stki 25th annual israel it market study 2017

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STKI Israel's IT Market 2017

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• Dr. Schwarzkopf has worked during the last 40 years in all areas of Computer InformationServices:

• 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 andBabson Conferences and Editorial Board Member of the academic journal "International Journal of Opportunity, Growth andValue Creation".

• As a consultant in Arthur Andersen Consulting (USA), Booz Allen (USA) and Kesselman & Kesselman. As a systems professionalin 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 asPresident of the Gymnazia Herzelia Association, Co-founder of the Mashov Political Movementand was a member of the Central Committee of the Labor Party. Major (Rav-Seren) in thereserves, 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 ofCentral Florida. Received a MSIA (Management Information Systems) and ABD (PhDProgram) in Systems Science (received (twice) the William Larimer Mellon Scholarship/Award)from Carnegie Mellon University. His doctorate (DM-Management/ Entrepreneurship) hereceived from Case Western Reserve University.

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STKI’s goal is to help our clients make the right choices in the strategicand 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:

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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

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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.

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› Real revenues of software licenses and maintenance.

› Real revenues of hardware sales.

› Differentiation between new projects and continuing projects. New projects countmore.

› 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 workoutsourced to another vendor. The revenue is transferred to the vendor actuallydoing the work.

› Distinguish revenues from projects done in fixed price, cost plus (SLA defined) andstaff augmentation (non SLA) projects.

› Differentiate value between work done by high level internal professionals in aproject and staff augmentation employees in the clients IT department.

Take into consideration IT department’s view/mindshare ofvendor’s value in projects/products

What our study looks at:

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STKI Summit 2017Israeli IT Market

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Israel 2017

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Israel 2017

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Israel 2017unemployment

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Israel 2017CORRUPTION

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State of the Economy Index

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State of the Economy Index (% change*)12/2014 - 12/2016

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Over 65% is BAD

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number ofcompanies

(payingtaxes)

number ofcompanies

(payingtaxes)

number ofcompanies

(payingtaxes)

number ofcompanies

(payingtaxes)

number ofcompanies

(payingtaxes)

% ofTOTAL

number ofcompanies

(payingtaxes)

% ofTOTAL

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 TOBITUACH LEUMI

2/2012


2/2013


2/2014


2/2015

201620152014

250,011

ACCORDING TO BITUACH LEUMI 2/2016

subtotals

1,622 0.63%4,374

2,752 1.07%

70,260262,901

267,275


101-2502,685 1.04%2,606

2011number ofemployees

v1

251+ 1,583 0.61%1,533 251+1,4761,348

257,873

number ofemployees

v2

totals

251+

101-250

2012

1,493

2,525


v1

232,393 235,773 243,168

2,4532,384 101-250

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number ofcompanies

(payingtaxes)

number ofcompanies

(payingtaxes)

number ofcompanies

(payingtaxes)

number ofcompanies

(payingtaxes)

number ofcompanies

(payingtaxes)

% ofTOTAL

number ofcompanies

(payingtaxes)

% ofTOTAL

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


2/2012


2/2013


2/2014


2/2015

201620152014

250,011


subtotals

1,622 0.63%4,374

2,752 1.07%

70,260262,901

267,275


101-2502,685 1.04%2,606


v1

251+ 1,583 0.61%1,533 251+1,4761,348

257,873

number ofemployees

v2

totals

251+

101-250

2012

1,493

2,525


v1

232,393 235,773 243,168

2,4532,384 101-250

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SMBMarket

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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

HARDWARE1,69

4,000

3.61%

1,755,20

0

SOFTWARE

1,350,20

06.72

%1,44

1,000

VALUE ADDED

SERVIC

ES

3,126,00

04.48

%3,26

6,000

TOTAL

6,172,21

34.73

%6,46

4,214

25 years ofIT Market Data

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ComparisonBudgets 2013-2017**

**We expect increase mid 2017 for“digital initiatives”

not on IT budget now

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2015 Israel IT Market

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

Value Added Resellers“VAR or Partners”

are incorporated intoSTKI’s “TIERS”.

Both sell into the IsraeliMarket.

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Products “sold” on the cloudSTKI “books” in on-premises software categoriesNO double bookings for IT market size forecasts

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IT Market in Israel

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2015 Israel Hardware Market

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Vendors: Hardware markets

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Israel: IT Hardware Total Market 2016-2020

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Server Markets

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Servers (manufacturers)

DB/DW, CONVERGED HW& OTHER APPLIANCES

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Servers (Resellers-VARs)

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Clients (B2B) Markets

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Client Computing (manufacturers) B2B

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Personal Computing (VARs)

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Storage Markets

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“storage” (manufacturers)

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“storage” (VARs)

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“storage” (manufacturers)VTL Backup , Storage Appliances and Storage Networks Tape Libraries

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“storage” (VARs)VTL Backup , Storage Appliances and Storage Networks

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Security Appliances andNetworking Markets

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Networking Products

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VoIP & other call center equipment

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Printers, Monitors, Self Service & DC Equipment

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Enterprise PrintersEnterprise Printers (manufacturers) Enterprise Printers (VARs)

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DC Equipment, monitors and Video Systems(VARs & Manuf.)

