STKI Israel's IT market 2017 v2

1. STKI Israel's IT Market 2017 STKI Copyright@2017

2. v2 2 STKI Israel's IT Market 2017 STKI Copyright@2017

3. v2 • 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 an MSIA (Management Information Systems) and ABD (unfinished 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. STKI Research Manager: Dr. Jimmy Schwarzkopf 3 STKI Israel's IT Market 2017 STKI Copyright@2017

4. v2 STKI’s goal is to help our clients make the right choices in the strategic and financial management of their information technology systems. Founded in 1992, STKI is the leading market research and strategic analyst firm in Israel, covering the IT infrastructures, IT applications and IT services industry . Over 25 years of experience in the IT analyst sector and thousands of annual face-to-face interviews with key industry participants have enabled us to establish solid, long-standing relationships with our customers. Our customers include major IT organizations (government, financial institutions, telecoms, manufacturing, medical, education, etc.) and IT suppliers/vendors (infrastructure and software suppliers, consulting and professional services firms). STKI works closely with vendor senior management (strategy, business development, and marketing). Where end users are concerned, STKI meets with CEOs, CFOs, CMOs, CDOs and CIOs (as with all levels of IT decision making) thereby attaining complete information of technology innovation as well as business transformation. STKI's mission is to advise and analyze users of information technology as well as their suppliers while conducting original research and providing advisory services regarding all parts of the information system puzzle. Israel's foremost IT companies have come to rely on STKI's market-proven experience and expertise. 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) Vendor Innovation Workshops In-house Workshops CIO Annual Bootcamp CTO Annual Bootcamp Brainstorming Workshops STKI Annual Summit 4 STKI Israel's IT Market 2017 STKI Copyright@2017

7. v2 7 STKI Research Results: 1. IT Trends 2. Surveys about organizational issues 3. Round Table Summaries 4. Industry IT Budgets 5. IT Market Forecasts by category 6. Vendor Tiers by category 7. Product Positioning 8. Staffing Ratios http://index.stki.info/http://index.stki.info/http://index.stki.info/ v2 STKI Israel's IT Market 2017 STKI Copyright@2017

8. STKI Summit 2017 Israeli IT Market 8 STKI Israel's IT Market 2017 STKI Copyright@2017

11. v2 Israel 2017 11 STKI Israel's IT Market 2017 STKI Copyright@2017

12. v2 Israel 2017 12 STKI Israel's IT Market 2017 STKI Copyright@2017

13. v2 Israel 2017 unemployment 13 STKI Israel's IT Market 2017 STKI Copyright@2017

14. v2 Israel 2017 CORRUPTION 14 STKI Israel's IT Market 2017 STKI Copyright@2017

15. v2 State of the Economy Index 15 STKI Israel's IT Market 2017 STKI Copyright@2017

16. State of the Economy Index (% change*) 03/2015 - 03/2017 16 STKI Israel's IT Market 2017 STKI Copyright@2017

17. Over 65% is BAD 17 STKI Israel's IT Market 2017 STKI Copyright@2017

19. v2 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?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 25 years of IT Market Data 19 STKI Israel's IT Market 2017 STKI Copyright@2017

20. v2 20 Over 150 categories STKI Israel's IT Market 2017 STKI Copyright@2017

21. v2 21 456 IT VENDORS in Israel STKI Israel's IT Market 2017 STKI Copyright@2017

22. v2 22 4,374 enterprises with IT departments in Israel STKI Israel's IT Market 2017 STKI Copyright@2017

23. v2 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. 23 STKI Israel's IT Market 2017 STKI Copyright@2017

25. v2 › 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: 25 STKI Israel's IT Market 2017 STKI Copyright@2017

27. number of companies (paying taxes) number of companies (paying taxes) number of companies (paying taxes) number of companies (paying taxes) number of companies (paying taxes) % of TOTAL number of companies (paying taxes) % of TOTAL 21-100 3,871 4,088 16,305 16,647 51-100 4,352 1.69% 21-100 17,995 6.98% 6-20 31,720 33,073 46,920 48,780 10-50 36,268 14.06% 6-20 52,265 20.27% up to 5 196,802 194,683 175,925 180,445 up to 9 212,985 82.59% up to 5 192,641 74.70% 192,641 ACCORDING TO BITUACH LEUMI 2/2012 ACCORDING TO BITUACH LEUMI 2/2013 ACCORDING TO BITUACH LEUMI 2/2014 ACCORDING TO BITUACH LEUMI 2/2015 201620152014 250,011 ACCORDING TO BITUACH LEUMI 2/2016 subtotals 1,622 0.63% 4,374 2,752 1.07% 70,260 262,901 267,275 ACCORDING TO BITUACH LEUMI 2/2017 101-2502,685 1.04%2,606 2011 number of employees v1 251+ 1,583 0.61%1,533 251+1,4761,348 257,873 number of employees v2 totals 251+ 101-250 2012 1,493 2,525 2013number of employees v1 232,393 235,773 243,168 2,4532,384 101-250 27 STKI Israel's IT Market 2017 STKI Copyright@2017

