IT in Canada: Hiding the Light Under the Bushell
"In most OECD countries, investment in knowledge - the sum of investment in R&D, software and higher education - has grown more rapidly than investment in fixed assets; the United States, Canada and Australia are the major exceptions" was one of the conclusions of the OECD's Technology and Industry Scoreboard 2003.
Of course, this is just one of a myriad of reports out there with countless comparative tables and statistics dealing with investment in this or that sector, an increase of which would somehow eventually improve Canada's economic performance. Whatever may be the case for other sectors, Canada has a viable information and communications technologies (ICT) sector. However, during the 20 years that I have been writing articles and reports in the IT sector, I have found communications equipment and software companies based in Canada to be, collectively, amongst the least co-operative of those in all the developed countries.
This lack of co-operation became most apparent when, in the preparation of reports for commercial publication in North America and the development of international category-specific directories for my Internet site, Canadian companies were less inclined to respond to emails seeking basic information in return for free inclusion and hence publicity. For all its various assistance programs, if the various Canadian government agencies were to balance these carrots with the occasional stick, Canada's ICT sector could develop into one that was truly world leading.
In 1999, I wrote a report on computer telephony integration (CTI, a set of technologies that allow the more intelligent management of telephone calls) that was published by USA-based Computer Technology Research Corporation (CTRC) in January 2000. In addition to 65,000 words of text covering all aspects of CTI, I included a directory of 200 vendors of CTI-capable telephone systems and CTI products from around the world. To be included, a vendor had to have relevant products and to have answered a few questions I'd e-mailed them. There was no listing fee.
Of the Canadian companies I contacted, I received responses from Décisif Software Solutions, InfoInterActive, MediaSoft, Nortel, ObjectWorld, Prima, Pronexus, Simplified Telephony Solutions, SoundLogic CTI and TSB International, all of which were included in the report. However, despite repeated e-mails, I did not receive responses from Computer Talk Technology, ESNA Tech, IntelliBase, Mitel, Pulse Software, Resource Software International, Response Interactive, SynreVoice Technologies, TKM Communications, Tri-Link Technologies or Vienna Systems. This response rate of 42% of companies contacted was the lowest of all the major countries (see table 1).
Table 1 - Companies Providing Information for Inclusion in 1999 CTI Report
Prior to researching this CTI report, my writing had been largely confined to Australia, where I've resided since 1982. From my first piece on statistical multiplexers in 1984, I've had about 140 articles published, most on communications technologies and almost all of them paid. And, despite what the secondary school English marks I was given at Peterborough Collegiate and Vocational School (Peterborough, Ont.) would suggest, most of my pieces have been published with little or no editing.
|Country of Head Office||Companies who Responded||Companies who did not Respond||% Who Responded|
As I reside in Australia, for those articles I have written about products and services, I have focused on those in the Australian market. And as I work with technologies from the enterprise users' perspective, most of the features I have written on technology topics have discussed the applications, strengths and weaknesses of technologies from this perspective, noting what the various products offer in an accompanying table. I don't re-write press releases into "articles" which trumpet this or that product.
Thus, while I have once or twice cited Gandalf, Develcon, Memotec and Newbridge, the one Canadian company which has regularly belonged in my articles, although has not always been included, was Nortel. As the Australian PBX market is dominated by NEC of Japan and Ericsson of Sweden, articles which give equal billing to manufacturers with single-digit market share percentages should be particularly appealing to such companies. However, Nortel's co-operation has been, at best, sporadic with then Nortel Australia Managing Director John Kranenberg once asking me "what had I done for Nortel?"
In 2000, I was planning to return to Canada and sought to meet with Nortel staff, as I had done in 1991, to discuss the development of the Meridian 1 PBX and other products. Having worked with the Meridian 1 and other PBXs for several years, I had three pages of notes on how this product could be further developed.
