling software or services is a side-line. Therefore it is important to indicate clearly which companies do and which companies do not belong to the software sector. For the purposes of this study, our use of the term „software sector‟ is confined to: all the organizations which are classified in the category defined by CBS as providing service activities in the field of information technology, with the exception of managing computer facilities. In terms of the standard CBS codes, this applies to all businesses in the category SBI 62*, but excluding SBI 6203. Table 1 provides a detailed overview of all the categories included in this study. The figures in the graphs and tables presented in the following 3 ICT~Office (2008). See report highlighting great software opportunities „Software als product: grote kansen voor een klein land‟. 4 Helsinki University of Technology, National Software Survey 2009, http://www.sbl.tkk.fi/oskari. 5 See e.g. the OECD Key ICT Indicators (Share of ICT value added in the business sector 1995 & 2006).
  • 8. Dialogic innovatie ● interactie8 sections refer to the SBI codes shown in Table 1. Our definition is confined to covering businesses which are active in software and services. This study does not take into account hardware, office technology, and telecommunication or organizations that produce software but are not registered as information technology companies. Table 1. Codes for the main ICT activities based on SBI 2008 Description SBI code Service activities in the field of information technology 62* Develop, produce and market software 6201 Develop, produce and market standard (product) software 620101 Develop and produce tailor-made software 620102 Information technology consultancy 6202 Hardware consultancy 620201 Software consultancy 620202 Other service activities in information technology 6209 Implementation of software 620901 Other services in information technology 620909 Before the start of this study, details of the scope and economic value of the software sector in the Netherlands were only available at aggregate level. There was no information on the type of activities and how these are organized. In order to obtain this information, Dialogic conducted a survey aimed directly at individual companies. The aggregated data enabled us to assess not only the scope and value of the software sector but also how it is structured. The method employed is described in detail in Chapter 7.
  • 9. Dialogic innovatie ● interactie 9 2 Economic indicators 2.1 Scope of the software sector Every organization which conducts commercial activities in the Netherlands has to be registered with the Dutch Chamber of Commerce. The register uses the same classification as CBS. In principle it is possible to identify directly the number of companies operating in the software sector (SBI code 62*). Once the source files were cleaned and the list of ICT~Office members added, this resulted in a total of 24,370 companies.6 These companies are spread all over the Netherlands.7 The figure below plots on the map of the Netherlands all the companies in the (representative) sample. The colour of the dots illustrates the number of companies established in each area - the darker the dot, the higher the concentration. The higher concentrations are especially found around (technical) universities. Another remarkable observation is the high concentration running along the border between the provinces of Utrecht and Gelderland. This is a legacy of the Baan empire. 6 The addresses extracted from the Chamber of Commerce data base were restricted to the head offices of companies actively operating in the sector (thus no associations or foundations). An additional random survey (n=250) of the latter dimension was conducted in order to check if the company in question had an operational website or could be found in any way on-line (for example via LinkedIn-profiles). This proved to be the case for 80% of the companies. That is why the results have been multiplied by the factor 0.8. 7 A closer look at the distribution of companies in each central economic activity reveals hardly any clustering. Thus companies who mainly sell software developed in-house (SBI 6201*) are located throughout the country. However it is remarkable that companies whose core activity is “selling the products they have developed with substantial embedded software” are mostly located in the North-East of the Netherlands. It should however be borne in mind that this group of companies is relatively small (n=20) and for the purposes of this study, we were not able to verify how this represents the overall distribution of companies throughout the Netherlands.
  • 10. Dialogic innovatie ● interactie10 Figure 1: Distribution of software companies in the Netherlands (SBI 62*, n=721) Based on the results of our study, the total turnover in the Dutch software sector can be estimated at 26 billion euros. Compare this to CBS, who in 2008 came up with a total turnover of 23.1 billion euros from 22,560 companies; and to Finland, where as previously stated the ICT industry contributes significantly to the national economy, the total turnover for 2008 amounted to 3.1 billion euros. In terms of GNP values, this boils down to 9.4 billion euros – still just 40% of the turnover in the Netherlands. The total number of persons employed full-time in the software sector is 192,068. That number is higher than the total figure provided by CBS – 162,300 fte. This is due to the fact that the number of small and medium sized enterprises (5-50 persons) is over-represented in our sample. The overall distribution of employment in companies is highly skewed. Two-thirds of the companies have only one full-time employee. Together they account for 7.9% of employment.8 The companies with 500 fte or more account for 29.3%. This skewed distribution can also be interpreted differently: considering the large number of very small companies, there is still a great deal of potential for growth. 8 The break-down according to size of company is based on CBS figures (2009). The CBS total (22,560) is therefore the equivalent of 1.19 fte per company. The average is higher than 1.0 fte because CBS does not include very small businesses (<0.5 fte) in their total figure.
  • 11. Dialogic innovatie ● interactie 11 The added value can be calculated based on turnover. The gross added value is turnover minus purchasing costs (including sourcing external staff) and is a measure of how much a sector of industry contributes to the national economy. Because the other costs stated by CBS reflect a relatively higher percentage of turnover compared to that of the respondents in Dialogic‟s survey - and the net added value is almost equal – the gross added value according to CBS is lower than Dialogic. The total amounts are respectively 12.8 and 17.3 billion, or 2.2% versus 2.8% of gross national product. 11.4% 10.5% 44.1% 58.4% 9.2% 44.5% 21.8% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% CBS Dialogic Net added value Costs of employee Sourcingexternal staff Other Figure 2: Division of turnover and costs, SBI 6201, 6202 & 6209, Dialogic (2010) and CBS (2008) Table 2. Overview of the software sector’s contribution to the Dutch economy Dialogic (2010) SBI 2008 CBS (2008) SBI 1993 Turnover (million euro) 25,024 23,137 Number of companies 24,370 22,5609 Jobs (fte) 192,068 162,300 Turnover per employee (euro) 130,287 142,,54 Gross added value 17,267 12.837 Gross added value (% GNP) 2.8% 2.2% Net added value (% turnover) 10.5% 11.4% 9 The latest SBI classification of companies is available already as is the 2009 data. The total number of companies in category SBI 62* (excluding SBI 6203) is 22,560. CBS does not count one-man companies with less than 1 fte (4.2% of the total jobs). If we do include these companies (and keep the average estimate at 0.5 fte), this adds another 1,895 companies. The total number of companies then amounts to 24,445 (versus Dialogic‟s 24,370). Further comparison of CBS and Dialogic data There are variations between the aggregate figures in this study and those provided by CBS. These can be largely explained by the slightly different structure of the sample whereby the calculations lead to a different final result. Moreover the CBS figures are based on the previous classification of companies in the SBI category 72* (SBI-1993). There was no comparable CBS data available yet for the new category 62* (in the new SBI-2008 classification) investigated by Dialogic. The distribution applied in the graphs and tables in the following chapters is based on turnover. Dialogic and CBS estimates for total turnover are almost parallel, which validates the results of this study. Dialogic‟s turnover figures are applied in the rest of the report.
  • 12. Dialogic innovatie ● interactie12 Software is therefore not just significant because it is used in very many sectors of industry, but it also makes a considerable contribution to the Dutch economy as a sector of industry in its own right. Its significance becomes even more apparent if we weigh up the added value of software against the added value of a number of key areas. These are strategic sectors in which the Netherlands excels internationally in knowledge and business activities according to the Innovation Platform.10 10 For innovation proposals, see Tilburg, R. van, and Bekkers, F. (2004). Voorstellen Sleutelgebieden-aanpak. Ambitie, excellentie en actie. Van dijkgraaf tot art director: voorstellen tot actie van het Innovatieplatform. The Hague : Innovatieplatform.
  • 13. Dialogic innovatie ● interactie 13 Table 3. Overview of the software sector’s contribution to the Dutch economy compared to other sectors Sector Year as % GNP Software sector (Dialogic) 2010 2.8% Key Area:11 Chemical industry 2008 2.0-2.5% Creative industry 2008 >3.0% Food & Horticulture 2008 2.5-3.0% Hightech systems & materials 2008 >3.0% Pensions & insurance 2008 2.0-2.5% Water 2008 <1.5% The software sector can be further subdivided into a number of specific sectors. We can distinguish three categories at the highest level: the core groups of companies that produce their own software (SBI 6201), companies that offer consultancy services (SBI 6202), and companies that implement software and provide other ICT services (SIB 6209). Table 4. Turnover, gross added value, and fte per SBI group (million euros) Label SBI Dialogic (2010) % Turnover Software production 6201 € 17,025 68.0% Consultancy 6202 € 6,526 26.1% Other ICT services 6209 € 1,473 5.9% Added value (gross) Software production 6201 € 11,746 68.0% Consultancy 6202 € 4,630 26.8% Other ICT services 6209 € 891 5.2% Fte Software production 6201 116,429 60.6% Consultancy 6202 62,210 32.4% Other ICTservices 6209 13,429 7.0% 11 See http://www.innovatieplatform.nl/projecten/Nederland%20in%20de%20Wereld/sleutelgebieden/foto.pdf. A broader perspective When looking at the figures for the software sector, we should bear in mind that the majority of companies are ICT companies but have not been classified in SBI category 62*. They do in fact belong in this category – we will consider this point in more detail in chapter 6. If we include these companies in the original group, the total added value will prove to be much higher. This value is then estimated at 24.3 billion euros or 3.9% GNP.