28. number of companies (paying taxes) number of companies (paying taxes) number of companies (paying taxes) number of companies (paying taxes) number of companies (paying taxes) % of TOTAL number of companies (paying taxes) % of TOTAL 21-100 3,871 4,088 16,305 16,647 51-100 4,352 1.69% 21-100 17,995 6.98% 6-20 31,720 33,073 46,920 48,780 10-50 36,268 14.06% 6-20 52,265 20.27% up to 5 196,802 194,683 175,925 180,445 up to 9 212,985 82.59% up to 5 192,641 74.70% 192,641 ACCORDING TO BITUACH LEUMI 2/2012 ACCORDING TO BITUACH LEUMI 2/2013 ACCORDING TO BITUACH LEUMI 2/2014 ACCORDING TO BITUACH LEUMI 2/2015 201620152014 250,011 ACCORDING TO BITUACH LEUMI 2/2016 subtotals 1,622 0.63% 4,374 2,752 1.07% 70,260 262,901 267,275 ACCORDING TO BITUACH LEUMI 2/2017 101-2502,685 1.04%2,606 2011 number of employees v1 251+ 1,583 0.61%1,533 251+1,4761,348 257,873 number of employees v2 totals 251+ 101-250 2012 1,493 2,525 2013number of employees v1 232,393 235,773 243,168 2,4532,384 101-250 28 SMB Market STKI Israel's IT Market 2017 STKI Copyright@2017

29. 29 STKI Israel's IT Market 2017 STKI Copyright@2017

30. 30 STKI Israel's IT Market 2017 STKI Copyright@2017

32. v2 32 Comparison Budgets 2013-2017** **We expect increase mid 2017 for “digital initiatives” not on IT budget now STKI Israel's IT Market 2017 STKI Copyright@2017

41. STKI Summit 2017 Israeli IT Market 2015 Israel IT Market 41 STKI Israel's IT Market 2017 STKI Copyright@2017

44. v2 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. 44 STKI Israel's IT Market 2017 STKI Copyright@2017

45. v2 Products “sold” on the cloud STKI “books” in on-premises software categories NO double bookings for IT market size forecasts 45 STKI Israel's IT Market 2017 STKI Copyright@2017

46. v2 IT Market in Israel 46 STKI Israel's IT Market 2017 STKI Copyright@2017

47. STKI Summit 2017 Israeli IT Market 2015 Israel Hardware Market 47 STKI Israel's IT Market 2017 STKI Copyright@2017

48. v2 Vendors: Hardware markets 48 STKI Israel's IT Market 2017 STKI Copyright@2017

49. v2 Israel: IT Hardware Total Market 2016-2020 49 STKI Israel's IT Market 2017 STKI Copyright@2017

51. v2 Server Markets 51 STKI Israel's IT Market 2017 STKI Copyright@2017

52. v2 Servers (manufacturers) DB/DW, CONVERGED HW & OTHER APPLIANCES 52 STKI Israel's IT Market 2017 STKI Copyright@2017

53. v2 Servers (Resellers-VARs) 53 STKI Israel's IT Market 2017 STKI Copyright@2017

55. v2 Clients (B2B) Markets 55 STKI Israel's IT Market 2017 STKI Copyright@2017

56. v2 Client Computing (manufacturers) B2B 56 STKI Israel's IT Market 2017 STKI Copyright@2017

57. v2 Personal Computing (VARs) 57 STKI Israel's IT Market 2017 STKI Copyright@2017

59. v2 Storage Markets 59 STKI Israel's IT Market 2017 STKI Copyright@2017

60. v2 “storage” (manufacturers) 60 STKI Israel's IT Market 2017 STKI Copyright@2017

61. v2 “storage” (VARs) 61 STKI Israel's IT Market 2017 STKI Copyright@2017

62. v2 “storage” (manufacturers) VTL Backup , Storage Appliances and Storage Networks Tape Libraries 62 STKI Israel's IT Market 2017 STKI Copyright@2017

