It looks like corporate Canada needs a reality check when it comes to ICT spending.
Perhaps a reality check à la reality TV is in order. Like the kind doled out on Til Debt Do Us Part. Right after I had a baby, reruns of that show beamed endlessly into my exhausted, newly chaotic life several times during the day (and night). The same bombshell drops on every featured couple: the host asks them how much money they think they’re saving and investing, then shows them the pitifully low amounts they’re actually putting aside.
That ‘a-ha’ moment exposes a huge (and financially dangerous) perception gap. Watching this scared me into an epic expense-tracking session with my husband not long thereafter.
Canadian companies suffer from a similar perception gap when it comes to investing in ICT – and they could use a reality check, too. That’s the conclusion of a Deloitte study called ‘The future of productivity: A wake-up call for Canadian companies.
“Canadian businesses think they’re investing enough in their own growth,” says Victor Lu, a Toronto-based consultant at Monitor Deloitte who helped research the study. “But they’re actually completely unaware that they’re investing significantly less than their counterparts. And this underinvestment (is) a significant cause of Canada’s productivity gap.”
Here’s how the study went down:
- Perception: Deloitte asked 884 Canadian firms to rate their own level of innovation and risk tolerance
- Reality: Deloitte also examined how much the firms actually spend in three categories of productivity investment (ICT, R&D, and machinery and equipment) vs. their sector peers within Canada.
As it turns out:
- More than one-third of Canadian companies (36 per cent) think they invest more than their domestic peers in productivity – but actually spend less
- This under-investment hurts productivity; Canadian companies have a productivity rate that’s 20 percentage points lower than U.S. firms
- On a per worker basis, Canadian companies invest only half (53 per cent) as much in ICT as their U.S. counterparts
That last figure is no surprise to any Canadian CIO; the fact that Canadian companies spend less on ICT than American firms has been documented for years.
But Deloitte’s new Productivity Diagnostic Tool might give Canadian executives a new way of framing their ICT investment priorities.
After completing the study, Deloitte created an online diagnostic tool to help Canadian companies see how their productivity investment stacks up. The tool, says Lu, can help Canadian firms do something they don’t do often enough: compare themselves with competitors.
“These (Canadian) companies may be too inward looking (if) they benchmark against their own business performance and past practice, rather than benchmarking against key competitors and the marketplace,” Lu says.
Over the long term, “failing to make key investments will ultimately put (their) survival in danger,” he warns.
Canadian firms are already paying a global price for their underinvestment. According to the Organization for Economic Development and Cooperation, Canada ranks near the bottom of OECD (eighteenth out of 22 nations) in labour productivity growth.
So run your company’s numbers through the diagnostic tool. It might not be as fun as watching reruns of a reality TV show. But it could be the reality check that sways your execs to rethink your ICT budget.
Next up: Download ‘The Converged IP Network: Your Future Productivity Depends On It,’ a white paper from Allstream.