Clus­ters

TRENDS, COM­PA­NIES AND MAR­KETS TO WATCH

Ottawa Business Journal - Techopia - - Contents - BY DAVID SALI

Ear­lier this year, In­vest Ot­tawa — a city-funded group that helps pro­mote eco­nomic de­vel­op­ment — ap­pointed busi­ness de­vel­op­ment man­agers to over­see growth in var­i­ous clus­ters of the lo­cal high-tech sec­tor.

Ot­tawa Tech­nol­ogy re­cently spoke to th­ese man­agers, as well as a cloud ex­pert, to get their in­sights into th­ese key ar­eas.

CLEAN TECH­NOL­OGY

CLOUD

DIG­I­TAL ME­DIA

LIFE SCIENCES

SE­CU­RITY

WIRE­LESS

THE LAND­SCAPE

Ev­ery­body al­ways thinks of Ot­tawa as a govern­ment town, or they think of it as Sil­i­con Val­ley North. Labour­ing away be­hind all of this has been the clean­tech sec­tor. It’s not that this is all just hap­pen­ing in Ot­tawa, it’s that the clean­tech sec­tor glob­ally is start­ing to take off. Dur­ing the pe­riod of 2006-10, while all other sec­tors were flatlin­ing or go­ing down, clean tech was ac­tu­ally go­ing up by about 30 per cent a year, which is enor­mous growth. It’s ac­tu­ally pro­jected that this growth will con­tinue on into 2020, 2030.

There are ar­eas of the Ot­tawa clean­tech sec­tor that have been es­tab­lished for years, en­ergy man­age­ment be­ing one of them. They’re see­ing a sig­nif­i­cant mar­ket share go­ing their way – En­er­gate is a per­fect ex­am­ple, Blue Line In­no­va­tion is an­other ex­am­ple. The other thing that’s hap­pen­ing is there are cer­tain sec­tors that Ot­tawa has al­ways been strong in, (such as) en­ergy man­age­ment, green build­ing – which is con­nected to smart grid – all of the biowaste-, solid waste- and agri­waste-to-en­ergy. Wa­ter (treat­ment and recla­ma­tion) is an­other huge area.

An­other part of it is that we have a great deal of in­no­va­tion that takes place in Ot­tawa. A lot of clean tech­nolo­gies have been de­vel­oped or started here.

COM­PA­NIES TO WATCH

In the area of wastew­a­ter, ob­vi­ously BluMet­ric is do­ing ex­tremely well. An­other in the area of wa­ter recla­ma­tion is Clear­ford. In solid wasteto-en­ergy, ob­vi­ously Plasco is one of the lead­ers. They have one of the lead­ing tech­nolo­gies in the world.

En­syn is big in the area of biomass-to-fuel, and is con­sid­er­ing go­ing pub­lic. Agri­soma is big in the area of agri­waste-to-jet fuel. They’re the first com­pany to ac­tu­ally be able to fly a jet plane on purely bio­fuel. That’s pretty as­tound­ing. Then, of course, there’s green build­ing. We’re home to

Wind­mill De­vel­op­ment Group, the green­est de­vel­op­ers in North Amer­ica. There are very few de­vel­op­ments they do that aren’t LEED plat­inum, which is ex­tremely rare. Minto is very big on pro­mot­ing en­vi­ron­men­tally friendly ap­pli­ca­tions, clean tech­nolo­gies. Then we’ve got all the en­gi­neer­ing firms that are in­volved in that area –

Stan­tec, ICF Mar­bek, Golder and As­so­ciates. Th­ese are all com­pa­nies that are ex­tremely well­known in North Amer­ica and in­ter­na­tion­ally for the work they do and the ex­per­tise they bring to projects. En­er­gate re­ceived smart-grid fund­ing (from the prov­ince) to con­tinue their work.

OP­POR­TU­NI­TIES

Why clean tech is go­ing to con­tinue to grow so rapidly is that con­nec­tion be­tween the high-tech in­dus­try and the clean­tech in­dus­try. Now we’re at the point where a lot of what’s go­ing to go on in ad­vance­ments of clean tech have to do with soft­ware de­vel­op­ment and an un­der­stand­ing of semi­con­duc­tor de­vel­op­ment – how you man­age big data, how you man­age in­te­grated net­works like a smart grid. That’s one of the rea­sons that I can see why Ot­tawa’s re­ally go­ing to take off when th­ese peo­ple start re­ally com­ing to­gether.

