As a German I say: I would not say we can't do software or we are bad at it. "Getting really big" is not the typical German culture - so instead we have software companies from mittelstand that are quite successful in their niche, but if you don't work in the specific industry, you surely have never heard of.
What we are really bad at is internet-based (cloud-based) services. On one hand in Germany there are strong data protection laws which make some kind of monetization harder - but only people from Germany and neighboring countries seem to care about what is done with their data. On the other hand there existed German companies that tried to provide similar services to GMail, Dropbox etc., but they simply did not have the large financial backing that is necessary to provide such a service with large capacities for free in the hope that some time in the future they will make money on it. So they had to do monetization attempts much earlier on which did not work out well.