software ag capital market day 2018

SOFTWARE AGCAPITAL MARKET DAY 2018

© 2018 Software AG. All rights reserved.

2 |

SAFE HARBOR


This presentation includes forward-looking statements based on the beliefs of Software AG management.

Such statements reflect current views of Software AG with respect to future events and results and are

subject to risks and uncertainties. Actual results may vary materially from those projected here, due to factors

including changes in general economic and business conditions, changes in currency exchange, the

introduction of competing products, lack of market acceptance of new products, services or technologies and

changes in business strategy. Software AG does not intend or assume any obligation to update these

forward-looking statements.

This presentation constitutes neither an offer nor recommendation to subscribe or buy in any other way

securities of Software AG or any of the companies that are members of the Group at present or in the future,

nor does it form part of such an offer and it should not be understood as such. This presentation does not

constitute an offer of sale of securities in the United States of America. Securities may not be offered or sold

in the United States of America without registration or exemption from registration in accordance with the U.S.

Securities‘ Act of 1933 in its currently valid form.

STRATEGY TO GROW MARKET SHARE:BUILDING AN IOT PARTNER ECO-SYSTEM

Karl-Heinz Streibich

CEO

Capital Market Day 2018

March 12, 2018


4 |

DISRUPTION: DIGITAL CHALLENGERS DRAW A WEDGE BETWEEN COMPANIES AND THEIR CUSTOMERS


DIGITAL DISRUPTION

Any industry...RetailHotels Banks Insurance

DIGITAL DISRUPTION

5 |

DIGITAL DILEMMA FOR ESTABLISHED COMPANIES:IN EVERY INDUSTRY


» Digital

business

models are

written in

software

» Challenge:

From IT

Supplier

relations to

Digital Eco-

Systems

» Think Digital

Architecture

First…

Middleware

Centricity

Current challenges

» Differentia-

ting use-

cases:

Artificial

Intelligence

(AI) and

Blockchain

Next big thing

6 |

Systems of Records

Classic ITBusiness

Logic

Enterprise

Applications

Digital innovations Data Logic &

AlgorithmInternet of Things (IoT) Platform

Integration centric

micro services architecture Integration

Logic

Integration &

Enterprise Process Automation

MASTERING THE CHALLENGE OF DIGITAL TRANSFORMATION:FROM CLASSIC IT APPLICATIONS TO NEW DIGITAL PLATFORMS

… …



Note: RoW = rest of world; Source: IDC: Gartner: ABI; CMI; BCG IoT market model

10 |

WIN MARKET SHARE WITH IOT ECO-SYSTEM PARTNERSHIPSKEY SUCCESS FACTORS


Industry Eco-Systems

Leading technology

Reliable, scalable, functional

Collaboration

Sharing synergies

Awareness

Known for success

Neutrality

No lock-in

Vertical industry solutions

Standards

Low barrier to entry

Use-based pricing


2007 2008 2009 2010 2011 2012 2013 2016 2017

€1.2B INVESTMENTS so far…

DEVICE CONNECTIVITY & MANAGEMENT

ENTERPRISE & CLOUD INTEGRATION

REAL-TIME ANALYTICS & VISUALIZATION

WORKFLOW AUTOMATION

Cumulocity IoT

SOLUTION ACCELERATORS

SOFTWARE AG’S SUCCESS IN THE DIGITAL WORLDLEADING TECHNOLOGY BUILT ON M&A INVESTMENTS


The Forrester Wave™:

HYBRID INTEGRATION

(SAG WebMethods)


IN MEMORY DATA GRID

(SAG Terracotta)

IoT Solutions

(SAG Cumulocity*)


STREAMING ANALYTICS

(SAG Apama)

*Cumulocity is the IoT solution portfolio of

Software AG encompassing Hybrid

Integration, In-Memory Computing and

Streaming Analytics

MARKET AWARENESS OF LEADERSHIP IS BUILDING UPBEST IOT TECHNOLOGY PARTNER IN THE MARKET

13 |

VERTICAL INDUSTRY SOLUTIONS AND STANDARDS


MACHINERY &

TOOLING

Machine

Learning

Connected

Manufacturing

Predicitive

Maintenance

PRODUCTION

Individualized

production

Digital Twins

RETAIL

Consumer

centric supply

chains

TELCOS

Platform-as-a-

Service

Device

connectivity

(Cities and

citizens)

MOBILITYMOBILITY

Connected cars

Autonomous

driving

Mobility service

Electric cars

http://www.google.de/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjaurW1vsnSAhXGWxQKHW5bBesQjRwIBw&url=http://www.amrismartsourcing.com/pharma-news-2/this-week-in-pharma-45/&bvm=bv.149093890,d.d24&psig=AFQjCNHFsVRktIh9dpcByqDRLdNW__SOBg&ust=1489151113717688

http://www.google.de/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjaurW1vsnSAhXGWxQKHW5bBesQjRwIBw&url=http://www.amrismartsourcing.com/pharma-news-2/this-week-in-pharma-45/&bvm=bv.149093890,d.d24&psig=AFQjCNHFsVRktIh9dpcByqDRLdNW__SOBg&ust=1489151113717688

https://www.google.de/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwj8m8jUvsnSAhVEVRQKHYT2DhQQjRwIBw&url=https://www.fcagroup.com/en-US/sustainability/we_care_about_environment/responsible_production/Pages/default.aspx&bvm=bv.149093890,d.d24&psig=AFQjCNEqmG6oYzY7pyIxpVz9RUSE3vjwaQ&ust=1489151181790942

