Diplomova Praca - Market Analysis PDF

Masarykova univerzita
Ekonomicko-sprvn fakulta
Studijn obor: Podnikov hospodstv
MARKETING RESEARCH
Diplomov prca
Vedouc diplomov prce: Autor:

Ing. Klra KAPAROV Eva PELOV
Brno, duben 2007

Masarykova univerzita
Ekonomicko-sprvn fakulta
Katedra podnikovho hospodstv
Akademick rok 2006/2007
ZADN DIPLOMOV PRCE
Pro: P E L O V Eva
Obor: Podnikov hospodstv
Nzev tmatu: Marketingov vzkum

Marketing research
Zsady pro vypracovn
Problmov oblast:
Marketingov vzkum.
Cl prce:
Analza trhu, pop. trh pro uveden produktu na trh.
Postup prce:
V teoretick sti se bude autorka vnovat problematice vzkumu trhu a jeho
jednotlivm metodm a technikm relevantnm pro tento typ vzkumu.
V praktick sti bude analyzovat zvolen trh, pop. zvolen trhy, formuluje
doporuen pro tvorbu danho produktu a provede ekonomick vyhodnocen
jeho zaveden.
Pouit metody:
Analza sekundrnch dat, dedukce, deskripce, komparace, relevantn
matematicko-statistick metody.
Rozsah grafickch prac: pedpoklad cca 15 tabulek a graf
Rozsah prce bez ploh: 60 70 stran
Seznam odborn literatury:

BOLDI, P. Bibliografick citace dokumentu podle SN ISO 690 a SN ISO
690-2 (01 0197): st 1 Citace: metodika a obecn pravidla. Verze 3.2
[online]. 19992002. Posledn aktualizace 2002-09-03. Dostupn na World
Wide Web: <http://www.boldis.cz/citace/citace1.pdf>
HENDL, J. Kvalitativn vzkum zkladn metody a aplikace. 1. vyd. Praha :
Portl, 2005. 408 s. ISBN 80-7667-040-2.
HENDL, J. Pehled statistickch metod zpracovn dat Analza a meta
analza dat. 1. vyd. Praha : Portl, 2004. 584 s. ISBN 80-7178-820-1.
KOTLER, P. Marketing management. 10. rozen vyd. Praha : Grada, 2001.
719 s. ISBN 80-247-0016-6.
TOMEK, G. VVROV, V. Vrobek a jeho spch na trhu. 1. vyd. Praha :
Grada, 2001. 352 s. ISBN 80-247-0053-0.
Vedouc diplomov prce: Ing. Klra Kaparov
Datum zadn diplomov prce: 10.3.2006
Termn odevzdn diplomov prce: 20.4.2007

Vedouc katedry Dkan
V Brn dne: 10.3.2006

Jmno a pjmen autora: Eva Pelov
Nzev diplomov prce: Marketingov vzkum
Nzev v anglitin: Marketing research
Katedra: Podnikov hospodstv
Vedouc diplomov prce: Ing. Klra Kaparov
Rok obhajoby: 2007
Anotcia
Moja diplomov prca sa zaober praktickm uplatnenm marketingovho
vskumu, konkrtne analzou trhu. Hlavnm cieom teoretickej asti je
charakteristika procesu marketingovho vskumu, analzy trhu a defincia
pouitch vskumnch metd. V praktickej asti je preveden analza
Rakskeho e-government trhu za elom zavedenie pecifickho
softwarovho produktu. Na zklade sekundrneho vskumu je preveden
environmentlna analza, zkladn charakteristiky trhu a Porterova analza
konkurennho prostredia. V rmci primrneho vskumu je preveden
analza uvateov produktu. Na zver s formulovan odporania pre
tvorbu danho produktu a ekonomick vyhodnotenie jeho zavedenia.
Annotation
This Diploma Thesis presents a practical application of marketing research,
concretely market analysis. The main objective of the theoretical part is to
describe the marketing research and market analysis process and to define
used research and analysis methods. In the practical part, market analysis for
specific software as a product in Austrian e-government market is conducted.
On the basis of secondary research, environmental analysis, general market
description and Porters five forces analysis is carried out. In the primary
research, the user analysis is conducted. Finally, recommendations for
implementation strategy and economical evaluation of the implementation are
formulated.
Kov slov
marketingov vskum, analza trhu, sekundrny vskum, primrny vskum,
PEST analza, Porterova analza konkurennho prostredia, dotaznk, e-
government, verejn sektor
Keywords:
marketing research, market analysis, secondary research, primary research,
PEST analysis, Porters five forces analysis, online questionnaire, e-
government, public sector industry.
Declaration
I declare that this work has been completed by me independently under the
direction of Ing. Klra Kaparov. I have used no sources or aids other than
those cited.
Brno, 28.04.2007
__________________________________
Eva Pelov
Non-Disclosure Note
This diploma thesis is SAP confidential. It may not be duplicated, published, or
made available to unauthorized persons, neither in full nor in part. Written
permission must be obtained from SAP AG before any publication of this text
or before passing it to third parties other than the relevant university
employees.
Brno, 28.04.2007
__________________________________
Eva Pelov
Acknowledgements
I would like first to thank Ing. Klra Kaparov for her guidance with this
thesis, valuable comments and professional advices.
I would also like to thank Susan-Marie Thomas, Petra Hochstein and Kay-
Uwe Schmidt from SAP AG Germany, for their inputs and continuous support
at various stages of my work. I have sincerely enjoyed working with each of
them over the last nine months.
I thank also Mag. Martin Spitzenberger for his time and readiness to give me
an interview.
Finally, I am grateful for all FIT Project co-workers and SAP AG employees
who helped me during my thesis writing.
INTRODUCTION ......................................................................................11
THEORETICAL PART ..............................................................................16
1. MARKETING RESEARCH ..............................................................16
1.1. Marketing Research in the Age of Information...........................16
1.2. Marketing research process.........................................................18
1.2.1. Problem Definition.................................................................19
1.2.2. Developing the Research Plan..............................................22
1.2.3. Fieldwork or Data Collection .................................................28
1.2.4. Data Analysis ........................................................................29
1.2.5. Findings Presentation ...........................................................30
1.3. Marketing research studies ..........................................................30
1.4. Summary......................................................................................31
2. MARKET ANALYSIS .......................................................................32
2.1 Definition ......................................................................................32
2.2 Marketing environment.................................................................32
2.3 Market analysis process...............................................................33
2.4 Software as a product ..................................................................34
2.5 Market analysis for software as a product....................................35
2.5.1 General market characteristics .............................................36
2.5.2 Customer analysis for software as a product ........................37
5.2.3 Competitor Analysis for Software as a product .....................38
2.6 Summary......................................................................................39
3. METHODOLOGY ............................................................................40
3.1 Secondary research .....................................................................40
3.2 Primary research..........................................................................41
3.1 Data analysis ...............................................................................43
PRACTICAL PART ...................................................................................45
4. INDUSTRIAL MARKET SEGMENTATION......................................45
4.1 By Industry ...................................................................................45
4.2 By Application Segment ...............................................................46
4.3 By Geographical Location ............................................................46
5. IT TECHNOLOGIES IN GOVERNMENT MARKETS.......................46
5.1 Strong IT Opportunities in Government markets ..........................47
5.2 E-government: new challenge for European Union......................48
6. COMPANY AND PRODUCT INTRODUCTION...............................49
6.1. SAP AG........................................................................................49
6.2. FIT Project ...................................................................................50
6.3 Self-adaptive e-Government Web Portal......................................50
7. MARKET ANALYSIS .......................................................................52
7.1 General Characteristics of the Austrian e-Government market....52
7.1.1 PEST Analysis ......................................................................52
7.1.1.1 Political Factors ...............................................................53
7.1.1.2 Economical Factors .........................................................55
7.1.1.3 Social Factors..................................................................56
7.1.1.4 Technological Factors .....................................................57
7.1.2 Austrian e-Government Market .............................................58
7.1.2.1 Austrian Public Sector .....................................................58
7.1.2.2 Austrian e-Government Principles...................................61
7.1.2.3 E-Government Market Trends .........................................62
Key E-Government Market Drivers...........................................63
7.1.2.4............................................................................................63
7.1.2.5 Austrian e-Government Market Size ...............................63
7.1.2.6 Austrian e-Government Market Growth ...........................64
7.1.2.7 Austrian e-Government Actors ........................................65
7.2 Competitor Analysis .....................................................................67
7.2.1 Barriers to Entry (high)..........................................................68
7.2.2 Threats of Substitutes (low) ..................................................69
7.2.2.1 Substitute Research Projects ..........................................70
7.2.2.2 Substitute Products .........................................................71
7.2.3 Threats of Suppliers (low) .....................................................73
7.2.4 The Power of Buyers (high) ..................................................73
7.2.5 The Competitive force of rivalry (high) ..................................74
7.2.5.1 Industry competitors ........................................................74
7.2.5.2 Top Competitors in Austrian Public Sector ......................77
7.2.5.3 Main Influencing Forces ..................................................78
7.3 User Analysis ...............................................................................79
7.3.1 National level (Ministry of Interior).........................................81
7.3.1.1 Usability...........................................................................82
7.3.1.2 Customization of the Website..........................................84
7.3.2 Regional & Local Level (Municipality Vcklabruck)...............84
7.3.2.1 Usability...........................................................................85
7.3.2.2 Customization of the Website..........................................86
7.3.3 Conclusion regarding other Product Features ......................87
7.4 Market Analysis Overall Conclusion.............................................87
8. PRODUCT IMPROVEMENT RECOMMEDATIONS........................90
9. IMPLEMENTATION STRATEGY.....................................................92
9.1 National e-government.................................................................92
9.2 Regional & Local e-government ...................................................93
9.3 Implementation plan.....................................................................94
9.4 Economical Evaluation of the Implementation .............................96
CONCLUSION........................................................................................ 101
LIST OF ABBREVIATIONS .................................................................... 105
LIST OF FIGURES ................................................................................. 107
LIST OF TABLES ................................................................................... 108
BIBLIOGRAPHY..................................................................................... 109
LIST OF APPENDICES .......................................................................... 121
GLOSSARY............................................................................................ 146
INTRODUCTION
We are living in an information based society, where IT and software

products, services and technologies drive our day to day life and revolutionize
the way the companies are thinking and acting in a rapidly changing business
environment. All businesses, from big global companies up to small local
players depend on the Internet, electronic platforms, intranets, extranets and
electronic based information exchange.
Software & IT industry represents nowadays one of the most dynamic and
challenging industries in the world. More than hundred thousand IT and
software companies, research institutes and universities operating all over the
world determine with new products and solutions the industry trends and
developments. The industry is characterized by extremely strong competition,
considerably high innovation quotas and short average products lifespan.
Based on these facts, to thrive in this industry even to survive companies
strongly depend on marketing research.
Companies usually do not conduct the whole marketing research. Based
on their marketing strategy and objectives, marketing managers often
commission marketing studies of specific problems and opportunities. One of
the most generated marketing studies is market analysis.
In this diploma thesis, I conduct a market analysis for specific software as
a product developed by world leading commercial software company. My
decision to carry out the market analysis for a software company is based on
the dynamic, challenging nature of software & IT industry as well as on its
strong dependence on marketing research.
The rivalry between individual IT and software companies is extremely

high. This fact has led to geographical as well as industrial expansion of IT
and software companies. The age of information society opened new great
business opportunities in new markets, new application areas and even in
new industries. A high profitable industry, IT and software companies are
currently more and more targeting at, is beyond all expectations the public
sector.
11
The public sector is offering great business opportunities for IT and
software companies worldwide, especially in the government markets. Based
on global statistics, government has even the highest software growth
opportunities worldwide. That leads into a significant increase of software
products- and new IT technologies and solutions- in government markets. The
use of information and communication technologies in government is called e-
government and is one of Europes foremost challenges. European
Commission co-funds a majority of projects that develop new software
products and technologies to make e-government more effective.
Based on these facts, more and more public authorities outsource their IT
services to commercial IT and software companies and buy commercial
software products and solutions. Public sector industry became for IT and
software companies as important as private sector industry which is reflected
in an increasing number of marketing research studies.
The possibility to analyze: specific markets within public sector industry for
new products developed by commercial software companies represents for
me an interesting and with regard to importance of public sector industry for
software & IT companies very relevant challenge.
The market analysis is carried out in the Austrian e-government market for
new software as a product called: self-adaptive e-government web portal and
is a part of seven country analyses conducted for the FIT project. The overall
objective of the FIT research project is to develop, test and validate a self-
adaptive e-government framework based on semantic technologies that will
ensure that the quality of public services is proactively and continually fitted to
the changing preferences and increasing expectations of e-citizens. These
analyses will be used by product development, as well as by solution
management and the marketing departments of the industrial project partners
for the creation of product implementation strategies. The analyses are also
an important part of the FIT projects exploitation plan that will be presented in
a first edition to the European Commission in August 2007.
The market analyses will be also presented to the SAP Industry Business
Unit who is responsible for all SAP solutions in public sector. The results of
12
the conducted market analyses will be explained in order to find new
exploitation possibilities of related IBU products.
The main objective of this market analysis is to find the best market
opportunities for the self-adaptive e-government web portal on the Austrian e-
government market.
I posed two partial objectives:
1. Partial objective: on the basis of conducted market analysis,
recommendations for possible product improvement in order to strengthen its
position on the target market will be formulated.
2. Partial objective on the basis of viable implementations opportunities,
the best implementation strategy for the e-government web portal on the
target market will be formulated
No citizens left behind with the objective, that e-services should be

tailored to the widest possible end-user population is one of the main
challenges for European e-government toward 20101. The statement is
underlined by the European Commissions vision2 of ambient intelligence that
places the citizen at the centre of future developments for an inclusive
knowledge-based society for all.
BISER Domain Report: Government and Public Administration shows that
public authorities themselves profit more from e-government than citizens and
businesses that means that European e-government is still not user centric.
Based on these facts, there is still a need for IT and software solutions that
will provide a more efficient flexible service delivery and will increase the
personalization of services by focusing on the preferences of each user.
Semantic technologies are defined as software technologies that allows
the meaning of and associations between information to be known and
processed at execution time..
1
For example: E-Government Action Plan. 2006. pp.20-25, Putting citizens first. 2007, and
Signpost toward e-Government 2010;.Nov. 2005. pp. 13-19.
2
Citizens and governance in a knowledge-based society. CORDIS. 2006.
13
Regarding world research companies3, the emerging semantic web
technologies open new possibilities for the dynamic reconfiguration of
services in order to enable their customization to the changing citizens needs.
The need of e-government IT and software solutions based on semantic
technologies is established in the Europe Action Plan 2006 as well as in new
e-Government Strategies of the majority of the Member States.
Taking into account above mentioned research studies and EU reports

statements, SAP AG goals and requirements and the diploma thesis
objectives, following hypothesis is posed:
Increasing trend of semantic technologies within European Union and
the need of citizen-centered e-government services tailored to the
widest possible end-user population open very good implementation
opportunities for a new generation of self-adaptive web portals in
Austria.
The diploma thesis consists of a theoretical part and a practical part.
In the theoretical part, I will at first concentrate on the marketing research

process, as one of the most important and fascinating facets of marketing. I
give a formal definition of marketing research and describe the marketing
research process in 5 steps, emphasizing its role of providing information for
marketing decision making. Next, I generally define the market analysis as an
important part of marketing research and explain the market analysis process.
Based on the fact that the market analysis in the practical part is very
specific, regarding the industry, market and product, I describe the market
analysis process for software products in more detail, describe the
government markets and explain their specifications.
In the part methodology, I define the used research and analysis methods,
including data collection, questionnaire design and statistical data analysis
with the help of statistical software programs.
3
For example: DUECK, P., FRANCE, N. Market Trends: IT Services in European Union.
2005. pp. 4-12, and BARTELS, A. IT Trends in Public Sector. Forrester Research. Nov. 2006.
pp. 22-25.
14
In the practical part, I describe the conducted market analysis for specific
software as a product, in the Austrian e-Government market and its results.
In order to identify the target market, industrial market segmentation will be
added. On the basis of secondary research, an environmental analysis will be
conducted and with regard to the product definition, an assessment of the
potential market will be carried out. The research will focus on the market
description, its size, market trends as well as key drivers and the analysis of
competitive products and key players in the market as well as the whole
industry.
By using primary research, product will be described and tailored to the
different groups of users in order to identify the main product benefits and
functionalities for the users in order to create a competitive advantage on the
target market. At the end, recommendations for implementation strategy and
economical evaluation of the implementation will be formulated.
15
THEORETICAL PART
1. MARKETING RESEARCH
1.1. Marketing Research in the Age of Information
The modern Marketing is becoming a battle based more on information than

on sales power. 4
Philip Kotler
Marketing is everywhere, affects our day-to-day lives, is embedded in

everything we do from the clothes we wear, to the web sites we click on, to
the advertisements we see. The emphasis in marketing is on the identification
and satisfaction of customer needs. One of the shortest definitions of
marketing is meeting needs profitably.5 The American Marketing Association
offers following definition: Marketing is an organizational function and a set of
processes for creating, communicating, and delivering value to customers and
for managing customer relationships in a way that benefit the organization and
its stake holders6.
In order to determine customer needs and to implement marketing
strategies and programs aimed at satisfying those needs, marketing
managers need information. In this rapidly changing environment, more
intense competition, affluent and sophisticated consumption and increasing
number of national and international firms, information plays a more
important role in the enterprise success and development than at any time in
the past.
The shifts are dramatic: from local to national to global marketing, from
buyer needs to buyer wants, from price to non-price competition. As
companies expand their geographical market coverage, their managers need
4
KOTLER, P., KELLER, K. L. Marketing Management; 2003; pp. 122
5
KOTLER, P., KELLER, K. L. Marketing Management. 2006. pp. 2-8.
6
AMA Website
16
more information more quickly. As incomes improve, buyers become more
selective in their choice of goods and managers need different information to
predict buyers responses to various features, styles, and other product
attributes. As marketing managers increase their use of branding, product
differentiation, advertising and sales promotion, they require information on
the effectiveness of these marketing tools.
In todays information-based society, companies with superior information
enjoy a competitive advantage. The company chooses its markets better,
develops better offerings, and executes better marketing planning7.
Provision of all above mentioned information that are relevant, accurate,

timely and actionable, is the task of marketing research. Marketing research
is defined as: the systematic design, collection, analysis and reporting of data
and findings relevant to a specific situation facing the company.8 Its
discovering what people want, need, or believe. It can also involve discovering
how they act. Its purpose is to help companies make better business
decisions about the development and marketing of new products9.
Marketing research is now about a $16.5 billion industry globally,

according to ESOMAR.10 Most large companies have their own marketing
research departments, which play crucial roles within the organization. At
smaller companies, marketing research is often carried out by everyone in the
company and by customers too. Companies normally budget marketing
research at 1 to 2 % of company sales. A large percentage of that is spent on
the services outside firms.11
7
8
KOTLER, P., KELLER, K. L. Marketing Management. 2006. pp. 12.
9
MALHOTRA, K. Naresh. Marketing Research. 2004. pp. 6-15.
10
World Association of Opinion and Market Research Professionals
11
ESOMAR Research Directory Website
17
1.2. Marketing research process
There are many opinions on how to conduct a marketing research. The
number of marketing process steps varies between five and seven, depending
on individual authors. Nevertheless, the major part of the authors
characterizes a marketing research study as a problem solving process.
Based on publications of Malhotra, Homburg and the majority of German
authors12, an effective marketing research involves five steps: 1. define the
problem; 2. develop the research plan (also called research design); 3. collect
information (fieldwork); 4. analyze the information; 5. present the findings.
Kotler adds to the five-step marketing research process a sixth step, called
making the decision. Because the decision is made by marketing managers
who commissioned the marketing research and its based on the research
results and researchers recommendation, many authors dont specify this
step as a real part of the marketing research process.
Another description of a marketing research process is given by Aaker
and Kumar. They define marketing research as a sequential process
consisting of seven steps: 1. research purpose; 2. research objective; 3.
estimating the value of information13; 4. research design; 5. data collection
(fieldwork); 6. data analysis; 7. research results presentation. In their
interpretation, estimating the value of information plays a crucial role in the
marketing research process by helping to determine how much, if anything
should be spent on the research. Aaker and Kumar recommend using
different mind tools, especially decision trees14 by information value
estimation. The other steps of their marketing research process agree more or
less with the opinions of previous authors.
I tend to the market research process definition described by Malhotra and
the German authors. Research purpose and objective, characterized by Aaker
12
For example: BHLER, H. Marktforschung. 2004. pp. 10-25, HERMANN, A.
Marktforschung. 2000. pp. 22-30, and STEINMETZ, P. Marktforschung. 2005. pp. 15-26.
13
The value of information is the value of obtaining answers to the research questions.
14
Decision tree is a decision support tool that generally refers to a graph or model of
decisions and their possible consequences. AAKER, A., KUMAR, V., and DAY, G. S.
Marketing research. 2004. pp. 43-63.
18
and Kumar are actually parts of the problem definition and the division into
two separate steps is in my opinion unnecessary. The value of information is
related to the concept of uncertainty in the decision making and depends on
the importance of the decision, the uncertainty that surrounds it, and the
influence of the research information on the decision. This is also mostly
involved in problem definition phase as information analysis.
Based on these facts, the basic marketing process steps are the following:
1. Problem Definition
2. Developing the Research Plan
3. Fieldwork, or Data Collection
4. Data Analysis
5. Findings presentation
The major part of the authors15 say that although the list does strongly
imply an orderly step-by-step process, it is rare that a marketing research
project follows these steps in this exact step-order. The main reason is on
their opinion the fact that marketing research is more of an interactive process
whereby a researcher, by discovering something in a given step, may move
backward in the process and begin again at another step.
1.2.1. Problem Definition

