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Building an innovative it Sector through gloBal PartnerShiPS

The CisCo AnnouncemenTFour years ago, Palestinian IT companies were still struggling to recover from the second intifada, which disrupted the few fledgling relationships they had managed to establish with international firms and greatly increased the perceived risk of doing business in the Territories. The industry was fragmented, with no clear vision for sector-wide growth and development and little understanding of what role it could play in the global marketplace. Despite uSAID efforts to engage the Israeli branches of large u.S.-based tech firms, the obstacles to working with Palestine were considered too great and the potential benefits too small. For multinational firms looking for emerging markets in which to invest, “Palestine was simply not on the map,” says Gai hetzroni, Senior Project manager for corporate Affairs at cisco Systems Israel.

That all began to change in 2008 when John chambers, ceo of cisco Systems, pledged uS$10 million to seed a sustainable model of job creation and economic development in the Palestinian Territories. 80% of the commitment was intended for venture capital financing, but Palestine had no venture capital funds to administer the investment. The industry also lacked the culture of collaborative innovation and entrepreneurship that fuels start-up companies.

The first phase of the initiative focused instead on

outsourcing projects that were coordinated through Cisco’s Corporate Social Responsibility office in Israel and engaged 20 Palestinian software engineers. Three years later, that figure has doubled, and the contracts are now financed directly by Cisco Israel’s Research and Development (R&D) department, as with the company’s other outsourcing relationships. “We’re trying to bring not only money, but multipliers like

know-how, knowledge, partners,” mr. hetzroni explains.

The contracts also brought much-needed credibility to the sector. Building on this momentum, cARAnA corporation’s enterprise Development and Investment Promotion (eDIP) project renewed outreach efforts to other multinational firms with a targeted message—that Palestinian

companies are a viable resource for top-quality, low-cost project management—and a successful model to back it up. This time, the firms responded.

HP GeTS In The GAmeBy late 2009, managers at hewlett Packard (hP) had learned of cisco’s positive experience with the Palestinian IT firms, but they were still wary of attempting a cross-border collaboration, unsure if the benefits would outweigh the risks. Recognizing

“We’re trying to bring not only money, but multipliers like know-how, knowledge, partners.”

Gai hetzroniSr. Project manager for corporate

Affairs at cisco Systems Israel

ExpoTech, held annually in Ramallah, has become a must-attend event, attracting global ICT firms such as Cisco, Intel, Microsoft, Google and HP.

A uSAID program implemented by

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the potential opportunity, the eDIP project offered critical financial and logistical support to mitigate the uncertainties.

By facilitating much of the start-up effort—including arranging a visit to Ramallah (obtaining the necessary permits and accompanying the hP delegation around the city) and prescreening Palestinian companies (providing detailed profiles for hP managers to review)—eDIP significantly reduced the time and expense associated with initiating a new partnership. Amir Banet, offshore manager for hP’s Business Technology optimization for europe, the middle east and Africa, credits the project with establishing the crucial first relationships that ensured the long-term success of the collaboration: “Thanks to uSAID for showing us the right vendors, matching the right companies with the opportunities we had available.”

The availability of U.S. government financial support was also instrumental in reducing psychological barriers for pioneering Israeli managers willing to break from the status quo. “There was some resistance internally, but we were more confident with the uSAID backing,” mr. Banet added.

With financial assistance from EDIP, HP Israel initiated projects with two Palestinian firms, including EXALT Technologies, which possessed experience with mobile applications that HP lacked internally. The first two pilot projects between HP Software and EXALT were a success, and word quickly spread among the

different departments at hP. The Indigo Division, which focuses on digital printing solutions, joined the pilot project as well, despite fewer uSAID resources available to subsidize the contract. Today, EXALT is managing six different projects for multiple departments—including hP Software, The Indigo Division and Scitex vision—as sustainable business initiatives, without uSAID support.

Mr. Banet points to a number of benefits of working with Palestinian firms over their counterparts in Asia and eastern europe, foremost of which is their proximity. “For specific, highly technical tasks with a need for close collaboration and a regular on-site presence, Palestine has the advantage,” he explains. With initial eDIP assistance to facilitate the issuing of permits, Palestinian engineers now travel to hP’s Tel Aviv offices up to twice a week to work directly with their Israeli colleagues. mr. Banet also credits the Palestinian firms’ passion, eagerness to deliver a top quality product and level of engagement with their customers as keys to their success.

For EXALT CEO Tareq Maayah, the contracts have transformed his organization: he has doubled his staff in the last year as the company has been entrusted with new and larger projects, moving from its core specialty of software development to new areas such as graphic design and user experience. Business is growing through word-of-mouth and referrals from hP. he credits cARAnA with functioning as the catalyst for those essential first contracts: “There hasn’t been anything done by uSAID that has had an impact like this initiative to give direct support to the private sector. This was very important in terms of building our reputation. Financial support is good, but the involvement of uSAID reduced the risk [for Israeli

Palestinian programmers at work on the iLabs project. See Spotlight on Page 3.

“Thanks to USAID for showing us the right vendors, matching the right companies with the opportunities we had available.”

