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THE Innovation Gap in Canada

�Produc'vity,growth,in,Canada,has,ranged,from,disappoin'ng,to,dismal.,Since,2001,,Canada�s,produc'vity,growth,has,slowed,to,historically,low,rates……,,…,with,Canadian,workers,having,only,about,half,as,much,M&E,and,ICT,capital,stock,to,work,with,as,their,U.S.,counterparts.,,,,…,and,with,a,persistently,strong,Canadian,dollar,,a,widening,compe''veness,gap,,low,interest,rates,,strong,balance,sheets,and,increasing,labour,scarcity,on,the,horizon,,the,impera've,for,Canadian,businesses,to,invest,has,rarely,been,more,compelling.�,

�Innova'on,is,the,ability,to,turn,knowledge,into,new,and,improved,goods,and,services….. Canada,remains,a,below,average,performer,on,its,capacity,to,innovate,

...Canadian,companies,are,rarely,at,the,leading,edge,of,new,technology,and,too,oIen,find,themselves,a,genera'on,or,more,behind�,,

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Conference!Board!of!Canada:!!!!!!!!!!!!!!!!How!Canada!Performs,!Sept!2012!

Speech!by!Senior!Deputy!Governor!10/04/12!

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Mobile Social

Cloud

Internet of Things

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As our planet becomes ever smarter, significant shifts are causing an explosion of data and giving rise to new opportunities

Mobile Devices now outnumber

people, precipitating the data growth

7.7 Billion Mobile Devices Among 7.1 Billion People By The End Of 2014

Every day, we create 2.5 quintillion bytes of data

IDC forecasts that we will generate 40 zettabytes (ZB) by 2020

Sources: IBM analysis, Ponemon Institute and Symantec Research, IBM Big Data Website 4

90% of the world�s data was created in last two years alone.

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If Analytics is so valuable why doesn�t everyone have it?

Lack of understanding how to use analytics to improve the business 38%

Lack of management bandwidth due to competing priorities 34%

Lack of skills internally in the line of business 28%

Ability to get the data 24% Culture does not encourage sharing

information 23% Ownership of the data is unclear or

governance is ineffective 23%

Lack of executive sponsorship 22% Concerns with the data 21%

Perceived costs outweigh the projected benefits 21%

No case for change 15%

Primary Obstacles to Widespread Analytics Adoption

Organizational

Data

Financial

Analytics: The New Path to Value Joint Study MIT Sloan Management Review

& IBM Institute of Business Value Copyright © Massachusetts Institute of Technology 2010.

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Skill Needs in the Marketplace What are we hearing from our customers and others?

Analytics ! Canada faces a shortage of people with analytical expertise

! Labor analysts forecast that the number of analytics-based jobs will grow by more than 20 percent between now and 2018

! 40% of organizations report a skills shortage in the ability to manage information

Sources: IBM Tech Trends report, McKinsey & Company, CompTIA, Enterprise Strategy Group, Dept of Labor

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Harness big data to gain insight and develop new offerings

… you and your clients could harness this explosion of data and use analytics to gain insight and predict outcomes for smarter decisions — in any environment?

What if…

1 IDC, The 2011 IDC Digital Universe Study Sponsored by EMC, 2011, http://www.emc.com/collateral/about/news/idc-emc-digital-universe-2011-infographic.pdf 2 IDC, �IDC Releases First Worldwide Big Data Technology and Services Market Forecast, Shows Big Data as the Next Essential Capability and a Foundation for the Intelligent

Economy,� news release, March 7, 2012, http://www.idc.com/getdoc.jsp?containerId=prUS23355112 3 ReadWriteWeb, �Google CEO Schmidt: �People Aren't Ready for the Technology Revolution�� Marshall Kirkpatrick, August 4, 2010; http://www.readwriteweb.com/archives/

google_ceo_schmidt_people_arent_ready_for_the_tech.php

You could increase client/customer value with every interaction?

You could anticipate and shape the impact of financial decisions?

You could prevent and minimize losses, risks and

mistakes?

What if… What if… What if…

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IBM�s POINT OF VIEW

Data is the new basis of competitive advantage:

To drive business outcomes, we need to apply more sophisticated analytics across more disparate data sources in more parts of any organization.

To capture the time value of data, clients need to develop �speed of insight’ and ‘speed of action��as core differentiators.

To change the game in your industry or profession, you will increasingly need cognitive capability.

