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Newsroom home > News releases
Unlocking the Potential of Technology to Accelerate Economic Growth |
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Paul Tsaparis Good afternoon - thank you for the invitation, Mark, I’m honoured to be here today. Before I begin my remarks, I think it’s both interesting and significant to note that today at the Empire Club, Federal Industry Minister David Emerson is speaking on the issue of Canadian productivity and the need for deeper and broader use of technology and innovation to drive Canada’s economic vision For all of us in the technology industry in Canada, it is certainly gratifying to know that the link between technology and economic growth is finally being recognized and is an important part of policy and economic dialogue these days I stand among you today as a Canadian business leader with a vested interest - as do all of you - in a strong and vibrant economy in Canada What I’d like to share with you is my perspective on how we achieve that economic growth we’re looking for More specifically about how important the Information and Communication Technologies sector (known as ICT) is to our productivity, our growth and ultimately our prosperity as both an enabler and a strong contributor to our economy And although we talk about productivity, I believe the majority of the workforce in this country doesn’t understand how important it is - or in fact what it really means to them We all understand the inextricable link between our productivity as a nation and our quality of life, which has differentiated us as a nation for years As I speak with you today, I would ask you to keep in the back of your mind the importance of educating our citizens on the necessity of productivity gains - as I believe we all have an important role to play here. First I’d like to review the facts surrounding the strength of ICT and its ability to positively impact our growth and then I will share with you my perspective on how we can move forward to unlock the tremendous potential of technology with specific examples based on my observations and experience over the years. The Strength of ICT Certainly technology is a given in today’s business landscape and its deployment is the price of entry for most successful companies. But there is a surprising lack of recognition of the contribution that the ICT sector alone makes to our economy in Canada. Many people don’t realize for example, that the ICT sector in Canada produced over $10 billion more in revenues than the entire automotive sector… and six times the revenue generated by the aerospace and defence industry in 2002 – the most recent year this data is available from the government. ICT consistently outperforms these and many other sectors in terms of GDP, R&D, Exports and Employment. As financial experts, I don’t need to tell you how clearly these factors are linked to productivity, competitiveness and ultimately greater economic wealth, which leads to a stronger and more vibrant society, served by its public and private entities. ICTs are also critical to social inclusion, providing opportunities for all individuals to participate in the network economy as skilled workers and informed citizens. This increased participation rate in turn means more economic opportunity and growth. It’s clear that productivity drives income and quality of life - and that the technology sector is a significant contributor to productivity. But the application of technology is also equally important. Only 1% of all integrated circuits go into computers for example – most go into other equipment such as cars, airplanes, manufacturing machinery, medical equipment and so on. And while the technology itself is the enabler, I maintain that the ICT sector is not really about technology at all, but about using information for critical decision making to gain competitive advantage. Successful business leaders across all sectors are investing in technology networks and infrastructure that create new business models and drive competitiveness. Let’s take Wal-Mart as an example. The data they routinely collect and analyze provides a core competitive advantage for them. Their systems capture all the day's sales and product data across its global operations on an hourly basis – that’s over $250 Billion in sales per year or $68 million per day – almost $3M per hour. The kind of agility and ability to react to changes in market conditions or demands that this type of information provides is what has allowed Wal-Mart to continue to drive the incredible growth and success it enjoys. At HP we call this an adaptive enterprise – a technology infrastructure that aligns business goals with technology to deliver the agility companies need to capitalize on change. Perhaps Darwin said it best when he stated “It is not the strongest of the species that survives, nor the most intelligent, but the most responsive to change.” Many companies still struggle with this type of enablement – and a lack of strategic technology infrastructure is often the case. The Need for Technology Investment While the call for more technology investment is not new and may admittedly seem self-serving on my part, I believe the facts are irrefutable – Canada is no longer a technology powerhouse. We appear to be coasting on the reputation that this country earned when we were among the leading investors in everything from computing technology to telecom infrastructure. Partly because of our far-flung geography, Canada was one of the first to recognize the potential of technologies like the Internet and wireless communication, and invested significantly in them. In the early 90’s, we became leaders in the evolution to a ‘connected’ economy – primarily from a consumer rather than a commercial perspective. Since that time, the pace of our investment has lagged. Meanwhile other countries, from the Western world to emerging economies, have developed national strategies and are pouring time, money and energy into technology that has set them on a fast track to competitiveness. There’s no question that we made great strides early on in the areas of consumer and personal connectivity.
