Embedded Systems in Germany

1
Embedded Systems in Germany
BITKOM
Christoph Chalons, Managing Director, PAC GmbH,
Munich c.chalons_at_pac-online.com 26 June 2008
2
Agenda

• Methodology and definitions
• The embedded systems market in Germany
  (preliminary)
• Challenges and issues related to embedded systems
  

3
Objectives of the BITKOM Study  Embedded Systems
Germany

• Increase visibility of embedded systems in
  Germany
• Assess the relevance of embedded systems for the
  German economy
• Assess market size and potential
• Employment situation and requirements
• Identify and understand issues and technology
  trends
• Identify and discuss potential improvement areas

4
Definition Embedded Systems

• An embedded system is a special-purpose computer
  system (1) designed to perform one or a few
  dedicated functions, often with real-time
  computing constraints. It is usually embedded as
  part of a complete device including hardware and
  mechanical parts. In contrast, a
  general-purpose computer, such as a personal
  computer, can do many different tasks depending
  on programming. (Source Wikipedia) (1)
  hardware - software bundle

xx
5
Methodology of the Study

• Cooperation TechConsult (phone and online survey)
  with PAC (face to face interviews)
• Face to Face interviews with 10 embedded systems
  user companies (manufacturing products with a
  substantial ES component) and 10 subcontractors/
  suppliers (HW, SW, services) of embedded systems
• Phone interviews with 160 user companies and 50
  suppliers (plus additional online survey)
• On supplier side there was the following
  spreading
• Manufacturing 64
• Distribution 4
• Services 32
• On industry side there was the following
  spreading among the participants

6
Relevant Industry Sectors for Embedded Systems
7
Agenda

• Methodology and definitions
• The embedded systems market in Germany
  (preliminary)
• Challenges and issues related to embedded systems
  

Slide 7
8
Preliminary Market Size (1/ 4)
Source PAC based on Eurostat and own research
9
Preliminary Market Size (2/ 4)
Source PAC based on Eurostat and own research
10
Preliminary Market Size (3/ 4)
Source PAC
11
Preliminary Market Size (4/ 4)
Source PAC
12
Resources for Embedded Systems - Education (Phone
Survey)
13
Resources for Embedded Systems - Education (Face
to Face)
14
Resources for Embedded Systems - Age
By industry segment
15
Resources for Embedded Systems - Comments

• Young industry!
• Electrical/ electronic engineering formations
  dominant, ahead of Information Technology other
  areas mechanical engineering, career changer,
  physician
• Experts vs. beginners the right balance
• Experts experience, long term thinking, but
  (too?) cautious
• Beginners learn from mistakes... but ready to
  make some!
• Level of formation approx. 5 doctors, 55
  universities/ colleges, 35 technical colleges,
  5 rest
• High salary level (start 50-60 K after 10
  years 90-100 K)
• Average staff increase 5 per year
• Vacancies average 7 to 8 of current staff (45
  beginners, 25 experienced, 30 senior)

Slide 15
16
Resources for Embedded Systems - Strengths

• Technology/ technical formation/ know-how/
  competency
• Accuracy, precision, quality, solid work, 100
• Commitment, determination
• Willingness ability to learn
• Down to earth
• Ability to recognize and discuss mistakes and to
  learn from them
• Holistic approach, ability to structure, to
  conduct large, complex projects
• Ability/ willingness to improve existing
  solutions
• Limited turnover, overall availability of
  resources
• Technology increasingly considered as attractive
  area to work in

Slide 16
17
Resources for Embedded Systems - Weaknesses

• Social competency, ability to communicate, to
  work in a team
• International/ multicultural/ multilingual
  competency
• Economic competency/ Lack of understanding for
  the rules of the market, management ability
• Lack of flexibility/ mobility
• Perfectionism never stop improving existing
  solutions! Focus on 100 solutions!
• Lack of resources in selected areas (industry,
  skills, geography in particular, automotive),
  difficulty to hire high level people (technology/
  specialisation, management)
• Embedded world still unknown by students
• High salary level (start 50-60 K after 10
  years 90-100 K), too high for mere development
• Insufficient public grant, complex/ not enough
  pragmatic rules

