By Prof. Shlomo Maital

Deloitte & Touche's Tech Trends 2002 Annual Report states that Sept.11 (Nine-Eleven, as it is now known) has left its mark on corporate investment policy. A survey shows that the five top spending priorities today for Information Technology are: security software, data networking, database software, storage software and disaster recovery systems. Two of the five are directly related to security, and the other three have strong security components (for instance, the robustness and redundancy of storage software). This is good news for Israeli startups, many of which bring expertise on security from Israel's intelligence community.

The 43-page Report has an interesting section on 3G (3rd generation) wireless technology. It reports that the US still lags behind Europe. One reason is that the spectrum suitable for 3G was tied up by the US Dept. of Defense, schools, churches and WorldCom & Sprint. 'Nine-Eleven' scuttled plans to free this bandwidth. The Defense Dept. has now decided to retain the spectrum and the FCC decided to let the schools, churches and telecoms keep their spectra too, thus effectively slamming the door to 3G licenses.

Learning Management: The Report notes that many forward-thinking companies are adding to their integrated ERP (enterprise resource planning) and CRM (customer relationship management) systems, modules known as LMS (learning management systems). LMS can now be embedded in ERP applications like Oracle, SAP and PeopleSoft. LMS systems enable companies to build comprehensive e-learning platforms, where knowledge is managed and transmitted over the Internet. Experts note that while some companies are simply dumping their current training programs online, smarter ones invest in designing attractive, user-friendly interactive environments that help employees get information and apply it to their jobs, as well as transmit that information to other employees who might need it.

Knowledge Management: Knowledge management will be one of the fastest growing markets within Information Technology, according to the Report. Current worldwide spending on knowledge management systems will rise from $2 billion in 2000 (over 80% of that, in the US) to $12 billion in 2005, with half of that sum spent outside the US. A study by Forrester Research showed that only one in every 8 Fortune 1000 companies use Web-based tools to collaborate on product development, for example; as that proportion rises rapidly, demand for appropriate software will grow exponentially. The cost savings accruing through good knowledge management are enormous. Jeff Stemke, head of knowledge management at Chevron-Texaco, claims his company's sharing of best practices helped cut operating expenses by over $2.5 billion a year!

Venture Capital: The Report examines the future of the Venture Capital industry-a key issue for Israeli companies-and notes that VC's are making deals again, though with greater caution than in 1999-2000. They are moving back to the traditional VC model of a four-to-seven-year "cash out" period (time from first investment to sale of holdings), shortened during the 1999-2000 boom, when some cash-outs happened after only six weeks! The new environment for venture capital will favor older, established firms with proven track records and strong expertise in specific markets. According to VentureOne, the dropoff in VC funding in 2001 was dramatic; total value of VC-backed IPO's (initial public offerings) went from $18,964 million in 2000 to only $1,734 million in 2001. VentureOne claims VC funds are showing interest in nanotechnology, life sciences, alternative energy sources, and software that improves Website performance.