Amir Banetoffshore manager at Business Technology optimization for

europe, the middle east and Africa at hewlett Packard

3BuIlDInG An InnovATIve IT SecToR ThRouGh GloBAl PARTneRShIPS

firms] of making the decision to work with Palestinian companies.” EXALT recently began work on a new contract through hP’s u.S. headquarters and, if all goes well, mr. maayah expects to double his staff again in two years.

Two years into the collaboration, Mr. Banet reflects on his initial skepticism of working with Palestinian firms, the impact of his first USAID-sponsored visit to Ramallah and the evolution of the partnership. He says, “My first visit to Palestine was shocking, in a good way, to see the level of infrastructure. I felt more secure about working with Palestinian companies. After that, they were more tactical visits to match new projects, get to know new companies. [Now] it’s like a regular working relationship.”

MiCrosoft lookS FoR InnovATIonhP wasn’t the only multinational technology company to take notice of the growing IT industry next door to its Israeli R&D facilities. With encouragement from uSAID, software engineers at microsoft’s Innovation labs (or ilabs), a one-of-a-kind research center in Tel Aviv, expressed an interest in working with their Palestinian counterparts for high-quality, cost-effective outsourcing from a team with a fresh perspective. cARAnA’s eDIP staff linked them with the Palestine Information and communications Technology Incubator (PIcTI), initiating a one-year pilot project to outsource several components of ilabs’ work.

under the guidance of Team leader Ayman Saleem, the Palestinian programmers started a one-month training exercise to introduce them to microsoft’s

Apply face recognition to video and watch the potential emerge: Televisions and gaming systems that recognize people in the room and customize content accordingly. home videos that automatically identify and tag subjects, making them searchable. even Tv viewing becomes interactive, as viewers link to more information about individuals on the screen.

To demonstrate the capabilities of face-recognition algorithms from microsoft’s ilabs, the Palestinian team developed and tested demo software called HomeVideoX, which uses still photos to identify people in video. Working in close collaboration with ilabs—including daily conference calls and regular on-site meetings—the Palestinian programmers conducted technical research that

led to the demo concept, refined the specs, developed prototypes, designed the detailed features and managed the development cycle from start to finish. Along the way, the team developed the video Splitter tool—essential for segmenting videos into still images so that the face-recognition algorithm is able to recognize the cast list of each movie—which was subsequently used in other vision applications from ilabs.

created in just six weeks in time for TechFest 2011, microsoft’s annual showcase of the most innovative products emerging from its research centers around the world, the HomeVideoX program was a tremendous hit that left visitors exclaiming “I want it now.”

For more information on the HomeVideoX project, please see http://channel9.msdn.com/posts/TechFest-2011-Facial-Recognition-in-videos

SPoTlIGhT: HOMEVIDEOX PROjECT

The Palestinian iLabs team poses in front of a computer displaying the Mixer product they developed.

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Azure cloud computing platform and web/mobile applications (apps). They then designed a new interactive, cloud-based online learning app that allowed professors to upload PowerPoint presentations with questions to assess students’ understanding of the material. Impressed with the results and the Palestinians’ quick learning curve, ilabs tasked the team with developing a workable version of mixer, a prototype Bluetooth app conceived at microsoft’s out-of-the-Box Week.

other successes followed. The Palestinian R&D team has developed three new products for ilabs to be marketed globally: mixer, which links users’ online profiles (e.g., Facebook) with their registered Bluetooth devices to recognize them when they enter a room; Ark, which gathers online information about movies and television shows to make personalized recommendations, including an active learning component that adapts to user likes and dislikes; and HomeVideoX (see text box).

With crucial support from eDIP, microsoft is looking to create another five-person team in Ramallah to work on Bing mobile applications. Together with the

ilabs group, these engineers could ultimately form the basis of an independent microsoft R&D facility in Palestine.

Ayman Saleem left a better-paying position for the opportunity to work with cutting-edge software and expand the Palestinian IT sector. “I have a mission here,” he says, “I want to build something using state-of-the-art microsoft technologies.”

salesforCe SPoTS An oPPoRTunITyAs the momentum continued to build with more and more collaborations between global IT firms and Palestinian companies,

the nature of eDIP’s role began to shift. Initially, the project had to overcome significant resistance to convince international firms to partner with Palestine. now companies are reaching out to uSAID seeking a facilitator who can identify firms in the West

of the 52 participants in the cloud computing and cRm workshop at hebron’s PPu, half were business owners looking for practical solutions for both their own and their clients’ needs. Rather than dwell on theory, the course was structured around a fictitious business association for the leather shoe industry—the largest employer in hebron—with the goal of developing european sales channels for local shoemakers. Participants visited 10 shoe manufacturers

and designed a complete sales and order process using Salesforce.com applications. At the conclusion of the course, the largest Palestinian supplier to the shoe industry, union Industrial chemical company, announced that it would fund the association, turning it from fiction into reality.