  • 14. Dialogic innovatie ● interactie14 Software producing companies (SBI 6201) are by far the largest group. In terms of turnover (17.0 billion euros) and gross added value (11.7 billion euros), this group contributes two-thirds of the total. Compared to turnover and added value (both 68%), the relatively small proportion of employment is lower (61%). The remaining category of „other ICT services‟ is much smaller than the two other categories, but proportionally it makes a large contribution to employment. 68.0% 26.1% 5.9% Verdelingomzet obv CBS 6201 6202 6209 Figure 3: Division of turnover 68.0% 26.8% 5.2% Verdeling TW obv omzetverdeling CBS 6201 6202 6209 Figure 4: Division of added value (gross)12 60.6% 32.4% 7.0% VerdelingFTE obv omzetverdeling CBS 6201 6202 6209 Figure 5: Division of fte13 45,7% 36,0% 18,3% Omzet 6201 6202 6209 2.2 Sources of revenue CBS‟s SBI categories distinguish software production, consultancy and implementation. In practice, however, it is not so easy to define in which category an activity belongs. This means that companies in various categories often conduct more activities simultaneously. Software producers can for example derive revenue from consultancy and vice versa. Table 5 and Figure 6 illustrate the division of revenue from nine different sources. Table 5. Division of nine different sources of income SBI 62* (million euros) Dialogic (2010) % Sales of own software (product or tailor-made software)14 € 9,392 37.5% Sales of products developed in house with substantial embedded software € 803 3.2% Programming for third parties (sourced) € 3,986 15.9% Implementation and/or testing software € 1,533 6.1% Support and/or management and/or (corrective) maintenance of software applications € 2,231 8.9% Other consultancy related to software € 2,225 8.9% Sales of third parties‟ software (Software reseller) € 437 1.7% Other products or services related to the software sector € 1,780 7.1% Other activities not related to the software sector € 2,638 10.5% Total € 25,024 100% 12 The division of added value is based on the relationship between turnover and added value in the survey, and applied to CBS added value data. 13 The division of fte is based on the relationship between turnover and fte in the survey, applied to CBS fte data. 14 The are various labels being used for the two categories of software. Product software (SBI 620101) is also called „standard software‟ or „commercial software‟. Note that the latter excludes open source software whereas it can be included in the other two definitions. Tailor-made software (SBI 620102) is also called „custom made software‟ or „bespoke software‟. See also Xu, L., & Brinkkemper, S. (2007). Concepts for product software. European Journal of Information Systems, 16(5), 531-541.
  • 15. Dialogic innovatie ● interactie 15 38.8% 3.3% 16.7% 6.0% 8.8% 8.3% 1.5%6.6% 9.9% 1,Verkoop van door uzelf gerealiseerde software (product- of maatwerksoftware) 2,Verkoop van door uzelf ontwikkelde producten die een substantiële softwarecomponent bevatten (embedded software) 3,Programmeerwerk voor derden (inhuur) 4,Implementatie en/of testen van software 5,Support en/of beheer en/of (correctief) onderhoud van softwareapplicaties 6,Overige consultancy met betrekking tot software 7,Verkoop van software van derden (software reseller) 8,Overige, aan de software-industrie gerelateerde producten of diensten 9,Overige, niet aan de software- industrie gerelateerde activiteiten Sales of software realised in-house (product or tailor-made software) Sales of products developed in-house which contain substantial software components (embedded software) Programming for third parties (hiring) Implementation and/or testing software Support and/or management and/or (corrective) maintenance of software applications Other software-related consultancy Sales of third parties‟ software (software reseller) Other software sector related products or services Other activities not related to the software sector Figure 6: Subdivision of nine various sources of revenue (SBI 62*) You can see from table 5 that the total software sales in the Netherlands amount to 10.2 billion euros or 41% of the sector‟s total turnover (from the sale of products, tailor-made and embedded software). That is much lower than the software producing sector‟s share (SBI 6201) as shown in figure 5 (68%). It means that software production has a significant economic knock-on effect. In other words, software production forms the basis on which other activities such as consultancy and implementation are founded. Without this basis, such related activities would not exist and the scope of the software sector would be much smaller. Revenues from production are of course much higher in the software production subsector (SBI 6201) than in consultancy (SBI 6202). The opposite naturally applies to revenue from consultancy although this revenue is more diversified than for software production. There the emphasis on core activities such as the production of embedded software is relatively strong. However even the software producers‟ share (SBI 6201) is no more than 51% and once again this underlines the wider implications of software production. Table 6. Nine different sources of revenue divided into software production (SBI 6201) and consultancy (SBI 6202) (million euros) Revenue % Revenue % Software production (6201) Consultancy (6202) Sales of software realised in-house (product or tailor-made software) € 7,934 46.6% € 1,207 18.5% Sales of products developed in-house which contain substantial software components (embedded software) € 715 4,2% € 46 0.7% Programming for third parties (hiring) € 3,252 19.1% € 679 10.4% Implementation and/or testing software € 970 5.7% € 437 6.7% Support and/or management and/or (corrective) maintenance of software applications € 1,209 7.1% € 881 13.5% Other software-related consultancy € 596 3.5% € 1,364 20.9% Sales of third parties‟ software (software reseller) € 119 0.7% € 241 3.7% Other software sector related products or services € 970 5.7% € 594 9.1% Other activities not related to the software sector € 1,260 7.4% € 1,077 16.5% Total € 17,025 100% € 6,526 100% Programming: product or service? According to the regular SBI classification, programming for third parties is considered an activity and as such falls into the category SBI 6202 not SBI 6101. This activity does create a product in the form of software and therefore should come under SBI 6101. In that case, the importance of software production as activity increases from 42% to 59%. This also applies to software production in the category SBI 6201. If we include programming for third parties in software production, its share rises from 51% to 70%.
  • 16. Dialogic innovatie ● interactie16 46,6% 4,2% 19,1% 5,7% 7,1% 3,5% 0,7% 5,7% 7,4% 1,Verkoop van door uzelf gerealiseerde software (product- of maatwerksoftware) 2,Verkoop van door uzelf ontwikkelde producten die een substantiële softwarecomponent bevatten (embedded software) 3,Programmeerwerk voor derden (inhuur) 4,Implementatie en/of testen van software 5,Support en/of beheer en/of (correctief) onderhoud van softwareapplicaties 6,Overige consultancy met betrekking tot software 7,Verkoop van software van derden (software reseller) 8,Overige, aan de software-industrie gerelateerde producten of diensten 9,Overige, niet aan de software- industrie gerelateerde activiteiten Figure 7: Subdivision into nine different sources of revenue | software production (SBI 6201) 18.5% 0.7% 10.4% 6.7% 13.5%20.9% 3.7% 9.1% 16.5% 1,Verkoop van door uze software (product- of m 2,Verkoop van door uze producten die een subs softwarecomponent be software) 3,Programmeerwerk vo 4,Implementatie en/of 5,Support en/of behee onderhoud van softwar 6,Overige consultancy software 7,Verkoop van software (software reseller) 8,Overige, aan de softw gerelateerde producten 9,Overige, niet aan de gerelateerde activiteite Figure 8: Subdivision into nine different sources of revenue | consultancy (SBI 6202) If we further subdivide the three main categories, this brings to light a number of differences that would otherwise go unnoticed. Alongside software sales, other significant sources of revenue for producers of product software (SBI 620101) are implementation and testing (12%), and especially support (16%). Revenue from sourcing programming for third parties is the main source of secondary income (20%) for producers of tailor-made software (SBI 620102). Certain consultancy companies‟ activities are distorted because hardware consultancy companies are included in the grand total of 6202. This has resulted in the importance of software production, support and management in that subcategory being slightly undervalued and software consultancy along with other services related to software actually being slightly overvalued. The difference in company profile is highlighted even more in the following charts. Companies are not grouped according to their SBI code, but on the basis of the activity that yields their highest revenue. In general the main activity‟s share is extremely large. For example, in (1) Sales of software, this share is 88%, which means that companies whose main activity is „software sales‟ derive 88% of their revenue from this activity. The shares of (6) Other consultancy (65%) and especially (5) Support and management (54%) and (4) Implementation and/or testing (51%) are lower. This corresponds with the earlier observation that the distribution of consultancy activities is relatively high. It is remarkable that in all three types of activities the revenue from software sales is also relatively high (respectively 11%, 17% and 13%).15 Thus consultancy appears to be strongly linked with the production of software but this does not apply the other way round. Software production hardly ever goes hand in hand with consultancy (or for that matter with any other activity at all). 15 CBS ranks (4) “Software implementation and/or testing” in the category SBI 6209 (other services) because these are conducted activities not advice (SBI 6202). Conceptually this is a correct classification but in practice it is not always so straightforward to distinguish between conducting activities and advising. The profiles (4) in Table 6 and Figure 9, however match SBI 6102 better than SBI 6209.
