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Risk Management

Israel takes a lead on information = security

Author:: Eleanor=20 Dallaway
Posted:: 12:13 04 Jan 2008
Topics:: Security=20

Israel=20 has a booming economy. Westernisation is sweeping the country, and its = advances=20 in research and development are taking the global market by = storm.

The information security market is no exception. Although comparing a = location to Silicon Valley is a clich=C3=A9, the similarities are rife, = and the=20 country's reputation as an international centre for research and = development has=20 been further enhanced by investments from Microsoft and IBM,=20 among others.

The country's economy used to rely on agriculture, but has now moved = towards=20 knowledge-intensive industries, with the aim of ensuring that the = country is at=20 the forefront of high-tech innovation, built on a sound infrastructure = and an=20 educated and creative workforce.

Israel's economy continues to grow strongly, and increasing demand = from the=20 international market for its technological expertise plays a big part in = this.=20 In 2005, almost half of the total industrial exports were technology = based.=20 Today, Israeli entrepreneurs lead the way in many fields of software=20 applications and homeland=20 security.

So why are so many information security companies founded and = developed in=20 Israel? "That is like me asking you why there are so many umbrella = manufacturers=20 in the UK," says Israel Levy, president and chief executive of = ControlGuard. "We=20 need security here like you need umbrellas in the UK."

A need for security

But is it really that simple? "The security sector here in Israel is = huge,"=20 Levy says. Even as a flying visitor, that much is apparent. Bags are = checked on=20 entry to most hotels, shops, bars and buildings, and you cannot go too = far=20 without catching sight of army or police. It is strange - although the = tight=20 security makes you feel safe, it is also a constant reminder that you = are in=20 Israel, a country that believes itself to be at war.

On entering the ControlGuard building in Herzlia near Tel Aviv, = visitors are=20 confronted by the first layer of security: a guard at the car park = entrance who=20 eyes visitors suspiciously and asks our guide - a ControlGuard staff = member -=20 who we are. The mood is soon lightened when he jokingly asks to check = the car=20 boot. Israelis know to take security seriously, but they also tend to = have a=20 sense of humour.

"Look at the Ministry of Defence and our army," says Levy. "We have = lots of=20 people coming out of the army with ideas for security, and they are good = ideas=20 because they have to be."

Nir Zamir, vice-president of marketing for information security firm = Yoggie,=20 agrees that Israel's wealth of knowledge about information security is = in line=20 with its strong army and military might.

"The industry is growing as the face of the battleground does. We = apologise=20 that our technological advantage comes from our army, but at least it is = something good that comes out of the conflict," he says.

Sitting in the Yoggie offices, bungalows surrounded by lush green=20 countryside, any sign of conflict seems a million miles away. The land = stretches=20 as far as you can see, and has potential for huge expansion. Plans are = already=20 under way to convert a third property into the company's marketing = offices, and=20 it is hard not to think of it as the foundations of a "Yoggie empire" if = the=20 company's growth continues to accelerate.

Yoggie recently released its new product, the Yoggie Pico, which = Zamir=20 describes as an "interesting and sexy gadget". No bigger than a flash = drive, the=20 Pico is a plug-in laptop security system. "There has been an avalanche = of=20 interest from all over the world," Zamir says. "The thing about Yoggie = is that=20 people need it now".

A thirst for innovation

Nick Outteridge is the director of business development for IT = security=20 company PureSight, and is the Israeli company's only British member of = staff.=20 "Israel needs superior security. Having survived the holocaust, it = sharpens=20 minds. What they have suffered has given them the edge."

At the age of 18, most Israeli men and single women are inducted into = the=20 Israel Defence Force, women for two years and men for three. Many IT = security=20 experts in Israel agree that this is where the thirst for innovation and = the=20 need for security is embedded into Israeli citizens.

"There are lots of people who come out of the army qualified in = security and=20 develop start-up companies," says Yaacov Sherban, chief executive for = web=20 security firm Applicure. "The Israeli government and army have a = tremendous need=20 for security and put investments into it - not just IT security, but = physical=20 security too."

