OCRI's Jeff Dale

After a year of studying the local tech sector and its place on the global stage, an OCRI task force has confirmed what many have long suspected—local firms spend too much energy on product development and too little on commercialization.

That was the conclusion of a preliminary report filed Thursday by The Ottawa-Gatineau Task Force on Commercialization. The task force was organized by the Ottawa Centre for Research and Innovation about a year ago, a time when the region's tech sector was still in full retreat before the telecom industry slump.

The task force includes representatives from local economic development agencies such as OCRI, as well as local universities. Its mandate is to determine why only a handful of Ottawa tech firms manage to become significant players in their respective industries.

OCRI president Jeffrey Dale said the biggest and best that Ottawa has to offer, such as homegrown success story Cognos, still fail to rank in the big leagues compared to the top U.S. tech firms.

The task report said the problem is that too few companies are growing into profitable, mid-sized enterprises, defined as having at least $50 million in annual revenue and 100 to 500 employees.

In the U.S. tech sector, Hewlett-Packard, Intel and Cisco Systems rank among the 100 biggest companies in the world.

In Canada, the biggest players such as Nortel Networks and Bell Canada Enterprises don't even rank in the top 350 of the Fortune 500 list, while Cognos doesn't even appear on the list.

In its preliminary report, the task force suggested a number of reasons why Ottawa's tech sector struggles to make a splash on the global stage:

* Local firms focus too much on research and development rather than on commercializing their product and getting it into the hands of customers.

* Both startups and more established firms suffer from a lack of a sufficient risk capital to fund growth.

* The region continues to suffer from a farm team mentality that sees many promising firms bought up by bigger rivals, often from the U.S., and stripped down to an R&D operation.

The task force suggests setting up centers of excellence in each of the main industries--information technology, biotechnology and environmental—that would help new companies make the leap from the R&D phase to revenue growth and profitability.

One proposal that is bound to stir controversy is to have the federal government tweak its R&D tax credit program to support commercializing a product.

In the next stage of its work, the task force will focus on how investment capital could be used to help small firms grow into larger, independent and successful enterprises.