Defining the problem is the single most important step in the research
process, because only when a problem has been clearly and accurately
identified a research project can be conducted properly.
Marketing management must be careful not to define the problem too
broad or too narrow for the marketing researcher. The problem definition
should take into account the purpose of the study, the relevant background
information, the information needed, and how it will be used in decision
15
For example: AAKER, A. Marketing research. 2004. pp. 95-90, HOMBURG, Ch.
Marktforschung. 2000. pp. 120-130, MALHOTRA, N. K. Marketing Research. 2004. pp.
10-20.
19
making. After the problem has been defined carefully, the manager and
researcher must set the research objectives.
To define the research objectives successfully, it is crucial to make the

transition from a management decision problem to a marketing research
problem. This transition is clearly shown in the following figure:
Figure 1: From a Management Decision Problem to a Marketing

Research Problem
A statement specifying the type of information

needed by the decision maker to help solve the Marketing A goal statement
management decision problem and how that defining the specific
information can be obtained efficiently and Research information needed to
effectively. solve the marketing
Problem research problem.
Management Marketing
Problem Becomes Research
a Marketing Objective
Research Problem:
Management
A statement specifying the Decision
type of managerial action
required to solve the Problem
problem.
Source: Mc DANIEL, C., GATES, R. Marketing Research Essential. 2005. pp: 50.
All marketing research and objectives can be classified into any of the
three generic categories: exploratory research, descriptive research and
casual research. These categories differ significantly in terms of research
purpose, research questions, the precision of the hypotheses that are formed,
and the data collection methods that are used. Exploratory research is
characterized as preliminary research conducted to increase the
understanding of a concept, to clarify the exact nature of the problem to be
solved, or to identify important variables to be studied. Descriptive research
embraces a large portion of marketing research and is usually designed to
provide a summary of some aspects of the environment when the hypotheses
20
are tentative or speculative in nature. Casual research is used when it is
necessary to show that one variable causes or determines the value of other
variables.16
Researchers usually conduct more than one research category. While
results of exploratory research by giving significant insight into a given
situation arent usually useful for decision-making, the purpose of descriptive
and casual research is to provide a reliable or representative picture of the
research problem through valid research instruments17. The main differences
between several marketing research categories are shown in the following
table:
Table 1: Comparison of basic research categories
Exploratory
Descriptive research Casual research
research
Clear Problem
Unaware Problem Aware Problem
definition
Purpose: Discover ideas and Describe market
Determine causes and
insights , generate characteristics and
effect (?) relationship
hypotheses functions
Characteristics Flexible
Marked by prior Manipulation of one or
Versatile
formulation of specific more independent
Often the front
hypotheses variables
research design
Key Methods Secondary data
Secondary data Surveys
Expert surveys Panels Experiments
Pilot surveys Observational and other
Qualitative research data
Possible Our sales are What kinds of people are Will buyers purchase
declining and we dont buying our product? Who more of our products in
Situations know why. buys our competitors a new package?
product?
Would people be Which of two
interested in our new What features do buyers advertising campaigns
product idea? prefer in our product? is more effective?
Source: author, based on information from: Mc DANIEL C., GATES R. Marketing Research
Essential. 2005. pp: 40-63, and MALHOTRA, N. K. Marketing Research. 2004. pp. 72-78.
16
The majority of authors have the same opinion on definitions of these three types of
marketing research. The definitions in this diploma thesis are based on: AAKER, A.,
KUMAR, V. and DAY, G. S. Marketing research. 2004. pp. 753-757.
17
HOMBURG, CH. Marketing Research. Lecture materials.
21
1.2.2. Developing the Research Plan
Once the research problems and objectives have been defined,
researchers must determine the exact information needed and develop a plan
to gather it efficiently. The research plan outlines sources of existing data and
spells out the specific research approaches, contact methods, sampling plans,
and instruments that researchers will use to gather new data.
The researcher can gather secondary data, primary data, or both.
Secondary data consists of information that already exists somewhere,
having been collected for another purpose. Primary data are collected
especially to address a specific research objective. A variety of methods,
ranging from qualitative research to surveys to experiments, may be applied.
Researchers usually start by gathering secondary data to see whether the
problem can be partly or wholly solved without collecting costly primary data.
The amount of secondary data is overwhelming, and researchers have to
locate and utilize the data that are relevant to their research. Secondary data
sources are divided into internal and external sources.
Based on American Marketing Association and EMAC18, the key internal
sources are:
1. Sales/patronage results;
2. marketing activity;
3. cost information;
4. distributor reports and feedback;
5. customer feedback.
The importance of internal sources, also called house-in sources has

grown incredibly within the last years. This trend relates to internet expansion
and increased popularity of database marketing.19 Database Marketing
involves the use of computers to capture and track customer profiles and
purchase details. Records of frequent customers and their transactions are
maintained, and the companies use this data to find out what is common
among its customers.
18
EMAC: European Marketing Academy
19
RSGER, J. Interactive Marketing. Lecture materials.
22
Large organizations have intranets that already facilitate the search for
access to internal secondary data. Coca-Cola Company, for example, has
developed powerful intranet applications that enable Coca-Cola managers
worldwide to search for past and current research studies and a wide variety
of marketing related information on the basis of key words20.
After collecting internal secondary data, the researchers have to collect
external secondary data. In fact, there are so many external data available for
the researcher, that it is important to classify them.
The classification of external secondary data is shown in the following
table:
Table 2: External Secondary Data

External Secondary Data
Published Data Syndicated Services21 Internet
Government publications Surveys Electronic Databases

Trade Associations Purchase Panels Search engines
Guides Media Panels
Directories Scanner Volume Tracking
Indexes Data
Statistical data Audit Services
Industrial Product
Syndicated Services
Source: author, based on information from: AMA Website, EMAC Website, and WEIS, H.
CH., STEINMETZ, P. Marktforschung. 2005. pp. 56-66.
Based on Kotler, Aaker and Homburg, the World Wide Web is today the
main source of secondary data for marketing researchers22. General business
information can be obtained by visiting various business-related sites that
provide sales leads, mailing lists, business profiles, and credit rankings.
Reports on different industries can be found at research firms sites, such as:
20
GREIPL, E. Aktuelle Strategien in Handelsmarketing. Lecture Materials. Own Translation.
21
Syndicated sources, also revered to as syndicated services, are companies that collect and
sell common pools of data of known commercial value, designed to serve information needs
shared by number of clients. For more detail, see Appendix.
22
AAKER, A. D., Marketing research. 2005, pp. 95-112, HOMBURG, Ch. Marktforschung.
2000. pp. 225-240, and KOTLER, P. Marketing Management. 2006. pp. 120-122.
23
www.jup.com, www.gartner.com, www.forrester.com, etc. Some research and
analyst reports run as low as $250, but most of the well-known research firms
charge at least $1000 for their reports. The prices depend on report scope,
structure and offered information.23
If researchers didnt find all required information in the secondary data,
they need to collect primary data.
All authors hold that primary data costs more and takes longer to conduct
than secondary data. To underline this prediction, I compare the costs of
primary and secondary data based on real research.
Internal secondary data is free, but most of secondary data is made up of

external data. Many published reports and resources can be found at the
library and online also for free, or for some small charges (in case of some
public databases, libraries, electronic newspapers and magazines).
However, it is important to make sure that the used information isn't outdated.
Professional analyst reports are on the other hand pretty expensive. For
example 6-pages Gartners Trends and Directions in the European Software
Market cost $1,295.00.24 That makes $215 for one page. Based on
interviews with various research and marketing employees, the majority of the
analyst studies bought didnt meet their expectations. They also said that the
descriptions of the reports are very poor and they didnt know its content until
they bought it. Longer reports have detailed content description, but not for
free. You can buy 2-pages Executive Summary of European Software Market
Share report for $195.00. Full, 27-pages report cost $6,995.00. And the
prices can climb up to US$15,000.
Professional studies are mostly about industry, national or international

product markets, trends or forecasts. To find out specific features about
concrete product, market, consumer behavior, etc. companies have to collect
primary data. Secondary data collections and bought research reports are in
these cases mostly insufficient
23
Based on prices of marketing research studies by leading research companies
24
Website of Gartner Research
24
Before researchers begin with the primary data collection, they have to
decide what research approach and contact methods should be used; what
sampling frame should be chosen; and which kind of research instruments
should be implemented (they are shortly explained in the following table). The
selection is influenced by the nature of the problem and by the availability of
time and money25.
Table 3: Primary Data Collection

Research Contact Sampling Research
Approaches Methods Plans Instruments
Observation Mail Sampling unit Questionnaire
Observing relevant To collect large Who is to be Consists of a set of
people, actions, and amount of information surveyed? questions presented to
situations at a low cost per respondents
respondent
Survey Phone Sample size Mechanical
Asking people One of the best How many people instruments
questions about their methods gathering should be surveyed? Are used occasionally
knowledge, attitudes information quickly. (people meters and
and preferences supermarket scanners)
Experiment Personal Sampling
Selecting matched Takes two forms: procedure
groups of subjects, individual and group How should the people
giving them different interviewing in the sample be
treatments, controlling chosen?
related factors.
Online
Internet Surveys,
experiments and
online focus group
Source: ARMSTRONG, G., KOTLER, P. Principles of Marketing. 2004. pp. 125.
Phone surveys cost from $5,000-$15,000 (per one survey). They typically
cost an average of $40 per interview (or person surveyed). However, this per-
interview price can increase or decrease according to the success rate of
responses: the less the number of responses, the higher the price.
In-person interviews are extremely expensive. Since an interviewer is
required to visit the respondents at their home or business or track them down
in shopping malls, a great deal of interviewing time is required. Even at low
25
HOMBURG, CH. Marktforschung. 2000. pp. 10-20. Own translation.
25
hourly rates for interviewers, an in-person interview currently costs at least
$100. Considering that most surveys use a sample size of at least 100 people,
a company pays from $10 000 $100 000. An average price is about
$50 000.
Email surveys are becoming more popular because their costs are lower -
about $3,000-$5,000 (per one survey). Costs are lower for two reasons. First,
postage isn't a concern. Also, email has a higher incidence rate, since the
option to answer questions on participants' own time makes them much more
likely to respond.
Prices for focus groups can range from $4,000-$6,000 per session by
outsourcing to a company that runs focus groups. Since it's recommended
that at least two sessions should be held, raise the price on $8,000-$12,00026.
Because costs of this size represent a substantial investment for most

small businesses, owners should ask themselves the following questions
before contacting a research firm:
Is the research worth doing?

Will the outcome of the research result in a benefit exceeding the cost of
the research itself? Spending $20,000 on a research project to realize an
increase in company revenues of $1,000 a year simply doesnt make sense.
Can I do the research by myself?

This is probably the hardest question to answer. The company must be
able to determine the complexity of the research problem and the risk involved
if the research was not done. To strike an analogy, several companies offer
do-it-yourself legal guides that allow the small business owner to create
contracts, incorporate the market research and so forth27. Companies can cut
26
How much does marketing research cost?; Surveys Buyer's Guide; and Phone Interviews
with GFK Group; Information Resources Inc; and Gartner Research employees
27
WARD, S. Do-It-Yourself Market Research. SBA Website and AMA Website.
26
costs in half, if the marketing research is conducted by the company itself and
not outsourced to a research company.
However both possibilities have their pro and cons as shown in the following
table:
Table 4: Own and Outsourced Marketing Research
Marketing research by a research company
Advantages Disadvantages
Objectiveness Period of vocational adjustment is
In principle all methods of collecting data necessary
can be conducted Higher costs
Faster implementation Secrecy is rather endangered
No ignorance of company related problems Communication problems
Assignment of experts
Better expertise and know how
Own marketing research
Advantages Disadvantages
No period of vocational adjustment Own data collection normally very difficult or
Familiarity with the problem impossible (for example Panels)
Lower Costs Ignorance of company related problems
Secrecy is rather assured Self-fulfilling prophecy
Mostly subjective
Communication problems
Lack of experts and associates
Big data collections (coverage of whole
area) mostly impossible
Long processing time
Source: WEIS, H. CH., STEINMETZ, P. Marktforschung. 2005. pp. 36. Own translation.
Following the decisions about how the data is to be collected the next
consideration is how to select a sample of the population of interest that is
truly representative.
Because marketers cannot survey an entire population, they use a
technique called sampling to work with smaller, more manageable groups.
Although some complex statistical laws govern sampling, there are a few
common sense principles that will help the company in deciding on
appropriate sample design.28
By defining the Sample Size, we have to follow the rule, the bigger the
sample the more confident we can be that it represents the target market29.
28
CARPENTER, M. Qualitative research overview. AMA report. 2001.
29
HOMBURG, CH. Marktforschung. Lecture Materials.
27
Of greater practical consideration when deciding on sample size is the desired
level of sub-group analysis you want to do. Drilling down into smaller sub-
groups in a study requires a larger pool of respondents30.
For example, to carry out meaningful comparisons between the yes/no
responses of men and women in a study, you would need a minimum of 40-50
respondents in each sub-group. If you needed to drill down further to identify
differences in response between older and younger people within each sex
then you would need 40-50 of each of young and old men and young and old
women
There are two main sampling methods (based on the majority of authors;
and AMA Website):
1. Probability Sampling
Is a subset of the population that can be assumed to be a
representative cross section of the population because every element
in the population has a known non-zero chance of being selected.
2. Non-probability Sampling
Is a subset of the population in which the chances of selection for the
various elements in the population are not precisely known31.
1.2.3. Fieldwork or Data Collection

The data collection phase of marketing research is generally the most
expensive and the most prone to error32.
Researchers have two major opportunities for collecting their data: They
can develop their own organization or they can contract with a fieldwork
agency. In either case, data collection involves to use a field force, which may
operate either in the field (personal interviewing and observation, mail
intercept) or from an office (telephone, e-mail and internet-surveys).
All fieldwork involves the selection, training, and supervision of the persons
who collect data33.
30
CHAUDHURI, A., STENGER, H. Survey sampling : theory and methods. 2005. pp. 20-35.
31
Mc DANIEL, C., GATES, R. Marketing Research Essential. 2005. pp. 40-65.
32
28
By selection of the fieldworker, it has to be taken into account, that
interviewers background characteristics, opinions, perceptions, expectation,
and attitudes can affect the responses they elicit34. The researcher generally
agree that the more characteristics the interviewer and the respondent have in
common, the greater the cooperation and better quality of data. Thus, to the
extent possible, interviewers should be selected to match respondents
characteristics. The job requirements will also vary with the nature of the
problem and the type of data collection method.35
Training of field workers is critical to the quality of data collected. Training
ensures that all interviewers administer the questionnaire in the same manner
so that the data can be collected uniformly. Training should cover making the
initial contact, asking the questions, probing36, recording answers, and
terminating the interview.37
Supervision of field workers means making sure that they are following the
procedures and techniques in which they were trained. Supervision usually
involves quality control, sampling control and control of cheating.
1.2.4. Data Analysis
The next-to-last step in the marketing research process is to extract

findings from the collected data. The researcher tabulates the data and
develops frequency distributions. Averages and measures of dispersion are
computed for the major variables. The researcher will also apply some
advanced statistical techniques and decision models in hope of discovering
additional findings.
33
GUBRIUM J. F., HOLSTEIN J., Handbook of Interview Research: Context and Method.
2001. pp. 45-50.
34
SINGER, E., FRANKEL, M. R., and GLASSMAN, M. B. The Effect interviewer
Characteristics and Expectations on Response. 1983. pp. 68-84, TUCKER, C. Interviewer
Effects in Telephone Surveys. 1983. pp. 84-95, and GROVES, R. M., FULTZ, N. H. Gender
effects among telephone interviewers in a survey of economic attitudes. 1985. pp. 31-52.
35
CENSUS Study of Survey No response, 2001.
36
Probing is intended to motivate respondents to enlarge on, clarify, or explain their answers.
37
KIECKER, P., NELSON, E. J. Do Interviewers Follow Telephone Survey Instruction? 1996.
pp. 161-176.
29
Detailed overview of statistical techniques is listed in the appendix.
1.2.5. Findings Presentation

As the last step, the researcher presents the findings. Researchers differ in
the way they prepare a research report. The personality, background,
expertise, and responsibility of the researcher reflect a unique character.
1.3. Marketing research studies

Companies usually do not conduct the whole marketing research. Based
on their marketing strategy and objectives, marketing managers often
commission marketing studies of specific problems and opportunities38.
Most generated studies are39:
Market analysis ;
product analysis;
advertising and promotion analysis;
customer satisfaction studies;
channels and distribution analysis
sales forecasting;
trend analysis.
Regarding the fact that this diploma thesis focuses on detailed market
analysis conducted in the practical part, I wont characterize other types of
marketing research studies. I rather give a detailed insight into market
analysis problems and define and describe the market analysis of software as
a product.
38
HERMANN, A., HOMBURG, Ch., Marktforschung. 2000. pp. 685-690.
39
MORT, D. K. Market Research Sourcebook. Pp. 55-80, and Phone Interviews with GFK
Group, Information Resources Inc, and Gartner Research.
30
1.4. Summary
We are living in the age of information, where the need to get relevant,
accurate and timely information is bigger than at any time in the past.
Companies with superior information enjoy a competitive advantage, can
choose their markets better, can develop better offerings, and execute better
marketing planning.
The process of collecting and analyzing information in order to solve
marketing problems is called marketing research.
Opinions on how to conduct a marketing research vary by author. I tend to
the market research process definition described by Malhotra and the German
authors, which consists of five basic steps: 1. problem definition; 2. developing
the research plan; 3. fieldwork, or data collection; 4. data analysis; and 5.
findings presentation.
The first and most important step in marketing research is defining the
research problem. After that, research objectives must be defined. All
marketing research and objectives can be classified into either of three
general categories: exploratory research, descriptive research and casual
research. These categories differ significantly in terms of research purpose,
research questions, the precision of the hypotheses that are formed, and the
data collection methods that are used.
The researcher can gather secondary data, primary data, or both. In
general the opinion prevails that primary data costs more and takes longer to
conduct than secondary data collection. To underline this prediction, I
compared the costs of primary and secondary data based on real research.
The comparison shows, that secondary data is really considerably cheaper
than primary data collection. An exception is made by professional analyst
reports (but those as such are results of long-term primary research, which
notably influences their price). Primary data costs on average 800% more
than secondary data40. But companies can cut costs in half, if the marketing
research is conducted by the company itself and not outsourced to a research
company.
40
AMA Website
31
The data collection phase of marketing research is generally the most
expensive and the most prone to error. Based on this fact, it is very important
to choose suitable fieldworkers. After this phase, data analysis is conducted
and final findings are presented.
2. MARKET ANALYSIS
2.1 Definition
Market analysis is a part of marketing research which deals with the
pattern of a market, measuring the extent and nature of the market, and
identifying its characteristics. It is a process of systematic gathering, recording
and analyzing of data about customers, competitors and the market41.
There are innumerous reasons why to conduct a market analysis. But the
market analysis is primary used to:
create a business plan;
launch a new product or service;
fine tune existing products and services;
expand into new markets42.
The goal of market analysis is to identify the market volume, customer

groups, deciding producers and suppliers, main competitors, distribution
channels, etc. It is also used to determine which portion of the population will
purchase the product/service, based on variables like age, gender, location
and income level43.
2.2 Marketing environment

Market analysis, often designated as external analysis is oriented on the
external company environment, called Marketing environment. A companys
marketing environment consists of the actors and forces outside marketing
that affect marketing managements ability to build and maintain successful
41
HERMANN, A., HOMBURG, Ch.; Marktforschung. 2000. pp. 10-12. Own translation.
42
BHLER, H. Marktforschung. 2004. pp. 40-65.
43
HOMBURG, CH. Marktforschung. Lecture Materials. own translation.
32
relationship with target customers. The marketing environment offers both
opportunities and threats. Successful companies know the vital importance of
constantly watching and adapting to the changing environment44.
The marketing environment is made up of a micro environment and a
macro environment. The micro environment consists of the actors close to
the company that affect its ability to serve its customers. The macro
environment consists of larger societal forces that affect the whole micro
environment. The main actors and forces of company marketing environment
are shown in the following figure.
Figure 2: Marketing Environment

