Thanks, John.
Thanks very much for having us in. I hope this information is helpful.
We have the survey results, which we can go over later if you want. They are in your package with some of the information. I did not want to take up a lot of time going through that right now.
PWGSC in 2008, I guess, made a presentation and sent out a message about what they were going to do. The message stated, I think, that they had four pillars, one being GENS, and that they were going to bundle everything. That was the impression our members received. Of course, this wasn't received very well by our industry, except maybe by a few large integrators.
What followed that, shortly after, was the bundling of furniture. So they saw that the SMEs were not going to be able to compete because everything was bundled and it was so large. They really viewed this as favouring large international companies, and that was the feedback they gave us on our survey.
When we looked at the telecom network--and I have heard a lot about GENS and what is going forward--I thought it would be important for us to put our opinion forward, especially from the CATA members.
Most large companies did what GENS is planning to do years ago. It just makes sense. Look at the status quo. I don't know what the exact numbers are, but I am hearing that there are anywhere from 100 to 150 networks out there. I believe there are a large number of networks, because when I worked with the Department of Justice, I put one in myself. I knew there were a fair number of them out there then that I would rather piggyback on, but I couldn't do it at the time.
When that happens, of course, you get a lot of redundancy and a lot of extra cost, and this is a big concern for me and for our members. It becomes insecure. It is open to hackers, attackers, and other governments to come in and attack our networks. I'll tell you that when I was with GE and looking at consolidating our networks, and with Abbott, we were attacked hourly, not just by people trying to come in and take a look at what we had but by people trying to steal things from us. So it is a very big concern.
There has been some confusion, and I just want to state CATA's view of this network. I have heard lots of people before using analogies, and I'll try one.
If you're in your house and you're looking for Internet connections, really, when you go out to look for an Internet company to give you service, you only have two, three, or four, depending on where you live, to choose from. There really aren't that many that are going to bring Internet to your house. That's because they can take care of all those things outside your house. They can connect you to all the various servers out there and the various networks. Anything you need to be connected to, they do it.
They also provide something called managed services, and they come bundled with your Internet. For those of you who have Internet, and I'm sure most of you do, one of your bundled services would be your billing. They send you a bill, and they tell you how much you owe. Sometimes they tell you how much bandwidth you've used--I know that mine does--and whether I need more or less. Of course, they fix problems when they go down on their side outside the house. Those are the kinds of bundled services they have, and they give a number I can call if my network isn't up.
That's how I see GENS. GENS takes care of that part. So instead of having the people in my house--I have five people in my house--having their own connections with all the different telcos, we have one for the house.
Inside the house, however, we could have another network, and this is not part of GENS. I could have a wireless network, and I could connect my son's Xbox, my daughter's Notebook, my desktop computer, and my wife's computer inside the house. I would go to any SME I want to have that put in. They could come and set up my network for me. I could buy a PC from any of these people.
That's where I see the difference between GENS and bundling that part outside and the part inside, and again all the applications that I see as SMEs play that role as well. Of course, it doesn't eliminate large companies from also playing in that area, but that isn't their field. SMEs play very well in that area.
What we see is that large telecom providers are very well suited to provide this outside network. There are only a very few of them. It's very capital-intensive. If they do that, with SMEs inside, we see this balance working very well.
With regard to bundling networks and the benefits to SMEs, just quickly, I think it does have balance. The SMEs now understand, if we have a network outside, what they're working with. That balance is positive.
Again, as I described in the earlier slide, the large telcos deal with that outside network that we need to secure, and the SMEs deal with all the other issues inside, from providing new security applications to modernizing. There's no reason why large integrators can't play in that space, either.
I want to move on to a few concerns about bundling that our members have. Outside the network that we just talked about, they certainly view anything that will get bundled as anti-competitive. If we bundle too much, they can't compete in it. They view it as favouring large companies.
In our first slide, we said that 97% of the companies in Canada are SMEs. I'm sure that in all your ridings and your areas, they depend upon being able to do business with various organizations. But for SMEs, when you bundle things, you create a very big RFP that they have to respond to.
I have been on the other side of this. I've been on both sides of this, in fact. From an SME's point of view, it could cost them tens of thousands of dollars just to respond to a large RFP. They simply don't have the money for that. And if they lose that one, they certainly don't have the money for the next one. What that really does is lessen the amount of Canadian companies that can deal with the federal government. That is the view our members have been feeding back to us.
I want to talk a little bit about the members' issues. They wrote out in our survey some of their issues. I thought it would be important to bring them up here. Some of them were a little bit surprising to me.
