What will happen to Canadian digital technology without DTAPP? (Views: 4492)
Tue, 19 Nov 2013
In 2011, faced with an outpour of Canadian dollars going to more tech-savvy American companies, the Minister of Industry launched a three-year pilot program to speed up the digital technology adoption rate of Canadian businesses. The Digital Technology Adoption Pilot Program (or “DTAPP”) was therefore established and backed by a $80 Million fund. In it’s 3 years, DTAPP has certainly made some grateful companies but recent reports seem to suggest that there has not been much improvement in digital technology adoption rates. Was the program properly structured to meet it’s objectives or is it still too early to see changes in adoption trends?
A generous, accessible funding program
DTAPP was a very generous funding program though which Canadian businesses incorporating digital technologies could access up to $100,000 in non-repayable contributions. These funds could be used to cover up to 80% of the project’s direct labor costs as well as 75% of sub-contracting costs. Components of the program also aimed to educate firm managers on the benefits of using digital technologies and established a framework to observe the relationship between productivity and the adoption of digital technology. DTAPP’s eligibility criteria weren’t very restrictive either. Applicants had to be Canadian businesses with no more than 500 employees, and have a project which involved the adoption of digital technology. They also had to agree to participate in DTAPP’s research linking productivity and digital technology.
Successful results
Already, the NRC lists several cases in which companies that benefited from DTAPP. For example, Ross Video Ltd. used DTAPP funds to update it’s Customer Relation Management (CRM) software. Their vice-president of finance and administration, Joe Lalonde, now credits the new software for "increased efficiencies for everyone in the sales chain, from the regional sales manager to the sales coordinator to technical support”.
Another example comes from Abbotsford British-Colombia, where New World Technologies’ infrastructure was rescued from crumbling under their explosive growth. The company used DTAPP to fund the implementation of an ERP system which has led to “higher productivity, lower inventory, shorter lead time, fewer errors and better customer service”.
Finally, Boomerang Kids benefited from DTAPP by complementing their bricks and mortar retail store with an online version with a current catalog of 8,000 products. The company expects to offer 40,000 products by next April, and have already seen a 10% increase in sales over the last six months.These examples support the idea that Canadian companies often delay updating their infrastructures even though these are causing losses in productivity and missed sales opportunities. Overall, the slow adoption of digital technologies seems to indicate that Canadian business owners are either undervaluing possible productivity gains or overestimating adoption risks. Finding the right balance of awareness and funding might be one of the biggest challenge faced by the government, should it decide to renew the program.
Not enough to change the trend?
In 2010, before DTAPP was announced, Statistics Canada released the Deployment of Electronic Business Processes in Canada report. The report was based on data from their 2007 Survey of Electronic Commerce and Technology, and found that only 11% of private-sector firms used e-business for either logistics or marketing and customer relations, while 35.4% of businesses used e-commerce solutions. Also noteworthy, is the fact that 46.3% of firms did no business whatsoever online.
This summer, Canada Post published a report indicating that Canadian consumers spent $21 B online in 2012, and 43% of these purchases were made through US-based websites. This finding suggests that Canadian businesses still haven’t caught up with digital technology adoption trends – not surprising after only about one year of DTAPP. Additionally, Canada Post’s report showed that it is shipping logistics and costs that discourage small business owners from transitioning to e-commerce. As a result, Canada Post revamped their e-commerce solution to make it easier to integrate into a small business owner’s online checkout system. They have also decided to encourage the adoption of digital technology by rewarding innovative Cannadian e-commerce solutions with over $1 M in prizes through their E-commerce innovation awards.
This Octobre, Statistics Canada released the individual internet use and e-commerce report which also supported the idea that Canadian Businesses are not catching up with digital technology adoption trends. Of all the goods ordered online, 63% were ordered from the United States and 21% from a company in another country.
What next?
If the government decides against extending the Digital Technology Adoption Pilot Program, hopefully Canadian businesses will still take hints from the success of DTAPP projects and better appreciate the productivity benefits of digital technologies. Although in light of current reports, more time and effort will be necessary. So hopefully the government decides to modify the pilot in order to turn it into a more permanent Digital Technology Adoption Program. Until then, I suspect we will continue seeing private-sector and non-profit initiatives such as the E-commerce innovation awards or Microsoft’s Bizspark, DAIR and Cybera to incentivize the adoption as well as lower the costs and risks of digital technology.
By Jason Gendreau
jgendreau@fundica.com
What are your experiences with digital technology and what do you think would best help Canadian businesses adopt digital technologies?
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