STKI IT Market 2018

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STKI 26th
Israeli
IT Market
Study
Summit 2018
Dr Jimmy Schwarzkopf
jimmy@stki.info
097907000 0547000020
STKI Company Confidential

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• Dr. Schwarzkopf has worked during the last 40 years in all areas of Computer Information Services:
• As an Industry Analyst at META Group (Israeli Research Manager) and was named a META Group Research Fellow.
• As an academic researcher in Entrepreneurship Sciences; has published and presented in the Academy of Management and Babson Conferences
and Editorial Board Member of the academic journal "International Journal of Opportunity, Growth and Value Creation".
• As a consultant in Arthur Andersen Consulting (USA), Booz Allen (USA) and Kesselman & Kesselman.
• As a systems professional in SCS Computers and the R&D Unit of the Israel Defense Forces.
• As a sales and marketing professional in Digital Equipment Corporation.
• As a teacher/mentor in the MIS department / Tel-Aviv Yafo Academic College and the Computer School of the IDF.
• As an entrepreneur founding three companies in the IT arena: STKI and companies in the areas of store/forward mail and office systems.
• Dr. Schwarzkopf served on the Board of Directors of Ashot Ashkelon Industries, served as President of the
Gymnasia Herzelia Association, Co-founder of the Mashov Political Movement and was a member of the
Central Committee of the Labor Party. Major (Rav-Seren) in the reserves, Israel Defense Forces (where he
served in an elite unit and later in the R&D unit). Registered Engineer (IS22881), member of MENSA Israel.
• Dr. Schwarzkopf received BSE and MSE degrees (Systems Engineering) from the University of Central Florida.
Received a MSIA (Management Information Systems) and ABD (PhD Program) in Systems Science (received
(twice) the William Larimer Mellon Scholarship/Award) from Carnegie Mellon University. His doctorate (DM-
Management/ Entrepreneurship) he received from Case Western Reserve University.

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STKI’s goal is to help our clients make the right choices in the
strategic and financial management
of their information technology systems.
Founded in 1992, STKI is the leading market research and strategic analyst firm in Israel, covering the IT infrastructures, IT applications and IT services industry .
Over 25 years of experience in the IT analyst sector and thousands of annual face-to-face interviews with key industry participants have enabled us to establish solid, long-standing
relationships with our customers.
Our customers include major IT organizations (government, financial institutions, telecoms, manufacturing, medical, education, etc.)
and IT suppliers/vendors (infrastructure and software suppliers, consulting and professional services firms).
STKI works closely with vendor senior management (strategy, business development, and marketing).
Where end users are concerned, STKI meets with CEOs, CFOs, CMOs, CDOs and CIOs (as with all levels of IT decision making) thereby attaining complete
information of technology innovation as well as business transformation.
STKI's mission is to advise and analyze users of information technology as well as their suppliers while conducting original research and
providing advisory services regarding all parts of the information system puzzle.
Israel's foremost IT companies have come to rely on STKI's market-proven experience and expertise
Face-to-face meetings Our services include Vendor Discovery Series (Newsletters and workshops)
•
STKI Analyst House Calls (for both users and vendors) Vendor Innovation Workshops
CIO STKI "Help Desk" In-house Workshops
Inquiries CIO Annual Bootcamp
Surveys CTO Annual Bootcamp
Strategic Marketing & Positioning Brainstorming (based on Design Thinking) Workshops
Round Tables for users STKI Annual Summit

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Israeli IT Market Products: Israeli Initiatives/treks &

Studies are here Positioning is here vendors are here

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STKI Methodology: equilibrium model

The sum of all IT expenditures (from users)
has to be equal to all IT sales (from vendors).
most research firms are either a
"demand-based"
(market information based on data from users of IT)
"supply-based"
(market information based on data from IT vendors).
STKI is one of the only research firms using an equilibrium model
and the only one in Israel.