Participants have already implemented Salesforce.com solutions at five other private sector firms, including: Galaxy Training, a provider of technical

courses including microsoft, cisco, and oracle training, to manage marketing and enrollment; Intel learning, a non-profit organization that provides low-cost netbooks to students, to track laptop distribution; Royal Plastics, a manufacturer of Pvc pipes and plastic furniture, to manage international sales and marketing; Trusted Systems, to oversee employee data for their client hebron hospital; and Avon Palestine, the make-up company, to handle recruiting and sales.

SPoTlIGhT: The InTeRSecTIon oF IT AnD BuSIneSS

“I see the future of the IT sector in this vital project with Microsoft, which proves that Palestinians have huge talent, skill and expertise not only in the deployment of IT services but also in the Research and Development field. This is the real path for development in Palestine.”

hassan kassemchairman at PIcTI

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Bank with the requisite human resources and IT skills.

one such organization is the Salesforce.com Foundation, the philanthropic arm of Salesforce.com, a leader in cloud computing and customer Relationship management (cRm) applications. The Foundation, which works with non-profits in more than 100 countries, became interested in working with Palestine after learning of other collaborative projects. “We were inspired by the hP outsourcing project, which had initial underpinnings as a philanthropic endeavor but was ultimately aimed at a commercial engagement,” explains Isabel kelly, International Director of the Salesforce.com Foundation.

In coordination with cARAnA, the Salesforce.com Foundation designed a project to teach cloud computing and cRm at the Palestine Polytechnic university’s (PPu) IT center of excellence. The initiative began with a 10-day continuing education workshop. Based on the success of this pilot [see spotlight], the PPU has decided to expand it to a semester-long course that will be integrated into its standard IT curriculum.

The Salesforce.com Foundation also awarded US$500,000 in free licenses to three Palestinian firms, and brought in partner Idealist consulting which, with financial support from EDIP, will help develop the firms into certified Salesforce.com partners.

As demand for cRm services grows, so will the need for CRM consultants and certified Salesforce.com administrators and developers. Once certified, individuals can implement Salesforce.com in Palestine, develop Arabic language apps for the Salesforce.com Appexchange platform, or serve as support agents for Salesforce.com customers throughout the Gulf region.

“What we’ve done is open up the opportunity and given [Palestine] a head start on developing Arabic content. The Arabic-speaking market is mostly untapped for Salesforce.com, but has tremendous

Ahmed Sahed looks to the future after receving his Salesforce.com training certificate.

Students pose with their certificates after completing Salesforce.com training.

“What we’ve done is open up the opportunity and given [Palestine] a head start on developing Arabic content. The Arabic-speaking market is mostly untapped for Salesforce.com, but has tremendous potential.”

Isabel kellyInternational Director at

Salesforce.com Foundation

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potential,” ms. kelly notes. Ahmed Saheb, one of the workshop participants, agrees: “As a fresh graduate looking for a job, this is a good opportunity. I think it’s my future.”

CisCo’S vISIon ReAlIzeDThe success of the Salesforce.com initiative illustrates a change in how Palestinians have come to view IT over the past four years—from a sector in and of itself to a solutions provider for a range of industries. This awareness was essential in order to proceed with the second part of the cisco initiative envisioned back in 2008: a program to build an ecosystem of innovation and develop start-up firms to access venture capital financing.

To this end, cisco teamed with eDIP to form the Bedaya (“Beginning”) project, including the Bedaya venture Program (BvP), which supports the development of start-up companies into sustainable business ventures; the Pull program, in which global entrepreneurs visit Palestine and offer opportunities for partnerships with local companies based on specific business needs; and a capacity building initiative to enhance PIcTI’s ability to provide these services in the future.

Ayman Arandi is co-founder of Iris, a Palestinian start-up offering touch-screen technology solutions, which grew out of a graduation project at An-najah university. mr. Arandi applied to Bedaya expecting the program to connect him with buyers and facilitate sales. What he received—particularly in sales and marketing training—was much more profound. “We’ve shifted how we look at solutions from a technical to a business problem solving perspective,” he explains. “We have achieved in four months with Bedaya what would have taken at least one year [of trial and error] on our own.”

more than three years after John chambers announced the cisco investment, Palestine now

“[Palestinian companies] understand better what it takes to work in international markets now. They don’t talk like they used to about ‘you need to invest in me because I’m the underdog,’ instead they talk about their competitive advantage, they understand the business side of things.”

Gai hetzroniSr. Project manager for corporate

Affairs at cisco Systems Israel

boasts not just one but three venture capital funds: Sadara ventures, Abraaj capital and the Siraj Palestine Fund. Thanks to cARAnA’s work in the sector,

the fundamental ecosystem is beginning to change, and multinational firms are taking notice. “[Palestinian companies] understand better what it takes to work in international markets now. They don’t talk like they used to about ‘you need to invest in me because I’m the underdog,’ instead they talk about their competitive advantage, they understand the business side of things,” says Gai hetzroni of cisco.

Palestinians have noted the improvements as well. As EXALT’S Tareq Maayah explains, “The ICT sector [in Palestine] is maturing. We know now what

kind of services we are able to provide, within what segment of the IT industry, and how to present ourselves. We used to think we were outsourcers, but now we understand how to define ourselves: We have top human resources capable of working on innovative projects.”

Cisco’s space at EXPOTECH 2010.