One thing is clear when it comes to Israeli tech trends: they’ve gone global. In conversations with three leading multinational tech companies operating in Israel, The Jerusalem Post heard again and again that the trends in Israel’s famed hi-tech sector are mirroring those around the world.
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Many of the important innovations in the biggest companies, however, have important roots in Israel. In one area in particular, however, Israel stands out: cybersecurity.
For a broad view of what’s happening in the tech market, we asked Intel, PayPal and SAP – representing computing, fintech (financial technology) and business – what the important tech trends were in 2015, and what they expect to develop in 2016.
Ran Senderovitz, vice president in the Client Computing Group and general manager of the Service Provider Division: I think the Israeli economy and hi-tech sector are following a few major trends that we’re seeing globally. If you zoom out and look at the key things in the industry, you’ll see that computer technology is becoming more human where the form factor [e.g. mobile phone, tablet, laptop] starts to feel your needs, and devices are starting to have senses they never had before. That’s revolutionizing the way we interact with computers, to the point that we are sometimes surrounded by devices and don’t even realize they’re there.
Ran Senderovitz (photo credit: INTEL).
In that light, Intel’s new Skylake processor, which was largely developed in Israel, is dramatic, opening up a whole new level of form factors.
Computer sticks or ultra-thin devices that have the power of the PC, or the 2-in-1 laptop/tablets – all of these things are basically changing the way you see computing. Then we start putting senses on these devices, and that’s a revolution driving how computers look at you.
For example, we have 3D camera technology that is getting embedded in mobile and enabling the computer to see in three dimensions; the “you are your own password” initiative, where the camera uses your face to log in, but you can’t fool the camera. The fact that the computer can see you in three dimensions also changes everything in terms of printing, capturing, scanning, not to mention the whole revolution of how it’s changing the gaming industry.
Then there’s a second layer where everything starts to become smarter, and we have the Internet of Things that connects all the devices [and other objects that have typically not been connected to the Internet or network] in an ecosystem.
On the third layer, you have to be able to make sense out of the data, get the useful information out of the devices and sensors, which is where the cloud comes into play.
Beneath those three layers there’s another foundational layer, which is that everything needs to be ultra-secure. Companies like Microsoft are starting to put their cybersecurity centers in Israel, and there is an emergence of a very vibrant system of security companies, which are starting to bring a lot of new technology in the space.
In the Israeli ecosystem we’re seeing people take this type of technology and break new ground with it. Israel continues to be a hub of communication technologies, so when you combine computing and communication, there’s a clear trend of how we are connecting the devices and the data.
That corresponds very well to the second trend of everything becoming connected and smarter.
The Internet of Things is one of the biggest revolutions, connecting anything, driving wearables, and we’re seeing it start to drive a revolution.
One example is agriculture or medical industry, and we’re seeing a wide spectrum of entrepreneurs in that space.
For example, one start-up was starting to look at how to increase connectivity of agricultural systems in order to maximize output. If, before, Israel created drip irrigation, it is now taking it to the next level, collecting data about how wet the ground is, how things are working in different places, and starting to identify whether all the ingredients are there and basically help the farmers get the best out of the ground they have.
That kind of application could not have been done without the ability to put low-power, lowcost connected devices that could push the data into a cloud that processes it.
In the coming year, I think more things will move into the cloud, and that will create new exciting collaborations in the ecosystem. A great example is the medical environment. When you start putting sensors on people, and looking at the emergence of wearable devices even for sports and leisure, you can discover amazing things about their habits and health.
This type of data can change the way we explore huge medical problems. For example, Intel is working with Michael J. Fox Foundation to HI-TECH analyze data and predict what kind of treatment will be the most effective for Parkinson’s patients.
Or [take, for example,] the Collaborative Cancer Cloud, a collaboration between Intel and Oregon Health and Science University that collects data about patients and their symptoms.
Basically, if you can start to get data on the genomes of people, you can get more personalized information and treatments.
Matan Bar, head of PayPal Consumer Product Center in Tel Aviv: Israel is getting bigger and bigger in terms of fintech activity. In many ways, Israel is following industry trends and global trends around fintech, which is becoming super competitive and disruptive for certain companies, disrupting old-school institutions, mainly banks and banking services, with the Silicon Valley treatment of creating delightful, engaging experiences.