We made initial progress, to be sure, but we have failed to capitalize on our early lead – and now we’re lagging behind Scandinavian countries, Singapore, the U.K. and the U.S. – not Canada – are now leading when it comes to market readiness for IT adoption And over the coming decades, Brazil, Russia, India and China – known as the BRIC economies – will be a much larger force in the world economy More and more, these economies are emerging as significant players, rapidly moving up the value chain and beginning to invest in next generation technologies China, in particular, is a driving force. China’s GDP will surpass that of France this year Its economy is expected to continue to grow at an annual rate of eight percent from 2006 to 2010, becoming the world’s third economic power in 2020, and outstripping Japan in 2050 to become the world’s second largest economic power One of the reasons why China is catapulting to this position of economic strength is its significant investment in technology. In fact, they are forecast to bypass Canada in the amount they spend on IT this year According to a 2005 report by the U.S. National Intelligence Council, a high-level CIA think tank, China is in a unique position not just to respond to the next wave of technology innovation but to produce it—in large part because of coherent government technology policies and strong investments in science and engineering education, basic research, and other pieces of infrastructure Elevating the importance of science and technology in their societies, nearly 40 per cent of Chinese college students pursued science and engineering degrees, and last year China surpassed the United States as the largest recipient of foreign direct investment. In essence, foreign companies are paying to train Chinese engineers In comparison, Canada’s consistent under-investment in technology has led to a number of alarming statistics related to prosperity and productivity In 2003, the Institute for Competitiveness and Prosperity noted a 16 per cent prosperity gap between Canada and the U.S. In the same year Canada’s productivity gap with the U.S. was 17 per cent. At the same time, Industry Canada tells us, our private investment in information and communications technologies, per employee, was only 38 per cent that of the U.S In addition, Canada’s technology sector as a share of the total economy, was only half that of the U.S., 5.6 per cent in Canada vs. 11.7 per cent in the U.S. in 2003 Simply put, Canada’s investment in technology is severely lagging that of our largest and closest trading partner and it is affecting our productivity – with the rate of productivity rising faster in the U.S. than in Canada The result? As I mentioned earlier and as David Crane pointed out so aptly in a recent column in the Toronto Star, productivity matters for many reasons – primarily because it is integral to our living standards, social services and more. If this gap in productivity growth continues, the income gap between Canada and the United States will widen as well – bringing with it many more problems Of course there are many other factors at play: the need for a skilled workforce, improvements in education, taxation policies, investment financing and so on These are all important and relevant. But equally important in my mind is the investment we make in technology – and its ability to affect productivity in so many industries Technology has certainly proven itself and become a key differentiator in some key sectors. Take financial services, for example Financial Services Success Story Each of you here is likely familiar with the extent to which technology underpins the financial services industry today The ability to deliver cutting edge services to both commercial customers and consumers has long depended on a strong technology infrastructure The financial services industry learned long ago that the road to customer service and competitive differentiation was paved with bits and bytes. This industry made the right investments and worked in collaboration to raise the bar for consumers In fact, consumers were demanding it This country’s adoption rate of debit cards is a good example Canadians made 81.7 debit card transactions per person in 2003 and are the highest users of debit cards in the world Thanks to an early and aggressive focus on integrated technology, the industry was ready and able to react quickly, adjust business models and roll out new services as required We have seen financial institutions making strategic investments in technology that not only have a positive impact on their own internal business process, but that also vastly enhance customer service It is due to investments in technology, for instance, that customers can now get a consolidated view of all their financial data, in real-time There is greater integration than ever between the data streams used by the teller, the call centre, the ATM and the Internet – all the channels with which a customer deals with his or her bank – and greater collaboration between different institutions It all adds up to improved consistency in customer service, a better experience overall for the customer and, ultimately, greater productivity for the financial sector as a whole Without question, this demonstrates a fulfillment of the promise of technology The Art of the Possible – Sectors with Potential But technology’s promise has not been fulfilled to the same degree in areas such as healthcare and in the small and medium business sector What is holding us back? There are a multitude of reasons why organizations don’t strategically invest in technology: for instance, lack of capital, or of skilled IT professionals They may be concerned about their ability to determine a concrete return on investment on their technology spending, or frustrated by a lack of standards or interoperability But, regardless of this, I believe companies across Canada understand the essential need for information technology, or IT, and its role in productivity. They know that it can’t be looked at purely as a cost And in my discussions with hundreds of organizations across the country, I’m always gratified to see the extent to which they strive to align business and IT Those who have been successful all have one thing in common: they don’t buy technology piecemeal They create a technology roadmap based on an analysis of their business in its entirety They look at investments that complement each other and improve the organization’s ability to adapt and change – making them ultimately more competitive Let me share some examples of innovative companies that are moving in the right direction to effectively unleash the power of IT and are beginning to realize impressive returns on investment and competitive advantage, not to mention productivity gains from their IT spend i) Health Care The health care industry is one that has yet to tap the full potential of technology. But the