Canada must enhance scale and breadth of ICT adoption by business: expert panel

IRAP for ICT?

A new report says Canadian policy makers need to encourage the formation of a "self-reinforcing virtuous circle" that helps the digital economy to grow and spread throughout all sectors of the economy through the widespread adoption of information and communications technologies (ICT). The submission to the Digital Economy Strategy consultations by a small expert panel of the Council of Canadian Academies builds upon its influential 2009 report — Innovation and Business Strategy: Why Canada Falls Short. Its key recommendation is the creation of a Digital Transformation Assistance program (DTAP) modeled on the Industrial Research Assistance Program (IRAP) to overcome barriers to ICT adoption.

In addition, it recommends strategic government procurement to encourage the growth of companies and applications focused on health care services, energy conservation and environmental monitoring and delivery of government services.

It argues that such catalytic procurement depends on "an extraordinary commitment of top-down leadership" and that, taken together, the two demand-side initiatives would go far in stimulating ICT uptake and improve Canada's notoriously low productivity growth.

Entitled Catalyzing Canada's Digital Economy (www.scienceadvice.ca/en/news.aspx?id=39), the report is the first CCA expert panel report to be self-initiated since the organization was founded in 2006. Expert panel chair Dr Peter Nicholson says that in addition to fulfilling a desire to contribute to the dialogue surround Canada's digital economy, the report is intended to extend and leverage the intellectual capital generated through the production of the CCA's Innovation and Business Strategy report.

"This is also the first time the Council went beyond simply evidence reporting and actually made recommendations," says Nicholson, who stepped down as CCA president at the end of 2009. "ICT is huge and affects absolutely everything … There's a need for everybody to get on the train."

Produced and reviewed in less than one month, the report limits itself to the economic aspects of the digital economy and only addresses supply side issues in passing. Its main focus is on demand-side policy and measures to reduce the gap in ICT uptake relative to the US — "where Canada falls short" — which currently stands at more than $15 billion annually. ICT investment per worker is just 62% that of the US, falling to 43% for software.

While the report cites several factors for the persistent ICT gap, it argues that the situation could be dramatically improved if policy makers "find a way to induce greater and quicker uptake and application of ICT", particularly by smaller companies, and "increase the size and competitiveness of ICT-producing subsectors". That in turn would stimulate skills acquisition, expend the base of sophisticated domestic customers and guide more productive investments in digital infrastructure.

Nicholson says the proposed DTAP directly addresses Canada's productivity growth problems and lagging ICT adoption throughout the economy and could have a significant multiplier effect if properly conceived, executed and funded.

"With a well organized program,, the return on investment could be very high. IRAP is a very successful program," he says. "It could start with high potential sectors and see how that works. The question is, can you get the scale required to move the needle. There are 1,000s of SMEs and the ICT gap with the US is more than $15 billion."

Nicholson cautions, however, that DTAP will work best when combined with other measures listed in the report:

* Continued and increased investment by those firms directly stimulated to act as a result of DTAP advice and initial financial incentives;

* Better design and targeting of DTAP advice and incentives as DTAP experience accumulates;

* A demonstration effect as ICT successes spread from sector to sector;

* More effective targeting of smaller enterprises by private sector ICT providers and advisors; and,

* Partnering and replication of the DTAP approach with provinces and large urban centres.

Uncertain fiscal environment

Whether the DTAP proposal is endorsed by the government remains an open question in the current fiscal environment. In a June 10th speech at the Univ of Toronto, Industry Canada DM Richard Dicerni stated that the uncertain economic climate is defined by constrained resources both in industry and government.

"The competition for resources will only intensify in the coming years. This, in turn, points to a pressing need to shift our focus from how much we spend to how smart we spend," said Dicerni. "The government no longer has the luxury of contemplating huge funding increases or new initiatives that carry massive price tags."

Former clerk of the Privy Council Kevin Lynch also sent a similar message to Canada's universities. In a recent column in The Globe and Mail, he also cited the need to "unclog whatever is blocking our usage of advanced ICT throughout the economy."

"Canada would benefit from a clearer blueprint, a "connectivity and content vision", on where and how we can be a leader in the information revolution; in applications, in content and in connectivity," stated Lynch.

The CCA report says government procurement totals approximately $15 billion annually and represents a potentially potent tool for encouraging ICT growth. It also notes that the philosophy underpinning current procurement policy is "precisely consistent with the panel's proposal".

The panel also urges the federal government to re-evaluate its ICT facilities and align its activities to support the digital economy strategy, particularly "key needs that will be identified by DTAP". It also calls for similar alignment by 4th pillar organizations (CANARIE, Precarn, CMC Microsystems, etc).

"For CMC, there's an opportunity to focus more on commercialization and the IP they develop," says Nicholson. "Canada clearly has a number of areas of world leading capabilities. There's a huge amount of telecommunications and it's not going away. Canada needs to be opportunistic."

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