Pupatello Re-engages Ontario ICT Roundtables

Hon. Sandra Pupatello, Ontario Minister of Economic Development and Trade, has re-engaged the Ontario ICT roundtable process. Our industry’s ongoing consultation with Minister Pupatello underscores the province’s understanding of the importance of Ontario's 284,000 people employed in our sector and the broader impact of its $28.4 billion in output as a critical economic driver for Ontario.

Our meeting in November brought together a diverse group of more than 20 corporate and academic leaders from the Toronto-area ICT cluster—representing the first of three regional ICT roundtable meetings the Minister will host. The Minister and industry discussed priority issues facing the sector in the Toronto-area with a focus on Innovation, Talent, Productivity and Procurement, and identified key opportunities that will promote the competitiveness of both our sector and Ontario. Both Kitchener-Waterloo and Ottawa roundtables will follow in early 2010, and will continue to focus on how we will work together to develop growth strategies.

Board Member Profile: Meet Paul Cooper

Paul Cooper, Director and General Manager, Dell Public Business Group

With so many ITAC members based in Ontario, the association has a special focus on our industry’s relationship with the Ontario government. An Ontario board of directors provides guidance and strategic direction on this relationship, particularly regarding public-sector business, and policies and programs that support small business growth. Paul Cooper, Director and General Manager of Dell’s Public Business Group, chairs this board and serves as the liaison between it and ITAC’s Board of Directors.

ITAC: As you look at the ICT sector in Ontario from your public-sector vantage point, what do you see as the major challenges?

Paul Cooper: In the public-sector domain, citizens are demanding accountability and more transparency from government than ever before. With governments in Canada and around the world we’re seeing no shortage of issues with regard to budgets, government spending versus revenues, and a desire to ensure that money is being spent effectively and with specific measures on outcomes. People want to ensure that their tax dollars are being spent wisely and that they’re receiving good value for money. That’s a trend that has been heightened by the financial difficulties that Ontario and other jurisdictions have faced in the past months. In response to that, we’re seeing governments breaking down barriers that have caused inefficiencies and inhibited transformation within their own organizations. We see a lot of steps being taken by the government to ensure they can operate in a more streamlined fashion. Our knowledge as it pertains to spending is that governments are spending about 80 percent of their ICT dollars on maintaining existing, legacy infrastructure, and the rest is being spent on new innovation and automation. We know from experience that if they could shift that split to something more like 50/50 that would move them down the road toward satisfying citizens. We see them making moves in that regard. The success we are seeing is a move toward standardization. That has a particular impact on cost, in terms of increased effectiveness and reduced complexity. We see a lot of moves to automate processes and the labour component in regards to managing the infrastructure. We see a lot of consolidation occurring. All of those moves are designed to drive costs out and efficiency in. And increasingly, we’re seeing the province leveraging virtualization to gain greater efficiency in terms of the number of devices they have to manage and reduce their power consumption. We really see the CIOs in the public sector as being change agents, and driving that transformation. It’s no small task, but it would appear that collectively they are making progress, and ultimately that’s allowing them to innovate in the delivery of services.

What do you see as the elements that are needed to keep Ontario’s ICT sector competitive?

There are a lot of things that need to happen. I think the federal and provincial governments have done a number of good things in regard to the funding of innovation, both at the university and the college levels. The Canadian Foundation for Innovation and the Ontario Innovation Trust have put mechanisms in place to provide funding on a continuous basis to research institutions across the province, and that has yielded some real breakthroughs and terrific outcomes in terms of the research that has been provided. That part of it seems to be working. There is still work to be done in determining how that can be commercialized more effectively. That is an area where more focus is required, and I think that ITAC can certainly help the government there. At ITAC, we are increasingly of the belief that these things need to happen at multiple levels. The federal government has a role, the provincial government has a role, and then there’s the community level. That could be a community of interest, or it could be a region, or a city like Waterloo or Toronto. It really has to be at all three levels for it to be effectively embraced and commercialized. That’s not a short-term fix, but I think it’s possible, and there’s plenty of evidence of companies based here in Ontario that have been very successful both locally and on the world stage. It’s a work in progress, but I think some progress has been made on cracking the code on how to take the innovation that is occurring and make it commercially viable so that it creates thriving businesses that ultimately drives investment and employment in Ontario.

Dell is somewhat unique in having a Public business unit. What’s the thinking behind it, and what is the scope of it?

It helps to think about it in a holistic sense. We currently have four business units at Dell, all of them organized around specific customer segments. Each of those units is global. We have a consumer and small business unit, a large business organization that focuses on major commercial customers around the world, the public-sector unit, and the newest, which focuses on the needs of telecommunications companies. The public-sector unit is one of the largest. We define public sector as all levels of government, education and health care. We see this as being consistent with our heritage; we’ve always been organized around specific customer segments. It’s about taking the products and services we have and creating solutions that are specific to the various customer sets. Our structure allows us to quickly access the knowledge we need to create targeted solutions.