ECONOMICAL
Company
TECHNOLOGICAL
Public Suppliers
SOCIAL
COMPANY
Marketing
Intermediaries
Customers
Competitors
POLITICAL
Source: KOCH, J. Marketing. 1999. pp. 12
2.3 Market analysis process

Every Market analysis process is different. Extent and nature of a market
analysis prior to creating a business plan is deeper than for a new product
launch or new markets expansion.
44
ARMSTRONG, G., KOTLER, P. Principles of Marketing. 2004. pp. 106-110.
33
Some authors indicate that the typical market analysis process consists of45:
PEST analysis (Political, economical, social and technical)
Opportunities and threats analysis
Market characteristics analysis
Market trends analysis
Customer analysis
Competitors analysis
Market segmentation
Generally, we cant assume, that every market analysis consists of the

above mentioned parts. Different industries, types of consumer markets,
offered products or services as well as management intentions and decisions
based on specific market problems or opportunities46 influence the to be used
methods and techniques.47
The market analysis conducted in the practical part of this diploma thesis
is analyzing software as a product. Based on the fact that software belongs to
a specific product group and has many characteristics that essentially differ
from other products, I define and describe the software as a product in more
detail.48
2.4 Software as a product

Software is a set of programs that enable a computer to perform specific
tasks, as opposed to the physical components of the system (hardware).
A. Heinzl
45
WILSON, C. G., RICHARD, M. S. Strategic Marketing planning. 2003. pp. 66-67.
46
A market opportunity is an area of buyer need and interest in which there is a high
probability that a company can profitably satisfy that need. The market problem isnt in the
marketing literature exactly identified. The fact that the sales are below expectation in the
East is a typical example for market problem. Source: KOTLER, P., KELLER, K. L.
Marketing Management. 2006. pp. 52-54.
47
MALHOTRA, N. K. Marketing Research. 2004. pp. 43-44.
48
HEINZL, A. Einfhrung in die Wirtschaftsinformatik II. Lecture Materials. Own Translation.
34
Regarding IEEE-Standards 72949, software is made up of program
systems, procedures and data, as well as of documentation that is needed to
install, to understand and to use the program.
Software specific characteristic is based on this configuration. The main
software attributes are the following:
software is an intangible product;
software is not a subject of wear-out;
software does not need spare parts;
software is aging;
software is more changeable than a material product;
the character of software is difficult to be quantified.50
2.5 Market analysis for software as a product

Market analysis for product software consists of a number of techniques
that allow an organization to collect and disseminate information from their
external environment of software products for use in determining their market
strategy and actions. For example, market analysis helps to determine critical
strategies for new software products such as time-to-market, product
differentiation, creation and preservation of supplier credibility, development of
effective distribution channels, formation of relationships with large customers,
and management of market efforts51.
Market analysis plays a large part in explaining the current situation of a
marketing plan. Marketing is very important to new product development
because software products have a short average lifespan of five years and
incur 75% of the costs during the research and development phase.52
Therefore, including market analysis information early on in the product
lifecycle can ensure resources are not wasted.
49
The IEEE (Institute of Electrical and Electronics Engineers) is a leading developer of
standards that underpin many of todays technologies.
50
WOLLE, B. Grundlagen des Software-Marketing. 2005. pp. 15-26.
51
IGEL, B., ISLAM, N. Strategies for service and market development of entrepreneurial
software designing firms. Management science. March 2001. pp. 157-166.
52
ATKINSON, A. A, KAPLAN, R. S., and YOUNG, S. M. Management Accounting
International. 2004. pp. 50-52.
35
Market analysis of product software generally consists of research in the
fields of53:
general market characteristics;
customer analysis;
competitors analysis; and
market segmentation.
2.5.1 General market characteristics

Analysis of general market characteristics should lead to information about
the market such as definition, size, trends, and potential.
The used methods and techniques dont depend on the type of customer
market, companies are operating in. However, data sources and types of
marketing information are different in markets.
The market is defined as the sum of all potential customers with specific
needs or requests, who are in a position to satisfy their needs or requests by
buying this product or service54. The key customer markets are: consumer
markets, business markets, non for profit markets, government markets and
55
international markets (consisting of these four market buyers in other
countries).
Based on the diploma thesis scope, I define government markets in more
detail.
Government markets are generally defined as markets, which are made

up of government agencies that buy goods and services to produce public
services or transfer the goods and services to others who need them.
Companies operating in government markets need to price carefully because
these agencies have limited purchasing power and much of government
purchasing calls for bids, with the lowest bid being favored56.
53
IGEL, B., ISLAM, N. Strategies for service and market development of entrepreneurial
software designing firms. Management science. March 2001 pp. 160-164.
54
DANNENBERG, M., BARTHEL, S. Effiziente Marktforschung. 2002. pp.20-24.
55
ARMSTRONG, G., KOTLER, P. Principles of Marketing. 2004. pp. 108-112.
56
ARMSTRONG, G., KOTLER, P. Principles of Marketing. 2004. pp. 109
36
Government markets are divided into national government markets (consisting
of central authorities) and regional government markets (province, city,
municipalities, etc.)
By analyzing the government markets it is important to take into account
that,
they belong to the public sector;
the customer deals with large amount of citizens data and data
security regulations, lacks of software competence and tools;
the adequate data analysis is very difficult.
2.5.2 Customer analysis for software as a product
Customer analysis is needed to predict behavior and develop demand

forecasts for product software. It is also necessary in the development of new
products to help identify the most profitable choice. One author states that a
key issue for new software product development is creating links between
57
customer needs and the product design specifications. This link builds the
main part of the customer analysis, implemented in the practical part. The
used technique to provide information on customers is customer satisfaction
dimensions.58
Improving customer satisfaction has become a key strategy of the majority,
if not for all software companies. The underlying premise is that fully satisfied
customers lead to long-term competitive advantage and thus profit. Based on
this fact, Kekre, Krishnan, and Srinivasan conducted a study with focus
groups and over 2500 responses from a questionnaire to discover what
factors drive customers satisfaction for software products. They analyzed the
results and found out that seven factors drive overall customer satisfaction
57
KERKE, S., KRISHNAN M. S., and SRINIVASAN, K. Drivers of Customer Satisfaction for
Software Products: Implications for Design and Service Support. Management Science.
Sep. 1995, pp. 1456-1460, and HOMBURG, CH. Marktforschung. Lecture Materials, Own
Translation.
58
Customer satisfaction is the extent to which a products perceived performance matches a
buyers expectation. Source: ARMSTRONG, G., KOTLER, P. Principles of Marketing. 2004.
pp. 18-20
37
(shown in Figure 3). However, the influence of the drivers varies substantially.
Capability and usability are the dominant factors, followed closely by the
performance factor. They also found out that the impact of the drivers varies
across customer and product segments. The seven dimensions model
directly yields a shift in a proportion of the customer to a higher level of
satisfaction due to improvement on any of seven factors59.
Figure 3: Customer satisfaction dimension for software as a product
Capability
Documentatio Usability
n
Customer
Maintainability Satisfaction
Performance
Installability Reliability
Source: author, based on information from: KERKE, S., KRISHNAN M. S., and SRINIVASAN,
K. Drivers of Customer Satisfaction for Software Products: Implications for Design and
Service Support. Management Science. Sep. 1995, pp. 1456-1500.
5.2.3 Competitor Analysis for Software as a product
The final major area of analysis in market analysis is the industry itself. By
knowing what is happening with competitors, a software company can adjust
strategies to be more successful in the marketplace. Companies should know
about market share percentages, strength and weaknesses, industry
59
KERKE, S., KRISHNAN M. S., and SRINIVASAN, K. Drivers of Customer Satisfaction for
Software Products: Implications for Design and Service Support. Management Science.
Sep. 1995, pp. 1456-1460
38
structure, and strategic groupings60 among other things to get a good picture
of what the competitive environment is like.
Competitor analysis is especially important when it comes to new product

introductions. There are many advantages, especially for revenue, for a
software company that can show major enhancement to software or be first to
market.61 This makes competitor analysis particularly important because it can
help a firm decide which new product opportunities to pursue by what the
market size will be by following the actions of other competitors.
Empirical research in the software product sector in many countries has
shown that knowledge about the competitors strategies is very important to
help predict failures from successes in product software.62 Knowing what is
going around in the software industry is essential for software firms to be
successful. Firms need to know which other software products their product
must work with to provide the most usability for the customer.
2.6 Summary
Market analysis as an important part of marketing research is a process of
systematic data gathering; recording and analyzing of data about customers,
competitors and the market. Every Market analysis process is different, but
some authors indicate that the typical market analysis process consists of:
PEST analysis; Opportunities and threats analysis; Market characteristics
analysis; Market trends analysis; Customer analysis; Competitors analysis
and Market segmentation.
The market analysis conducted in the practical part of this diploma thesis
is analyzing software as a product. Market analysis for product software
consists of a number of techniques that allow an organization to collect and
60
Strategic groupings can be in the form of alliances between product software firms
(common strategic alliance formations for software firms are research partnerships, joint
61
MESSERSCHMITT, D. G., SZYPERSKI C. Marketplace Issues in Software Planning and
Design. IEE Software. 2004. pp. 62-70.
62
CORNISH, S. L. Product Innovation and the Spatial Dynamics of Market Intelligence: Does
Proximity to Markets Matter? Economic Geography. Apr. 1997. pp. 143-165
39
disseminate information from their external environment of software products
for use in determining their market strategy and actions.
Market analysis of product software generally consists of research in the
fields of:
general market characteristics;
customer analysis;
competitors analysis;
and market segmentation.
3. METHODOLOGY
It is very important to take into account, that the market analysis in the
practical part is not a general analysis of Austrian software market. It is a
market analysis of specific software as a product that should be launched into
the Austrian e-government market.
The main objective of the e-government market analysis is to identify and

analyze the market in which the final product will be positioned. The market
analysis identifies on the one hand the possibilities of a final product from a
commercial point of view, but at the same time it also identifies the
competition. The analysis of the market aims at identifying the appropriate
position of the product on the market of similar IT solutions.
3.1 Secondary research

Secondary research activities are regularly conducted through analyzing
and evaluating official company documents (annual and quarterly reports,
press releases, etc.), external reports regarding the external environment in
general as well as the e-government environment in particular.
Before secondary research is conducted, industrial market segmentation
with the goal to determine and specify the target market scope is conducted.
The segmentation criteria are: geographical location and industry
Secondary research is conducted by:

40
GENERAL MARKET CHARASTERICTICS:
The goal of the analysis is to gain general market information on the

Austrian e-government market. The analysis consists of:
External environment analysis;
E-Government markets characteristics;
Market trends based on EU publications as well as on external e-
government reports and internal SAP reports;
Market sizing and growth based on e-government budget
estimation for federal and local e-government authorities as well as
on IT spending in various e-government markets
Used research method is: Descriptive research

Used analysis methods are: PEST Analysis
COMPETITORS ANALYSIS:
The goal of the analysis is to gain information on the insights of

competitors that will influence the product market investment decision and the
effort to structure an effective market strategy. The analysis starts with the
identification of the current and potential competitors. After the identification
process has been finalized, the focus is to attempt and understand the
strategies of the identified competitors. The analysis is based on:
internal competitors reports
external reports of leading research companies a
internet recherch
Used research method is: Descriptive research

Used analysis method is: Porters five forces model
3.2 Primary research

In the primary research, the customer analysis is replaced by the user
analysis.
41
In public sector customer stands for a specific government institution
(ministry, city, municipality, etc.) and user for an individual who makes use of
services, or products. Those can be citizens or government employees. The
satisfaction of users is in both cases of crucial importance. If users arent
satisfied with offered services or products, the government institutions wont
buy them. 63
The software product presented in this diploma thesis is developed for
citizens as final users and the purpose of primary research is regarding this
fact to analyze main users characteristics and skill level in using web in order
to identify the main product benefits and functionalities.
Based on this analysis, user problems and requirements were taken into
account, in order to create and improve the developed product.
For the purpose of primary data collection, an online questionnaire64 has

been constructed. Because of its flexibility, the questionnaire is by far the
most common instrument used to collect primary data.
Questionnaire construction is properly regarded as a very imperfect art.
There is no established procedure that will lead consistently to good
questionnaire. Questionnaires need to be carefully developed, tested, and
debugged before they are administered on a large scale. In preparing the
questionnaire, the researcher carefully chooses the questions and their form,
wording and sequence. The form of the questionnaire can influence the
response.65
There are two kinds of questions:
Close-end questions specify all the possible answers and provide
answers that are easier to interpret and tabulate
Open-end questions allow respondents to answer in their own
words and often reveal more about what people think.
63
WIND, M. Handbuch IT in der Verwaltung. 2006. pp. 12-20. Own translation.
64
Questionnaire is a formalized set of questions for obtaining information about respondents,
MALHOTRA, N. K. Marketing Research. 2004. pp. 280.
65
42
A detailed overview of all questionnaire type of questions is listed in the
Appendix.
3.1 Data analysis
The questionnaire is evaluated by a computer program called SPSS

(originally, Statistical Package for the Social Sciences) that is used by market
researchers and survey companies for statistical analysis. In the diploma
thesis used statistics included in the base software are:
Descriptive statistics: Frequency distribution and Cross tabulation

Bivariate statistics: Correlation analysis
Prediction for identifying groups: Cluster analysis
Frequency distribution simply reports the number of responses that each

question received, and in the simplest way of determining the empirical
distribution of the variable. A frequency distribution organizes data into
classes, or groups of values, and shows the number of observations from the
data set that falls into each class.
Cross Tabulation is the statistical analysis technique for studying the

relationships among and between variables. It is also called contingency table
analysis. In cross tabulation, the sample is divided into subgroups in order to
learn how the dependent variable varies from group or subgroup.
Cross (Contingency) tabs are frequently used because they are easy to
understand, can be used with any level of data and they are simple to
conduct. Another big advantage of cross tabulation is the possibility to test the
statistical significance of analyzed variables through Chi-square test66.
As a general rule, the results of the chi-square test are valid only if the
value of expected frequency in each cell of the contingency table is at least 5.
Correlation analysis involves measuring the strength of the relationship

between two variables. The Pearson correlation coefficient (r) measures the
66
Chi square test is testing the null hypothesis that there is no relationship between the two
variables
43
degree to which there is a linear association between two variables. The
sample correlation r always lies between 1 and -1.
r = 1, indicates a perfect positive correlation between two variables
r = -1, there is a perfect negative correlation
r = 0, reflects the absence of correlation.67
Cluster analysis is a technique for grouping individuals or subjects in

unknown groups. The cluster analysis is mostly used to identify similar
consumer segments. Thus it is useful to cluster customers. We might group
the customers by the product benefit they seek, by the personal
characteristics, by lifestyle, etc.
There are many different clustering methods that generate different
solutions. The method used in this diploma thesis is called Wards method.
This procedure tends to combine clusters with a small number of
observations. It is also biased toward producing clusters with approximately
the same number of observations. The main characteristic is: to minimize
within cluster variation and create mostly homogeny groups.
67
Positive correlation reflects a tendency for a high value in one variable to be associated
with a high value in the second. Negative correlation reflects an association between a high
value in one variable and a low value in the second variable.
SIVIA, D.A. Data analysis. 2006. pp. 60-65.
44
PRACTICAL PART
Before I begin with the analysis itself, I will carry out the industrial market
segmentation, to specify the analyzed market segment. After that, I will
emphasize the importance of the public sector and government markets for IT
and software companies; describe the e-government markets as significant
governments submarkets and point out their growing trend within the
European Union.
Following, the company and the developed product will be characterized
and the market analysis will be conducted.
4. INDUSTRIAL MARKET SEGMENTATION
For structuring industrial markets mainly three differentiating factors are

used. Kotler defines these as: Industries; Location and Size of enterprise68. Im
using two Kotlers segmentation variables: geographical location and industry,
adding application area as the third one. Application area is an important
market segmentation criterion in IT and software industry69.
4.1 By Industry
70
Based on vertical markets segmentation, the analyzed industry is the
public sector industry that represents great future opportunities for IT and
software companies based on the world wide government transformation and
the need of better and flexible IT technologies.71
The public sector industry is divided into four sub industries: Government;
Health and social services; Education and Defense.
68
KOTLER, P., BLIEMEL, F.; Marketing Management, Analyse, Planung, Umsetzung und
Steuerung. 1995. pp. 20-25
69
BROCKHOFF, K. Industrial Research for Future Competitiveness. 1997. pp.30-35
70
Vertical Market is a market which meets the needs of a specific industry
71
The IT opportunities in public sector industry are detailed described in following chapter.
45
4.2 By Application Segment
Speaking about IT technologies in public sector, four main application
areas come into consideration: e-government, e-health, e-education and e-
defense (or public security).
The application segment in the conducted market analysis is e-
government. E-Government is characterized as the use of information and
communication technologies in the government sector72. E-government
markets represent nowadays the biggest challenge for IT and software
companies within the public sector industry and are important target markets
of world leading IT and software companies.
4.3 By Geographical Location

The analyzed Region is Austria. Austria, officially the Republic of Austria
is a landlocked country in Central Europe. It is a parliamentary representative
democracy consisting of nine federal states and since 1995 a member of the
European Union. Austria is one of the most active countries in the e-
government arena. In the year 2006, Austria has become Europes leading
country in providing e-Services to citizens with the highest e-government
sophistication stage73 within the European Union.74 Based on these facts,
Austria represents the most attractive e-government market in the European
Union.
The market analysis is conducted for the Austrian e-government market.
In the following chapter, the importance of public sector industry and e-
government markets for IT and software companies are explained.
5. IT TECHNOLOGIES IN GOVERNMENT MARKETS
The importance of government markets for IT and software companies

increased significantly within the last decade. The main reason is the
72
Website of Europes Information Society
73
Sophistication stage is an indicator showing the availability of public services online;
74
Capgemini. Online Availability of Public Services: How Is Europe Progressing? 2006. pp.
5-16
46
transformation of public administration that is putting major emphasis on
process consolidation, standardization, transparency and simplification.
Flexible IT technologies play a crucial role in this transformation process.
5.1 Strong IT Opportunities in Government markets

Citizens and businesss demand for around-the-clock access to
information and services continues to extremely increase. In 2006, information
and communication technologies have become even more important than a
year ago in delivering on the many challenging objectives of government
organizations worldwide, ranging from better operational efficiency and
performance, to more-effective citizen service, through the transformation
towards more-integrated, joined-up processes and more-accurate and
effective management of programs and initiatives75. Regarding Gartner
Research, IT Infrastructure is still the largest single global trend to drive
successful government transformation76. Leading analysts expect that the
government organizations of the future will need to be more constituent-
focused, more business-like, agile and smarter in their use of technology77.
Based on all these facts, government markets offer strong opportunities for
IT and software companies not only today, but also in the future.
The use of information and communication technologies to make public

administrations more efficient and effective is called e-government78. Based
on studies of leading research companies, e-government represents
nowadays the biggest challenge for IT and software companies within the
public sector.79
The new IDC statistic underlines this potential by showing, that the
government sector has the highest software growth opportunities worldwide
75
Mc CLURE, D. IT Drivers in Public Sector. 2006
76
Di MAJO, A. What Does Technology Mean to Government Transformation? 2006
77
Datamonitor. Future IT Trends in Public Sector. 2006
78
Website of Europes Information Society
79
Datamonitor. Future IT Trends in Public Sector. 2006, Forrester Research. IT Trends in
Public Sector. 2006, and Gartner Research, IT Drivers in Public Sector. 2006.
47
(see Figure 4). Much of these opportunities are for starting new or expanding
existing e-government initiatives.
Figure 4: Best Worldwide Software Opportunities
12
10 F
J
2005-2006 growth
8
EL I H
6 C
K A
G
4 D
2 B
0
-20 0 20 40 60 80 100 120
Relative size of software spending
A Finance B Communications C Consumer

D Manufacturing E Education F Government
G Healthcare H Retail/wholesales I Service
J Utilities K Resource L Transport
Source: author, based on information from: HENDRICK, D., OLOFSON, C. and

ROGERS, W. S. Worldwide Software Opportunities. IDC. Dec. 2006.
5.2 E-government: new challenge for European Union

