TORONTO — Canadian businesses need to invest more in machinery, equipment and software to help close a 16 per cent prosperity gap between Canada and the United States, according to a Toronto not-for-profit organization.
This was one of several recommendations that the Institute for Competitiveness and Prosperity (ICAP) made in its second report on Canada’s economic performance titled “Realizing Canada’s prosperity potential.”
The findings were presented to approximately 80 customers and partners attending Microsoft Canada Co.’s second annual Heroes of Innovation event in Toronto Wednesday. Panelists included report author Roger Martin, John Melodysta, chief information officer,Grand & Toy, and Shafiq Amarsi, enterprise services manager, Microsoft Canada.
Grand & Toy realized this 15 years ago, which is why business intelligence and business-to-business e-commerce have been the cornerstone of its IT strategy since. “We had to adapt to a new national and competitive environment,” said Melodysta. “We were facing competition from big box retailers and NAFTA.”
The report, which was originally prepared for the annual meeting of the World Economic Forum in Davos, Switzerland last month, found that from 1991 to 2003, Canadian businesses invested an average of 13 per cent less than their counterparts in the U.S., costing Canadians $400 in lost GDP per capita.
“Our productivity has worsened dramatically over the past 20 years,” said Martin, chairman of the institute for competitiveness and prosperity and dean of the Joseph L. Rotman School of Management at the University of Toronto. “The gap is actually four times as big than the U.S.”
While Canada is the second most prosperous country of those with a population over 16 million, it significantly trails the U.S. in terms of economic performance, the report said. Whereas in 1981 Canada was behind the U.S. by $1,800 in per capita GDP, the gap rose to $7,200 in 2003, said Martin, quoting the report.
To get back to 1981 levels, Martin said, in addition to investments in IT, Canadian citizens, businesses and governments need to make reforms to the tax system, open up regulations that prevent competition, focus more on future prosperity, discourage the government from consumption of prosperity, and invest more in higher education.
“If we work on these six areas we can make Canada the most prosperous and equitable country on the face of the planet,” said Martin.
Likewise, Amarsi linked prosperity to productivity. For example, in terms of managing costs, he said, the majority of businesses spend 70 per cent of their IT budgets on maintaining platforms and only 30 per cent on future development.
Melodysta said Grand & Toy, for example, spends roughly 40 to 50 per cent of its IT budget on new investments and the remainder on maintaining current hardware and software.
Leigh Popov, technical services manager at Credit Valley Hospital in Mississauga, Ont. said 40 to 50 per cent would be ideal. However, with only two per cent of the hospital’s operating budget to work with, Popov doesn’t have that kind of spending freedom.
“We try to spend as little on existing technology and put as much towards new product,” said Popov.
“Microsoft’s role is to provide a platform that allows customers and partners to be innovative and to provide value,” said Amarsi, adding that partners play a big role in taking these solutions to market.
Clarity Systems, for example, has worked on two major projects with Grand & Toy recently. In one case, Clarity helped Grand & Toy develop an Internet-based ordering system grandandtoy.com, which went live in the fall of 2000. The application offers streamlined ordering functionality, enhanced inventory monitoring, product searching capabilities and a user-friendly design.
More recently Clarity implemented Clarity Performance Management, a suite of Web-based applications including Defector Detector, which helps Grand & Toy track customer buying behaviour and customer analysis.
In another case, Microsoft partner Lanworks helped Oakville, Ont.-based Frontier Adventure Racing (FAR), which organizes adventure races across North America including a six day non-stop race, build a virtual private network and implement Windows Server 2003.
One year ago FAR had two laptops and two desktops, which, in some cases, weren’t even connected to the network. “It was a jungle,” said Rene Noel, IT manager at FAR, adding that there was no hierarchy and there were multiple versions of the same file in folders.
Now with VPN access, Noel can access FAR’s network remotely from the location of the race whether it be in Newfoundland or Whitehorse. “The amount of time freed up is invaluable,” said Noel. “Now I get to actually sleep at races.”