Slide 17
18
Open Source - Situation and Trends

• High penetration in embedded software engineering
  (eg, Linux approx. 25, Eclipse approx. 45)
• Still low penetration for embedded software
  itself
• Security issues
• Licensing issues/ need to make code publicly
  available
• Overall progressive increase
• Reasons for Open Source
• Short innovation cycles -gt supports innovation
• Ability to maintain the software in-house if
  required
• ROI? licensing vs. maintenance internal
  costs...
• Open Source model lessons for the embedded
  systems industry? (Networking/ cooperation)

Slide 18
19
Embedded Systems Related Subcontracting (Phone
Survey)
20
External Services with Embedded Systems - by
Contract
21
Project Characteristics - Face to Face Interviews

• Rather long projects most often 0.5 to 3 years
• From 2-10 to 300-400 engineers
• Large teams often spread over 3-5 sites, both in
  Germany and abroad
• Very intensive test phase 30 to 65 of total
  project costs and schedule
• Requirement analysis/ Planning/ Architecture/
  Design 15 to 30
• Development/ Implementation 20 to 40
• Core competency architecture/ design
  definition of test criteria
• Subcontracting development/ implementation
  testing
• Progressive trend towards fixed-price contracts
• Combination of strategic, global partners and
  local, flexible partners
• Selection criteria 0. transparency 1. quality
  2. on schedule 3. price

Slide 21
22
Agenda

• Methodology and definitions
• The embedded systems market in Germany
  (preliminary)
• Challenges and issues related to embedded systems
  

Slide 22
23
Embedded Systems Projects - Trends, Challenges
(Phone Survey)
24
Risks in Embedded Systems Business (Phone Survey)
25
Improvement Areas (Phone Survey)
Slide 25
26
Major Issues - Selected Quotes from Face to Face
Interviews

• Increase project efficiency
• Develop reuse, standardisation, synergies
• Increase attractiveness of German locations
• Enable small, innovative companies to be
  successful on the market
• Take advantage of the global economy

Slide 26
27
Improvement Areas - Selected Quotes from Face to
Face Interviews

• Projects
• Project Management (eg, earned value iterative,
  weekly validation)
• Requirements definition (targets, precision)
• Best practice (planning, development)
• Test required vs. too much
• Reuse
• Standards, in particular for communication (with
  competitors/ customers/ public bodies)
• Develop repository
• Think (reusable) module/ kernel/ scalable
• Cross-industry synergies (eg, automotive,
  aerospace, mechanical engineering, communication)
• Synergies with commercial/ administrative IT
  (multi-core, networking, SOA/ IP, data volume,
  virtualisation)

Slide 27
28
Improvement Areas - Selected Quotes from Face to
Face Interviews

• German Image
• Germany manufacturing of high value goods -gt
  huge importance of embedded systems
• Germany quality! Embedded requires quality -gt
  embedded Germany
• Germany SMBs! Innovation requires small
  companies -gt Innovation Germany
• Resources
• Multicultural and multilingual ability
• Team ability
• Sales Marketing
• Management
• Facilitate foreign resources involvement
• Organisation
• Mixed teams (culture, country, age, sex)
• Experience from other businesses/ industries/
  countries
• Develop (public or private) granted networks of
  small companies (management, sales/ marketing)
• Cooperation with competitors, public
  organisations, universities
• Answer employees expectations challenge, change
  (vs. security, long term)

Slide 28
29
Improvement Areas - Selected Quotes from Face to
Face Interviews

• Take advantage of globalisation - instead of just
  discussing the risks...
• Address the growth markets (BRIC!) -gt require
  onsite presence (at least for customisation)
• Take advantage of competencies and availability
  (eg, India)
• Facilitate foreign resources involvement
• Also realize the offshore issues (turnover,
  security, piracy, mobility, transparency, process
  development/ process costs)
• Public grant (vs. competing locations)

Slide 29
30
Thank you and Good Luck!
Christophe Chalons Managing Director PAC
Germany Tel [phone] c.chalons_at_pac-onlin
e.com