Posted October 11, 2012
By taking advantage of all that the cloud has to offer, Canada can position itself as a true global economic player.
Canada has long been a natural-resource-based economy. We remain, to a large extent, “hewers of wood and drawers of water.” Because we’ve enjoyed a stable trade relationship with our neighbours to the south, we’ve historically lacked the urgency to diversify. We’ve focused on exporting raw goods to great success. What’s long been missing is the added value that is essential to creating globally competitive businesses.
Adding value is the key to our prosperity. Companies with higher value-added processes produce more innovative, more complex, and ultimately more desirable products and services. This increases a company’s profits and the wages they pay their employees, which ultimately drives growth in GDP.
The only tried and true way to create more value-added and globally competitive businesses is through innovation. And the cloud offers us an unprecedented opportunity.
Stuck in the past
Sadly, the innovation that is so vital in creating more valuable companies is an area in which Canada has lagged. According to the World Economic Forum’s latest report, Canada slipped two spots and now ranks 14th in global competitiveness. What’s more, we fell six places to 15th in terms of innovation and business sophistication.
Should we be surprised? As a country, we invest substantially less in machinery and equipment than many of our global peers, especially the U.S. Despite a stronger dollar, this gap has continued to widen since 2010. Nowhere is this more pronounced than in the area of software investment. According to the Task Force on Competitiveness, Productivity and Economic Progress, U.S. companies spend roughly 40 per cent more on software than their Canadian counterparts. We may purchase the basic systems and hardware infrastructure to run our businesses, but it is through software that new opportunities for innovation and creating competitive advantage are realized.
Enabling global scale
The good news is Canada has a well-educated and technically savvy population and one of the highest rates of internet connectivity in the world.
While the majority of our businesses are small – with less than 100 employees – today, that matters less and less. A decade ago, lack of scale was a significant hindrance in competing with larger, more established companies. But with disruptive technologies like the cloud, small organizations can now access the tools and capabilities to punch above their weight. This new era of computing now favours the agile and creative, and that bodes well for Canada.
As a nation of small businesses, the cloud offers Canadian companies the opportunity to access powerful, game-changing applications without the need for capital-intensive infrastructure or staffing investments. Software and extra computing muscle can be consumed “as a service,” allowing new tools and processes to be deployed quickly, without the long, costly implementation cycles of days gone by. Just as the internet gave every business the ability to project a “big company” feel by having their own website, the cloud allows even the smallest companies to project “big company” capabilities through the use of software and infrastructure-as-a-service computing. The potential for productivity gains and to create more sophisticated, innovative businesses is unprecedented.
Why we need to move forward
As competition intensifies in the Canadian market and beyond, businesses that don’t make the necessary investments in technology and human capital will be left behind. Our best and brightest will be leading the companies that have demonstrated their commitment to creating new platforms for innovation. Whether that is here in Canada or elsewhere depends on our willingness to embrace and integrate new technologies to build smarter, more value-added businesses.
Currently, our government is making great strides to ensure there is an increased market for our resources. We are strengthening our ties globally through free-trade agreements in Asia, which will help relieve our dependency on U.S. consumption. But it is time for us to expand beyond this dependency and become more competitive in new industries. We owe it to ourselves, and to future Canadians, to reach to the cloud, building a value-added economy that closes the productivity gap and positions Canada as a true global economic player.