However, despite the Sydney sales manager e-mailing her contacts for months before I left, I was not able to arrange such a meeting, and was only granted a 90 minute conference call the day before I left Canada. And when I subsequently raised this with Nortel's then CEO John Roth by e-mail, he eventually responded that "Meridian is managed out of Dallas." and "If you wish to talk to any product manager you will need to visit a different Nortel office". In other words, if I want to share my ideas on how Nortel can further develop one of its key products, I should fly myself from Sydney Australia to Dallas Texas!
The following year, I began to develop a series of product directories on my internet site, www.occidental.com.au. After completing pages for 13 product categories for Australia and New Zealand, I added international directories for four categories of speech technologies. As with the CTI report, I didn't and don't charge a fee, but require answers to a few questions.
My attempts to meet with Nortel staff during my 2000 visit to Canada lead to me being contacted by Chris Luxford of Nortel Australia. After initial cordiality, he became increasingly hostile when I sought information on Nortel for my Internet site. He refused to classify Nortel's Succession telephone system as PC-based or LAN-based (it turned out to be the latter) and demanded that I locate it on the page of VoIP (voice over IP) gateways instead of the page of telephone systems, to fit their current marketing push.
Almost all of the other vendors I'd contacted had, after one or several e-mails, responded and were included. But again, there were exceptions, notably three other companies that are, or were, based in Canada:
l Delano Technology (subsequently acquired by USA-based divine, itself subsequently went bankrupt), despite having an office in Australia when I contacted them, refused to respond to several emails.
l 43 of 44 developers of text-to-speech software responded to my emails and are included. Victoria-based Speech Technology Research was the only one that refused.
l VoiceGenie refused to respond to repeated e-mails with questions to be listed in the VoiceXML software directory, although they eventually responded and were included.
Also in 2001, when I was researching an article on integrating the Internet into the call centre that was published in the UK, Response Interactive refused to respond to my e-mails. Only in 2003 did they advise me that the product that would have been relevant to that article was no longer being developed. Maybe no one in the market was able to find out about it.
When I was researching a conference paper on speech recognition in early 2002, Nortel would not respond to repeated questions on their deployment of that technology which is used by Bell Canada's directory assistance service. Fortunately, another vendor was able to confirm that Nortel no longer developed the core SR technology used by Bell Canada, as well as the low per transaction success rate of that service which perhaps explained why Nortel had not responded.
Whenever the subject of the success or otherwise of Canada's technology business sectors comes up, much of the discussion will inevitably turn to the degree of scientific research and development (R&D) undertaken and government support, or otherwise, of this research.
Canada's gross domestic expenditure on R&D (GERD) as a percentage of GDP has increased from 1.60 percent in 1991 to 1.94 percent in 2001. This placed Canada 5th among the G7 and 12th among the 30 OECD countries (OECD Main Science and Technology Indicators, 2003). Perhaps more significantly, only 40% of R&D in Canada is funded by business compared with 72% in Korea, Japan and Sweden, 66% in the USA and Germany, 58% in China, 53% in France and 46% in the UK and Australia (UNESCO, Institute for Statistics, most figures for the year 2000).
Funding of R&D notwithstanding, Canada has certainly produced its share of inventions, including the electron microscope, IMAX, pacemaker, telephone, zipper, washing machine and Java programming language, although many Canadian inventions have been successfully commercialized in other countries, a characteristic Canada shares with Australia and, to a lesser extent, the UK. It is thus arguable that the role played by the Canadian government to facilitate and directly assist commercialization is at least as important as that of the funding of R&D.
The Canadian government does, of course, support industry development. The Technology Partnerships Canada (TPC) which help companies bring products to market received $C328 million in 2002-3. The Networks of Centres of Excellence (NCE) program which helps transfer science and technology knowledge among researchers through 21 subject matter-specific networks received $C77.4 million that year. And the Program for Export Market Development (PEMD) received $C4.7 million the year before. And through tax credit to businesses for scientific research & experimental development (SR&ED), Canadian companies are entitled to tax relief for performing research in Canada.
