Israel IT Market: STKI tiers 2016 V2

Dr. Jimmy Schwarzkopf

Research Fellow,
STKI
http://index.stki.info/it-tiering
jimmy@stki.info
Tel: 972 9 7907000

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.
Teaching in the MIS department / TelAviv Yafo Academic College and the Computer School of the IDF.
Entrepreneur founding three companies in the IT arena: STKI, store and forward mail and office information systems.

Dr. Schwarzkopf served on the Board of Directors of Ashot Ashkelon Industries, served as
President of the Gymnazia 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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STKIs 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 22 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 IT managers as well as with all levels of IT decision making,
thereby attaining complete information of processes.
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.
Our services include:

Face-to-face meetings
STKI Analyst House Calls (for both users and vendors)

CIO STKI "Help Desk"

Inquiries

Surveys

Strategic Marketing & Positioning

Round Tables for users

Vendor Discovery Series (Newsletters and workshops)

In-house Workshops

CIO Annual Bootcamp

CTO Annual Bootcamp

Brainstorming Workshops

STKI Annual Summit

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.
6

What our study looks at:

Real revenues of software licenses and maintenance.

Real 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 are learning how to account for cloud usage for IT (Israel) only
We 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 departments view/mindshare of

vendors value in projects/products
7

STKI Summit 2016

Israeli IT Market

Global Information Technology

Report 2015

Israel 2016

10

11

Israel Economic Sentiment Chart

THE BUSINESS CONFIDENCE INDEX

increased from 15.8 in January to 17.7 in
February
THE CONSUMER CONFIDENCE INDEX
increased from minus 17.5 in December to
minus 16.0 in January
Both indexes have the highest readings
in over four years.

12

Economy improves significantly in Q4 2015

Israel GDP Chart

In annual terms, GDP expanded 2.7% in Q4,

up from the 2.5% in Q3.
The Central Bank
expects GDP to grow 2.8% in 2016 and 3.1%
in 2017.
Focus Economics Consensus
Foresee GDP to grow 3.0% in 2016 and 3.3%
in 2017.

13

State of the Economy Index

14

State of the Economy Index (% change*)

4/2014 - 4/2016

2-3 Q 2014

15

Over 65% is BAD

16

17

Israel Business Confidence Survey

18

STKI Summit 2016

Israeli IT Market

19

Number of Firms in Israel 1/2016

20

Number of Firms in Israel 1/2016

21

In order to get the IT Market (what is bought/sold out there) :

24 years of
IT market history

What users bought?

From whom?
Why?

14

13

20 ,200
55
1, 7
000
41,
1, 4
%
00
2
6, 0
6. 7
6
3, 2
4
8%
, 21
4
4. 4
6
6, 4

1
3. 6

20 ,000
94
1, 6
200
50,
1, 3
RE
A
00
W
RD
6, 0
E
A
2
R
H
3, 1
WA
D
FT
213
DE
SO
D
2
7 ,
E A ES
6, 1
LU
IC
VA
RV
SE
AL
T
TO

IT Departments

4. 7

How much did they sell?

To whom?
For how much?
Competitors?

3%

IT Vendors
22

23

24

STKI IT Market Health Index

STKI IT
Market
Health
Index

STKI IT
Market
Health
Index

industry

Budgets 2012

government
education
health
banks
insurance
fin other

$1,350
$1,250
$250 $1,900
$230 $1,770
$300
$290
76.32%
79.38%
$900
$815
$350 $1,450
$400 $1,405
$200
$190

STKI IT Market
Health Index

2012

Budgets 2013

2013

Budgets 2014

STKI IT
Market
Health
Index

Budgets 2015

STKI IT
Market
Health
Index

STKI IT
Market
Health
Index

Budgets
2016

$1,310
$1,350
$1,500
$235 $1,820
$230 $1,870
$260 $2,080
$275
$290
$320
81.04%
81.55%
69.52%
$835
$850
$800
$425 $1,475
$430 $1,525
$400 $1,446
$215
$245
$246