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POS ,Self-Service Appliances

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2015 Israel Software Market

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Vendors in the Software (on/off premises) markets

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IT Software Total Market 2014-2019

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System Infrastructure Software

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System InfrastructureSoftware

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System Software Vendors

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Storage and Backup Software

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Databases (SQL NOSQL)

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Private Cloud and Automation ToolsPrivate Cloud And Automation Tools

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Middleware Software

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Security Software

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Security Software

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Security/ Cyber Software Vendors

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Security/ Cyber Software (VARs)

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Security/ Cyber Software (VARs 2)

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Office of the CIO & Development Tools

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Office of the CIO & Development Tools

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Office of the CIO & Development ToolsDevelopment and ALM (including testing tools) VARs: Development and ALM (including testing tools)

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Information Management Applications

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Information Management Applications

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KM (Enterprise portals, ECM, Search, Knowledge Bases)

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BI, Analytics, Cognitive and Data Mgmt Tools

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BI, Analytics, Cognitive and Data Mgmt Tools 2

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Digital Output Management/Customer Communication Management

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Business Applications 1

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2014 2015 2016 2017 2018 2019ERP 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% 23,000326,500 5.51% 344,500 7.11% 369,000 5.93% 390,900 5.40% 412,000 3.64% 427,000

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Business Applications 1ERP Software (all sizes)

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Business Applications 1CRM/XRM

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Business Applications 1HR/ Talent Mgmt./ LMS / PAYROLL

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Contact Center and Multi channel engagement tools (chat, bots, Video etc…)

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Marketing Automation Software

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Web Content Management + e-Commerce Platforms

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IoT tools and platforms

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Value Added Services Market 2014-2019

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Vendors that sell in the VAS markets

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"Enterprise" CONSULTING:advice in a particular area not

AUGMENTATION (gulgalot) or IMPLEMENTATION

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"Enterprise" CONSULTING:advice in a particular area not

AUGMENTATION (gulgalot) or IMPLEMENTATION

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IT Strategy Consulting & Analysts Services

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Digital Transformation Consulting

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(Big) Data Consulting

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IT Infrastructure/Delivery Consulting

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IT Application Consulting

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Cyber/Security Consulting

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Infrastructure Projects

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

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

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Project Management Services

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Project Management Services

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ALM Q/A & Testing

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IT Training

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HatMaa

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Auditing, Governance & Risk Management

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Business Applications Implementation 1

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Business Applications Implementation 1ERP (on premise/cloud)

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Business Applications Implementation 1ERP (on premise/cloud)

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CRM-XRM (on premise/cloud)

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HR and Talent Management

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Contact Center and Multi channel engagement tools

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Data, BI, Analytics

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Data, BI, Analytics

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Marketing Automation (on premise/cloud)

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“general” software development

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SaaS implementations

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Migrations

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Business Applications Implementation 3Mobile Development

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Business Applications Implementation 3UX Design

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Business Applications Implementation 3Core Vertical Package Implementation

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Business Applications Implementation 3IoT Projects

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Knowledge Management (ECM, Portals)

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Web & eCommerce

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Web Accessibility

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Managed Services and Outsourcing Services

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Managed Services and Outsourcing Services

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Managed Services and Outsourcing ServicesInfrastructure Outsourcing Services (Infrastructure, Storage & DBA Services)

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Managed Services and Outsourcing ServicesOff-site Data Center (Operational/DRP). (Client owns the HW)

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Managed Services and Outsourcing ServicesHelp Desk Outsourcing Services

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Managed Services and Outsourcing ServicesCyber security managed services ( SIEM service)

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Managed Services and Outsourcing ServicesPrinting Outsourcing Services (pay per click)

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On-Demand or Cloud Services

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Business Services as a Service- BSaaS (Salaries, Payments, BPO, etc)

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Platform as a Service PaaS/ Infrastructure as a Service IaaS

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(PARTNERS) Platform as a Service PaaS/ Infrastructure as a Service IaaS

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Software as a Service SaaS

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DRP as a Service

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Staff Augmentation Services

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Gulgalot on-premises & Gulgalot off-premises (Nearsite)

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Nearshore

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stki 25th annual israel it market study 2017

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