One of the signals was JPMorgan’s chief Jamie Dimon warning this year that “Silicon Valley is coming.”
The first obvious global trend is mobile payments.
Matan Bar, of PayPal, claims mobile payments is an ‘old, but still a very relevant trend.’ (photo credit: PAYPAL)
This is an old trend everyone’s been talking about for years, but it’s still growing at an amazing rate. Last year, we saw 70 percent growth year over year in PayPal’s peer-to-peer payments business, which is processing almost one billion transactions a year. I’m sure we’ll see a similar pace in 2015 and 2016. More and more payment activity will occur on mobile.
There are two explanations for that. One is that more and more e-commerce is happening on mobile, but the other is there’s a great trend of mobile P2P payment – that’s just me paying back a friend for coffee or splitting dinner through an app like Venmo or Google Wallet, and with PayPal, this is the activity that’s being developed here in Tel Aviv. Outside PayPal, you see Israeli companies like Zooz, which enables mobile payments, which is a very lucrative space because everyone recognizes that people pay more online. So it’s an old trend but still a very relevant trend.
Another trend is that finance is moving online rapidly, basically unbundling banking services. Instead of going to a bank and trying to borrow money, whether for personal or business, there are now these online lending clubs. They give a great alternative to the traditional banking services when people want loans.
Some of these “small” companies have surpassed $1b.
in funding for small businesses and people.
Millennials, who are the target market, care a lot about a great user experience. So when these millennials go to bank sites, they are horrified, because they’re used to an Uber-level of service; they’re used to an Amazon-level of service; so they expect the same when it comes to loans. If you look at an Uber experience and an Israeli bank experience, there’s no comparison.
In Israel we see two recent examples. BillGuard is a start-up that was acquired by Prospera company that understands the importance of creating an engaging experience for millennials, and that’s where BillGuard will come in. Israel is generally known for cyber and risk management, but I must say that this is changing, and user experience is becoming quite strong. I mean, think of Meerkat – it’s the type of app you never would have imagined could come from Israel. It’s a pure consumer play.
The other example is Lemonade, founded by Shai Wininger. They’re interrupting insurance with a peerto- peer Silicon Valley treatment, creating a user-friendly insurance experience, and raised $13 million, and that’s just seed money! They’re going to disrupt the insurance business in a similar way that crowdfunding is affecting investing.
Looking to 2016, I think that what’s definitely going to happen is that more and more start-ups and more and more corporates are going to compete directly with traditional banking services. New initiatives will come up, new services will grow in crazy places; these things will just grow and grow.
If we go a bit further and talk a few years ahead, I would definitely say that blockchain technology [the technology that underpins Bitcoin] is going to disrupt everything we’re going to see. Let’s separate Bitcoin and blockchain, because Bitcoin isn’t very stable and gives blockchain a bad name, but millennials might prefer using blockchain solutions because they want things more secure and centralized.
We can’t overlook security. From companies like PayPal or any other fintech company, the No. 1 priority is security. PayPal acquired a security start-up in Beersheba called Cyactive, and they are now securing most of PayPal’s servers around the world, because they know what they're doing.
Orna Kleinmann, manager of SAP Labs Israel: I think we can talk about five major trends that we can see globally in the business tech space this past year, and we can also see them in Israel.
The first is the “Internet of Me,” the whole personalization of communication between a company and its customers. We see more and more companies exploring new channels to engage with customers, and business leaders believing that the customers’ experience will be their primary basis for competition in the future, so the UX, User Experience, the way the customer touches the product, is critical. The new generation is used to simplicity of software.
Orna Kleinmann, manager of SAP Labs Israel(photo credit: SAP)
We just completed research here in SAP Israel on the second trend, which is “Industry 4.0.” Industry 4.0 is the industrial aspect of the Internet of Things [i.e., how businesses will take advantage of having industrial parts or other useful devices connected to sensors and a network].
We see a big, big trend in the world with connected devices, and we see more and more software and analytics on top of these connected devices.