Another area where Dell really sets itself apart is in the area of community involvement. Could you talk a bit about Dell’s Global Giving Council and how that is reflected here in Ontario?

It’s an umbrella concept for what we call direct giving, which incorporates both charitable contributions that are made by our employees as well as volunteer time provided by Dell employees to causes of their preference. We are encouraged around the world to participate in supporting charities at a local level. So, while the concept is global, the activities are local and driven at the community level, where they make the greatest impact. Dell contributes matching funds to the charities we support individually and also allows for each of us to participate in volunteerism, both within the workday and outside of that, and in fact encourages to do that—either at an individual or team level. Recently, I was at the Yonge Street Mission with a couple of our team members to recognize some students who had graduated from a technology class that the Mission runs. Dell has been instrumental in providing technology to help educate students who wouldn’t otherwise have access to technology. We contribute volunteer time to assist with the training and organization of events, and we give the graduates computers at the end of the session.

Safe At Home

John Millar, President, Digital Boundary Group

Since its launch in 2003 in London, Ontario, Digital Boundary Group has established itself as a leading supplier of operational information and communications technology security assessment services. In recent years, the company has expanded to 12 employees and opened a subsidiary in Michigan to provide security and auditing services in the United States. President John Millar spoke to us about his company’s growth and why Ontario remains a good home.

ITAC: Within your focus areas, what has represented the largest growth for Digital Boundary?

John Millar: Pretty well all of our areas of service are growing. Our strongest sectors include law enforcement—about a third of Canada’s police forces call on us to test their infrastructures—municipal governments across Canada, utilities such as water/waste water treatment, and electricity generation and distribution. Although we got our start in financial services, it’s no longer our largest sector. But, we continue to work with one of the chartered banks and we work with credit unions and insurance companies. Health care is a growing area, both on the private clinic side and smaller hospitals. Education—at all levels—is also an area of growth for us.

When you compare the Canadian market to the market in the U.S., do you see different levels of maturity?

Interestingly enough, in Canada the public sector is more attuned to operational security than in the U.S. Canada’s police forces seem to be ahead of their U.S. counterparts in terms of the secure sharing of information. In the U.S., the private sector seems more attuned than in Canada.

What is Digital Boundary’s key value proposition?

We are able to assist an organization in determining what exploitable vulnerabilities exist in their electronic infrastructure. That will range from a utility—Can anyone get access of control mechanisms?—through to a municipal government and any of the electronic offerings they might put out to the public through websites. Could they be comprised so someone could get unauthorized access to a database that might contain taxpayer records or employment records? We’re able to tell people where the holes are in their security profile.

What has been your strategy for managing through the past year’s economic environment?

Increasing our market reach through business development partners. We’ve focused more on our technical resources, and our go-to-market strategy has been more through business development partners in different geographic regions who have relationships with the customers. We’ve also paid a lot of attention to our strong sectors through sector-specific activities, such as the Canadian Association of Chiefs of Police. We try to link current customers with prospects so people can hear what we do not only from ourselves but also from people who have used us. In general, we’ve just been much more active in the marketplace.

What are the advantages you see for having your head office in Ontario?

There’s very good infrastructure, particularly broadband capability. All of our work—no matter where we might do it to service a client—we can do right from London. There’s good, reliable electricity. The environment for staffing is reasonably good. ITAC introduced us to the federal government’s Industrial Research Assistance Program. We didn’t think a small firm like ours and what we did would qualify for any support programs, but we’ve been able to get some assistance on developing a new offering we hope to bring to market in 2010.

What are some of the challenges that face you here?

Whenever you go to hire a new person you’re looking at your volume of business and asking if you can support that full-time resource. We like to take people who come through the Ontario college system, where they have security training programs. We like to develop those people internally, but it’s a big challenge to bring somebody on full-time when you know that it’s going to take you six to twelve months to get them up to speed with your methodology and make sure they’re a fit. So we’re concerned that the “recent grad” support program won’t continue. Small business mentoring is another area that I see as a challenge. Who can I turn to as the president of the company to talk to someone who has run a small service-oriented firm, to ask questions, share experiences, and maybe avoid some pitfalls that others have worked their way through? It can be lonely out there.

As you look five years ahead, what is your vision for Digital Boundary?

We see an opportunity to double our revenue in Canada, and then we’re looking at a U.S. market that has potential to be about four times the size of the Canadian market. We’ve got some fairly significant initiatives underway in the U.S. right now, and we’re seeing positive response to possible work in 2010.