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IBM investments are designed to help Canadian organizations fulfill the promise of Big Data .. …to reduce costs, manage risk and innovate for better business outcomes.

Innovate

of Canadian firms surveyed have suffered system downtime, and an additional 37% site outages 1

50% Manage risk

of enterprise-sized firms in Canada rank data centre space as the top data centre challenge 1

45% Reduce costs

of outperforming CEOs collaborate extensively with external providers to drive innovation2

59%

1 IDC Canadian Data Centre Overview for IBM, July 2012, Mark Schrutt, Director, Services & Enterprise Applications, and David Senf, Vice-President, Infrastructure Solutions Group, IDC Canada 2 �Leading through connections: Insights from the Global Chief Executive Officer Study,� IBM Institute for Business Value, May 2012.

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The Solution: Collaborating and Investing in building Big Data and Analytic capability in Canada

Segment A

IBM Canada Research and Development Centre

Segment B

Significantly expanded Big Data capacities

Segment D

Advanced microelectronics research facility

Segment C�

Opened Nova Scotia Analytics COE and Global Delivery Center

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IBM�s Big Green Innovations

! Top Ten Environmental Issues

– Global Warming/Climate Change*

– Energy*

– Water*

– Biodiversity & Land Use

– Chemicals, toxics & heavy metals*

– Air pollution

– Waste Management

– Ozone layer depletion

– Oceans & fisheries

– Deforestation

* Focus Area for IBM

IBM Systems and Technology Group

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IBM Canada Research & Development Centre

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1.  Bolster skills and economic development through a ground-breaking collaborative research model focused on important aspects of Canadian society/economics

2.  Provide researchers with support and access to a unique High Performance Computing (HPC) platform to expand and accelerate research scope and outcomes

3.  Accelerate commercialization of �Made in Ontario� new products and services, leveraging small-med sized businesses and industry partnerships

Ci#es& Agile&Compu#ng&

Water&

Collaborative Research for Smarter Planet and Agile Computing

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Southern Ontario Smart Computing Innovation Platform

Energy&Health&

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SOSCIP Consortium

!  Announced April 10, 2012

!  Collaboration is foundational and key to success

-  Seven major university partners

-  Federal and Ontario Governments

-  Private industry through IBM and OCE collaboration

!  $210M Investment over three years

-  IBM invests $175M in computing infrastructure and new jobs

-  Federal and Provincial Governments invest $36.5M

-  UofT and Western lead and support !  Five focus areas to bolster Ontario and Canada skills/

capacity and innovation

-  Energy

-  Water

-  Health

-  Cities

-  Agile Computing

!  Distinguished High Performance Computing Infrastructure

-  Fastest supercomputer in Canada

-  Premier agile research environment

-  Advanced cloud/analytics research platform

-  IBM Canada Leadership Data Centre

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High Performance Computing and Big Data

Collaboration with focus on Research Outcomes Governance and Cross Team Support

Academic Leaders

IBM IBM CLDC

Simulate Real World Complex system modeling Fast design and prototyping Real time analysis/response

Agile Computing Research

Advanced Analytics Cloud

Canada�s #1 Supercomputer

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Small-Med Enterprises

Research Outcomes Research

Delivery Framework

Board of Directors Scientific Advisory Committee Agreements and Frameworks Cross Team Collaboration

SOSCIP Assets

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Applications for HPC and Big Data/Advanced Analytics

Applica#on& Examples&

Simulate)real)world)physical)assets)

Preventa6ve)maintenance)of)remote)physical)structure)(ie)turbines,)bridges))Simulate)weather/wind)Electrical)grid)planning)

Model)complex)func6ons)and)processes)

Grid)planning)and)profiling)Priori6ze)and)select)right)decisions)Outage)and)impact)planning)

Faster)Design)and)prototyping)

Design)new)device)or)material)Integrate)a)variety)of)diverse)data)sources)

Real)6me)analysis)and)response)

Interac6ve)sensors)and)devices)Streaming)data)analysis)Weather)forecas6ng)Sense)and)respond)(water,)grid,..))