https://www.google.de/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwj8m8jUvsnSAhVEVRQKHYT2DhQQjRwIBw&url=https://www.fcagroup.com/en-US/sustainability/we_care_about_environment/responsible_production/Pages/default.aspx&bvm=bv.149093890,d.d24&psig=AFQjCNEqmG6oYzY7pyIxpVz9RUSE3vjwaQ&ust=1489151181790942

https://www.google.de/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwj0xO2avsnSAhUH7BQKHQHRDvEQjRwIBw&url=https://www.tieto.com/industries/retail-and-wholesale/tieto-retail-experience-the-shopping-of-the-future&psig=AFQjCNFRpB4qBCbVSTlaNBHP0JmBgy_b4w&ust=1489151044415420

https://www.google.de/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwj0xO2avsnSAhUH7BQKHQHRDvEQjRwIBw&url=https://www.tieto.com/industries/retail-and-wholesale/tieto-retail-experience-the-shopping-of-the-future&psig=AFQjCNFRpB4qBCbVSTlaNBHP0JmBgy_b4w&ust=1489151044415420

http://www.google.de/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjlsc6Bv8nSAhVJlxQKHcSNBu0QjRwIBw&url=http://infowebsystems.com/insurance/&bvm=bv.149093890,d.d24&psig=AFQjCNFSQzA1Zq5Kpjxj21JM3qmTHh0rEQ&ust=1489151232954630

http://www.google.de/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjlsc6Bv8nSAhVJlxQKHcSNBu0QjRwIBw&url=http://infowebsystems.com/insurance/&bvm=bv.149093890,d.d24&psig=AFQjCNFSQzA1Zq5Kpjxj21JM3qmTHh0rEQ&ust=1489151232954630

https://www.google.de/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwi0uZKfv8nSAhWEtRQKHff7DlkQjRwIBw&url=https://convent.de/de/archiv/managed-events/connected-mobility-2016/&bvm=bv.149093890,d.d24&psig=AFQjCNHFfwWWU0q2N7dFUP_d7bhvO9B6Jw&ust=1489151351127705

https://www.google.de/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwi0uZKfv8nSAhWEtRQKHff7DlkQjRwIBw&url=https://convent.de/de/archiv/managed-events/connected-mobility-2016/&bvm=bv.149093890,d.d24&psig=AFQjCNHFfwWWU0q2N7dFUP_d7bhvO9B6Jw&ust=1489151351127705

14 |

ADAMOS.COM© 2018 Software AG. All rights reserved.

15 |

IT AND OT: HEAVY IOT INVESTMENT BUT NO DOMINATION(YET!)


IT Vendors OT Vendors


IOT MARKET AWARENESS FOR SOFTWARE AG

Computerwoche

Handelsblatt

IT & Production

Big Data Insider

Stuttgarter NachrichtenHeise Online

Golem

European Business Review

Silicion.de

IS BUILDING UP

17 |

DIGITAL PRIORITIES FOR EVERY INDUSTRY


4. Implement open IoT framework for new digital

business solutions

3. Extent IT architecture: From app-silos to middleware

centric architectures

1. CEOs and Business Divisions have to think

„Software First“, in every industry

2. Make your products smart for new data centric

digital business models

5. Rebuild your IT know-how: Beyond admin IT and

embedded product software….business IT

Cumulocity Edge Analytics…Portfolio

We are SOFTWARE!

Software AG contribution

WebMethods Middelware…Portfolio

Software AG’s leading Cumulocity IoT

framework…Portfolio

Software AG’s Global Consulting

Services…Portfolio

18 |

…AND THE NEXT BIG THINGS!


Artificial

Intelligence

based

applications

Blockchain

based

intercompany

processes

Innovative Public

Sector Platforms

(e.g. Darmstadt

Digital City)

CAPITAL MARKET DAY 2018

Q&A



TECHNOLOGY PLATFORMSTRATEGY

Dr. Wolfram JostChief Technology Officer


March 12, 2018


Gartner, October 2017

WHY ARE WE MORE RELEVANT THEN EVER?

“A Digital Business Technology Platform

Is Fundamental To Scaling

Digital Business”

22 |

YOUR DIGITAL BUSINESS PLATFORMYOUR DIGITAL FUTURE WITHOUT COMPROMISE

+HYBRID

CLOUD

ONPREMISE

ANALYTICS & DECISIONSStreaming Analytics & Artificial IntelligenceIn-Memory Data

PROCESS & APPLICATIONS Dynamic Process Automation

Low-Code Applications

INTEGRATION & APIHybrid Integration

API Management

DEVICESDevice Connectivity

Device Management

BUSINESS & IT

TRANSFORMATION

Process Transformation &

Management

Governance, Risk &

Compliance

Portfolio Management

Enterprise Architecture

Management

INT

ER

NE

T O

F T

HIN

GS

powered by

ARIS & ALFABET

powered by

CUMULOCITY

powered by

WEBMETHODS

powered by

TERRACOTTA & APAMA

powered by

WEBMETHODS


Reduced Complexity

Economies of Scale

Continuous User Experience

MegaPaas

Integrated Set of singlefunction PaaS

23 |

PLATFORM VS PACKAGED APPLICATION


INNOVATION OWNERSHIP

Packaged Applications Digital Platform Applications

• Process logic

• Task logic

• Decision logic

• Analytics logic

• Event logic

• Integration logic

Inn

ova

tion

Built-in, interwoven types of logic:

