Israel IT Market 2009

ICE AGE 2 the meltdown and beyond Dr. Jimmy Schwarzkopf Research Fellow STKI jimmy@stki.info http://drjimmystki.blogspot.com/ 1 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

http://www.slideshare.net/jimmyschwarzkopf /stki-8th-cio-bootcamp-2009-presentation 2 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Copyright © 1990-2009 IMDb.com, Inc. Do not remove source or attibution from any graphic or portion of graphic

2009: The meltdown 1 Latest STKI-IT Spending Survey Results 2 IT Market in Israel: what is changing ? What are customers looking for in 2009? 3 4 Who is gaining share of the shrinking IT budget ? 3 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

1 Latest STKI-IT Spending Survey Results 200 years since Darwin: • Data from Bank of Israel is becoming ever more available I feel like Darwin in Galapagos – Economic activity data from 1989 • GDP collecting data , looking at patterns • GDP for Business Sector – Indexes that could forecast change that emerge and(but only until 2006) trying to figure out • Series of State-of-the-Economy-indexes • OECD has data on Israel what they mean – Productivity 4 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

1 Latest STKI-IT Spending Survey Results • Data from Bank of Israel is becoming ever more available – Economic activity data from 1989 • GDP • GDP for Business Sector – Indexes that could forecast change • Series of State-of-the-Economy-indexes • OECD has data on Israel (but only until 2006) – Productivity 5 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

“The only function of economic forecasting (STKI-IT forecasting included)* is to make astrology look respectable” John Kenneth Galbraith * my additions 9 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

low per capita ($ USD) IT expenditure IT spending in Israel is 2.71% of GDP European Union IT spending is 3.3% of GDP European Union per capita spending on IT amounts to 1100 € 10 * IT spending data by STKI Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

GDP per hour worked (x5)… excellent indicator but data is usually 3 years behind IT Market change Change in GDP per hour worked (*5) 11 11 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI * IT spending data by STKI Do not remove source or attibution from any graphic or portion of graphic

But in real time: State of the Economy Index as an “indicator “ of IT investment State-of-the- economy index is an indicator for examining the direction in which real economic activity is moving, in real time. (Bank of Israel) Deviation from the trend is calculated via the Markov-switching model and enables the turning points in the business cycle to be identified at an early Deviation from the trend (*10) IT market growth rate stage. (Bank of Israel) All IT spending data by STKI 12 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