63. v2 “storage” (VARs) VTL Backup , Storage Appliances and Storage Networks 63 STKI Israel's IT Market 2017 STKI Copyright@2017

65. v2 Security Appliances and Networking Markets 65 STKI Israel's IT Market 2017 STKI Copyright@2017

66. v2 Networking Products 66 STKI Israel's IT Market 2017 STKI Copyright@2017

69. v2 VoIP & other call center equipment 69 STKI Israel's IT Market 2017 STKI Copyright@2017

71. v2 Printers, Monitors, Self Service & DC Equipment 71 STKI Israel's IT Market 2017 STKI Copyright@2017

72. v2 Enterprise Printers Enterprise Printers (manufacturers) Enterprise Printers (VARs) 72 STKI Israel's IT Market 2017 STKI Copyright@2017

73. v2 DC Equipment, monitors and Video Systems (VARs & Manuf.) 73 STKI Israel's IT Market 2017 STKI Copyright@2017

74. v2 POS ,Self-Service Appliances 74 STKI Israel's IT Market 2017 STKI Copyright@2017

75. STKI Summit 2017 Israeli IT Market 75 2015 Israel Software Market STKI Israel's IT Market 2017 STKI Copyright@2017

76. v2 Vendors in the Software (on/off premises) markets 76 STKI Israel's IT Market 2017 STKI Copyright@2017

77. v2 IT Software Total Market 2014-2019 77 STKI Israel's IT Market 2017 STKI Copyright@2017

78. v2 78 System Infrastructure Software STKI Israel's IT Market 2017 STKI Copyright@2017

79. v2 79 System Infrastructure Software STKI Israel's IT Market 2017 STKI Copyright@2017

80. v2 System Software Vendors 80 STKI Israel's IT Market 2017 STKI Copyright@2017

81. v2 Storage and Backup Software 81 STKI Israel's IT Market 2017 STKI Copyright@2017

82. v2 Databases (SQL NOSQL) 82 STKI Israel's IT Market 2017 STKI Copyright@2017

83. v2 Private Cloud and Automation Tools Private Cloud And Automation Tools 83 STKI Israel's IT Market 2017 STKI Copyright@2017

86. v2 Middleware Software 86 STKI Israel's IT Market 2017 STKI Copyright@2017

89. v2 89 Security Software STKI Israel's IT Market 2017 STKI Copyright@2017

90. v2 90 Security Software STKI Israel's IT Market 2017 STKI Copyright@2017

91. v2 91 Security/ Cyber Software Vendors STKI Israel's IT Market 2017 STKI Copyright@2017

92. v2 92 Security/ Cyber Software (VARs) STKI Israel's IT Market 2017 STKI Copyright@2017

93. v2 93 Security/ Cyber Software (VARs 2) STKI Israel's IT Market 2017 STKI Copyright@2017

94. v2 94 Office of the CIO & Development Tools STKI Israel's IT Market 2017 STKI Copyright@2017

97. v2 97 Office of the CIO & Development Tools STKI Israel's IT Market 2017 STKI Copyright@2017

98. v2 98 Office of the CIO & Development Tools Development and ALM (including testing tools) VARs: Development and ALM (including testing tools) STKI Israel's IT Market 2017 STKI Copyright@2017

99. v2 99 Information Management Applications STKI Israel's IT Market 2017 STKI Copyright@2017

100. v2 100 Information Management Applications STKI Israel's IT Market 2017 STKI Copyright@2017

101. v2 KM (Enterprise portals, ECM, Search, Knowledge Bases) 101 STKI Israel's IT Market 2017 STKI Copyright@2017

102. v2 BI, Analytics, Cognitive and Data Mgmt Tools 102 STKI Israel's IT Market 2017 STKI Copyright@2017

103. v2 BI, Analytics, Cognitive and Data Mgmt Tools 2 103 STKI Israel's IT Market 2017 STKI Copyright@2017

104. v2 104 Digital Output Management/Customer Communication Management STKI Israel's IT Market 2017 STKI Copyright@2017

105. v2 105 Business Applications 1 STKI Israel's IT Market 2017 STKI Copyright@2017