The other part is we have the fed­eral labs here. It’s the abil­ity of com­pa­nies here to be able to work with the sci­en­tists, re­searchers, engi­neers in the fed­eral labs as well as in the uni­ver­si­ties.

CHAL­LENGES

There’s a lot more in­volved in set­ting up clean­tech com­pa­nies than there is for, say, high-tech com­pa­nies. Also, there’s more of the re­quire­ment for real-world demon­stra­tion. When you re­al­world demon­strate some­thing in the clean­tech sec­tor, that’s usu­ally con­nected to build­ings or in­fra­struc­ture, which then makes ev­ery­body ev­ery ner­vous – what if some­thing hap­pens (to the in­fra­struc­ture)? That also makes in­vestors very ner­vous. They like to be able to have a fairly quick re­turn on in­vest­ment, or they’re used to that more se­cure en­vi­ron­ment of other sec­tors. We can find in­vestors from out­side of Canada – there are all kinds of them. But we don’t have a lot of lo­cal in­vestors. They’re will­ing to go when the prod­uct is at the com­mer­cial­iza­tion stage, but clean­tech is a rel­a­tively new sec­tor. The other (is­sue) is find­ing demon­stra­tion sites.

TRENDS TO WATCH

The big­gest ar­eas of growth are go­ing to be smart grid, en­ergy stor­age, wa­ter, trans­porta­tion and any­thing that is in waste-to-en­ergy. Th­ese are all go­ing to be huge ar­eas. En­ergy stor­age, to be­come op­ti­mized, needs to be able to go from zero to full charge quickly, it needs to be con­sis­tent in that you have (power) when you need it. This is kind of like the holy grail for smart grid.

The other area is what can done be in re­la­tion to in­fra­struc­ture – how you make sure in­fra­struc­ture is go­ing to be safe (dur­ing nat­u­ral dis­as­ters such as flood­ing).

The clean­tech sec­tor has the ca­pa­bil­ity of be­com­ing what the high-tech sec­tor was for Ot­tawa back in the ’80s and ’90s. I think peo­ple are just start­ing to see that.

THE LAND­SCAPE

We have a lot of dif­fer­ent cloud play­ers, right from some of the ma­jor tel­cos and sys­tems in­te­gra­tors to some of the smaller com­pa­nies that ac­tu­ally have a spe­cific fo­cus such as se­cu­rity and en­cryp­tion. In Ot­tawa, a lot of the com­pa­nies that are in­volved with cloud are very much in­volved in the in­ter­na­tional space, be­cause that’s where the mar­kets are. As well, un­til we get some sort of spe­cific govern­ment di­rec­tion, the Ot­tawa mar­ket is go­ing to be more fo­cused on the in­ter­na­tional sec­tors rather than on Cana­dian con­sumers. It’s kind of in­ter­est­ing right now – ev­ery­thing’s ac­cel­er­at­ing re­ally fast. Ba­si­cally, all of the ma­jor tel­cos now are in­volved to some ex­tent with the cloud. They ac­tu­ally have a lot of in­fra­struc­ture that’s been set up be­cause they all of­fer In­ter­net ser­vices. They’ve ac­tu­ally had to add a lot of ca­pac­ity just in case you have the next (royal) wed­ding ... that gets a mil­lion hits. They have a lot of in­fra­struc­ture in place that they want to see bet­ter uti­lized. The other thing the tel­cos have is the net­work. In cloud com­put­ing, if your net­work is un­sta­ble, the odds are pretty good that your cus­tomer ex­pe­ri­ence in the cloud is also go­ing to suf­fer.

CHAL­LENGES

One of the chal­lenges in Canada is that we still don’t have very good di­rec­tion from a govern­ment point of view. The U.S. has a cloud­first ini­tia­tive, so that has helped ac­cel­er­ate some of its cloud ac­tiv­i­ties in terms of try­ing to fig­ure out how to make it work. In the U.K., they have a cloud strat­egy, and cloud com­put­ing strate­gies have been de­vel­oped in New Zealand and Aus­tralia and even in China. In Canada, we’re tra­di­tion­ally a pretty cau­tious lot, so I’m not sur­prised that we are some­what last to the cloud ta­ble. Our cul­ture is very re­sis­tant to risk-tak­ing, and the per­cep­tion right now by a lot of peo­ple is that there are higher risks in the cloud. Some of that’s true, some of it’s not. Ninety-nine per cent of the time, your cloud provider is ac­tu­ally go­ing to have more ro­bust se­cu­rity and pri­vacy and poli­cies in place than your own com­pany does ... but it’s the idea of re­leas­ing con­trol.

