Capturing Alberta's Opportunity to Build a World-Class IT Industry

Rotary Club of EdmontonNovember 16, 2006

Tom Ogaranko

What you

imagine steers what you see, feel, think

and experience.

What if our new Premier Faced…

• 2006– no water permits issued south of Red Deer

• 2011 – major workforce retraining required due to changing capital

projects• 2020

– Alberta Forests devastated by Pine Beetle• 2025

– net importer of natural gas, conventional oil, falling royalties

NOT so fictional!

What if this was 1981 again?

Why do I care? Simply, their future.

“Ideas are the factors that lift civilization. They create

revolutions. There is more dynamite in an idea than in many

bombs.”

John H. Vincent

Overview

• Background on Information and Communications Technology– The impact– The opportunity – The imperative

• Outline an Action Agenda– For our families– For our businesses– For our public sector

What is the ICT Industry?

• Businesses involved in – computer software and

services,– telecommunications

equipment and services,– computer hardware, – communication cable and

wire, – recorded media, – internet service providers

(ISPs) and – additional ICT products.

What is ICT’s impact?

How big is the ICT Industry?

ICT Market (C$B)

1998 2005 2007 Est.

2013 Est.

Global $2,500 $2,800 3,200 4,800Canada 125 130 149 220Alberta 12.5 8.5 10 30AB as % of Global

0.5% 0.3% 0.3% 0.6%

• Though the global market is growing steadily at 7%, Alberta’s current strategy has targeted 15% growth.

US GDP

6 Sectors32%

All Others68%

ICT Industry is key to competitiveness

Advanced Technology Industries account for only 32% of US GDP.

Advanced Technology Industries account for 76% of US GDP Net Productivity Gains over the past 10 years; 85% globally.

Why? Strategic Use of ICT to create products/refine processes.

US Net Productivity Gain

6 Sectors76%

All Others24%

ICT is an Enabling Technology

ICT is an enabling technology and Canadian Businesses and individuals have embraced it

50

100

150

200

250

300

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

ICTs Non-ICTs

Indexed growth of business sector investment in ICTs and non-ICTs

1990 = 100 (current $)

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

Computer & other office eqpt Telecom. Eqpt Software

Breakdown of business sector investment in ICTs by type of asset

1990-2002 (millions of current $)

ICT is an Industry & an Enabler

Private Sector R&D Expenditures2003 Intentions ($ millions)

ICT Canada’s most innovative sector

• ICT sector R&D expenditures are expected to reach $5.2 billion in 2003; 43% of the total Canadian private sector R&D

• Six of the top ten R&D performers in Canada are ICT firms

Source: Industry Canada’s compilation and Statistics Canada Cat. 88-001

5,182

ICTSector

Aerospace Products & Parts

Scientific R&DArchitectural

and EngineeringServices

Pharma-ceutical

& Medicine

1,147 1,051 872

Alberta’s ICT Industry• 4th largest sector in terms of GDP contribution (7.5%), 5th largest employer• 4500 companies• Employees focused on two major activities

– 50% in computer consulting mostly global brands– 50% developing products and technologies

• Technology company profile– 6-10 people, most under 40 years old– Little business experience– Undercapitalized

Industry Sector Revenues (2005)

$ in Billions

Employees

All Manufacturing $59.3b 147,100Construction $42.1b 159,700

Mining, Oil and Gas $42.5b 122,600ICT Sector $10.0b 70,000

What are some of the Global opportunities?

• Thought based computing• Simulation• Artificial Intelligence• Robotics• Social Economy

What is Alberta’s ICT Opportunity?

• Wireless, Software – Focus: Data Services, Simulation and Business

Intelligence in• Heritage Industries (Energy, Forestry, Agriculture)• Healthcare and Life Sciences• Entertainment and Education • Defense and Security

• 2 (real) Examples:– Forestry: Sustainable Forest Management

Modeling– Healthcare: Ending Diabetes

Potential Alberta Impact Areas

Opportunities– Simulation and

modeling– Data

acquisition

Healthcare: Ending Diabetes

• Integrate leading health, nano and ICT research with– Wireless Nanosensors– Artificial Pancreas

– Transmit blood sugar level from sensor to artificial pancreas for automatic insulin dosage adjustments

Our Choice Today

“Buy” or “Build and Sell”?

ICT

24

Why Act Now?

7%

Our Heritage Industries are Threatened

• Oil and Gas– Forecasts – out of Natural Gas and Conventional Oil

by 2025• Forestry

– Pine Beetle threatening forests and migrating species• Agriculture

– No more water permits south of Red Deer– Salination of Southern Alberta– Water for Life Strategy

• Our water use by 2020 determines the sustainability of Saskatchewan and Manitoba

The Challenges

Access to Patient Capital

Access to Markets

• First Customer Access– 85% of Alberta ICT firms have more problems

selling locally than elsewhere• Export Market Access

– No natural distribution channel– Weak intelligence on target markets– Little support to access market– Underdeveloped international business skills

R&D Commercialization, Leverage

• Improve commercialization track record– 2005, C$19M net commercial returns on

C$5B in Canadian research funding– Poor linkages between industry and research

• Increase R&D2– 0.73:1 Ratio of Private:Public R&D in Alberta

• 3:1 in Finland and leading countries– Build capacity for demonstration projects– Increase innovation and adoption rates in

Alberta industry

Skilled, Experienced People

• Technologists– Canadian Software Human Resources Council projects

75,000 ICT jobs offshored by 2010– Alberta leads Canada in supply of educated S&T

graduates (7.5/1,000 persons employed v. 6.4 nationally) but we lack US (9/1,000) and Finland (15/1,000)

• Business Skills– International business – Finance– Technology product development and marketing

Supportive Tax, Fiscal Environment

• R&D Tax Credit– Alberta is the only province in Canada to not have one.– Canada’s SRED Credit skews start-up behaviour

• Investor Incentives– Parallel flow through share, stumpage fee, agricultural subsidy,

film tax credit– BC Angel funding experiment created 16000 jobs and 570

companies with a 90% survival rate after 5 years.

• Foster Collaboration in key public sector areas with ICT industry– Procurement practices

What Can you Do At Home?

• Promote ICT education with your kids, grandkids– As a career– As a life skill

• Mentor– Help a technology entrepreneur

• Invest– Ask your investment advisors how you can invest in

Alberta’s technology sector• Ask your MLA, MP

– what they are doing to support Alberta’s technology industries

What Can you do At Work?

• Strategic Sourcing – co-develop solutions with local firms

• Encourage commercialization of technologies

• Invest – In innovation– In training

What can we do as Rotarians?

• Equipment

• Training

• Mentorship

• International linkages

Your actions will make them smile!

Thank you!