Autumn in Quebec is Lovely for ICT Firms (So is Winter Spring and Summer)

We’ve been spending a fair amount of time in Quebec recently, drawn not just by the charms of Old Montreal or the great cider in the Eastern Townships. Our trips have much more to do with the fact that Quebec “gets” ICT. Quietly and carefully, Quebec has built one of the most research and development-friendly environments in Canada.

For example, it offers a fully refundable basic tax credit corresponding to 17.5 percent of R&D salaries paid in Quebec. We love this model and have strenuously advocated it as a means of making our national SR&ED credits more accessible. In addition, a fully refundable tax credit of 37.5 percent on R&D salaries has made Quebec very attractive for companies seeking locations for their labs. And foreign workers employed by a company doing research in Quebec benefit from a five-year tax holiday. In our discourse with other jurisdictions we use measures like these as illustrations of effective policies to attract R&D investment into our relatively high-cost labour jurisdiction.

It certainly seems to be working. The province’s knowledge-based sector in general is strong, anchored by aerospace (with companies like Bombardier and CAE) and pharma. But there is a large and growing ICT footprint as well, with companies such as Ericsson, CSC, Dassault and SAP operating labs there. More than one million people in Quebec are employed in science and tech.

But there is much more than tax incentives at work here. There is a spirit of adventure, fueled by the national self-confidence that is the great legacy of late 20th-century Quebec history. It has helped to build hugely successful ventures like CGI, DMR and LGS. This growth has occurred in an environment that is, as Mike Roach recently told our governors, “prepared to take a risk on two 27-year-olds.” It’s an environment that produces effective relationships within all dimensions of the innovation ecosystem.

Generally speaking, Quebec is a fruitful environment for knowledge-based business. None of this happened by accident. It is all due to an objective-driven, integrated approach to public policy that can transform societies. In 2006, R&D expenditures accounted for 2.7 percent of Quebec’s GDP. The target for 2010 is 3 percent.

It’s amazing what can happen when you set goals.

CGI's Growth Imperative

Michael Roach, President and CEO, CGI

In its first year of operation (1976), CGI generated $130,000 in revenue. Today CGI has grown into a global powerhouse in the hotly contested ICT services marketplace and it generates that same level of revenue every five minutes. ITAC Governors and guests enjoyed a unique opportunity on October 6 to hear how the company has evolved so successfully directly from CGI President and CEO Michael Roach. Speaking in one of the oldest inns in Vieux Montréal (a room that probably has seen similar gatherings of fur traders), Mike shared a few secrets. To begin with, CGI’s two founders, Serge Godin and André Imbeau, dreamt big and saw global growth as an imperative. The strategy they set was to grow aggressively – 50 percent organically and 50 percent through acquisition. Their acquisition in 2004 of American Management Systems (AMS) was one of the largest in Canadian ICT. CGI also paid careful attention to culture, creating “an environment in which we enjoy working together in a company we are proud of.” Mike himself is proud of the large stake employees have in the firm pointing out that 85 percent of employees are shareholders – shareholders who have helped the company survive many forces that have buffeted their competitors. He noted CGI is the last public traded ICT services company headquartered in Canada and he predicts the vigorous M&A activity occurring in the services space will continue.

CGI is also selective and strategic. This applies to its approach to global markets. CGI has resisted the pull to be everywhere in the world. “We’re in 16 countries,” Mike said, “and they represent more than 75 percent of the world’s ICT spend.”

As the leaders of one of Canada’s largest ICT firms, Mike has participated in recent meetings around the formulation of a national ICT action plan and he offered several suggestions. “We need to create and communicate a compelling Canadian vision in ICT,” he said. “And that means ensuring that Government procurement policies do their part. Government business provides valuable references for Canadian companies competing for business around the world. They help to level the playing field for us. Our first client in 1977 was the Québec Government. Somebody took a chance on our two 26-year-old founders who had a dream and look where we are today.”

Mike noted the importance talent for the ICT industry and pointed out ICT’s tremendous potential to create high-value employment just about anywhere. “We have 400 people in the Saguenay,” he said, “and 150 in Charlottetown. These are high-paid, high-quality jobs. So any ICT action plan needs to focus on proactive investments in education and infrastructure.” Mike believes that the Canadian talent pool is immense, but is too frequently an underestimated resource.

He closed by reinforcing his confidence in CGI and in the ICT future in Canada.

A Community of Interest: SAP Labs Montreal

Maria Codipietro, Managing Director, SAP Labs Canada – Montreal and Toronto

Situated in more than 50 countries, leading business software developer SAP is a company with a sense of place. SAP Canada’s Quebec presence is significant, and it does not stop at the front door; the company is exceptionally well integrated into the community.