So let’s look at the numbers: From the data we see several cycles for the IT Industry in Israel: 1. Up to 1996 : Market v0 : Age of Irrational IT Exuberance 2. 1997-2000: Market V0.1 : Age of re-structuring 3. 2001-2003: Ice Age : Age of “panic” 4. 2004-2007: Market V1 : Recovery, Growth and Integration 5. 2008- 201?: Ice Age 2 : Age of the “re-start” : Market V2: Age of Industrialization of IT 6. 201?- 16 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Age of Irrational IT Exuberance • 1987 : first year the IT expenditures passed 1b USD • Profit came from moving BOXES • Mainframes from IBM (VM/VSE.. DASD): entering most big companies (some look-alike HDS were bought) – Most were changing from NCR and CDC big machines • Minicomputers like DEC, DG, Prime, HP were taking a slice (AS/400 - migrating from S/38 and S/36 from IBM) – First time computer users – Microcomputers entering : • As terminals in enterprises • For accounting and office use in SMBs 18 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Age of Irrational IT Exuberance 2 • Software sold through distributors: – Israeli software was successful: 4 dimension, Magic, DB1…. – John Bryce, IBS, Tekem, Contahal, SPL ……… – data bases, mainframe software and 4GL were third party • BIG VENDORS: IBM , DEC, DG, HP…… – Mostly sold “hardware” and software/ networking came as “add-ons” – Some services like “system engineer” came with the “machine” – INTEGRATED server, storage and networking products 19 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Age of re-structuring • IT departments re-organize infrastructures and applications… under the Y2K umbrella • Services become a profitable and independent “product” • Projects are starting to go to VARs as contractors (before they were sub to the big hardware vendors) • Big UNIX projects (billing, ERP , etc) • VAS vendors grow with Y2K related projects – New “testing” vendors start – Complicated project management 21 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Age of re-structuring 2 • International software vendors in Israel start being the main movers in Growth in the 1990’s software deals (Microsoft, CA, Oracle ….) • Consolidation in the Service Market, several companies are bought by international and local players • Service players get their own sales All amounts in K $ USD force and compete with hwre vendors 22 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Age of “panic” • Excess inventory (IT professionals and products) and very few projects: – Vendors “destroyed” the service market by taking projects that could never generate profit – Software & hardware products were sold at ridiculous prices (even 90% discount in one case) 24 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Age of “panic” • Excess inventory (IT professionals and products) “Unfortunately, a generation of and very few projects: salespeople – Vendors “destroyed” the service market by taking havecould notion that they the never generate profit projects that create & hardwarebringing in revenue value by products were sold at – Software we found out that bringing ridiculous prices (even 90% discount in one case) revenue means collecting value not creating it not enough to survive in today’s competitive markets.” Source: McKinsey Quarterly 25 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Age of “panic” 2 • CIO recognized as a profession: – hired from one industry to another and succeed – become part of the COMPANIES MANAGEMENT Team – started talking about tactical and strategic IT • The internet bubble hit the Israeli IT companies very hard but…… – New power houses in the IT market … (Matrix, Ness, One1, Taldor …..) 26 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Age of Recovery, Growth And Integration • Consolidation of Local and International Vendors changed the way IT business is done: – most International vendors (hwre & sftre) sell through channels and only support (super experts) the local “delivery” of their products – STKI changed the way we look at the market, CIOs now make two decisions: • What product • Who integrates it 28 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Age of Recovery, Growth And Integration 2 • Boom in server and storage sales – “utilization” of resources fell under 30%: mainly because of high price of consolidation management (tools and people) • Boom of “application&data” integration: – Resource Management: Financial, logistics, procurement and HR – Transaction Management: core applications – Client Management: CRM and call centers – Analytics: Data Warehousing/ business intelligence/data mining 29 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Age of Recovery, Growth And Integration 3 • Start of “data center” integration, consolidation, virtualization and infra management efforts • SERVICE ARCHITECTURE : – CTO / Architecture VPs are hired in most IT installations and in most vendor management teams – SOA projects that include BPM, enterprise buses, portals and composite applications – Infrastructure projects where services are defined, optimized, managed and delivered 30 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Age of the “restart” • What's different about this crisis is it's a CAPEX (capital expenditure) crisis – CAPEX involves expenditures used to acquire or upgrade physical assets and IT projects. • Today's credit crunch directly affects IT because: – Information technology is the No. 1 \"CAPEX\" (capital expenditure) item. CAPEX is not just affecting end users but also solvency of the IT vendors 33 33 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Age of the “restart” 2 • IT is not buying (CAPEX- frozen) products: – Hardware sales have dropped more than expected during 1Q2009 … about 37% average – STKI might make a change to its 2009 forecasts in the next 60 days • Some CIOs are starting to feel pressure in OPEX expenses: 34 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

New metric is PAYBACK PERIOD ROI IN THE NEXT 90 DAYS cost reductions and revenue enhancement precedence over functional enhancements 35 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Slide based on force.com presentation Do not remove source or attibution from any graphic or portion of graphic

Age of the “restart” 3 “business models” will change and IT is the strategic partner • Companies will have to: – Allow due diligence of products and services – Tools for self service – NEW BUSINESS PROCESSES • Customers demand: Value – Quality – Reliability – Service – Individuality – 36 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Age of the “restart” 4 • Vendors change and the • Users change and when backbone of any new buying services will go business model: to vendors that have: – Delivery management – Pockets of excellence – Crisis management – Good delivery record – Pockets of excellence – Financial soundness (technologies) This change is reflected in STKI’s IT categories 37 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

