Israeli IT Market 08-10

STKI SUMMIT 2008 3/25/2008
Israel IT market
2008‐2010
Click to edit Master title style
trends & market
Dr. Jimmy Schwarzkopf
Research Fellow
Managing Partner
jimmy@stki.info
STKI Methodology
STKI trends forecast for
2008 based:
• STKI tech survey Step 2
• STKI user survey Forecasts
• STKI vendor survey categorized STKI forecasts
into “in”, what will be
• Vendor Briefings
“out” and “yet “In” for 2008.
• User Roundtables
to come”*..
Step 1 Step 3
All Rights Reserved @STKI Moshav Bnei Zion, Israel +972 9 74 444 74 www.stki.info 2
All rights reserved @STKI jimmy@stki.info 1

STKI SUMMIT 2008 3/25/2008
CEOs study : Pricewaterhouse Coopers

World Economic Forum in Davos (1/2008)
1 Availability of key skills (
1. Availability of key skills ( H U M A N C A P I TA L )
2. Downturn in major economies (RECESSION)
(RECESSION)
3 . OV E R ‐ R EG U L AT I O N
4. Low‐cost competition (( H U M A N C A P I TA L )
3
All Rights Reserved @STKI Moshav Bnei Zion, Israel +972 9 74 444 74 www.stki.info
Agenda
1 Click to edit Master title style
Israel 2008: INNOVATION & HUMAN CAPITAL
2 IT and its 2008 Transformation
Your Text here Your Text here
CIO Trends & Technologies 3
4
IIsraeli
li V
Vendors
Conclusion d Sh
Showcase
4

STKI SUMMIT 2008 3/25/2008
1 Click to edit Master title style
Israel 2008: Innovation and human capital
Global Innovation Index
Dr. Soumitra Dutta 6 SWITZERLAND
18 ISRAEL *
INSEAD Professor 7 SINGAPORE
8 CANADA 19 SOUTH KOREA
GLOBAL 9 NETHERLANDS 20 ICELAND
I N N O VAT I O N 10 HONG KONG 3 0 K U WA I T
INDEX 11 DENMARK
Your Text here
which places: 12 SWEDEN Your Text here
1 US 13 FINLAND
* Because of
2 GERMANY 14 UAE HUMAN CAPITAL
3 UK 15 BELGIUM
4 JAPAN 16 LUXEMBOURG
5 FRANCE 17 AUSTRALIA

STKI SUMMIT 2008 3/25/2008
IMD WORLD COMPETITIVENESS
YEARBOOK 2007 (2006)
(1) USA 1 (10) FINLAND 17 (29) THAILAND 33
(3) SINGAPORE 2 (17) TAIWAN 18
(21) NEW ZEALAND 19
(33) SLOVAK REPUBLIC 34
(35) HUNGARY 35
(2) HONG KONG 3
(20) UNITED KINGDOM 20 (36) GREECE 36
(9) LUXEMBOURG 4
(40) JORDAN 37
(5) DENMARK 5 (24) ISRAEL 21*
(8) SWITZERLAND 6
(19) ESTONIA 22
(4) ICELAND 7
(22) MALAYSIA 23
(15) NETHERLANDS 8
(16) JAPAN 24 Professor
(14) SWEDEN 9
(7) CANADA 10
(26) BELGIUM 25 Stéphane Garelli
(23) CHILE 26
(13) AUSTRIA 11
(27) INDIA 27 IMD Business School
(6) AUSTRALIA 12
(12) NORWAY 13
(30) FRANCE 28
(32) KOREA 29
Because of *
(11) IRELAND 14 HUMAN CAPITAL
(31) SPAIN 30
(18) CHINA MAINLAND 15
LITHUANIA 31
(25) GERMANY 16
(28) CZECH REPUBLIC 32
ISRAEL: human capital (what the world thinks)
S T R O N G T I E S to Silicon Valley and US academic and
other research institutions
H I G H E S T S P E N D I N G O N R & D of any industrialized
nation (4.6%)
I N C U B ATO R A N D V E N T U R E C A P I TA L P R O G R A M S
to convert research into new businesses.Your Text here
Your Text here
H I G H E S T N U M B E R O F E N G I N E E R S P E R C A P I TA
in the world (twice that of the US and Japan)
supportive C U LT U R E O F R I S K - TA K I N G
powerful D R I V E TO S U C C E E D
Source: Central Bureau of Statistics, Ministry of Finance

STKI SUMMIT 2008 3/25/2008
Graduation Rates (OECD)
Click to edit Master title style Only country
going down?
ISRAEL 32%
Unemployment
ISRAEL 2008: Participation Rates
Source: Central Bureau of Statistics

