Israel has adopted technology that will enable new economic growth

The cloud could be the new growth engine of the Israeli economy as a whole, and the government sector in particular.

By TOMER SIMON

JUNE 6, 2020 22:09

A nighttime view of Tel Aviv from the municipality building (photo credit: TEL AVIV-JAFFA MUNICIPALITY) — A nighttime view of Tel Aviv from the municipality building

(photo credit: TEL AVIV-JAFFA MUNICIPALITY)

The hyperscale public cloud is arriving in Israel. It brings a promise for a lot of changes for the economy and the government sectors. It is happening as a part of a world trend in which public cloud giants are setting up regions in more and more new countries and geographical areas, due to an increase in government requests or based on their own initiative.

It’s understandable why governments want it. The public cloud offers many direct and indirect benefits that no regular technology or server farm can provide. The advantages go well beyond the physical location of the data center and the accessibility to the forefront of global technology. It affects the national and state economic level.

One of the most important indices for economic growth is the FDI (Foreign Direct Investment). It measures the volume of foreign investments in the country – mainly the acquisition of companies, mergers, investments in factories and equipment and opening of local branches. It is possible to see a direct link to a rise in the FDI numbers in countries where public cloud data centers are set up. The number of international and multinational companies operating in that country increases as well. It also directly contributes to a rise in the GDP of the country and improves the business effectiveness of the government and the commercial sector.

The building of a data center of one of the biggest players in the cloud market in a country also contributes to the progress of advanced technological education. Many may choose to study and acquire cutting-edge hi-tech and digital proficiencies.

Digital transformation, the leading global business strategy for the last five years, relies on and is driven by three main technologies: Artificial Intelligence (AI), robotics and the Internet of Things (IoT). But what really makes it possible is the hyperscale cloud, the powerful technological “engine” that leverages these functions and facilitates their use.

But it is not only the hi-tech, industry and government sectors that can benefit from the promises of the cloud. Small businesses can enjoy it, too. In Israel, small businesses have been defined as the “real, driving engine of the economy.” They employ 69% of the total number of employees in the economy.

IN THE current state of events, there is shortage of technological workforce in Israel. It is estimated at 15,000 skilled workers. Combining it with tough competition for talent in the hi-tech world, it appears that small businesses cannot benefit from the same technological progress. They cannot use it to enable them to create new business models and services.

But it’s not true. The public cloud provides advanced technological services that are available for use and consumption without the need for IT staff and development. Numerous advanced technologies developed through the last decade, including the development of AI, have undergone a process of democratization, and now essentially anyone can operate and consume them. They can use AutoML, which allows organizations to benefit from advanced AI without the need for a data scientist. They can develop digital apps and services by using a no-code platform.

Research conducted by Griffith University in Australia suggests that the cloud provides small and medium-sized businesses with a high degree of access to international markets. It also helps them to reduce the costs and to start using previously unavailable or unattainable innovations.

The hyperscale cloud offers several significant advantages to organizations, both large and small, enabling them to meet their goals and business objectives. This commences with user simplicity and flexibility and access to an enormous range of services, and without the prior need to invest in hardware or purchase of licenses.

The second advantage relates to the reliability and availability of the services. The cloud services providers heavily invest in the supply of services with an unrivaled level of availability (and at no extra cost). Microsoft established a global network of more than 56 regions, with more than 140 data centers, intending to offer the best services in the most reliable manner possible.

Another inherent advantage in the hyperscale cloud is the concept of reducing user costs – they are based on use. In contrast, in the usual state of affairs, organizations are required to spend heavily to purchase hardware and network equipment, as well as other infrastructure. Over the last decade, Microsoft has reduced the costs of several services in the region, including storage and database services, by more than 90%. Any user can begin to consume cloud-based services and resources in a manner and at a cost that suit him, and may even grow and expand to a global scope, when needed, at the touch of a button.

WE LIVE in a period dubbed by Klaus Schwab, the founder and chairman of the World Economic Forum, as the “Fourth Industrial Revolution.” It’s an age in which the global business environment is stormy and constantly changing at an unprecedented pace. The adoption of the cloud enables organizations to benefit from agility, which enables them to evolve and adapt themselves to the changing environment. Any change in the service – expansion, increase or even reduction – can be carried out immediately and without any need for a middleman, and can be done straight away by anyone, from anywhere.

Before the big breakthrough of the cloud, most of the organizations found it hard to adapt to new technologies that emerged at an accelerated pace. In many cases, they even didn’t have the needed resources. The large technological variety demanded recruitment and training of employees who are experts in installing, maintaining and developing every technology used. The cloud enables organizations to invest their resources in their business needs, and to leave services installation, maintenance and upgrade to the providers.

In the past few years, information and cyber security have become core issues, gaining momentum on a global scale. Organizations need to comply with new regulations at an uncompromising level. The cloud can help in this area, too. It offers a broad, comprehensive platform with the best currently available information and cyber security. This solution prevents organizations from having to deal with the complexity of securing every component by themselves.

Microsoft invests more than a billion dollars a year in the development and enhancement of these technologies. The defensive and response of Azure provided by 3,500 cyber engineers and experts operating around the world and around the clock. This stuff provides the best information and cyber security in the world. Moreover, Microsoft provides the most comprehensive privacy protection service. The company does not accumulate or make use of any client information for its personal use or onward sale to third parties. All the platforms and services provided by Microsoft fully support the strictest standards, including the EU GDPR (General Data Protection Regulation, to which Israel is a signatory).

2019 was the second hottest year since temperature measurements started. We begin to experience and feel the results of climate change and global warming here in Israel, too. The State of Israel is defined as a region with a very acute water problem and has even been ranked as the second-highest country in terms of water stress risk. We also experience more and more extreme climactic incidents with a growing frequency, as has been the case this past winter.

Governments and organizations across the world are trying to find a way to reduce their environmental impact while improving their business efficiency output – a challenge that is extremely difficult to manage. The energetic efficiency of the cloud data centers is considerably greater than that of any other server farm. Microsoft, as an example, makes major investments in the development of technology for improving the energy efficiency of its computing centers, the development of environment-friendly cooling technologies, as well as extensive use of renewable energy sources, such as solar and wind energy.

The cloud could be the new growth engine of the Israeli economy as a whole, and the government sector in particular.

The writer, a PhD, is national technology officer at Microsoft Israel and a futurist.