ITAC Online
In ITAliCs

The Calm After the Storm

Success in the midst of the worst global economic crisis since the Great Depression has to be measured in relative terms. And if there's one consistent message that can be derived from the presentations at our February 1, 2010, State of the ICT Industry Briefing, it's that the Canadian ICT industry is weathering the storm quite well, and is well-positioned to enable and enjoy the recovery - relatively speaking.

This was the second annual State of the ICT Industry Briefing, a forum designed to discuss economic and technology issues with key policy makers and political staff. This year, our program began with an industry overview from our Chair Tom Turchet. A panel of technology experts – Michael Hennessy from TELUS, Doug Cooper from Intel, and Jen Evans of Sequentia Environics – provided briefings on telecom, ICT applications in health, and social media. The Branham Group's Wayne Gudbranson provided an analysis of some of Canada's key strengths among emerging technologies and companies. All in all, they presented the views of a cautiously optimistic industry.

It was a stimulating discussion and we thought we'd share a sampling of it in this issue of ITAC Online.

Tell us your thoughts on this story

ICT Rides out the Storm, but Value is Key to Recovery

Tom Turchet, ITAC’s Chair and vice-president, Software, IBM North America, kicked off our 2010 State of the Industry briefing for policy workers with a measured but ultimately upbeat view of the current fortunes of the ICT industry.

Tom Turchet, ITAC Chair and Vice-President, Software, IBM North America Tom Turchet, ITAC Chair and Vice-President, Software, IBM North America

“Like all other sectors, we have seen revenues decline throughout 2009,” he noted. “But generally, our industry has fared better and shows signs of recovering faster than other sectors.” He pointed out that many firms including his own have taken pains to sharply reduce their costs during the downturn. Citing IBM as an example, he noted that the company is currently reporting positive results in spite of relatively flat revenues.

Tom stressed that ICT will play an important role in the recovery especially for companies that can clearly demonstrate value and return on investment. Tom’s role with IBM gives him a particularly close perspective on the small- and medium-sized market in both Canada and the United States. He believes that segment is showing surprising resiliency. “Small- and medium-sized businesses were affected by the economic downturn later than larger firms,” he said. “And they appear to be coming out of it sooner, especially in the United States.”

Shifting briefly to a quick overview of technology trends, Tom noted that emerging computing models will accelerate in their breadth and penetration. “We will continue to see the explosive growth of mobile devices and the burgeoning marketplace for application for these devices,” he said. Cloud computing will also grow in popularity, he noted. “Cloud computing is presenting lower cost alternatives for the use of applications, storage, and other computing functions,” he said. “This will be a particular benefit for small- and mid-sized companies.” The computing model that Tom expects to gain widespread adoption is green ICT. “All major ICT companies have developed sophisticated green strategies and are committed to executing them,” he said.

Tom concluded with a pointed appeal to policy makers. “As we recover from the global recession, many leaders around the world have shown a clear understanding of the leadership role that technology can play in the success of a nation. The Obama Administration in particular has seized this idea. ITAC has advocated for a more robust use of technology throughout our economy. We believe it is central to our economic health.”

Tell us your thoughts on this story

Broadening the Span of Broadband

As Canada emerges from the recession, certain sectors of the economy will see continued stimulus spending, while others will see funding cuts. But ICT in general will need to rely on its own resources to investment. That’s why “smart regulation” that encourages private sector spending is critical; and for Michael Hennessy, Senior VP of Regulatory and Government Affairs at TELUS, encouraging “smart” government investment in – and regulation of – ICT is priority number one.

Michael Hennessy, Senior VP of Regulatory and Government Affairs, TELUS Michael Hennessy, Senior VP of Regulatory and Government Affairs, TELUS

“In a period when government is running a $50-billion deficit at least, it can do very little from a fiscal stimulus perspective to stimulate investment in IT and communications infrastructure,” Michael said. “But it can, through good policy, help stimulate private sector investment; or, through bad policy, it can de-stimulate.”

