Ottawa Business Growth Survey 2020

2020 AN EXCLUSIVE REPORT ON THE OUTLOOK AND ATTITUDES OF OTTAWA’S BUSINESS LEADERS

HOW OTTAWA WILL EMERGE FROM COVID-19 INSIGHTS FROM LOCAL BUSINESS LEADERS ON WHAT’S NEXT FOR THE CITY’S ECONOMY

BROUGHT TO YOU BY

WORKING TOGETHER ON THE PATH TO

ECONOMIC RECOVERY FOUNDED IN 1918 With deep roots in the Ottawa community, Welch LLP is a Chartered Professional Accounting firm that provides a full range of accounting, assurance, tax, advisory and specialty services.

Welch offers private enterprises, government and not-for-profit organizations industry specific services and knowledge with a relationship-driven approach to client service.

Let our team of experts help your team during this period of economic recovery. Contact us at covidhelp@welchllp.com or visit welchllp.com/covid-19 for more information.

613.236.9191 | welchllp.com/covid-19

2 THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020

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FOREWORD

Working together for a stronger Ottawa

Insights into a period of unprecedented change and uncertainty

In these unprecedented times, the Welch LLP Ottawa Business Growth Survey is more important than ever as a tool for our local businesses to have their opinions heard. Collectively, we will work together to help Ottawa thrive in the face of this year’s challenges.

We thank our presenting partners Ottawa Business Journal, the Ottawa Board of Trade and Abacus Data, and major sponsor Field Effect. We also thank RBC and the Ottawa Senators for their generous support.

Thank you to our local business community for your participation and for helping Ottawa to be stronger together as we head into this period of economic recovery.

Thank you to our partners in the 2020 Welch LLP Ottawa Business Growth Survey. If ever there was a time for evidence-based decision making, it is now.

We bring this annual report to you just after the peak of the pandemic as we begin to reopen and reignite our economy. These results will mark a time in our history that will be known for unprecedented change and uncertainty. We will remember this period as a turning point for trends such as digital transformation and remote work that are quickly becoming realities for many organizations. Even more significantly, we will recall the leadership of our business and community champions for how they responded to COVID-19.

We have learned many lessons during this time, not the least of which is how connected we all are and how much we can accomplish using the tools of collaboration, communication and creativity. The COVID-19 countermeasures have revealed many fault lines in our businesses, our communities and our governments. What matters now is how we use this information to forge a healthier and more sustainable future. We have witnessed amazing stories of innovation, resilience and opportunities for growth. We will build on those as many of us find new ways to live, work and invest.

The success of our recovery will depend on each of us as business owners, citizens and political leaders. The government support that saw us through the first few months is unsustainable for the expected duration of our living with COVID-19. We need to get back to business and ensure public health remains a priority as we do so. Government relief will turn to stimulus, and policymaking must foster business and economic growth.

Finally, thank you to our local businesses for your determination and strength. You are the drivers of our economy and our community prosperity. On behalf of the Ottawa Board of Trade, we will do everything in our power to support you and ensure you have a competitive environment in which to thrive.

Micheal Burch FCPA, FCA, CFP Managing partner, Welch LLP

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Sueling Ching President and CEO Ottawa Board of Trade

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FOREWORD

The perceptions and expectations shaping Ottawa’s economy On behalf of the entire team at Abacus Data, it is a privilege to present the findings of the 2020 Welch LLP Ottawa Business Growth Survey.

The value of this study is even more important at a time of crisis like we face today. The pandemic has shaken the foundations of so many aspects of our lives. Collectively, we feared whether our health system could manage a wave of infections and patients requiring intensive care. Millions of Canadians found themselves unemployed while organizations of all sizes confronted a challenge unlike anything before.

This year, business leaders from across the National Capital Region completed our survey and shared their experiences through this difficult time.

The goal of the annual study is to obtain an accurate picture of the current state of our city’s economy through the eyes of business leaders. We seek to understand perceptions, expectations, and identify areas where collectively all stakeholders can make the business environment stronger to achieve growth.

The results this year, as you can expect, deviate greatly from previous years, and present a troubling picture.

