2.4 Key markets

Healthcare

Nedap develops and provides software services that support healthcare institutions in the Netherlands in planning, registering and administering. With our Ons® platform we enable care professionals to spend more time providing care, as they can work more efficiently and spend less time on administrative tasks. We are active in elderly care (nursing homes, care homes and home care organisations), disability care and mental healthcare sectors. With the acquistion of MediKIT, Nedap is also entering the general practitioner market. Ongoing investments in the reliability, ease of use and functionality of the software increase the competitive strength of the software solution year by year. With more than 1,700 healthcare organisations using our software services daily, we are the market leader in the Dutch healthcare market.

Developments in 2023

The number of healthcare professionals using our software services daily increased again in 2023. In all sectors in which we operate, we further expanded our position as market leader. We also see excellent growth opportunities in the general practitioner market. 

Streamlining the organisation

To accommodate the growth of our position in the healthcare market, the number of employees in the business unit has increased significantly. This requires a different way of organising and managing. In recent years, hard work has been done to implement a new organisational model. The numerous development teams that were previously separate have now been consolidated into larger, care process-oriented teams, such as dossier, logistics, integration and administration. The new structure reduces the fragmentation of development resources and facilitates a focus on optimising integral care processes rather than individual applications in our Ons® platform.

Market driven development

The experience gained over the past year with this new way of working has shown that more valuable development capacity becomes available. This capacity is used to develop and roll out relevant new functionalities faster than before, based on insights from healthcare practice. For each healthcare sector in which we currently operate, a sector manager has been appointed. Their task is to collect, bundle and translate these sector-specific insights into specifications for concrete new functionalities in our software services. This approach not only promotes efficiency but also contributes to continuous customer-focused innovation within our organisation.

In addition, a new process has been started to create one development roadmap for our platform. The goal is to better visualise interdependencies and increase the predictability of delivering new functionalities. This way of working ensures that the functionalities that have the greatest market impact also get the highest priority, and that our customers can count on these functionalities becoming available according to agreement, allowing them to make timely preparations to use the functionality in practice. In this way, we want to help our customers find an answer to the increasing demand for care, staff shortages and the need to reduce healthcare costs.

Network care

Due to this increasing pressure on healthcare organisations, the call to organise care in the Netherlands differently is growing. In this approach, care processes are no longer optimised in each individual organisation, but the entire care in a region is restructured. Working across organisations means the available care capacity can be used more effectively.

We want to play an active role in enabling network care, for example, in regions. An important condition for this is that organisations can easily exchange data about clients. To this end, Nedap launched the Nuts initiative. The goal was to design and build an architecture based on open standards, the design of which is made available free of charge. Nuts finally makes it possible for software suppliers to exchange this data safely and in a controlled manner. Many software suppliers have already embraced the Nuts initiative, making it much easier to connect systems.

A recent example of this network care is the joint provision of care capacity in the evening, at night and at weekends in a region. We are now developing a new functionality that provides healthcare professionals with insight into client dossiers of fellow institutions in the region. This makes it possible to organise care in a region much more efficiently than before.

General practitioner market

General practitioners are often in charge of organising the formal and informal care for their patients, so access to general practitioners and the systems they use is an important condition in developing software that supports network care. We already had plans to enter the general practitioner market. However, this would require a lot of development capacity at the expense of new functionalities on our platform for existing customers. This has prevented us from taking this step so far.

With the acquisition of MediKIT in 2023, we entered a for Nedap new sector in the Dutch healthcare market that offers us excellent growth opportunities. MediKIT is a modern general practitioner information system, that is very user-friendly and fully based on open standards. Moreover, this acquisition significantly improves our strategic position to play a leading role in network care. The integration of the MediKIT proposition has now been successfully completed. The first general practitioners have already chosen Nedap.

Results and outlook

The number of healthcare professionals and facilities using our solutions daily continued to increase in the 2023 financial year, leading to an increase in our revenue as well. We anticipate that, due to the ongoing pressure on the Dutch healthcare market, the demand for smart solutions to save time will only continue to grow. Continual investments in the reliability and functionality of our software services bolster our distinctive capability. We are therefore excellently positioned to further increase our market share and revenue in the coming years. For the 2024 financial year, we also expect further growth in revenue.