Michael is Chair of an ITAC committee devoted to Smart Regulation. One of the committee’s main objectives this year will be to support positive government regulation and tax policy, in order to encourage private sector spending.

“Let me give you an example: if the government continues to pursue its plan to increase fees for spectrum, then that has two effects – it either increases consumer prices, or it reduces investment to offset those costs. That would be a bad policy. A good policy would be something like a capital cost allowance, that actually encourages builders to spend more than they might otherwise have done – particularly during a recession – or accelerate spending they had planned.”

For Michael and his work at TELUS, the key area of investment is broadband infrastructure, as it “is going to increasingly be the engine that drives the information economy,” he said.

“So when you look at fees and taxes, whether they’re on broadcasting, the internet, or wireless carriers, those are all counter-productive in terms of rolling out broadband. Whereas issues like channeling spectrum auction revenues back into the ICT sector, and encouraging digital literacy training and development through some of those funds, those are immensely positive things that the government can do.

“On a broader basis, with ICT in general, I think the mantra has been and continues to be: recognize that if you’re going to have an information economy, you have to invest in digital literacy; you have to invest in commercial application development, because you really have to develop indigenous intellectual property. In today’s environment, we have to think of intellectual property as the currency for an information economy.”

Other policies Michael advocates for are general tax relief, particularly in regards to capital cost allowance, and the protection of intellectual property.

“While copyright is often looked at as an issue that tends to affect movies and the music industry, I think it’s also a critical issue to address in terms of the intellectual property in software and applications, because if we can’t secure and protect that kind of intellectual property, then it makes it incredibly difficult to build commercial entities and successful new ventures,” he said.

The foundation of all these concerns, though, lies in providing all Canadians with access to advanced broadband networks – online access, after all, is the first step toward global participation, on social, cultural, and economic levels.

There has been recent criticism of Canada’s global position as a broadband provider. For instance, a Globe and Mail editorial called Canada out for lagging in broadband investment, and claimed that in comparison to other OECD countries, broadband prices in Canada are extremely high.

But Michael sees a more pleasant picture.

“My biggest criticism is that the Globe trashed Canada for being a laggard in terms of 3G wireless networks, when there are now 17 advanced 3G networks in the world – what is called HSPA Plus – and three of them are in Canada, with a couple more being built this year. There are only two other countries in the world – I think Finland and Hong Kong – that have two, and most of our major trading partners have none,” Michael said. “In comparison to the U.S., when it comes to wireless broadband, we’re a generation ahead.”

Michael admitted the situation in Canada isn’t perfect, but that there were major problems with the data found in Harvard’s Berkman study, which the Globe used as the basis of its article.

“The media and government are not actually checking the data for accuracy, and then they’re making public policy on things like network sharing based on erroneous data. If we’re going to have a good debate in this country, we have to check our facts, we have to assess what the problem is, and we have to understand that if you’re looking at a country’s readiness in terms of ICT, you cannot simply look at some advertised prices in the consumer market. You really have to focus on the business and enterprise market just as much, because that’s where productivity gains from the use of IT and communications are most likely to occur. But nobody does that because it’s too complex. If you want to do a national digital strategy like the government says, you’ve got to do more than google and re-quote reports, many of which have been discredited by peer review.”

As for government collaboration with the ICT industry to develop this national digital strategy, Michael doesn’t see much progress being made.

“I know there’s thinking going on in Industry Canada and I know there’s work going on at Heritage. But there’s been very little collaboration as a follow up to the June meetings with Minister Moore and Tony Clement last summer,” he said. “Government keeps indicating they want to look at this, but they tend to get trapped by the bricks and mortar issues of things like the auto industry; even though my sense would be at this point that ICT is probably a bigger contributor and bigger employer than things like the auto industry in terms of the Canadian economy.”

But Michael will continue to work to unite ITAC members on issues of government regulation and investment, to present to government all companies’ points of views in as coalescent a voice as possible – which isn’t always easy.