(An­other chal­lenge is) the pric­ing mod­els are all over the map. It’s ba­si­cally al­most im­pos­si­ble to com­pare one ser­vice (to an­other) on a con­sis­tent ba­sis. No two com­pa­nies re­ally use the same cost­ing model.

In the Ot­tawa mar­ket, we’re lucky to have a lot of good-qual­ity car­ri­ers. One chal­leng­ing part is our car­ri­ers are typ­i­cally more ex­pen­sive than some of the other net­work­ing car­ri­ers, for ex­am­ple, south of the bor­der. That’s a re­al­ity, just be­cause of the fact we’re a large coun­try with­out a lot of peo­ple. We don’t have the pop­u­la­tion to re­al­is­ti­cally sus­tain low rates for com­mu­ni­ca­tion. For small or medium-sized busi­nesses want­ing to be­come cloud providers, one of the ba­sic rec­om­men­da­tions is ... you re­ally are go­ing to need to have some type of a re­la­tion­ship with your net­work/car­rier. At the end of the day, the odds are pretty good that if you don’t es­tab­lish some type of re­la­tion­ship, the cus­tomer ex­pe­ri­ence is go­ing to suf­fer and you’re go­ing to lose busi­ness.

OP­POR­TU­NI­TIES

The fact that we do have cheap power for data cen­tres is a con­sid­er­able ad­van­tage. We also have a strong pool, be­ing Sil­i­con Val­ley North, of soft­ware engi­neers who are ca­pa­ble of gen­er­at­ing the busi­ness soft­ware sys­tems that are go­ing to be op­er­at­ing more and more in a cloud en­vi­ron­ment. In cloud ter­mi­nol­ogy, those are called soft­ware-as-aser­vice prod­ucts. We also have some plat­for­mas-a-ser­vice ca­pa­bil­i­ties be­cause of com­pa­nies ... such as Mi­tel and Cisco. This ap­plies to the ca­pa­bil­ity to de­velop soft­ware and test soft­ware and re­us­able com­po­nents. In­fra­struc­ture-as-a-ser­vice deals with stor­age, com­put­ing and net­work­ing within a fire­wall en­vi­ron­ment. In Ot­tawa, again, we have th­ese types of ca­pa­bil­i­ties. We have a lot of com­pa­nies in Ot­tawa that are sat­is­fy­ing dif­fer­ent needs.

TRENDS TO WATCH

I think we’re go­ing to see an ex­plo­sion in terms of hav­ing ad­di­tional net­work ca­pac­ity be­ing built to have bet­ter net­work con­nec­tiv­ity through­out Canada. There are go­ing to be ma­jor net­work­ing in­fra­struc­ture projects to ( build) a “fi­bre su­per­high­way” of sorts. On the net­work­ing side, we have some ca­pac­ity, but the is­sue is as more con­sumers sign up for the cloud and as more or­ga­ni­za­tions re­al­ize what you can do in the cloud, de­mand for the band­width is only go­ing to go up. The net­work is the crit­i­cal thing. Ba­si­cally, no net­work, no cloud.

Some of the satel­lite ca­pa­bil­i­ties around net­work con­nec­tiv­ity are also go­ing to ex­plode, prob­a­bly in the next five years, be­cause you need to put more satel­lites up there. For some ge­o­graphic lo­ca­tions, it’s just not go­ing to make sense to run fi­bre there. You’re go­ing to need to think about us­ing some sort of satel­lite com­mu­ni­ca­tion sys­tems.

THE LAND­SCAPE

Ot­tawa has 85 com­pa­nies spe­cial­iz­ing in film and TV, do­ing work in ev­ery field from an­i­ma­tion and film and video pro­duc­tion to cast­ing and sup­port ser­vices. The city fo­cuses on mod­est pro­duc­tions with bud­gets of be­tween $3 mil­lion and $7 mil­lion that usu­ally em­ploy 50-100 lo­cal work­ers.

