Think of Germany, and you’ll inevitably think of quality, efficiency and high-tech products. One region that has helped shape this image of the country is Greater Frankfurt/Hessen, which has roots in the IT and telecoms industries that go back more than 150 years. With its eyes firmly set on the future, Hessen continues to attract new investors who believe that it is the best location to build and expand their business operations. So what brings so many people to Hessen?
According to investment promotion agency Hessen Trade and Invest, the area is one of the most important investment locations for foreign enterprise in Germany. Companies from all over the world have set up bases in Hessen, with more than 900 from the US, some 300 from China, more than 250 from India and in excess of 200 from Japan and South Korea. Additionally, Hessen is the site of numerous missions and representative offices of international countries and regions. According to central bank statistics, the region is responsible for €77.1bn of FDI, representing 14.7% of foreign investment coming into Germany in 2012.
Building on its reputation for knowledge and technologies, the Hessen region is proving a popular location for foreign investors from the ICT sector. Firms involved in this sector cover a wide range of ICT disciplines, ranging from research to the development and sales of innovative products and services.
Hessen Trade and Invest says that the region provides an excellent environment to obtain and strengthen national and international competitiveness. It adds: “There are lively exchanges between industry sectors, companies, universities and government in Hessen, whether it is initiated by the Ministry of Economics or by the various clusters and networks of the state. Thus, we provide an infrastructure fit for the future which supplies a powerful economy with an ideal cultural medium.”
Situated at the heart of Germany’s road and rail network, Hessen is well served by road, rail and air links to the rest of Europe and further afield, with Frankfurt Airport ranked in the top 15 worldwide by passenger numbers. Some 107 airlines serving 275 destinations in 111 countries take off and land at the airport, which handles 56.4 million air travellers each year and 4630 passenger flights per week.
International enterprise software firm Deltek says Hessen’s geographical location was one of the reasons it made a strategic decision to establish an office in the region in the first half of 2012. “Our office in Frankfurt expands our reach in central Europe,” says a spokesperson for the company. “The location in Frankfurt allows us to connect with the large number of professional services firms in Germany, Austria and Switzerland. “This region is one of the most important international business locations in Europe. It is a dynamic and growing region, and Deltek is a perfect fit into this business context.”
But it is not just great logistics links that encourage firms to invest in Hessen. Other links with the rest of the world include the Enterprise Europe Network Hessen (EEN Hessen), which is a partner in a network spanning 50 countries with approximately 600 member organisations. EEN Hessen assists small and medium-sized enterprises to strengthen their internal position and effectively increase their business opportunities in Europe and beyond.
But Hessen has other strengths beyond its geography and logistics. The Hessian Ministry of Economy, Traffic, Urban and Regional Development says that more than 9400 companies with approximately 76,300 employees generating a turnover of €17.8bn are currently involved in the region’s strongest technology sector, ICT.
And it is these stats that are encouraging investors to grow and expand in the region. “Hessen offers a great opportunity for us to generate new business since there are a significant number of project-based professional services companies,” says a spokesperson for Deltek. “These include architecture firms, engineering firms, consulting companies, and marketing agencies. Hessen is also a progressive and international region that offers a variety of resources to support Deltek’s future growth.”
FrankfurtRhineMain, and particularly the Darmstadt district, accounts for 78% of all ICT companies, 83% of all ICT employees and 89% of the ICT turnover in Hessen. Major suppliers such as Deutsche Telekom, Siemens, Rittal, Bosch, Accenture, Vodafone, Avaya, CSC Deutschland, Software AG, IBM, Lufthansa Systems, national or European corporate headquarters of suppliers such as Atari, CA, Dell, Fujitsu, Huawei, Infosys, Motorola, Nintendo, Panasonic and Samsung are located in Hessen, as well as major users of ICT such as banks and insurance companies, the automotive and chemistry sectors, Fraport and other traffic service providers.
Consultancy firm Prognos says that Darmstadt is the ‘centre of the German software industry’. Darmstadt is also the centre of a leading international software cluster. This cluster unites the three major German corporate software suppliers as well as a multitude of other leading companies and research institutions. New software solutions created by the cluster are designed to enable companies to transform themselves into competitive, completely digitally networked companies. According to the Hessian Ministry of Economy, Traffic, Urban and Regional Development, the number of software companies in the region has more than doubled since 2000.
Frankfurt is globally renowned as a financial metropolis, and this is providing opportunities to firms supporting the financial sector. Joachim Schreiner, area vice-president for central Europe at Salesforce.com says that the company’s Frankfurt office brings it closer to Germany’s financial hub, which is an important segment for the global cloud computing company. “We serve many firms from the financial industry, such as Commonwealth Bank, GE Capital and Wells Fargo. Additionally, Hessen and the wider Frankfurt area in particular is a great location for ICT – often referred to as Germany’s Silicon Valley.
“The financial industry is one of our key markets. This industry is fast growing and companies have to adapt to their customers’ needs on a regular basis. New mobile and social technologies provide a powerful opportunity to listen and engage with customers and intermediaries, and exceed everyone’s expectations. We provide those solutions that connect financial services companies of all kinds with employees and customers on a deeper level in order to provide higher value services and to build a fiercely loyal customer base.”
