We are connected to the world, now what?

Given the geographical isolation and over-reliance on the natural resource industry, northwestern Ontario has benefited greatly from the implementation of broadband technology and its application in every aspect of the economy.

In fact, the introduction of high speed access and telecommunications infrastructure has greatly enhanced our region's reach into international markets, increased productivity, and allowed the small- and medium-sized enterprises (SMEs) to leverage their limited resources.

Or has it? There are recent studies and findings that may surprise many.

The importance of SME to our economy

To put things in perspective, we need to have a clear understanding of the importance that the small business sector has in economic growth and job creation. According to Statistics Canada, a full 75 per cent of Canadian businesses employ fewer than five people, and a full 55 per cent of Canadians work for a small- or medium-sized business. The small business sector creates most of the new jobs in the economy (around 70 per cent). Small businesses are prevalent in every corner of the economy (from as high as 90 per cent in agriculture and over 80 per cent in business services, to a more modest 56 per cent in the food and accommodation sectors).

Small businesses dominate the economies of every province in the country, with SMEs in general representing over 90 per cent of the total businesses in each province.

SMEs in the new e-economy

The stats above clearly show our general well-being as a nation is closely tied to the fortunes of the small business sector. Industry Canada has long recognized that to compete globally we need to be connected to the world. Great strides have been made in recent years in this area and the country has been recognized for five years as a world leader in electronic commerce and Internet adoption, and attaining some of the highest levels of connectivity and infrastructure development. A recent Ipsos-Reid poll put Canada in the lead for the adoption of the Internet by individuals, followed by South Korea, the U.S. and Japan, and the Conference Board of Canada rated Canada second among the G-7 nations in connectivity. But is being connected to the world enough? Have the SMEs been able to leverage this substantial competitive advantage and integrate it into their operations? A recent study by the Canadian e-Business Initiative (a private/public sector partnership that includes federal and provincial representatives), clearly shows that we are falling behind.

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A troubling scenario

Two recent studies (Sep. 2004) Net Impact Canada IV: Strategies for Increasing SME Engagement in the E-Economy and Fast Forward 5.0: Making Connectivity Work for Canada, show that the Canadian small business sector has stalled on e-business adoption. According to the studies, in 2001 Canada ranked fourth of 64 countries in Economic Intelligence Unit e-readiness rankings; by 2002, it had dropped to ninth and by 2004 had slipped to eleventh place. The major reason appears to be that, while Canadian companies are connected, they are not taking advantage and leveraging the benefits of Internet business solutions. The reports cite three Cs, caution, conservatism and complacency, as the three issues plaguing Canadian businesses. Caution in adopting e-business practices, complacency in making ICT investments to improve business processes, and conservatism in online purchasing habits.

The government's role

The Canadian government has also been traditionally cautious and complacent about relying on Canada's strategic advantage in telecommunications infrastructure and the use of technology. What seems to be needed now is more strategic policy leadership to facilitate the integration of this technology into businesses' practices and continued growth. Canada's once outstanding global performance and growth potential is at stake and it is good to see that the key players acted quickly by coming together at a two-day e-economy fall conference to create a framework for moving forward to stimulate greater participation in building Canada's e-economy.

How about northwestern Ontario?

The reports did not break down the findings by region of the country, but it is fair to assume that a similar situation is occurring in Northern Ontario. In late 2001, a regional survey research project sponsored by the Northwestern Ontario Associated Chambers of Commerce (NOACC). It was conducted by the Institute for Global Entrepreneurship and Electronic Commerce (the Institute) at Confederation College, and principally funded by FedNor. This initiative was in part prompted as a follow-up to an earlier e-commerce study that the Institute had carried out for the Thunder Bay Chamber of Commerce. That study, conducted in early 2001, had examined the use or non-use of e-commerce tools and related matters, as experienced by the roughly one thousand business and organizational members of the Thunder Bay Chamber. Over 210 members participated in the study, and provided a large body of information about the use of e-commerce by businesses in and around Thunder Bay.

Conclusion

The regional survey of 2001 showed a high connectivity in both the city and region with a much lower participation in electronic commerce activities. At the time, it was difficult to compare to the national figures due to the discrepancies in broadband availability in various parts of the region. Today, however, we are in a much better position to evaluate our participation in electronic commerce and the benefits that may or may not have accrued in northwestern Ontario. With governments keen on ensuring Canada does not fall behind, it is imperative that we put this item very high on the agenda of decision-makers in the North. The future well being of this region will depend on it.

Frank Pullia is the Principal of Pullia Accounting & Consulting. He can be reached at [phone] or at [e-mail]