STKI SUMMIT 2008 3/25/2008
ISRAEL 2008: ONLY 2,224,000 EMPLOYEES
80% OF EMPLOYEES EARN
LESS THAN
The World Economic Outlook
April 2007
Israel’s per capita GDP (2007)
10 052 NIS GROSS
10,052 31 767
$ 31,767
MONTHLY INCOME (WAGES) 18 place in OECD
12,000
10,000
8,000
6,000 AVERAGE Gross
4,000 monthly income - (NIS)
2,000 Upper
U limit
li it (NIS)
-
1 2 3 4 5 6 7 8
90% OF EMPLOYEES EARN LESS THAN 14,700 NIS GROSS
11
Tech Grad Shortage Changes the Face of IT
CIOs expect fewer young people in IT profession

Half of those who graduate with IT and
computer science degrees aren't well ll prepared d
(Universities versus Colleges)
HUNTING the IDF personnel:
Hiring junior technical roles is one way
Getting g more difficult to attract excellent
medium level officers to IT (instead of startups
or vendors)
Post Lebanon 2 effect

STKI SUMMIT 2008 3/25/2008
New employees come very well prepared for the
modern IT environment ... Do you agree ?
HiringClick to edit Master title style
and retaining high quality employees
STKI is predicting that: Scarce IT professionals will
continue
ti tto b
be a ffocus ffor th
the CIO
CIO. A
As fi
firms struggle
t l tto
remain competitive, success may will be driven by the
quality of its own IT personnel.

STKI SUMMIT 2008 3/25/2008
IF you hire new people in 2008 they will be:
15
IF you hire new people in 2008 they will be:
16

STKI SUMMIT 2008 3/25/2008
CHARACTERISTIC 20TH CENTURY 21TH CENTURY

ORGANIZATION FOCUS PYRAMID NETWORK
STYLE STRUCTURED FLEXIBLE
SOURCE OF STRENGTH STABILITY CHANGE
STRUCTURE Click to edit Master title style
SELF‐SUFFICIENCY INTERDEPENDENCIES
RESOURCES ATOMS ‐ PHYSICAL ASSETS BITS – INFORMATION
OPERATIONS VERTICAL INTEGRATION VIRTUAL INTEGRATION
PRODUCTS MASS PRODUCTION MASS CUSTOMIZATION
REACH DOMESTICAL GLOBAL
FINANCIALS QUARTERLY REAL TIME
INVENTORIES MONTHS HOURS
STRATEGY TOP‐DOWN BOTTOM‐UP
LEADERSHIP DOGMATIC INSPIRATIONAL
WORKERS EMPLOYEES EMPLOYEES & FREE AGENTS
JOB EXPECTATIONS SECURITY PERSONAL GROWTH
MOTIVATION TO COMPETE TO BUILD
IMPROVEMENTS INCREMENTAL REVOLUTIONARY
17
QUALITY AFFORDABLE BEST NO COMPROMISE
CHARACTERISTIC 20TH CENTURY 21TH CENTURY

ORGANIZATION FOCUS PYRAMID NETWORK
STYLE STRUCTURED FLEXIBLE
SOURCE OF STRENGTH STABILITY CHANGE
STRUCTURE Click to edit Master title style
SELF‐SUFFICIENCY INTERDEPENDENCIES
RESOURCES ATOMS ‐ PHYSICAL ASSETS BITS – INFORMATION
OPERATIONS VERTICAL INTEGRATION VIRTUAL INTEGRATION
PRODUCTS MASS PRODUCTION MASS CUSTOMIZATION
REACH DOMESTICAL GLOBAL
FINANCIALS QUARTERLY REAL TIME
INVENTORIES MONTHS HOURS
STRATEGY TOP‐DOWN BOTTOM‐UP
LEADERSHIP DOGMATIC INSPIRATIONAL
WORKERS EMPLOYEES EMPLOYEES & FREE AGENTS
JOB EXPECTATIONS SECURITY PERSONAL GROWTH
MOTIVATION TO COMPETE TO BUILD
IMPROVEMENTS INCREMENTAL REVOLUTIONARY
18
QUALITY AFFORDABLE BEST NO COMPROMISE

STKI SUMMIT 2008 3/25/2008
Innovation IS strategy: from BUILD to CREATE
Red Ocean Strategy Blue Ocean Strategy
Compete in existing market space. Create uncontested market space.
Beat the competition. Make the competition irrelevant.
The New Economic Age
Exploit existing demand. Create and capture new demand.
Make the value-cost trade-off. Break the value-cost trade-off.
Align the whole system of a firm’s Align the whole system of a firm’s
activities with its strategic choice of activities in pursuit of
differentiation or low cost. differentiation and low cost.
Innovation IS strategy: from BUILD to CREATE
Red Ocean Strategy Blue Ocean Strategy
Compete in existing market space. Create uncontested market space.
Beat the competition. Make the competition irrelevant.
Exploit existing demand. Create and capture new demand.
Make the value-cost trade-off. Break the value-cost trade-off.
Align the whole system of a firm’s Align the whole system of a firm’s
activities with its strategic choice of activities in pursuit of
differentiation or low cost. differentiation and low cost.

STKI SUMMIT 2008 3/25/2008
Innovation:
water drum that is easy to pull
What is this?