  • 17. Dialogic innovatie ● interactie 17 1: Sales of self-realised software (product or tailor-made) 2: Sales of products developed in- house with substantial embedded software 3: Programming for third parties (sourcing) 4: Implementation and/or testing software 5: Support and/or management and/or (corrective) maintenance of software applications 6: Other consultancy related to software 7: Sales of software to third parties (software reselling) 8: Other products or services related to the software sector 9: Other activities not related to the software sector Figure 9: Nine different sources of revenue, divided according to the activity which organizations say generates the most revenue (7) Software reselling is an interesting category as it accommodates the most hybrid group of companies. Its core activity – selling third parties‟ software – accounts proportionately for less than half of its total revenue (43%). Support and management (14%) are also the main sources of revenue in this category, and to a lesser extent other services related to software (11%).
  • 18. Dialogic innovatie ● interactie18 2.3 Division of labour In order to generate the revenues mentioned in the previous section, companies must obviously first carry out activities to provide products and/or services. This is the input or expenditure side and has been determined for the survey by asking companies what proportion of their labour capacity is devoted to the six activities listed in Table 7. Expenditure is expressed in number of fte not jobs. The major activity is software development, which provides a total of 67,888 fte in the Netherlands. Together with implementation (46,612 fte) and support (26,908 fte), the core activities account for nearly three-quarters (74%) of employment.16 Table 7. Division of labour (fte) over six types of activities (SBI 62*) CBS (2008) Dialogic (2010) % Software development 57,367 67,888 35.% Implementation 39,388 46,612 24.3% Support 22,737 26,908 14.0% Sales and/or Marketing 15,901 18,818 9.8% R&D 12,063 14,276 7.4% Other 14,843 17,566 9.1% Total 162,300 192,069 100% 35.3% 24.3% 14.0% 9.8% 7.4% 9.1% 6201-02-09 Software development Implementation Support Sales and/or marketing R&D Other Figure 10: Subdivision of labour capacity in six types of activities (SBI 6201, 6202, 6209) The major activity of companies producing software (SBI 620101 and 620102) is of course software development. However the proportion is lower than one would initially expect. This is because implementation and support (especially with standard software) are also important activities underpinning software sales. Naturally implementation is the main input activity for companies in the category implementation (SBI 620901). The same also applies to consultancies. Once again other ICT services (SBI 620909) are the most hybrid category. Their support activity is relatively significant. 16 The number of employees involved in software development (68,000) is in sharp contrast with the number of IT students joining the sector every year (ca. 5,000). This is 7% of the total – scarcely enough to meet replacement demand.
  • 19. Dialogic innovatie ● interactie 19 Table 8. Labour capacity divided over six activities (expressed in percentages) Software production Consultancy Other services standard tailor-made hardware software implementation other 620101 620102 620201 620202 620901 620902 Software development 44.8% 51.4% 26.6% 24.6% 23.9% 22.7% Implementation 14.1% 13.3% 37.5% 32.6% 32.2% 27.5% Support 15.3% 10.1% 13.9% 16.7% 11.7% 17.2% Sales and/or marketing 10.% 8.7% 14.3% 9.5% 13.9% 11.0% R & D 8.4% 9.4% 3.9% 6.3% 6.5% 5.5% Other 7.0% 7.1% 3.7% 10.2% 11.9% 16.0% Software development and R&D are quite close. R&D‟s share is indeed highest (8-9%) in software production (SBI 6201). This scarcely differs from the other categories. In any case it appears that software producers themselves are definitely able to differentiate clearly between software development and R&D. As anticipated beforehand, the highest percentage of R&D was found in tailor-made software (SBI 620102) and here too there are only slight differences.17 According to data provided by CBS, the percentage of in-house R&D staff compared to total staff numbers (expressed in fte) is 3.3%.18 This is much lower than the 7.3% for sector 62* in this study due to the fact that the CBS figures differentiate between staff whereas Dialogic makes a differentiation in time. Only a handful of companies employ fulltime (dedicated) researchers and this is usually reserved for large firms. That does not mean that other companies are not carrying out research. It forms part of their regular invoiceable activities, some of which are reserved for non- R&D activities. Dialogic has included these hours whereas CBS has not. In chapter 4 we look in more detail at how the various sectors differ in their R&D and scope of innovation. 17 The Finnish study showed that R&D‟s share among software producers is much higher (27.0%) than in the other categories (software product contracting: 11.5% and consulting firms: 7.7%). What are noticeable are the very high percentages. In this study R&D is expressed as percentage of turnover (not percentage of labour capacity) but this only partially explains the difference. 18 CBS only has comparable figures based on the old SBI (1993) classification which applied to service activities in information technology, SBI 72*.
  • 20.
  • 21. Dialogic innovatie ● interactie 21 3 Types of products 3.1 Differences between product and tailor-made software In 2005 the Dutch innovation platform (Innovatieplatform) stated in its report on the pivotal role of ICT in innovation 19 that it is generally recognized that software is playing a more and more significant role in a large number of industries. A less well known fact is that the Netherlands‟ software sector is also a significant and wide-scale industry in its own right, as was shown in the previous chapter. In as much as software is developed in the Netherlands, people tend to think that it is only tailor-made software. Software sales account for 9.4 billion of the 10.2 billion euros turnover in software. Contrary to general opinion, Table 9 shows that this turnover is not only achieved thanks to tailor-made software. Of the 9.4 billion euros worth of software sold in the Netherlands, product software accounts for 3.9 billion (42%).20 It is undisputable that software producers (SBI 6201) have the lion‟s share: 3.2 billion euros (83% of all product software). Consultancy companies obviously achieve in absolute terms a much lower turnover in product software (0.59 billion euros), but it is remarkable that the division within SBI 6202 is almost exactly the same for product software and tailor-made software. Table 9. Distribution of product and tailor-made software in software production (SBI 6201), consultancy (SBI 6202) and other services (SBI 6209). Turnover in million euros. Product software Tailor-made software SBI Turnover % Turnover % 62* € 3,921 100% € 5,471 100% 6201 € 3,237 82.6% € 4,704 86.0% 6202 € 594 15.1% € 615 11.2% 6209 € 90 2.3% € 152 2.8% 41.7% 40.8% 49.1% 37.2% 58.3% 59.2% 50.9% 62.8% € 0 € 1.000 € 2.000 € 3.000 € 4.000 € 5.000 € 6.000 € 7.000 € 8.000 € 9.000 € 10.000 62* 6201* 6202* 6209* Tailor-made software Productsoftware Figure 11: Share of product compared to tailor-made software in each SBI group 19 Innovatieplatform report (2005) on ICT‟s opportunities “ICT als innovatie-as: kansen pakken met ICT”. 20 The questionnaire asked to distinguish between product and tailor-made software but not each sector‟s share of turnover. The sales figures in this paragraph were calculated by means of several interim steps.
  • 22. Dialogic innovatie ● interactie22 The relationship between product software and tailor-made software is determined by various factors. The first influential factor is the size of the company: it seems that the larger the company, the greater the share of product software.21 0% 20% 40% 60% 80% 100% 1-10 fte 10-100 fte 100+ fte Productsoftware Tailor-made software Figure 12: Share of product and tailor-made software related to the size of company Besides size, a company‟s economic activities also have an impact on the relationship between tailor- made and product software. The larger the proportion of sales of in-house developed software, the greater the proportion of product software. We see the very opposite in revenue from programming for third parties as such activities involve a relatively lower amount of product software. This is logical because programming for third parties is more linked with tailor-made than product software. 3.2 Number of software products We asked all the companies how many software products they are currently selling on the Dutch market. Product lines/families are treated as one product. Based on the number of companies, we can estimate that the total number of software products currently on the Dutch market is between 30,000 and 35,000. Of the companies in the software producers category (SBI 6201), 31% do not have any software products on the market. This means these companies purely concentrate on tailor-made software. Of the consultancies (SBI 6202), 63% have no software products on the market. Conversely, a remarkably high percentage (37%) does bring software products on the market and here we are still talking about more than 2,500 companies and about 6,000 software products. 0 2000 4000 6000 8000 10000 12000 14000 16000 None 1 2 or 3 4 or more 0 2000 4000 6000 8000 10000 12000 14000 16000 None 1 2 or 3 4 or more 0 2000 4000 6000 8000 10000 12000 14000 16000 None 1 2 or 3 4 or more Figure 13: Distribution of number of companies with # software products and lines (SBI 62*) Figure 14: Distribution of number of companies with # software products and lines (SBI 6201) Figure 15: Distribution of number of companies with # software products and lines (SBI 6202) 3.3 Characteristics of software products and services The companies were given a large number of statements describing their main type of products and services. These included topics such as tailor-made, pricing policy, SaaS (software-as-a-service), and open source. An overview of their responses is shown in Figure 16. 21 r= +0.11. The significance level of this relationship is indeed low (0.061). In all subsequent correlations it will be ≤0.05.
