Industry Committee on June 6th, 2013

[John Cousens]

I think why we're lagging is that we're traditionally risk averse in Canada. That's one reason. With regard to technology adoption, you've heard plenty of witnesses prior to today say that Canada is not adopting fast enough. It's affecting our productivity. It's impacting our ability to compete in the world, as well. That's just part of who we are in our DNA.

I think the opportunity is the fact that others have already gone there. We can learn from them. They've made mistakes. There is opportunity to learn from their mistakes, turn it into something even better than what they've done, and at the same time stimulate small and medium enterprises. That's the opportunity.

That's probably why you're seeing campaigns from the associations.

[Geoff Regan, Liberal, Halifax West, NS]

If in the U.K. the policy means that businesses have to consider cloud computing strategies before implementing other technologies, how do you regulate that? Is that something the government ought...? How would this work?

[John Cousens]

It was the government's mandate for government agencies. They had to consider public cloud first prior to any investment in a new application. If there was a flood in Winnipeg, for instance, which there traditionally is, there would be some kind of a program to hand out aid. It could be financial aid or aid in a number of different ways, and that would get tracked.

In the U.K., they might have a cloud-based application that they would use for the term needed to adjudicate loans or work that funding. When they were done with paying, then they would be done. In other jurisdictions they might acquire systems, integrate them, and then maintain that for years waiting for the next event.

That's a dramatic change. They're able to match an IT requirement with a business requirement for the duration of that government program and then be gone with it. That's what happened in the U.K. From a government standpoint, this is the model they've moved to.

They've created an application store where departments can buy things there first. Just as you would on your iPhone or BlackBerry device, you would acquire that, consume it, and enact a business transaction. What that did was to open the government to small and medium enterprises as their first customer.

Having been a small and medium enterprise and a start-up, and having had IRAP funding in my past life, the last place we would ever go would be to government. We'd never spend that precious amount of little money on trying to sell into a large organization. The barriers to entry were massive from a procurement standpoint. The U.K. removed those barriers and democratized access to that first customer. That was critical.

We did an interview with the deputy g-cloud director two weeks ago, a guy who had five employees a year ago and has 35 now selling into the U.K. government. He's able to take that IP, intellectual property, and resell it in other jurisdictions around the world. That's 35 jobs that didn't exist before. They are software engineers. They are high-quality jobs.

That's the shift. That is the disruptive nature of it, but also the opportunity for business.

[Geoff Regan, Liberal, Halifax West, NS]

We have a handful of cloud service providers in Canada: Canadian Cloud Computing, CloudPath, Radiant, Salesforce.com and so forth.

Are SMEs utilizing these resources? How do these companies rank internationally? Are they big or notable, for example, compared to the cloud service providers in the U.S.? What do you see as the future of these companies?

[John Cousens]

The member from Waterloo might not think this way, but ironically, BlackBerry was probably our first cloud computing company. It was a common service going through a common set of data provisions, and that was real innovation. That took that confluence of mobile, social, and cloud all in one, so they really were the first cloud computing company for Canada.

There are medium-sized ones and ones that have been acquired by U.S. providers. It is at a stage where it really needs some stimulation in order to compete. If foreign governments are now opening the doors to help stimulate and grow it, that means we are slightly behind as far as the adoption of it and the growth and investment in those Canadian cloud enterprises are concerned.

There's a lot of them out there, and BlackBerry, ironically, was probably the first cloud computing company.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you.

Mr. Ciobanu, in 2011 the NRC published a report entitled, “Cloud Computing and Creativity: Learning on a Massive Open Online Course”, and another about an open collaboration service framework based upon cloud computing.

Do you think researching cloud computing is or should be a priority?

[Bogdan Ciobanu]

I'm sorry, but I'm not a specialist in research on cloud computing.

[Geoff Regan, Liberal, Halifax West, NS]

You're the wrong person to ask, I guess.

Can someone tell me whether NRC is doing research in this area?

[Bogdan Ciobanu]

Currently, NRC is not doing research in this area. There are parts of the technologies that are researched within the NRC, especially the emerging technologies part of the NRC, so there is research being done, different components, different technologies, that can evolve into this.