STKI SUMMIT 2008 3/25/2008
The Dyson phenomena
successful INNOVATION needs SILLINESS how
can IT help ???
FedEx was silly

World Wide Web was silly.. (back in 1995)
.. And so was …

STKI SUMMIT 2008 3/25/2008
Google 10 years of innovation
Core Search Ads Monetization Communications Collaboration ?
1995 1998 2000 2003 2004 2005 2007 ?
Should we start building ?

STKI SUMMIT 2008 3/25/2008
2 IT Transformation
IT Transformation
STKI is predicting that:
• Only through IT transformation will CIOs
meet the increasing demands of the business
and maximize competitiveness.
• CIOs must be models of transformation as
their businesses capitalize on business
their businesses capitalize on business
processes, relationships, information flows
and services.

STKI SUMMIT 2008 3/25/2008
support systems
The next IT frontier

STKI SUMMIT 2008 3/25/2008
IT ......Support Systems
IT Systems
IT of Click to edit Master title style
Competitor
Value Business
1
ERP captured Process 1 Market
by
verticals
No Real Competitive Sales

difference in value Differentiation Prospect
IT of
Competitor Value Business
ERP captured Process 2
2
by
verticals
32

STKI SUMMIT 2008 3/25/2008
IT Systems
IT of Click to edit Master title style
Competitor
Value
Operations
1
ERP captured
by
Business
Process 1 Market
and Competitive
verticals
Competitive
Management Differentiation
No Real
difference in value
Support Sales
Prospect
IT of Support
Competitor
2
ERP
Systems by
Value
captured
Systems
Business
Process 2
verticals
33
Innovation Management
systematic processes
New IT Click to edit Master title style
Systems
that organizations use to develop
new and improved products, services
and business processes.
Innovation
Support
Systems involves harnessing the
creative ideas
Competitive of an organization's employees
Advantage and utilizing it to bring a steady
S t
Support
Systems pipeline of new innovations
to the marketplace
Management Operation
Support Support
Systems Systems
34

STKI SUMMIT 2008 3/25/2008
WEB 2008
pushes need for “new CIO”
Innovation
WEB 2008
Time
WEB 2008
WEBClick to edit Master title style
2008 phenomenon
(fi-nom-uh-non)
-noun
1. a rare or significant fact or event in the
web that happened in 2007
2. something that is impressive or
extraordinary that happened in 2007

STKI SUMMIT 2008 3/25/2008
2007: the year of my discovery
2007: the year of my discovery
• “SACRED ORDER OF THE EXTERNAL MIND”
I could outsource mental tasks
Life is a math problem and I have a calculator
• MAGIC OF THE INFORMATION AGE
Not that it allows us to know more
Not that it allows us to know more
It really allows us to know less
37
An example:
my romantic attachment to my “GPS”
GPS
• EXTERNALIZE GEOGRAPHIC INFORMATION FROM MY
BRAIN
• OUTSOURCE MAP READING SKILLS
• ALLOW CALCULATION OF DRIVE TIME

STKI SUMMIT 2008 3/25/2008
I have outsourced
outsourced part of my life
to external cognitive servants
external cognitive servants:
• No longer need a
memory
• Musical taste:
– ITunes
– Google
– Yahoo • Books and others:
– Wikipedia – Amazon
• Personal Information • Social Capital
– Smartphone tells me – LinkedIn
about birthdays, phones,
addresses – Xing
– Facebook
39
And with access to these tools I can answer
ANY question in less then 30 minutes

STKI SUMMIT 2008 3/25/2008
Pinpoints a supermarket in MEXICO ?
my son is calling from there
WEB 2008
WEB 2008: user
: user
Banks YOUtube Business Average person:
Insurance Click to edit Master title style
Slideshare Simulations
Training
10‐15 intimate
150 social
Travel Blogs
“Amazon” p p
Newspapers Second Life 500‐1500 weak
“e‐bay” WIKIPEDIA Sales links
Transaction Sites Multimedia Sites Game Sites Social Sites
Websites can
no longer be
islands
Users want
bridges
elsewhere
42

STKI SUMMIT 2008 3/25/2008
Internet 2 is not Web 2
44

STKI SUMMIT 2008 3/25/2008
WEB 2
WEB are WEB Technologies
2 are WEB
Internet2: 2.4 Gbps plumbing
46

STKI SUMMIT 2008 3/25/2008
In 2010: all new WEB experience
Soon each website will become a 3 dimensional room
that can be experienced alone or with friends
2008 in perspective
Impact of WEB 2008
STKI is predicting that: Embracing WEB 2008 will be a
challenge that CIOs will face in 2008 - successful ones
will see this as a way to stay competitiveYour Text here
Your Text here
• Some CIOs see this as a threat as information has been
stored on blogs, wikis and Facebook in a way that many
people find difficult to access or would prefer not to be
there at all.