  • 23. Dialogic innovatie ● interactie 23 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Our end products/services areusedvia a (generic) webbrowser Our end products/service areopen source Our end products/services requirespecialist installation and integration The price ofour end products/services is basedon actual useof the product Our end products are based on SaaS (Software as a Service) construction There is an online user community related to our end products/services We deliver tailor-madefor everyclient Our end products/services contain softwarethat wehaveto install at the client’s premises 27% 65% 46% 34% 16% 58% 12% 24% 5% 10% 8% 18% 17% 14% 16% 19% 18% 14% 23% 28% 30% 15% 30% 27% 16% 4% 11% 10% 20% 6% 26% 16% 34% 7% 12% 10% 18% 6% 16% 14% Not applicable Hardly applicable Partly applicable Broadly applicable Fully Applicable Figure 16: Statements describing the characteristics of main products and services (SBI 62*) A number of categories is interlinked, that is to say the responses to the statements have a significant correlation. This cannot be concluded directly from Figure 16 but as a result of further analysis. The following consecutive interrelationships were found in response to the eight statements: 1.Products with software that has to be installed at the client‟s premises require both specialist (r=+0.52) as well as tailor-made (r=+0.20) installation. At the same time, products often cannot be used via a web browser (r=-0.29) and are often not based on SaaS (r=-0.35). 2.Tailor-made products mostly require specialist installation and integration (r=0.12), usually do not use a SaaS construction (r=-0.18), and their price is not based on actual product utiliza- tion (r=-0.12). 3.With products used through a (generic) web browser (r=0.21) and open source (r=0.22), online user communities are used more often than average. Products that have to be installed at a client‟s premises score slightly under the average (r=-0.14). 4.SaaS constructions require both tailor-made (r=0.19) as well as installation at the client (r=0.52). Regarding the latter, this requires a local client in order to be able to run the SaaS software. SaaS is already so well developed that relatively little specialist installation and integration are required (r=-0.24). 5.Pricing a product or service based on actual usage is relatively commonly used with SaaS constructions (r=0.29) – “software per minute” – and relatively little with tailor-made products (r=-0.12). 6.SaaS products can be used via a specific client (see 4) or (generic) web browser (r=0.53). At the moment both options are equally popular. The specific clients are so generic that they do not require any specialist installation (r=-0.24) or tailor-made (r=-0.18).
  • 24. Dialogic innovatie ● interactie24 7.End products which are open source are often used via a (generic) web browser (r=0.24), are generally based on a SaaS construction (r=0.11), are mostly tailor-made (r=0.18), and make relatively little use of an online user community (r=0.28). 8.Software products that are used through a (generic) web browser are relatively mostly SaaS products (r=0.53) and have relatively often an online user community (r=0.21). Both types were discussed above. Besides these, there are remarkably few differences between the responses from the software producers (6201) and the consultancies (6202). The only exception is the open source category (which will be discussed in more detail in section 3.5). Software producers see their products and services as more open source than consultancies do. It should be noted the main difference is found in the category „hardly applicable‟ which does not have a significant effect on the weighted average (see Table 10). 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Our end products/services areusedvia a (generic) webbrowser Our end products/service areopen source Our end products/services requirespecialist installation and integration The price ofour end products/services is basedon actual useof the product Our end products are based on SaaS (Software as a Service) construction There is an online user community related to our end products/services We deliver tailor-madefor everyclient Our end products/services contain softwarethat wehaveto install at the client’s premises 27% 65% 46% 34% 16% 58% 12% 24% 5% 10% 8% 18% 17% 14% 16% 19% 18% 14% 23% 28% 30% 15% 30% 27% 16% 4% 11% 10% 20% 6% 26% 16% 34% 7% 12% 10% 18% 6% 16% 14% Not applicable Hardly applicable Partly applicable Broadly applicable Fully Applicable 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Onze eindproducten/dienstenwordengebruikt via een (generieke)webbrowser Onze eindproducten/dienstenzijn opensource Onze eindproducten/dienstenzijn gebaseerdop een Software as a Service (SaaS)-constructie De prijs van onze eindproducten/dienstenis gebaseerd op het feitelijkegebruikvan hetproduct Onze eindproducten/dienstenvereisen specialistische installatieen integratie Er is een onlineusercommunity gerelateerd aan onze eindproducten/diensten Voor iedereklantleveren wijmaatwerk Onze eindproducten/dienstenbevatten software diedoor ons geïnstalleerd moetwordenop locatievan de klant 29% 61% 46% 35% 18% 58% 10% 27% 3% 13% 11% 17% 17% 13% 16% 21% 17% 15% 22% 26% 29% 16% 26% 23% 17% 4% 11% 13% 21% 7% 29% 16% 34% 7% 10% 8% 15% 7% 20% 13% Niet van toepassing Nauwelijks van toepassing Deelsvan toepassing Grotendeelsvan toepassing Volledig van toepassing 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Onze eindproducten/dienstenwordengebruikt via een (generieke)webbrowser Onze eindproducten/dienstenzijn opensource Onze eindproducten/dienstenzijn gebaseerdop een Software as a Service (SaaS)-constructie De prijs van onze eindproducten/dienstenis gebaseerd op het feitelijkegebruikvan hetproduct Onze eindproducten/dienstenvereisen specialistische installatieen integratie Er is een onlineusercommunity gerelateerd aan onze eindproducten/diensten Voor iedereklantleveren wijmaatwerk Onze eindproducten/dienstenbevatten software diedoor ons geïnstalleerd moetwordenop locatievan de klant 24% 73% 44% 32% 11% 59% 18% 23% 5% 5% 3% 19% 15% 16% 15% 12% 18% 13% 23% 29% 31% 13% 33% 33% 18% 3% 15% 6% 20% 5% 22% 18% 36% 6% 16% 14% 23% 6% 12% 14% Niet van toepassing Nauwelijks van toepassing Deelsvan toepassing Grotendeelsvan toepassing Volledig van toepassing Figure 17: Characteristics of main products & services (software production) Figure 18: Characteristics of main products and services (consultancy) To provide an overview, the responses to the statements have been calculated as a report figure in table 10 based on the weighted average, that is to say with a value on a scale of 0 (not applicable) to 10 (fully applicable). If we start with this figure, the differences also remain small. This means that the responses to the statements are consistent and therefore the differences between the statements are more robust. Table 10. Weighted averages (on a scale of 0 to 10) of the statements - total (62*) and divided into software production (6101) and consultancy (6202) Statement 62* 6201 6202 Our end products/services contain software that we have to install at the client‟s premises 4.5 4.3 4.8 We deliver tailor-made for every client 5.5 5.8 5.0 There is an online user community related to our end products/services 2.3 2.3 2.0 Our end products are based on SaaS (Software as a Service) construction 3.5 3.3 4.0 The price of our end products/services is based on actual use of the product 3.8 3.5 3.8 Our end products/services require specialist installation and integration 5.3 5.0 5.8 Our end products/service are open source 2.0 2.0 1.5 Our end products/services are used via a (generic) web browser 5.8 5.5 6.0
  • 25. Dialogic innovatie ● interactie 25 3.4 Share of SaaS Based on Figure 16, the total turnover from SaaS (or ASP) services can be estimated at 13%. In order to verify this, companies were approached directly to find out what percentage of their revenue comes from SaaS services. This gave a much higher percentage, namely 38%. The most likely reason for the variation is that the respondents interpreted the question as the percentage of software turnover (not the total turnover) coming from SaaS. If we change this to percentage of software, the total figure is 15%. This is indeed closer to the 13% that we previously calculated. In absolute terms, this is equivalent to a turnover value of 1.26 (13%) to 1.45 (15%) billion euros. In comparison: it was 17% in the Finnish study (figures from 2008).22 As the market in SaaS is developing rapidly at the moment, we emphasize that we are talking about a snapshot here. SaaS‟s market share is expected to continue to rise considerably in the coming years.23 Table 11. Share of revenue from SaaS, per subsector 62* 6201 6202 6209 Share of revenue from SaaS 15.0% 19.1% 6.4% 5.2% SaaS is used above all by companies that offer product software (r=0.22). It is notable that those companies whose business model is SaaS, make less use of open source components than other companies (r=-0.16). Finally the size of a company (in fte) bears no relation to the use of SaaS – there is no or hardly any difference between small (<10 fte), medium (10-100 fte) and large (>100 fte) companies. 3.5 Open source & hybrid software To what extent a certain software product is considered open source, is determined on the basis of which software licence is chosen for that product. Businesses, governments and online communities are all familiar with the open source software licences approved and issued by the Open Source Initiative.24 The open source nature of software products is seen from a mostly technical licensing perspective. It is also possible for a software product to use many open source components or components which people have released as part of an open source licence while the (end) product has not been given an open source licence. Moreover, a software product can be supplied under various licences and in this way, the same software product can be both open source as well as closed source. From a technical licensing point of view, this approach provides only limited insight into the use of open source in software products. 22 Apart from this, the study defined another intermediate form, namely „web based solutions‟. This is a very large category: 53% of the total. The category „little or no SaaS‟ is therefore much lower (30%) than in the Netherlands. 23 Compare the results of two recent Gartner surveys on http://www.gartner.com/it/page.jsp?id= 1062512 (2009) and http://www.mis-asia.com/news/articles/gartner-saas-adoption-on-the-rise (2010). 24 See http://www.opensource.org.