Eyal Adar, founder and chief executive of information risk management = firm=20 White Cyber Knight, says, "We have a culture that knows how to = understand the=20 needs of people and security. The entire architecture of Israel is drawn = from=20 risk assessment, a unique know-how when it comes to understanding risks. = We just=20 engineer security solutions to match each risk."

Sdema Group, a homeland security provider, emphasises the importance = of=20 security systems preventing breaches before they happen, rather than = finding a=20 solution after the damage has been done. Sdema Group was founded in 2004 = by=20 Shlomo Harnoy and Dror Mor, both of whom have backgrounds in Shabak, = Israel's=20 equivalent to MI5.

The political situation in Israel requires forward planning and a = state of=20 high alert, says Batsheva Iluz, vice-president of business development = for Sdema=20 Group. Iluz says that an organisation can heighten its security and=20 profitability by creating an inclusive and efficient environment for = security,=20 rather than buying one security product at a time. "Technology is only = part of=20 the solution," she says.

Pre-emptive security systems

"Physical and IT security are co-dependent in Israel. A while ago, = there was=20 a suicide bombing in Tel Aviv. Intelligence had picked up this threat = before,=20 and had used cameras and technology to track him. They knew where he = was, but=20 that is where IT security stops," Iluz says.

"The security guards at the bar that the suspect tried to enter = refused him=20 entrance. The bomb exploded outside and still caused deaths, but not = nearly as=20 many as if physical security had not been in place to stop him entering = the=20 packed building."

Guy Lifshitz, chief executive of information security firm iTcon, = says that=20 Israel's political position and the conflict in the country is why = activity in=20 the information security market in Israel has grown enormously.

"Our government is a high target for all of the world. We therefore = have to=20 be innovative and superior in protecting our government from e-threats," = he=20 says.

Avishai Wool, chief technology officer and co-founder of network = security=20 firm AlgoSec, says that education, rather that the army, is the reason = for=20 strong research and development and numerous security start-ups in = Israel.

"The army is a melting pot, an effective filter of people. The = high-tech=20 units separate the young, intelligent and driven children they take on=20 responsibility at a very young age and go to university later because of = their=20 service in the army," he says.

"Education is taken more seriously here. Students are older, and = therefore=20 more focused and driven. And this is why we are seeing so much talent = and=20 superior research and development - it is not just about the military. =

"The industry is booming out here, and all of the innovation coming = out of=20 Israel has led to major US companies positioning their development teams = out=20 here."

In the late 1990s and early 2000s, the Israeli government offered = funding to=20 many start-up companies, and Almog Aley-Raz, chief executive of = biometric=20 security firm PerSay, says that to some extent this was the drive for = innovation=20 in the IT security sector.

Government promotion had a significant impact on the Israeli = information=20 security industry, and encouraging start-ups with financial help aims to = keep=20 talent in Israel. "Otherwise, all of the talent would have gone and done = this in=20 the US," Aley-Raz says.

International business

At the end of the 1980s, the government and the Bank of Israel began = to=20 implement a policy of full foreign currency convertibility, decreasing = the=20 country's currency-control regulations and consequently liberalising = Israel's=20 trade. This made it easier for individuals to make portfolio investments = abroad=20 and for foreigners to trade in Israel. Today, Israeli residents can = trade freely=20 and make portfolio and direct investments overseas.

Israeli information security companies are traded on the US market, = and many=20 position their sales and marketing teams there. "It is just practical," = says=20 Outteridge. "Because of time differences, to sell to America you have to = be in=20 America.

"Everyone wants to make it big in the biggest market in the world. It = is=20 important to have a footprint in the domestic land of the US if you want = to make=20 it out there. People like to buy within their homeland.

"I like to buy British for example, but I am happy to buy outside of = Britain=20 if the technology is better."

Having worked for UK web security firm Su= rfControl,=20 Outteridge now notices cultural differences working for an Israeli = company.=20 "They are very blunt people, they tell it how it is, and that is = refreshing.=20 They are very bright people."

With a population of more than seven million, Israel is a very small = market.=20 So why don't start-ups head out to the US to build up their businesses? = "Moving=20 staff out of Israel would be very hard. There are big cultural = differences, and=20 it is not like Israel, where everybody knows everybody," Wool says.