“I think the value of something like ITAC is you try to build off the things where everybody benefits, then it’s up to the members to slug out the polarizing issues. And I would say ITAC is actually better at doing that than a lot of associations I’ve been involved in. [Division] is a critical problem, though, because the more we tend to argue among ourselves, the less weight we have for influencing government to do things. But with lots of people at the ITAC smart regulation table with very different interests, we have managed to collaborate under the umbrella of smart regulation, because there does tend to be general agreement on issues, like stimulating investment and not taxing it away, and the importance of ICT to the economy in general. You have to focus on the positives. Because you have to accept there will always be significant differences of opinion on commercial issues. It’s just something you live with.”

Tell us your thoughts on this story

The Lessons of 2009

Wayne Gudbranson, founder of Branham Group Inc., spends plenty of time analyzing the health of the Canadian ICT industry and the companies that operate within it.

Wayne Gudbranson, Founder, Branham Group Inc. Wayne Gudbranson, Founder, Branham Group Inc.

His company’s highly anticipated annual report, the Branham300, lists the country’s top 300 ICT firms by gross revenue, and outlines key trends across the industry over the past year. 2009 was a challenging year for the industry at large, and Wayne shared many of the lessons learned from his recent work at this year’s State of the ICT Nation briefing for public policy workers.

While the industry demonstrated drops in revenue almost universally, Wayne said the final figures were not as negative as he expected them to be.

“Back in October, when we were looking at the initial data set, you could almost go in a state of absolute despair and hit that bottle of Scotch right away,” he said. “We were looking at the initial data that was coming in – it wasn’t all in – but it was very, very disillusioning. Some firms that had done well for years had minus 50 per cent growth in their revenue. By the time we had all the data in by the end of December and first part of January, the results were looking a lot better.”

He acknowledged that there are many important lessons ICT companies ought to take from 2009; one of them being a shift away from traditional indicators of growth and success.

“Where the focus to gauge the economy is generally job growth; I don’t think you’re going to see dramatic job growth in the ICT sector. Last year, there was sort of a realignment of resources and assets, and unfortunately, that manifested itself in a reduction of headcount. Most ICT companies right now are at a level of critical mass that they feel comfortable with, so if they do increase headcount, it’s not going to be measurable in net new people,” he explained. “Now that may be different among some of the larger organizations that are still showing very high end, double-digit growth; those firms will continue to hire.

“By the very nature of the ICT industry, we can deliver more with less, by utilizing technology even more, so I think the bigger indicator is the end-user on the buy-side increasing their overall spend on net new technology to achieve corporate goals and objectives.”

It wasn’t all bad news in 2009, though, Wayne said. Wireless companies of all sizes, for instance, showed strong growth – and he said this trend will continue as we shift from mobility to wireless.

“People are demanding more capabilities out of their smart phones and their handheld devices than they get from their laptops,” he said. “Now iPads, from Apple, have really opened up a brand new area, but it remains to be seen how well they’re going to do technically. So I think the wireless area is critical as a horizontal area.”

Looking ahead, Wayne sees the reconfiguration of our healthcare system as one of the most important opportunities for growth in the ICT industry, stating that investment in ICT must represent more than the 2 per cent it is currently allocated of the $180-billion national spend on healthcare.

“The problem is that in the healthcare industry, there hasn’t been the close relationship between the buyer and vendor that there needs to be. The awareness of the value the eHealth industry can bring to the healthcare industry is lower than other vertical markets. There is still some evidence that the healthcare industry has a vertical leaning – they like to do things themselves as opposed to engaging the vendor community – and I think that has to change. The healthcare industry has to focus on what they do best – the delivery of healthcare services – and leverage the eHealth industry to deliver enabling effects of ICT,” he said.

“Having said that, I feel for the buyer community on the healthcare side, because they just haven’t had the resources, mainly fiscal, to do what they need to do. When only 2 per cent of your overall gross expenditures are allocated to IT and where 75 per cent of that is focused on maintenance, you’ve got a problem. You’re never going to get to the next level.”

Wayne said there must now be a call to action to address these inefficiencies.