STKI SUMMIT 2008 3/25/2008
CIO Trends 3
Two types of CIOs
CIOs connected with technology and
processes of the business
• product/process differentiation strategy
product/process differentiation
• more creative specialized technology experience
• Have a greater role in strategic planning
CIOs connected with the financial part of
the business
the business
• advantage through cost structure
advantage through cost structure strategy
• under constant pressure to cut expenses
• have little role in strategic planning

STKI SUMMIT 2008 3/25/2008
In what companies the CIO reports to the CEO?
the company strives for competitive
When Click to edit Master title style
advantage by differentiating their products
andd servicesi
1. Then the CIO has to constantly think about
potential
Your Text here new IT that can widen that
Your Text here
advantage
2 Then the CEO is focused on innovation
2.
51
In what companies the CIO reports to the CFO?
WhenClick to edit Master title style
the company strives for competitive
advantage g throughg their cost structure
• When IT plays a supporting role, ensuring
that operations are conducted efficiently
• When the CIO’s challenge is to Your Text here
Your Text here
deliver value
to customers at a lower cost
• When the ways to use IT is to eliminate
waste and increase efficiency

STKI SUMMIT 2008 3/25/2008
The evolving role of the CIO
STKI is predicting that: role of the CIO will change
– CBPO or COO (CBusinessProcessO;
COperatingO): capitalize their understanding of
)
technology’s potential to grow into the role of
business change agent
– Mistake:
• ALLOW business unit managers to take more
ALLOW business unit managers to take more
responsibility for the IT
• ONLY focus on running the business
of IT.
What do you think will be the CIO job
description in the future ?
GROW IN IMPORTANCE

STKI SUMMIT 2008 3/25/2008
What is the main responsibility of the CIO
in 3 years ?
BUSINESS STRATEGY
BUSINESS STRATEGY
BUSINESS PROCESSES
DELIVER GOOD INFORMATION
No Downturn for CIO Role, Central IT
STKI isClick to edit Master title style
predicting that: In Israel the CIO’s role will
grow more important, not less, even if some CIOs
report to C CFOs.O
• The IT function will grow more centralized.
• TheYour Text here
strategic CIO/central IT organizationYour Text here
model
for IT management will continue to dominate.
p
• Companies will need CIOs and IT organizations
g that
can oversee one of the most complex functions in
business.
56

STKI SUMMIT 2008 3/25/2008
What do you think will happen in 5 years ?
Do you agree with the following statements as
referring to your organization ?
NO MANAGEMENT INVOLVEMENT IN IT ??
NO OPEN SOURCE APPLICATIONS???

STKI SUMMIT 2008 3/25/2008
What are the three most important goals
for IT during 2008 ?
The buzz: CIO Agenda for 2008/9
EFFECTIVENESS AGENDA
ALIGNMENT AGENDA
COST REDUCTION AGENDA


STKI SUMMIT 2008 3/25/2008
IT Effectiveness
• Office of the CIO (PMO..)
Management of • BSM and CMDB
IT • Vendor Management
Vendor Management
• Servers
Infrastructure
• Storage
Virtualization • Thin PCs and/or “new” station
• ITIL
Regulation
• CobiT
Methodologies
• ISO
IT Alignment
Core/Strategic Systems
• New support systems
Information Support
• BI DW KM ECM
Compliance and Business Continuity
• SOX
• Basel 2
• Other regulators

STKI SUMMIT 2008 3/25/2008
Alignment and Governance
BothClick to edit Master title style
need to be there, in balance.
IT Alignment
IT Alignment IT Governance
IT Governance
Performance‐oriented Compliance‐oriented
Strategy‐focused Operations‐derived
Effectiveness Efficiency
Core & mission‐critical Mission‐critical
Make a difference Don’t make a mistake
63
First Move......... should be?
• Management of IT
IT
IT • Infrastructure consolidation
Infrastructure consolidation
effectiveness •
•
Data Center (GREEN) rebuilding
Security
• New Core/Strategic Systems
• I f
Information support (BI, DW, KM)
ti t (BI DW KM)
IT alignment •
•
Regulation support
Support for innovation & competitive
advantage initiatives

STKI SUMMIT 2008 3/25/2008
What should we do ?
Alice came to a fork in the road.
Which road do I take?”
“Which take? she asked
asked.
“Where do you want to go?”
responded the Cheshire cat.
“II don
don’tt know
know” Alice answered.
“Then” said the cat,
“it doesn’t matter”. Lewis Carroll, Alice in Wonderland
Bain Survey Results
"In order for IT to

enable growth, that
first move is critical-
and itit's
s the one that
companies often get
wrong."
- Rudy Puryear

STKI SUMMIT 2008 3/25/2008
BEWARE: the IT “2008” trap
S l i i ll
Solutions especially Holding off
Holding off
Costs rise; standardization
designed for user
delays mount;
fragmentation
undercuts
coordination Postponing
Postponing upgrade of
pg
infrastructure legacy systems
improvements
that first move is critical
single most important task is to forget
about enhancing alignment (for the
moment)
focus first on increasing the

effectiveness of the IT organization.
organization

STKI SUMMIT 2008 3/25/2008
The Bain Consulting IT model
Alignment IT
+
Alignment “IT 2008” enabled
Trap growth
IT in
IT in Well‐oiled
Maintenance
Zone IT
-
- Effectiveness + 69
In 2008 first priority

STKI SUMMIT 2008 3/25/2008
In 2008 first priority
So what technology should your
organization invest in?
Open or Closed Source? Best of Breed or Best of Suite?
Wireless or Wireline?
Desktop or “Webtop”?

