Dr. Jimmy Schwarzkopf has over 40 years of experience in various roles in the IT industry including as an analyst, academic researcher, consultant, entrepreneur, and teacher. He founded STKI in 1992, which is now the leading market research firm in Israel covering the IT industry. STKI uses an equilibrium model to provide strategic analysis and advisory services to both IT users and vendors in Israel. Their goal is to help clients make informed strategic and financial decisions regarding their IT systems.

1. 1
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

2. 2
• 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.

3. 3
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 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


4. 4

5. 5

6. 6
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.

7. 7
› 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 department’s view/mindshare of
vendor’s value in projects/products
What our study looks at:

8. STKI Summit 2016
Israeli IT Market 8

9. 9
Global Information Technology
Report 2015

10. 10
Israel 2016

11. 11

12. 12
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.

13. 13
Economy improves significantly in Q4 2015
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.
Israel GDP Chart

14. 14
State of the Economy Index

15. 15
State of the Economy Index (% change*) 4/2014 - 4/2016
2-3 Q 2014

16. 16
Over 65% is BAD

17. 17

18. 18
Israel Business Confidence Survey

19. STKI Summit 2016
Israeli IT Market 19

20. 20
Number of Firms in Israel 1/2016

21. 21
Number of Firms in Israel 1/2016

22. 22
In order to get the “IT Market” (what is bought/sold out there) :
What users bought?
From whom?
Why?
IT Departments IT Vendors
How much did they sell?
To whom?
For how much?
Competitors?
24 years of
IT market history
2013
2014
HARDWARE
1,694,000
3.61%
1,755,200
SOFTWARE
1,350,200
6.72%
1,441,000
VALUE ADDED
SERVICES
3,126,000
4.48%
3,266,000
TOTAL
6,172,213
4.73%
6,464,214

23. 23

24. 24

25. 25
industry
STKI IT
Market
Health
Index
STKI IT
Market
Health
Index
STKI IT
Market
Health
Index
STKI IT
Market
Health
Index
STKI IT
Market
Health
Index
government $1,350 $1,250 $1,310 $1,350 $1,500
education $250 $230 $235 $230 $260
health $300 $290 $275 $290 $320
banks $900 $815 $835 $850 $800
insurance $350 $400 $425 $430 $400
fin other $200 $190 $215 $245 $246
STKI IT Market
Health Index
Budgets 2013 Budgets 2014 Budgets 2015
Budgets
2016
2012 2013 2014 2015 2016
$1,525
$1,770
79.38%
$1,405$1,450
76.32%
$1,820
$1,475
81.04%
$1,446
81.55%
STKI IT Market Health Index
$2,080$1,870$1,900
69.52%
Budgets 2012industry
STKI IT
Market
Health
Index
STKI IT
Market
Health
Index
STKI IT
Market
Health
Index
STKI IT
Market
Health
Index
STKI IT
Market
Health
Index
government $1,350 $1,250 $1,310 $1,350 $1,500
education $250 $230 $235 $230 $260
health $300 $290 $275 $290 $320
banks $900 $815 $835 $850 $800
insurance $350 $400 $425 $430 $400
fin other $200 $190 $215 $245 $246
STKI IT Market
Health Index
Budgets 2013 Budgets 2014 Budgets 2015
Budgets
2016
2012 2013 2014 2015 2016
$1,525
$1,770
79.38%
$1,405$1,450
76.32%
$1,820
$1,475
81.04%
$1,446
81.55%
STKI IT Market Health Index
$2,080$1,870$1,900
69.52%
Budgets 2012

26. 26

27. 27
Client inquiries (STKI) FY 2014-15 shifting

28. 28
Client inquiries (STKI) FY 2014-15 shifting

29. 29
Tri-Modal IT Consequences
IT Centric Business Centric Customer Centric

30. 30
IT Budget
Divisions Transfer Budget
P/L software vendor
MF
computing
Hybrid
computing
SaaS delivery

31. 31
The “IT” market is in the middle of
profound change
(products/services and vendors)

32. STKI Summit 2016
Israeli IT Market
2015 Israel IT Market
32

33. 33
The Great Debate: explanations
Even if the
graphs “look”
different
“not worse”
just smaller
“boutique”

34. 34
The Great Debate: explanations
Even if the
graphs “look”
different
“not worse”
just smaller
“boutique”

35. 35
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.

