Canada Information Technology Report Q3 2012

BMI View: Canadian IT spending is expected to reach US$46.9bn in 2012, up 3%, with BMI
downwardly revising its forecast due to expectations of a macroeconomic cooling in H212. Government
spending will continue to be constrained by a focus on cutting costs, with cost reviews being conducted by
Toronto and Ontario, but there have been a spate of large tenders, highlighting continued opportunities
within the sector. BMI expects Canada''s IT market to continue to report moderate overall growth in
2012, although much will depend on the overall business environment.
Headline Expenditure Projections
Computer hardware sales: US$14.9bn in 2011 to US$15.1bn in 2012, +2% in US dollar terms.
Forecast in US dollar terms downwardly revised due to macroeconomic factors, although Canadian
PC sales reported positive growth in 2011.
Software sales: US$9.3bn in 2011 to US$9.7bn in 2012, +4% in US dollar terms. Forecast in US dollar
terms downwardly revised due to analyst modification and given the large public sector deficits, vendors
will need to provide clients with ways to reduce costs by increasing efficiency.
IT Services sales: US$21.4bn in 2011 to US$22.1bn in 2012, +4% in US dollar terms. Forecast in US
dollar terms downwardly revised due to analyst modification with the market shaped by a continued
move towards distributed computing and service-oriented architectures.
Risk/Reward Ratings: Canada''s score was 70.7 out of 100.0. Canada ranks second in our latest RRR
table, behind the US, but still ahead of Latin American giants such as Brazil and Mexico. The country
ranked third for its Industry Rewards score, but its overall rating was boosted by a relatively high Country
Rewards score of 90.
Key Trends & Developments.
􀂃 Fiscal constraints faced by the Ontario government in particular represent a challenging
environment for vendors. Meanwhile Toronto authorities have also launched a Core Spending
Review targeted, which could have negative implications for IT spending. However a focus, by
Ontario and other authorities, on deficit reduction through public services delivery reforms
should also potentially represent an opportunity for IT vendors.
􀂃 Growing interest in cloud computing is expected, with Canada currently lagging the US and
some other advanced markets. The market in Canada remains fairly small. A 2011 survey
commissioned by Microsoft Canada found that nearly 73% of Canadian SMEs understood that
cloud-based services was a cost-effective delivery model, but that just 30% were investing in
such services.