Process Engine

Task Engine

Scoring Engine

Rules Engine Integration Engine

Analytics Engine

Ag

no

stic

, sta

ble

Platform Container

Device Engine

Event Engine

UI Engine

Business Logic

Application User Interface

Decision logicProcess logic

Task logic Analytics logic

Event logic

Integration logic

24 |

DIGITAL BUSINESS PLATFORM


PaaS PERSPECTIVE

PaaS

…

Data Sources

API portal

& gateway

Device

management

Application

integration

Cloud & Big Data

integration

Process

automation

Task & work

management

Low code app

development

Dashboards &

Visual analytics

In-Memory

store & compute

Alerts &

actions

Predictive

analytics

Streaming

analytics

Device

connectivity

Process design

& analysis

Portfolio

management

Existing IT

Resources• Stable

• Mature

• Complex

• Expensive

• Standardized

New Digital

Applications• Agile

• Flexible

• Innovative

• Differentiating

• Outcome oriented

Digital Business Applications

Customer

Experience

Management

Predictive

Asset

Maintenance

Digital

Enterprise

Twin

Audit & Risk

Management

Supply

Chain

Efficiency

Digital

Workplace

ERP

25 |

MEGAPaaS PROVIDERS


PREVENT UNNECESSARY LOCK-INS

Software AG

No Lock-in

SaaS SaaS SaaS

PaaS

IaaS IaaS IaaS

Oracle/Microsoft

Full Lock-in

SaaS

PaaS

IaaS

Amazon/Google

IaaS Lock-in

No Multi-Cloud

PaaS

IaaS

SAP/Salesforce

SaaS Lock-in

SaaS

PaaS

SaaS focus Independent

26 |

HOW TO DIFFERENTIATE FROM SINGLEPaaS PROVIDERS


SOFTWARE AG AS MEGAPaaS VENDOR

Software AGMule, Appian, PTC, Boomi, …

Singlefunction Paas

bpmPaaS

Multifunction Paas

iPaaS

apiPaaS

MegaPaas

iPaaS apiPaaS

aPaaS bpmPaaS

IoTPaaS bpoPaaS

eamPaaSevent processing

PaaS

Tactical Strategic (long term relationship)

27 |

SOFTWARE AG


PaaS MARKET RELEVANCE

Oracle

SAP

IBM

Microsoft

…

Giants

Appian

Mule

PTC

Dell Boomi

…

Singlefunction Paas Independent MegaPaas

Full Lock-in Only tactical

High Complexity

Strategic

“modern mainframes” Independent (SaaS, IaaS)