Livestock Management

Nedap Livestock Management develops and markets technological solutions for individual animal monitoring and management for the dairy farming industry worldwide.

Developments in 2023

Livestock Management had a dynamic year. As a result of the component scarcity in 2022, the business unit was unable to meet the rising demand for its products in that year. At the beginning of 2023, we managed to increase the volume of product deliveries and quickly caught up on delivery backlogs. This led to our business partners reaching the limits of their capacity for installing and commissioning our systems. In addition, investment appetite reduced due to falling milk prices, rising feed costs and interest rates trending upwards. Both resulted in a decline in the number of orders over the course of the year. After initially facing the challenge of delivering more quickly, we had to reduce our production capacity quickly in the second half of the financial year.

Organisation

In the first half of 2023, the business unit took a major step in sharpening its strategy. Market data supports our estimate that in the coming years, the adoption of technology for automated identification and monitoring of individual animals on increasingly larger farms will accelerate. It is therefore crucial to ensure that the organisation is ready to capitalise on this growth.

In 2023, we continued to intensify our investments in our commercial and support organisation globally. This resulted in us having our own employees on all continents who can support our partners with professional marketing and support materials. Our business partners have seen that our increased activity levels in local markets result in concrete revenue growth for them. This strengthens mutual trust and results in more and more regions inviting us to train and support employees of business partners, positively impacting regional market operations.

We invested in the development team, and a new way of working was implemented for the development processes. The goal is to increase market orientation and to ensure better coordination between teams, thereby avoiding unnecessary delays. But above all to ensure that the available development capacity is deployed for fewer topics so that the right functionality can be brought to the market much faster.

Innovation

We made good progress with our development agenda in 2023. A focal point here is the Nedap Now cloud platform. Nedap Now combines the accuracy and reliability offered by Nedap products installed at the farm with the processing power and scalability of cloud computing. It unlocks new possibilities in cow and herd management, such as detailed data analysis, extended historical data storage and the ability to consolidate data from multi-site dairy farms.

Another major advantage is that it is much easier to disseminate these insights through data integrations so that all relevant parties (farmer, staff, feed supplier and veterinarian) always have access to this data. The Nedap Now cloud platform also enables new functionalities to be deployed much faster than before, accelerating our innovation processes.

Nedap Now also enables other business models. In the financial year, we started offering SmartTag as a service. Within this model, the farmer pays a limited start-up fee and is billed monthly by the business partner through Nedap Now. This gives farmers the opportunity to switch to advanced Nedap technology, where the monthly costs of the Nedap solution can typically be funded from the higher yield per cow that results from the use of Nedap technology. We expect that both pricing models (project investments and SmartTag as a Service) will continue to coexist. Being able to offer both pricing models to meet different needs in the market ensures that sales opportunities increase.

In 2023, we also conducted the first field tests of our solution for detecting lameness in cows based on camera images. When hoof problems in cows are detected earlier, intervention can occur at an early stage. This leads to significant health gains, which directly leads to higher production. The automatic processing and interpretation of camera images based on artificial intelligence offers entirely new possibilities for developing valuable solutions to practical problems and with that, a valuable addition to our existing health insights. The crucial aspects here are not only technically mastering this technology, but also the ability to translate technical possibilities into practical applications that allow a farmer to demonstrably cut costs or increase revenues.

The new milk meter is being applied at more and more farms. The benefits of the milk meter, such as improved udder health and easy installation due to wireless technology, have also proven to exist in practice. However, fully integrating our milk meter into the existing milk installations of our business partners sometimes slows down the speed at which we can bring our solution to the market.

Results and outlook

Livestock Management’s revenue grew again in 2023. However, there were two sides to the year. By expanding of our delivery capacity, we quickly caught up on delivery backlogs, giving an impulse to revenue growth in the first half of the year. Due to this growth in delivery, our business partners reached the limits of their installation capacity in the second half of the year. This, combined with the reduced investment appetite in the market, slowed down the level of orders in the last few months of the year, which will have an impact on the revenue in the first half of 2024.