[Geoff Regan, Liberal, Halifax West, NS]

To your knowledge, do SMEs use services like the NRC Publications Archive, or the NRC National Science Library to learn about ICT, to learn about cloud computing, and other topics? What can government do to encourage this to a greater extent?

[Bogdan Ciobanu]

One service IRAP is providing to its clients is information on science, technology, intellectual property, market intelligence. This is a service that's provided free of charge to our clients so they can align their R and D projects better with the market needs, with the competition, with existing IP. Sometimes the end supplier of these services is NRC's knowledge management, and of course, there are other suppliers across the world that help us do it. SMEs are more and more open and interested in using information.

[The Chair, Conservative, David Sweet]

Thank you very much, Mr. Ciobanu.

Mr. Cousens, go ahead, quickly.

[John Cousens]

I can add an example to that for you.

I was at an awards ceremony last Wednesday, the CATA gala. They awarded a company for creating a new human resources management tool to sell in Canada. He created it completely on cloud, meaning he didn't have to buy hardware or software. He developed the application, and now he's going to market. He won that leadership award for doing that. He was able to quickly take his intellectual property and his team.... He didn't have to make capital investments. He was able to quickly innovate and take it to market rapidly. That's why they call it an innovation platform.

If you think of what Netflix is in the United States.... We may or may not use it. You don't see Rogers video stores anymore, do you? I don't go into Blockbuster. Instagram arguably killed Kodak. It was a business model that changed the world. Netflix is purely a cloud-based solution that we all may have used on our TV. It's the same with Apple TV.

These innovators are looking to create these things that are a panacea of opportunity for Canadians to create niche or new solutions, and disrupt the existing status quo, and go out there. So it's a different model.

[The Chair, Conservative, David Sweet]

Thank you very much.

Now we're going to our round of five-minute questions and answers.

Madam Gallant, for five minutes.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Thank you, Mr. Chairman.

Through you, first of all, to Mr. Ciobanu, please give me some examples of DTAPP, successful applications and the types of things they were used for, maybe starting specifically with the forestry industry. Are you familiar with any forest-based companies that have taken advantage of the DTAPP?

[Bogdan Ciobanu]

There are some examples here. I cannot provide you with the names of the companies, just the general—

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Not the names, just in general what they—

[Bogdan Ciobanu]

Generally, what I can tell you is that the most important technologies that have been adopted by clients under DTAPP have been, first of all, enterprise resource management systems. These are software systems that integrate different operations of the company to increase productivity. There are other technologies, such as automation, robotics, automatizing assembly lines or production lines and bringing robots onto the production lines.

Specifically for the forestry industry, 10.1% of the budget went into this industry across Canada.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Is it the same sort of things, the enterprise and the robotics?

[Bogdan Ciobanu]

Hundreds of different technologies have been assessed and implemented under those programs, but I'm talking to you in terms of percentage of our budgets.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Without naming the companies, would you be able to provide the committee at a later date with the types of technologies you helped with in the forestry industries?

[Bogdan Ciobanu]

Yes, of course, absolutely.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Mr. Cousens, do individual SMEs look for a cloud computing company or would it come as part of a business solution? For instance, if they wanted PayPal on their website, or as part of a software solution, would it automatically be built into something they're already purchasing?

[John Cousens]

They can build it in many different ways. There are different elements to what the cloud computing model is and there are more detailed technology discussions, but you can pretty much build whatever you want.

You could build Netflix on a cloud-based model, which has you being able to secure payments for whatever you're about to watch. It is completely cloud-based. So, yes, it can run the gamut of running a business on various elements, including enterprise resource planning software. It is available in the cloud on a pay-per-use basis.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

It came as a bit of a surprise that we have Canadian-based cloud companies, because it's not something we hear about. When we're buying an application, a solution or a service that is cloud-based, we're not necessarily told whether it's Canadian-based or U.S.-based.

After the fact if we are told that it is a U.S.-based cloud, then we've got some security issues to deal with. That is something that these unaware SMEs should be asking in advance, but they're unaware of that.