CLOUD STRATEGY

29 |

SOFTWARE AG CLOUD


CURRENT & FUTURE STATE

ARIS

Cloud

Alfabet

Cloud

Integration

Cloud

IoT

Cloud

CUMULOCITY

Agile Apps

Cloud

API

Cloud

Aligned positioning

Unified user experience

Cross-product use-cases

Unified hosting platforms and operations

Hybrid/migration use-cases

Software AG Cloud

B2B

Cloud

ARIS

Cloud

Alfabet

Cloud

Integration

Cloud

IoT

Cloud

CUMULOCITY

Agile Apps

Cloud

API

Cloud

B2B

Cloud

2013 2013 2014

2013 2017

2018

2018

2017

30 |

FUTURE STATE


SOFTWARE AG CLOUD

First name

Last name

Email

Company

Country

Start free trial

Integration

Powered by

webMethods

Applications

> Integration

Configure

+ Add applications

Accounts

Users

Roles

Payment

API Gateway

Powered by

webMethods

IoT Cockpit

Powered by

Cumulocity

IoT Devices

Powered by

Cumulocity

LPWAN

ConnectorPowered by

SigFox

Industrial

IoT PackagePowered by

Adamos

Platform apps Software AG solutions Partner solutions

Explore, discover and

add additional

capabilities from

Software AG and

partners

Low-touch entry

from microsites

LAND EXPAND


CUMULOCITY IOT

32 |


PROCESS & APPLICATIONProcess

automation

INTEGRATION & API

ANALYTICS & DECISIONS

DEVICES

CUMULOCITY IOT KEY CAPABILITIES


BASED ON FUTUR PROOF TECHNOLOGY

BUSINESS & IT

TRANSFORMATION

PROCESS &

APPLICATIONS

ANALYTICS &

DECISIONS

INTEGRATION &

API

DEVICES

INT

ER

NE

T O

F T

HIN

GS

Process

analytics

Business strategy

& planning

Design &

analysis

Risk & compliance

management

Portfolio

management

Enterprise

architecture

Customer

journeys

B2B & managed

file transfer

API & service

catalog

API

gateway

API

portal

Master data

management

Edge

services

Device

management

Device

agents

Device

connectivity

Application

integrationMessaging

Cloud & Big Data

integration

Mainframe &

data integration

Process

automation

Case

management

Mobile

enablement

Task & work

management

Rules

management

Content

management

Dynamic

orchestration

Robotic process

automation

Low code app

development

Visual

analytics

In-Memory

store & compute

Machine

learning

Event routing

& persistence

Alerts &

actions

Distributed

caching

Predictive

analytics

Streaming

analytics

Edge

analytics

IoT

all devices, all networks, all verticals, all use cases

+HYBRID

CLOUD

ONPREMISE

EDGE

DEPLOYMENT

MODELS

…

Device

connectivity

Messaging

Edge

services

Device

agents

Cloud & Big Data

integration

Rules

management

Event routing

& persistence

Machine

learning

Edge

analytics

API

portal

Mobile

enablement

Streaming

analytics

Low code app

development

Device

management

API & service

catalog

Alerts &

actions

Distributed

caching

Application

integration

In-Memory

store & compute

Visual

analytics

API

gateway

Predictive

analytics

Process

automation

Device

connectivity

Messaging

Device

agents

Rules

management

Event routing

& persistence

Machine

learning

Edge

analytics

Mobile

enablement

Streaming

analytics

API & service

catalog

Distributed

caching

Application

integration

In-Memory

store & compute

Visual

analytics

API

gateway

Predictive

analytics

Cloud & Big Data

integration

Alerts &

actions

Edge

services

Device

management

API

portal

Low code app

development

Digital Business Platform


KEY PLATFORM CAPABILITIES

all devices, all networks, all verticals, all use cases

…

DEVICES

INTEGRATION & API

ANALYTICS & DECISIONS

PROCESS & APPLICATIONS


Developer SDK

& Open APIs

Metering

& Billing

Device

Agents

Edge

Services

Device

Connectivity

Device

Management

Smart Rules

Data StoragePredictive

Analytics

Edge

Analytics

Streaming

Analytics

Visual

Analytics

Industrial IoT

Vehicle

Tracking

Condition

Monitoring

Predictive

Maintenance

DEPLOYMENT

MODELS

+HYBRID

CLOUD

EDGE

ON-PREMISES

TRUE

MULTI-TENANCY

SECURITY

SCALABILITY &

HIGH AVAILABILITY

API

Management

Big Data

IntegrationApplication

Integration

Cloud

Integration

Workflow

Automation

Case & Task

Management

High-Control

App Dev

App

HostingLow-Code App

Development

Rules

Management

Messaging

Master data

management

34 |

REAL TIME ANALYTICS


APPLIES CONCEPT OF LAMBDA ARCHITECTURE

Connecte

d A

pplic

ations &

Thin

gs

Real T

ime A

pplic

atio

ns

Speed Layer

Streaming AnalyticsPredictive

Model ExecutionIn-Memory

Store

Batch Layer

Stored Data Batch Analytics Machine Learning

Context

Enrichment

Analytical

storageContinuous

Learning

Se

rvin

g L

aye

r

Real-time

Insight

Hindsight

ForesightAlerts,

Decisions,

Actions

Universal

Messaging

Connect

&

Integrate

Device, Cloud,

Enterprise IT,

Production IT

ERP

Cust

CRM

35 |

DISTRIBUTED IIOT ARCHITECTURE


ANALYTICS AT ANY LEVEL

IoT Device

(Agents)

Thin Edge

(On-Premises

Gateway)

Thick Edge

(On-Premises

Server)

Private Cloud(Dedicated)

Public Cloud(Shared)

36 |

USE OF MACHINE LEARNING

… operationalizes these models to

enable organizations to respond

intelligently.


… uses machine learning to allow

organizations build models that

represent patterns of behavior.

Predictive Analytics Streaming Analytics

37 |

SOFTWARE AG RANKED AS A LEADERTHE FORRESTER WAVE™: STREAMING ANALYTICS, Q3 2017

Source: The Forrester Wave™: Streaming Analytics, Q3 2017, Forrester Research,

Inc., September 7, 2017

The Forrester Wave is copyrighted by Forrester Research, Inc. Forrester and Forrester Wave are trademarks of

Forrester Research, Inc. The Forrester Wave is a graphical representation of Forrester's call on a market and is

plotted using a detailed spreadsheet with exposed scores, weightings, and comments. Forrester does not

endorse any vendor, product, or service depicted in the Forrester Wave. Information is based on best available

resources. Opinions reflect judgment at the time and are subject to change.

“Software AG’s Apama continues to be a broadly

applicable and perennially capable streaming

analytics platform.”

“With its recent acquisition of Cumulocity, Apama

deeply extends its reach deeper into industrial IoT

use cases by providing device management,

digital twin, and other connectivity-oriented

services.”

“There is no stopping Apama to become the real-

time engine for digital transformation that extends

all the way from the factory floor to direct

customer interactions.”


38 |

ADAMOS.COM© 2018 Software AG. All rights reserved.

39 |

ADAMOS.COM 39

40 |

SOFTWARE AG @ SIEMENS MINDSPHERE


HEADER OF RELATED PRESS RELEASE FROM NOVEMBER 23, 2017

SIEMENS STRENGTHENS ITS IOT OPERATING SYSTEM MINDSPHERE THROUGH

TECHNOLOGY PARTNERSHIP WITH SOFTWARE AG

Software AG (Frankfurt TecDAX: SOW) and Siemens AG today announced a partnership to strengthen the presence

of the cloud-based open Internet of Things (IoT) operating system MindSphere across industries. MindSphere

supports industrial companies in their digital transformation and offers a development platform to a broad customer

base where companies can integrate their own applications and services to promote IoT innovations. Software AG

brings the highly scalable components of its Digital Business Platform to MindSphere, which help customers to

flexibly manage networks of millions of end devices.