We have invested to capitalise on excellent growth opportunities in this industry in the coming years. However, we expect this market to continue to experience volatility, affecting demand for our products in the short term. For the full year 2024, we expect revenue growth for the business unit, with the largest revenue contribution in the second half of the year.

Retail

Nedap Retail develops and markets RFID solutions that help retailers worldwide in making inventory visible, optimising store processes, and preventing shrinkage. This enables retailers to sell more at lower costs and lower inventories. With iD Cloud, Nedap is a market leader in the rapidly growing market of RFID applications for retailers. Besides the iD Cloud platform, the business unit provides RF-based, conventional anti-theft systems for stores.

Developments in 2023

The retail market was particularly volatile in 2023. Developments varied greatly by region, sector, and individual retailer. After an excellent start to the financial year, economic conditions in the retail market led to delays in purchasing processes.

iD Cloud

Nedap has further expanded its leading role in the market of RFID solutions for retailers. Our strategic decision to develop a single platform solution and not carry out customer-specific projects is beginning to pay off. The basic design of iD Cloud was already to handle large-scale simultaneous use at thousands of stores. This ensures that our solution is very robust and scalable in practice. Even during peak loads in stores, such as Black Friday, retailers can continue to sell without any problems.

Furthermore, we have continuously worked on developing a standardised project approach with all the necessary supporting resources to successfully implement iD Cloud at stores. The goal is to make the threshold for retailers to start using RFID as low as possible. Thanks to this proven approach, we have repeatedly succeeded in rolling out our solution on a large scale. For example, in 2023, a large number of Levi's stores in North America were equipped with iD Cloud in a short time. The 100% success rate of our projects sets us apart from competitors and is an important reason for potential new customers to consider Nedap as their RFID supplier.

In recent years, work has also been done on iD Cloud Supply Chain, expanding our market from stores to distribution centres. The challenge here was the significant difference in the design and working methods of individual distribution centres. For this, we have developed an entirely new dedicated architecture, called Harmony, which offers all the standard functionality of RFID in logistics, but also allows system integrators to add project-specific functionality themselves. With Harmony, we can also respond to opportunities for RFID in other markets. However, we are currently focusing on distribution and logistics within the retail sector, whereby the Harmony technology stack is fully integrated in the iD Cloud platform. This broadening of our iD Cloud platform has increased our relevance among more retailers.

We have further invested in the growth of our team in North America. With a local Nedap team that now possesses all competencies, we have become a serious option for American retailers. This was evident from the enormous interest in our iD Cloud platform during the annual retail fair NRF in New York in early 2024.

The great wish of retailers is to use RFID not only for inventory management but also to detect shoplifting. However, in practice, conventional RF technology has performed much better than RFID in terms of detection and reliability. This has long hindered the acceptance of RFID in the retail market. In 2023, Retail launched iD Gate Pro, a groundbreaking RFID detection technology that blends the best aspects of RF technology's reliability with RFID's advanced features. This patented antenna-design allows us to unlock a new part of the market: retailers who have chosen a different software solution but are looking for high-performing RFID hardware. iD Gate Pro therefore offers not only short-term revenue opportunities, but also an excellent starting position to convince these parties of the software part of our RFID platform when they have experienced the capabilities of our technology.

RF systems

The business unit continues to engage in the rapidly growing RFID solutions market. Additionally, we maintain a strong presence in the substantial conventional anti-theft systems market with our RF-based systems. A dedicated team of our own people for development and commerce ensures that opportunities for sales in this part of the retail market are quickly seized. In the long term, this market will decrease in size. But still, through smart and targeted improvements in functionality, cost price and distinctive capability, valuable orders can be secured. By optimising the associated operational activities, these orders can have a positive contribution towards Nedap’s financial result in the retail market.

Organisation

To further increase the organisation’s impact, it has been decided to split the retail business unit into an iD Cloud team and a connected devices team. This division gives each team its own development and commercial team for RF systems. We are convinced that this is currently the best way to create more focus and increase the organisation’s clock speed.

