In most countries, with the exception of Israel, defense budgets are being cut in all areas but one. Cyberwarfare has bucked the trend and is the target of increased funding. The diverse array of new threats, the growing importance of online data collection and the development of new generations of miniature sensors have all turned cyber into a field of strategic importance. In the Israel Defense Forces, cyber is even dubbed the fifth theater of battle, after air, sea, land and space.
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In 2012, the Netanyahu government established a special cyber command with an annual budget of 100 million shekels. In addition, other parts of the defense establishment are directing more funds to the field. Both startups and traditional companies in the defense industry have jumped on the bandwagon.
“The defense companies have proven development, integration and amazing marketing capabilities,” says Rami Efrati, head of the civilian sector division of the National Cyber Bureau in the Prime Minister’s Office. “The entrance of these companies into the cyber field is not limited to Israel. Large multinational corporations like Lockheed Martin, Thales, General Dynamics and Boeing are also there. It is an obvious and evolutionary process – everyone is going there in order to bring about more advanced solutions. From the perspective of Israeli companies, there is a great opportunity here and we see the way they are received around the world.”
The National Cyber Bureau is co-sponsoring the Cybertech conference on cyber security, which is taking place at the end of the month.
One major indicator of the increased emphasis on cyber technology are the organizational changes taking place at Israel’s largest defense manufacturers.
Last week, Brig.-Gen. Ariel Karo (Res.) who served in his last role as IDF chief intelligence officer, became the head of the new cyber directorate being established at Rafael Advanced Defense Systems. The new directorate joins a list of similar organizational units created at Elbit Systems, Israel Aerospace Industries and Israel Military Industries. These companies’ efforts to create new business opportunities in the cyber field challenge the commonplace perception of them in Israel as conservative behemoths.
“The defense industry’s job is to preserve Israel’s competitive advantage in all arenas and create and maintain its independence (from foreign suppliers),” says Esti Peshin, who joined IAI last July and founded its cyber directorate. “That means that all the companies active in these areas must become involved in the cyber field. The question is who will become the market leader. From my perspective I am managing a startup that works within an organization with revenues of more than $3.5 billion per year.”
Peshin is one of the pioneers of the cyber field in the IDF’s much vaunted signal intelligence corps Unit 8200, which is the Israeli functional equivalent of the American National Security Agency. She has also served in recent years as director general of the Knesset’s high-tech lobby, a role in which she will continue to serve.
“We are going through a process of evolution, not of revolution,” says Penshin. “Our intention is to take the knowledge that already exists today in IAI and leverage it into information in the fields of intelligence, electronic warfare and command and control.” The IAI in particular intends to develop advanced intelligence and warning systems as well as command and control systems in the cyber field.
As part of its cyber activities, IAI has partnered with the startup Cyberia. IAI gives the startup technological challenges and Cyberia develop prototypes for it. Once the IAI receives a prototype its own engineers develop it as a mature product.
Rafael had set up a cyber product development unit by May 2011 as part of its missile division located at the Leshem facility near Carmiel. The cyber field, says Karo, has been identified by the company as an engine for growth. “There is a market of clients today that is developing, and we believed this trend will continue,” he says. Our advantage is our deep familiarity with defense customers and their needs. We know how to build systems that fit this segment of the market, and from there we can begin to expand.”
“Rafael began working in the cyber field 15 years ago, even before they were calling the field ‘cyber,’” says Karo. Cyber products were originally developed for Rafael’s own cyber defense needs. As part of its business activities in the field, Karo says, Rafael plans to develop cyber defense solutions based on existing products and sell them under the brand name CyberDome. The brand name purposely harkens to one of Rafael’s greatest product successes to date, the Iron Dome missile battery system for intercepting short-range rockets.
The cyber directorate established in Rafael will not directly employ the majority of Rafael workers that will work in the cyber field at the company. Instead, most cyber employees will be spread throughout the company. Already, the number of people at Rafael involved in cyber is well into the double digits. “The directorate is responsible for synchronizing this activity and formulating a work plan and the strategy in the area,” Karo says.
Civilian solutions too
While the main target of Rafael’s cyber products will be its existing client base in the defense market, the company is also seeking to adapt the capabilities it has developed in recent decades toward civilian markets.
Seven months ago, the state-owned Israel Military Industries established a cyber directorate within the company’s research and development division. Although it has to date invested only a few millions shekels in the cyber field and hired less than a dozen employees, IMI now intends to recruit new employees who will work on developing new cyber technologies and examining possible cooperation with the startup companies.
Aside from developing cyber products, the directorate will work on creating cyber systems that will complement existing IMI products, like missile interception systems. In IMI’s different units there will be “cyber loyalists” belonging to the directorate with the job of ensuring the cyber security of the various products being developed. Similar to other defense industry companies that preceded IMI’s entry into the cyber field, IMI intends to primarily focus on the defense market but then expand into civilian markets, especially targeting large companies that manage critical infrastructure.
Elbit Systems founded its cyber directorate five years, and today it is led by Brig. Gen. (Ret.) Yair Cohen, who once served as the commander of Unit 8200. The company recently underwent a structural change that led to the creation of electro-optics and intelligence division called Elop. The new division became the home of Elbit’s Intelligence and Cyber Solutions directorate in place of the company’s land products division.
The ICS directorate has 215 employees and is led by Lital Grossman, an alumna of Unit 8200. The cyber field is a market growing 8% per year, she says. Foremost among the products developed by the ICS directorate is Wise Internet Technology, a complex intelligence gathering system that companies word search, business intelligence and facial recognition software and is used by intelligence organizations and police in Israel and around the world.
Elbit has 80 employees who work directly in the cyber field. The two main areas that are the focus of the company’s cyber efforts are command and control systems and training simulators.
Elbit is also active in the civilian cyber market through the company C4, which it bought in 2011. C4, which has 30 employees, specializes in reverse engineering supervisory control and data acquisition systems and identifying the source of attacks.
“We seek to give a complete solution to armies, countries and organizations for critical infrastructure. The ability to create an integrated resource management system on the scale of an army or state is something unique to companies like Elbit,” says Grossman.