Lo­cal firm Ex­o­cor­tex has de­vel­oped soft­ware tools for (com­puter-gen­er­ated im­agery) pro­fes­sion­als on ma­jor Hol­ly­wood pro­duc­tions such as Iron Man 3, while an­other com­pany, XYZ RGB, does 3D scan­ning for Hol­ly­wood films. The city is al­ways work­ing on find­ing in­no­va­tive ways of mak­ing the pro­duc­tion process eas­ier, said Me­gan Martin, who works in In­vest Ot­tawa’s film, TV and dig­i­tal me­dia depart­ment. She points to the city’s new on­line film per­mit­ting sys­tem, which was launched in Jan­uary and saves pro­duc­tion com­pa­nies the has­sle of fill­ing out pa­per­work and the as­so­ci­ated red tape that is still nec­es­sary in larger cen­tres such as Toronto and Mon­treal.

“We’re re­ally proud of this,” says Ms. Martin. “The on­line sys­tem stream­lines it and makes it a lot eas­ier for lo­ca­tion man­agers here.”

An­i­ma­tion is a par­tic­u­larly im­por­tant part of the in­dus­try in Ot­tawa, with more than 40 com­pa­nies in the ar­eas of vis­ual ef­fects, tra­di­tional 2D dig­i­tal and 3D an­i­ma­tion. Big Jump Pro­duc­tions re­cently helped do the an­i­ma­tion for CMT’s first an­i­mated se­ries, Bounty Hunters, fea­tur­ing co­me­dian Jeff Fox­wor­thy. “We’ve al­ways been strong in an­i­ma­tion in Ot­tawa,” says Ms. Martin.

The cap­i­tal also has more than 150 firms in the field of dig­i­tal me­dia, pro­duc­ing ev­ery­thing from orig­i­nal in­de­pen­dent pro­duc­tions in mo­bile soft­ware and games to in­ter­ac­tive con­tent such as mu­seum ex­hibits and on­line worlds. The lead­ing com­pa­nies in­clude bitHeads, one of the largest mo­bile ap­pli­ca­tions and en­ter­prise soft­ware de­vel­op­ment com­pa­nies in North Amer­ica; Mag­mic, a world leader in mo­bile casino and sports games; Mer­cury Film­works and its re­cently launched mo­bile gam­ing arm Mer­cury Ac­tive; and Fuel In­dus­tries, which has worked with ma­jor clients in­clud­ing Lu­cas­Film and NBC Univer­sal on live-ac­tion tele­vi­sion, gam­ing and dig­i­tal for­mats.

OT­TAWA’S AD­VAN­TAGES

Ot­tawa’s po­si­tion as a high-tech hub has pro­vided a mas­sive boost for the dig­i­tal me­dia sec­tor, Ms. Martin says.

“There’s al­ways go­ing to be this nat­u­ral in­cli­na­tion for cer­tain peo­ple to be able to start their own busi­ness, but they still have their net­work and their ex­per­tise,” she says. “I think com­ing from the back­ground of soft­ware and en­gi­neer­ing, it’s just nat­u­ral that peo­ple will want to see what’s com­ing up and what’s new and they’ll want to be at that van­guard. Be­cause we have this pool of peo­ple, it’s just nat­u­ral that they’ll want to branch out and do other things” such as the fast-grow­ing field of mo­bile gam­ing.

The sec­ond an­nual Ot­tawa In­ter­na­tional Gam­ing Con­fer­ence at­tracted ap­prox­i­mately 500 peo­ple last May to the Ot­tawa Con­ven­tion Cen­tre, and Mag­mic has set up a $4-mil­lion gam­ing fund to help star­tups find their foot­ing.

“It’s a good time in the dig­i­tal me­dia sec­tor, par­tic­u­larly be­cause a lot of the key com­pa­nies are grow­ing over the next few months,” Ms. Martin says.

CHAL­LENGES

The big­gest hur­dle, both in the film and tele­vi­sion and dig­i­tal me­dia spheres, is find­ing tal­ent.

“Be­cause we’re still in some­what early stages, for TV in par­tic­u­lar, you need pro­duc­tions to grow, but you also need the tal­ent to grow,” says Ms. Martin. “It’s just be­ing able to bal­ance those. We still have a smaller pool of tal­ent than other cities. That’s the big­gest chal­lenge is be­ing able to grow it bit by bit so that you grad­u­ally build the tal­ent base.”