Overall business confidence in Ottawa is down substantially from last year and no sector of our business community has been spared:

•

•

•

•

The survey also explored how businesses in our city are reacting to the pandemic.

Almost all are using video conferencing and most are making a shift to virtual ways to connect, given that in-person conferences and business events have been cancelled. But despite this shift to a digital-first and work-fromhome posture, most businesses have not provided training to their employees on the specific cybersecurity risks arising from working from home.

With a challenging market, most businesses report that client

TITLE SPONSOR

Audit

Tax

Accounting

Only a third of business leaders expect revenue to grow this year, down more than 20 percentage points from last year; About one in five expect the market for their business sector to improve over the next 12 months, down 30 points since last year; Perhaps most telling, while 49 per cent of businesses planned to recruit new employees last year, only 25 per cent plan to do so over the next 12 months; and Only six per cent of business leaders say their confidence in the local economy has increased, the lowest it has ever been in the history of this survey.

PRIMARY PARTNERS

development and prospecting, brand building, and employee retention will be their top priorities for the year.

Unfortunately, given the market, few rate employee recruitment as a top priority for the coming year.

Abacus Data, a full-service Canadian market research firm based in Ottawa, carried out the survey from June 1 to June 28, 2020. Respondents were recruited by email and website intercept by the Ottawa Board of Trade, the Ottawa Business Journal and the Welch LLP contact list. Members of BIAs from across Ottawa, the Better Business Bureau, BOMA, the Ottawa Construction Association, and the National Capital Heavy Construction Association were also invited to participate.

Thank you to every business leader who took part in our survey. Your input makes this study possible. Wishing you all the very best as we recover from the crisis and rebuild stronger.

David Coletto CEO, Abacus Data

MAJOR SPONSOR

Consulting

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6

COVER STORY OTTAWA’S EMERGENCE FROM COVID-19:

WHAT’S NEXT FOR BUSINESSES AND THE LOCAL ECONOMY

9

OTTAWA’S BUSINESS CONFIDENCE INDEX MARKET OUTLOOK, HIRING PLANS

AND FINANCIAL PERFORMANCE

15

ECONOMIC RECOVERY AND RE-EMERGENCE INVESTMENT OPPORTUNITIES,

BUSINESS SUSTAINABILITY AND WORKPLACE EFFICIENCIES

27

THE EVOLVING WORK ENVIRONMENT: NEW TECHNOLOGIES AND CYBERSECURITY EMERGING THREATS AND SAFEGUARDS

33

RESPONDENT PROFILES

Editor’s note: Some results on the following pages may not add up to exactly 100 per cent due to rounding.

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THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020 5

COVER STORY

HOW OTTAWA WILL EMERGE FROM COVID-19

KEY FINDINGS

Highlights of the 2020 Welch LLP Ottawa Business Growth Survey

70% OF RESPONDENTS SAY THEIR CONFIDENCE IN THE LOCAL ECONOMY HAS DECLINED OVER THE PAST YEAR.

50%

Pandemic weighs down business outlook but sparks new opportunities for local economy

BY LISA THIBODEAU lisa@obj.ca

J

ust a few months ago, Ottawa’s economy appeared unstoppable.

A booming tech industry, a healthy public sector and a wave of massive infrastructure projects made managing growth – attracting and retaining employees, for example – one of the top issues cited by many local organizations.

But that changed almost overnight this spring. The rapid spread of COVID-19 upended the plans and priorities of business leaders, many of whom were suddenly forced to establish remote workplaces, mitigate the impact of sharply declining revenues and rethink the relevancy of their products and services

in a pandemic economy.

With so much uncertainty, a sharp drop in local business confidence is unsurprising.

But look behind the headline findings of the 2020 Welch LLP Ottawa Business Growth Survey and a more nuanced picture of Ottawa’s economy, containing signs of optimism and opportunities, emerges.

Challenges undoubtedly remain for many businesses – and entire industries.

Half of all respondents predict business conditions will deteriorate further before starting to improve, and expectations of revenue and net income growth are down significantly from last year.

On the other hand, large numbers of respondents say their top and bottom lines remain strong. Meanwhile, many business leaders say they’re still planning to recruit

6 THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020

OF RESPONDENTS BELIEVE THE MARKET FOR THEIR BUSINESS SECTOR WILL WORSEN.