106. v2 2014 2015 2016 2017 2018 2019 ERP 145,000 -1.38% 143,000 -2.10% 140,000 -1.43% 138,000 -2.90% 134,000 -2.99% 130,000 Vertical (Core Business) Applications 125,000 10.40% 138,000 12.32% 155,000 9.68% 170,000 8.82% 185,000 5.41% 195,000 CRM/XRM 45,000 11.11% 50,000 16.00% 58,000 12.07% 65,000 12.31% 73,000 8.22% 79,000 HR/ Talent Mgmt/ LMS 11,500 17.39% 13,500 18.52% 16,000 11.88% 17,900 11.73% 20,000 15.00% 23,000 326,500 5.51% 344,500 7.11% 369,000 5.93% 390,900 5.40% 412,000 3.64% 427,000 106 Business Applications 1 STKI Israel's IT Market 2017 STKI Copyright@2017

107. v2 Business Applications 1 ERP Software (all sizes) 107 STKI Israel's IT Market 2017 STKI Copyright@2017

108. v2 Business Applications 1 CRM/XRM 108 STKI Israel's IT Market 2017 STKI Copyright@2017

109. v2 Business Applications 1 HR/ Talent Mgmt./ LMS / PAYROLL 109 STKI Israel's IT Market 2017 STKI Copyright@2017

112. v2 112 Contact Center and Multi channel engagement tools (chat, bots, Video etc…) STKI Israel's IT Market 2017 STKI Copyright@2017

113. v2 113 Marketing Automation Software STKI Israel's IT Market 2017 STKI Copyright@2017

114. v2 114 Web Content Management + e-Commerce Platforms STKI Israel's IT Market 2017 STKI Copyright@2017

115. v2 115 IoT tools and platforms STKI Israel's IT Market 2017 STKI Copyright@2017

117. v2 Value Added Services Market 2014-2019 117 STKI Israel's IT Market 2017 STKI Copyright@2017

118. v2 Vendors that sell in the VAS markets 118 STKI Israel's IT Market 2017 STKI Copyright@2017

120. v2 120 "Enterprise" CONSULTING: advice in a particular area not AUGMENTATION (gulgalot) or IMPLEMENTATION STKI Israel's IT Market 2017 STKI Copyright@2017

121. v2 121 "Enterprise" CONSULTING: advice in a particular area not AUGMENTATION (gulgalot) or IMPLEMENTATION STKI Israel's IT Market 2017 STKI Copyright@2017

122. v2 122 IT Strategy Consulting & Analysts Services STKI Israel's IT Market 2017 STKI Copyright@2017

123. v2 123 Digital Transformation Consulting STKI Israel's IT Market 2017 STKI Copyright@2017

124. v2 124 (Big) Data Consulting STKI Israel's IT Market 2017 STKI Copyright@2017

125. v2 125 IT Infrastructure/Delivery Consulting STKI Israel's IT Market 2017 STKI Copyright@2017

126. v2 126 IT Application Consulting STKI Israel's IT Market 2017 STKI Copyright@2017

127. v2 127 Cyber/Security Consulting STKI Israel's IT Market 2017 STKI Copyright@2017

128. v2 128 Infrastructure Projects STKI Israel's IT Market 2017 STKI Copyright@2017

131. v2 Consolidation/ Virtualization /Monitoring/ BSM/ Storage/ Hardware/ Data Center Environment/ Networking Projects 131 STKI Israel's IT Market 2017 STKI Copyright@2017

132. v2 Software integration, middleware, SOA, BPM, ALM, Testing tools, DevOps 132 STKI Israel's IT Market 2017 STKI Copyright@2017

133. v2 Cyber Security Product Implementation 133 STKI Israel's IT Market 2017 STKI Copyright@2017

134. v2 Unified Communication (IM, Video, Voice) 134 STKI Israel's IT Market 2017 STKI Copyright@2017

135. v2 135 Project Management Services STKI Israel's IT Market 2017 STKI Copyright@2017

136. v2 136 Project Management Services STKI Israel's IT Market 2017 STKI Copyright@2017

138. v2 138 ALM Q/A & Testing STKI Israel's IT Market 2017 STKI Copyright@2017

139. v2 139 IT Training STKI Israel's IT Market 2017 STKI Copyright@2017

140. v2 140 HatMaa STKI Israel's IT Market 2017 STKI Copyright@2017

141. v2 141 Auditing, Governance & Risk Management STKI Israel's IT Market 2017 STKI Copyright@2017

142. v2 142 Business Applications Implementation 1 STKI Israel's IT Market 2017 STKI Copyright@2017

144. v2 144 Business Applications Implementation 1 ERP (on premise/cloud) STKI Israel's IT Market 2017 STKI Copyright@2017