TRENDS TO WATCH

“I think the busi­ness mod­els are chang­ing,” says Ms. Martin. “Tra­di­tion­ally for film and tele­vi­sion, a lot of the broad­cast­ers or the dis­trib­u­tors were tra­di­tional kind of gate­keep­ers, but now, I think that the com­pa­nies who are able to find their own au­di­ences and con­nect with the au­di­ences di­rectly and re­ally take that into their own hands for mar­ket­ing and things like that are go­ing to be the ones that help to pro­pel (the in­dus­try) for­ward. In gam­ing as well as dig­i­tal me­dia, the au­di­ences are all out there, it’s just be­ing able to con­nect with them and know what’s hap­pen­ing.”

Stephanie Davy, co-or­di­na­tor of In­vest Ot­tawa’s film, TV and dig­i­tal me­dia depart­ment, says new In­ter­net crowd­fund­ing plat­forms such as Kick­starter, which is launch­ing in Canada in Septem­ber, are mak­ing the in­dus­try ac­ces­si­ble to a whole new group of po­ten­tial con­tent cre­ators.

“In­stead of re­ly­ing on a broad­caster, you can just raise the money your­self, re­lease (a pro­duc­tion) your­self,” Ms. Davy says. “Hope­fully, peo­ple will take ad­van­tage of it.”

THE LAND­SCAPE

More than half of our life sciences com­pa­nies are ac­tu­ally from the med­i­cal sub­sec­tor. A lot are us­ing tech­nolo­gies from tra­di­tional sec­tors like pho­ton­ics and tele­com and wire­less and then ap­ply­ing those to the health-care in­dus­try.

An­ni­dis uses op­ti­cal-sen­sor tech­nol­ogy to make eye ex­am­i­na­tion de­vices. It’s the only de­vice that can see through all 10 lay­ers of your eye and de­tect po­ten­tial eye dis­eases be­fore they be­come se­ri­ous. We have a lot of com­pa­nies do­ing DNA anal­y­sis, such as DNA Genotek.

We have a big national med­i­cal de­vices in­sti­tu­tion. Tofy Mus­si­vand (chair and di­rec­tor of the car­dio­vas­cu­lar de­vices pro­gram at the Univer­sity of Ot­tawa Heart In­sti­tute) is prob­a­bly the No. 1 per­son in the med­i­cal de­vices soft­ware (field). He’s still do­ing a lot of cool things in his national med­i­cal de­vices in­sti­tute. They are pro­duc­ing a lot of in­no­va­tive tech­nolo­gies.

The sec­ond area we are stress­ing is health IT. The Ot­tawa Hos­pi­tal was one of the first hos­pi­tals that in­tro­duced iPads to nurses and doc­tors ... so they can check pa­tients’ records wher­ever they go and they can ex­change records wher­ever they go. It’s greatly trans­formed the way health care is de­liv­ered to pa­tients. A lot of national re­search in­sti­tutes, such as the National Re­search Coun­cil, Ot­tawa Hos­pi­tal Re­search In­sti­tute and the Ot­tawa Heart In­sti­tute, are here and we have a huge tal­ent pool com­ing from them. In med­i­cal de­vices, the big play­ers are Ab­bott Point of Care and Nor­dion. They prob­a­bly em­ploy more than one-third of em­ploy­ees in the med­i­cal de­vices in­dus­try. Best Ther­a­tron­ics are do­ing great in the ad­vanced man­u­fac­tur­ing area for med­i­cal de­vices. For health IT, we have big play­ers such as IBM and Telus here. Both of them have their ma­jor so­lu­tion-builders here. Pa­tient­way is a smaller com­pany that deals with se­cu­rity of pa­tient records. In the bio­phar­ma­ceu­ti­cal re­search area, Pfizer has a big R&D op­er­a­tion.

OT­TAWA’S AD­VAN­TAGES

Canada’s largest car­dio­vas­cu­lar health cen­tre is here, the Univer­sity of Ot­tawa Heart In­sti­tute. OHRI is the third-largest hos­pi­tal re­search in­sti­tute in Canada and we have two national cen­tres of ex­cel­lence here – the Cana­dian Stroke Net­work and the Cana­dian Stem Cells Net­work. With those here, it ( helps) at­tract tal­ent to do more re­search in th­ese ar­eas and to en­cour­age more com­mer­cial­iza­tion com­ing out of those ar­eas. And the med­i­cal de­vices in­sti­tute is head­quar­tered here.

