Thank you very much for inviting me and letting me join you from another cloudy day in Halifax via video conference.
As you mentioned, I'm founder and president of TeamSpace. We're a custom software development and video game studio based here in Halifax. We maintain a full-time staff of roughly 80 people, the majority of whom live here in Nova Scotia, and some in Toronto, the United States, and England. Roughly 13 years old, we've grown steadily. We've been recognized five times as one of the fastest-growing companies in Atlantic Canada, and in 2011 we were named Nova Scotia's export company of the year.
Our core business is software engineering for world-class interactive projects. Many of our clients are global entertainment brands and broadcasters, such as MTV, Nickelodeon, Sony Pictures, Fox, and many others. They drive their businesses forward through the adoption and creative application of emerging technologies. To remain relevant to them, we must do the same.
For our part, in the past we used to maintain a lot of in-house IT infrastructure at TeamSpace. We had racks of servers, co-location facilities, and ran all of our internal systems on those servers. We built a lot of those systems ourselves or bought expensive ones off the shelf. It was costly up front and costly over time: there was constant updating as computers aged and software needs evolved, plus we needed a dedicated IT staff to look after all of that.
As a result we tended to invest a minimum amount required to get by. In recent years we've moved most of our systems to cloud-based offerings, rented monthly as needed from third-party providers. This trend has been game-changing for us and for many of our partners. It has allowed us to try new approaches and to stay current on more leading technologies without a huge upfront capital cost and risk from buying servers and on-premises software licences. We still invest heavily in workstation computers and mobile devices—smart phones and tablets—but the move to cloud services for our core operations has allowed us to keep pace with changes in our market.
We can test different tools to find the best ones for our business. We can afford to change and adopt platforms that our key clients use. This is important because it makes us more attractive to our largest clients because we're using similar platforms to do business and a similar vocabulary about how we work. Our people who work from multiple devices—laptops, tablets, phones—can access information when and where it's needed without complex set-up or technical support.
I would actually argue that at a macro level, we now spend more on IT than we used to under the older on-premises model of infrastructure, but we tend to spend on the right things that fit our business now. We can afford to take risks and try new approaches, helping us realize incremental value without massive capital outlay. To use a metaphor, we sample a lot of things from the menu now, rather than ordering one big entrée that we might not like.
I realize that the numbers show that companies in the U.S. tend to spend more on IT than Canadian firms do. My experience certainly aligns with that data. Perhaps it's an American ethos. Most start-up companies I know, including one that I founded in Boston in 1999, work hard to establish a dominant image from day one. That often means having the cool office space and all the latest gear.
My experience starting companies here in Canada would suggest that similar Canadian firms tend to err on the cautious side. We spend only what's needed to get by, and we build our brand a little bit more slowly. Perhaps that's cultural; perhaps that has to do with a different funding landscape between our countries. In general, there is simply more debt and equity financing available to U.S. companies than Canadian ones, certainly at least Atlantic Canadian ones. Perhaps it's simply because in general new technology is always available earlier in the U.S. than it is here. It generally costs less for the same items. A move to globally priced cloud services may help to erase some of those differences.
Looking at things through a human resources lens, there is a war for talent in many industries, especially the IT sector in which we operate. Companies like Google, who are well known for their office spaces and passion for technology, are defining the new normal for companies like mine. For our own part, we are presently planning an office move to a new, open, more Google-like space in the coming few months, almost entirely to help us attract and retain talent here in the region.
Companies in Silicon Valley, with whom I'm competing for talent, attract talent by posting pictures on their websites of what the employee's desk would look like when they start—loaded with all the latest gear from Apple. We're starting to do more of the same to attract and keep those people. It's costly, but we simply can't afford not to do it. I honestly wish we could do more.
I believe that spending on the right types of IT can drive both efficiency and growth for our company, but we need to see the value first, and then take the risk and invest. I believe our government may be able to help on the cost side of the equation, working creatively to reduce that risk to companies that are considering investing in IT.
Tax programs to encourage borrowing for IT expenditures might be considered, as might federal support for labour-based credits by industry. We have digital media and gaming tax credits here. They're administered provincially at the moment, but a look at things like that on the federal level might help to free up capital, which in my sector almost always gets reinvested into IT-driven innovation initiatives. Working across borders to bring costs for technology more in line with other markets might also help.
As a member of a company working in the global marketplace, I'd close by suggesting we need to review Canada's position in a global context, not just relative to the United States. Every month I'm bidding for work against new competitors out of Brazil, Costa Rica, Belarus, India, Israel, and other emerging economies.
I don't have the hard data in front of me. I expect that for now Canadian firms probably do spend more on innovative new IT than do firms in many of those countries, but I also suspect that the spending rates in many of those markets are trending upwards a lot more quickly than they are here in Canada.
Thanks. I'd be happy to open it up to discussion if I can be of any use.