  • 26. Dialogic innovatie ● interactie26 Another notion of open source software in software products is the input/output approach. This looks at both the input (using open source as „commodity‟) as well as the output (revenue from open source products and services). These two dimensions are indeed greatly interdependent.25 With a number of frequently used forms of licensing such as GPL, the use of an open source component of a product (input) will for example result in the product having to be also offered (output) when companies decide to distribute the software. Composite software products – and that is the bulk of the software – are a group unlike the above mentioned in that certain product components can be open source while others are not. This makes it difficult to determine to what extent a product is entirely open source software. Nevertheless, companies were approached directly with the statements in Figure 16 to say to what extent „our end products/services are open source‟ applies to their products/services - 65% of the companies said this statement does not apply to their products at all; 11% said it was broadly or fully applicable. Consultancies‟ percentage is a little lower (9%) than the average. It is easier to measure the proportion of open source on the input side. Firstly we asked what proportion of software is developed internally; then of the remainder („external‟), what percentage is purchased under (proprietary) licences, and which part is obtained as open source. These questions revealed percentages comparable to the input side: 11.5% for the total and software producers, and 10.3% for the consultancies. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 62* 6201* 6202* 75.2% 79.7% 70.0% 13.4% 8.7% 19.7% 11.4% 11.6% 10.3% External: open source External: licences Internal Figure 19: Comparison of input in software development, software production (SBI 6201) and consultancy (SBI 6202). The percentage in the Finnish study was considerably higher (19%). On the other hand, the Finnish definition was less precise (“product contains a lot of open source software”). The figures do not reveal how much of the software developed internally can actually be defined as open source but some of it can probably be classed as such. The estimate of an 11% share in the Netherlands is therefore possibly rather low. 25 r=0.55.
  • 27. Dialogic innovatie ● interactie 27 In theory the dichotomy between closed source and open source is very much the same as that between products and services. That is to say that companies who offer their products completely open source will not generate revenue from selling their software. Current practice shows that companies who acquire a significant part of their software as open source, combine it with their own (proprietary) software and consequently bring their software product on the market as a closed source software product. Thus there are more business models that utilize open source software and to which the theoretical dichotomy between open and closed source does not apply. For example there seems to be a positive correlation between open source and tailor-made software. This refers to a group of companies who offer tailor-made services over and above an open source product. Due to these hybrid forms, it is hard to consider companies as entirely open or closed source, as we will attempt to explain in the box below. Apart from the appearance of hybrid forms, it is a remarkable fact that companies who use a relatively large amount of open source, seem to carry out more than average research and development (R&D).26 Note that this is only a weak relationship, possibly influenced by the hazy boundary between software development and R&D. It is a fact that companies who use open source relatively often, are the ones who do a relatively large amount of software development. This is not an illogical relationship but its consequences are unknown. It is possible that the use of open source leads to more R&D. It is also possible that companies who do a relatively large amount of R&D make more than average use of open source. The latter relationship is not illogical either, considering the popularity of open source in the academic community. 26 This is a significant but weak relationship: r=0.12.
  • 28. Dialogic innovatie ● interactie28 Explaining „open source‟ and „closed source‟ companies – an exercise The available data enables us to define whether companies are open source, closed source or even hybrid. This exercise can be done based on either an input (how much open source is employed to develop software) or output approach (the amount of end products/services that are open source). You do come across mixed forms but there is not yet a large amount of these. Although the two approaches show patterns that are strongly linked, there are still considerable differences in proportions between the various forms. The input approach showed that 0.6% of all companies are mixed form. These are the 145 companies who not only generate a significant amount of their revenue from software sales but also state that the title „open source‟ in any case partially applies to their products – on the bottom left of Table 3.5A*** 1.2% of all software companies (290) can be considered „true‟ open source companies (much open source, little revenue from software sales) – on the top right of the table, 31.4% of the companies (7,650) use the closed source model (high revenue from software sales). Table 3.5A. Percentage of open source compared to revenue from sales of self-realised software (input approach) Revenue from software sales Low Average High % Open Source Low 38.2% 18.0% 31.4% Average 6.2% 1.9% 2.2% High 1.2% 0.3% 0.6% The output approach shows a shift in favour of open source. The percentage of hybrid companies increases from 0.6% to 3.6% (875) and the percentage of „true‟ open source companies from 1.2% to 5.5% (1,340). Closed model companies‟ share drops to 26.1% (6,360). Table 3.5B Comparison of statement “our products are open source software” to % revenue from self-realised software (output approach) Revenue from software sales Low Average High Statement “Open Source” Low 34.0% 15.5% 26.1% Average 7.0% 3.0% 4.0% High 5.5% 1.2% 3.6% ________ *** A few companies even indicated to generating all their revenue from software sales and at the same time state that their products are 100% open source. From a legal point of view, this is not possible. One possible explanation is that subscriptions received from open source users are also considered as software sales.
  • 29. Dialogic innovatie ● interactie 29 4 Innovation The intensity of companies‟ R&D activities has already been discussed in section 2.3. The percentage of labour capacity devoted to R&D lies between 9% (software producers) and 6% (consultancy and other ICT service providers). 4.1 WBSO scheme Another method of determining the software sector‟s R&D intensity is by examining the extent to which the sector makes use of innovation subsidies under WBSO (R&D Promotion Act). Through this scheme, companies can receive subsidies for the salaries of employees working on R&D projects. The Act was extended on 1 January 2009 and under certain conditions allows the development of software to be also considered as R&D.27 Since this extension, the proportion of ICT and telecom companies has risen spectacularly. The proportion of R&D working years has raised the total from 10.4% in 2008 to 13.5% in 2009.28 As far as number of applications is concerned, the sector can now compare with – or is even ahead of – other R&D intensive sectors such as the machinery and equipment, electro-technical, and chemical industries. Figure 20: Absolute number of WBSO applications in 2009 x growth in R&D hours 2008-2009. Source: Agentschap NL (2010) 27 SenterNovem (2009). For the impact of extending the WBSO Act, see „Diensteninnovatie en de WBSO: Effect van de verruiming in 2009‟. The Hague: Ministry of Economic Affairs. 28 Focus on R&D and use of the WBSO scheme „FOCUS op speur- en ontwikkelingswerk. Het gebruik van de WBSO in 2009‟. Agentschap NL (2009, 2010).
  • 30. Dialogic innovatie ● interactie30 In our survey a total of 14% of the companies say they make use of the WBSO scheme.29 Software producers make twice as much use of the scheme (20%) as consultancies (10%). Among the software developers, the scheme is again more popular with product software companies (SBI 620101) than with tailor-made software companies (SBI 620102). Companies with many open source components (input approach) make relatively little use of the scheme. This is remarkable because these companies are in fact the most relatively R&D intensive (see previous chapter). It would seem that this group of companies has not yet been able to find its way to the WBSO. The geographical spread of software producers (the blue dots in the figure below) shows a large overlap with the geographical distribution of WBSO applications for software projects (the red areas). Figure 21: Geographical distribution of software producers SBI 6201 (blue dots) and WBSO applications for software projects (red areas) Qualitatively speaking, there is a significant difference. In general it is especially SMEs (fewer than 250 employees) that make use of the scheme. In 2008 two-thirds (68%) of the WBSO subsidies went to SMEs.30 The Agentschap NL figures show that the rise in number of applications in 2009 is thanks to small companies (<10 employers) in the Netherlands. Our sample showed that especially larger companies make use of the WBSO scheme.31 Thus there still seems to be great potential for growth in the software sector. Table 12. Which companies use the WBSO scheme <10 fte 10-100 fte 100+ fte WBSO Yes 9.75% 55.81% 87.50% No 90.25% 44.19% 12.50% 29 If we exclude companies with only one employee, this percentage rises to 30%. 30 SenterNovem (2009). For focus on R&D see, “Focus op speur- en ontwikkelwerk: Het gebruik van de WBSO in 2008”. Zwolle: SenterNovem. 31 Companies that make use of the WBSO scheme have an average fte of 110.3 compared to 4.9 fte in companies that do not use the scheme.
  • 31. Dialogic innovatie ● interactie 31 4.2 New products Alongside the percentage of labour capacity for R&D and utilization of the WBSO scheme, the third and final way to measure the level of innovation in the Dutch software sector is by making use of standard European CIS (Community Innovation Survey) items.32 The CIS survey has two different items relating to the number of products (in terms of turnover share) new to the market and the number of products new to the company. The former type of innovation is more radical than the latter, which is why the former usually scores lower than the latter.33 In our study the scores for these two items were almost the same, but at respectively 23% and 24%, are higher than in the European survey. Further analysis of the underlying figures does reveal obvious differences. While the scores for „products new to the market‟ are hardly or not related to certain company characteris- tics, this does apply to the scores for „products new to the company‟. Companies that derive a relatively large part of their turnover from products that are new for them, have the following characteristics:  A relatively large part of their work capacity is devoted to R&D (r=0.23);  They derive their turnover mainly from sales of software developed in-house (r=0.25) or from products developed in-house with substantial embedded software (r=0.19);  They supply mainly product software instead of tailor-made software (r=0,.7);  They make relatively frequent use of SaaS constructions (r=0.23). In the literature it is often assumed that innovative companies are small. However, we found no significant correlation between the size of a company and the share of new products in its turnover. 32 See http://epp.eurostat.ec.europa.eu/portal/page/portal/science_technology_innovation/data/database. 33 The European CIS survey showed that the average for all Dutch companies is respectively 10% (new to the market) and 14% (new to the company). It also showed the same averages for the ICT industry in the Netherlands (computer and related activities, thus a wider definition of the software sector) to be above the national average, respectively 15% and 19%.
