Future Looks Bright for Alberta's Technology Industry: Ernst & Young Report

Calgary and Edmonton, March 13, 2001 -- According to an Ernst & Young survey conducted by Ipsos-Reid, 76% of responding senior technology executives say the province's technology industry will grow faster than other tech regions in Canada in the next 5 years. "The economic environment in Alberta, with its lower taxes, healthy economy and good entrepreneurial business community, provides a better base for quicker growth than any other province," explains Ian Robinson, a partner with Ernst & Young who leads the Technology, Communications & Entertainment industry team in Calgary.

In addition, 83% of those surveyed feel Alberta's technology industry is growing. Rick Cormier, Ernst & Young's Office Managing Partner, Edmonton, notes, "Alberta has a lot of technology-able entrepreneurs who are actively identifying opportunities in the growth areas of the Internet and wireless." Of course, money always helps. Cormier says, "The venture capital community is broadening, with several new funds being created in the last 12-24 months looking to assist these entrepreneurs in building on those growth opportunities."

The survey behind the Alberta Technology Report 2000 (the Report) went to those who know: CEOs and senior executives from across a broad cross-section of the Alberta technology industry. 276 responded with their opinions and experiences within the industry. Last year, in our first such survey, (the Alberta Technology Report 1999), the respondents of the province's technology industry were looking forward to unprecedented growth. However, as demonstrated by this year's responses, fiscal 2000 was instead a challenging year for this sector. Cormier comments, "At the start of the year, entrepreneurs believed the business paradigm was different for technology companies. However, the major market correction in the spring brought tech businesses back to reality."

Alberta's Tech Companies Grow by Going Global

This year, 26% of all responding companies got most of their revenue from sales to other parts of Canada, the U.S. or overseas. Among medium companies (10-49 employees) this figure is 29%; among large companies (50+ employees) it's 54%. Cormier says the message is clear: "In order to grow your technology business, you have to focus on the global market."

Western Canadian Lifestyle Helps Fight Brain Drain

Of the employees that left Alberta's technology companies, The Report found that less than 188 (21%) of employees left for other markets. The region loses less to the United States than to other Canadian companies. But the good news is that the majority (76%) of departing, trained employees migrate to other Alberta companies rather than leave the province. Robinson believes, "For many technology employees, Alberta's just the right size. It has a vibrant business community and appealing quality of life without being as expensive or crowded as the Silicon Valley."

Government Could Be Angel

Like their American counterparts, Alberta's surveyed technology CEOs still feel that the most effective government support for the industry would be tax cuts. This is consistent with last year's findings. Only 188 of Alberta's technology firms reported receiving support from a government program supporting research and development. The Report shows that many in the tech industry are simply not aware of what is being offered by the government to help the technology sector. Robinson adds, "It's my experience that smaller companies are frustrated by the bureaucracy required to access government research programs. It is very interesting that the companies that have been successful in partnering with government are finding these programs supportive, and the survey indicates that these are the companies with higher revenues."

Methodology

The objectives of the study were to track the state of the technology industry compared to the benchmarks established by the Alberta Technology Report 1999 and to establish new benchmarks on topics of current interest to the industry. The Alberta Technology Report 2000 was based on the findings of an Ipsos-Reid online survey conducted between November 2, 2000 and January 2, 2001. 1,000 randomly recruited technology decision-makers were invited to participate. 276 people actually completed the survey via secure website. With a sample of this size, the results are considered accurate within +/- 5.9 percentage points, 19 times out of 20, had the entire sample of technology decision-makers responded. The margin of error will be larger within sub-groupings of the survey population. Ernst & Young, Ipsos-Reid Corporation, TD Bank, CompCanadaAtlas and Silicon Valley North sponsored the research study that formed the Report.

Report Information

The Alberta Technology Report is available at www.altatechreport.com or at Ipsos-Reid Technology Studies.

About Ernst & Young

Ernst & Young, a global leader in professional services, helps clients to quickly and confidently make financial decisions designed to enhance value. Its 77,000 people in more than 130 countries have the industry and financial experience to provide fresh perspectives on operating in the new economy. Ernst & Young offers traditional audit and tax services, as well as customized services in corporate finance, online security, risk management, the valuation of intangibles and e-business acceleration. In addition, legal services are available in various parts of the world where permitted. A collection of Ernst & Young's latest ideas on the new economy can be found at www.ey.com/thinkglobal.

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For more information please contact:
Jennifer Sherriff (416) 943-5410
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Tim Olafson (403) 294-7397
Tim Olafson