ONE IN FOUR RESPONDENTS SAY THEY PLAN TO RECRUIT NEW EMPLOYEES IN THE COMING FISCAL YEAR. THAT’S HIGHER THAN THE 21% WHO SAY THEY PLAN TO REDUCE EMPLOYEE NUMBERS.

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COVER STORY

44% OF RESPONDENTS SAY THEY PLAN TO BRING NEW PRODUCTS OR SERVICES TO MARKET TO INCREASE THEIR OPERATIONAL SUSTAINABILITY – A HIGHER NUMBER THAN THOSE LOOKING TO CUT COSTS.

THREE IN FIVE RESPONDENTS SAY STAFF AT THEIR ORGANIZATION WILL BE ASKED TO WORK FROM HOME MORE FREQUENTLY AS A WAY OF INCREASING EMPLOYEE HEALTH AND SAFETY.

24% OF RESPONDENTS SAY THEY FEEL THAT IT’S MORE LIKELY THAT THEIR ORGANIZATION WILL BE TARGETED IN A CYBER ATTACK WITH EMPLOYEES WORKING FROM HOME.

48% OF RESPONDENTS SAY THEY APPROVE OR STRONGLY APPROVE OF OTTAWA MAYOR JIM WATSON’S PERFORMANCE.

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SECURING THE DIGITAL WORKPLACE

new employees and are looking to unlock fresh opportunities by investing in new products and services.

Such signs of innovation and adaptation are evident around the city, says Jim McConnery, a partner at Welch LLP. “There’s lots of business development and a great entrepreneurial spirit all across Ottawa,” McConnery says. “There is optimism that the worst is behind us and now we’re all just looking to recover.”

THE NEW WORKPLACE As the wider economy reopens and businesses look to ramp up – or, in some cases, restart – their operations, many managers are re-examining their internal operations.

After being abruptly and unexpectedly forced to enter into a prolonged work-fromhome experiment, many organizations are exploring whether to make remote work and other flexible arrangements a permanent feature, says McConnery.

“A lot of organizations have always had a setup where working remotely was feasible for employees, but perhaps not taken advantage of,” he says. “Nowadays, people are becoming comfortable with the notion that they can work remotely and still be productive.”

Such a shift is prompting changes in managerial mindsets. Roughly half of survey respondents say they’re giving employees more flexibility over their work schedules.

A similar proportion have upgraded their communication tools to allow for more remote collaboration.

Many local businesses have also expedited their adoption of e-commerce, says Sueling Ching, president of the Ottawa Board of Trade. Indeed, more than a quarter of survey respondents say they’re putting a greater emphasis on e-commerce and online sales channels.

“We knew beforehand that our Ottawabased businesses needed to level up in terms of digitization, and COVID has really accelerated that,” she adds. “This pandemic has revealed a lot of opportunities to make changes that were required anyways – let’s not lose the opportunity to do that.”

Technology such as cloud-based file storage, remote email access and videoconferencing plays a key role in enabling teams to collaborate and work from home.

Many survey respondents said their employers had already adopted these tools prior to the pandemic, equipping them for the sudden shift for telework.

Securing those operations and their digital networks, however, was a seemingly lower priority.

More than half of respondents said they didn’t implement any new cybersecurity practices, a finding that Andrew Loschmann – the chief operating officer of Field Effect – says is unsurprising, but concerning.

“We’re seeing businesses being forced into a new dynamic and they’re simply unprepared,” he says. “Cybersecurity is a foundational piece of business that is often overlooked because people think their firewall or virus scanner will fully protect them.”

While many organizations were understandably focused on simply staying operational during the early days of the pandemic, more attention is being paid to digital security as the landscape stabilizes.

Half of respondents said they have implemented password managers and VPNs to protect their networks, which is a good first step towards safer work, says Loschmann.

As businesses continue to understand the risks of employees using personal computers for work or the security limitations of cloud service providers, he says having a cybersecurity system will be paramount in protecting businesses – especially if remote work becomes the new norm.