2014

2015

2016

25

26

Client inquiries (STKI) FY 2014-15 shifting

27

Client inquiries (STKI) FY 2014-15 shifting

28

Tri-Modal IT Consequences

IT Centric

Business Centric

Customer Centric

29

MF
computing

IT Budget

Hybrid
computing

Divisions Transfer Budget

SaaS delivery

P/L software vendor

30

The IT market is in the middle of

profound change
(products/services and vendors)
31

STKI Summit 2016

Israeli IT Market

2015 Israel IT Market

32

The Great Debate: explanations

Even if the
graphs look
different

not worse
just smaller
boutique

33

The Great Debate: explanations

Even if the
graphs look
different

not worse
just smaller
boutique

34

VARs or Partners:
NO double bookings for IT market size forecasts

Value Added Resellers

VAR or Partners
are incorporated into
STKIs TIERS.
Both sell into the Israeli
Market.

35

Products sold on the cloud

STKI books in on-premises software categories
NO double bookings for IT market size forecasts

36

IT Market in Israel

37

STKI Summit 2016

Israeli IT Market

2015 Israel Hardware Market

38

Vendors: Hardware markets

39

Israel: IT Hardware Total Market 2014-2016

HARDWARE

40

Hardware: Servers and Clients

41

Server Markets

42

Market Players: Servers (manufacturers)

DB/DW, CONVERGED HW
& OTHER APPLIANCES

43

Market Players: Servers (Resellers-VARs)

DB/DW, Converged HW & other Appliances

44

Clients (B2B) Markets

45

Market Players: Client Computing (manufacturers) B2B

46

Market Players: Personal Computing (VARs)

47

Hardware : storage, networking and security

48

Storage and Networking Markets

Disks (HDD and SSD)

135,000

-3.70%

130,000 -3.08%

2016
126,000

VTL Backup and other

Storage Appliances

29,000

-3.45%

28,000 -7.14%

26,000

Tape Libraries

11,000

-4.55%

10,500 -4.76%

175,000

-3.71%

168,500 -3.86%

10,000
162,000

storage

total

2014

2015

205,000

0.98%

207,000 1.93%

Security / Cyber

95,000

10.53%

105,000 14.29%

VoIP/Call Center Equipment

55,000

-9.09%

50,000 -4.00%

2016
211,000
120,000
48,000

355,000

1.97%

362,000 4.70%

379,000

networking
Enterprise Networking

total

2014

2015

2017

2018

-2.38%

123,000

-2.44%

120,000

-3.85%

25,000

-4.00%

24,000

-10.00%

9,000

0.00%

9,000

-3.09%

157,000

-2.55%

153,000

2017

2018

-2.84%

205,000

-2.44%

200,000

8.33%

130,000

3.85%

135,000

-6.25%

45,000

-4.44%

43,000

0.26%

380,000

-0.53%

378,000

49

Market Players: storage (manufacturers)

VTL Backup, Storage Appliances & networking

Disks (HDD and SSD)

Tape Libraries

50

Market Players: storage (VARs)

VTL Backup, Storage Appliances & networking

Tape Libraries

51

Market Players: Networking Products

52

Market Players: Security Appliances

53

Market Players: VoIP & other call center equipment

54

Hardware: printers, monitors, self-service and data center

55

Printers, Monitors, DC Equipment, Self Service Markets

56

Market Players: DC equipment & enterprise printers

57

Market Players: POS ,Self-Service, monitors and Video Systems

58

STKI Summit 2016

Israeli IT Market

2015 Israel Software Market

59

Vendors that sell in the Software markets

60

Israel: IT Software Total Market 2014-2018

SOFTWARE

2014

changes

2015

1,515,500

4.39%

1,582,000

changes

2016

4.42% 1,652,000

changes

2017

changes

2018

4.36%

1,724,000

4.76%

1,806,000

61

Delivery and Development Software

62

Infrastructure and Middleware Software

63

Market Players: system software

64

Market Players: Storage and Backup Software

65

Market Players: Data Bases, Cloud and Automation Tools

66

Market Players: Middleware Software

67

Delivery and Development Software

e

68

Security, Cyber and Regulation (IT-GRC & e-GRC) Software

69

Market Players: project, portfolio, governance, risk and compliance software

70

Market Players: Development & ALM Software

71

Market Players: BSM Software

72

Market Players: Security/ Cyber Software

73

Software: Information Management

74

Software: Information Management Markets

75

Market Players: KM Tools

76

Market Players: Collaboration and Output Software

77

Market Players: Analytics & Data Mgmt Software

78

Software: Business Applications

79

Software: Business Applications Markets

80

Market Players: ERP Software (all sizes)