ENTERPRISE DIGITAL TWIN

44 |

ENTERPRISE

PREPARES YOU FOR THE MARKET BASED DIGITAL TRANSFORMATION

• Gain greater insight into how assets are contributing to business operations

• Simulate changes and evaluate the effects

• Predict, inform, and warn against incurring unnecessary costs or unwisely squandering

resources

ENTERPRISE DIGITAL TWIN


45 |

DESIGN YOUR “DIGITAL ORGANIZATIONAL TWIN”


WITH ARIS

OR

GA

NIS

AT

ION

PR

OD

UC

TS

CU

ST

OM

ER

JO

UR

NE

YS

PR

OC

ES

SE

SR

ISK

SIT

SY

ST

EM

S

ENTERPRISE

REALITY

ENTERPRISE

REALITY


HYBRID INTEGRATION & API

47 |

HYBRID INTEGRATION


DRIVING “PERVASIVE” CONNECTIVITY

Hybrid

Integration

“Things”

Mobile Apps

Social NetworksOn-Premises

Applications and Data Sources

Business

Process

Networks

Business

Partners

Subsidiaries

SaaS/Cloud

Services

EDW Mart

MDM

48 |

HYBRID INTEGRATION HYBRID INTEGRATION

Citizen Integrators

• Needs maximum agility

• Needs option to expand to enterprise

class

Citizen Integrator

Power users

• Bring your own code (Lift and Shift)

• Packaged as microservices

IT Specialist

HYBRID INTEGRATIONBI-MODAL CAPABILITIES

Mode 1Mode 2

Ad-hoc Developers

• Shadow IT (LOB IT)

• Agile execution of LOB projects

Ad-hoc Developer


49 |

INTRODUCING WEBMETHODS API CLOUD

© 2018 Software AG. All rights reserved

50 |

WEBMETHODS API MANAGEMENT PLATFORM

API Catalog

• Define your APIs

• Manage API lifecycle

• API governance

• Impact analysis

API Portal

• Promote APIs

• Document usage

• Enable registration

• Community and

collaboration

• Testing

API Consumption

• Consume SaaS / PaaS APIs

• Connectors to SaaS apps

• Runtime governance policies

• API consumption governance

API Gateway

• Protect your APIs from

unregistered usage

• Protect your backend

systems from malicious

attacks

• Monitor and track usage

for monetization and

product improvement

© 2018 Software AG. All rights reserved

51 |

SOFTWARE AG RANKED AS A LEADER


Source: The Forrester Wave™ Hybrid Integration For Enterprises, Q4 2016,

Forrester Research, Inc., November 18, 2016

The Forrester Wave is copyrighted by Forrester Research, Inc. Forrester and Forrester Wave are trademarks of

Forrester Research, Inc. The Forrester Wave is a graphical representation of Forrester's call on a market and is

plotted using a detailed spreadsheet with exposed scores, weightings, and comments. Forrester does not

endorse any vendor, product, or service depicted in the Forrester Wave. Information is based on best available

resources. Opinions reflect judgment at the time and are subject to change.

“Software AG's DBP Integration Platform provides

typical integration capabilities, including

orchestration, transformation, messaging,

advanced routing, and wizard-based tooling. Its

platform supports multiple integration patterns,

including data integration and long-running

transactions.”

THE FORRESTER WAVE™: HYBRID INTEGRATION FOR ENTERPRISES, Q4 2016

Robotic Process Automation&

Application Development

53 |

DYNAMIC APPSINTEGRATED RPA, PROCESS AND CASE MANAGEMENT


WEB SHOPDATABASESSAP CRM

Adapter Adapter Adapter Adapter

Service ServiceService Service

Start

Task/Case

Task/Case End

Human workforceVirtual workforce Hybrid workforce

WORK AUTOMATION AND

COORDINATION

DYNAMIC PROCESS

ORCHESTRATION

PREDICTIVE, CLOSED-LOOP

ANALYTICS

MARKET LEADING

INTEGRATION CAPABILITIES

LOW-CODE DEVELOPMENT

AND PROGRAMMING

BACKENDS

INT

EG

RA

TIO

NO

RC

HE

ST

RA

TIO

NW

OR

K

New


CONTINUOUS USER EXPERIENCE

– DBP DELITE

55 |

APPLYING DELITE LEVEL ONE10.1 RELEASE



Q&A



Dr. Stefan SiggChief R&D Officer


March 12, 2018

AI STRATEGYENABELING AN INTELLIGENT ENTERPRISE


MISSION STATEMENT

BY INTEGRATING AI CAPABILITIES, WE

WILL ENABLE OUR CUSTOMERS TO BUILD

NEW TYPES OF DATA-DRIVEN

APPLICATIONS THAT DRIVE NEW

BUSINESS MODELS.