Improve)scalability)and)performance)

Drama6cally)downscaled)climate)modeling)(10:1))Longer)term/more)accurate)weather)forecas6ng)100X�s)faster)execu6on)

" Faster " Cheaper " More Accurate " Accessible

… In addition to access to world class research talent and accelerating R&D

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Key Accomplishments

Government Scorecard

" Delivered on job commitment " Delivered on investment commitment

Research Projects

" 48 SOSCIP projects announced " New project researchers

Big Data and High

Performance Computing

" Installation of BG-Q, Cloud, and Agile hardware " Opening of IBM Canada Leadership Data Centre

"  80 New technical specialists/HQP�s

Industry Partner (SME)

Engagement

" >100 industry partner outreach activities "  >30 engaged SME�s and many new prospects

"  Dedicated OCE Director

Foundation and Governance

" Board of Dir and Scientific Advisory Committee " Consortium and Project Collaboration

Agreements " Foundation for Research Delivery Framework

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RENEWABLE SOLAR ENERGY

Develop a new, low-cost, paint-on, solar cell-based renewable energy.

COMBUSTION SYSTEM SIMULATION

Develop a high-performance computing algorithm that simulates combustion systems to improve the design of gas-turbine engines in transportation and power-generation applications.

CREATING SUSTAINABLE ENERGY FROM ARTIFICIAL PHOTOSYNTHESIS

Examine artificial photosynthesis and water-splitting at a nanoscale level to better understand the chemical and physical properties of these processes. This level of understanding will contribute to the development of clean, renewable, and sustainable sources of energy in Ontario.

SMART METER DATA ANALYTICS

Develop software for small/medium enterprises which will help to identify smart ways to reduce energy consumption.

WIND-FORECASTING MODEL

Develop a wind-forecasting model to enable renewable wind energy generation in Ontario to be more proactive and operationally cost effective.

A MODEL FOR SHORT AND LONG TERM ENERGY PLANNING

Improve models for power distribution reliability building on IBM�s weather forecast model.

ENER

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REAL-TIME, REMOTE SENSOR, WATER SHED DATA ANALYSIS

Design communications software that will transmit real-time data from remote sensors in the Grand River Watershed. The data will improve both the understanding of water behavior, as well as water management tactics.

CLIMATE CHANGE IMPACT ON WATER RESOURCES

Develop a 3D hydrological model that represents the impact of the climate-change forecast on the quality and quantity of the surface and subsurface water resources in the Grand River Watershed.

WATER QUALITY MONITORING

Create a low-cost, easy-to-use, real-time sensor system for water quality monitoring, including biological and chemical contamination detection.

REAL-TIME DRINKING WATER MANAGEMENT & MONITORING

Create a real-time water data processing system to aid in water contamination alerts, ensuring enough water is supplied to the public, and to control residential water use.

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SMART URBAN SYSTEM DESIGN

Research into transportation and urban activity systems in the Greater Toronto Area (GTA), improving the decision-making ability of urban planning designers in Ontario.

AUTOMATIC DETECTION OF MAN-MADE OBJECTS FROM IMAGE DATA

Develop a cloud-based tool that will automatically identify features (buildings, roads, forest types, etc.) from high-resolution image data for use in areas like urban planning or forest management.

CLIMATE MODEL

Create new detailed climate projection and drive hydrological models to assess impact of global warming using dynamic downscaling specific to the Grand River watershed.

CITIES&

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MAKING HIGH-PERFORMANCE COMPUTING ACCESSIBLE Design a program that enables software application developers, with minimal hardware skills, to leverage agile, high-performance computing, resulting in faster development cycles.

MAKING CLOUD MORE SECURE Improve the security of cloud environments by developing defense mechanisms that audit and fix configuration-related vulnerabilities.

ASTRONOMICAL DATA MINING Leverage agile, high-performance computing to boost the processing capability of data obtained from Ontario�s world-leading astronomical radio telescope at the Algonquin Radio Observatory.

REAL-TIME NETWORK CAPACITY ADJUSTMENT Leverage agile computing to develop an accelerated ray-tracing algorithm, allowing network operators to adjust network capacity in real-time based on changes in network state and improving quality of service.

IMPROVING SMART GRID DATA EXCHANGE Improve the security and efficiency of handling massive data exchanges in smart grid infrastructures through hardware accelerated computing.

DESIGN PATTERNS FOR HETEROGENEOUS COMPUTING Develop a set of design patterns that will make high performance computing more accessible to software developers creating complex applications.

HARDWARE ACCELERATION THROUGH AGILE COMPUTING Using agile computing, develop a hardware-based system that will accelerate the ability of the IT industry to solve optimization problems, such as routing and scheduling of airplanes and urban transportation systems.

AGILE&

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IBM Imperatives for Canadian IT Innovation

Commit to a path of constant and continuous transformation

Cultivate public and private partnerships

Convert Big Data into solutions using analytics with real-world benefits