“Healthcare represents 40 to 45 per cent of some provincial budgets now. It could be as much as 70 to 75 per cent in as much as five to seven years, according to pundits, and by 2025, some people consider that healthcare unattended will absorb 95 per cent of our total public purse. So this is crying out for some serious change. If it does, then that could have a significant impact on accelerating certain portions of our ICT sector.”

Wayne also cited lessons in marketing and market research and areas to improve on in 2010, especially considering ICT companies pay marketing professionals 20 to 25 per cent more than other industries, he said.

“A lot of ICT firms don’t do enough engaging with the customer and market research; they still fall prey to building something, then trying to understand the opportunities for it. The ICT sector, and technology by itself, has to come of age and do a little bit more front-end market research and feasibility to determine what are good investments, and where there are markets. There are a lot of good things companies should have learned from this last year.”

Tell us your thoughts on this story

Other News and Events


Budget 2010: Building to a Digital Economy Strategy

Ottawa. March 4, 2010. Today’s Budget 2010 reiterated yesterday’s commitment in the Speech from the Throne “to launch a digital economy strategy to drive the adoption of new technology across the country,” but offered no details or provisions for the strategy, or any new information about when the strategy would be unveiled. The Government has been careful in recent weeks to set no expectations of new funding initiatives and a great deal of the Budget focused on the roll-out of two year programs announced last year.

For example, Broadband Canada, a program to expand coverage to unserved areas, expects to identify and fund its successful applications in 2010. And the Government is “moving forward” with the transfer of the $500-million that was announced in Budget 2009 to ensure that 50 percent of Canadians have electronic health records by 2010.

The Speech from the Throne spoke of the need to “fuel the ingenuity of Canada’s best and brightest and bring innovative products to market.” The Budget addressed this primarily through significant increases in funding to the granting councils, Canadian Foundation for Innovation, and specific public research institutions. Budget 2010 does contain one new measure to advance enterprise innovation. It has created a two-year pilot program where Federal agencies will adopt and demonstrate the use of innovative products and technologies developed by small and medium-sized businesses. ITAC has supported the idea of such an initiative. $40-million has been allocated for this purpose. The National Research Council’s regional innovation clusters program will receive an additional $135-million to foster knowledge transfer among business, academia, and government.

Budget 2010 asserts that the “Government is taking steps to improve its support for innovation and ensure that investments are effective and yield the best possible result for Canadians.” It has announced another comprehensive review of all Federal support for R&D including the SR&ED; tax credit, although timing and terms of reference for this review are still pending.

This Budget contained few references to the capital crisis facing many emerging knowledge-based firms. Here, the focus is primarily on non-monetary measures to free investment capital. Section 116 of the Income Tax Act has been an impediment for on-resident investors in Canadian firms. Budget 2010 indicates the Act will be amended to eliminate onerous compliance obligations for non-resident shareholders of corporations. ITAC has advocated for and welcomes this change as one measures to eliminate dis-incentives for investment.

10th Annual IT Hero Awards - Call for Nominations

ITAC is seeking nominations for its 10th Annual IT Hero Awards which celebrate and recognize creative applications of information technology that significantly improve the lives of Canadians. For more information or to submit a nomination, visit: www.itheroawards.com.

On Line Brand Extension a Risky Business

Lavalife, the great Canadian innovator in using electronic technology – voice networks, the web, and mobility networks – to connect singles and enrich single life, has one of the most valuable brands on the Internet. In 2007 market research indicated a 66 per cent unaided, 96 per cent aided recognition rate. Not bad for a brand first introduced in 2001 as the place where singles click.

Until recently, Lavalife was focused extensively on young singles 18-34. Then CEO/co-founder Bruce Croxon decided he wanted to create a suite of singles services for people his mother’s age. This meant extending Lavalife’s brand into a whole new market and it was a challenging idea. How do you take a brand built on youth, adventure, and romance, providing services to technology-savvy, web-adept twenty- and thirty-somethings, and make it meaningful to baby-boomers (otherwise known as their parents)? According to Lally Rementilla, the answer is “very carefully.” Lally is the Vice-President, Finance of Lavalife and lavalifePRIME, a new platform “where singles 45+ click.”