Within the last years, the importance of e-government within the European
Union considerably increased. Established in the Action Plan for the
European Commissions initiative e-Europe 2005, e-government is one of
Europes foremost challenges80.
The bulk of the execution of any of the decisions that might be adopted
was going to depend on the actions undertaken by the Member States.
Besides the e-government actions of the individual Member States, the
European Commission is currently co-funding a number of projects to meet
above mentioned e-government challenges. The projects regarding software
products and new IT technologies are planned to be implemented in the
majority of the Member States in the near future.
80
e-Europe Action plan 2005: An information society for all. Brussels. June 2002.
48
The software prototype, this market analysis is implemented for, is
developed within a research project funded by the European Commission.
The project is lead by a company, who is the global market leader for IT and
software solutions in public sector and is run together with further partners
from industry, government and academia.
The company and research prototype are briefly being introduced in the
following chapter.
Comment: For reasons of simplification in running this market analysis,
this research prototype has been considered rather as being already a
product instead of becoming a product in the near future to estimate the
market potential.
6. COMPANY AND PRODUCT INTRODUCTION
6.1. SAP AG
The market analysis, conducted in the practical part of the diploma thesis
is worked out for SAP (Systems Applications and Products in Data
Processing), the largest business software company in the world and the
world's third-largest independent software provider overall.
The company was founded in 1972 by five former IBM employees with the
vision: to develop standard application software for real-time business
processing. Today, SAP employs more than 39,300 people in more than 50
countries and drives innovation in more than 25 industries. Total revenues in
the previous year amount about 8 500 Mio , whereas 2 800 Mio was
earned by software products.
SAP provides a comprehensive range of enterprise software applications
and business solutions to empower every aspect of the business. With more
than three decades of experience serving the needs of the public sector, SAP
leads the global market in delivering the industrys most complete and
integrated solutions. SAP delivers proven, flexible solutions that incorporate
best practices and emerging global standards to address public sector
organization needs.
49
6.2. FIT Project
Through SAP Research, SAP introduces new ideas for future solutions. As
the global technology research unit of SAP, SAP Research significantly
contributes to SAP's product portfolio and extends SAP's leading position by
identifying and shaping emerging IT trends through applied research and
corporate venturing. In contrast to SAP's product groups, which work on new
functions and releases, SAP researchers explore opportunities that haven't
yet been developed into products. The business model of SAP Research is
based on co-innovation through collaborative research.
The conducted market research is carried out for software as a product,
called FIT e-government web portal that is currently developed within the
FIT Project. The FIT research project is part of the European Community's
Sixth Framework Program81 for research and development and is partly
funded by the European Commission. The project has started on 01.01.2006
and takes 30 months. The Project consortium consists of several international
partners both from industry, government and academia, lead by SAP. The
final outcome of the research project will lead to new and enhanced products
within the industrial partners product portfolio.
The overall objective of FIT is to develop, test and validate a self-adaptive
e-government web portal based on semantic technologies that will ensure that
the quality of public services is proactively and continually fitted to the
changing preferences and increasing expectations of e-citizens. This is
expected to be achieved as FIT places into the centre of e-government stage
the citizens themselves.
6.3 Self-adaptive e-Government Web Portal

Web portals are defined as entry points for information presentation and
exchange over the internet used by a community of interest82. This
information exchange is more and more based on adaptive web, which is
defined as an open information space that allows collaboration between
81
For more information see: Participation in European Research; European Commission.
Feb. 2004.
82
HEINZL, A. Wirtschaftsinformatik II. Lecture Materials. Own Translation.
50
portals to enable better adaptation to the needs of their users.83 Web Portals
belong to the application software product family. Application software is a
subclass of computer software that employs the capabilities of a computer
directly to a task that the user wishes to perform84.
The main benefit of the self adaptive e-government web portal is
considerable improvement of e-government portals through continually
growing usability (as one of the seven customer satisfaction dimension for
software as a product).
According to the latest study about the usability of e-government web
portals, usability is still an important issue that must be improved. Not being
able to find the needed service/information, difficult use of e-services, the
need for better help regarding the e-service provided on the website, the
language understandability etc. are some of frequently reported usability
problems. These problems have arisen since technological possibilities rather
than user needs have determined the design of government online services.
Indeed, many of the current generation of e-government services are offline
services converted for on-line use without further development and
optimization of the services.85
FIT technologies will apply concepts related to the users behavior in the
portal such as language skill, navigation skill, thus enabling the customization
of the service delivery and the way how services are published.
Self-adaptive web will enable public administration to provide, proactively,
context-sensitive and personalized services/information through the dynamical
discovery of each users preferences by analyzing their behavior on a
semantic basis. 86
83
AROYO, L., De BRA, P., and CHEPEGIN, V. The Next Big Thing: Adaptive Web- Based
Systems. 2004.
84
HEINZL, A. Wirtschaftsinformatik II. Lecture Materials. Own Translation.
85
User Satisfaction and Usage Survey of e-government services. Dec. 2004. pp. 40-45
86
Semantic technology encode meanings separately from data and content files; and
separately from application code
51
In that way the FIT research addresses three of four key research
challenges envisioned for e-government in the EU in the next decade:
knowledge-based, user-centered and networked e-government.87
The main objective of this market analysis is to find the best market
possibilities for a self-adaptive e-government web portal on the Austrian e-
government market.
7. MARKET ANALYSIS
I start my market analysis by examining secondary data. After that,
primary data collection and analysis will be conducted.
7.1 General Characteristics of the Austrian e-Government

market
Austria has significantly improved the availability of public e-services within
the previous years and has become Europes e-government leading country.
A number of administrative procedures can already be conducted entirely via
the Internet. According to Eurostat data, the use of e-government services by
citizens in Austria is above the EU average (29% against 22% EU).88
The Market analysis begins with the external environmental analysis,

called PEST Analysis.
7.1.1 PEST Analysis

PEST analysis involves the political, economical, social and technological
influences that have an impact on the Austrian e-government market. In
particular, political decisions at an EU and Austrian level, the economic
situation in Austria, social environment as well as new emerging technologies
influence the market and set new trends.
87
e-Government in the EU in the next decade: the vision and key challenges. European
Commission. Aug.2004
88
Eurostat Website
52
7.1.1.1 Political Factors
The launch of the European strategy for the development of e-government
at the Lisbon European Council 2002 was the first big step forward to a new
e-government era in Europe.
The majority of the European States takes over the basic e-government
challenges and principles, established in the e-Europe Action Plan 2002 and
2005. The bulk of the execution of any decisions that might be adopted is
going to depend on the actions of the Member States.
The responsibility for Austrias e-government strategy/policies lies directly
with the Federal Chancellor.89
Austrian e-government is based on the Austrian e-Government Act that
entered into force as from 1st of March 2004. The Act sets the obligation for
public bodies to be capable of full electronic transactional service delivery by
200890 as well as closer cooperation between all authorities providing e-
government services. 91
On 1st April 2005, Data Protection Act 2000 became effective. It regulates
the pre-conditions for the lawful use and transfer of data. The most important
requirement is that data-security protection shall be taken by all
organizational units 92
On 1st January 2006, Federal Chancellery published An ABC Guide to E-
Government in Austria which sets among other things, fundamental principles
for e-government in Austria.93
The tax reform of 2005 was also an important political factor with
significant influence on the Austrian business environment. The cornerstones
of the 2005 tax reform were the reduction of corporate income tax from 34%
to 25%; a new modern group taxation system enabling the pooling of profits
and losses of Austrian resident group companies; and new income tax tariff 94
89
For more information see the Website of Federal Chancellery Austria
90
E-GovG; Part 1,Sec. 1(1)
91
E-GovG, Part 1, Sec. 1 (2-3)
92
DSG 2000, Part 1, Sec.14 (1)
93
An ABC Guide to E-Government in Austria. 2006. pp. 23-25.
94
Steuerreform 2005. OVP 2004
53
The tax reduction had a negative impact on government revenue95.
Currently is the government revenue quota is still on decrease, but positive
economical growth neutralized the impact of tax reduction.
Based on this fact, government revenue in absolute figures totaled 122.9
billion (+4.0% compared with the previous year).
Table 5: Ratios for the Federal Government Sector

Government Government Government deficit
GDP
(in mill)
Revenue expenditure (-) / surplus (+)
(in % of GDP) (in % of GDP) (in % of GDP)
2002 220 841 50.0 50.7 -0.6
2003 226 243 49.3 51.1 -1.6
2004 235 819 49.0 50.3 -1.2
2005 245 103 48.2 49.9 -1.7
2006 256 389 48.0 49.2 -1.1
2007 268 470 47.8 48.7 -0,9
Source: Statistic Austria. 2007.
Another political factor was the general election for the National Council in
Austria, held on 1st October 2006. The strongest parties in Austria remain
SP and VP96. Based on these facts, the e-government reforms will
continue without considerable changes.
The new government published on 1st January 2007 the Program of the
Austrian Federal Government for the 23rd Legislative Period. Based on this
program, a constitutional and administrative reform was submitted. (The
reform should be completed at the end of the year 2007) The program put
emphasis on strengthening of the autonomy of the Federal Provinces and the
legal position of the municipalities and pointed out the role of municipalities for
the implementation of the e-government initiative.97
Generally, the reforms initiated by the Austrian Federal Government are

not yet complete and continue to drive the IT services market.
96
SP (Sozialdemokratische Partei sterreichs ); VP (sterreichische Volkspartei)
97
Program of the Austrian Federal Government. 2007. pp.25-35
54
7.1.1.2 Economical Factors
Austria, with its well-developed market economy and high standard of

living, is closely tied to other EU economies (especially to Germany). The
outgoing government has successfully pursued a comprehensive economic
reform program, aimed at streamlining government, creating a more
competitive business environment, further strengthening Austria's
attractiveness as an investment location, and implementing effective pension
reforms; however, lower taxes in 2005-2006 have lead to a small budget
deficit in 2006.
Gross domestic product (GDP) at current prices rose by 11.3 billion, or

4.6%, to approximately 256.4 billion in 2006. Hence, GDP per inhabitant
amounted to 31,030 (+4.2%). The economic growth has a positive impact
on corporate profits, business investment, employment and wage growth.
As we can see in the Table 6, in the next two years, the dynamic growth
will slow down in the wake of the value-added tax increase in Germany and
the more sluggish international economy.
Table 6 : Economic Growth Austria 2003-2008

Years 2003 2004 2005 2006 2007P 2008 P
GDP at current prices, 226.2 235.8 245.1 256.4 265.4 274.9
bill. EUR
% change to previous + 2.4 + 4.2 + 3.9 + 4.6 + 3.5 + 3.6
year
P
Prediction of Federal Ministry of Finance, Austria
Source: author, based on information from Statistics Austria. March 2007. and STIEBER, H.
Exogenous Determinants of Austrian Economical Growth. Federal Ministry of Finance.
Austria. 2006
Concerning the e-government market in Austria, the economical growth

has positive impact on Austrian research, technology and innovation policy
(regarding government as well as commercial companies) and domestic as
well as foreign ICT investments. The slow-down of the economical growth,
55
predicted for the following two years, hasnt negative impact on the e-
government future markets development98.
Austrian inflation rates are consistently among the lowest in Europe and
with 1.5 under the EU (25) average (EU (25) = 2.2). In the following couple of
years temporary increase in the pace at which prices are rising is predicted
and inflation should settle at 1.7 in 2007 and 1.8 in 2008, remaining still under
the EU average99.
Low inflation has positive impact on the whole Austrian business
environment, including e-government markets.
Austrian unemployment rates are, like the inflation, the lowest in Europe
and with 6.8 in 2006, under the EU (25) average (EU (25) = 8.5).
Unemployment seems difficult to curb due to strong labor immigration and a
pension reform which tries to keep older workers in the labor market, both
generating ongoing strong labor supply. Based on AMS100 prediction in 2006,
unemployment will decrease during 2007 and 2010101.
Unemployment creates an unstable business and consumer climate, with
negative effects on IT services investments and IT spending habits.
7.1.1.3 Social Factors

Future demand will largely depend on demographics factors
Every fourth Austrian will soon be of retirement age.

Lower birth rate (8.74 births/1000 population) than death rate (9.76
deaths/1000 population)
Low population growth by 0,09 %
Regarding this facts, immigration is the motor for growth.102
98
Wirtschaftsbericht sterreich. Federal Ministry of Finance Austria. 2006. pp. 52-68. Own
translation.
99
Statistic Austria. March 2007, and Ministry of Finance Austria. March 2007.
100
AMS - Austrian Labor Market Service is an Austrian public body providing services for and
on the labour market.
101
WIFO (Wirtschaftskammer sterreich). 2007.
102
World Fact Book. CIA (Central Intelligent Agency) Website. 2006.
56
E-Government markets in the near future will be influenced by aging
population. Increase of usability will have crucial importance for e-government
webs and portals.
Consumer needs will be more in the area of wellness, health, and vitality.
This opens many new opportunities for FIT self adaptive web portal not only in
e-government, but also in e-health markets.
Computer usage depended greatly on age. In the 16 to 24 age group, 91%

of respondents have used a computer, compared to only 12% in the 65 to 74
age group103.
7.1.1.4 Technological Factors

Austrias R&D Intensity expected to be 2.43% of the GDP in 2006 (an
increase of 7.9% against 2005). According to the latest estimation of Statistics
Austria on R&D performed in Austria, 6.24 billion is expected to be spent in
2006
New information technologies (Internet) are redefining the way public

administration and e-government is done. Processes are improving,
accelerating, and becoming more streamlined.
Information society indicators belong to the highest in Europe:
Percentage of households with Internet access: 52% (2006)

Percentage of enterprises with Internet access: 94% (2004)
Percentage of individuals using the Internet for interacting with public
authorities: obtaining information 28%, downloading forms 22,2%,
returning filled forms 12,1% (2006)
Percentage of enterprises using the Internet for interacting with public
authorities: obtaining information 56%, downloading forms 76%,
returning filled forms 54% (2006)104
103
The European survey on the usage of information and communication technology (ICT) in
households 2006. Statistic Austria. 2006.
57
In the following subchapter, whole Austrian e-government market will be
analyzed and characterized.
7.1.2 Austrian e-Government Market
Government segment, as an important part of public sector industry is sub-

divided into three basic parts:
1. Federal administration (Federation);

2. Regional administration (federal states); and
3. Local administration (municipalities and localities).
This sub-division has to be taken into consideration by every e-

government market analysis. The structure and organization of Austrian public
sector has significant influence on the e-Government market105.
7.1.2.1 Austrian Public Sector
GENERAL CHARACTERISTICS:
The Austrian Public Sector, compared to other European countries (for

example Germany, France) is not highly diversified.
Austria has 11 Federal Ministries. The Federal Ministries and the
authorities subordinated to them are entrusted with conducting all business on
behalf of the Federal Administration. The powers and responsibilities of the
individual Federal Ministries are clearly defined in the Federal Ministries Act.
Austria has about 8,266 million inhabitants and is constituted of 9 federal
states: 1. Burgenland;, 2. Carinthia, 3. Lower Austria, 4. Upper Austria, 5.
Salzburg, 6. Styria, 7. Tyrol, 8. Vorarlberg, 9. Vienna.
The members of the Federal States Governments are assisted by
Province Government Offices which are headed by directors. The 84 district
authorities and their branch offices are subordinated to the federal states
104
Eurostat Website.
105
e-Government in the European Countries. IDABC e-Government Observatory. 2006.
58
authorities. They are responsible for performing administrative functions for
the province but also act on behalf of the Federal Administration.
Besides the Federal Government and the Federal States Governments,
2,351 towns and local communities carry out administrative tasks.
Figure 5: Total spending by areas in 2006
Local Administration
Regional Administration
14%
38% Federal Administration
24% EU-spendinge
1%
24% Spending on special
1% assets
Social Security
Source: Statistic Austria. 2007.
The total Federal expenses in the Public Sector amounted to 66.172 Mio
Euro in 2006. In the graph above they are broken down by function.
Expenditures for social security constitute the biggest chunk of all public
spending, followed by federal, regional and local administrations.
The two other segments are spending for the European Union and
spending on special assets of the federal administration.
SOFTWARE AND IT SERVICES MARKET IN AUSTRIAN PUBLIC

SECTOR:
The core software and IT services (SITS) market in the Austrian public
sector is worth 0.48 billion in 2006, which represents approx. 13% of the
overall Austrian SITS market.106 Regarding this volume it is therefore by one
of the most important sectors in the Austrian SITS market.
106
KALTENBRUNNER, R. Austria IT Services 2006-2010 Forecast. July 2006
59
Talking about the core software and IT services market in the Austrian
public sector, the total of all revenues that have been generated through the
sale of software products and solutions, project services as well as
outsourcing and processing services are taking into account. (See Figure 6)
Figure 6: Share of the public sector in the total Austrian SITS market
Transport; 4%
Service; 8%
Retail; 8% Manufacturing;
38%
Utilities; 6%
Telecom; 6%
Public; 13% Banking; 11%
Insurance; 6%
Source: author, based on information from KALTENBRUNNER, R. Austria IT Services

2006-2010 Forecast. July 2006.
As we can see in the Figure 6, Public sector is the second most profitable
sector in the Austrian SITS market. The total IT revenue, been generated in
the Austria public sector amounts 0.0624 billion .
PRODUCTS AND SERVICES:

The market for application software products is still relatively
underdeveloped compared to other industries such as the manufacturing
industry. Public administrations use a lot of custom developed software
solutions and, as far as in-house development activities are concerned, the
public sector is topped only by the banking sector. This is due to the fact that
there are hardly any standard software products available that fulfill the needs
of public institutions. This underdeveloped standard software offering is a
result from the fact that authorities were doing all their development
themselves or in custom development. The share of custom development
projects is particularly high in the public sector, even if there is recently a shift
towards standard products, which will generate implementation projects.
60
7.1.2.2 Austrian e-Government Principles
The Austrian e-government strategy is based on some important
principles:
Convenience through efficiency
In todays information society, citizens expect greater convenience from online
procedures: No need to go to an office, no restrictive office hours, no waiting,
no being sent from one authority to the next, but rather straightforward
processes, intelligent forms which are easier to complete, responsible
handling of data and speedy completion of requests. In order to meet these
expectations, public administration must optimize processes by automating
them and making use of process models.
Transparency
Transparent processes provide the basis for cooperation between the private
sector and administration.
Accessibility
Services provided by the public authorities must be available to all by
prevention of social and technical barriers.
Usability
The range of offered electronic services must be structured in an easily
comprehensible, clear and straightforward manner. A standard layout for
forms and portal structure, arranged according to personal circumstances,
have to facilitate clarity, navigation and usability.
Sustainability
Implementation of a modular structure which permits continuous further
development
Interoperability
Systems must be able to communicate with each other.
Cooperation
Great importance is placed on cooperation between the Federal
Government, the provinces, municipalities and local authorities.
Technological neutrality
E-government solutions must be open to new technologies. No particular
technology has preference and dependency on monopolies must be avoided.
61
Security and data protection107
Austrian government is still searching for suitable new technologies that
will meet all above mentioned principles108. Considerable Improvement of
usability, more transparent processes, creation of intelligent, user friendly
services, by use of semantic modeling, prevention of social and technical
barriers and thereby improvement of accessibility, by guarantee of better
sustainability, interoperability are strong arguments for the new FIT e-
government web portal.
Based on the fact that the product is still in research phase and the
implementation should be carried out first in summer 2008, I recommend
creating the web portal in a way that will meet all above mentioned principles.
The fulfilling of all e-government principles will lead to a great competitive
advantage and will considerably increase the products implementation
opportunities on Austrian e-government market.
7.1.2.3 E-Government Market Trends
Regarding to Austrian e-government principles, as well as European e-

government standards and the need to improve Austrian public image; e-
government trends in Austria are:
Politically motivated IT initiatives

Growing E-government budgets (Total spending in the Austrian
government sector grew by 7.6% year-on-year) 109
Increasing total IT spending in e-government domain110
Shift towards standard software products, based on European e-
government standards.
Increasing trend of outsourcing 111 and open source software (OSS)
107
An ABC Guide to E-Government in Austria. 2006. pp. 20-30.
108
Website of Federal Chancellery Austria.
109
IKT Masterplan sterreich. 2005. pp. 62-68
110
IDC believes that IT services spending within this sector will increase at a rate higher than
that of other vertical markets in the medium term. BROOKS, A. Prediction on the Austrian
Government Sector in 2006. IDC. 2006. pp. 10-15
62
Better cooperation between federal, state and local authorities, in order to
work more efficiently.
Networking and network integration of federal public institutions is still one
of the main priorities.
Improvement of usability plays a major role due to the fact that the majority
of Austrian e-services are still difficult to use.
Increasing interest of several federal ministries, cities and municipalities in
new e-government technologies.
Strong orientation on citizens demands and usage of semantic
technologies.
7.1.2.4 Key E-Government Market Drivers

The key drivers of IT and software solutions and technologies in national,
federal and local e-government markets are the following:112
Demand to constituents easy to use, easy to understand government
services and programs
Transition from simple, information-only websites to full service portals
able to respond to all citizens needs
Vertical integration with Federal, State & Local IT systems
Strong emphasis on open source software
Preference of semantic technologies.
7.1.2.5 Austrian e-Government Market Size
The size of the Austrian e-government market is determined by total e-

government IT investments and is based on telephone interview with Mag.
Martin Spitzenberger, the director of Federal Chancellery Department I/11.113
111
Outsourcing in public sector is in Austria on pretty low level but has strong growing
tendency in following couple of years; based on: GOODNESS, E. Outsourcing in Public
Sector. 2006. pp.5
112
BARNREITER, M. SITSI in Public Sector Austria. Feb. 2007, and Mc CLURE, D. IT
Drivers in Public Sector. Sep. 2006.
113
For full contact information see the contact list.
63
The Austrian government views IT as an enabler with which it can reach
greater service efficiencies. Based on this fact, the Austrian e-government
investments are higher than in the majority of the other European countries.
Areas of high government spending include integration and replacement or
upgrading of existing information systems.
Austrian government has spent about 0.7 % of total federal expenses in

the Public sector on e-government. (Total Federal expenses in the public
sector amounts to 66.172 mill )
Total IT spending in the government sector in 2006 amounts 441.72 mill