  • 32.
  • 33. Dialogic innovatie ● interactie 33 5 International context 5.1 Export The software sector in the Netherlands is strongly focused on the domestic market while 7.7% of this sector‟s revenue (still 1.93 billion euros) comes from abroad. More than two-thirds of that 7.7% comes in turn from neighbouring West European countries. Outside Europe, the USA is the major export market. 92.3% 4.9% 0.3% 1.4% 0.2% 0.2% 0.2% 0.2% 0.1% 0.2% 7.7% NL W-EU E-EU USA Canada SM America Middle East Asia Austria Africa Figure 22: Share of markets in total turnover at home and abroad, per destination, for the entire software sector (62*) The 7.7 average percentage disguises large differences between subsectors and between companies. Export is greatly concentrated in a few large product software companies. Export accounts for more than half of their profit. These high percentages, however, disappear in the total figure. It is true that the export percentage in the subsector product software (620101) is nearly twice as high as the average, which means product software companies claim the clear majority of the total export.34 In addition, the export portfolio is also more varied: almost half (49%) of the exports are beyond Western Europe. The percentage for the entire software sector (62*) is much lower, namely 33%. 34 We see a similar picture in the Finnish study: ‘Software product firms’ export one and a half to twice as much as the other subsectors.
  • 34. Dialogic innovatie ● interactie34 86.6% 6,9% 0.5% 3.2% 0.5% 0.5% 0.3% 0.8% 0.7% 0.1% 13.4% NL W-EU E-EU USA Canada SM America Middle East Asia Austria Africa Figure 23: Share of markets in total turnover(%) home and abroad, to destination, product software (620101) Exporting companies certainly do not do better or worse than companies that only focus on the domestic market. Their turnover for example hardly differs from the average. We can, however, say that companies who only target the Dutch market are less innovative.35 5.2 Nearshoring & offshoring software developments The doomsday scenario that jobs in ICT are moving (far) abroad, has been a hotly debated topic for years, especially in the United States. Although it is not a wide-scale problem in practice,36 it is still important to consider the situation in the Netherlands. The Netherlands develops 92.1 % of its software, figures that reflect the same picture in the USA. Of the remaining 7.9%, slightly more than half (4.0%) is produced in Dutch subsidiaries abroad. Only 3.9% is outsourced to foreign companies abroad. 87.7% 4.3% 2.9% 1.3% 0.5% 0.6% 0.6% 2.0% Netherlands Netherlands - outsourcing Western Europe - subsidiary Western Europe - outsourcing Eastern Europe - subsidiary Eastern Europe - outsourcing Far East - subsidiary Far East - outsourcing Figure 24: Software production locations showing proportions of outsourcing (SBI 62*) 35 r=-0.21. 36 See for example Head, K., Mayer, T. & Ries, J. (2009). "How remote is the offshoring threat?", European Economic Review, Elsevier, 53(4), 429-444.
  • 35. Dialogic innovatie ● interactie 35 Offshoring, or outsourcing work to remote low-wage countries (especially India) plays an insignificant role, just as in the USA. It accounts for 2.6% of the total software development and three-quarters of this takes place via outsourcing. The percentage of work in remote low-wage countries is only higher (5.0%) in the subsector implementation of software (SBI 620901). And that percentage is entirely outsourced to foreign companies. The extent of nearshoring, outsourcing work to near-shore low-wage countries (especially Eastern Europe), is even lower with a total of 1.1%. In a third of the cases, subsidiaries of the company are used in those countries. The subsector product software (SBI 620101) has more an average amount of software developed in near-shore low-wage countries (1.9%) and thereby usually utilizes its own subsidiaries abroad (1.4%). Contrary to popular belief, the majority of the work that is outsourced abroad takes place in nearby wealthy countries. That share (4.2%) is larger than offshoring and nearshoring put together. There is a great difference between the subsectors. The percentages for most service provider subsectors (SBI 620201: 12.5%; 620901: 19.5%; 620909: 13.3%) are much higher than in other sectors. These are mostly companies‟ own subsidiaries abroad. The logical explanation is that the provision of services is more localized than production. The following table provides another overview of these percentages. We can clearly see that the proportion of outsourcing increases the further the location is from the Netherlands. In other words, distance matters when setting up (and managing) subsidiaries abroad. Table 13. Overview of each part of the world’s share in software development % Of which outsourced In the Netherlands 92.1% 4.3% (5%) In Western Europe 4.2% 1.3% (32%) In Eastern Europe 1.1% 0.6% (51%) In the Far East 2.6% 2.0% (76%) Large companies do not outsource significantly more work abroad than smaller companies. If this is corrected for small companies (to exclude all companies with one employee), the percentage increases slightly (to 9.7%) but there is really no significant difference. Where we can see an entirely different amount is in outsourcing to Eastern Europe: 3.1% compared to 0.8% in total. A relatively large amount of the work is now done in companies‟ subsidiaries: 52% (compared to the 27% total).
  • 36.
  • 37. Dialogic innovatie ● interactie 37 6 The software sector from a wider perspective 6.1 Software outside SBI 62* The previous chapters focused solely on the software sector in the Netherlands (SBI 62*). In chapter 2 this sector‟s total turnover was estimated at 25 billion euros and the gross added value - its contribution to the Dutch economy – at 2.8%. The ICT industry in the Netherlands is much broader than this software sector. It encompasses the production of computers and types of hardware (SBI 26* and 46*), as well as telecom equipment and services (SBI 61*). Some companies in these subsectors derive a significant proportion of their revenue from sales of software products and services. It is difficult to determine the exact number of such companies. Our survey was conducted among companies in the three previously mentioned sectors, however the response rate was too low to enable further calculations. This is because the division is very skew. Most of the companies do not derive much of their turnover from sales of software products and services. But a number of companies does get at least as much revenue from software as the average company in the core sector SBI 62*. All things considered, these companies should be reckoned as part of the software sector. On the other hand, there are currently several companies that come under category SBI 62* but on the basis of their profile, do not belong (any more) in that category. These are the companies that derive the greater part of their revenue (80% or more) from the last activity mentioned in Table 5 - “other activities not related to the software sector”. This is 6% of all the companies. The extent of the first group, companies that could be classed as SBI 62*, is more difficult to define. We can make a rough estimate based on the combination of the ICT~Office‟s list of members and the responses to the survey. All the ICT~Office members were approached to take part in the survey; 40% of those who responded are from outside SBI 62*. On the basis of self selection we can therefore assume that these are very software-intensive companies and that this is the group we are looking for. This means that the software sector – in the broadest sense of the word – is one and a half times bigger than the core category 62*. If we take off the 6% of companies that do not belong to SBI 62*, this results in an increased percentage of 41%. 37 Thus the total turnover of the Netherlands‟ software sector is now estimated at 35.2 billion euros (instead of 25.0 billion), bringing its contribution to the Dutch economy up to 3.9% (instead of 2.8%). 37 The calculation is as follows: 60%/40% = 1.5. (100% - 6.1%) x 1.5 = 140.9%.
  • 38. Dialogic innovatie ● interactie38 Examples of software-intensive companies outside SBI 62* One of the larger companies in the sample (575 fte, 200 million euros turnover) produces medical electronics. All things considered, this is the production of hardware not software. The proportion of software components embedded in products is increasing especially in advanced electronics such as the medical devices produced by this company. At least 76% of their revenue comes from embedded software. Besides this a small part (2%) comes directly from sales of tailor-made software developed in-house. A similar case is a small automation company (25 fte, 2 million euros turnover) operating in the transport sector. It is classified as SBI code 4651 (wholesale trade in computers, peripheral equipment and software) but achieves its entire turnover from software related activities: 20% comes from sales of tailor-made software developed in-house, 30% from implementing that software, and 20% from support and management. Another 10% of the turnover comes from sales of third parties‟ software and the remaining 20% is generated by activities related to the software sector. A third, medium sized company (120 fte, 11 million euros turnover) also belongs to sector 4651 but provides business services. Its main focus is developing software to improve business processes. More than half of its revenue (55%) comes from sales of tailor-made software developed in-house, 42% from the implementation of this software, and the rest (3%) from related software consultancy. In the first and third example we see opposite shifts which in both cases have led to greater intensification of software components. In the first case it is all about the „virtualisation‟ of a physical product (that is increasingly becoming more of a software product – think of the continuously growing role of software in controlling cars). In the third case, service „productivisation‟ – provides services which are being more and more coded and standardized in software.38 We see this reflected in our sample where we encountered for example organisation consultancy firms and stockbrokers. These companies have literally converted part of their services into software products. Both product virtualisations as well as service productivisation are continuing trends which still have a long way to go. This means that the share of software-intensive companies outside the SBI 62* core group can only increase. Companies that were originally outside SBI 62* are gradually becoming more a part of the core group. Note that we are still talking about companies that derive a significant part of their revenue directly from software or activities related to software. Right across the entire economy there are companies delivering software products for internal use or services. Think of financial institutions, large retailers, energy and transport companies. The significance of software in and for the Dutch economy – ICT as innovation axis – is much, much greater than the scope of the software sector in the Netherlands. In itself it already represents an economic force of considerable magnitude. The estimate of 35.2 billion and 3.9% of GNP is probably conservative to say the least. 38 See also P den Hertog (UvA) „Managing Service Innovation‟, to be published in October 2010.