The path toward the creation of lavalifePRIME was with research. “Primary research conducted by the American Association of Retired People (AARP) told us that the sexual attitudes of baby boomers had changed forever the way we view age-related problems pertaining to health and sexuality. This generation does not meekly accept these problems but sees them as within their power to control and overcome,” Lally told an ITAC group at a recent Digital Commerce Forum. The research showed that 75 per cent of single boomers date regularly and that women in the 40-50 age group are better educated and more affluent than ever before in human history. And, as Lally pointed out, they are not shy. “They are proud of themselves, they want a place to show themselves off and they are used to getting what they want.”

This research guided the creation of lavalifePRIME as a place to share interests and celebrate the whole person, a place to show and tell people who you are on your own terms. The service was launched in beta in 2007 and has grown largely by word of mouth. Lally’s advice on extending a venerable brand: “Start with no preconceived notions. Make sure the qualities and values of your brand can be consistent across the new product line. Identify and celebrate the unique qualities of the market you are addressing. And take your time. Extending a brand, especially an online brand, is always risky.”

Join the Canadian delegation at WCIT 2010 in Amsterdam

On May 18, 2008, the World Information Technology Services Alliance (www.witsa.org) awarded Canada and ITAC the responsibility to host WCIT 2012, the most important ICT conference in the world. The conference will take place in Montréal, Canada, May 21-24, 2012.

In less than four months, Amsterdam, the Netherlands, will host WCIT 2010 from May 25 to 27, (www.wcit2010.org). Canada and ITAC will be present with a large delegation of Ministers, ITAC board members, and representatives from Canadian ICT companies interested in exchanging ideas with the most senior leaders of the ICT industry. They will have the opportunity to meet potential partners from more than 80 countries and listen to CEOs from all over the world debate the top issues related to the use of ICT under the theme of “Challenges of Change.”

If you are interested in joining the Canadian delegation in Amsterdam, please express your interest on the WCIT 2012 website at: www.wcit2012.org.

Tremblant Venture Forum 2010
May 5 and 6, 2010

Calling all up-and-coming companies and venture capitalists.

If you are looking to invest, or be invested in, the ultimate venue for your next business move is coming in May, to Mont Tremblant, Québec.

On May 5 and 6, ITAC is organizing the Tremblant Venture Forum. This forum enables Eastern Canada’s ICT and cleantech companies to present their business plan to 40-50 leading Canadian and American Venture Capitalists. This event takes place at the Fairmont Tremblant, in Québec.

ITAC is organizing the event in cooperation with its partners: Communitech, Ottawa Centre for Research and Innovation (OCRI), Research Centre in the Information Technologies (CRIM), Québec Technology Association (AQT), Réseau Capital, and Canada’s Venture Capital & Private Equity Association (CVCA).

If you are a company seeking between $2-million and $10-million in financing, please send your business plans as indicated on the website before March 15, 2010.

If you are an investor, an early-stage or growth-stage company, or a participant in the conference, please register online at: www.tremblantventureforum.com.

Places are limited.

Join the 22nd annual PROFIT 100/ Inscrivez-vous au 22e classement annuel PROFIT 100

Every year the PROFIT 100 turns successful entrepreneurs into the heroes of Canadian business. You can be one of them.

Now in its 21st year, the PROFIT 100 is the definitive ranking of Canada’s Fastest-Growing Companies. Its alumni include some of the biggest names in Canadian business, such as Research in Motion, Open Text, 1-800-GOT-JUNK? and WestJet Airlines.

You’ll enjoy many great benefits as a PROFIT 100 company, including coverage in the June 2010 issue of PROFIT Magazine and online at PROFITguide.com. PROFIT 100 leaders also receive an exclusive invitation to the PROFIT 100 CEO Summit, Canada’s most rewarding conference for entrepreneurial achievers. What’s more, a PROFIT 100 ranking can attract new customers, employees and business partners—and lead to higher sales.

The entry deadline is March 31, 2010.