IT situation: overview • The recession : • IT departments will cut budgets • But will invest mostly in projects that: – cut costs of existing processes and activities – new ways to capture revenue/ growth – Smaller “divided” projects • Radical transformation of IT Management: Different way of consuming IT • Industrialization of IT delivery • Utilization increase of assets (over 90%) • Cloud computing models (in-house, private and public) • 42 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Radical transformation of IT Management Managing the IT Budget Managing IT for Managing the business value IT capability Managing IT like a business 43 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Managing the IT Budget COST OF DELIVERING versus COST OF BUYING • IT will have “new economics” – Portfolio Management in order to drive maintenance and cost reductions – New models for “purchasing” USAGE of resources – Flexible sourcing of product usage and service • Budget management will be influenced by the new statement : “CLEAN UP the waste” 44 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Datacenters today have 30% utilization 100s different Energy waste Software products 25% 30% max in utilization Storage x86 servers Utilization Ala-carte telecomm Hundreds of services Enterprise Processes 45 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

ROY: Optimization of IT Optimize (Return on Yesterday)* High Utilization Of Resources Manage + + Develop Install + Deliver 46 * From SYMANTEC Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Managing the IT capability • Utilization is all about: – Virtualization – Automation – Standardization – Provisioning • Things to do : – ITIL, CoBIT, ISO 17799 (discipline & efficiency) – IT system performance management – Application Rationalization – AGILE project development 47 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Application Rationalization • An assessment of applications will show what applications have to canceled and which should remain. • If usage continues, then which have high HATMAA and which do not: – LOW HATMAA need special tools and re-training – HIGH HATMAA need tool for constant reinforcement Which applications are over supported and which under supported. Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

2 years ago IT was “overhead” After the meltdown: 100 years ago IT Engineers Industrial Engineers: – Will take state of the art – Assembly line technology and change revolutionized the workflow (service factory) economy – Change How Work Is – Assembly line took state of Organized the art technology and organized work differently – Develop New for PRODUCT factory Products And Services Based On New Technologies 51 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Building the IT factory Moving IT from: LAB environment to FACTORY environment Local Factory Local Outsourced Factory Outsourced Factory Factory 52 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Standardized Services Economies Of Scale “Application Image” is a sum of infrastructure services and software services needed to deliver an IT product Two types of IT services: 1. Infrastructure Services or Ensembles 2. Software Services or Mashups 54 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

New in Cloud Computing 1. The illusion of infinite computing resources available on demand, thereby eliminating the need to plan far ahead for provisioning. 2. The elimination of an up-front commitment, start small and increase hardware resources only when there is an increase in their needs. 3. The ability to pay for use of computing resources on a short-term basis as needed (e.g., processors by the hour and storage by the day) and release them as needed. 57 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Transformation of IT: CIO priorities for 2009 1. Cost reduction 9. Storage virtualization 2. DRP/BCP 10. Desktop virtualization 3. Server virtualization 11. Data De-duplication 4. Server consolidation 12. Governance, risk management and 5. BI/DW compliance 6. Security 13. Self-service 7. CRM 14. Mainframe 8. WAN Optimization/ optimization application 15. Open Source acceleration 58 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Creating with IT >business value §Grow Revenue Bends the revenue line up faster than your competitor – includes innovation §Protect Revenue Holds the revenue line at its current Net Revenue growth rate §Reduce Cost Short term impact to drive costs down through automation and Operating Expense process improvement §Avoid Cost INCREASE THE SPREAD Avoidance of future costs that TO INCREASE MARGIN would bend the expense line up – includes innovation on the expense side/process side §Manage Risk Enables risk management from a firm and regulatory perspective 59 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Based on Howard Rubin’s presentation Do not remove source or attibution from any graphic or portion of graphic