However, while these programs suggest generous government support of technology-based industries, none of these programs actually supports the commercialization of R&D. Participating businesses must contribute funding to the NCEs and must pay to participate in Team Canada Trade Missions which promote Canadian businesses overseas. The TPC does not have an export or commercial focus, but instead focuses on enhancing technological capabilities of Canadian industry. WTO rules limit just how far government agencies can directly assist industry.
But does Canada's ICT industry need any assistance? Perhaps not, according to Angela Kooij, the Manager of Communications at Information Technology Association of Canada who noted that Canadian government assistance is "not usually the handouts variety since the IT sector is vibrant enough and contributes significantly to the Canadian GDP. More infrastructure assistance, and policy setting that affects the economy and the industry."
Of the 24 countries listed by the OECD, Canada's technology balance of payments as a percentage of GDP was 0.18 putting Canada in 6th place behind the UK, Switzerland, Belgium, Denmark and the USA for 2001 (OECD TBP database, May 2003). This figures suggests that Canada's technology sector as a whole is not only vibrant but generating significantly more exports than the country is consuming in corresponding imports.
Given this apparently strength, which covers much more than ICT, it's worth noting that Nortel's share of Canada's PBX and key system market (in terms of shipments of new and add-on premises switching lines) in 2001 was 62% and Mitel's was 11% (Source: Gartner Dataquest, August 2002). Although there are other subsectors within ICT, given Nortel's strength and Mitel's presence in many other countries' markets, their exports will far outweigh the imports which comprised the remaining 27% of the Canadian PBX and key system market. Even if Canada had no other companies in the ICT sector, Canada would probably still have a positive ICT balance of payments.
However, according to Gartner, these two companies' shares of the Canadian PBX and key system market in 2002 fell to 53% and 10%, respectively (Source: Gartner Dataquest, June 2003). If this trend continues, unless other companies in the ICT sector take a greater interest in international marketing, Canada's current positive technology balance of payments will decrease.
Returning to the issue of government assistance, whether or not a specific sector really needs it, without a government-funded carrot to dangle in front of them, there is no government-backed stick to be applied to the posterior of those businesses that need it. Perhaps the TPC needs to include developing technology marketing competence as an adjunct to enhancing technological capabilities.
Later in 2002, I was again researching CTI for a report specific to Australia and New Zealand. This time, Mitel responded promptly (amazing what e-mailing the CEO does) but when I contact Mr. Luxford with straightforward questions on Nortel's products, he complained about the resources necessary to answer questions such as what CTI protocols the Meridian 1 supported, yet complained that I had not sought to interview him and his team for the report, as if such an interview during which I would ask the same questions could possibly take less time! 3D Networks, which retails Nortel PBXs in Australia, gave answers for Nortel, although Mr. Luxford eventually did so as well. This report was published in mid 2003.
As the antipodes represents about 3% of the world market, I sought out and signed contracts with Bloor Research (www.bloor-research.com) to write CTI reports for Europe and North America and Datamonitor (www.datamonitor.com) to write one for Asia using the Australia and New Zealand report as a template. So again, I sought answers from companies with relevant products that were present in one or more of these markets. And again, there was no charge - companies simply had to answer a few questions.
As had been the case in 1999, some vendors responded promptly, some eventually and some not at all. The Canadian companies that responded were Computer Talk Technology, Mitel, Nortel (despite Mr. Luxford's efforts to dissuade his colleagues), Telecor and Upstream Works. However, Sys-X, IP5, Nortak, Pulse Software and Tri-Link (subsequently acquired by USA-based Teltronics) did not respond to my emails and Vocalscape's Lacy Fortier responded to one of the many emails asking a few specific questions about that company with, "are you selling something?"