STKI SUMMIT 2008 3/25/2008
IT Trends 2008‐2010
• Vendor • Performance • Voice/Data
management management integration (VoIP,
• Business • Utility based VoDSL, VoWiFi,
intelligence computing voice portals)
• Outsourcing/BPO/ • Open source • Storage networks
ASP/Nearshoring • Innovation (SAN/NAS)
• Project Support Systems • Virtualization
management
Your Text here • Web 2008 • Web services
Your Text here
standards • Mobile devices • SaaS
• Project portfolio and wireless • Smart displays
management networks • IP 6
IPv6
• Security and • Enterprise • Green Data
business applications (CMS, Center
continuity ERP, CRM, WFM, BI,
• Governance Groupware, SCM, EIP,
PSA, EAI)
(Office of the CIO)
To answer that: IT Model STKI 2008

STKI SUMMIT 2008 3/25/2008
The model and its parts
Delivery
M f IT
Management of IT
Security
Applications
Office of the CIO
Offi f th CIO
Infrastructure
Green Data Center
2008 the year when we want to
“keep it simple stupid” (KISS)

STKI SUMMIT 2008 3/25/2008
2008 the year when we want to
“keep it simple stupid” (KISS)
How would you describe your organization's
involvement with the following technologies

STKI SUMMIT 2008 3/25/2008
SPECULATION versus INVESTING
Optimized Sourcing
who does what?
Consolidation Data Center Vendor
• Servers • Electrical Management
M t
• Storage Usage • IT procurement
• Thin PCs • Printers • Avoid lock‐up
and/or “new” • Other Green • Buying optimal
station issues cost and value
IT Procurement
(problematic in ISRAEL)

STKI SUMMIT 2008 3/25/2008
USER VENDOR relationships
All Rights Reserved @STKI Moshav Bnei Zion, Israel 81
+972 9 74 444 74 www.stki.info
A user value expectation in an RFP
Maximum
Value
Value proposition Many value
is positive propositions
Value not Many options but none
acceptable
p answers the value
answers the value
to the user proposition in the RFP
82

STKI SUMMIT 2008 3/25/2008
A vendor answer to an RFP
Maximum bells
and whistles
and whistles
Some
Still things
taken out
profitable
Looses money ?
83
The right procurement “area”
• Reducing and
controlling IT costs
t lli IT t
– Non professional
procurement will
continue the spiraling
upward cost of “low
d f “l
buyer value” project
acquisition

STKI SUMMIT 2008 3/25/2008
WHY DO THEY THINK THEY ARE HONEST?
85
HUMAN ERRORS: vendor management
“If a problem has no solution, it may not be a problem, but
a fact, not to be solved, but to be coped with over time”
Shimon Peres
86

STKI SUMMIT 2008 3/25/2008
THE SOLUTION:
BOTH SIDES HAVE TO BE MORE PROFESSIONAL
• VENDORS: HIRE A CRISIS MANAGEMENT VP AND
INVOLVE HIM IN THE CONTRACT NEGOTIATIONS WITH
CLIENTS.
• USERS: HIRE AN IT PROCUREMENT SPECIALIST AND
MEASURE HIM NOT ONLY BY DISCOUNTS IN
PROCUREMENT BUT WITH PROJECT SUCCESS
(FINAL CLIENT SATISFACTION, ON TIME, IN BUDGET)
2007‐2008: BUDGET – DOLLAR ‐ NIS

MOST Click to edit Master title style
IT DIVISIONS HAVE THEIR BUDGETS IN DOLLARS
• What happened in 2007 ?
• Budgets where cut in real NIS values?
• What will happen in 2008 ?

STKI SUMMIT 2008 3/25/2008
Who's Afraid Of A Little Recession?
growth in company's future?
Slowing
what does that mean for the IT shop?
p
• Smaller budget?
• Less resources? (no new hires)
• Less discretionary spending (new technology)
• New ways of doing things (SaaS)?
• More outsourcing?
Israel GDP and GDP per Capita
(Annual rate of change (%), in Constant Prices)
9.0 8.0
70
7.0 5.2 5.3 5.2 5.4
5
4.6
5.0 3.4 3.5 3.4 3.6 2.5
2.3 1.5
3.0
0.4
1.0
-1.0
-0.9 -0.9
-3.0
-2.9 -2.9
-5.0
50
2000 2001 2002 2003 2004 2005 2006 2007 2008
GDP
GDP per Capita
All Rights Reserved @STKI Moshav Bnei Zion, Israel +972 9 74 444 74 www.stki.info 90 6