The first one was that procurement is needlessly slow and complicated in the Canadian government. They really see that it disadvantages Canadian SMEs, Canadian R and D companies in particular, and that Canada should make it easier for them to do business.
The also say--I thought this was an interesting point--that managers within the public service fear exercising their delegated authority because of too many conflicting rules and regulations that impede their progress. They fear that they will get in trouble. There are too many of these conflicting rules.
I've had other members tell me that directors general would not make the decisions because of all these conflicting rules, with other organizations having to review it and somebody having a different opinion on the regulation or rule. Yet the DG was probably in the best position of anybody to make that decision.
Some SMEs have abandoned altogether the idea to sell to the Canadian government, but they've successfully sold to foreign governments. This really concerns me. I'll give you an example of a company in Kanata.
I know about this company in Kanata. I went to see their technology and what they work with. They now make arguably the fastest computer in the world. It's faster than the Cray computer, which used to be the fastest computer in the world. They have taken into account big concerns in our data centres. Our data centres are areas where we put large amounts of computers. They take up an enormous amount of power and they take up an enormous amount of space. That power now is very expensive. It shows up in all of our budgets as a very big line item, as do real estate costs. We have to buy more real estate to house this in. Of course, that is very expensive.
This company has come up with a machine that takes about one third the power. It consolidates a whole bunch of other equipment into one and makes it very powerful--very good equipment to reduce the real estate and power costs.
I was told only about three weeks ago by a VC who deals with the company that the board has given instructions to the CEO not to bother trying to sell to the Canadian government anymore. In their view, it's a waste of time. It takes up too much energy, and nothing goes anywhere. I think they've been in talks for two to three years. But they've successfully sold four units to the U.S. government.
I think that's very disturbing. That's very concerning for us. If we want to see Canadian companies grow, we have to address those issues.
Canadian SMEs also see themselves as incubators of innovation and solution. You only have to look down the street and at what they're doing in Montreal in biotech to see how well that is moving forward. In Kanata you've seen Newbridge spin out lots of companies. Despite the demise of Nortel, people have found jobs in the other companies Newbridge has spun out. We can see the benefits of that.
On my last point, I made a mistake on the slide. It says that other countries have set-aside policies. I was mistaken on that. It's the term that was used to me, and after the slides went out I was corrected on what that was. As you can well imagine, I really wanted to steer away from the “set-aside” after I understood what it meant.
What they're really talking about is an innovation policy. Other countries, including the U.S., buy innovation products from innovation companies, and they have special policies to be able to do that. Our members are asking why we don't have that in Canada. It would really help them build successful companies.
I think SMEs play a positive role, and I won't belabour that. I think they provide good value for the money. One only has to look around this room at the BlackBerrys people have. RIM started out as an SME. If I drive away from my house and forget my BlackBerry, I turn back to get it. That's quite a difference from five years ago.
As John pointed out earlier, we like to pick on the government as often as we can, but we also want to bring a bit of balance here. We are encouraged by seeing a few things. I spoke about the statements that were made in 2008, but there's new IT management in PWGSC. We've had the privilege of talking to them, and they indicate they do not intend to bundle professional services. They truly understand the need for balance and for the outside network to be something that the large telcos do. They very much understand the value of the SMEs, and that's certainly the message we're getting back from them.
Not bundling professional services seems like the right thing to do. They want to listen, and I believe they have a tough balancing act for all the people they have to please, but we would simply like a document that states that. I think that's what makes our members nervous. We saw these statements being made in 2008. We haven't seen anything in writing recently, and they would like to see something in writing that says you're not going to bundle professional services.
A balanced approach for us is the right approach. On where the telcos, large integrators, and SMEs fit, I think there's a place for everyone, and Canada sees that as the right thing to do.
Last are our recommendations.
I think it's obvious we're saying not to bundle professional services. The Government of Canada should implement better procurement practices to help our SMEs and look at other countries, if need be, because we seem to be more successful selling to them than to our own.
The Government of Canada needs to continue with network integration. We think it's very important to get that outside network consolidated to reduce our security risk and the costs. As a taxpayer, I think it's a great idea. We need to improve PWGSC's communications. From talking to them, I think they really want to do that as well. They want to get out and make it known what they want to do.
Another recommendation is to let managers manage. Keep it simple. Stop creating layers of bureaucracy, regulations, and new rules that impede the people who know what to do from doing their jobs.
Finally, buy from Canadian companies and make that easy.
Thank you very much.