Tales Of A Disruptive Influencer

Pat Saavedra, President and Chief Technology Officer, TELoIP

If you were writing a film about a scrappy little ICT company in the post-Technology Boom era, Toronto-based TELoIP might be your ideal model. Since 2002, the provider and manufacturer of networking solutions has helped push Voice Over IP technology into the telephony mainstream. Today, the company’s technology powers some of the offerings of major ISPs and telephone carriers. President and Chief Technology Officer Pat Saavedra, who started TELoIP after success with ISP Passport Online, talked to us about what it takes to succeed in the current environment.

ITAC: What is TELoIP’s value proposition?

Pat Saavedra: Over the past 18 months, our message of ‘more for less’ in the telecommunications space has done very well. In fact, there are customers that we spoke to a couple of years ago who saw our value proposition at the time as being simply ‘more speed.’ We did have better value than our competitors, but it was speed that they focused on. Since the economy turned, we’ve found these very same customers coming back to us, having had their budgets cut and their departments reduced significantly. They were now in a position to seriously consider the consolidation of their voice and data budgets in a converged environment so they could lower cost. Really it is the only way for some small businesses to lower their cost; to take advantage of the cost of IP. And that’s what we do. We have a technology that we’ve created—our Autonomous Network Aggregation system—and we license it out to ISPs. Companies such as Rogers resell it to their end-customers, and this technology enables companies to take advantage of voice in a high-quality environment. One normally doesn’t equate quality or reliability with Voice Over IP. Once you apply our technology, you can. So, we’re in the business of providing that infrastructure to customers. To keep up with demand, we also started supplying our customers, which include resellers and other ISPs, our voice product on top of this networking product. That’s been driving month-0ver-month growth during the past 18 months.

What’s been the evolution of TELoIP?

I started it because I felt there was a need for proper technology to converge voice, video and data. We started as a hardware manufacturer; we write the code that powers these devices we call convergence gateways. That was the initial vision, but it’s interesting how, over the years, having received certification from various carriers, we always found ourselves in a position where we were so disruptive that it was very difficult for these carriers to sell our technology. Moreover, we’re a small and growing company on Adelaide Street in Toronto; with a unique technology. For some reason they liked to see a much larger brand, a little bit safer bet, when they’re picking their technology. So the way that we were able to get to market was by turning this technology into a service offering. I guess you could say we sell technology as a service. Once that happened, those very same carriers that we were trying to work with, they started buying. I now had a platform that they could test, evaluate. They didn’t have to make any modifications to their infrastructure in order to have a look at the product. And the same went for their customers. And that really turned the company around.

What’s your view of where we sit today in the growth of the IP telephony marketspace?

I think that reliability is the biggest issue. Once the industry gets past that you’ll start to see a lot quicker adoption of Voice Over IP technology. I think the driving factor is cost. There is no question about it; you can reduce cost by adopting Voice Over IP, whether it be hosted Voice Over IP replacing your PBX or Voice Over IP trunks into your existing PBX. Either scenario is quite compelling. You get better LD rates, it’s easier to scale, all the features and benefits that you would want to run your business. All the phone features are there. They only come in IP-based PBXs today, so the demand is there, the value is there. It’s the quality.

When do you think we’ll see IP telephony really get traction and steal serious marketshare from traditional telephony?

I think it’s already started in some cases. You have some of the larger players offering IP-based voice services, but what they’re missing is that they haven’t converged it onto the same network as their data network, therefore the savings are not there. So they’re doing it from a pure features and benefits basis instead of cost saving. In our business plan, we’re forecasting that it starts to grow—as far as companies adopting voice—in the second quarter of 2010. In our business plan, 2011 is a boom year for voice.

So, you seem to have grown right through the rough economic climate. What’s been your secret?

It’s all been about focus. We focused on the customers and the market segments that needed us the most. We identified and profiled our target customers, and that allowed us to navigate these troubled times.

There’s lots of speculation about what happens next. As someone who’s been around the industry for a while, what’s your take?

In October, we were invited to present at a venture technology summit in Ottawa. We had eight minutes to present our offering, and within minutes there were people lined up to talk to us. They were all American VCs. We haven’t taken any American VC funding in the past; it’s been all private angel funding that’s been growing the company. We’re just finishing an investment round now. Those VCs were interested in our next round for our next phase of evolution, because they do much larger rounds, and that’s where it gets exciting for them. They’ve been passing us leads to some of their larger customers. These are active telecom investors, but not in Canada.

From your vantage point, what are the advantages of being situated in Ontario?

I don’t think there are too many advantages for new technology companies. This just happens to be our backyard and where we developed the technology. I just came back from a trip to Vancouver, where we licensed our technology to a large TELUS wholesale ISP. It was one of the most successful trips we’ve ever had; we were selling while we were presenting.

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