The overseas security market

Lifshitz says that there is often reluctance from foreign customers = to deploy=20 Israeli products. "At the moment we are trying to sell our service to = other=20 governments, but more developed countries already have the structures in = place.=20 And besides, they do not like to bring foreign talent in."

And it seems to work both ways, with Israeli security companies = admitting=20 they like to use designers and manufacturers within Israel, giving both = ease of=20 development and quality as reasons for doing so.

Is the foreign reluctance to use Israeli security products fuelled by = Israel's political conflicts? "Not at all," says Adar. "There are many=20 collaboration issues between different governments in different = countries. It is=20 just the fact that the technology is coming from a different country." =

Adar gives the US as an example. "It is difficult to sell to America = from=20 outside - most Americans do not even know how to dial out of the = country."

The internal landscape

There is a great and arguably deserved pride among many Israeli = security=20 companies. The market is strong, it is growing fast and it is = innovative.

The I Safe group was established by finance firm Managing Investments = Worldwide, with the plan to centralise services in the security market. = Most=20 suppliers agree that the marketing opportunities that I Safe creates are = the=20 biggest benefit. For example, at London's Infosecurity Europe exhibition = last=20 April, I Safe ran an Israel stand, decreasing the cost for each company = and=20 maximising exposure.

Daniel Giron, director of the Department of Telecom, Computer and = Software=20 Industries for the Ministry of Industry, Trade and Labour, has granted I = Safe a=20 loan for the third year running. "The idea of the I Safe group is very = positive=20 - the co-operation between the companies is harmonised, the group is = energetic=20 and alive, and sets a good example," Giron says.

I Safe has one rule, which sets the tone of the organisation: there = must be=20 no competing companies in the group. It is this that prevents network = security=20 firm CheckPoint from joining.

"We are too big for I Safe," says Eyal Katz, business development = manager for=20 the firm. "There should be an equilibrium between members, and = CheckPoint would=20 have too much power - it would affect the productivity of the = forum."

There was little evidence of a competitive atmosphere at the I Safe=20 conference, held on 5 September in Tel Aviv, as attendees listened to = one=20 another's presentations and searched for compatibility rather than a = competitive=20 edge.

Yaacov Sherban from web security firm Applicure even talked about the = possibility of Israeli technology companies joining forces to make an = integrated=20 project. "There is a lot of synergy between Israeli security companies, = and=20 everyone is filling a different gap. In the long run, an idea would be = to work=20 with the Israeli government to provide a single Israeli platform that = customers=20 could build on."

Outside of the I Safe group, however, there is competition within the = industry. Lifshitz says that being in Israel makes competition that bit = tougher.=20 "Because everyone is an expert, we are always looking for an edge."

Israel claims the highest rate of research and development investment = in the=20 world, with 4.8% in 2005, and says it ranks third in entrepreneurship. =

"The percentage of Israeli technology companies greatly outweighs and = goes=20 beyond the size of the country. So naturally there will be some = competition.=20 However, we all got here on the same road, so there is a sense of unity, = and we=20 always try to see how we can be better served together," Zamir says.

Foreign investment

Bill Gates explains why Microsoft has established an office in = Ra'anana, "For=20 Microsoft, having a research and development centre in Israel has been a = great=20 experience the quality of the people here is fantastic."

With reasons such as motivated staff and an innovative atmosphere = backed by=20 government-funded research and development programmes, Cisco, Motorola = and eBay=20 have also invested in Israeli technology.

Although Katz argues that telecommunications has been the largest = market to=20 emerge from Israel in the past 12 years in purely economic terms, the = success of=20 the information security industry is undeniable. "The thing about Israel = is that=20 the cultural influence shines through - Israelis see a huge task and = just want=20 to overcome it," he says.

Giron says, "The security market is only rising. It is just a pity = that we=20 need it so much."

And this is the crux of the matter: Israelis know that their = technology -=20 especially in the information security sector - is among the best in the = world.=20 They know that their researchers and developers are among the most = talented=20 available.

But they are still burdened with the perhaps unjustified need to have = to=20 apologise for it. And that is what makes this story of growth and = success just a=20 little bit tainted.

=E2=97=8F This article first appeared in Infosecurity=20 magazine

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