signs are encouraging The government investment in Canada Health Infoway is one of the first steps to making real progress in this area Infoway is an independent, not-for-profit organization whose members are Canada’s 14 federal, provincial and territorial Deputy Ministers of Health Since its launch in 2001, Infoway has received $1.2 billion in investment capital from the Government of Canada Their unique mandate is to work with the provinces and territories to accelerate the development and adoption of electronic health information systems with compatible standards and communications technologies across the country Infoway’s target is to have an interoperable electronic health record in place across 50 per cent of Canada (by population) by the end of 2009 This means the ability for your health record to follow you where ever you go This sounds simple, but what it means in terms of patient service levels and outcomes is significant As we watch our neighbours in the US deal with the horrifying aftermath of Katrina, the implications of such a system come to light Because only a fraction of healthcare providers in the US today are paperless, doctors are struggling to care for hurricane evacuees without any knowledge of past treatments or even the illnesses they have. Even determining daily medicines is a challenge Not only does primary care suffer terribly, but costs are increased exponentially To me, the promise of Infoways is not only exciting, it is prudent in light of what we have learned from Katrina The possibilities surrounding technology in the health care sector are tremendous: providing patients with advanced care, at a reasonable cost, through state-of-the-art technology UHN The University Health Network, or UHN, is one organization that has already recognized how rapid advancements in technology can help it transform itself UHN is a hospital network composed of Toronto General Hospital, Toronto Western Hospital and Princess Margaret Hospital. It is also an affiliated teaching institution of the University of Toronto About a year ago, UHN started out on a five-year strategic plan to improve the links among its own hospitals and with other organizations, paving the way to the ultimate goal of becoming better connected to the broader health care community UHN’s objective is to enable its staff, researchers and students to access critical medical and administrative information in a secure environment that will not jeopardize patient confidentiality It all boils down to improved productivity – reductions in cost, increases in speed and better quality service delivery for patients For example, it means a surgeon at Toronto General will be able to instantly – and confidentially – access the electronic records of a patient who came from St. John’s Rehabilitation Hospital, improving the patient’s quality of care while making the surgeon more efficient And it’s important to remember that this kind of technology investment doesn’t happen overnight. UHN is just at the beginning of a five-year strategic plan. So, while technology is an absolute requirement, what is equally important is the vision to support it ii) SMB The power of technology can have a dramatic impact on small and medium-size businesses as well. Accounting for more than 95 per cent of all businesses in Canada, these companies cannot be ignored Conros Corporation is a good example. Known for their Pine Mountain and Northland fire logs, they are a market leader in artificial fire log manufacturing and distribution. The North York based Conros is using a radio-frequency identification system - or RFID - to track and manage its inventory, from raw materials through retail shelf and to receivables RFID tags are placed on cases and pallets of artificial logs, and the system is connected to Conros' servers, giving the company visibility into its inventory and supply chain, seven days a week, 24 hours a day Aside from the obvious benefits of inventory control and supply chain management, this particular initiative was undertaken for one very important reason - it was a requirement mandated by Conros' largest client - retail giant Wal-Mart. Most importantly, it made sense to Conros While RFID is not a new concept, it is most often associated with larger manufacturing organizations and represents a significant investment in planning and execution Conros saw this as a tremendous opportunity to gain competitive advantage and embraced the RFID concept, becoming compliant well ahead of the Wal-Mart requirement With the system in place and running well today, they not only have a significant competitive advantage, but have experienced productivity gains and cost reductions within their own organization Clearly, strategic technology investments at the core of your business processes are the secret to succeeding in the long-term. Successful organizations consistently look beyond the curve As the business landscape changes and customers demand more, sophisticated technology becomes the price of entry; SMB's can use IT to effectively compete with larger firms and neutralize their traditional advantage of scope and scale Unlocking the Potential/Close: With the global economic and competitive pressures we are facing, it is time for us to seize our opportunity and unlock our true potential for revenue growth, productivity growth and competitive advantage So how do we do this and get ourselves back on track? First, we must press the urgency to make real change in technology investments and policies with regulators and governments Technology makes us more productive – we must act on that knowledge Certainly the public sector has a role to play, in terms of setting an overall technology strategy for our nation that will allow us to remain competitive My colleague Bernard Courtois and the organization he currently leads, The Information Technology Association of Canada, and many other organizations are working hard in partnership with the government to make that happen Your voice will be an important addition to that dialogue Secondly we need to re-focus on the imperative to invest in strategic technology that will allow all industries the kind of agility we see today in the financial services sector Recognizing the need and encouraging this investment is a priority Within our own companies, we need to follow the lead of organizations such as UHN and Conros in seeking out technology investments that will ensure competitiveness and improve our overall productivity Thirdly, we have a responsibility to educate our citizens on the importance and reality of productivity – how it can be achieved and why it is imperative to our quality of life here in Canada All of us can play a role here, encouraging everything from employee communications that underscore the value to citizens of a productive workforce to public forums such as this And of course we need to move quickly. |
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