. The regional/local government sector spent $110.43 mill , while the central
government spent 331.29 mill .
The market size is shown in Figure 7.
Figure 7: Austrian e-Government Market Size (in mill )
110,43;
25%
331,29;
75%
Regional/Local Gvernment Spending

Central Government Spending
Source: author.
7.1.2.6 Austrian e-Government Market Growth

The Austrian government sector has increased its IT spending by 4.5 %
year-on-year to 441.72 mill in 2006. The local government sector spent
110.43 mill (up 4.4% year-on-year) on IT services in 2006, while the central
government spent 331.29 mill (up 5.0%).
The Austrian e-government market is growing, as shown in Table 7.
64
Table 7: Austrian e-Government Market growth rate
(in % change to previous year)
2003 2004 2005 2006

TOTAL IT spending in government
sector
+8,20% +8,00% +7,50% +4,50%
Federal/ Local government IT spending +6,20% +7,00% +14,60% +5,00%
Central government IT spending +4,30% +5,10% +5,50% +4,40%
Source: Information and Communication Technologies Austria. Proviso Austria. 2006.
Even if the annual market growth rate is slowing down, the market trend
should remain positive within the following couple of years. According to IDC
statistics as well as Gartner research, the compound annual growth rate
(CAGR) from 2003 to 2008 is 7%.114
The annual e-government spending is shown in Figure 8.
Figure 8: Austrian annual e-Government Spending (2003-2006)
450,000
400,000
350,000
annual 300,000 317,615 331,290
250,000 286,930 300,146
government IT
200,000
investments
150,000
100,000
85,253 89,740 105,084 110,430
50,000
0,000
2003 2004 2005 2006
year
Federal/ Local government IT spending Central government IT spending
Source: author.
7.1.2.7 Austrian e-Government Actors

Main roles and responsibilities for e-Government development
In this chapter, I introduce the most important e-government bodies,

responsible for e-government coordination and implementation on all
114
KALTENBRUNNER, R. Austria IT Services 2006-2010 Forecast. July 2006. pp. 40-50 and
DUECK, P., FRANCE, N. Market Trends: IT Services in European Union. 2005
65
administrative levels in Austria. The successful implementation of the new self
adaptive e-government web portal in Austria depends on rulings and
decisions of those bodies.
The responsibility for Austria's e-Government strategy/policy lies directly
by the Federal Chancellor. E-Government in Austria is divided into: national
e-government (represented by the Federation), federal e-government
(represented by Federal States) and local e-government (represented by
Austrian municipalities).
NATIONAL E-GOVERNMENT
For e-government coordination of all federal Ministries is responsible the

ICT Strategy Unit, a special administrative unit within the Federal Chancellery.
The overall Coordination on all levels of Government is ensured by
Platform Digital Austria115. This strategic platform is composed of
representatives of the federal government, regions, cities, municipalities,
private and public sector bodies. The main tasks of the Platform are strategic
decision-making, priority setting regarding the implementation of common e-
Government projects, their coordination and monitoring and the
communication of these activities. The Platform is headed by the Chief
Information Officer and supported by the ICT Strategy Unit based in the
Federal Chancellery.
Those two bodies are of crucial importance for organizational issues of e-

Government and for the coordination of the technical infrastructure.
REGIONAL & LOCAL E-GOVERNMENT
In order to provide a uniform system of e-government, intensive

cooperation across all levels of administration is required116. Such
coordination is guaranteed by the cooperation with the Platform Digital
115
Digital Austria is a strategic Platform that ensures the active participation of all levels of
Government. It is composed of representatives of the federal government, regions, cities,
municipalities, private and public sector bodies.
116
An ABC Guide to E-Government in Austria. 2006. pp. 84-90
66
Austria which operates as umbrella for all working groups open for
representatives of the federal, regional and local authorities. The open
participation enables Federal administration, regions, the Austrian Association
of Cities and Towns and the Austrian Association of Municipalities to develop
joint solutions for legal, technical and organizational issues. The required
transparency is ensured by a common information and communication
platform.
However, responsibility for implementation lies within the individual
Federal State and Municipal Governments.
7.2 Competitor Analysis
The competitor analysis is based on Porters five forces analysis model,

in which market factors can be analyzed so as to make a strategic
assessment of the competitive position of a given supplier, product or
competitor in a given market. The five forces that Porter suggests that drive
competition are visualize in the following figure:
Figure 9: Porters Five Forces
Source: HOMBURG Ch.; Marketing I.; Lecture Materials
67
7.2.1 Barriers to Entry (high)
Barriers to entry are characterized as obstacles that discourage or prevent

companies from entering an industry or market. They relate to economies of
scale117; existence of learning and experience curve effects118; brand
preferences and customer loyalty; capital requirements; cost disadvantages
independent of size; access to distribution; government actions and policies.
As I said before, public sector industry is currently driven by IT
technologies.
E-government, as an important public sector sub industry is characterized
by high barriers to entry119.
The relevant barriers to entry are:
High levels of knowledge on many asset types, jurisdictions, market

practice, infrastructure organizations and complex funding types.
Strong technology and quality standards
New entrants are rare, due to immense costs of software development
before any revenue. (75% of the costs during the research and
development phase).Typically they start as niche players in one area and
then they expand.
High level of innovation, making catch up difficult.
Brand, reputation and industry references are highly important and
therefore increase barriers to entry
Relatively high number of international product development projects that
are co-funded by the European Commission. Product pre-development
within such projects is by no means a guarantee of success in the majority
of the Member States.
117
Economies of scale characterize a production process in which an increase in the number
of units produced causes a decrease in the average cost of each unit.
118
The learning curve effect and the closely related experience curve effect express the
relationship between experience and efficiency. As individuals and/or organizations get more
experienced at a task, they usually become more efficient at them.
119
Datamonitor. Industry drivers and implications. July 2006; pp.10-12.
68
By extensive IT solutions, strong preferences for state-owned or domestic
IT companies.
7.2.2 Threats of Substitutes (low)
Substitutes are other products and services that can perform the same
function as existing industry offerings. In Porters model, substitute products
refer to products in other industries. I, on the other hand have listed all
relevant substitutes to FIT e-government web portal in European and US
public as well as in private sector.
Speaking about IT and software companies, the most important factor by

new products introduction is not their price/performance relationship as it is by
majority of other products (although its a very important factor too). The main
factor is to be first to market.120
Figure 10: Market Growth to 2010
700
600
500
400
In B US$
300
200
100
0
Software Hardware Services Semantic
technologies
2003 2010
Source: author, based on information from IDC; Gartner; and Forrester statistics
This means, that the semantic market is one of the most dynamic markets
all over the world, and the number of software products based on semantic
technologies will considerably increase in the following years. Although as we
will see in the following sections, there are still only a few software products
120
MESSERSCHMITT, D. G., SZYPERSKI, C. Marketplace Issues in Software Planning and
Design. IEEE Software. 2004. pp: 62-70.
69
and solutions based on semantic technologies. This fact means a
considerable competitive advantage for the FIT e-government web and for the
partners planning to realize a product out of it.
7.2.2.1 Substitute Research Projects

In this section a list of projects related to Semantic Web Portal and e-
Government is presented121. All projects mentioned in Table 12 are co-funded
by the European Commission. (The EC co-funding amounts 50 - 90% of total
costs, depending on individual projects and category of participant) with
relevance to all e-Government markets within the European Union.
Table 8: Projects Related to FIT

Start of End of
Project Name Description
Project Project
Access-eGov aims to develop and validate

a platform for composition of government
Access-eGov 01.01.2006 31.12.2008 services into complex process definitions
enabling semantic interoperability of
particular e-Government services.
DEMO-net is a Network of Excellence
DEMO-net 01.01.2006 31.12.2009 project in e-participation based on semantic
technologies.
The goal of the project is to provide a
platform for management of the E-
Onto Gov 01.01.2004 30.06.2006 Government services based on semantic
technologies.
The overall objective of SAKE is to develop
a holistic framework and supporting tools for
an agile knowledge-based e-government
SAKE 01.03.2006 30.04.2009 that will be sufficiently flexible to adapt to
changing and diverse environments and
needs.
The overall objective of FIT is to develop,

test and validate a self-adaptive e-
FIT 01.01.2006 30.06.2008 government web portal based on semantic
technologies.
Source: author, based on information from SAP Intranet Alias EU Projects
Based on the Table 12, Onto Gov is the only serious competing project to
the FIT research project. This fact is based on the end times of individual
121
For more information, see the product web sites in appendix.
70
projects. Access e-Gov ends 6 months, SAKE ends 10 months and DEMO-
net even 18 months after the end of the FIT Project. Taking into account the
main time to market factor, those three projects dont endanger successful
self-adaptive web portal introduction and implementation on European Union
e-Government markets. Onto Gov Project ended in June 2006 and has been
successfully implemented in the majority of the EU Member States. But
according to the project description, Onto Gov is oriented on management
and employees of e-Government (or back office), while FIT project on e-
government users (front office).
Summarizing all these facts, FIT Project has no serious competitor among
other European e-Government research projects.
Regarding Austrian e-government projects, there isnt currently a project
focused on semantic technologies122. These relate on one hand to high
development costs of such technologies, and increasing trend of outsourcing
and open source technologies (see e-Government market trends) on the other
hand.
7.2.2.2 Substitute Products
In this section the main relevant substitutes to FIT e-government web

portal in European and US public sector as well as in private sector are
listed123. Those are: Esperonto Web Platform; Onto Web; Emplois K42;
Mondeca ITM; SWWS Web and Mindswap Web124.
Esperonto Platform, developed within an EU Project in 2005 is

characterized as a semantic knowledge portal for intranets (corporation) and
extranets (outsides users) that is strong user oriented. Esperonto is mainly
performed by intranet users, although it does not restrict to extranet users.
The platform was implemented in the majority of the EU Member States, but
not in government markets.
122
An ABC Guide to E-Government in Austria. Jan. 2006. pp.160-162.
123
Based on architecture, ontology used technological tools and process modeling
similarities.
124
More information to those project are on the project websites (see appendix).
71
Onto Web, developed in the UK is a semantic web used in public sector.
The application areas are e-health and e-education. Currently, onto web
should be implemented on some e-government web site in the UK and
expansion into Nordic countries is planned. Expanding to other European
counties in the near future is not planned.
Emplois K42, also developed in the UK in 2005 is a semantic e-
government web platform, used in the UK. Emplois K42 platform is back
office oriented (on management and public institution employees), not front
office oriented (on end users/citizens). Further Platform improvement toward
strong end user orientation is currently taking place. The new platform should
be introduced in September 2008 (2 months after FIT ends).
Mondeca ITM Platform, developed by Mondeca IT Company in 2006 in
France is a semantic web portal for enterprises. It provides efficient access to
content for stakeholders inside and outside the enterprise, networks an
increasing number of corporate IT departments and ensures extreme flexibility
of company IT systems. By now, the platform was not used in the public
sector.
SWWS (Semantic Web enabled Web Services), developed in 2001 in the
USA (California) is currently used by the majority of federal and local
government authorities in the USA. Based on European e-government
standards as well as on a low e-government services level in Europe (in
comparison with the USA), the implementation in Europe is not planned.
Mindswap Web using semantic technologies was developed by a US
Company and is used in the USA. Implementation in Europe is currently not
planned.
This was a short overview of FIT egovernment web portal substitutes that
are based on similar architecture, ontology and semantic technologies.
Despite these facts, the only serious competitor to FIT e-government web
portal is due to this list the UK semantic e-government web platform Emplois
K42. The other products are used either in other applications areas and
sectors, or in other geographical markets.
72
7.2.3 Threats of Suppliers (low)
We can divide suppliers in two main categories: suppliers of commodities

and technology suppliers. In IT and software industry, the software companies
are in the role of technology suppliers (they supply software products, tools
and technologies, or providers of IT services).
Many IT solutions rely on specific database or middleware125. In addition,
some competitors may have expanded the scope of their offering by
incorporating elements licensed from other entities. The licensed components
might be specific to e-government services (such as FIX engines, data feeds,
or analytic models) or more generic, such as document management software
or workflow tools. In such cases, the original provider of the licensed material
is also a supplier and in some cases, a potential competitor.
Taking into account public sector industry and e-government, there is

growing trend of software products and services outsourcing. This growing
trend forces public sector and government agencies to put more emphases on
efficient control systems that should ensure the quality of existing services
and processes.
7.2.4 The Power of Buyers (high)
Buyers (customers) in public sector are all government and public sector
organizations (for example: federal ministries, government offices, cities, etc.)
that provided the purchased products and services to the citizens.
In Austria there are 11 Federal Ministries, 9 federal states offices, 99
political districts, 139 judicial districts, 2358 municipalities and 17395 localities
that carry out administrative tasks online. Therefore we can size the market as
being around 20 000 potential buyers that are characterized by:
Moderate bargaining power, due to moderate to high switching costs

especially with more modern, highly integrated systems.
125
In the IT industry, middleware is a general term for any programming that serves to "glue
together" or mediate between two separate and often already existing programs.
73
Buyers in general lack sufficient power to affect price (exceptions: new
entrant (?) vendor desperate for reference account, or multi-site buyer
seeking multiples.)
Buyers must keep up with regulatory changes and/or new practices,
protocols, or instruments in government markets, so must consider new
purchases vs. upgrades to existing.
At the same time, it is quite difficult to make a comparative evaluation of
the available solutions since there is a high degree of differentiation.
7.2.5 The Competitive force of rivalry (high)
Companies strive to secure a competitive advantage over their rivals. The

intensity of rivalry varies within each industry and these differences can be
important in the development of strategy.
Rivalry in the industry can be weak, with few competitors that dont
compete very aggressively. Or it can be intense, with many competitors
fighting in a cut-throat environment.
The main factors affecting the intensity of rivalry are: industry growth, fixed
costs, product differences, switching costs, diversity of competitors; exit
barriers, etc.
7.2.5.1 Industry competitors
Public industry is driven by IT and software products and technologies.

Based on this fact, there are a large number of competitors in all application
areas (e-government, e-health, e-education and e-defense).
Figure 11 shows main players in world public sector software market, by
total revenue-shares. Those companies represent 38% of total public sector
software market. The remaining 62% are small technology providers,
local/niche players or state owned companies and research institutes as well
as universities.
Product differentiation (detail functionality) is a major strategy to separate

oneself, but most players do it. In the public industry, we generally
74
differentiate between three types of software products: core applications,
industry specific software products and business intelligence.
Figure 11: Main players in world Public Sector Market 2006
SAP
Oracle
2% McKesson
2% 2%
2% 2% 2% Cerner
3% 1%
20% WebMD
3%
Misys PLC
3%
Siemens
3%
SAGE
4% 14%
Cognos
4% 10% SAS Institute
6% 8%
4% Kronos
5% Business Objects
Microsoft
Eclipsys
Sun Gard Data
Source: CMI Analysis of IDC Mega Model 2006
Core applications include total FI, HR, CRM, SCE, SRM, SCP and PLM
solutions that can be used in all industries. Industry specific software products
are developed specially for a specific industry, or a specific industry market.
(FIT e-government web belongs to specific industry solutions).126 Business
Intelligence (BI) is defined as the process of gathering information in the field
of business. It can be described as the process of enhancing data into
information and then into knowledge127. Figure 12 shows TOP 20 public
sector competitors by product type.
The leading position of SAP in public sector is influenced by the fact that
SAP is the only vendor that competes in all 3 segments. On the other hand,
specialization of the competitors in one area can provide them a good
competitive advantage.
126
Defined by SAP
127
HEINZL, A. Wirtschaftsinformatik II. Lecture Materials. Own Translation
75
Figure 12: Public Sector Competitors by Type
Industry Specific
Core Applications
Solutions
Cerner
Siemens McKesson
Sage SunGard WebMD
Microsoft Fujitsu Misys PLC
Kronos Eclipsys
Fair Isaac
$1.3B
Oracle SAP $595M
Cognos
SAS
Hyperion
Business Objects
IBM
Information Builders
$377M
Business Intelligence
Source: CMI Analysis of IDC Mega Model 2006
By now, I introduced only the global, international IT and software

companies operating in public sector. Global/international players compete
more on price and time to market. But as I mention before, theyre making
only 38% of the whole public sector software market.
The remaining 62% fall on small technology providers, local/ niche players,
stated own company and research institutes as well as universities.
Local/niche players compete more on specific country knowledge and target
more small public authorities (offices, localities, etc.) Stated own companies
are supported and financed by the government. The trend of state own
companies is currently decreasing, because of strong growth of IT
outsourcing.128 Research organization and industry can be financed also by
government, or by IT and software companies. Based on this fact, they can be
competitors, as well partners.
128
Datamonitor. Future IT Trends and Project in EMEA. Nov. 2006
76
7.2.5.2 Top Competitors in Austrian Public Sector
In the following section, I present top IT services providers according to

total IT services-related revenue in public sector in Austria. The top providers,
representing the strongest SAP competitors on Austrian public sector market,
are: Siemens Business Services, Raiffeisen Informatik, IBM, HP, CSC,
Accenture, Telekom Austria and ACP. Their market share, compared with
SAP is shown in Figure 13.
Siemens Business Services (SBS) remained the top vendor on the

Austrian public sector IT service market, followed by Raiffeisen Informatik und
IBM. SAP is the sixth-largest IT services provider in public sector in Austria.
Figure 13: Top IT Vendors in Austrian Public Sector
350,00
300,00
250,00
200,00
mill.
150,00
100,00
50,00
0,00
SBS Raiffeisen IBM HP CSC AccentureTelekom ACP SAP
Informatik Austria
Top IT vendors
Source: author, based on companies revenues in public sector
These companies represent top IT-services vendors in Austrian public

sector industry. But not all of them have strong presence in the e-government
market. The percentage revenue share of the strongest Austrian IT services
players in e-government market is shown on following page in Figure 14.
The strongest presence in Austrian e-Government market has Siemens

Business Services (SBS) followed by Accenture, ACP, Raiffeisen Informatik
und Telekom Austria. SAP is on the eighth position.
77
Figure 14: Revenue of top IT Vendors in e-Government markets in
Austria
40%
35%
30%
25%
20%
15%
10%
5%
0%
SBS Raiffeisen IBM HP CSC AccentureTelekom ACP SAP
Informatik Austria
Top IT/software companies Austria
Source: author, based on companies revenues in public sector
On the other hand, SAP is the leading ERP vendor on the Austrian market
and first choice for ERP solutions for large companies, has very good brand
image and reputation as well as many experiences and success
implementations of e-government software products and technologies all over
the world. Based on these facts, the current eighth position on e-government
market could be in the following couple years considerably improved.
7.2.5.3 Main Influencing Forces

The main factors influencing the intensity of competitive rivalry are:
Large number of competitors

Competitor costs are relatively fixed in development, upgrade and
maintenance, so new license revenue is critical to sustaining cash
flow and recovering development costs.
Product differentiation (detail functionality) is a major strategy to
separate oneself, but most players do it.
Competitors are diverse, in nationality, mix of related
solutions/products, and detailed functionality. New entrants in global
market emerge first as upstarts in local markets.
Local/niche players compete more on specific country knowledge
and target more small public authorities (small government
agencies, localities)
78
Global/international players compete more on price and time to
market and target more bigger public authorities (federal ministries,
cities, municipalities)
All those facts point out, that in Austrian public sector is characterized by
high intensity of rivalry.
7.3 User Analysis
The User Analysis is based on primary research. The research purpose is

to analyze main users characteristics and skill level in using web in order to
identify the main product benefits and functionalities. Based on this analysis,
user problems and requirements were taken into account, in order to create
and improve the developed product.
The second research purpose is to verify the below set formal hypothesis,
which is based on European research studies129.
With regard to strong orientation on improvement of e-Government

130
services in the European Union as well as European Commissions vision
of ambient intelligence that places the citizen at the centre of future
developments, European Union conducted few years ago a number of e-
government surveys, in order to define and characterize the weak points in
users satisfaction dimensions, online availability of e-government services,
used technology and business processes.
According to the latest study about the usability of e-government portals131,

usability is still an important issue that must be improved. European
Commissions technical report underlines this statement by adding, that usage
129
For example: User Satisfaction and Usage Survey of e-government services. EU report.
Dec. 2004, and Signpost toward e-Government 2010. Nov. 2005. pp. 13-19.
130
Citizens and governance in a knowledge-based society. CORDIS Website
131
User Satisfaction and Usage Survey of e-government services. EU Report. Sep. 2004.
pp.15-25.
79
of semantic technologies leads to customization of e-government portals and
to constituent improvement of the usability.132
Based on these facts, the following formal hypothesis is posed:
The majority of users are satisfied with provided e-government information

and services, but usability is still an important issue for improving user
satisfaction.
For the purpose of primary data collection, an online questionnaire has

been constructed133. The majority of questionnaire questions are close-end
questions (dichotomous, multiple choices and rating scales). The open-end
questions (word association) are used to in order to specify other possibilities
not mentioned in the multiple choices.
The questionnaire consists of four parts:

