The IT Industry as Economic Driver in Baden-Württemberg

Cars from Baden-Württemberg are a familiar sight the world over. But in addition to the automotive industry and engineering, the IT sector has long been a driving force of the region’s economy. Innovative IT systems also guarantee the efficiency of development and production processes in the traditionally strong technology sectors of Southwest Germany.
 

Economic structure: the IT sector in figures

Over 18% of people employed in Germany’s information and communication technology (ICT) sector work in Baden-Württemberg. The region’s ICT industry comprises around 13,000 VAT-registered companies, with the latest figures showing total turnover of over 65 billion euros. (Regional Statistical Office 2009, data for 2008). Since 2000, employment in the ICT sector has grown at more than twice the rate of the economy as a whole. The software industry plays a significant role here. Of some 232,000 people employed in Baden-Württemberg’s ICT industry, by far the biggest proportion (45%) work for software companies and IT service providers. These firms are equally adept at generating jobs, creating around 25,000 new posts between 2000 and 2008.
 

Strong clusters: powerhouses of the digital economy

Baden-Württemberg’s performance in the IT sector can be largely attributed to its strong clusters – networks that enable IT manufacturers, service providers and education/research institutions to work closely together throughout the region and learn from each other. The northern part of Baden-Württemberg is widely regarded as a leading IT cluster in Europe. The European Cluster Observatory in Stockholm ranks the Karlsruhe region as one of the three strongest IT clusters in the whole of Europe (27 EU states) with 820 companies and 28,836 employees in 2009. The Observatory also ranks the Stuttgart region among the top ten IT clusters in Europe, with 1,122 companies and 26,574 employees.
 

At home in Baden-Württemberg: global players and sought-after specialists

Many of Baden-Württemberg’s IT companies and research institutions are internationally renowned industry leaders. IT giant IBM, ranked by brand consultants Millward Brown as the world’s third most valuable brand, built a research and development laboratory in Böblingen in the 1950s and today has eight subsidiaries in Baden-Württemberg. Hewlett Packard also has strong ties to the region, and Walldorf (near Heidelberg) is home to the headquarters of Europe’s largest software provider – SAP.

In addition to these and other major international companies, numerous small and medium-sized enterprises ensure a high level of innovation, including many software and technology providers specialising in sector-specific solutions.

One of Germany’s online marketers with the greatest reach, United Internet Media (listed fifth in the AGOF internet facts 2010-IV marketer ranking) is responsible for marketing the group’s own WEB.DE, GMX and 1&1 portals. WEB.DE, now Germany’s third largest Internet portal (AGOF internet facts 2010-IV), was taken over by United Internet in 2005. Specialists for various multimedia and Internet applications have also emerged within the advertising agency sector (>> see Creative Industries section).

Companies from the region are among the pioneers of open source applications. KDE, the free desktop environment for Linux, was created in Tübingen in 1996. In 2005, the Linux Solutions Group (Lisog) was formed. Its network of IT suppliers, users and scientific partners aims to promote open source-based solutions. MFG Baden-Württemberg is responsible for managing the Lisog office, and around a third of Lisog’s members come from Southwest Germany.

Last but not least, Baden-Württemberg is also a leader in e-government. The central Internet portal for local and regional public services, www.service-bw.de, which provides a range of information and services covering some 50 common bureaucratic tasks, is the leading portal of its kind in Germany.
 

Strong networks: a joint approach to new markets

When it comes to expertise and dynamic innovation, Baden-Württemberg benefits from a robust education and research landscape in the IT field, including efficient facilities for the transfer of research findings (>> see Education & Research section). IT companies also receive strong support from the user side as a result of the many large, influential clients from the automotive and engineering sectors as well as from manufacturing, medical technology and the media industry (>> see Media section).

A typical feature of the region’s IT businesses is that they not only deliver excellent individual performance but also have the proven ability to work together effectively. The largest business network is Baden-Württemberg Connected e.V. (bwcon) – an initiative established by information and communication technology companies in 1997. The Federal Ministry of Economics awarded it the accolade of “Best German Innovation Network” in the 2008 Competence Network competition. Its activities are complemented by a number of regional cluster initiatives that promote partnerships across different organisations. The Baden-Württemberg cluster atlas lists ten IT networks operating successfully in this way.

As Public Innovation Agency for ICT and Media, MFG Baden-Württemberg is key partner for connecting, developing and promoting the industry and acts as the catalyst for innovative processes. MFG has established industry meetings that have proved very popular across Germany, such as the German Multimedia Summit (DMMK). It organises and supports highly respected competitions in the IT field, including the DMMA Online Star, and actively fosters new talent by means of initiatives such as the Karl Steinbuch Scholarship programme.

MFG has also set up cross-border initiatives to foster links between the region’s companies and those in other countries and regions, including the EU project INNOTRAIN IT and the European Interest Group on Creativity and Innovation (EICI). MFG strives to ensure that small and medium-sized businesses also benefit from the latest research findings, new technologies and industry expertise.

A number of competitions and funding initiatives support the region’s innovative forces and founders, including the CyberOne business plan competition and the Heidelberg Innovation Forum. The latter event brings together researchers and developers with potential partners and investors. The region’s Software Centres provide excellent conditions for launching start-up companies. In the mid-90s, a total of six such centres were established with support from the Ministry of Economic Affairs (in Böblingen, Friedrichshafen, Heilbronn, Lörrach, Mannheim und Pforzheim), shortly followed by two more (in Stuttgart und Waldkirch).