36. 36
Products “sold” on the cloud
STKI “books” in on-premises software categories
NO double bookings for IT market size forecasts

37. 37
IT Market in Israel

38. STKI Summit 2016
Israeli IT Market
2015 Israel Hardware Market
38

39. 39
Vendors: Hardware markets

40. 40
Israel: IT Hardware Total Market 2014-2016
HARDWARE

41. 41
Hardware: Servers and Clients

42. 42
Server Markets

43. 43
Market Players: Servers (manufacturers)
DB/DW, CONVERGED HW
& OTHER APPLIANCES

44. 44
Market Players: Servers (Resellers-VARs)
DB/DW, Converged HW & other Appliances

45. 45
Clients (B2B) Markets

46. 46
Market Players: Client Computing (manufacturers) B2B

47. 47
Market Players: Personal Computing (VARs)

48. 48
Hardware : storage, networking and security

49. 49
Storage and Networking Markets
storage 2014 2015 2016 2017 2018
Disks (HDD and SSD) 135,000 -3.70% 130,000 -3.08% 126,000 -2.38% 123,000 -2.44% 120,000
VTL Backup and other
Storage Appliances
29,000 -3.45% 28,000 -7.14% 26,000 -3.85% 25,000 -4.00% 24,000
Tape Libraries 11,000 -4.55% 10,500 -4.76% 10,000 -10.00% 9,000 0.00% 9,000
total 175,000 -3.71% 168,500 -3.86% 162,000 -3.09% 157,000 -2.55% 153,000
networking 2014 2015 2016 2017 2018
Enterprise Networking 205,000 0.98% 207,000 1.93% 211,000 -2.84% 205,000 -2.44% 200,000
Security / Cyber 95,000 10.53% 105,000 14.29% 120,000 8.33% 130,000 3.85% 135,000
VoIP/Call Center Equipment 55,000 -9.09% 50,000 -4.00% 48,000 -6.25% 45,000 -4.44% 43,000
total 355,000 1.97% 362,000 4.70% 379,000 0.26% 380,000 -0.53% 378,000

50. 50
Market Players: “storage” (manufacturers)
Disks (HDD and SSD)
VTL Backup, Storage Appliances & networking
Tape Libraries

51. 51
Market Players: “storage” (VARs)
Tape Libraries
VTL Backup, Storage Appliances & networking

52. 52
Market Players: Networking Products

53. 53
Market Players: Security Appliances

54. 54
Market Players: VoIP & other call center equipment

55. 55
Hardware: printers, monitors, self-service and data center

56. 56
Printers, Monitors, DC Equipment, Self Service Markets

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Market Players: DC equipment & enterprise printers

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

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Israeli IT Market 59
2015 Israel Software Market

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Vendors that sell in the Software markets

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Israel: IT Software Total Market 2014-2018
SOFTWARE
1,515,500 4.39% 1,582,000 4.42% 1,652,000 4.36% 1,724,000 4.76% 1,806,000
2017 changes 2018changes2014 changes 2015 changes 2016

62. 62
Delivery and Development Software

63. 63
Infrastructure and Middleware Software

64. 64
Market Players: system software

65. 65
Market Players: Storage and Backup Software

66. 66
Market Players: Data Bases, Cloud and Automation Tools

67. 67
Market Players: Middleware Software

68. 68
Delivery and Development Software
e

69. 69
Security, Cyber and Regulation (IT-GRC & e-GRC) Software

70. 70
Market Players: project, portfolio, governance, risk and compliance software