1. Information about yourself - in order to define the main users
characteristics as well as the structure of users visiting the website.
2. Information about your use of this web site - in order to characterize the
skill levels in using the web.
3. Problems using this or other web sites - in order to identify the main
usability problems on the website. This section is subdivided into problems
regarding information and problems regarding services)
4. Please share with us any other comments, problems or suggestions you
have. As the only one open-end completely unstructured question in the
questionnaire, was answered by very low number of respondents.
Regarding, that Austrian e-government market is subdivided into national,

regional and local level, primary research was conducted once on national
level (Federal Ministry of Interior) and once on regional & local level
(municipality Vklabruck).
132
Government in the EU in the next decade: the vision and key challenges. EU Technical
Report. Aug. 2004. pp. 48-56.
133
The whole questionnaire is in the appendix.
80
The questionnaire questions are the same on both levels, beyond the
question 2.3 (list of information provided by the website) and 2.5 (list of
services provided by the website), which were adapted by each public
authority.
It is very important to point out that considering the limited scope of the
diploma thesis; I describe only inferences that resulted from the statistical
analysis and not the whole analysis process. Concrete examples of statistical
methods that are used by the analysis are in the appendix.
7.3.1 National level (Ministry of Interior)
The survey was conducted by an online questionnaire and placed on the

website of the Federal Ministry of Interior within a period of three months (from
01.06.2006 to 31.08.2006). The sampling procedure employed for the survey
was simple random sampling134 Based on the type and scaled response,
appropriate statistical methods were used and inferences were made.135
Respondents were all citizens visiting the web-site of the Ministry of
Interior and using its e-government services. Based on this fact, the end user
structure was defined and characterized (regarding gender, age, education,
occupation).
Close to 300 responses to the questionnaire were collected from the

Ministry of Interior. Some respondents didnt answer all questions. This
regards to the questionnaire questions about information and services in
sections 3.1 and 3.2 and was based on the fact that some respondents use
only information (and not services) or only services (and not information).
Nevertheless, I received enough responses (on average 90% of questions
were answered) to analyze the users characteristics, skills level in using the
134
Simple random sampling is a procedure, in which each subject from the population is
chosen randomly and entirely by chance, such that each subject has the same probability of
being chosen at any stage during the sampling process.
135
Preview of used statistical methods based on concrete examples from the survey is in
appendix.
81
web portal and usability problems in order to draw conclusions and formulate
recommendations for product improvement.
The gender distribution is equally distributed 50% of respondents are

female and 50 % male. Based on frequency distribution, the majority of
citizens visiting the web site are end users at the age of 19 40. The
respondents differ regarding education and occupation. 61% of respondents
are visiting the website daily.
Regarding age, only one respondent was less than 18 and seven
respondents were 51 65. Because of this small number, I cant draw general
conclusions for these age classes. In the same way, I cant take into account
students (4%) and housewives/househusbands (0%) of neither respondent,
respectively; nor can I take into account respondents with a PhD Degree (2%)
or a High School Degree (2%). This fact, on the other hand, points out, that
the website of Ministry of Interior is less visited by these respondents.
The majority of the website users are based on these facts citizens with
bachelors degree and masters degree; citizens employed in public sector,
private sector and self-employed citizens.
Taking into account the main product benefits: usability and semantic
technologies (which adapt the website to users needs and expectations), the
conclusions are following:
7.3.1.1 Usability
The analysis shows that usability of the federal Ministry of Interior website
has to be improved.
The majority of respondents (see Figure 15) are feeling confused, cant
find the needed information easily and demand changes in the website
structure. They have as well problems with website layout, text, content and
links (see Figure 16). These problems are related to the website usability. This
is underlined by the fact, that 89% of all respondents are satisfied with
provided information and 91% with provided services. The quality of
information and services is regarding these facts not the weak point of the
website. Those facts corroborate the above posed hypothesis, that majority of
82
users are satisfied with provided e-government information and services, but
not with the websites usability.
Figure 15: Usability, regarding the web site structure
84% 82%
90% 77%
80% 76%
70%
60%
50%
40%
30% 23% yes
16% 24%
20% 14% no
10%
0%
Find Find Feel Satisfied
information services confused with the
easily easily website
structure
Source: author
Figure 16: Usability, regarding information on the website

70%
70% 61%
57%
56%
60%
50% 43% 44%

39%
40% 30%
no
30%
yes
20%
10%
0%
Problems Problems Problems Problems
with layout with text with content with links
Source: author
The problem is to furnish information and services in a way that will be easier,
more understandable and especially will meet the user needs and
expectations. Shortly to say in a way that will help users to achieve their
goals efficiently and thereby improving usability. This can be reached through
website customization by usage of semantic technologies the FIT web portal
is based on.
83
7.3.1.2 Customization of the Website
67% of the respondents are not able to customize the web site to their
needs and are mostly unsatisfied with the way, the needed information or
service is achieved. 91% of respondents think that there is a need for a
website, which will meet their needs and expectation.
Based on this fact, respondents are interested in a new technology that will
make their online communication with the Federal Ministry of Interior better
and more efficient.
7.3.2 Regional & Local Level (Municipality Vcklabruck)
The survey was conducted by an online questionnaire and placed on the

Vcklabruck136 website within the period of two months (from 01.09.2006 to
31.10.2006). The sampling procedure employed for the survey was simple
random sampling. Based on the type and scaled response, appropriate
statistical methods were used and inferences were made.
Respondents were citizens that visit <www.voecklabruck.at> 86% of the
web-sites users were Vcklabruck citizens.
50 responses to the questionnaire, in order to draw conclusions and

formulate recommendations for product improvement, were collected. As in
the first case, some respondents didnt answer all questions (on average 92%
of questions were answered), but the received responses were sufficient for
drawing conclusions.
As in the first survey, the gender distribution is quite equally 46% of

respondents are female and 54% are male. Based on correlation tabulation,
the majority of citizens visiting the web site are end users at the age of 19
40. Compared to previous survey, only 10% of respondents are visiting the
website daily. The majority of respondents (47%) visit the website once a
week. 58% of respondents have high school degree and 20% of respondents
a master or bachelor degree.
136
The municipality Vklabruck is the administrative center of the Vcklabruck district, located
in the western part of Upper Austria. For more information see: < www.voecklabruck.at>
84
Regarding age, only one respondent was less than 18, three respondents
were 51 65 and three more than 65. Because of this small number, I cant
draw general conclusions for these age classes. In the same way, I cant take
into account self-employed (4%) and seeking work respondents. This fact, on
the other hand, points out, that the Vcklabruck website is less visited by
these respondents.
Taking into account the main product benefits: usability and semantic
technologies (which adapt the website to users needs and expectations), the
conclusions are following:
7.3.2.1 Usability
As we can see in Figure 17, the majority of respondents cant find the
needed information and services easily, however the differences are visibly
smaller than in Figure 15.
The majority of respondents have as well problems with web sites text,
layout, content and links. Like in the previous survey, 90% of respondents are
satisfied with provided information. Based on the fact that only 18 % of
respondents use the provided services, I couldnt draw any conclusions
regarding services.
Figure 17: Usability, regarding the web site structure

70%
70% 58%
52% 54%
60%
48% 46%
50% 42%
40%
30%
30%
ja
20%
nein
10%
0%
Find Find service Feel Satisfied
information easily confused with the
easily website
structure
Source: author
85
As we can see, the analysis results are similar to the survey on national
level and corroborate the above posed hypothesis, that majority of users are
satisfied with provided e-government information and services, but not with
the websites usability.
Figure 18: Usability, regarding information on the website
80% 74% 70%

70%
58%
54%
60%
50% 46%
42%
40% nein
30%
30% 26% ja
20%
10%
0%
Problems Problems Problems Problems
with layout with text with content with links
Source: author
7.3.2.2 Customization of the Website
74% of the respondents are not able to customize the web site to their
needs and are mostly unsatisfied with the way, the needed information or
service is achieved. 86% of respondents think that there is a need for a
website, which will meet their needs and expectations.
The user analysis shows that the majority of users is unsatisfied regarding
many different usability problems on the e-government website and can not
customize the website to their needs. Based on these facts, the main features
of FIT e-government web portal considerably will improve the e-government
services and increase citizens satisfaction.
But the user analysis shows us also other features that can be improved.
They will be shortly discussed in the following chapter.
86
7.3.3 Conclusion regarding other Product Features
On the basis of conducted cluster analysis, following clusters regarding

usability problems have been created:
Custer 1: Respondents with navigation problems on the website

Cluster 2: Respondents who have problems with layout, text, content and
links (Correlation analysis shows, that there is extremely strong correlation
between problems with layout, text, content and links)
Cluster 3: Respondents unsatisfied with service and information provided on
the website
Based on these facts, product features could be improved in order to

concentrate on these three clusters of potential users.137
7.4 Market Analysis Overall Conclusion

E-government, with the highest software growth opportunities worldwide,
represents nowadays the biggest challenge for IT and software companies
within the public sector industry and is one of Europes foremost challenges.
Established in European Commissions initiative e-Europe 2005, the bulk of
the execution of any decisions that might be adopted was going to depend on
the actions of the Member States.
The main objective of the conducted market analysis was to find the best
market possibilities for the FIT self-adaptive e-government web portal on
Austrian e-government market. The main benefit of the new web portal will be
considerable improvement of e-government portals through continually
growing usability through the use of semantic technologies.
137
Only the first cluster is relevant for products features improvement. Problems in cluster
two are adjust through semantic technologies and problems in cluster three through
intervention of relevant public authority (this process is also improved through semantic
technologies - semantic descriptions of existing administrative processes)
87
The market analysis shows that the demand for new, semantic e-
government solutions is high. Especially in Austria which is Europes leading
country in providing e-services to citizens.
Political, economical, social and technological factors positively influence

Austrian e-government market and generate profitable business environment.
The e-government investments are higher than in the majority of other
European countries and the market is characterized by upward future trends.
Austrian e-government is strongly influenced by Austrian e-government
principles, established in the ABC Guide to E-Government in Austria.
Austrian government is still searching for suitable new technologies that will
meet the majority (best all) of them. Many of those principles are strong points
of the new self adaptive e-government web portal, but fulfilling all of them will
considerably improve its position on the market.
The market trends and challenges are good starting points for successful
products implementation as well. The user analysis also pointed out the need
for increase of usability and more citizens oriented e-services.
The analysis of related projects and solutions shows that there is a need
for a web portal that is based on semantic technologies. Despite of strong
growing trends of semantic technology markets, there is still an entire lack of
semantic solutions in Europe.
Above mentioned findings considerably improve the position of self-
adaptive e-government web on Austrian e-government market and predicated
implementation and future business success.
Findings that could have unfavorable impact on the products

implementation are in the first place high barriers on entry, high power of
buyers and high rivalry. Very important is also the fact that SAP currently
takes only number eight among IT vendors on Austrian public sector markets.
Although on global markets SAP has a leading position in providing solutions
to public sector industry. This is related to bigger preferences of domestic IT &
software companies to international vendors. The increasing trend of
outsourcing, established in Austrian e-Government Act should support the
international vendors and Austrian outsourcing market is growing by CAGR
88
12%. Currently outsourcing in Austria amounts about 190 mill and is,
compared to other European countries, on a very low level.138 Especially small
Austrian public authorities prefer local/niche companies. The preference of
small local/niche companies could lead to the implementation of e-
government web portals at the expense of e-government modernization,
mainly in small localities. Based on the fact that budgets of localities are very
low, (from 5000 to 10 000)139 they arent so attractive for SAP AG, as big
cities and municipalities.
SAP AG as a world leading software company is generally concentrating
on bigger public authorities with enough financial resources.
The leading position of SAP on the global market of public sector

solutions, very good brand image and high innovative new product could open
new opportunities on whole Austrian e-government market.
The results of the conducted market analysis corroborate the posed

hypothesis. The market analysis showed that the increasing trend of semantic
technologies is growing both worldwide and in the European Union. The need
of usage of semantic technologies is pointed out in Austrian e-government
market challenges, market key drivers and the analysis of related projects and
solutions within the porters five forces analysis shows that there is a need for
web portals that are based on semantic technologies.
The competitive advantage represented by high innovative product, the

increasing need of semantic technologies and user centric services create
good business opportunities for FIT web portal in Austria. Strong product
features can easily weaken the buyers power. Austria is currently number one
in EU e-government and to remain on this position will need high innovative
and progressive IT solutions.
138
The graphic chart showing European outsourcing market is in appendix.
139
Datamonitor. Government Spending in Europe. June 2006
89
The high intensity of rivalry between competitors is, since they havent
developed and in near future wont develop a substitute product, loosing on its
importance.
In order to strengthen the position of FIT web portal in the market,

improvement in a way that will meet all Austrian e-government principles,
challenges, citizens expectations and technology standards is recommended.
After that, exploitation and implementation strategy should be formulated.
8. PRODUCT IMPROVEMENT RECOMMEDATIONS
The FIT e-government web portal has good initial position in Austrian e-
government market. This is based in the first place on the fact, that the web
portal fulfills the European technology standards on one hand and meets the
majority of Austrian e-government principles on the other. The strongest
points of FIT web portal are improvement of usability and strong orientations
on citizens demands. These are as well ones of main Austrian e-government
trends.
Usage of semantic technology that is pointed out in Austrian e-government
challenges and market key drivers represent future trends in the whole IT
industry. Despite of strong growth of semantic technologies market and
considerable increase of demand on semantic products is the number of
products and projects that are based on semantic technologies still very low.
This fact creates important competitive advantage and can strengthen the
position of SAP AG on the Austrian e-government market.
In order to strengthen this position even more, following recommendations

are formulated:
1. The FIT web-portal should meet all e-Government principles
Great advantage is that the majority of them are already met.

In my opinion, the FIT web-portal should put more emphasis on security
and data protection. The secure exchange of information and transfer of data
have to be guaranteed by definition of security standards and pointed up in
exploitation plan. This is based on the PEST Analysis (the most important
90
requirement in the Data Protection Act 2000 is that data-security protection
shall be taken by all organizational units) as well as on the Austrian e-
government principles, the Austrian e-government strategy is based on.
Interoperability is the second product feature that should be improved. The

ABC Guide to E-Government in Austria conditions that e-government
solutions have to be based on internationally accepted interoperability
standards and open interfaces.140 Those standards should be built in the
software architecture and pointed out by product exploitation plan as well.
2. The web portal should be highly adaptable to different

141
technologies , used by individual public authorities
Results of analysis of Austrian public sector as well as general e-
government market characteristics show that the e-government services of
individual public authorities are running on different technologies. Based on
this fact, the adaptability of FIT web portal to different technologies is crucial
important.
3. The web portal should implement technologies to adjust the

navigation problems
Results of user analysis show, that it is advantageous to concentrate on
navigations problems, whereas the majority of users have problems with the
navigation. The most common navigation problems are: the respondents do
not find the needed information easily and theyre feeling confused about
where they are as they navigate the web site.
These should be based on semantic technologies as well.
Now, recommendations for implementation strategy will be formulated.

Following, economical evaluation of the product implementation will be added.
140
An ABC Guide to E-Government in Austria. 2006. pp. 18-19
141
The recommendation applies to technological adaptability (not adaptability of user needs
that is the main feature of the self-adaptive web portal).
91
9. IMPLEMENTATION STRATEGY
On the basis of the Austrian e-government market analysiss results I

formulate in my opinion the most suitable implementation strategy for FIT e-
government web platform.
Conducted market analysis shows very good product positioning on the
Austrian e-government market and growing importance of e-government in
Austria.
Austrian e-government market is subdivided into national market (Federal

Government), regional market (provinces) and local market (municipalities
and localities). The individual public authorities, operating on these markets
are networked through Platform Digital Austria which ensured cooperation
between them. It is very important to say, that this cooperation ensured
conformity of provided e-government services in whole Austria, but not
technological conformity. Public authorities in Austria are completely
autonomous by the selection of information technologies and their providers.
The quality of e-government portals and the implementation possibilities of
FIT self-adaptive web portal vary depending on individual public authorities.
Based on this fact implementations strategies on each level will be
formulated.
9.1 National e-government

Implementations success on national level depends on support of Federal
Chief Information Officer and ICT Strategic Unit.
Federal Chief Information Officer is the most important person by e-
government implementation in Austria on the national level. He advises the
Federal Government at strategic and technical level and promotes Austrian e-
Government solutions in the European and international arena. ICT Strategic
unit is responsible for the organizational issues of e-Government and the
coordination of the technical infrastructure.
By implementation of the new FIT e-government web on Austrian national
level, SAP needs to be supported by both of them. To get this support, it is
crucial important to show that the implementation of the FIT e-government
92
web portal in Austria considerably increases the e-government efficiency and
therewith maximizes the total public value through maximizing the Public
ROI142 The public ROI framework is described in detail in the appendix.
The chance for an implementation on the whole national level that means
to build the FIT technology in Platform Digital Austria is in my opinion
relatively minimal. This is based on two factors:
1. Outsourcing in Austria is with its 190 mill still on a low level, to financed
such extensive e-government project
2. Austrian government supports and gives priority to a state-owned company,
the Federal Data Processing Centre that currently operates a number of
government-wide e-Government systems within the Platform Digital Austria.
Otherwise, the new FIT self adaptive e-government web fulfills all sets of
e-government principles and its implementation is supported by the European
Commission. This fact could open new negotiation possibilities on the
national e-government space.
I see on the other hand very good implementation opportunities on the

level of Federal Ministries. This is based on the fact that different ministries
and agencies assume responsibility for their own projects and have good
experiences with other SAP public sector solutions.
9.2 Regional & Local e-government
In order to provide a uniform system of e-government, intensive

cooperation across all levels of administration is required143. Such
coordination is guaranteed by the cooperation with the Platform Digital
Austria which operates as umbrella for all working groups open for
representatives of the federal, regional and local authorities.
However, responsibility for implementation lies within individual federal
State and Municipal Governments. This fact opens as well excellent
implementation opportunities for the new FIT self adaptive eGovernment
142
Public ROI is method for defining, measuring, and communicating the economic, social,
and political returns of government IT programs.
143
An ABC Guide to E-Government in Austria. 2006. pp.84-90.
93
web. Based on previous experiences in Austria, it is more effective to contact
the individual Federal States, cities and municipalities, than the whole city or
municipalities associations144. Based on the excellent product features and
benefits, I estimate the demand as pretty high.
Probability of product rejection is higher in small cities, small government
agencies and localities. Regarding the conducted market analysis, small
public authorities give priority to local /niche players for international
companies.
My recommendation is to start at first with the individual Federal States
and after that with bigger cities and municipalities (over 10 000 inhabitants-
smaller cities are regarding very tight budgets currently not attractive for SAP
AG.) The success on higher level and positive feedback could open in my
opinion new opportunities on lower level.
9.3 Implementation plan
Based on all these facts, the best implementation plan is in my opinion the
following:
PRODUCT INTRODUCTION
- Introduce the product to individual Federal Ministries, Federal States,
and cities and municipalities with more than 10 000 inhabitants.
- Make use of the patronage of the European Commission and support
of other partners (especially of Federal Ministry of Interior, municipality
of Vcklabruck)
- Present the Public ROI framework to support the product contribution
to the public value maximization.
- Present SAP success stories in worlds public sector to underline
SAPs good and strong brand and image
- Underline the product benefits on the basis of cost-benefit analysis
144
Austrian Association of Cities and Towns (sterreichischer Stdtebund); Austrian
Association of Municipalities (sterreichischer Gemeindebund)
94
If theres an interest on the part of federal ministries, cities, municipalities
or other public authorities the solution could be implemented.
The implementation plan is different for every public authority. Regarding
the limited scope of the diploma thesis, I introduce from here standard
implementation plan for SAP AG public sector software products.
IMPLEMENTATION PREPARATION
- List of customers (naming, roles, and responsibilities).
- Product and implementation standards (status, documentation types)
- Identification of implementation team requirements (including all
members)
- Implementation timeframe ( based on earliest possible time time to
market criterion)
- Fix prices for implementation
BUSINESS BLUEPRINT
- Customer business process requirements and documentation
- Implementations conditions and prices
- Consulting services and maintenance conditions and prices
- Generation of Blueprint
TECHNOLOGICAL BLUEPRINT
- Customer technological requirements
- Standards for ontologies
- Technological and security standards and methodologies
- Quality standards and methodologies
- Generation of Blueprint
IMPLEMENTATION (GO LIVE & SUPPORT)

- Product implementation, by taking into account customers used
technology and quality standards and processes
- Agreement on consulting service
- Agreement on maintenance
95
9.4 Economical Evaluation of the Implementation
Total IT spending in the government sector in 2006 amounts 441.72 mill .
The regional/local government sector spent $110.43 mill , while the central
government 331.29 mill .
E-Government in Federal Ministries is financed from central government
spending. E-Government on federal & local level is financed from central
government spending as well, but only by circa 50-70%. The rest is financed
from own sources (the majority from tax revenue). Individual Federal
Ministries annually spent approximately 100 000 250 000 on purchased
e-government solutions (raw estimation).145 Investments of individual cities
depend on the city and population size. As I mentioned in the implementation
strategy, I recommend concentrating on cities with more than 10 000
inhabitants at first.
Austria has 72 such cities and municipalities, whereas five have more
than 100 000 inhabitants and 25 more than 20 000 inhabitants. (The list of
them is in the appendix). Austria has 2358 cities and municipalities, and
17 294 localities.. Raw estimation of e-government spending of individual
cities is shown in the following table.
Table 9: Raw Estimation of e-government spending
City Annual e-government spending
Vienna 250 000 500 000

Graz, Linz, Salzburg, Innsbruck
(as cities with more than 100 000 100 000 250 000
inhabitants)
20 cities 50 000 100 000
With more than 20 000 inhabitants
47 cities 10 000 50 000
With more than 10 000 inhabitants
Annual e-government spending for all cities
with more than 10 000 inhabitants:
2 100 000 - 5 750 000
Source: author, based on information from Datamonitor. Government Spending in Europe.