  • 39. Dialogic innovatie ● interactie 39 7 Method 7.1 Motivation Before the start of this study, only general aggregate level figures existed on the scope and economic value of the Netherlands‟ software sector. Data on the type of activities conducted by Dutch companies was not available. In order to obtain this information, Dialogic has collated data directly at micro level (individual companies) by carrying out an online survey and subsequently aggregating this data. You could say we that we chose to put a thermometer in the sector itself rather than assemble something based on general statistics such as CBS data. As this is the first time such a study has been carried out in the Netherlands, the emphasis is on comparisons between SBI codes, types of company activities etc. Only once a consistent study has been carried out over a certain period of time can meaningful statements be made on the progress of developments. This current study can pave the way. 7.2 Population and sample What was important for this study was to map out the sector distinctly beforehand. In this way it would be clear which companies had to be approached and about which group of companies statements could be made. We made use of CBS standard SBI39 categories as all Dutch companies are divided into one or more SBI codes according to their core economic activity. In collaboration with ICT~Office it was determined which activities come under software activities. The table below shows companies‟ main activities: Table 14. Codes for main economic activities based on SBI 2008 Description SBI Develop, produce, and deliver standard software 620101 Develop and produce tailor-made software 620102 Hardware consultancy 620201 Software consultancy 620202 Implementaion of software 620901 Other service activities in IT 620909 In other words: this study focuses on all the organisations in the category provide service activities in information technology (SBI 62*), with the exception of management of computer facilities (SBI 6203). 39 SBI is based on the EU classification Nomenclature statistique des activités économiques dans la Communauté Européenne (NACE) and on the United Nations International Standard Industrial Classification of All Economic Activity (ISIC).
  • 40. Dialogic innovatie ● interactie40 Contact details of companies in one of these categories were then requested from the Chamber of Commerce (KvK). In order to determine the sample, all companies were included with a minimum of 100 fte workers, and based on a reliability level of 95% and a reliability interval of 1.0, the scope of the sample was determined for companies with fewer than 100 fte. The address database was further cleaned up by including only head offices of economically active firms (thus no associations or foundations registered with the Chamber of Commerce). Table 15. Scope of the sample of companies registered with the Chamber of Commerce (KvK) SBI Total sample >100 fte <101 fte Description Total at KvK 620101 739 10** 733* Develop/produce/publish standard software 2,275 620102 5,292 21** 5,283* Develop/produce tailor-made software 14,125 620201 667 3** 664* Hardware consultancy 1,369 620202 5,363 29** 5,344* Software consultancy 10,582 620901 668 3** 665** Implementation of software 668 620909 1,442 6** 1,436** Other services related to IT 1,442 * ** Sample Including all organisations Alongside these, more than 1,000 companies were approached who do not come under the main activities described in Table 15 and who possibly carry out activities related to software. These companies are not included in the main analysis but have been used to gain qualitative insight into work related to software alongside the SBI 62* group. These additional categories are: Table 16. Codes for additional firms’ main economic activities based on SBI (2008) Description SBI Production of computers and peripheral equipment 2620 Production of alarm systems 263001 Production of communication equipment (not alarm systems) 263002 Production of consumer electronics 2640 Production of measuring, navigation and control equipment 2651 Production of timepieces 2652 Wholesale trade in computers, peripheral equipment and software 4651 Other telecommunication 6190 In addition, all the companies who are members of ICT~Office were approached. It was checked whether these members were already included in the sample obtained through the Chamber of Commerce. If this was the case, the ICT~Office contact details were used to approach them. Any members who did not appear in the sample were added to it. There were 363 members of ICT~Office who were not in the Chamber of Commerce‟s sample. A total of 14,560 companies were approached with the request to fill in the survey.
  • 41. Dialogic innovatie ● interactie 41 7.3 Procedure for conducting the survey Dialogic set up the survey after a dialogue with ICT~Office. The “National Software Industry Survey 2009”40 carried out by Helsinki University of Technology was used as starting point and refined. Thus it was possible to use some of the data in this survey to compare the results in the Netherlands with Finland. Companies were informed about the study by letter. This explained the reasons for the study and gave a brief description of which topics would be covered. The letter was signed by Henk Broeders, chairman of ICT~Office, Sylvia Roelofs, director of ICT~Office, Bernhard van Oranje (chairman of Raad van Advies Software~VOC (software advisory board), and Sjaak Brinkkemper (professor at Utrecht University) to emphasize the importance of the study. The letter provided unique login codes to enable online access to the questionnaire. At the request of companies that were not included in the sample but did want to fill in the questionnaire, an „open‟ questionnaire was also issued. In this way companies could fill in the questionnaire even without login codes. These companies had heard about the study for example through other media announcements. Afterwards we looked at: (i) whether these companies also appear on the list of companies that received the letter, and (ii) under which main economic activity these companies are classified. This is because a few companies that come under the categories as shown in Table 15 are included in this study. The questionnaire was issued in a Dutch version as well as in English. You can read the letter and the questionnaires in the appendices. 7.4 Response The questionnaire was available from 27 April till 7 June. On 9 May ICT~Office sent a reminder to all its members who had not yet completed the questionnaire. A fortnight later it was checked if the response was representative of the population. It appeared that especially companies with more than 100 fte were under-represented. Consequently ICT~Office began approaching companies directly in order to bridge this gap. A total of 803 companies completed the survey.41 The majority, 721 respondents, belong to the SBI 62* group. The proportion of companies larger than 100 fte is 1.4%, compared to 0.6% in the CBS data. Large companies are therefore more likely to be over- represented than under-represented. Based on the number of letters sent, this gave a response rate of 5.14%. However, the data obtained through the Chamber of Commerce appeared to be more inaccurate than assumed. The first sign of this was the fact that more than 100 letters were returned. As we can assume that only a small number of letters was returned due to incorrect contact details, the amount of undeliverable mail is therefore (much) higher. Another reason why we can assume that the Chamber of Commerce‟s data is inaccurate, came to light during the analysis. The profile of the Chamber of Commerce‟s population appeared to differ greatly from the survey data and ICT~Office data (list of members). There is a correlation of nearly 1 between the number of fte for the companies included in the survey and ICT~Office‟s list of members. The correlation between these data and the Chamber of Commerce‟s is however much lower. 40 For more information see: http://www.sbl.tkk.fi/oskari/. 41 When designing the survey, a deliberate decision was made not to insist on answering all the questions, to ensure fewer people would close down the questionnaire before completing it. This means that we do not have 803 responses to every question.