CUTTING COSTS vs OPTIMIZING COSTS • Changing BUSINESS PROCESSES to fit new business models • Fast delivery of “analyzed data” to enable decision making (BI,DW, Data Mining, MDM..) • Self- service and real time delivery of business and consumer services over the INTERNET will grow more than software sales 60 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Roadmap: Business Process Innovation High Improve: SURVIVE Innovate : GROW Invent: CHANGE Contribution to Business 2012 Performance 4Q 2009 2011 2010 2010 2009 Low Redo Existing Rethink Redefine Processes Business Business 63 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

SELF SERVICE AND MOBILE “STOP aligning IT with the business- Connect with the CUSTOMERS” 64 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

How new “models” like due diligence of products changes everything: • Los Angeles Restaurants must have a letter in front window reflecting the results of last health inspection (A,B,C) • Restaurant Websites show the results and allow other comments on the restaurant’s service and food. 65 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

This study cannot ………. • The IT market offers service and products in: – Over 500 different hardware classes – Over 1000 different software families – Over 1000 different types of services offered • The Israeli IT market has: – Over 250 firms that have over 5 employees – Over 100 firms that have between 2-4 employees – Over 1000 individuals that work as “freelancers” 67 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

This study cannot ………. • The IT market offers service and products in: – Over 500 different hardware classes – Over 1000 different software families – Over 1000 different types of services offered • The Israeli IT market has: – Over 250 firms that have over 5 employees – Over 100 firms that have between 2-4 employees – Over 1000 individuals that work as “freelancers” 68 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

The Israeli IT Market (% changes) “missed” 4Q2008 was worse than expected “hope not” new data after Q2 2009 Q1 was worse than expected 70 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

STKI Technology Spending Cycle Outsourcing Development Consulting Time Software Transaction Hardware processing Networking Technology Contract awarded to… 75 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

As markets changed, STKI also changed its categories (pockets of excellence) \"It is not enough that I should succeed, others must fail“ Gore Vidal • Pockets of excellence – Users identified the need for experts – Most vendors are moving or moved into the new delivery model All amounts in M $ USD 76 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

TOP 9 IT Vendors in Israel These 9 vendors either sell in all Hardware, Software and Services categories or they have extremely large market share in only part of the categories 77 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Tactics : to lower spending on hardware 1. Elongating PC upgrade cycle 2. Reuse of desktops/notebooks rather than replacing all 3. Increase utilization rates above typical levels 4. Purchasing from fewer vendors in exchange for lower prices 5. Accelerate migration from Unix, Open VMS and OS400 79 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Servers 1. HP strong in BLADES and HIGH END servers 2. IBM continues to sell System z and System p/i besides their x86 servers MANUFACTURERS 3. SUN strong in UNIX server sales All amounts in K $$USD M USD 81 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Clients 1. Notebooks continue to displace desktop units in corporate PC market. 2. Substantial JUMP in “desktop” virtualization 3. NETBOOKS, SMARTPHONES, MANUFACTURERS APPLE are game changers in the next 24 months. All amounts in K $ USD 82 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Storage Equipment 1. Clients are storing more and more data into midrange and low-end arrays. 2. DRP projects : new purchases. 3. Biggest issue : how to deploy storage in virtualized MANUFACTURERS environments. 4. Storage virtualization? All amounts in K $$USD M USD 83 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Networking strong gain for WAN optimization and application acceleration solutions: high VoIP / Call Center ROI by cutting MANUFACTURERS communication costs Network MANUFACTURERS All amounts in K $$USD M USD 84 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Printers and “new” services • We were very surprised at the slow use of printing services and software in order to cut costs during 2008 All amounts in K $$USD M USD 85 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Special Categories COMPUTER ROOM (Racks, etc) COMPUTER SUPPLIES SELF SERVICE AND DISPOSABLES Mobile and Special Purpose (ATMs, Kiosks, etc) All amounts in K $$USD M USD 86 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Big issues in SOFTWARE • IT departments are “changing” the way they choose software (next slide) • Licensing problems in virtualized and multi-core environments • Open Source will start to be standard in several areas • Focus on “high” maintenance costs: – Customers may consolidate best-of-breed purchases into bundled suites with “cheaper” maintenance – Move to SaaS solutions 87 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Top 10 criteria for selecting software 1st and 2nd time around 88 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Source: Deloitte & Touche - 1500 companies surveyed Do not remove source or attibution from any graphic or portion of graphic