“Visibility into what technology is on your network is only going to become more important,” he says, adding that Field Effect saw an uptick in cyber-attacks this spring.

“We understand that running a business is difficult and to add in cybersecurity on top of that can feel overwhelming. Just like other challenges in business, this is one that’s here to stay and we have to take it seriously.”

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What we do in our region matters, both locally and globally. The world needs Ottawa.

– INVEST OTTAWA CEO MICHAEL TREMBLAY

OTTAWA’S RE-EMERGENCE COVID-19 is making a lasting impact on both individual workplaces as well as the economy as a whole, creating new markets and increasing demand for some existing products and services.

Just as more organizations are thinking about their cybersecurity requirements, for example, others are rushing to purchase personal protective equipment and disinfectant cleaning services. Investors, meanwhile, see

renewed opportunities in globally oriented tech firms developing medical tools and platforms enabling remote work. “(Ottawa companies) are not micro players that don’t touch (international) markets – we’re embedded in so many things,” says Invest Ottawa CEO Michael Tremblay.

One of the strongest indicators of Ottawa’s resilience can be found in the responses to a question about

how businesses plan to become more operationally sustainable. Despite all the financial challenges facing organizations, bringing new products and services to market were cited more frequently than cost-cutting and workforce reductions – a reflection, Tremblay says, of the community’s creativity and innovation.

“What we do in our region matters, both locally and globally,” he says. “The world needs Ottawa.”

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8 THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020

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OTTAWA’S BUSINESS CONFIDENCE INDEX • Market outlook • Hiring intentions • Revenue and net income • Credit conditions

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THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020 9

BUSINESS CONFIDENCE

A ‘CHALLENGING MOMENT’ FOR OTTAWA BUSINESSES

E

ven after enduring measures aimed at controlling the spread of COVID-19 –­ and, in many cases, declining revenues and profits – businesses in the National Capital Region say they believe economic conditions will deteriorate further before the economy starts to recover.

Ottawa’s business confidence index dove

deeply into negative territory in mid-2020, a dramatic reversal of the consistently positive outlook expressed by respondents each year since Ottawa’s business confidence index was launched in 2013.

Declining confidence was recorded across all sectors, with the hospitality industry – hit hard by travel restrictions and disruptions to conference bookings – seeing

the sharpest drop.

And even though the Welch LLP Ottawa Business Growth Survey was administered at a time when the economy was starting to gradually reopen amid relatively low numbers of COVID-19 cases in the community, half of all respondents said the market for their business will get worse in their current fiscal year.

“There’s a sizable group of Canadians who worry about a second wave (of COVID-19) and don’t think this is over,” says David Coletto, the CEO of Abacus Data. The local market

Sector by sector:

12 2

12 2

12 5

12 4

9.

2 11

7 11

HOSPITALITY

11

120

4 .2

150

-56

78

90 CONSULTING

-44

60 2013

2014

2015

2016

2017

2018

2019

2020 TECHNOLOGY

CALCULATING CONFIDENCE Business confidence is an essential driver of economic growth. Starting, operating and growing a business involves, by definition, taking risks.

And businesses are more likely to take risks by hiring new employees, purchasing new technologies and expanding when there’s a belief that it will pay off.

The business confidence index is a composite calculation based on the responses to several of the questions contained on the following pages.

The scale ranges from zero to 200, with a score of 100 representing a neutral position. A score higher than 100 is positive, while a score lower than 100 is negative.

-44

RETAIL

-43

CONSTRUCTION

-31 10 THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020

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BUSINESS CONFIDENCE

There’s a sizable group of Canadians who worry about a second wave.

– DAVID COLETTO, CEO, ABACUS DATA research firm administered the Welch LLP Ottawa Business Growth Survey and analyzed the results.

He notes that even if the health crisis was relatively under control in Ottawa and most of Canada this summer, businesses – particularly

those dependent on the U.S. and other markets – won’t be able to fully recover until the pandemic is curtailed south of the border and overseas.

There are, however, a sizable number of local businesses that reported rising revenues

and plans to recruit new employees. That’s supported by anecdotes from across the city of manufacturers switching into overdrive to produce personal protective equipment, tech firms that seamlessly switched to remote work as well as niche businesses such as RV dealers that are seeing a spike in demand.