Be­ing the national cap­i­tal re­gion, one ad­van­tage we have is all the reg­u­lat­ing bod­ies and all the de­ci­sion-mak­ers are here. Health Canada is here, the Pub­lic Health Agency

of Canada is also here. This all makes it very con­ve­nient for com­pa­nies to get ap­provals from Health Canada and also to get fur­ther fund­ing to do com­mer­cial­iza­tion and re­search in the life sciences area. We do have all the key com­po­nents for suc­cess – from in­dus­try, from the govern­ment, from the aca­demic and hos­pi­tal re­search side.

CHAL­LENGES

For life sciences, the over­all R&D cy­cle to con­duct bio­phar­ma­ceu­ti­cal re­search is long. Peo­ple need to be pa­tient. We need to keep con­tribut­ing to those ar­eas.

We need to align th­ese three sec­tors – the govern­ment, re­searchers and in­dus­try – so we can con­tinue to en­cour­age more com­mer­cial­iza­tion out of those re­search ar­eas. Some­times it’s a chal­lenge to have the re­search peo­ple meet with the busi­ness­peo­ple so that things can hap­pen. That’s some­thing we re­ally need to im­prove. For med­i­cal de­vices, we have so many cool tech­nolo­gies, but peo­ple need to work with the hos­pi­tals to un­der­stand their needs. In­dus­try needs to talk with the doc­tors. They need to un­der­stand what the pa­tients and the doc­tors need.

The third thing is the cap­i­tal side. When it comes to life sciences, we see less and less fo­cus and ex­per­tise from in­vestor teams. We need to en­cour­age more in­vest­ment into this sec­tor, to en­cour­age more re­search and com­mer­cial­iza­tion.

TRENDS TO WATCH

Med­i­cal de­vices and health IT, as well as tech­nolo­gies en­abled by th­ese new de­vices and new so­lu­tions, are go­ing to be big in the life sciences in­dus­try. They will have a huge im­pact in how health care is go­ing to be de­liv­ered, from the de­vices side, the ap­pli­ca­tions side and the so­lu­tions side. In the fu­ture, you won’t re­ally need to see the doc­tor face to face (to get med­i­cal re­sults). Ev­ery­thing will be de­liv­ered to your own de­vice (such as an iPhone or iPad) and you’ll be able to check your test re­sults from dif­fer­ent health-care providers.

This is go­ing to be the next trend in the health sciences in­dus­try and it’s go­ing to be huge.

THE LAND­SCAPE

Ot­tawa’s still a cen­tre of in­no­va­tion, and that also ap­plies to the de­fence and se­cu­rity sec­tor. There is quite a lot of cross­over – a lot of the com­pa­nies have ex­per­tise in both ar­eas.

The main play­ers in the in­dus­try, that hasn’t changed too much. We’ve still got Lock­heed

Martin and Gen­eral Dy­nam­ics. Be­cause we are spend­ing money on de­fence here now in Canada, Ot­tawa’s the nat­u­ral cen­tre. You’re close to DND head­quar­ters and also the Coast Guard for the national ship­build­ing pro­cure­ment pro­ject. That’s $33 bil­lion over 30 years – it’s go­ing to be a long-term op­por­tu­nity, it’s go­ing to cre­ate jobs. And that’s just the ac­tual fund­ing from the govern­ment, and that’s es­ti­mated. Over time, that will prob­a­bly in­crease. Even though we’re in the cen­tre (of the coun­try) and as far as you can get from the sea, we do have a lot of com­pa­nies in Ot­tawa with ex­per­tise in com­mand-and-con­trol sys­tems and other things that could be put on those ships. We’re sup­port­ing com­pa­nies here, we’re part­ner­ing with them, but then we’re also try­ing to at­tract large in­ter­na­tional play­ers here to Ot­tawa to help grow jobs as well here.

OT­TAWA’S AD­VAN­TAGES

One of the sell­ing points for Ot­tawa is we’ve got the broad range of com­pa­nies. You think of any as­pect of de­fence and se­cu­rity, any of the sub­sec­tors, you can pretty much guar­an­tee we’ve got at least one com­pany here do­ing that, ev­ery­thing from un­manned ve­hi­cle sys­tems to air­port se­cu­rity. Searidge Tech­nolo­gies, for ex­am­ple, has got this re­ally cool ap­pli­ca­tion. You could be in Mon­treal and you could see what’s hap­pen­ing at the Ot­tawa air­port and you could di­rect traf­fic. Even gen­er­ally when a com­pany’s main pres­ence is else­where in Canada, such as

Mar­shall Aero­space and De­fence, they’ve at least got a rep­re­sen­ta­tional of­fice here in Ot­tawa be­cause they need to be close to ( govern­ment clients).

