Growing the ICT Industry

Summary

We need a balanced approach that can cover the complete ecosystem. At this point, the key gaps exist at research commercialization, venture finance and critically customer adoption of new technology.

Public supports are not sufficient and we need to see much more willingness of the private sector to invest in R&D in Canada. Or perhaps focus on the companies willing and able to reap the rewards of their investments.

Submission

Do our current investments in R&D effectively lead to innovation, and the creation of new businesses, products and services?

The public funding going to commercialization support in R&D do make an impact — federal programs such as the SR&ED tax credit, the NRC IRAP program, NSERC CRD and provincial programs such as the Ontario Centres of Excellence. But the funding for these programs pales what is invested in early stage research.

More importantly the private sector investment in ICT R&D does not appear to be sufficient to exploit the results of the public investments.

While not an investment per se, the slow adoption of ICT by Canadian industry is a huge impediment to growing competitive ICT companies in Canada. Sophisticated, demanding customers willing to invest in new technology pull suppliers into new markets and opportunities. The world is not really as flat as claimed — having access to customers so they can be quickly serviced and support is an important competitive advantage.

Would changes to existing programs better expand our innovation capacity?

• Improve the balance between research stage support and commercialization support, preferably without reducing early stage research support.
• Provide a single point organization that can oversee the complete research to commercialization system, ensuring their are no significant gaps.
• Bring market and customer pull into the assessment of opportunities early.
• Consider a program similar to the US SBIR program.

What is needed to innovate and grow the size of the ICT industry including the number of large ICT firms headquartered in Canada?

• Extend a tax credit program similar to SR&ED for foreign companies with significant R&D and product mandates based in Canada. (IBM Canada, AMD Canada)
• Focus on large companies around which an ecosystem can be built to support their value chain. Either building value–add products and services around their technology or as key suppliers.
• Support and build strong academic research connections that develop HQP and provide ideas to the company.

What would best position Canada as a destination of choice for venture capital and investments in global R&D and product mandates?

Extend flow–through tax credits to ICT or technology companies. Offer the same advantages as we have for years to the resource sector.

Ensure that foreign venture investors are treated the same as domestic investors.

Build options for exits and ensure equitable treatment for investors. (A single national regulator will not hurt.)

Recognize that successful exits, even if the company may move, supports and encourages additional investments in new ventures.

What efforts are needed to address the talent needs in the coming years?

• Continue programs such as the MITAC Accelerate and Post–Doc Internships, OCE First Job, IRAP YES.
• Encourage and support professional, masters level programs such as the one being launched by the University of Toronto Computer Science department.
• Expect industry to step up to the challenge with financial commitments for training and support of academic programs that meet industry needs. This is not simply a government problem.

John MacRitchie