STKI SUMMIT 2008 3/25/2008
IT MARKET IN ISRAEL
Bank of Israel and STKI Composites
from experience we know that the

combined index goes from
0.99 to 2.99
exceptions have to be explained

STKI SUMMIT 2008 3/25/2008
Bank of Israel and STKI composites
index
BANK OF ISRAEL 1/2008 State-of-The-Economy (Composite) Index

ICT COMPANIES (TASE RESULTS)

STKI SUMMIT 2008 3/25/2008
NUMBER OF ORGANIZATIONS PAYING TAXES
(ISRAEL, 2008)
IT MARKET AND $ CHANGES PER INDUSTRY

STKI SUMMIT 2008 3/25/2008
2008 IT Market according to Industry and Products
The CXOs in my company believe that
there is "unneeded fat" in the IT budget

STKI SUMMIT 2008 3/25/2008
Mark two good ways of cutting IT expenses in 2008?
If in the middle of FY2008 you have to cut your budget ;
where do you think the cut will happen?

STKI SUMMIT 2008 3/25/2008
4
Israeli Vendors Showcase
Conclusion
ICT (IT) MARKET PLAYERS

STKI SUMMIT 2008 3/25/2008
ICT (IT) COMPANIES 2008
THE HARDWARE MARKET

STKI SUMMIT 2008 3/25/2008
HARDWARE MARKET 2008
over $1 BILLION USD
MOST COMPANIES SELLING HARDWARE HAVE

PROFIT PROBLEMS
DOLLAR AT 3.4 NIS
SERVER DEVELOPMENT
COMPANIES ARE NOT DEVELOPING 128 BIT PROCESSORS
OR INVESTING IN REGULAR INCREASES IN THE PROCESSING
SPEED OF CHIPS
CHIPS WILL HAVE 100 CORES (PROCESSORS) ON A CHIP

• AREYour Text here
YOU PROTECTED IN YOUR SOFTWAREYour Text here
CONTRACTS ?

STKI SUMMIT 2008 3/25/2008
NON‐X86 SERVERS
MAINFRAMES AND
HIGH END UNIX SERVERS
WILL CONTINUE TO HOLD
AROUND THEM A BIG PART OF
DEVELOPMENT AND CORE
SYSTEMS
X86 SERVES
THE 64 BIT X86 SERVERS.. WORKHORSE
PROBLEM WITH LICENSING (#CORES)
USEFUL LIFE OF BLADES
CONSOLIDATION / VIRTUALIZATION
SOFTWARE MIGRATION TO 64 BIT
VMWARE, CITRIX AND MICROSOFT ARE LEADING
THE CHARGE INTO CENTRALISED APPLICATION
DELIVERY

STKI SUMMIT 2008 3/25/2008
PERSONAL COMPUTING STATIONS
desktop virtualization and/or
thin clients will emerge as the
only cost-effective method for
managing desktop costs
(management, security and
others)
At what pace are you growing your storage capacity?

STKI SUMMIT 2008 3/25/2008
STORAGE
STKI is predicting that: we will see big storage
breakdowns…. Impossible to manage and until
companies learn to do more with less data, there's no
end in site to the demand for storage.
• Legal requirements, disaster recovery needs,
and strong interest in business intelligence
means companies will continue to
accumulate data.
• Only , storage virtualization will help keep
related costs in check
THE CIO AND THE IP REVOLUTION
IP revolution has brought new
ecosystems into the IT department:
• Voice
V i ecosystem
Telephony
PBXs
Video conferencing ........
• Printing ecosystem
p , copiers
printers, p &faxes
Toners & paper
Printing services
Secure printing............

STKI SUMMIT 2008 3/25/2008
PRINTER ECOSYSTEM
2008 IS A DECISIVE YEAR IN THIS ECOSYSTEM
• PRINTING IS/SHOULD BE A SERVICE IN THE HANDS OF THE
CIO AND PART OF HIS BUDGET
• PRINTING BUDGETS INCLUDE INHOUSE PRINTING (FAXES,
COPIERS,PRINTERS, TONERS, PAPER AND SOFTWARE) AND IN
THEYour Text here
FUTURE WILL INCLUDE PRINTING DONE OUTSIDE
Your Text here
• THE PLAYERS WILL CHANGE AS RESPONSABILITIES AND
DELIVERY CHANGES
• SOME ANALYSTS THINK THAT PRINTING BUDGET CAN BE
LARGER THAN THE IT BUDGET IN SOME INDUSTRIES
NETWORKING
VoIP telephony growing exponentially
NETWORKING IS becoming aware of
application, content, location and user
• Content based switching
• Complex event processing
• Event driven switching
• Business oriented balancing
• Flo management
Flow
• Role based network control

STKI SUMMIT 2008 3/25/2008
The software market 2008
SOFTWARE MARKET 2008
$ 658 Million USD
SOFTWARE
FROM
PRODUCT
TO
SERVICE