59 |

THE TYPICAL AI CYCLE


FROM MODEL TO PREDICTION

DATA SCIENTIST USING

PYTHON, R, SPSS, OR OTHER

MODEL BUILDING TOOLS

CENTRAL

DEPLOYMENT OF

ALGORITHM

EXECUTION

60 |

TARGET SCENARIO


AUTOMATICALLY GENERATED

MODEL, USING INHERENT

SEMANTICS – NO DATA

SCIENTIST NEEDED

MAKE AI SCALABLE

• Accelerate and industrialize AI

• Move from one-off projects toubiquitous deployments

• Get AI in the hands ofbusiness users

• Use-case driven development

61 |

FROM ARTIFICIAL INTELLIGENCE TO APPLIED INTELLIGENCE


AI = APPLIED INTELLIGENCE

B2B, BPM, Tasks, …

ProcessMining

IoT

62 |

MAKE AI TANGIBLE


ENABLE DATA-DRIVEN APPLICATIONS

Cumulocity IoT Cloud

• Predictive Maintenance

• AI-based Quality Control

• AI-based Alerting

ARIS Process Mining

• Outlier Analysis

• Process Optimization Prediction

• Optimization recommendations

Adabas & Natural

• Zementis for IBM z Systems

• Adds AI to mainframe applications

• Scalable transaction & batch processing

webMethods

• Automated Claims Management

• Intelligent purchasing decisions

• Next possible actions

Apama Streaming Analytics

• Intelligent rules

• Ad-hoc predictions

• Real-time clustering

Alfabet

• Project risk management

• Optimization recommendations

• Investment warning system


Q&A



LUNCH BREAK



GO TO MARKET STRATEGY

NEXT STEPS

Eric Duffaut Jari SalminenChief Customer Officer VP Global IoT Sales


March 12, 2018


Optimize, Transform, Modernize

DBP ProductivitySales Efficiency

INDUSTRYCentric Specialization+142% # Deals / +232% Use Cases

DBP RevenueProfitable Growth

A&N StabilizationPredictability

+50% vs. 14

All time high

Improved Operational Excellence

A&N 2050 program

Strengthened ability to execute GTM

…IN OUR 3 YEARS GTM TRANSFORMATION JOURNEY…WE MOVED THE NEEDLE…

Q4 17 best Quarter ever


+23% Average Deal Size

+49% Deals +1M€

BRAND AWARENESS

Increased Deal Size

Gained Relevance through

…IN OUR 3 YEARS GTM TRANSFORMATION JOURNEY……WE MOVED THE NEEDLE…

Social Media followers up 191%

Website engagement up 300%

Relevance & Scale

Ecosystem Expansion

Accelerated

Doubled # of partners/ Revenue Sourced by

Partners 28% (2017)

Cloud BusinessEstablished a fast growing

+227% Order Entry / +361% Revenue


130%+ over 3 years

STOCK

Development

Sustained

…IN OUR 3 YEARS GTM TRANSFORMATION JOURNEY…TO MAKE SOFTWARE AG A DESTINATION

Customer Satisfaction

Rating

All time high

NPS from -24 to 18.9


ACCELERATE

SUCCESS…


13%

• Accelerate growth in

Emerging markets

• Expand share of wallet in

Installed Base

• Simplified Pricing Model:

DBP Bundles and

Subscription Based Pricing.

• Market Play & Industry

specialization: CoEs

SUSTAIN A&N REVENUE

A&N 2050: Legacy Digitization

DBP GROWTH

Effective & Efficient GTM Scalable

• Building a road-2-future for

every customer’s mission-

critical A&N application to

Optimize, Modernize &

Transform.

• Continuous innovation in

A&N technologies.

• Legacy Digitization

• Establish IOT GTM CoE:

strong GTM execution in

key selected markets to

quickly gain market share.

100M€ by end 2020

2018 PRIORITIESRELEVANT - SCALABLE - CUSTOMER CENTRIC - PROFITABLE GROWTH

IOT & CLOUD : ACCELERATED

GROWTH

71 |

IOT MARKET VIEW


72 |

LARGE ADDRESSABLE MARKET WITH POCKETS OF VERY FAST GROWTH


73 |

MANUFACTURING, LOGISTICS AND UTILITIES LEADING THE WAY


BUT SIGNIFICANT GROWTH ALSO IN B2C, RETAIL AND OTHER

74 |

WHERE DO WE SEE REAL MARKET DEMAND – NOW


AND WHAT ARE OUR CUSTOMERS FOCUSING ON

Smart Equipment Manufacturers

• Air/Gas compression equipment

• Industrial tools, consumer hardware

• Wind turbines

• Pumps/pump solutions

• Metal forming equipment

• Weather monitoring sensors

• Plastic extruders

• Textile machinery

• Healthcare machines

• …

Industrial IoT Solution Providers

Telecommunications

Utilities

Cities/Municipalities

Healthcare

Aviation

Retail

Oil & Gas

Insurance

Beverage

Construction

Facility/Property

…

75 |

A TYPICAL IOT JOURNEY FOR AN ENTERPRISE CUSTOMER


FROM SIMPLE USE CASES TO AUTOMATION, PREDICTION AND INNOVATION

•

•

•

•

•

•

•

•

76 |

•

•

•

BUYING IOT SOLUTIONS IN LARGE ENTERPRISES


CENTRAL ORGANISATIONS ARE GETTING MORE INVOLVED

•

•

•

•

•

•

•

•

•

77 |

SINGLE IOT PLATFORM OFFERING


ADDRESSING THREE KEY MARKET OPPORTUNITIES

•

•

•

•


Benefits

• Reduced costs

• Increased customer loyalty

• Increased after sales revenues

Reactive

Maintenance

costs

Limited

up-sell


Capture

operational info

+ provide to the

support org

Minimize

failures

Benefits

• Cost effective solution

• Time-to-value

• White-labelling


Benefits

• Creating a new B2C service

offering

• Making the bike more than the

bike

• Creating a relationship with

the consumer


Out-of-stock

situations

Reacting to

failures

Benefits

• Reduced costs

• Increased customer loyalty

• Increased revenue

Operational

costs

82 |

IOT GTM EXECUTION PLAN


83 |

© 2017 Software AG. All rights reserved. For internal use only

Apr May Jun Aug Sep Oct Nov

CeBIT

Germany

Jul DecJan

GITEX

Dubai

IoT Mobile World

Congress

Barcelona

MarFeb

IoT World

Santa Clara

IOT World Forum

London

Asia IOT Business Platform

Various cities ASEAN

Bosch Connected

World

Berlin

IoT Solutions World Congress

Barcelona

IoT Tech Expo

Santa Clara

IOT Forum

Sydney

IOT World Santa Clara

– Emerald Sponsor

– 2 x speaker session

• Analyst Engagement

– Machnation - 3 Scorecards, 2 white papers, Online TCO

calculator

– Gartner IIOT Quadrant

– Forester webinar

MAJOR MARKETING FOCUS: 2,9M€ INVESTMENT IN IOT


84 |

IOT FIELD CENTER OF EXPERTISE (COE)