OP­POR­TU­NI­TIES

We’re one of the few western economies that’s ac­tu­ally in­creas­ing our de­fence spend­ing at a time when ev­ery­one else is cut­ting costs. We have to ac­quire cer­tain equip­ment ... so there are op­por­tu­ni­ties.

Even though bud­gets are be­ing cut in the U.S., there are still huge op­por­tu­ni­ties. If you look at graphs of the world’s spend­ing in de­fence and se­cu­rity tech­nolo­gies, the U.S. is up there and then you’ve got Rus­sia, China and then it goes down. The U.S. is by far and away the largest mar­ket for our com­pa­nies. Hav­ing said that, they are mak­ing some cuts, so we are try­ing to en­cour­age our com­pa­nies to look fur­ther afield and not put all their eggs in one bas­ket. It’s got to be mar­kets that we ac­tu­ally can get an ex­port li­cence to, so we are some­what re­stricted. Latin Amer­ica, ob­vi­ously Aus­tralia, Brazil, there’s op­por­tu­ni­ties there, some parts of Asia.

In my ex­pe­ri­ence, it’s not un­usual for smaller com­pa­nies to be able to ex­port be­fore they can sell into the Depart­ment of National De­fence here in Canada. There’s more money and op­por­tu­nity for them in the U.S. Panacis (which de­signs and man­u­fac­tures lithium power pack sys­tems for the de­fence and aero­space in­dus­try), we’re work­ing with them and help­ing them ex­pand in­ter­na­tion­ally.

CHAL­LENGES

We’re very for­tu­nate here in Ot­tawa with the fed­eral govern­ment pro­cure­ment pro­grams. I sup­pose the chal­lenge might be that his­tor­i­cally, they get pushed back and de­layed.

My ad­vice to all com­pa­nies is to di­ver­sify and look at other mar­kets. If you sat around wait­ing for a Cana­dian de­fence pro­cure­ment op­por­tu­nity, you’d starve to death. Cana­dian com­pa­nies have been heav­ily re­liant on the U.S. mar­ket his­tor­i­cally, and there is still op­por­tu­nity there. This is a good time now to start ( look­ing at in­ter­na­tional mar­kets).

TRENDS TO WATCH

The sec­tor moves pretty slowly. De­fence pro­grams run over a long pe­riod of time. I think there’s a lot of po­ten­tial for com­pa­nies in the sec­tor. There are op­por­tu­ni­ties there, and they are long term.

Ev­ery­one’s fa­mil­iar, for ex­am­ple, with cy­ber­se­cu­rity be­ing a huge area of op­por­tu­nity. We’re al­ready work­ing with com­pa­nies in that area. In-ser­vice sup­port (is an­other area to watch) ... be­cause once we do get around to ac­quir­ing this new equip­ment, that (field) will be quite lu­cra­tive. We haven’t got a ship­build­ing in­dus­try here right now, and I hope that’s one of the trends. We’re go­ing to help grow that back, and there’s go­ing to be op­por­tu­ni­ties for Ot­tawa com­pa­nies to be a part of that. There’s a real dan­ger that we could be over­looked be­cause all the fo­cus is on the east and the west coast. It’s a national ship­build­ing pro­cure­ment strat­egy, so there should be equal op­por­tu­ni­ties for us here.

THE LAND­SCAPE

When we did our re­search pro­ject last year, we dis­cov­ered that 74 per cent of the com­pa­nies own­ing op­ti­cal net­work­ing in the world have R&D cen­tres here. Al­ca­tel-Lucent has 2,400 peo­ple, Ciena is grow­ing and Cisco is grow­ing. In­fin­era is an­other player and a lot of peo­ple don’t even know they’re here. BTI Sys­tems and Optelian are two Ot­tawa home­grown com­pa­nies that are tak­ing mar­ket share. Th­ese guys are here and they’re just qui­etly grow­ing, for the most part.