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What our study (Israeli projects only) looks at:
› Real yearly revenues of software licenses, maintenance and cloud usage.
› We are learning how to account for cloud usage for IT (Israel) only
› Real yearly revenues of hardware sales.
› Differentiation between new projects and continuing projects. New projects count more.
› We do not include any work/ products for OEMs and military non-IT projects.
› We try to distinguish between work done by the vendor's employees and work outsourced
to another vendor. The revenue is transferred to the vendor actually doing the work.
› Distinguish revenues from projects done in fixed price, cost plus (SLA defined) and staff
augmentation (non SLA) projects.
› Differentiate value between work done by high level internal professionals in a project and
staff augmentation employees in the clients IT department.
Take into consideration IT department’s view/mindshare of
vendor’s value in projects/products (surveys)

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VARs or Partners:
NO double bookings for IT Market Size Forecasts
Value Added Resellers

“VAR or Partners”
are incorporated into
STKI’s “TIERS”.
Both sell into the Israeli
Market.

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for SaaS products “sold” on the cloud
STKI “books” in the on-premises software categories
and on the SaaS category
(but NO double bookings for the IT Market Size Forecasts )

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26 years of
IT Market Data
What users bought? How much did they sell?

From whom? To whom?
Why? For how much?
Competitors?
IT Departments IT Vendors

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Over 150 categories

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456 IT VENDORS
in Israel

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STKI Research Results:

1. IT Trends
2. Surveys about organizational issues
3. Round Table Summaries
4. Industry IT Budgets
5. IT Market Forecasts by category
6. Vendor Tiers by category
7. Product Positioning
8. Staffing Ratios
http://index.stki.info/
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STKI
Summit
2018
STKI Summit 2018

Israeli IT Market

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from
24thto 16th
better
in all
indexes

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80% find difficulty in hiring

and retaining skilled people
12% 52% 28% 8%

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State of the Economy Index

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State of the Economy Index (% change*)
1/1998 - 12/2017

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*
* Correlates with Israeli State of the Economy Index

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Over 65% is BAD

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STKI
Summit
2018
STKI Summit 2018

Israeli IT Market

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Number of Registered * “COMPANIES” in Israel 27
(* paid employee taxes in 1/2018)

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STKI interviewed over 200 CIOs (about 70-75% of total in Israel) about:
1. Budgets * for 2018

2. Used “budgets” of 2017
3. Projects postponed: 2019-2020
4. IT department organization
5. Vendor recommendations
*IT “internal” budgets are not the same for all enterprises:
manpower, rent, electricity, LOB extra budgets, etc.
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4,613
enterprises with
IT departments
in Israel
18,730
SMBs that will
“migrate” into
“cloud” solutuions

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STKI
Summit
2018
STKI Summit 2018 2017 Israel IT Market

Israeli IT Market

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IT Market in Israel 34

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STKI
Summit
2018
STKI Summit 2018 “how to read the study”

Israeli IT Market

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The Great Debate: explanations

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ALPHABETIC ORDER
“not worse” just
smaller “boutique”
shops

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The Great Debate: explanations

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ALPHABETIC ORDER
“not worse” just
smaller “boutique”
shops

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STKI
Summit
2018
STKI Summit 2018 2017 Israel Hardware Market

Israeli IT Market

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Vendors: Hardware markets

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Israel: IT Hardware Total Market 2014-2020 40

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Modernization of the Data Center
by using HCI technologies
Hyper-Converged
Infrastructure
Virtualization, Compute,
Storage and Networking
Built on industry-standard
servers and components

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Server Markets
2014-2020

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servers/white boxes
(manufacturers)

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servers/white boxes
(VARs)

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Servers: others
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(manufacturers)
DB/DW , Converged HW & HCI Appliances Legacy (non-x86)

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Servers: others 46
(VARs)
DB/DW , Converged HW & HCI Appliances Legacy (non-x86)

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CLIENTS/PCS 47
(commercial use only)

Markets

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Client Computing B2B
manufacturers resellers VARs

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Storage Markets
2014-2020

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“storage” (manufacturers)

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“storage” (VARs) 51

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“storage” (manufacturers)
VTL Backup , Storage Appliances and Storage Networks Tape Libraries

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Security Appliances and

Networking Markets
2014-2020

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Networking Products
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Networking Products
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VoIP & other call center equipment

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Printers, Monitors, Self Service & DC Equipment

2014-2020

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DC Equipment, monitors and Video Systems 60
(VARs & Manuf.)

