STKI Israeli IT market study 2016 V2

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Israel IT Market: STKI “tiers” 2016 V2

Dr. Jimmy SchwarzkopfResearch Fellow,STKIhttp://index.stki.info/[email protected]: 972 9 7907000

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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 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 servicesregarding 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

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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 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 toanother 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 staffaugmentation (non SLA) projects.

› Differentiate value between work done by high level internal professionals in a projectand 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:

STKI Summit 2016Israeli IT Market

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Global Information TechnologyReport 2015

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Israel 2016

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Israel Economic Sentiment Chart

THE BUSINESS CONFIDENCE INDEXincreased from 15.8 in January to 17.7 in

February

THE CONSUMER CONFIDENCE INDEXincreased from minus 17.5 in December to

minus 16.0 in January

Both indexes have the highest readingsin over four years.

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Economy improves significantly in Q4 2015

In annual terms, GDP expanded 2.7% in Q4,up from the 2.5% in Q3.

The Central Bankexpects GDP to grow 2.8% in 2016 and 3.1%in 2017.

Focus Economics ConsensusForesee GDP to grow 3.0% in 2016 and 3.3%in 2017.

Israel GDP Chart

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State of the Economy Index

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State of the Economy Index (% change*) 4/2014 - 4/2016

2-3 Q 2014

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Over 65% is BAD

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Israel Business Confidence Survey


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Number of Firms in Israel 1/2016

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Number of Firms in Israel 1/2016

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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?

24 years ofIT market history

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

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industrySTKI ITMarketHealthIndex

STKI ITMarketHealthIndex




government $1,350 $1,250 $1,310 $1,350 $1,500education $250 $230 $235 $230 $260

health $300 $290 $275 $290 $320banks $900 $815 $835 $850 $800

insurance $350 $400 $425 $430 $400fin other $200 $190 $215 $245 $246

STKI IT MarketHealth Index

Budgets 2013 Budgets 2014 Budgets 2015Budgets

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 2012industrySTKI ITMarketHealthIndex





government $1,350 $1,250 $1,310 $1,350 $1,500education $250 $230 $235 $230 $260

health $300 $290 $275 $290 $320banks $900 $815 $835 $850 $800

insurance $350 $400 $425 $430 $400fin other $200 $190 $215 $245 $246

STKI IT MarketHealth Index

Budgets 2013 Budgets 2014 Budgets 2015Budgets

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

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Client inquiries (STKI) FY 2014-15 shifting

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Client inquiries (STKI) FY 2014-15 shifting

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Tri-Modal IT Consequences

IT Centric Business Centric Customer Centric

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IT Budget

Divisions Transfer Budget

P/L software vendor

MFcomputing

Hybridcomputing

SaaS delivery

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The “IT” market is in the middle ofprofound change

(products/services and vendors)


2015 Israel IT Market

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The Great Debate: explanations

Even if thegraphs “look”

different

“not worse”just smaller“boutique”

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The Great Debate: explanations

Even if thegraphs “look”

different

“not worse”just smaller“boutique”

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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


2015 Israel Hardware Market

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Vendors: Hardware markets

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Israel: IT Hardware Total Market 2014-2016

HARDWARE

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Hardware: Servers and Clients

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Server Markets

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Market Players: Servers (manufacturers)

DB/DW, CONVERGED HW& OTHER APPLIANCES

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Market Players: Servers (Resellers-VARs)

DB/DW, Converged HW & other Appliances

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Clients (B2B) Markets

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Market Players: Client Computing (manufacturers) B2B

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Market Players: Personal Computing (VARs)

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Hardware : storage, networking and security

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Storage and Networking Markets

storage 2014 2015 2016 2017 2018Disks (HDD and SSD) 135,000 -3.70% 130,000 -3.08% 126,000 -2.38% 123,000 -2.44% 120,000

VTL Backup and otherStorage 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 2018Enterprise 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

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Market Players: “storage” (manufacturers)

Disks (HDD and SSD)

VTL Backup, Storage Appliances & networking

Tape Libraries

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Market Players: “storage” (VARs)

Tape Libraries

VTL Backup, Storage Appliances & networking

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Market Players: Networking Products

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Market Players: Security Appliances

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Market Players: VoIP & other call center equipment

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

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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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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

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Delivery and Development Software

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Infrastructure and Middleware Software

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Market Players: system software

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Market Players: Storage and Backup Software

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Market Players: Data Bases, Cloud and Automation Tools

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Market Players: Middleware Software

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Delivery and Development Software

e

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

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

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Market Players: Development & ALM Software

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Market Players: BSM Software

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Market Players: Security/ Cyber Software

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Software: Information Management

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Software: Information Management Markets

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Market Players: KM Tools

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Market Players: Collaboration and Output Software

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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 ChannelsApplication 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


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Israel: Value Added Services Market 2011-2015

VALUE ADDED SERVICES

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Vendors that sell in the VAS markets

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The SIX categories of IT Value Added Services Offered in Israel

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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)

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

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VAS: Hardware & Software Maintenance Services

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VAS: Hardware Maintenance Services

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

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Market Players: software integration and legacy projects

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

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Market Players: Security Projects

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

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VAS: Project Management, training and “Hatmaa” services

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VAS: Project Management, training and “Hatmaa” services

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Market Players: Office of the CIO Projects

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Market Players: ALM, Q/A & Testing Projects

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Market Players: Training Services

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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)

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

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

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Market Players: Web Accessibility

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Market Players: Migration Projects

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Market Players: Mobility Projects

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Market Players: IoT and UX Projects

IoT (enterprise) ProjectsUX Design

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VAS: outsourcing services

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VAS: outsourcing services

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Market Players: "off site" data center

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Market Players: help desk outsourcing

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Market Players: complete outsourcing

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

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Market Players: application SLA based (managed services, third partysoftware maintenance, others)

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

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

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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

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Market Players: SaaS Services

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Market Players: DRaaS Services

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VAS: Staff Augmentation

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VAS: Staff Augmentation

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

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Market Players: Nearshore augmentation

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http://index.stki.info/it-tiering/