Apply now at www.profit100.com or visit www.profitguide.com/events for more information.

Business venture competition, TiEQuest Toronto, accepting applications

ITAC would like to help call on all entrepreneurs and innovators seeking a potential showcase for their work. The 2010 installment of TiEQuest – the annual business venture competition held in Toronto aimed at encouraging entrepreneurship, fostering emerging entrepreneurial talent, and stimulating the entrepreneurial ecosystem – is now accepting applications.

TiEQuest attracts more than 200 entrepreneurs every year. These contestants include existing and emerging entrepreneurs, patent holders and/or applicants, university students, and alumni across North America. TiEQuest offers more than $150,000 in prizes to the winners, and to encourage youth participation, TiEQuest offers a New Entrepreneur Prize to the best student team. The top teams also have an opportunity to win up to $1 million in investment from sponsors.

TiEQuest boasts more than 25 success stories, where contestants have taken their business idea to established enterprises, and have obtained financing, signed partnerships, acquired customers, and generated revenue. Contestants see value in participating in the competition as it offers networking opportunities with leading entrepreneurs and investors, recognition with investment, legal, and accounting firms, opportunities to practice pitching their venture to investors, and opportunities to turn an innovative idea into a real business.

Founded in 2005, the mission of TiEQuest is simply to connect entrepreneurs with angel investors, venture capitalists, and fund managers. Visit www.tiequest.org for details.

The Ninth Annual RE$EARCH MONEY Conference:
“Industrial R&D: Is Canada Really Lagging?”
National Arts Centre, Ottawa
March 25, 2010

Corporate R&D is being transformed. The large industrial research lab is no longer the norm. Multinational firms now globally distribute their R&D and collaborate with partners in public and private sector institutions. Does the “new normal” offer opportunities to a country like Canada?

Speakers and panelists include H. Douglas Barber, co-founder and former CEO, Gennum Corp and Distinguished Professor in Residence, McMaster University; Bill Buxton, Principal Researcher, Microsoft Research; Fred Gault, Professorial Fellow, United Nations University MERIT; Raymond Leduc, Director, Bromont Manufacturing, IBM Canada; and David Miller, Senior VP, The Woodbridge Group. Join RE$EARCH MONEY to discuss and debate the present reality and future of industrial R&D. For more information and to register, visit: www.researchmoneyinc.com/conferences/201003.

ITAC Presents an Executive Forum on Green ICT

Information and communication technology is green technology. From the simplest solutions to the most complex, ICT plays an integral role in the solutions to climate change and in reducing our impact on the planet.

ICT companies are working hard with their customers to provide the means to operate greener 21st century businesses and households. And they are walking the talk of sustainability, ingeniously using their technology to reduce the environmental impact of their products and services, their facilities, and their business practices.

Join us in Toronto on April 27 (8:30a.m. to 4:00p.m.) for a celebration of this unheralded but vital aspect of information and communication technology.

Presenters include:
- Melissa Alvares, Sustainability Program Manager, Softchoice Corporation
- Neil Sentance, Assistant Deputy Minister, OPS Green Office, Ministry of Government Services, Ontario
- Mark Aboud, President and Managing Director, SAP Canada

Panelists include:
- Paul Cooper, Vice-President, Public Business Group, Dell Canada
- Frances Edmonds, Director of Environmental Programs, Hewlett-Packard
- Bob Crow, Vice-President, Industry, Government and University Relations, Research in Motion
- Shelagh Kerr, President and CEO, Electronics Product Stewardship Canada (moderator)
- Wayne Karpoff, President, Willowglen Systems
- Marzio Pozzuoli, President, RuggedCom Inc. (invited)
- Peter Corbyn, CEO, GreenNexxus
- Keith Taylor, Regional Sales Manager, Texas Instruments
- Chris Carradine, Eco Bee
- Mike Schell, Air Test Technologies
- Niall Wallace, Infonaut (moderator)
- Alan Fair, Syncrude
- And more.

For further information, contact Bill Munson (munson@itac.ca) or Lynda Leonard (leonard@itac.ca).