But, as a whole, Coletto says there’s likely a hard road ahead for businesses as the economy recovers.

“It’s a challenging moment and will be challenging for the foreseeable future,” Coletto says.

Compared to a year ago, how has your confidence in the local economy changed? n INCREASED

n STAYED THE SAME

n DECLINED

80

70%

SAY IT’S DECREASED

70

PERCENTAGE OF RESPONDENTS

60

50

24% SAY IT’S STAYED THE SAME

40

30

20

6%

SAY IT’S INCREASED

10

0 S2015

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F2015

2016

2017

2018

2019

2020

THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020 11

HIRING INTENTIONS

EMPLOYEE RECRUITMENT

In the current fiscal year, do you plan to…

In a sign that COVID-19 will continue to cast a pall over the local economy for several more months, slightly more than one in five respondents say their organization plans to reduce the size of their employee headcount in the current fiscal year. To put that number in context, that figure had previously never been higher than seven per cent since 2016.

But the pandemic is not affecting all businesses evenly; despite the high number of organizations forced to lay off employees, an even higher proportion – one in four – say they plan to hire new staff. That’s down significantly from 49 per cent in 2019.

KEEP EMPLOYEE LEVEL THE SAME

39%

RECRUIT NEW EMPLOYEES

25%

REDUCE EMPLOYEE NUMBERS

21%

I DON’T KNOW/ NO COMMMENT

16%

ANALYSIS

A divergent hiring outlook Parts of the Welch LLP Ottawa Business Growth Survey paint a polarizing picture of the city’s economy. When it comes to hiring intentions, for example, the proportion of respondents who said they plan to reduce employee numbers is almost equal to the number saying the opposite – that they plan to recruit new staff members in the coming year.

Observers say that reflects the uneven economic impact of the pandemic.

Ottawa’s booming tech sector was largely unaffected by COVID-19 as many companies seamlessly switched to remote operations.

The sector’s underlying strength and adaptability helps to explain the industry’s relatively positive outlook on employee retention and net income, says Michael Tremblay, president of

Invest Ottawa.

“A lot of these companies have long-range contracts which serve them well and allow them to navigate through with little volatility,” he says.

“That shows a lot of resiliency.”

But it’s a starkly different picture for the city’s retailers, says Mark Kaluski, chair of the Ottawa Coalition of BIAs. “The brick-and-mortar sector has been absolutely devastated,” he says.

“They saw their sales essentially drop to zero in a day, and while some revenue is coming back, it’s definitely nowhere near where they were.”

This harsh new reality explains the overall dramatic decrease in business confidence, says Kaluski, as well as the fear that the market will only get worse as businesses continue to fall into debt with little to no economic relief on the way.

12 THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020

“The biggest issue we’re seeing is the accumulation of rent,” says Kaluski. “Not only have these business owners lost revenue, but now they are accumulating debt every month.”

While business confidence has reached an all-time low in Ottawa, Tremblay says it is important to remember that the city has seen hardship in the past and has always recovered and grown stronger.

“Some companies won’t make it through this, but the majority of them will,” he adds. “One thing is certain: At the core of it, we have great talent, and that talent will be able to persevere.”

MARK KALUSKI

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REVENUES AND PROFITS

TOP AND BOTTOM LINES

How has your revenue changed in the last fiscal year?

60

Widespread revenue and profit growth has been replaced by significantly divergent financial outlooks for local businesses.

Over the previous five years, respondents to the Welch LLP Ottawa Business Growth Survey provided a highly consistent outlook, with slightly more than half saying their revenues were growing. A marginally lower – but no less stable – percentage also reported their net income increasing.

COVID-19 broke both trends.

Most respondents fell into one of two sizable segments, with the largest numbers reporting decreasing revenues and falling net income. But a significant, albeit slightly smaller, group said the revenues and net income were increasing – reflecting the uneven economic impact of the pandemic.