81

Market Players: Vertical Application Software

82

Market Players: CRM + CEM + Contact Centers + Service Channels

Application Software

83

Market Players: HR /Talent Mgmt/ LMS Software

84

Market Players: Marketing, WCM and e-commerce software

Marketing Tools .. Campaign Management

85

STKI Summit 2016

Israeli IT Market

86

Israel: Value Added Services

Market 2011-2015

VALUE ADDED SERVICES

87

Vendors that sell in the VAS markets

88

The SIX categories of IT Value Added Services Offered in Israel

89

VAS: IT consulting and analysis services

90

VAS: IT consulting and analysis services

91

Market Players: IT Consulting

Consulting: IT Strategy / Digital Innovation/ Industry Analysts

Consulting: IT Infrastructure/ Delivery (on-premises & cloud)

92

Market Players: IT Consulting 2

Consulting: IT Business Applications (ERP, CRM, BI)

93

VAS: Hardware & Software Maintenance Services

94

VAS: Hardware Maintenance Services

95

Market Players: Hardware Maintenance Services

96

VAS: Infrastructure Projects

97

VAS: Infrastructure Projects

98

Market Players: hardware integration projects

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

99

Market Players: software integration and legacy projects

Software integration, middleware, SOA, BPM, ALM,
Testing tools, DevOps

100

Market Players: Security Projects

101

Market Players: Unified Communication (IM,Video,Voice) projects

102

VAS: Project Management, training and Hatmaa services

103

VAS: Project Management, training and Hatmaa services

104

Market Players: Office of the CIO Projects

105

Market Players: ALM, Q/A & Testing Projects

106

Market Players: Training Services

107

Market Players: Hatmaa Projects

108

VAS: contact center & EGRC Projects

109

VAS: contact center & eGRC & IT-GRC Projects

110

Market Players: Risk & GRC Projects

111

Market Players: VoIP- Call Center Projects

112

VAS: Business Application Implementation

113

VAS: Business Application Implementation

114

Market Players: ERP Projects

115

Market Players: Core / ERP vertical Projects

116

Market Players: CRM,

Marketing and social (on-premises & cloud)

117

Market Players:
Knowledge Management (ECM, Portals, LMS)

118

Market Players: Data Analysis (BI, Analytics, Big Data)

119

Market Players: Application development (on-premises & cloud)

120

Market Players: Web Accessibility

121

Market Players: Migration Projects

122

Market Players: Mobility Projects

123

Market Players: IoT and UX Projects

IoT (enterprise) Projects

UX Design

124

VAS: outsourcing services

125

VAS: outsourcing services

126

Market Players: "off site" data center

127

Market Players: help desk outsourcing

128

Market Players: complete outsourcing

129

129

Market Players: application cost-plus (managed services,

third party software maintenance, others)

130

Market Players: application SLA based (managed services, third party

software maintenance, others)

131

Market Players: Infrastructure cost-plus (managed services, storage,

DBA services, third party maintenance, others)

132

Market Players: Market Players: Infrastructure SLA based (managed services,

storage, DBA services, third party maintenance, others)

133

VAS: Cloud Services

134

VAS: Cloud Services

135

Market Players: BSaaS (many different) B2B Services

136

Market Players: PaaS & IaaS Services

* partners
137

Market Players: SaaS Services

138

Market Players: DRaaS Services

139

VAS: Staff Augmentation

140

VAS: Staff Augmentation

141

141

Market Players: gulgalot- temps- on premises augmentation

142

Market Players: Nearshore augmentation

143

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

144