Another notable investment is Sapient Global Market’s June 2013 launch of a new office in Frankfurt. The office provides business and technology consulting for capital and commodity markets, and has clients across the German-speaking countries of Europe.
Frankfurt is also making a name for itself as being the largest data hub in the world. The internet exchange point DE-CIX, which supplies 90% of German and 35% of European data traffic, is attracting telecommunication suppliers and is also the second largest collocation space in Europe. As a result, the region has become a natural choice for some of Germany’s most successful software and IT services as well as advertising agencies and companies in the games sector.
What’s more, the majority of innovations in other industries in the region – such as automotive, logistics, and medical technology – are also driven by ICT.
If success really does breed success, then the presence of so many IT firms in Hessen is encouraging to investors. “Hessen has more than 10,000 IT companies, with 94,000 employees working for companies such as Software AG, Computer Associates, Avaya, Cisco Systems, Google, Dell, Deutsche Telekom, Motorola and now Deltek,” says a spokesperson for Deltek. “This network of technology companies will support our growth in sales, business development and support of our enterprise resource planning solutions.”
The region’s particular ICT strengths are in:
- Ambient mobility – ambient intelligence for mobile citizens and companies;
- Augmented reality – digital information and control systems for virtual environments;
- Embedded systems – product and production intelligence;
- Energy-efficient IT;
- Telecommunication networks and data centres;
- Innovative enterprise software;
- Games and creative industries;
- Satellite navigation and traffic telematics;
- International research, development, production and networking;
- eSkills – public IT skills.
House of IT
One initiative to promote ICT in the region is the House of IT, which was founded as a science-oriented hub to develop and strengthen the ICT industry in the Rhine-Main region. Partners in the business and scientific communities have joined forces with the state government of Hessen to launch the project.
The House of IT is a place to meet, exchange ideas and collaborate. It co-operates with existing ICT initiatives and potential in the region, including top projects such as the Center for Advanced Security Research Darmstadt and the office of the software cluster Software Innovation for the Digital Enterprise. The House of IT also facilitates new projects and offerings that align with the three pillars underpinning its guiding concept: research and the transfer of knowledge and technology; executive education and professional training; and start-ups, entrepreneurship and growth.
Innovations are supported by the Hessen Intellectual Property Organisation, which brings together 10 state universities in Hessen to market product and process innovations. The organisation supports small and medium-sized companies by introducing new products, methods or innovations. Three patent and utilisation agencies were established in the regions of northern, middle and southern Hessen. These agencies undertake the evaluation, protection and marketing of the newest research results by order of the 10 state universities.
Hessen’s strong technology focus is seen at every level, from its colleges and universities and in its industries. IT has been one of the most popular degree studies in the region for years, and an estimated 13,000 students annually complete their IT degree in the FrankfurtRhineMain region. The Hessian Ministry of Economy, Traffic, Urban and Regional Development points to two reasons for this success: “It could be the high quality of the IT degree programmes, which regularly achieve top placements in rankings and company surveys, or it could be due to the fact that the highest IT salaries in Germany are paid in Frankfurt.”
The region’s universities include: Technische Universität Darmstadt, Goethe-Universität Frankfurt, Justus-Liebig-Universität, Gießen Philipps-Universität Marburg, Universität Kassel, European Business School, Frankfurt School of Finance & Management, Hochschule Darmstadt, Fachhochschule Frankfurt, Fachhochschule Fulda, Technische Hochschule Mittelhessen, Hochschule RheinMain and Hochschule Fresenius.
Holiday rentals website HomeAway, which in 2005 acquired FeWo-direkt, the leading web-based holiday company in Germany, rates the region’s skills highly. “Thanks to HomeAway's team in Germany, the site has grown from 80 properties in 1997, spiking to 14,700 properties 10 years later. Travellers can now browse more than 550,000 properties on the site,” says Brent Bellm, the company's chief operating officer.
“After three years in Berlin and eight years in Kassel, FeWo-direkt.de relocated to Frankfurt in 2009. Hessen has a population of educated, diverse and hard-working people, making it the perfect place to build a professional, highly motivated team. HomeAway has grown its Frankfurt office to more than 70 people.”
Mr Schreiner at Salesforce.com agrees: “Hessen is a great location for ICT and promising perspectives. The area holds the top position for the technology industry in Germany and Europe, and provides an innovative and up-to-date infrastructure for internet connections and broadband. Furthermore, the area provides one of the most dense networks of software and IT service companies.
"Additionally, many big players in IT consulting and system integrations, as well as standard software companies, are located in this area. Furthermore, the area is known for its expertise in research and development, with institutions including Fraunhofer Institute and leading universities in Darmstadt and Frankfurt. For a fast-growing company such as Salesforce.com that is continuously looking for talented professionals and specialists, Hessen is great talent pool – especially in times of skills shortages.”
The cost of this article was underwritten by Hessen Trade and Invest. Writing and editing were carried out independently by fDi Magazine.