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POS ,Self-Service Appliances

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STKI
Summit
2018
STKI Summit 2018 2017 Israel Software Market

Israeli IT Market

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Vendors in the Software (on/off premises) markets

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IT Software Total Market 2014-2020
2014 2015 2016 2017 2018 2019 2020

FTWARE $1,528,000 4.19% $1,592,000 3.53% $1,648,250 5.12% $1,732,650 3.80% $1,798,500 4.10% $1,872,200 4.39% $1,954,350

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System Infrastructure
Software
2014-2020

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System Software Vendors

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Software Local VARs

Software Vendors

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Storage and Backup Software 67
Software Local VARs

Software Vendors

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Databases
(SQL - NOSQL)
Software Local VARs
Software Vendors

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Private Cloud and Automation Tools
Private Cloud and Automation Tools
Software Local VARs

Software Vendors

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2014-2020

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Middleware Software
Software Vendors

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Middleware Software
Software Local VARs

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BSM, (Asset Management, APM, Monitoring etc), workload-scheduling

Software Vendors

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Software Local VARs

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ITSM - Service Desk
Software
Vendors
CA
managengine
microFocus

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Security Software
2014-2020
2014 2015 2016 2017 2018 2019 2020

security software tools 180,000 8.33% 195,000 5.13% 205,000 5.32% 215,900 3.80% 224,100 4.19% 233,500 2.51% 239,350

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Security/ Cyber Software Vendors

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Security/ Cyber Software Vendors (cont)

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Security/ Cyber Software (VARs 2)

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2014-2020

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Project & Portfolio Management

Software Vendors

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Project & Portfolio Management

Software Local VARs

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Office of the CIO & Development Tools
Software Vendors Software Local VARs

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Development and ALM (including testing tools)
Software Vendors

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Mobile Apps Development Platforms including Mobile Testing/monetizing
Software Vendors
Software Local VARs

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Information Management Applications

2014-2020

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Knowledge Management
(Enterprise portals, ECM, Search, web accessibility)

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BI, Analytics, Cognitive and Data Mgmt.Tools

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Digital Output Management/ Customer Communication Management

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Business Applications 1
2014-2020

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ERP Software (all sizes)

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CRM/XRM

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HR/ Talent Mgmt./ LMS / PAYROLL

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2014-2020

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Contact Center and Multi-channel engagement tools

(chat, bots, virtual IVR, Video etc…)

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Marketing Automation Software

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Web Content Management + e-Commerce Platforms

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IoT tools and platforms

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STKI
Summit
2018
2017 Israel Value Added Services

STKI Summit 2018
(VAS) Market
Israeli IT Market

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Value Added Services Market 100
2014-2020

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Vendors that sell in the VAS markets

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"Enterprise" CONSULTING:
advice in a particular area not
AUGMENTATION (gulgalot) or IMPLEMENTATION
2014-2020

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IT Strategy Consulting & Analysts Services

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Digital Transformation Consulting

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(Big) Data Consulting

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IT Infrastructure/Delivery Consulting

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IT Application Consulting

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Cyber/Security Consulting

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Cyber/Security Consulting (cont)

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2014-2020

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Hardware Maintenance Services (3rd party) Software Maintenance

Services (3rd party)

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Consolidation/ Virtualization /Monitoring/ BSM / Storage/

Hardware/ Data Center Environment/ Networking Projects

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(CONT)
Consolidation/ Virtualization /Monitoring/ BSM / Storage/
Hardware/ Data Center Environment/ Networking Projects

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Mainframe (z) /AS400 / OpenVMS projects

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DevOps Implementation projects