  • 42. Dialogic innovatie ● interactie42 Table 17. Correlation between the number of fte in companies in the KvK (Chamber of Commerce), ICT~Office and survey data sets Correlation Significance KvK x ICT~Office 0.321 0.04 KvK x Survey 0.186 0.00 Survey x ICT~Office 0.989 0.00 This was the reason why we also tried to find out the exact size of the population. We did this by searching on the internet for hundreds of companies in the SBI 62* group, thereby assuming that software related companies have their own website or can be found online in some other way (for example via LinkedIn profiles). This sample showed that 80% of the companies were active online. Thus the actual population referred to in this study is 4/5 of the Chamber of Commerce population. This resulted in an actual response rate of 6.35%. The reliability interval is 3.35 (at a reliability level of 95%). The reliability interval of just the SBI 6209 group is however too high to enable valid statements. Therefore this group was not included separately in the study (apart from a few exceptions). Table 18. Response rate and reliability interval of the sample SBI code Number Response rate Reliability interval 62* 721 6.35% 3.35 6201 317 6.57% 5.32 6202 317 6.57% 5.32 6209 87 5.15% 10.24
  • 43. Dialogic innovatie ● interactie 43 Bijlage I | Online questionnaire EN Introduction The purpose of this questionnaire is to get a better overview of the Dutch ICT sector. The results will be published in statistics and tables that will not reveal individual companies. By responding to this questionnaire, you are helping us to collect valuable information about the current state of software business in The Netherlands. The questionnaire is conducted by Dialogic (www.dialogic.nl). Our contact person is research manager Robbin te Velde, telephone 030 215 05 80, email tevelde@dialogic.nl. Survey Which of the following products and/or services best describes your firm‟s main source of revenue in The Netherlands? The actual delivery of the product and/or service (e.g., whether a SaaS−construction is being used or not) is not relevant to this question. ( ) Sales of in−house realised software (product or tailor-made software) ( ) Sales of in−house developed products with a major software component (embedded software) ( ) Programming activities for third parties (contract or freelance) ( ) Implementation and/or testing of software ( ) Support and/or administration and/or maintenance of software applications ( ) Other consultancy activities related to software ( ) Sales of third−party software (reselling) ( ) Other software−related products or services ( ) Other activities that are not related to the software industry Could you please indicate how the revenues of your firm in The Netherlands are distributed between the following products and/or services (should add up to 100%)? The actual delivery of the product and/or service (e.g., whether a SaaS−construction is being used or not) is not relevant to this question. Sales of in−house realised software (product or tailor-made software) ____________ % Sales of in−house developed products with a major software component (embedded software) ____________ % Programming activities for third parties (contract or freelance) ____________ % Implementation and/or testing of software ____________ % Support and/or administration and/or maintenance of software applications ____________ % Other consultancy activities related to software ____________ % Sales of third−party software (reselling) ____________ % Other software−related products or services ____________ % Other activities that are not related to the software industry ____________ % Sum 100 % Which percentage of the software that is in−house realised by your firm is being sold as product software/software package? I.e., sold on the basis of the price of the product itself, not on the basis of the efforts (manhours, lines of code) that have been made developing the product. _________ % What is the size of your firm in The Netherlands in fte (Full Time Equivalent)? Please estimate when necessary. __________ fte
  • 44. Dialogic innovatie ● interactie44 How is the revenue of your firm in The Netherlands distributed between the following geographic areas? (in total 100%) The Netherlands _____ % Western Europe (excluding The Netherlands) _____ % Eastern Europe (including Russia) _____ % United States _____ % Canada _____ % South and Central America _____ % Middle East _____ % Asia _____ % Australia and New Zealand _____ % Africa _____ % Sum 100 % How many different software products or software product families does your firm sell on the Dutch market? Note: a software product family/line should be regarded as one product. ( ) None ( ) 1 ( ) 2-3 ( ) 4 or more How well do the following statements describe your final products and/or services? Notapplicable Hardlyapplicable Partlyapplicable Broadlyapplicable Fullyapplicable Our final products/services are used through a (generic) web browser ( ) ( ) ( ) ( ) ( ) Our final products/services are open source ( ) ( ) ( ) ( ) ( ) Our final products/services are sold as Software as a Service (SaaS) ( ) ( ) ( ) ( ) ( ) The pricing of our final products/services is based on actual usage ( ) ( ) ( ) ( ) ( ) Our final products/services require special(ist) installation and integration ( ) ( ) ( ) ( ) ( ) There is an online user community related to our final products/services ( ) ( ) ( ) ( ) ( ) Our final products/services are tailor−made for each of our clients ( ) ( ) ( ) ( ) ( ) Our final products/services have software that needs to be installed by us at the premises of the client ( ) ( ) ( ) ( ) ( ) What part of the revenues of your firm in The Netherlands is derived from the sales of SaaS− or ASP−services? ________ % Software can be completely developed within your own firm, but can also (partly) be based on components developed by third parties. Please indicate the general composition of your product(s). (total is 100%) Internal: own software development _____ % External: licensing (bought or otherwise) _____ % External: open source _____ %
  • 45. Dialogic innovatie ● interactie 45 Possibly, not all your software development activities take place in your own firm in The Netherlands. Perhaps your firm owns subsidiaries abroad and/or outsources work abroad. Where does the software development of your firm take place and on what base? Note that the total does not necessarily have to be 100% since there are other modes to develop software (next to the two ones mentioned), such as joint software development. Part of own firm Based on contracts (outsourcing) In The Netherlands __________ __________ % In the Western world (other than The Netherlands) __________ __________ % In nearshore countries (e.g. Eastern European states and Russia) __________ __________ % In offshore countries (e.g. India or China) __________ __________ % What percentage of the total labour capacity of your firm in The Netherlands is aimed at the following activities? (total should add up to 100%) Software development and/or programming and/or testing _____ % Implementation and/or consulting and/or training services _____ % Support and/or maintenance services _____ % Sales and/or marketing _____ % Research and/or development (R&D) _____ % Other (e.g. procurement, administration) _____ % Which part of your firms turnover is based on new or significantly improved goods or services that in the last three years were ... ... introduced onto your market before your competitors did (it may have already been available in other markets)? __________ % ... new to your firm, but that were already available from competitors in your market? _________ % Does your firm make use of the WBSO−act? WBSO provides a fiscal facility for companies, knowledge centers and self−employed persons who perform R&D work. In this context, R&D means technical/scientific research, the development of technically new physical products or physical production processes (or parts thereof) and the development of technologically new software (or parts thereof). Under the Act, a contribution is paid towards the wage costs of employees directly involved in R&D. ( ) Yes ( ) No ( ) Do not know What is the total turnover of your firm (in The Netherlands) in 2009? If possible, please answer this question only for the Dutch turnover. If you are not able to provide the turnover for The Netherlands alone, please give the overall (consolidated) figures. ____________ euro Which share of your firm‟s turnover in 2009 is spent on ... 0%<5% 5%<10% 10%<20% 20%<30% 30%<40% 40%<50% 50%<60% 60%<70% 70%<80% 80%<90% 90%-100% staff? ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) hiring external staff? ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) other costs (equipment, rent, energy, et cetera)? ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( )
  • 46. Dialogic innovatie ● interactie46 Do your answers on the previous two questions on turnover and costs also refer to subsidiaries outside The Netherlands? ( ) Yes ( ) No Which part of your firm‟s turnover in 2009 originates from The Netherlands? ( ) 0% < 5% ( ) 5% < 10% ( ) 10% < 20% ( ) 20% < 30% ( ) 30% < 40% ( ) 40% < 50% ( ) 50% < 60% ( ) 60% < 70% ( ) 70% < 80% ( ) 80% < 90% ( ) 90% - 100% On which of the following levels do you serve in your company? Choose the best option. ( ) Board of directors ( ) Management team ( ) Other upper management ( ) Middle management ( ) Other If you are interested in receiving a summary of the results of this study, please provide an e−mail address. The entered e−mail address will only be used for this study. E-mail address: ________________________________________________________________
  • 47. Dialogic innovatie ● interactie 47 Bijlage II | Letter to respondents <handelsnaam> <contactpersoon> <adres> <postcode en plaats> Gebruikersnaam: <gebruikersnaam> Wachtwoord: <wachtwoord> Woerden, 23 april 2010 Zeventien vragen over software in Nederland <aanhef>, Software vormt het centrale zenuwstelsel van de moderne samenleving. Het zorgt voor hoogwaardi- ge en duurzame werkgelegenheid. De ontwikkeling van softwareproducten en de dienstverlening rond software maken ons land kennisintensiever en economisch sterker. Het succesvol doorontwikke- len van onze software-industrie is medebepalend voor de kansen van Nederland als kenniseconomie en motor voor nieuwe producten, diensten en werkgelegenheid, ook in andere economische sectoren. U bent als bedrijf of ZZP‟er zelf natuurlijk allang doordrongen van het belang van de software- industrie voor de Nederlandse economie. Elders wordt dat belang echter vaak sterk onderschat. ICT~Office, de brancheorganisatie voor ICT-bedrijven in Nederland, heeft daarom het onderzoeksbu- reau Dialogic gevraagd om de economische bijdrage van de software-industrie in Nederland te meten. Het ministerie van Economische Zaken onderschrijft het belang van dit onderzoek. De resultaten worden ook gebruikt om de gegevens van het CBS aan te vullen en te verbeteren. We willen graag uw medewerking als deskundige bij de uitvoering van dit belangrijke onderzoek. Onderaan deze brief vindt u een overzicht van de onderwerpen van de vragenlijst. Gemiddeld zal het minder dan 10 minuten kosten om de lijst in te vullen. In de rechterbovenhoek van deze brief staan een gebruikersnaam en wachtwoord waarmee u toegang krijgt tot de online vragenlijst. Deze vindt u op www.dialogic.nl/softwareonderzoek en kunt u invullen tot en met 14 mei 2010. Bij het verwerken van de data hanteren we de strenge privacynormen van het CBS. Al uw gegevens worden onder strikte geheimhouding verwerkt en geanalyseerd tot algemene economische statistieken. Uit de informatie die wij uiteindelijk publiceren, zijn nooit herkenbare gegevens over een afzonderlijk bedrijf af te leiden. Dialogic is een strikt onafhankelijk onderzoeksbureau. De kwaliteit van het onderzoek wordt verder geborgd door een begeleidingscommissie. Hierin zitten vertegenwoordigers van zowel „open source‟ als „closed source‟ bedrijven, evenals de Universiteit Utrecht. The questionnaire on the Dutch software industry is also available in English at www.dialogic.nl/softwareonderzoek.