(Of the other developers I contacted in 1999, Décisif went bankrupt in 2003, TSB was acquired only for some former TSB staff to establish Upstream Works, IntelliBase was renamed IP5, SoundLogic CTI and TKM Communications had been acquired by Avaya, Vienna Systems had been acquired by Finland-based Nokia and tighter classification criteria excluded InfoInterActive, Elix (itself formed when MediaSoft merged with Prima), ObjectWorld, Pronexus, Resource Software International, Response Interactive, Simplified Telephony Solutions and SynreVoice Technologies.)
These reports also featured a limited number of case studies, featuring an application for which the product developer had provided a customer contact. Upon being given a contact person at CRM-developer Minacs for their use of Upstream's CTI software, I repeatedly emailed Minacs with questions. I even stayed up to 04:00 to phone the person at the time he requested, but I never did receive any answers.
As illustrated in Table 2, Canada was not at the bottom of the list for major countries this time but it couldn't get much closer.
Table 2 - Companies Providing Information for Inclusion in 2003 CTI Reports
These three reports, each more than 90,000 words in length with 132, 108 and 66 vendors in the respective directories, were published in October 2003, January 2004 and October, 2003, respectively. More significantly, Bloor Research had requested me to write specific assessments of some of the individual firms in the vendor directories. After approaching 51 such firms, I wrote assessments on 41 of them, including Mitel, Nortel and Upstream Works. Telecor would not then respond to my emails.
|Country of Head Office||Companies who Responded||Companies who did not Respond||% Who Responded|
|New Zealand *||6||1||86%|
|* The Australia and New Zealand report includes distributors|
Again, getting answers out of Nortel was as difficult as getting blood out the proverbial stone, in part because of their insistence, presumably to ensure that the cost was allocated to the correct media liaison budget, that I forward questions about their operations in Asia, Europe and North America etc. to their Australian PR firm!
However, given that Nortel lost $C5.6 billion ($US3.6 billion) on revenues of $C16.4 billion ($US10.6 billion) in 2002 following a loss of $C40 billion ($US27.3 billion) on revenues of $C27 billion ($US17.5 billion) in 2001 with these revenues falling from $C44.9 billion ($US30.0 billion) the year before, and the company sold the Clarify CRM product to Amdocs for $US210 million ($C330 million) in October 2001 having acquired Clarify for $US2.1 billion ($C3.1 billion) in October 1999, the company's apparent reluctance to engage in dialogue with the media is perhaps understandable. In light of these numbers, the questions of why this ostensibly Canadian company uses American dollars in its annual report (perhaps the losses look smaller) and sells some equipment worldwide which generates reports using the backwards American MM/DD/YY format not used by any other country, looses their significance.
(And what does that say about those firms that would not respond to my emails at all!)
Shortly after completing these CTI reports, I signed a contract with Oxygon GmbH (www.oxygon.de) to write a report on CTI for the German-speaking European market which was published, in German, in February 2004. As this followed the sale of Swiss-based Ascom's PBX division to Concord, Ont. based Aastra in September, 2003 this presented the opportunity for another Canadian firm to join the list of those I assessed. But for whatever reason, their failure to respond to repeated emails ensured they were not.
Still more recently, I added six more product categories to the international developer directory on my Internet site, which now includes over 400 companies, including seven from Canada. Undoubtably, a few more belong.
During my research, I found it interesting to note the extent to which Canadian company names are disproportionately towards the end of the alphabet, although perhaps not that surprising given the preference of many Canadians for the less exciting American version of gridiron football over Canada's own game, and the readiness of many Canadians to adopt American spelling (it's call centre, not call center) and the readiness of many Canadians to adopt the American convention of two-letter state abbreviations for the provinces.
A business cannot hope to prosper by hiding its light under a bushel. Government assistance can help - governments around the world help some of their industries. But perhaps the Canadian government gives too much carrot and not enough stick. It might be a bit much to expect government to require industries receiving assistance to respond to media enquires that can publicise their products and services, but at least there could be a requirement to be competent. As once cannot force a horse to drink, it is prudent to first confirm that the horse intends to drink before one invests in the effort to lead it to water.
© Occidental Communications, 2008