STKI SUMMIT 2008 3/25/2008
Software as a Service (SaaS)
STKI Click to edit Master title style
is predicting that: 2008 will be SaaS’s
breakout year. In light of their low risk,
rapid deployment and low cost,
organizations will look to hosted and on-
demand solutions to perform
• project management
• content management
• e-commerce
• collaboration functions
Failure of Windows/Office Alternatives
In Israel, Microsoft rules the desktop
desktop.
• Very few CIOs will consider a radical alternative to
conventional Windows PCs. PCs
• Very few CIOs will consider Google Office
alternative
• Vendors do not translate (Hebrew) their
Your Text here
office
Your Text here
products for Israel

STKI is
i predicting
di ti g th
that:
t costt off software
ft will
ill push
h
“extremely thin clients” for enterprise desktop users
118

STKI SUMMIT 2008 3/25/2008
DIFFERENT TYPES OF SOFTWARE PURCHASING
MODEL FOR SOFTWARE PURCHASING:
• PERMANENT PLUS MAINTENANCE
• PERMANENT WITH NO MAINTENANCE
• RENTAL (YEAR OR MONTH)
PLEASE ASK:
• “WHEN I STOP PAYMENT CAN I STILL USE THE

SOFTWARE
• HOW MUCH WILL IT COST ME TO GET BACK INTO
PAYING MAINTENANCE AFTER 3 YEARS OF NOT
PAYING”
VALUE ADDED SERVICES
• DATA CENTER SERVICES
– HARDWARE
• DECISION PROCESS
SERVICES
MAINTENANCE – ANALYSTS
– PRINT MANAGEMENT – CONSULTANTS
– ENVIRONMENTALS
• IT PROJECTS SERVICES
• IT RISK MANAGEMENT – ERP/CRM
– SECURITY – CORE DEVELOPMENT
– TESTING & Q/A
TESTING & Q/A – BI/PORTALS
– TRAINING & – MIDDLEWARE
IMPLEMENTATION
– INFRASTRUCTURE
– SELECTIVE OUTSOURCING INTEGRATION

STKI SUMMIT 2008 3/25/2008
PLAYERS IN THE 2008VALUE ADDED $ 2.27
BILLION USD MARKET
IT CONSULTANTS AND ANALYSTS
BIG MISUNDERSTANDING
(ANALYSTS AND CONSULTANTS)
CONSULTANTS (ETHICALLY)
CANNOT WORK BOTH SIDES OF
THE COURT (VENDORS AND
USERS)
ANALYSTS WILL NEVER WORK IN

RFPs OR PROJECT WORK

STKI SUMMIT 2008 3/25/2008
APPLICATION DEVELOPMENT
referring to your organization ?

STKI SUMMIT 2008 3/25/2008
What technology do you think will be important
for you in 2008?
In what areas of customer management and service
will your company increase their investment?

STKI SUMMIT 2008 3/25/2008
What do you think are the greatest
advantages of SOA and Web services?
2008‐2012 :CORE SYSTEM REPLACEMENT/ENHANCEMENT
Most industries will replace their core systems in

the next 5 years
• SOA/BPM will be used in order to reuse/keep using
many application components
• BI/CRM/e-Commerce connected to “core”
application
Your Text here
processes will be critical Your Text here
Two different vendors will be used

• Application development (expertise in industry)
• Infrastructure/middleware development (expertise
in technologies)
VENDORS TRYING TO DIFFERENTIATE
THEIR SERVICES

STKI SUMMIT 2008 3/25/2008
ERP/CRM/BI/CORE APPLICATION
DEVELOPMENT PROJECTS
2008-2012 most CORE
SYSTEMS will have to
changed or at least
go through major
revision
BI andYour Text here
CRM projects Your Text here
flourish
For old CORE SYSTEMS
...15%
15% of development is
maintenance cost per year
INFRASTRUCTURE /MIDDLEWARE/
NETWORKING/ INTEGRATION PROJECTS
VENDORS here have great
specialty in their
integration skills (i.e.
integration, networking,
storage and ..)
NEW Your Text here
DEVELOPMENT WILL Your Text here
START IN MOBILE
APPLICATIONS……

STKI SUMMIT 2008 3/25/2008
DATA CENTER
referring to your green data center?

STKI SUMMIT 2008 3/25/2008
DATA CENTER ENVIRONMENT
USERS ARE CLOSING OLD
APPLICATIONS IN ORDER TO OPEN
NEW ONES BECAUSE OF ELECTRICITY
NEEDS
NEW DESIGN OF DATA CENTERS
VAS: RISK MGMT PRODUCTS
Office of the CIO /PMO Outsourcing
Testing and Q/A
Security
BCP/DRP
Training & Implementation
Selective Outsourcing

STKI SUMMIT 2008 3/25/2008
RISK MANAGEMENT STRATEGIES
Risk is an inherent property of any business
process or project
Quantifying operational risk exposure is difficult but:
• Risk Probability x Risk Impact = Risk Severity
Operational Risk *:
• A degradation
Your Text here in process output or process
Your Text here
consistency
• Probability that a project/process will either
fail to meet its objectives or
make excessive use of resources to meet them