145. v2 145 Business Applications Implementation 1 ERP (on premise/cloud) STKI Israel's IT Market 2017 STKI Copyright@2017

146. v2 146 CRM-XRM (on premise/cloud) STKI Israel's IT Market 2017 STKI Copyright@2017

147. v2 147 HR and Talent Management STKI Israel's IT Market 2017 STKI Copyright@2017

148. v2 148 Contact Center and Multi channel engagement tools STKI Israel's IT Market 2017 STKI Copyright@2017

149. v2 149 Data, BI, Analytics STKI Israel's IT Market 2017 STKI Copyright@2017

150. v2 150 Data, BI, Analytics STKI Israel's IT Market 2017 STKI Copyright@2017

151. v2 151 Marketing Automation (on premise/cloud) STKI Israel's IT Market 2017 STKI Copyright@2017

154. v2 154 “general” software development STKI Israel's IT Market 2017 STKI Copyright@2017

155. v2 155 SaaS implementations STKI Israel's IT Market 2017 STKI Copyright@2017

156. v2 156 Migrations STKI Israel's IT Market 2017 STKI Copyright@2017

159. v2 159 Business Applications Implementation 3 Mobile Development STKI Israel's IT Market 2017 STKI Copyright@2017

160. v2 160 Business Applications Implementation 3 UX Design STKI Israel's IT Market 2017 STKI Copyright@2017

161. v2 161 Business Applications Implementation 3 Core Vertical Package Implementation STKI Israel's IT Market 2017 STKI Copyright@2017

162. v2 162 Business Applications Implementation 3 IoT Projects STKI Israel's IT Market 2017 STKI Copyright@2017

165. v2 165 Knowledge Management (ECM, Portals) STKI Israel's IT Market 2017 STKI Copyright@2017

166. v2 166 Web & eCommerce STKI Israel's IT Market 2017 STKI Copyright@2017

167. v2 167 Web Accessibility STKI Israel's IT Market 2017 STKI Copyright@2017

168. v2 168 Managed Services and Outsourcing Services STKI Israel's IT Market 2017 STKI Copyright@2017

170. v2 170 Managed Services and Outsourcing Services STKI Israel's IT Market 2017 STKI Copyright@2017

171. v2 171 Managed Services and Outsourcing Services Infrastructure Outsourcing Services (Infrastructure, Storage & DBA Services) STKI Israel's IT Market 2017 STKI Copyright@2017

172. v2 172 Managed Services and Outsourcing Services Off-site Data Center (Operational/DRP). (Client owns the HW) STKI Israel's IT Market 2017 STKI Copyright@2017

173. v2 173 Managed Services and Outsourcing Services Help Desk Outsourcing Services STKI Israel's IT Market 2017 STKI Copyright@2017

174. v2 174 Managed Services and Outsourcing Services Cyber security managed services ( SIEM service) STKI Israel's IT Market 2017 STKI Copyright@2017

175. v2 175 Managed Services and Outsourcing Services Printing Outsourcing Services (pay per click) STKI Israel's IT Market 2017 STKI Copyright@2017

176. v2 176 On-Demand or Cloud Services STKI Israel's IT Market 2017 STKI Copyright@2017

178. v2 178 Business Services as a Service- BSaaS (Salaries, Payments, BPO, etc) STKI Israel's IT Market 2017 STKI Copyright@2017

179. v2 179 Platform as a Service PaaS/ Infrastructure as a Service IaaS STKI Israel's IT Market 2017 STKI Copyright@2017

180. v2 180 (PARTNERS) Platform as a Service PaaS/ Infrastructure as a Service IaaS STKI Israel's IT Market 2017 STKI Copyright@2017

181. v2 181 Software as a Service SaaS STKI Israel's IT Market 2017 STKI Copyright@2017

182. v2 182 DRP as a Service STKI Israel's IT Market 2017 STKI Copyright@2017

183. v2 183 Staff Augmentation Services STKI Israel's IT Market 2017 STKI Copyright@2017

185. v2 185 Gulgalot on-premises & Gulgalot off-premises (Nearsite) STKI Israel's IT Market 2017 STKI Copyright@2017

186. v2 186 Nearshore STKI Israel's IT Market 2017 STKI Copyright@2017

187. v2 187 STKI Israel's IT Market 2017 STKI Copyright@2017 Digitally signed by Dr Jimmy Schwarzkopf Location: Date: 2017-06-10 17:40+03:00