Black­Berry, they al­ways talk about Water­loo, but they need to talk about Ot­tawa more. They’re here, they’re do­ing all of their nextgen­er­a­tion soft­ware here with QNX. Huawei’s here, too. IBM, they do all of their an­a­lyt­ics stuff out of Ot­tawa with their ac­qui­si­tion of Cog­nos. We have ev­ery­thing from the com­po­nents ex­perts right through to the peo­ple do­ing ap­pli­ca­tions. We’ve got the satel­lite firms, which in­cludes com­pa­nies such as CCom, EMS Sat­com (which is now part of Honey­well) and Te­le­sat, all of which are do­ing some great stuff. And then there are the back­haul com­pa­nies, the DragonWaves of the world, the net­work man­age­ment, the Bridge­wa­ters (now a di­vi­sion of Am­docs). We’ve got kind of all of the pieces of that whole en­tire ecosys­tem, right from JDS on through. JDS is still here. If you go on their web­site, they’ve got lot of job recs out, they have over 400 peo­ple, they’re here and they’re do­ing great stuff.

OT­TAWA’S AD­VAN­TAGES

The Cana­dian Pho­ton­ics Fab­ri­ca­tion Cen­tre (an en­gi­neer­ing and man­u­fac­tur­ing foundry ser­vice) is the only one of its kind in all of North Amer­ica. It at­tracts com­pa­nies from all around the world. They’re like, ‘Oh, we’ve got this piece of in­fra­struc­ture. Wow, look at the com­pe­tency in Ot­tawa.’ Th­ese guys, they’re boom­ing, they’re go­ing 24/7 now, they’re look­ing to ex­pand. It’s re­ally quite a suc­cess story.

Ninety per cent of Canada’s tele­com R&D is con­ducted in Ot­tawa. I’d ar­gue there’s no other city in the world that has ev­ery­thing from the com­po­nents right through to the ap­pli­ca­tions. Peo­ple re­ally un­der­stand net­works here in Ot­tawa. That comes from our legacy with Nor­tel and BNR be­fore them.

CHAL­LENGES

A lot of the new com­pa­nies that are com­ing into the sec­tor are on the soft­ware side. The hard­ware is never go­ing to go away, but to start a hard­ware com­pany th­ese days is re­ally dif­fi­cult. It’s usu­ally a bit of a longer-term turn­around on in­vest­ment, it’s a much more ex­pen­sive play, you’ve got to pro­to­type, you’ve got to do all th­ese other things. So just los­ing some of that ven­ture cap­i­tal on the hard­ware side is some­thing I hope changes for the sec­tor. Two of the stars in my sec­tor are (Kanata-based op­ti­cal net­work­ing equip­ment ven­dors) Optelian and BTI Sys­tems. I bet if we talked to them, they would prob­a­bly say, ‘I don’t know if we could start this com­pany to­day.’ It would be hard to get the cap­i­tal to do that. And yet they’re two of our fastest-grow­ing com­pa­nies.

In terms of things we could do bet­ter, one of them is rais­ing (the city’s) pro­file. I would ar­gue we’re still the leader in tele­com in Canada. The jumping-off point from that is all th­ese ap­pli­ca­tions and things that run on that net­work, and we’re cer­tainly see­ing a lot of new com­pa­nies play­ing in that space, es­pe­cially with hav­ing Black­Berry here do­ing all of their soft­ware stuff. It’s OK to be a tele­com city. We need to be pos­i­tive. We’ve got the com­pe­tency to com­pete with other play­ers in the world.

TRENDS TO WATCH

What I’m see­ing in trends in tele­com is this whole shift to pro­gram­mable net­works. A lot of the car­ri­ers, they’ve built the net­work and now they’re try­ing to get more out of the net­work. Terms like soft­ware-de­fined net­work­ing are re­ally hot in the sec­tor now. And that’s great, but if you don’t re­ally un­der­stand the net­work and how it works, how do you write that soft­ware? We’re start­ing to see some new com­pa­nies pop up. Net­work func­tion vir­tu­al­iza­tion is an­other term you’re go­ing to see. That’s again ... try­ing to get more out of that hard­ware us­ing soft­ware. How do you get more band­width? How do you speed it up? The In­ter­net is every­where, so how are we go­ing to deal with this data over­load? That’s prob­a­bly the big­gest trend I’m see­ing in the sec­tor ... and I’d say Ot­tawa is su­per well­po­si­tioned for that. We’ve got that legacy – that core com­pe­tency on the hard­ware side.

This test bed that we’re look­ing at build­ing (to al­low smaller de­vel­op­ers to test out soft­ware on hard­ware from var­i­ous com­pa­nies), it will be able to test th­ese new ap­pli­ca­tions – so ar­eas like health care, min­ing and en­ergy are huge. Smart grid and en­ergy projects, de­fence and se­cu­rity, par­tic­u­larly IT se­cu­rity, that’s su­per hot.

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