Results and outlook

Nedap Retail achieved revenue growth in 2023. However, economic developments leading to uncertainties in the retail market led to delays in purchasing processes. This had a dampening effect on revenue development, particularly in the second half of 2023. Despite the market’s inherent volatility, we foresee that our increased commercial and development capacity will unlock excellent growth opportunities for the coming years. For 2024, we expect revenue to increase, with the second half of the year contributing the most.

Security Management

Nedap Security Management develops access control and security systems for companies and institutions worldwide. The business unit’s customer base ranges from organisations in critical infrastructure to office and production environments of multinationals. More than a quarter of all major brands with headquarters in Europe use Nedap’s access control system.

Developments in 2023

Throughout the year, the business unit worked hard with our supply partners to catch up on delivery backlogs. This led to a significant increase in the number of hardware devices delivered during the financial year. Consequently, our business partners reached their installation capacity limits over the course of 2023.

Strengthening the proposition portfolio

Over the past few decades, Nedap has built an excellent reputation in the security market in Europe and the Middle East as the leading provider of solutions for managing physical access to premises. The strategy involves investing in continual product innovation, creating more value for the variety of customer groups. This led to the launch of two new propositions in the past year, with which we expect to further expand our footprint and strengthen our leading position in the market for physical access control.

With Access AtWork, the business unit added a Software-as-a-Service solution to its offering. This proposition responds to the growing acceptance of and need for scalable and secure access control in the form of a service. Access AtWork distinguishes itself by drawing upon Nedap’s 40 years of experience in access control for the business unit, coupled with 25 years of expertise in developing and delivering secure and reliable SaaS solutions across various markets at Nedap. Access AtWork is designed not only to provide the required security but also to offer convenience for both the security team and the building’s users. The proposition has already been implemented at the first organisations.

The current generation of physical access control systems makes it possible to provide automated access to doors quickly and securely based on individual access rights. However, research has shown that managing all access rights in large organisations is becoming an increasingly pressing problem. Besides the efforts associated with this management, it is particularly difficult to maintain an overview and ensure that everyone has the correct current access rights. For this problem, Nedap has developed Pace, a unique solution, introducing it to the European market in 2023.

Pace is a Physical Identity and Access Management (PIAM) system that helps organisations with high authorisation dynamics to manage identities and access smoothly. Its unique authorisation model and intuitive visualisation tools make the task of managing the authorisations of very large numbers of cardholders quicker and easier. Pace works as an overarching system for all access control systems at multiple sites.

In addition to Access AtWork and Pace, AEOS will remain an important pillar in the proposition portfolio aimed at the security market. Especially at locations with complex security issues and the highest security requirements, AEOS has built a unique position. In the coming years, we will invest in the reliability, security and functionality of AEOS.

At the business partner event in June last year, the two new propositions as well as Nedap Mobile Access were presented. The positive reactions from business partners and the concrete customer projects that are now being worked on jointly confirm the strategy of leveraging continuous product innovation to further expand our competitive advantage. Also, it allows us to offer a wider range of services to our customer base.

Organisation

Now, with a portfolio of three inspiring propositions aimed at the same market of physical security, the business unit is entering the next stage in its organisational development. The organisation that has grown considerably in the last few years has to align its efforts, adopt an agile mindset and focus on servicing our customers in the best possible way. In the financial year, a project was started to design and implement this desired organisational structure and new way of working within the business unit. This project makes intensive use of experience with such transformation processes gained in key markets such as Livestock Management and Healthcare, without losing sight of the specific dynamics within its own key market. The new organisational set-up will be implemented over the course of 2024.

Results and outlook

In 2023, the Security Management business unit achieved substantial increase in revenue, partly due to catching up on delivery backlogs. We therefore expect a dampening effect going forward. With the introduction of the new propositions, the result of ongoing investments in product innovation, Nedap’s market position in the security market has been further strengthened. We are therefore positive about the growth opportunities for the coming years. For 2024, however, revenues are expected to be at a similar level to 2023.