STKI SUMMIT 2008 3/25/2008
TWO WAYS OF MANAGING RISK IN PROJECTS
RISK has to be managed correctly:

Never accept “low level” audit/work in
security, help desk, testing and Q/A (students)
15% of your budget goes to
risk management
137
RISK , SECURITY, BCP SERVICES
DO YOU ALLOW STUDENTS TO
DO YOUR SECURITY WORK?
BCP IS A REGULATORY NEED
RISK MANAGEMENT IS BOOMING
• FOR PROJECT
• FOR REGULATION

STKI SUMMIT 2008 3/25/2008
Do you agree with the following statements as referring
to the security threat in your organization?
Q/A (DATA AND SOFTWARE)
QUALITY VENDORS ARE THOSE THAT
WILL SELL Q/A AS A PROJECT AND NOT
AS TEMP CHEAP LABOR
DATA Q/A IS STARTING AND THE END

PRODUCT IS A WORKING MASTER DATAYour Text here
Your Text here
MANAGER OR A DATA HUB

STKI SUMMIT 2008 3/25/2008
TRAINING AND IMPLEMENTATION
LIKE WITH EVERY RECESION WE
WILL SEE CUTS IN TRAINING
COURSES AVAILABLE SHOULD
INCLUDE ACADEMIC LEVEL PROJECT
MANAGEMENT
MAINFRAME
Your Text here AND STORAGE Your Text here
MANAGEMENT COURSES NEEDED
VENDORS LOOKING AT THE MARKET OF
CORE REPLACEMENT Q/A
VENDORS SHOULD CONNECT INTO ONE OFFERING
• OLD CORE MAINTENANCE WORK

• HELP DESK ON OLD CORE
• TESTING OF NEW DEVELOPMENT
• BUILDING OF MASTER DATA MANAGER
• TESTING/QA OF NEW DATA IN MDM
• IMPLEMENTATION SUPPORT
• HELP DESK ON NEW APPLICATION

STKI SUMMIT 2008 3/25/2008
HWRE MAINTENANCE
CONSOLIDATION OF STRGE AND
SERVERS AND QUALITY OF EQUIPMENT
ALLOWS USEFUL LIFE OF BETWEEN 5
TO 7 YEARS
• DIFFERENT ACCOUNTING PRACTICES
• NEED FOR DIFFERENT MAINTENANCE
CONTRACTS
• NEED FOR NEW DATA CENTER DESIGN
• SAME SERVER DIFFERENT OS SAME COST?
HOSTING/ DRP SERVICES
REAL ESTATE HOSTING IS CHANGING INTO
A SERIES OF VALUE ADDED SERVICES IN
THE MENU
DRP IN ISRAEL AND DATA DRP OVER THE

SEA (EUROPE)
Your Text here WILL BE REQUIRED IN THE
Your Text here
NEXT COUPLE OF YEARS BY EVERY BOARD

STKI SUMMIT 2008 3/25/2008
O U T S O U R C I N G
OUTSOURCING PERSONNEL
(TEMPS, ANGELS, xSHORING)

STKI SUMMIT 2008 3/25/2008
OUTSOURCING OF IT AND BUSINESS PROCESSES
FINALLY FORGETTING THE
NONSENSE 80/20 PHRASE
MORE AND MORE BPO WILL
BE OFFERED

Israeli IT Market 08-10

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STKI SUMMIT 2008 3/25/2008

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CEOs study : Pricewaterhouse Coopers

2 IT and its 2008 Transformation

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Source: Central Bureau of Statistics

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90% OF EMPLOYEES EARN LESS THAN 14,700 NIS GROSS

 CIOs expect fewer young people in IT profession

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CHARACTERISTIC 20TH CENTURY 21TH CENTURY

CHARACTERISTIC 20TH CENTURY 21TH CENTURY

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Beat the competition. Make the competition irrelevant.

Make the value-cost trade-off. Break the value-cost trade-off.

Beat the competition. Make the competition irrelevant.

Exploit existing demand. Create and capture new demand.

Make the value-cost trade-off. Break the value-cost trade-off.

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FedEx was silly

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1995 1998 2000 2003 2004 2005 2007 ?

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No Real Competitive Sales

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Transaction Sites Multimedia Sites Game Sites Social Sites

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COST REDUCTION AGENDA

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"In order for IT to

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focus first on increasing the

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Open or Closed Source? Best of Breed or Best of Suite?

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CIOs expect fewer young people in IT profession

focus first on increasing the

CHIPS WILL HAVE 100 CORES (PROCESSORS) ON A CHIP

ANALYSTS WILL NEVER WORK IN

Most industries will replace their core systems in

Two different vendors will be used

NEW DESIGN OF DATA CENTERS

RISK has to be managed correctly:

BCP IS A REGULATORY NEED

DATA Q/A IS STARTING AND THE END

DRP IN ISRAEL AND DATA DRP OVER THE