June 2006.
145
Datamonitor. Government Spending in Europe. June 2006.
96
Based on the fact that SAP AG is concentrating on big customers, I
implemented the economical evaluation only for the cities and municipalities
with more than 10 000 inhabitants. The budget of small cities, localities as
well as small government agencies varies between 5000 and 10 000.
Another important fact is outsourcing of IT services in the Austrian Public

sector. The outsourcing in Austria amounted in 2006 190 mill . Until product
implementation (in autumn 2008) an increased outsourcing in Austria by 250
mill is expected. (See appendix).
The total product costs consist of RTD costs146, product development

costs and product implementation costs.
1. RTD Costs
It is important to take into account that the result of the research project is
not a product, but provides only additional findings and new directions for
further product development. The FIT-project RTD costs for SAP are shown in
the following table:
Table 10: RTD Costs
COSTS SAP AG
Euro / Person Month 6.000
RTD Costs of PM for RTD 300.000
Travels, equipment , other costs -
Overhead 400.000
Total Costs of RTD 700.000
Factor147 0,5
Grant 350.000
Management Person Months 0.5

Cost of PM for Project Mngmt. 7. 000
Audit 3. 000
Total 10. 000
Grant 10. 000
TOTAL Total Budget 710.000

ACTIVITIES
Total Funding 360.000
Source: author. The data shown in this table are approximate data, based on real FIT RTD
costs
146
Research and technology development costs
147
that EC only funds 50% of the costs of an industrial project partner
97
2. Product Development Costs
Software development is characterized as a set of activities that results in

software products. Software development may include new development,
modification, reuse, re-engineering, maintenance, or any other activities that
result in software products148 Based on the fact that product development
consists of majority of steps, the product development costs are considerably
higher than the research development costs.
On the basis of information on product lifecycle and costs of products that
seem to be similar from effort and complexity I depicted the following cost
estimations to assess the costs and the potential for producing and selling the
envisioned product resulting from the FIT research project at the Austrian
market. The estimated FIT-web portal development costs are shown in the
following table.
Table 11: Product Development Costs
Effort related Costs Sources

Total person TOTAL
Specification days
200 125 000
Design 200 125 000
Development 600 400 000
Intern Project Management 150 100 000
Customer Management 50 30 000
Quality Management 50 30 000
Integration Test 150 100 000
Acceptance Test 150 100 000
Documentation Management 150 120 000
Standards Compliance 50 30 000
Pre standard Maintenance
(should be multiplied by years) - -
Solution Validation + Delivery
incl. Scenario Test 50 30 000
Development Support 50 30 000
PM Support 50 30 000
TOTAL Effort Related Costs 1850 1 250 000
148
DRM Associates. New Product Development Glossary.
98
Direct Costs in EUR - TOTAL
Total person TOTAL
Multilingual Translation days
- 200 000
Travel Costs - 500 000
System costs - 100 000
Other Costs 1 - 200 000
Other Costs 2 - 50 000
TOTAL Direct Costs - 1 050 000
TOTAL COSTS
2 300 000
Source: author. The data are estimated on the basis of SAP AG software products similar to
the FIT web portal.
3. Implementation Costs
Software as a product implementation is the phase in the software life-
cycle, where the actual software is implemented. The implementation costs of
FIT web portal depend on the implementation complexity.
Table 12: Implementation costs
Costs per unit Costs per formula

20 000 n* 20 000
The implementation costs can increase up to 70 000 , regarding the implementation
complexity
Source: author, based on SAP Master Price List Services 2006.
The price per unit amounts to 50 000 . The price can increase on the
basis of product implementation complexity up to 100 000 .149
The economical evaluation is based on cost-profit comparison, shown in

the following table:
149
Estimated on the basis of SAP Master Price List 2007. SAP AG Intranet.
99
Table 13: Cost-Price Comparison
Total Budget EC Funding Own Funding
RTD 710 000 360 000 350 000
Product 2 300 000 - 2 300 000
Development
Implementation150 45 000 - 45 000
TOTAL 3 055 000 360 000 2 695 000
Price per unit Price per formula
Average price 75 000 n* 75 000
PROFIT per Unit
30 000
Source: author.
SAP AG has to sell 40 of FIT web portals units in order to cover the RTD
and product development costs. The estimated profit151 from each new
product implementation (after the 40 product implementations) will amount to
30 000 .
Taking into account the relation between the research costs and the
development costs, the development costs take 75 % of total costs, whereas
RTD costs only 22%. Base on these facts, the majority of costs is funded by
SAP itself and the 11 % that are funded by EC didnt make any financial
advantage for SAP AG.
By implementation failure would SAP AG lost almost 3 000 000 . Based
on these fact, it is crucial important to conduct a market analysis and find out
the market opportunities.
On the basis of conducted market analysis, I conclude that the Austrian e-

government markets are offering very good implementation and business
opportunities for FIT self-adaptive web portal, provided by SAP AG. And I
recommend launching the FIT self-adaptive web portal on this market.
150
Average implementation costs ((20 000 + 70 000)/ 2)
151
Raw estimation based on cost-price comparison.
100
CONCLUSION
The current trend for IT and software companies is expansion into the
public sector industry that is offering great business opportunities, especially
in the government markets. Based on world statistics, government has even
the highest software growth opportunities worldwide, what leads into
significant increase of software products- and new IT technologies and
solutions- in government markets.
I conducted a market analysis for specific software as a product, currently
in the stage of becoming a research prototype, being developed by a world
leading commercial software company. For this market study it was assumed
that the research prototype will already have been developed into a product,
based on the objectives of the project. If this product is developed it should be
implemented in a specific e-government market within the public sector
industry in 2008.
The main objective of the conducted market analysis was to find the best
market opportunities for the FIT self-adaptive e-government web portal on the
Austrian e-government market, whereas two partial objectives were posed.
Regarding the first partial objective, recommendations for possible product
improvement in order to strengthen its position on the target market were
formulated. Based on the second, the best implementation strategy for the e-
government web portal on the target market was formulated.
In the theoretical part, I gave a formal definition of marketing research and

described the marketing research process in 5 steps, emphasizing its role of
providing information for marketing decision making. Next, I generally defined
the market analysis as an important part of marketing research and explained
the market analysis process.
Based on the fact that the market analysis in the practical part was very
specific, regarding industry, market and product, I described the market
analysis process for software products in more detail, described the
government markets and explained their specifications.
101
In the part methodology, I defined the used research and analysis
methods, including data collection, questionnaire design and statistical data
analysis with the help of statistical software program.
In the practical part, I conducted a market analysis for specific software as

a product, in the Austrian e-Government market.
In order to identify the target market, industrial market segmentation was
added. On the basis of secondary research, an environmental analysis was
conducted and with regard to the product definition, an assessment of the
potential market was carried out. The research was focused on the market
description, its size, market trends as well as key drivers and the analysis of
competitive products and key players in the market as well as the whole
industry.
By using primary research, the potential product was described and
tailored to the different users in order to identify the main product benefits and
functionalities and to create a competitive advantage on the target market. At
the end, recommendations for an implementation strategy and economical
evaluation of the implementation were formulated.
In the diploma thesis introduction, I posed on the basis of world research

studies, EU reports and statements following hypothesis:
Increasing trend of semantic technologies within European Union and

the need of citizen-centered e-government services tailored to the
widest possible end-user population open very good implementation
opportunities for new generation of FIT self-adaptive web portals in
Austria.
The conducted market analysis has in my opinion corroborated the posed

hypothesis. The market analysis showed that the increasing trend of semantic
technologies is growing both worldwide and in the European Union. The need
of usage of semantic technologies is pointed out in Austrian e-government
market challenges, market key drivers and the analysis of related projects and
102
solutions within the porters five forces analysis shows that there is a need for
web portals that are based on semantic technologies.
The need of citizen-centered e-government services tailored to the widest

possible end-user population is established in important European e-
government documents, as well as in the Austrian e-Government Act and
ABC Guide in Austria. Austria, as current number one in EU e-government,
puts strong emphasis on citizen-centric services. The conducted user analysis
pointed out as well, the need for an increase of usability and more citizen-
oriented e-services.
Based on the conducted market analysis, Austrian e-government market

offers very good implementation opportunities for self adaptive web portals,
especially for FIT web portal. This statement is underlined by the fact, that
despite a strong growth of the semantic technologies market and a
considerable increase of demand on semantic products the number of
products and projects that are based on semantic technologies is still very
low. This fact creates important competitive advantage and strengthens the
position of such a product on the Austrian e-government market.
In order to strengthen this position even more, three product improvement

recommendations were formulated:
1. The FIT web-portal should meet all e-Government principles.

2. The web portal should be highly adaptable to different technologies,
used by individual public authorities.
3. The web portal should implement technologies to adjust the navigation
problems.
The best implementation strategy for the e-government web portal was
formulated on national and federal & local level.
On the national level, the implementation should be focused on the
individual Federal Ministries and not on the whole national level. On the
federal & local level, individual Federal States and cities over 10 000
inhabitants are the most attractive customers. Small cities and localities are
103
regarding the tight budgets and the strong preference of local/niche
companies unattractive.
Economical evaluation of the implementation showed, that the individual

public authorities, SAP AG should concentrate on, have enough capital to buy
new IT and software solutions and are regarding the market analysis strongly
interested in innovative technologies.
The results of this diploma thesis pointed out that solutions based on
semantic technologies and current e-government principles have great
competitive advantage that is opening very good implementation opportunities
in Austria. These findings can be used by product development, as well as by
solution and marketing teams of the industrial partners of the FIT project for
the creation of product implementation strategies not only for the FIT e-
government web portal.
The results of the conducted market analyses will be used in order to find
new exploitation opportunities for further related products and will open new
possibilities of usage of semantic technologies in IT & software industry.
104
LIST OF ABBREVIATIONS
ACP: All Computer Products

AMA: American Marketing Association
BI: Business Intelligence
BISER: Statistical Indicators for Benchmarking the Progress of
European Regions in the Emerging Information Society
CAGR: Compound Annual Growth Rate
CI Competitive Intelligence
CMI Competitive & Market Intelligence
CORDIS: Community Research and Development Information Service
CRM: Customer Relationship Management
CSC: Computer Sciences Corporation
EC: European Commission
EMAC: European Marketing Academy
EMEA: Europe, Middle East and Africa
ERP: Enterprise Resource Planning
ESOMAR: World Association of Opinion and Market Research
Professionals
EU: European Union
Eurostat: European Statistics
FI: Finance
FIT: Fostering self-adaptive e-government service Improvement
using semantic Technologies
GDP: Gross Domestic Product
HP: Hewlett-Packard
HR: Human Resources
ICT: Information Communication Technologies
IBM: International Business Machines Corporation
IBU: Industry Business Unit
IDABC: Interoperable Delivery of European e-Government Services to
public Administrations, Businesses and Citizens.
IDC: International Data Company
IEEE: Institute of Electrical and Electronics Engineers
IT: Information Technologies
ITM: Intelligent Topic Management
MI: Market Intelligence
NPD: New Product Development
OSS: Open Source Software
VP: sterreichische Volkspartei
PAC Pierre Audoin Consultants
PEST: Political, Economical, Social and Technological
PLM: Product Lifecycle Management
R&D: Research and Development
ROI: Return of Investments
RTD: Research and Technology Development
SAKE: Semantic-enabled Agile Knowledge-based e-Government
SAP: Systems Applications and Products in Data Processing
SBA: Small Business Administration
SBS: Siemens Business Services
SCM: Supply Chain Management
SCP: Supply Chain Planning
SITS: Software and IT Services
SP: Sozialdemokratische Partei sterreichs
SRM: Supplier Relationship Management
SWWS: Semantic Web enabled Web Services
LIST OF FIGURES
Figure 1: From a Management Decision Problem to a Marketing Research

Problem .........................................................................................................20
Figure 2: Marketing Environment ...................................................................33
Figure 3: Customer satisfaction dimension for software as a product............38
Figure 4: Best Worldwide Software Opportunities.........................................48
Figure 5: Total spending by areas in 2006 .....................................................59
Figure 6: Share of the public sector in the total Austrian SITS market...........60
Figure 7: Austrian e-Government Market Size (in mill ) ...............................64
Figure 8: Austrian annual e-Government Spending (2003-2006) ..................65
Figure 9: Porters Five Forces........................................................................67
Figure 10: Market Growth to 2010 .................................................................69
Figure 11: Main players in world Public Sector Market 2006 .........................75
Figure 12: Public Sector Competitors by Type...............................................76
Figure 13: Top IT Vendors in Austrian Public Sector .....................................77
Figure 14: Revenue of top IT Vendors in e-Government markets in Austria..78
Figure 15: Usability, regarding the web site structure ....................................83
Figure 16: Usability, regarding information on the website ............................83
Figure 17: Usability, regarding the web site structure ....................................85
Figure 18: Usability, regarding information on the website ............................86
LIST OF TABLES
Table 1: Comparison of basic research categories...................................21

Table 2: External Secondary Data............................................................23
Table 3: Primary Data Collection .............................................................25
Table 4: Own and Outsourced Marketing Research.................................27
Table 5: Ratios for the Federal Government Sector .................................54
Table 6 : Economic Growth Austria 2003-2008 ........................................55
Table 7: Austrian e-Government Market growth rate................................65
Table 8: Projects Related to FIT ...............................................................70
Table 9: Raw Estimation of e-government spending ................................96
Table 10: RTD Costs ................................................................................97
Table 11: Product Development Costs .....................................................98
Table 12: Implementation costs................................................................99
Table 13: Cost-Price Comparison........................................................... 100
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LIST OF APPENDICES
Appendix 1: Overview of Syndicated Services............................................. 122

Appendix 2: Classification of Statistical Techniques .................................... 123
Appendix 3: Questionnaire Type of Question .............................................. 124
Appendix 4: FIT Self-Adaptive Web Portal Description................................ 125
Appendix 5: List of Contacts ........................................................................ 126
Appendix 6: Homepages of Substitutes Research Projects and Substitute
Products....................................................................................................... 127
Appendix 7: Public ROI Framework ............................................................. 128
Appendix 8: European outsourcing market in public sector ......................... 129
Appendix 9: FIT Sample Questionnaire ...................................................... 130
Appendix 10: Used Statistical Methods........................................................ 136
Appendix 11: Administrative division Austria ............................................... 142
Appendix 12: Cities with more than 10 000 Inhabitants Austria ................... 143
Appendix 1: Overview of Syndicated Services
Type Characteristics Advantages Disadvantages Uses
Surveys Surveys conducted Most flexible way Interviewer errors; Market

at regular intervals of obtaining data; respondent errors segmentation,
information on advertising theme
underlying motives selection, and
advertising
effectiveness
Purchase Households provide Recorded Lack of Forecasting sales,
Panels specific information purchase behavior representativeness; market share, and
regularly over an can be linked to response bias; trends; establishing
expended period of the demographic/ maturation consumer profiles,
time; respondents psychographic brand loyalty, and
asked to record characteristics switching;
specific behaviors as evaluating test
they occur markets
Media Electronic devices Same as purchase Same as purchase Establishing
Panels automatically panel panel advertising rates;
recording behavior, selecting media
supplemented by a program or air time;
diary establishing viewer
profiles
Scanner Household Data reflect actual Data may not be Price tracking,
Volume purchases recorded purchases; timely representative; modeling,
Tracking through electronic data, less errors in recording effectiveness of in-
Data scanners in expensive purchases; difficult store modeling
supermarkets to link purchases to
elements of
marketing mix
other than price
Audit Verification of Relatively precise Coverage may be Measurement of
Services product movement information at the incomplete; consumer sales
by physical records retail and matching of data n and market share,
of performing wholesale levels competitive activity competitive activity,
inventory analysis nay be difficult analyzing
distribution
patterns, tracking of
new products
Industrial Data banks on Important source Data is lacking in Determining market
Product industrial of information in terms of content, potential by
Syndicated establishments industrial firms, quantity, and geographic area,
Services created through particularly useful quality defining sales
direct inquiries of in initial phases of territories,
companies, clipping the projects allocating
services, and advertising budget
corporate reports
Source: Homburg Ch.; Marketing I.; University Mannheim; 2005

Appendix 2: Classification of Statistical Techniques
UNIVARIATE TECHNIQUES
Are appropriate when there is a single measurement of each element but each variable is analyzed
in isolation.
Metric Data Nonmetric Data
Are measured on interval or ration scale Are measured on nominal or ordinal scale
One Sample Two or more One Sample Two or more
t test Samples Frequency Samples
z test Chi-square
K-S
Binominal
Independent Related Independent Related
Two-group Paired t test Chi Square Sign

t test Mann - Whitney Wilcoxon
z test Median Mc Nemar
One-way K-S Chi Square
ANOVA K-W ANOVA
MULTIVARIATE TECHNIQUES
Are suitable for analyzing data when there are two or more measurements of each element and
the variables are analyzed simultaneously.(Multivariate techniques are concerned with the
simultaneous relationship between two phenomena)
Dependence Techniques Independence Techniques
Are appropriate when one or more variables The variables are not classified as
can be identified as dependent variable and the dependent and independent; rather, the whole
remaining as independent variables. set of interdependent relationship is examined.
One Dependent More than one Variable Interobject

Variable Dependent
Independence Similarity
Variable
Cross-tabulation
Analysis of variance Multivariate analysis of Factor analysis Cluster analysis
and covariance variance and Multidimensional
Multiple regression covariance scaling
Two group discriminant Analysis of variance
analysis and covariance
Conjoint analysis Canonical correlation
Multiple discriminant
analysis
Appendix 3: Questionnaire Type of Question
Name Description Example

Close end questions
Dichotomous A question with two possible answers Sex:
Male Female
Multiple choice A question with three or more answers How often do you visit this website?
daily once a week
once a month never
Likert scale A statement with witch the respondent I always find the searched information
shows the amount of agreement / easily:
disagreement Disagree Neither agree Agree
or disagree
Semantic A scale connecting two bipolar words. The This website is website:
differential respondent select the point that Very useful----------------------------Not useful
represents his or her opinion Good structured-----------------Bad structures
Importance scale A scale that rates an importance of some Search function on the web site is for me:
attribute Very Not very Not at all
important important important
Rating scale A scale that rates some attribute from Provided information are:
poor to excellent Excellent Good Fair Poor
Intention to buy A scale that describes the respondents If this software product were available, I
scale intention to buy would
Buy Not sure Not buy
Open end questions
Completely A question that responded can answer in What is your opinion of the website?
unstructured an almost unlimited number of ways
Word Words are presented, one at the time, What is the first word that comes to your
association and respondents mention the first word mind when you hear following?
that comes to mind. Web site______
Accessibility_____
Sentence An incomplete sentence is presented and When I chose an software product, the most
completion respondents complete the sentence. important consideration in my decision
is____
Story completion An incomplete story is presented and I was visiting your website few days ago. I
respondents are asked to complete it noticed that the site structure was change.
This arouse in me the following
thoughts.Now complete the story
Picture A picture of two characters is presented,
with one making a statement. Well,
Respondents are asked to identify with
those are
the other and fill in the empty balloon.
our new
Thematic A picture is presented and respondents

Apperception are asked to make up a story about what
Test (TAT) they think is happening or may happen in
this picture
Source: Kotler, P.; Keller, K.Lane; Marketing Management; 12th Edition, Pearson Education
Inc., New Jersey, 2006; pp: 108
Appendix 4: FIT Self-Adaptive Web Portal Description
Appendix 5: List of Contacts
Mag. Martin Spitzenberger

Director of Federal Chancellery Department I/11
E-Government Legislation, Organization und International Affairs
Ballhausplatz 1, A-1014 Wien; Austria
Tel: +43 53115 2597
E-mail: martin.spitzenberger@bka.gv.at
Marion Eisenbltter
PR Administrator
GfK Aktiengesellschaft
Nordwestring 101, 90319 Nrnberg; Germany
Tel: +49 (0)911 395-2645
E-mail: marion.eisenblaetter@gfk.com
Nolan Reilly
Senior Consultant
Gartner, Inc.
Research Board
5 West 54th Street, New York, NY 10019; USA
Tel: +1 212 632 7600
E-mail: nolan.reilly@gartner.com
Thomas Bhler
Information Resources GmbH
Office Dsseldorf
Hansaallee 247b
40549 Dsseldorf; Germany
Tel: 49 (0) 911-88182-404
E-mail: thomas.boehler@irr.de
Appendix 6: Homepages of Substitutes Research Projects and
Substitute Products
Project Homepage
Access-eGov http://www.accessegov.org
DEMO-net http://www.imu.iccs.gr/index.php?option=com_wrapper&Itemid=77
OntoGov http://www.ontogov.com
SAKE http://www.sake-project.org
FIT http://www.fit-project.org
Project Homepage
ESPERNTO: http://www.esperonto.net/semanticportal/jsp/frames.jsp
ONTO WEB: http://62.231.133.220/xmlus02-nav/index.html
EMPOLIS http://k42.empolis.co.uk/
K42:
MONDECA: http://www.mondeca.com/
SWWS: http://swws.semanticweb.org
MINDSWAP: http://www.mindswap.org/
Appendix 7: Public ROI Framework
Governments Transforming Themselves to Maximize Public Value
Operational ROI: Traditional cost / benefit analysis, financial

(Cost savings, cost avoidance)
Social ROI: The impact of IT on society and quality of life

(Adequate medical services, food & shelter, safe streets)
Political ROI: The impact of IT to policies, legislation

(Closing the digital divide, economic development,
citizen participation)
Appendix 8: European outsourcing market in public sector
Source: Goodness, E.; Outsourcing in Public Sector; 2006; pp.8

Appendix 9: FIT Sample Questionnaire
1. Information about yourself
1.1 Do you live in x? (city, area that the web site serves)
yes
no
1.2 What is your mother tongue? (adapt list for country)

German
English
Other (please specify) ___________
1.3 Which gender are you?

female
male
1.4 How old are you?

less than 18
19-30
31-40
41-50
51-65
over 65
1.5 Which of the following best describes what you do? (needs
modification for the country)
studying or in training
employed
employed in management position
self-employed
housewife or house-husband
seeking work
retired
Other (please specify) ___________
1.6 Which of the following is the highest educational degree you have
achieved? (must be adjusted for each country)
PhD Degree
Masters Degree
Bachelors Degree
High School Diploma or equivalent
Vocational Degree
no degree
1.7 How many hours do you spend on the Internet each week?
more than 10 hours
3 to 10 hours
less than 3 hours
none
1.8 Which device do you use to access this web site?