47% SAY IT’S DECREASED

PERCENTAGE OF RESPONDENTS

50

40

33%

30

SAY IT’S INCREASED 20

18% SAY IT’S STAYED THE SAME

10

3% 0 S2015 n INCREASED

F2015

2016

n STAYED THE SAME

2017

n DECREASED

2018

2019

2020

n DON’T KNOW OR NO COMMENT

NET INCOME How has your net income changed in the last fiscal year?

PERCENTAGE OF RESPONDENTS

100

8%

8% 16%

80

22%

60

18%

15%

12%

3% 17%

20%

16%

20%

23%

17%

20%

17%

23%

48%

48%

51%

43%

40

51% 20

46% 37%

0 2015

2016 n HIGHER

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2017 n LOWER

n NO CHANGE

2018

2019

2020

n DON’T KNOW OR NO COMMENT

THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020 13

BUSINESS OUTLOOK

MARKET EXPECTATIONS Half of all respondents say the full impact of COVID-19 has not yet been felt in their sector and predict that conditions within their industry will worsen in the coming months.

How will the market for your business sector change in this fiscal year? n IMPROVE

n STAY THE SAME

3% PERCENTAGE OF RESPONDENTS

100

n WORSEN

9%

7%

6%

7%

5%

7%

9%

10%

10%

34%

37%

35%

31%

33%

45%

49%

51%

52%

52%

10% 12%

80

38% 60

n I DON’T KNOW / NO COMMENT

10%

50%

40 20

50%

19% 21%

0 S2015

F2015

2016

2017

2018

2019

2020

CREDIT CONDITIONS Amid low interest rates and emergency business loan programs, more than one in 10 respondents say credit is becoming easier to access – the highest figure recorded since the Welch LLP Ottawa Business Growth Survey was launched in 2015 and an encouraging trend as businesses look for financing to either remain operational or make new investments. However, a slightly higher proportion of respondents say access to credit is actually tightening.

Compared to a year ago, is credit…

12% HARDER TO ACCESS

17% EASIER TO ACCESS

29% DON’T KNOW OR NO COMMENT

42% ABOUT THE SAME

14 THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020

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RECOVERY AND RE-EMERGENCE • The new work environment • Business sustainability • Operational efficiencies • Government relief programs • Growth opportunities • Events • Exporting

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THE NEW WORK ENVIRONMENT

EMPLOYEE SAFETY AND WELLBEING As employers look to align their operations with post-pandemic realities, many are increasingly exploring ways of working and meeting remotely. At the same time, many are looking to take extra steps to promote employee health and wellness.

What measures has your organization taken or are planning to implement to increase employee health, safety and wellness?

60%

69% FEWER IN-PERSON MEETINGS

INCREASED COMMERCIAL CLEANING OF OUR BUSINESS PREMISES

ENCOURAGING MORE EMPLOYEES TO WORK FROM HOME MORE FREQUENTLY

48%

INCREASED COMMUNICATION AND/OR SUPPORTS AROUND EMPLOYEE MENTAL WELLNESS

49%

21%

9%

INTRODUCING EXPANDED OR MORE RELAXED SICK LEAVE POLICIES

NONE OF THE ABOVE

48%

ADJUSTING THE LAYOUT OF OUR OFFICE/COMMERCIAL PREMISES TO CREATE MORE SPACE BETWEEN EMPLOYEES

ANALYSIS

Approaches to employee wellbeing shifts amid workplace reopenings Employee health and safety is top of mind for many employers looking at reopening their workplaces. While there are clear physical changes that can be made to an office to make it safer – limiting face-toface interactions and putting more distance between workstations, for example – there is also a growing

focus on mental wellbeing, says Ian Cullwick, an Ottawa-based partner at Mercer, an HR consulting firm.

Companies are exploring new ways of supporting employees, regardless of whether they’re in the office or working from home.

“A lot of companies are making the shift to offer digital-based mental

16 THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020

health counselling, advice and guidance,” says Cullwick. “In some cases that even includes financial advice, especially if some of the employees have been laid off.”

He predicts there will be a greater emphasis on company-wide performance reports at the expense of individual employee evaluations as companies focus on stabilizing the overall business as opposed to looking at individual departments or employees.