•

•

•

•

On-

Prem, Cloud & Edge

•

•

•

•

85 |

MULTI-LEVEL APPROACH


FOR DIFFERENT CUSTOMER NEEDS & PHASES

Growing Maturity Level over Time

Fle

xib

ilit

y &

So

ph

isti

ca

tio

n

IoT SaaS

Fast Entry Low Touch GTM

• Web, self-service, supported by

Inside Sales

• Pre-defined solution accelerators

IoT PaaS

“Land & Expand” Specialized

IoT GTM resources

• Fast go-to-market

• Focus on business users

IoT Framework

Scale out C Level Support

• “Expand” footprint at existing

customers

• Strategic Partnerships

IoT Suite

86 |

AGILE AND FAST CUSTOMER ENGAGEMENT


FROM PROSPECT TO REPEAT CUSTOMER

www

traffic

Free trial POC LAND

# trials # POCs

€ of POCs

EXPAND

IOT SALES SPECIALIST

INSIDE SALES CUSTOMER SUCCESS MGR

# deals

Revenue committed

Revenue forecasted

Retention/renewal rate

Incremental revenue

Qualified

lead

# leads

€ leads

Other

Fast and good deal

qualification is critical

Our current win rate with

qualified leads is 50%+

Our current win rate from

POC is 80%+

Qualification checklist

POC offer template

Key Metrics

Tools

SAG

sales

roles

Demo kit

Reference stories

Teasers, whitepapers

Transparent, simple pricing

Contract templateRoadmap webinars

Use case webinars

# leads

87 |

SOFTWARE AG’ IOT PARTNER ECOSYSTEM


2018 FOCUS

Awareness & Mindshare Delivery & Devt. Extension New scalable Routes to

Market

Create stronger C-Level

Awareness

Broaden Cumulocity IOT

Development Capabilities

and Delivery Capacity

Drive Cumulocity IOT market

adoption by addressing partner

owned customer base

(OEM, Market Places, …)

Analysts, Strategy & Mgmt

Consulting Firms

Global and Regional

System Integrators

IoT Solutions & Services providers

SaaS & Cloud Providers

IOT Hardware & Devices

OT (Operations technology)

Providers

70 to 80% of IoT Business through Partners

88 |

EXPANDING 360O PARTNER ECOSYSTEM


Hardware (IT) Providers

E2E IoTSolution

Providers

Telco operated

Cloud

Strategy & Mgmt

Consulting

IT Consulting & System Integrators

Cloud and SaaS

Providers

SAG‘S IOT ECOSYSTEM SCOPE IS GETTING WIDER

89 |

IoT Suite

MULTIPLE GO TO MARKET MODELS


ECOSYSTEM ENABLING SCALE

End Customer

SaaS

End Customer

PaaS

IoT Platform or

Solutions provider

End Customers

SaaS

IoT Service Provider

SaaS PaaS

PaaS


Q&A



IFRS 15IMPLICATIONS

IOT / CLOUDBUSINESS LINE

Arnd ZinnhardtChief Financial Officer


March 12, 2018


IFRS 15IMPLICATIONS

93 |

INTRODUCTION


IFRS 15 REVENUE FROM CONTRACTS WITH CUSTOMERS

Reduction of inconsistencyand improve regulations

Make revenue recognitioneasier!

Development of high

quality accounting rules

Better comparability ofcapital market projects

Previous Situation from Jan 1st, 2018 Target Consequence

All previous

revenue

recognition-

related guidance

is being replacedIFRS 15

Topic 606

94 |

SOFTWARE AG‘s APPROACH TO IFRS 15


Software AG applies the “modified retrospective approach” to transition to IFRS 15.

Consequently the financial statements must be reported as follows:

Disclosures in the notes to the 2018 Financial Statements will provide

information how the 2018 revenues would have looked like under IFRS “old”.

Financial Statements 2017

2017 2016

Revenue Old Old

Expense Old Old

Profit Old Old

Assets Old Old

….. Old Old

Financial Statements 2018

2018 2017

Revenue New Old

Expense New Old

Profit New Old

Assets New Old

….. New Old

In principle: relevant only for contracts

which reach into 2018

Differences between previous IFRS

rules and IFRS 15 only relevant for a

minority of contracts.

Potential impacts are:

Revenue will never be

recognised at all (Black Hole)

Revenue or expense will be

recognised twice (Double Dip)

IFRS 15

Old = previous policies / New = IFRS 15 policies

95 |

EFFECTS RESULTING FROM CHANGES IN IFRS RULES


BLACK HOLE REVENUESOn-Premise Term Contracts

(e.g. Subscriptions)

Risk and awards

Revenue Recognition

over time (pro rata)

Transfer of control

Revenue Recognition

upfront before 2018

Previous Policies IFRS 15

Black Hole

96 |



DOUBLE DIP REVENUES (TYPE 1)

Term License early Renewal

Risk and awards

Revenue Recognition

in 2017

Transfer of control

in 2018

Revenue Recognition

in 2018 after regular termination of

previous contract


Double Dip

97 |



DOUBLE DIP REVENUES (TYPE 2)So called “Option” for future

discounts on Maintenance

No accounting for future “Option”

Basis: Contracted Term

No allocation of deal price to future

“Option”

Accounting for future “Option”

Basis: Estimated Term

Allocation of deal price including

future “Option”


Double Dip

98 |



CAPITALIZATION OF COSTS TO OBTAIN A CONTRACT

Sales commissions received by Sales

All contract types

No capitalization of sales commissions/

cost to obtain a contract

(expense as incurred)

Contract duration

< 1 year

No capitalization

(expense as

incurred)


Capitalization of direct sales commission according to IFRS 15.