PC
handheld
mobile telephone
1.9 Which browser do you use to access this web site?

Microsoft Internet Explorer
Mozilla Firefox
Opera
Netscape
Konqueror
Apple Safari
iCab
other (please specify) ________________
1.10 Are you employed by x? (x is the provider of the web site, e.g., city
or ministry)
yes
no
2. Information about your use of this web site
2.1 How often do you visit this web site?

daily
at least once a week
at least once a month
less than once a month
never
2.2 What is your overall impression of the web site?

very good
good
average
below average
inadequate
2.3 Which information provided by this web site do you use?

(This list has to be provided by each end user partner)
XXXX

Other (please specify) ________________
2.4 Which information did you hope to find at this web site, but did not
find?
please specify: ________________
2.5 Which services provided by this web site do you use?

(This list has to be provided by each end user partner)
XXXX

2.6 Which services did you hope to find at this web site, but did not
find?
please specify: ________________
3. Problems using this or other web sites
3.1 Navigation
3.1.1 Are you able to easily find the information you need?
yes
no
If you answered no, please specify what you think the cause of the problem is:
3.1.2 Are you able to easily find the services you need?
yes
no
If you answered no, please specify what you think the cause of the problem is:
3.1.3 Do you feel confused about where you are as you navigate the web
site?
yes, often
yes, sometimes
no, never
If you answered yes, please specify what you think the cause of the problem
is:
3.1.4 Do you find the site map helpful for navigation?

yes, I use it often
yes, sometimes I use it
no, I never use it
3.1.5 Do you think that the site structure needs to be changed so that
some navigation paths are shorter?
yes, a new site structure is needed
yes, some modifications to the site structure are needed
no, the site structure is good
is:
3.1.6 Are you able to customize the web site to your needs?
yes
no
3.1.7 Do you think, there is a need for a website that can adapt itself to
your needs?
yes
no
3.2 Information
3.2.1 Below is a list of potential problems with information on a web

page. Please tick all the problems you have found on this or similar web
sites.
Layout
The look of the page is distracting, e.g, colors, images or animation seem
inappropriate.
The layout of the page makes it hard to read.
Text
The text size is too small to read
The text is too wordy
The text uses too much jargon
Content
There is too much information on one page
The information is not up-to-date
The information is incomplete
The information is inconsistent or confusing
Links
It is difficult to pick out the links on the page
The purpose or destination of the link is unclear
3.2.2 Are you satisfied with the information that is provided?

yes
mostly yes
no
3.3 Services
3.3.1 Below is a list of potential problems with services offered by this

web site. Please tick all the problems you have found on this or similar
web sites.
The pre-requisites for using the service are not clearly explained
The instructions for using the service are unclear
It is difficult to recover from mistakes made in using the service, e.g., it is
not easy to correct mistaken data entries.
The forms are difficult to fill out, e.g., it is unclear what syntax to use for
data fields like dates
It is not possible to track the status of services that require action by some
government office.
3.4 Is the response time of the web site acceptable?

yes
mostly
no
3.5 My browser cannot present content from this web site or presents it
incorrectly?
yes
no
is:
4. Please share with us any other comments, problems or

suggestions you have:
Appendix 10: Used Statistical Methods
FREQUENCY DISTRIBUTION
Frequency distribution shows the number of observations falling into each

of several ranges of values. Example of the frequency table is showing the
age distribution of respondents visiting the website of Federal Ministry of
Interior.
Age
Cumulative
Frequency Percent Valid Percent Percent
Valid less than
1 ,4 ,4 ,4
18
19-30 114 40,6 42,1 42,4
31-40 116 41,3 42,8 85,2
41-50 31 11,0 11,4 96,7
51-65 8 2,8 3,0 99,6
over 65 1 ,4 ,4 100,0
Total 271 96,4 100,0
Missing 0 10 3,6
Total 281 100,0
CROSS TABULATION WITH CHI-SQUARE TEST
The cross tabulation procedure is useful for investigating this type of

information because it can provide information about the relation between two
variables, whether they are independent or dependent.
How to read the cross tabulation?
- There are a lot of numbers in cross tabulation.

- In the body of the table, each cell has four numbers: a count, a row
percent, a column percent and a total percent.
- The count says, how many cases fall into this cell
- The row percent tells what percent of this rows cases are found in this cell
- The column percent tells what percent of this columns cases are found in
this cell.
Cross tabulation: Gender x Feeling confused
Feeling confused
yes,
yes, often sometimes no, never Total
Gender female Number 10 10 113 133
% Gender 7,5% 7,5% 85,0% 100,0%
% Feeling confused 32,3% 33,3% 55,4% 50,2%
% Total 3,8% 3,8% 42,6% 50,2%
male Number 21 20 91 132
% Gender 15,9% 15,2% 68,9% 100,0%
% Total 7,9% 7,5% 34,3% 49,8%
Total Number 31 30 204 265
% Gender 11,7% 11,3% 77,0% 100,0%
% Total 11,7% 11,3% 77,0% 100,0%
Chi Square Test
The Cross tabulation procedure is used to conduct a Chi-square test of

independence testing the null hypothesis that there is no relationship between
the two variables.
Chi Square Test
Asymptotic
Value df Significance
(2-sided)
Pearson Chi-square 20.829 12 .000
Likelihood-Ratio 22,321 12 .000

Linear by Linear Association 1.993 1 .000
Number of available falls 262
Asymptotic Significance (2-sided)
In this example, the significance level of Pearson p is .000. This does not
really mean zero, only that the number is so small that the first tree decimal
digits are all zero and the fourth is less than five, that is it is a number less
than .0005. The result obtained is highly significant, and I would conclude that
the difference between the two variables is statistically significant.
Two variables are considered to be dependent if the significance level, p,
for the chi-square test (2) is below 0, 05. In other words, for
p < 0,05 variables are dependent, they are correlated

p > 0,05 variables are independent, they are not correlated
The significance level, p, is also called the asymptotic significance.
Value and degree of freedom (df)
The value of the 2 statistic (in the example 20.829) is of no particular use,
since its size at a given level of significance depends on the 'degrees of
freedom' shown in the second column. The 2 statistic by itself gives no
indication of the strength of the relationship between two variables, only its
significance. There are two statistics based on chi-square which do measure
the strength of the relationship.
One of these is Cramer's V (STATISTIC PHI in SPSS) and the other is the
contingency coefficient (STATISTIC CC).
Symmetric Measures
Value Approx. Significance
Nominal by nominal
Phi .263 .000

Cramers V .187 .000
Number of available falls 262 .
Both take values in the range 0 to 1, and higher values signify greater
association; a value of 0 signifies no association.
The statistic PHI in this analysis produced Cramer's V, with a value of
0.187. In this case, I would conclude that a rather weak but statistically
significant relationship exists between the dependent and independent
variables. A relationship can be WEAK even if it is statistically significant, or
conversely STRONG but not statistically significant.
CORRELATION ANALYSIS
Correlation analysis involves measuring the strength of the relationship

between two variables. The Pearson correlation coefficient (r) measures the
degree to which there is a linear association between two variables. The
sample correlation r always lies between 1 and -1.
r = 1, indicates a perfect positive correlation between two variables
r = -1, there is a perfect negative correlation
r = 0, reflects the absence of correlation.
Generally is differentiating between bivariate and partial correlation

analysis. Bivariate correlation analysis measures of association (strength) or
relationship between two variables. The partial correlations procedure
computes partial correlation coefficients that describe the linear relationship
between two variables while controlling for the effects of one or more
additional variables.
Regarding the fact that I use by the analysis only bivariate correlation, I
wont explain partial correlations more detailed.
Bivariate Correlations
Able to
Age customize
website?
Age Pearson Correlation 1 ,091
Sig. (2-tailed) ,147
N 271 257
Able to customize Pearson Correlation
,091 1
website?
Sig. (2-tailed) ,147
N 257 258
I take for my example the variables age and able to customize the website.
The correlations table displays Pearson correlation coefficients, significance
values, and the number of cases with non-missing values (N). The values of
the correlation coefficient range from -1 to 1. The sign of the correlation
coefficient indicates the direction of the relationship (positive or negative). The
absolute value of the correlation coefficient indicates the strength, with larger
absolute values indicating stronger relationships. The correlation coefficients
on the main diagonal are always 1, because each variable has a perfect
positive linear relationship with itself.
The significance of each correlation coefficient is also displayed in the
correlation table. The significance level (or p-value) is the probability of
obtaining results as extreme as the one observed. If the significance level is
very small (less than 0.05) then the correlation is significant and the two
variables are linearly related. If the significance level is relatively large (for
example 0.50) then the correlation is not significant and the two variables are
not linearly related.
This example shows, that the correlation between these two variables is
pretty small and statistically insignificant (0.147 > 0.005).
CLUSTER ANALYSIS
Cluster analysis is a technique for grouping individuals or subjects in

unknown groups. The cluster analysis is mostly used to identify similar
consumer segments. There are many different clustering methods that
generate different solution. Method used in this diploma thesis is called
Wards method. This procedure tends to combine clusters with a small
number of observations. It is also biased toward producing clusters with
approximately the same number of observations. The main characteristic is: to
minimize within cluster variation and create mostly homogeny groups.
Following, the final clusters regarding usability problems of the end users
will be shown. Based on the fact, that cluster analysis is pretty time-
consuming and consists of majority of steps; I show only the final cluster
centers and explained their meanings.
Final Cluster Centers

Cluster 1 2 3
1 3.500 4.863
2 3.500 3.396
3 4.863 3.396
This table shows the Euclidean distances (The distance between two
points that is computed by joining them with a straight line) between the final
cluster centers. Greater distances between clusters correspond to greater
dissimilarities.
Following final clusters were created:
- Custer 1: Respondents with navigation problems on the website

- Cluster 2: Respondents who have problems with layout, text, content and
links
- Cluster 3: Respondents unsatisfied with service and information provided
on the website
Cluster one and three are most different. Cluster 2 is approximately

equally similar to clusters 1 and 3. These relationships between the clusters
can also be intuited from the final cluster centers, but this becomes more
difficult as the number of clusters and variables increases.
Appendix 11: Administrative division Austria
Administrative division 2006

Federal Political Judicial
state Districts districts Municipalities Localities
Burgenland 9 7 171 328
Carinthia 10 11 132 2824
Lower Austria 25 32 573 3908
Upper Austria 18 28 445 6660
Salzburg 6 9 119 737
Styria 17 21 542 2083
Tyrol 9 13 279 677
Vorarlberg 4 6 96 154
Vienna 1 12 1 23
Austria 99 139 2358 17394
Source: Statistics of Austria 2006

Appendix 12: Cities with more than 10 000 Inhabitants Austria
Rang CITY INHABITANTS FEDERAL STATE

(2006)
1. Vienna 1.651.365 Vienna
2. Graz 244.537 Styria
3. Linz 188.407 Upper Austria
4. Salzburg 148.549 Salzburg
5. Innsbruck 116.881 Tirol
6. Klagenfurt 92.231 Carinthia
7. Wels 58.607 Upper Austria
8. Villach 58.290 Carinthia
9. Sankt Plten 51.068 Lower Austria
10. Dornbirn 43.864 Vorarlberg
11. Wiener Neustadt 39.687 Lower Austria
12. Steyr 39.102 Upper Austria
13. Feldkirch 29.855 Vorarlberg
14. Bregenz 27.241 Vorarlberg
15. Leoben 25.439 Styria
16. Wolfsberg 25.378 Carinthia
17. Baden 25.217 Lower Austria
18. Klosterneuburg 25.123 Lower Austria
19. Krems 23.965 Lower Austria
20. Traun 23.961 Upper Austria
21. Leonding 23.248 Upper Austria
22. Amstetten 23.060 Lower Austria
23. Kapfenberg 22.031 Styria
24. Mdling 20.716 Lower Austria
25. Lustenau 20.518 Vorarlberg
26. Hallein 19.012 Salzburg
27. Braunau 16.362 Upper Austria

28. Kufstein 16.305 Tirol
29. Traiskirchen 16.196 Lower Austria
30. Schwechat 15.993 Lower Austria
31. Spittal 15.945 Carinthia
32. Saalfelden 15.658 Salzburg
33. Ansfelden 15.488 Upper Austria
34. Ternitz 15.162 Lower Austria
35. Stockerau 14.955 Lower Austria
36. Hohenems 14.615 Vorarlberg
37. Perchtoldsdorf 14.395 Lower Austria
38. Telfs 14.363 Tirol
39. Feldkirchen 14.263 Carinthia
40. Bad Ischl 14.106 Upper Austria
41. Tulln 14.082 Lower Austria
42. Bludenz 13.964 Vorarlberg
43. Bruck an der Mur 13.328 Styria
44. Gmunden 13.265 Upper Austria
45. Sankt Veit 13.030 Carinthia
46. Schwaz 12.664 Tirol
47. Hall 12.365 Tirol
48. Eisenstadt 12.190 Burgenland
49. Knittelfeld 12.102 Styria
50. Lienz 12.100 Tirol
51. Neunkirchen 12.030 Lower Austria
52. Hard 11.995 Vorarlberg
53. Vcklabruck 11.893 Upper Austria
54. Waidhofen an der 11.821 Lower Austria

Ybbs
55. Wrgl 11.819 Tirol
56. Korneuburg 11.742 Lower Austria
57. Marchtrenk 11.694 Upper Austria

58. Rankweil 11.616 Vorarlberg
59. Ried 11.578 Upper Austria
60. Zwettl 11.508 Lower Austria
61. Vlkermarkt 11.430 Carinthia
62. Wals-Siezenheim 11.417 Salzburg
63. Bad Vslau 11.195 Lower Austria
64. Hollabrunn 11.117 Lower Austria
65. Mistelbach 10.980 Lower Austria
66. Enns 10.904 Upper Austria
67. Sankt Johann 10.674 Salzburg
68. Sankt Andr 10.575 Carinthia
69. Gtzis 10.454 Vorarlberg
70. Brunn am Gebirge 10.435 Lower Austria
71. Kflach 10.227 Styria
72. Bischofshofen 10.101 Salzburg
Source: Statistic Austria, 2006

GLOSSARY
Regarding the fact that the diploma thesis contains majority of

technological and IT terms, they are explained one more time in this glossary.
Adaptive web: is an open information space that allows collaboration

between portals to enable better adaptation to the needs
of their users
Business Intelligence is a business management term which refers to
applications and technologies which are used to gather,
provide access to, and analyze data and information
about their company operations
Competitive is both a process and a product. The process of
Intelligence
Competitive Intelligence is the action of gathering,
analyzing, and applying information about products,
domain constituents, customers, and competitors for the
short term and long term planning needs of an
organization.
E-Government Is the use of information and communication technologies
in the government sector
IT outsourcing is using outside vendors to create, maintain, or reengineer
IT architectures and systems
Market Intelligence information relevant to a companys markets, gathered
and analyzed specifically for the purpose of accurate and
confident decision making in determining market
opportunity, market penetration strategy, and new market
development metrics
Open source Allows for anyone with programming experience to revise
software
and change the programming code to suit their individual
needs. It allows to fully customizing your settings.
Self Adaptive Web Has the ability to adapt itself by identifying upcoming
problems and by making required reconfigurations on the
fly in order to resolve problems.
Semantic Encode meanings individually from data and content files;
Technology
and individually from application code.
Software as a The complete set, or any of the individual items of the set,
product
of computer programs, procedures, and associated
documentation and data designated for delivery to a
customer or end user
Software Set of activities that results in software products. Software
development
development may include new development, modification,
reuse, re-engineering, maintenance, or any other
activities that result in software products
Usability A measure of how easy it is for a user to complete a task.
In the context of Web pages this concerns how easy it is
for a user to find the information they require from a given
Web site.
Web portal is a single point of access to information which is linked
from various logically related internet based applications
and of interest to various type of users

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Masarykova univerzita

Vedouc diplomov prce: Autor:

Brno, duben 2007

Katedra podnikovho hospodstv

Akademick rok 2006/2007

ZADN DIPLOMOV PRCE

Obor: Podnikov hospodstv

Nzev tmatu: Marketingov vzkum

Zsady pro vypracovn

Rozsah prce bez ploh: 60 70 stran

Seznam odborn literatury:

Vedouc diplomov prce: Ing. Klra Kaparov

Datum zadn diplomov prce: 10.3.2006

Termn odevzdn diplomov prce: 20.4.2007

V Brn dne: 10.3.2006

We are living in an information based society, where IT and software

The rivalry between individual IT and software companies is extremely

No citizens left behind with the objective, that e-services should be

Taking into account above mentioned research studies and EU reports

The diploma thesis consists of a theoretical part and a practical part.

In the theoretical part, I will at first concentrate on the marketing research

1.1. Marketing Research in the Age of Information

The modern Marketing is becoming a battle based more on information than

Marketing is everywhere, affects our day-to-day lives, is embedded in

Provision of all above mentioned information that are relevant, accurate,

Marketing research is now about a $16.5 billion industry globally,

1.2.1. Problem Definition

To define the research objectives successfully, it is crucial to make the

Figure 1: From a Management Decision Problem to a Marketing

A statement specifying the type of information

Table 1: Comparison of basic research categories

The importance of internal sources, also called house-in sources has

Table 2: External Secondary Data

Government publications Surveys Electronic Databases

Internal secondary data is free, but most of secondary data is made up of

Professional studies are mostly about industry, national or international

Table 3: Primary Data Collection

Source: ARMSTRONG, G., KOTLER, P. Principles of Marketing. 2004. pp. 125.

Because costs of this size represent a substantial investment for most

Is the research worth doing?

Can I do the research by myself?

1.2.3. Fieldwork or Data Collection

1.2.4. Data Analysis

The next-to-last step in the marketing research process is to extract

1.2.5. Findings Presentation

1.3. Marketing research studies

Most generated studies are39:

The goal of market analysis is to identify the market volume, customer

2.2 Marketing environment

Figure 2: Marketing Environment

Source: KOCH, J. Marketing. 1999. pp. 12

2.3 Market analysis process

Generally, we cant assume, that every market analysis consists of the

2.4 Software as a product

2.5 Market analysis for software as a product

2.5.1 General market characteristics

Government markets are generally defined as markets, which are made

2.5.2 Customer analysis for software as a product