So how do you really give added value to the fact that you have these devices connected to each other, and this big data that you can’t explore yourself? You need analytics of the data that is constantly streaming in, and you need to go from analytics to action, which means you need to automate these processes, and in Israel we see a lot invested in machine learning, and are incorporating it into the analytics and how to make them predictive.
Machine learning and Internet of Things are major trends on which we hope to collaborate with start-ups in Israel. There are more and more start-ups that are investing in these areas, and we’ll see more collaboration from multinationals and start-ups.
I don’t want to mention names, but there are several Israeli start-ups that are concentrating on collecting data from legacy machinery. Not all factories are concentrating on buying connected machinery. Most have equipment that’s not connected, and there are some start-ups that are trying to see how we can reach this old machinery, how can we extract data from it; and I think if we reach out to the current state of industry, it’s a great contribution.
On the other hand, we see a lot of local start-ups concentrating on the security aspect of IoT, asking how we secure the channel from the sensor or device to the analytics, because if all the data is going to the cloud, we need a lot of security.
Next, we see a trend connected to IoT called the “Intelligent Enterprise.” There’s market research showing that more than 90% of companies believe that software intelligence is critical for IT. I think IT departments in organizations today are facing massive amounts of data, and it’s getting more difficult to analyze the data. We see dashboards everywhere, and there are a lot of efforts to produce the personalized dashboard that show the relevant information, so I expect we’ll see more simplification.
Over time, more and more members of the workforce globally will be millennials. Their expectations from UX and how they take decisions is part of another trend.
For example, you can’t write software for millennials if they’re not part of the team – we see a lot of emphasis at SAP on recruiting young talent to bring a fresh perspective on how to design the products.
Looking at Israel specifically, I think that we see cyber as a much more dominant field. We also see that in Silicon Valley, so it’s not just here, but you see more universities offering a degree in cybersecurity. You see the CyberSpark project in Beersheba, centralizing the special units from the army, academia from Ben-Gurion University, and a hi-tech park with start-ups and venture capital, so this is something very unique to Israel. It requires a macro country view of where it wants to go, and we see the government playing a big part in that project, either in reducing taxes for employees working in Beersheba, or benefits for companies all over, involving the National Cyber Bureau. It’s very unique.
More broadly, Israel is really strong in the whole scene of accelerators, start-ups, early-stage entrepreneurs growing a lot of ideas all over. I know companies in each and every trend we discussed.
Taking that into the future, I think the field of business networks will become more and more dominant in the enterprise life. The business network means the connections between suppliers, companies, third parties – the whole ecosystem of companies’ interactions. Creating a picture of that network and then leveraging this data to add value will be big. We see that in SAP’s acquisitions of Concur, Ariba and Fieldglass.
With IoT, you will also see a lot of investments from GE, SAP, and automotives in the connected vehicle network, asking how you create a network between service providers and end users. We have a specific investment in the lab, the SAP vehicle network, and we see a lot of start-ups in that area: finding parking, automatic fueling, all this data around the driving experience.
At SAP I think that what we also talk about is a digital transformation. Up until now, companies in IT invested most of their efforts in the “digital core,” software that makes the business run better. What we will see in the future is that companies want to reduce the wallet share, what they spend on just running the business, and looking instead at digital transformation – reaching their customers, software, intelligence, and if you noticed, all these trends don’t talk about CRM [customer relationship management] or HR [human resources] from the digital core. We talked about everything that’s beyond just running your business. And in order to have the budget to spend on these extensions, you’ll have to see reductions in the prices of these core products. And that’s a very interesting trend we see over the industry, regardless of the country.
All of these developments fall under the massive trend of transition to the cloud. We’ve been talking about this for a while, and we’re actually seeing it happen now. A lot of companies, even in the fintech industry or industries that we call traditional – they’re not doing a 100% switch, but it’s a transition; so more and more core services are consumed from the cloud.
For example, a customer won’t have to worry as much about maintenance and getting stuck in old versions of the software, because the whole thing is done by the supplier in the cloud.
I think 2016 is another year of transition, and I think it is changing the way we license software and the value we bring to our customers.