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Software/Cloud Integration, Middleware, SOA, BPM, ALM,

Testing Tools Implementation Projects

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Cyber Security Product Implementation

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Cyber Security Product Implementation

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Unified Communication (IM, Video, Voice)

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PaaS and IaaS Implementation & Maintenance Projects

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Project Management Services

2014-2020

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ALM Q/A & Testing

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IT Training

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Implementation (HatMaa)

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Auditing, Governance & Risk Management

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Business Applications Implementation 1

2014-2020

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ERP (on premise/cloud)

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CRM-XRM (on premise/cloud)

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Contact Center and Multi channel engagement tools

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HR ,Talent Management & Payroll

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2014-2020

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software development

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SaaS implementations

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Core (Modernization& Package) Implementation

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IoT Projects

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2014-2020

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Mobile Development

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UX Design

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Data, BI, Analytics

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Data, BI, Analytics (cont)

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Marketing Automation (on premise/cloud)

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Marketing Automation (on premise/cloud) cont…

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2014-2020

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Knowledge Management (ECM, Portals)

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Web & eCommerce

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Web Accessibility

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2014-2020

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Managed Services and Outsourcing Services

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Infrastructure Outsourcing Services (Infrastructure, Storage & DBA Services)

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Off-site Data Center (Operational/DRP). (Client owns the HW)

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Help Desk Outsourcing Services

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Cyber Security Managed Services ( ie: SIEM service)

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Printing Outsourcing Services (pay per click)

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Business Services as a Service - BSaaS (Salaries, Payments, BPO, etc)

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Platform as a Service PaaS/ Infrastructure as a Service IaaS

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Platform as a Service PaaS/ Infrastructure as a Service IaaS

(PARTNERS)

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Software as a Service SaaS

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Software as a Service SaaS (cont)

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DRP as a Service

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Gulgalot on-premises

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Gulgalot on-premises

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Gulgalot off-premises (Near-site)

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Gulgalot Nearshore

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http://index.stki.info/it-tiering/

STKI IT Market 2018

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Page 1

STKI Company Confidential

STKI Company Confidential

CIO STKI "Help Desk" In-house Workshops

Inquiries CIO Annual Bootcamp

Surveys CTO Annual Bootcamp

Strategic Marketing & Positioning Brainstorming (based on Design Thinking) Workshops

Round Tables for users STKI Annual Summit

STKI Company Confidential

Israeli IT Market Products: Israeli Initiatives/treks &

STKI Company Confidential

STKI Company Confidential

STKI Methodology: equilibrium model

STKI Company Confidential

STKI Company Confidential

STKI Company Confidential

Value Added Resellers

STKI Company Confidential

STKI Company Confidential

STKI Company Confidential

What users bought? How much did they sell?

STKI Company Confidential

Over 150 categories

STKI Company Confidential

STKI Company Confidential

STKI Research Results:

STKI Company Confidential

STKI Summit 2018

STKI Company Confidential

STKI Company Confidential

STKI Company Confidential

STKI Company Confidential

STKI Company Confidential

80% find difficulty in hiring

12% 52% 28% 8%

STKI Company Confidential

STKI Company Confidential

STKI Company Confidential

* Correlates with Israeli State of the Economy Index

STKI Company Confidential

Over 65% is BAD

STKI Company Confidential

STKI Summit 2018

STKI Company Confidential

Number of Registered * “COMPANIES” in Israel 27

(* paid employee taxes in 1/2018)

STKI Company Confidential

1. Budgets * for 2018

STKI Company Confidential

STKI Company Confidential

STKI Company Confidential

STKI Company Confidential

STKI Company Confidential

STKI Summit 2018 2017 Israel IT Market

STKI Company Confidential

STKI Company Confidential

STKI Summit 2018 “how to read the study”

STKI Company Confidential

The Great Debate: explanations

STKI Company Confidential

The Great Debate: explanations

STKI Company Confidential

STKI Summit 2018 2017 Israel Hardware Market

STKI Company Confidential