71. 71
Market Players: Development & ALM Software

72. 72
Market Players: BSM Software

73. 73
Market Players: Security/ Cyber Software

74. 74
Software: Information Management

75. 75
Software: Information Management Markets

76. 76
Market Players: KM Tools

77. 77
Market Players: Collaboration and Output Software

78. 78
Market Players: Analytics & Data Mgmt Software

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Software: Business Applications

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Software: Business Applications Markets

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Market Players: ERP Software (all sizes)

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Market Players: Vertical Application Software

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

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Market Players: HR /Talent Mgmt/ LMS Software

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Market Players: Marketing, WCM and e-commerce software
Marketing Tools .. Campaign Management

86. STKI Summit 2016
Israeli IT Market 86

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Israel: Value Added Services Market 2011-2015
VALUE ADDED SERVICES

88. 88
Vendors that sell in the VAS markets

89. 89
The SIX categories of IT Value Added Services Offered in Israel

90. 90
VAS: IT consulting and analysis services

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VAS: IT consulting and analysis services

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Market Players: IT Consulting
Consulting: IT Strategy / Digital Innovation/ Industry Analysts Consulting: IT Infrastructure/ Delivery (on-premises & cloud)

93. 93
Market Players: IT Consulting 2
Consulting: IT Business Applications (ERP, CRM, BI…)

94. 94
VAS: Hardware & Software Maintenance Services

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VAS: Hardware Maintenance Services

96. 96
Market Players: Hardware Maintenance Services

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VAS: Infrastructure Projects

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VAS: Infrastructure Projects

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Market Players: hardware integration projects
Consolidation/ Virtualization /Monitoring/ BSM/ Storage/
Hardware/ Data Center Environment/ Networking Projects

100. 100
Market Players: software integration and legacy projects
Software integration, middleware, SOA, BPM, ALM,
Testing tools, DevOps

101. 101
Market Players: Security Projects

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

103. 103
VAS: Project Management, training and “Hatmaa” services

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VAS: Project Management, training and “Hatmaa” services

105. 105
Market Players: Office of the CIO Projects

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Market Players: ALM, Q/A & Testing Projects

107. 107
Market Players: Training Services

108. 108
Market Players: “Hatmaa” Projects

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VAS: contact center & EGRC Projects

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VAS: contact center & eGRC & IT-GRC Projects

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Market Players: Risk & GRC Projects

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Market Players: VoIP- Call Center Projects

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VAS: Business Application Implementation

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VAS: Business Application Implementation

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Market Players: ERP Projects

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Market Players: Core / ERP vertical Projects

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Market Players: CRM,
Marketing and social (on-premises & cloud)

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

119. 119
Market Players: Data Analysis (BI, Analytics, Big Data)

120. 120
Market Players: Application development (on-premises & cloud)

121. 121
Market Players: Web Accessibility

122. 122
Market Players: Migration Projects

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Market Players: Mobility Projects

124. 124
Market Players: IoT and UX Projects
IoT (enterprise) Projects
UX Design

125. 125
VAS: outsourcing services

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VAS: outsourcing services

127. 127
Market Players: "off site" data center

128. 128
Market Players: help desk outsourcing

129. 129
Market Players: complete outsourcing
129

130. 130
Market Players: application cost-plus (managed services,
third party software maintenance, others)

131. 131
Market Players: application SLA based (managed services, third party
software maintenance, others)

132. 132
Market Players: Infrastructure cost-plus (managed services, storage,
DBA services, third party maintenance, others)

133. 133
Market Players: Market Players: Infrastructure SLA based (managed services,
storage, DBA services, third party maintenance, others)

134. 134
VAS: Cloud Services

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VAS: Cloud Services

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Market Players: BSaaS (many different) B2B Services

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Market Players: PaaS & IaaS Services
* partners

138. 138
Market Players: SaaS Services

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Market Players: DRaaS Services

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VAS: Staff Augmentation

141. 141
VAS: Staff Augmentation
141

142. 142
Market Players: “gulgalot”- temps- on premises augmentation

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Market Players: Nearshore augmentation

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