System Software DBMS Operating Systems Middleware All amounts in K $$USD M USD 90 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Information access & analysis 1. Tools for finding and Exploding volumes of making sense of the digital information (video, audio, images, text, information. transactional data, etc) 2. Tools for data cleansing. 3. Tools for minimizing duplication. 4. Tools for storage management. 5. Tools for backup management. 91 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

IT Management Software Service desk Storage Management Enterprise System Management Security Software 92 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI All amounts in M $ USD Do not remove source or attibution from any graphic or portion of graphic

Cont: Information Management Software PORTAL & COLLABORATION DEVELOPMENT AND MODELING BI / MDM/ ETL 94 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Testing Software 1. APPLICATION TESTING SOFTWARE market is close to saturation. 2. DATA TESTING SOFTWARE will start to dominate this category (needed for SOA projects) All amounts in K $$USD M USD 96 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Value Added Services • This remains the one area that CIOs look for potential cost-reductions by re-negotiating contracts – Third party professional services have been the target for most contract openings during the last 90 days. Maybe changing the “game rules”. • No “big” IT service supplier can survive with the rates being talked today (less than 10% + cost) – Project delays and slow-downs have helped CIOs cut budgets but the cost could be higher than expected when the IT department wants to start again 97 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

IT Consultants & Analysts The use of consultants has been reduced but: – People still don’t check the ethics of consultants – Risk officer should check – Still use integrators as consultants, analysts as consultants and consultants as analysts All amounts in K $$USD M USD 101 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Hardware Maintenance • Maintenance will change given the change in purchasing and using of equipment: – Keeping equipment longer – Using it at higher capacities – Users need 24X7 All amounts in K $$USD M USD 103 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Hardware/ networking/infrastructure /DRP/ Management The need for changing usage and management of infrastructures will force users into complicated projects All amounts in K $$USD M USD 104 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

System Integration Projects • Virtualization and consolidation plus SOA projects will be exponentially more difficult All amounts in K $$USD M USD 106 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

TRAINING and HATMAA • Training, assimilation, implementation, rollout,etc: are change management processes. • Change management that helps users change working processes. • HATMAA: is the measurement of the change process success. All amounts in K $$USD M USD 107 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Enterprise Risk Management • Governance and risk management became confused with obeying the law • According to any “new age” theory: – Management proposes OPTIONS to the CEO/Board and also shows the RISKS each of them carries. – Risk also changes with TIME – This process is called: “ENTERPRISE RISK MANAGEMENT” 110 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Enterprise Risk Management • Should be divided into several categories: – Ethics – Regulation – Operations control and quality – Risks – Data and premises security – Q/A (testing …) – Project and portfolio management All amounts in K $$USD M USD 111 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Enterprise Risk Management Customer Demand Shortfall Cost Overruns 24 Accounting Irregularities Competitive Pressure Management Issues M&A Integration Problems Supply Chain Issues 11 Product Issues 12 Foreign Macro-Economic Customer Pricing 7 7 Commodity Prices 6 7 Loss of Key Customer 6 3 4 Interest Rates 2 2 1 1 1 1 0 0 Strategic Operational Financial Hazard 58% 31% 6% 0% 112 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Outsourcing Services many .. many types from call centers (Calanit Carmon) , complete outsourcing (HP-EDS), BPO salaries (Hilan) to cloud computing ( Salesforce.com) All amounts in K $$USD M USD 115 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

IT Service Delivery (“good souls”) This type of service will finally see its maturity: 1. Augmented IT staff providers 2. Project-based on-site third party service providers 3. Specialized on-site third party service providers 4. Near-shore third party service providers 5. Off-shore third party service providers All amounts in K $$USD M USD 117 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Thank you Dr. Jimmy Schwarzkopf http://drjimmystki.blogspot.com/ jimmy@stki.info 119 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic

Israel IT Market 2009

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