For contracts under transition, the related sales commissions will be capitalized as

an adjustment to the opening balance of retained earnings (Equity). Due to amortization

of opening balance expenses will be shown in P&L again. (Double Dip of expenses)

Contract duration

> 1 year

Capitalize directly

allocatable sales

commissions


IFRS 15 HARMONIZES LICENSE REVENUE RECOGNITIONSIMPLIFIES GO TO MARKET

Leading criteria for Revenue Recognition: Transfer of control of the promised goods or services!

Changes from IFRS „old“ to IFRS 15 - No changes / Changes

Old New

Perpetual license Upfront Upfront

Term license (lease type contracts) Pro rata Upfront

Term license (sales type contracts) Upfront Upfront

Subscription (license portion) Pro rata Upfront

SaaS (Public Cloud) Pro rata Pro rata

Usage based license as used as used

Maintenance Pro rata Pro rata

Services as provided as provided

REVENUE RECOGNITION

100 |

P&L

Revenuesno material

impact(~ + 0.5%)

Expenseno material

impact(~ +/- 0%)

Balance sheet

- Other non-financial

assets

no material

impact

- Deferred revenueno material

impact

- Equity/

Retained earnings

no material

impact

REVENUE AND EARNINGS IMPACT ESTIMATION

Certain futures “Options”

especially for maintenance

and contracts with early

renewals

Double Dip

Capitalization of costs

to obtain a contract.

Amortization and new

capitalization offset each

other, net P&L impact

expected to be immaterial

Effects


DUE TO IFRS 15 IMPLEMENTATION AS OF JAN 1st, 2018

“Subscription” contracts

reaching into 2018 for

which customer received

control before 2018

Black Hole

All other changes from old

GAAP to IFRS 15 are

estimated as not material

Estimated impacts


IoT / CLOUDBUSINESS LINE

102 |

IoT / CLOUD BUSINESS LINE


REVENUES in m€

2017 Actuals

14.9 m€

2.4

3.5

9.0

SaaS

Usage Based

Maintenance

Non-Recurring

2018 Outlook

25 - 30 m€

103 |

IoT / CLOUD BUSINESS LINE


INCLUDES IN GENERAL THE FOLLOWING REVENUES

Transactions that include Cumulocity (IoT connectivity) and/or

Zementis (artificial intelligence) products1

Other products for IoT use cases2

Usage based revenue (e.g. connected devices, data volume)3

Software as a Service (SaaS) based contracts4

104 |

ARR – ANNUAL RECURRING REVENUE


COMPONENTS

Term- / Subscription License

• Rented on-premises software (Term / Subscription)

is installed on systems of the customer and customer

takes possession of the software

• Even though IFRS 15 provides upfront License

Revenue Recognition - for ARR purposes the

respective monthly / quarterly pro-rata amount will be

used due to its recurring character

Software as a Service (SaaS)

• Revenue from Software as a Service contracts

including License, Maintenance and Hosting

components net of one-time effects

Maintenance

• Maintenance from Perpetual and Term-/ Subscription

contracts recognized for the respective period net of

one-time effects

Usage Based

• Revenues from software usage (measured by number

of connected devices, exchanged data volume etc.) in

a given period of time

105 |



DEFINITION

Annualized* Total Contract Value (TCV) from active IoT / Cloud customers:

• Term-/ Subscription licenses

• Maintenance from Term-/ Subscription and Perpetual licenses

• Software as a Service (SaaS)

• Usage based licenses**

* TCV of active contracts at period end (net of one-time effects) divided by contract duration in months, times 12

** Monthly revenue recognised from usage based license contracts at period end times 12

106 |



CALCULATION EXAMPLE FOR INSTRUCTION ONLYREVENUE MRR* ARR

Quarter Month 1 Month 2 Month 3 Total

Software as a Service (SaaS) 25 7 8 10

x 12

months

120

Usage Based 9 1 3 5 60

Maintenance 57 18 19 20 240

Term- / Subscription License 72 N/A N/A 2** 24

444

* Monthly recurring revenue

** Pro forma revenue from TCV of active contracts at period end divided by contract duration in months, times 12

107 |

DIGITAL BUSINESS PLATFORM (INCLUDING IoT / CLOUD)


LAYOUT EXTERNAL REPORTING

(in €m)Q1

2018

Q1

2017Δ%

Δ%

acc

License

Maintenance

SaaS / Usage Based

Total Revenue

Cost of Sales

Sales & Marketing

R&D

Segment Result

Margin in %

ARR (Annual Recurring Revenue)

108 |

IoT / CLOUD


LAYOUT EXTERNAL REPORTING

(in €m)Q1

2018

Q1

2017Δ%

Δ%

acc

License

Maintenance

SaaS/ Usage Based

Total Revenue

ARR (Annual Recurring Revenue)


Q&A


SOFTWARE AGCAPITAL MARKET DAY 2018


software ag capital market day 2018

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