We traded questions and answers with Maria Codipietro, Managing Director, SAP Labs Canada – Montreal and Toronto.

ITAC: When did SAP open the Montreal lab?

Maria Codipietro: SAP Labs Montreal was established in 1998 and has experienced strong growth ever since; its workforce has increased from 85 employees in 2003 to approximately 400 – about 18 percent of our total Canadian workforce – today.

Could you provide an overview of the types of projects/products the Montreal lab handles?

SAP Labs Montreal is an integral part of SAP’s global research and development network. As such, it develops cutting-edge software products for a wide array of SAP solutions that are used by companies and organizations around the world to improve their businesses processes, make them more efficient and profitable, and enhance their competitive position.

Few IT companies can offer skilled software developers the opportunity to work on innovative solutions that have global impact. SAP Labs Montreal has. While the CRM team is busy shaping the future of customer loyalty, others are developing the next-generation SAP solutions for the retail, utilities and communications industries: Point-of-Sale, Enterprise Point-of-Sale, CRM for Utilities, AMI (Advanced Metering Infrastructure) and more.

But we don’t just develop products at Labs Montreal. Our location is also home to an Installed Base Maintenance and Support Development team, an SAP Business One support team, a Custom Development team, an advanced research group as well as an Integration & Certification Center — the second of its kind in the Americas.

Our internal ability to research, define, develop and support products in Montreal means increased responsiveness to customers while helping reduce turnover as more career opportunities are available within one location.

You put a lot of emphasis on your many partnerships with what your marketing materials terms “the local software industry ecosystem, including government agencies, universities, research centres...in Montreal.” Could you expand on those?

As a key component of Montreal’s R&D community and the local software industry, SAP Labs Montreal’s mission is indeed that of a growth engine; hence the importance of co-innovation projects with partners and universities. A recent example of collaboration with a strategic SAP partner is “Ajax weaver.” In early 2009, Nakisa undertook beta tests and extended the applications of this mobile platform designed by the Office of the Chief Scientist by creating a prototype of their OrgChart application for Apple’s iPhone.

The Office of the Chief Scientist is also responsible for reaching out to universities and engaging noted Quebec scientists in joint research projects with SAP Labs in Montreal and beyond. Over the past few years, more than 15 joint projects took place with nine different Quebec universities/research centers with results transferred as suitable to different entities within the company. These projects vary in subject, but also in method: exploratory research by a professor, prototype by a team of students, hosting of a PhD student with a development group, sabbatical by a professor inside the Research group, in-kind contributions such as advisory experts or anonymized databases, etc.

What are the benefits for SAP Labs Montreal to be located in Montreal/Quebec?

When it was launched, SAP Labs Montreal was mandated to leverage local expertise and technical skills, and help drive economic, business and workforce development in Montreal, Quebec and Canada. To do so, we were able to take advantage of a number of compelling, location-related advantages. First of all, Montreal offers a wealth of highly qualified, multilingual talent in addition to being in a convenient time zone for business in the Americas. Secondly, Montreal is renowned for its thriving research community and world-class universities, with whom SAP Labs Montreal partners on co-innovation and research projects.

Our success in Montreal is also the result of close teamwork with government agencies. Not only do they help us leverage the public sector support offered by the Quebec Government in the e-business/R&D field, but their strategic advice and ongoing support have helped fuel our growth over the years. This growth is a testament to our ongoing investment, commitment and growth in the Canadian market, but it also demonstrates Montreal’s competitive advantage in securing IT projects and highly skilled IT jobs in a very competitive global marketplace.

Community involvement is a core value of the company. Could you provide some examples of the projects that employees (and the company) are involved with in Montreal and environs?

Every October, all SAP employees worldwide participate in the Month of Service, SAP’s largest and most encompassing volunteer initiative with hosted events designed to build better communities. In 2008, more than 61 percent of SAP Canada participated in more than 20 Month of Service events, donating more than 2,950 volunteer hours to communities in need. On October 7, a group of 50 employees helped Heritage Laurentian plant more than 1,300 indigenous trees and plants to protect Montreal's natural habitat in an at risk region and recreate a sustainable home for endangered species. A week  later, a team of 20 helped the Santropol Roulant rest their Edible Campus Garden for the winter before joining the Santropol’s Meals-on-Wheels Volunteer team to deliver meals to seniors and individuals living with a loss of autonomy.

But Month of Service is only one chapter of SAP’s corporate social responsibility program, which also encompasses skills-based volunteering projects, school partnerships, local episodic volunteer projects and matching grants for employee donations to charity organizations.

ITAC Events

November Events

For a full event listing, and to register for ITAC events, go to: http://www.itac.ca/index.php?/site/events/