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OPERATIONAL SUSTAINABILITY

INVESTMENTS AND RESTRUCTURING As Ottawa emerges from the COVID-19 pandemic, more businesses believe that the path to sustainability lies in innovation and bringing new products or services to market, rather than cost-cutting.

What investments is your organization making to increase its operational sustainability?

BRINGING NEW PRODUCTS/ SERVICES TO MARKET

44%

REVIEWING OFFICE SPACE REQUIREMENTS

42%

REVIEWING THE PRICING OF OUR PRODUCTS/SERVICES

32%

REDUCING LABOUR COSTS

32%

RECRUITING EMPLOYEES WITH NEW SKILL SETS

21%

ABANDONING LEGACY PRODUCTS AND SERVICES

17% 18%

NONE OF THE ABOVE 0

10

20

30

40

50

PERCENTAGE OF RESPONDENTS

CASE STUDY

Ottawa’s Iversoft spins off marketing arm Back in the fall of 2019, it seemed the sky was the limit for Ottawa-based Iversoft.

The company had just moved into a new office on Lola Street in Overbrook. After making its name helping the likes of Audi and Tamarack Homes craft their digital presence, the agency had reached 40 employees and was a regular on lists of the country’s fastest-growing tech ventures, boasting triple-digit annual revenue increases and customers in major markets such as Toronto and New York.

“Eight months ago, it was kind of like, ‘We’re going to do everything and bring it all in-house and take over the world,’” explains Graeme Barlow, who was named the company’s first official CEO last November after

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being promoted from chief marketing officer. “Then the world kind of changed.”

That’s putting it mildly. Like business leaders around the world, Barlow and his team got blindsided by an event no one could have ever seen coming. As the COVID-19 pandemic threw the global economy into chaos, executives like Barlow were forced to tear up their carefully thought-out growth plans and start anew.

As a result, Iversoft is making some dramatic moves to restructure its business model and cut costs.

The company recently spun off its digital marketing arm. Now a much leaner operation at about 30 employees, Iversoft will focus on what Barlow calls its core strengths

in app and web development.

He says it wasn’t an easy decision, but he believes becoming a more streamlined company will pay off for Iversoft in the long run. While overall revenues are down compared with last year, he says the firm is actually on pace to turn a higher profit in 2020 than ever before.

“It’s obviously a stressful time for a lot of people, but we’re trying to take it as a huge opportunity to rethink every element of how we structure and scale the company,” Barlow explains.

IVERSOFT CEO GRAEME BARLOW

THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020 17

OPERATIONAL EFFICIENCY

NEW BUSINESS PROCESSES

What steps is your organization taking to improve is operational efficiency?

UPGRADING INTERNAL COMMUNICATION TOOLS

Respondents say they expect to increase their operational efficiency by introducing more flexibility into their processes, namely by allowing employees to work remotely and to have more control over their schedules.

50%

GIVING EMPLOYEES MORE SCHEDULING FLEXIBILITY

46%

MORE EMPHASIS ON E-COMMERCE / ONLINE SALES

28%

MOVING MORE CORPORATE DATA INTO THE CLOUD

25%

INCREASED INVESTMENT IN AUTOMATION

GOVERNMENT RELIEF PROGRAMS To help businesses survive amid restrictions aimed at controlling the spread of COVID-19, the federal government funnelled billions of dollars into relief programs that subsidized employee wages and commercial rents. While some Ottawa businesses say these programs played a critical role in helping them weather the pandemic, the results of the Welch LLP Ottawa Business Growth Survey suggests the impact – and takeup – of these initiatives was uneven.

22% 0

10

20

30

40

50

PERCENTAGE OF RESPONDENTS

What was the impact of government relief measures on your organization?

KEPT OUR ORGANIZATION OPERATIONAL

36% 30%

AVERTED LAYOFFS KEPT US FROM FALLING INTO ARREARS WITH CONTRACTORS / SUPPLIERS

20%

PREVENTED OUR ORGANIZATION FROM PERMANENTLY CLOSING

16%

MEASURES DID NOT APPLY / WEREN’T NEEDED

23%

SCOPE / ELIGIBILITY WAS TOO LIMITED TO IMPACT OUR ORGANIZATION

16% 0 5 10 15 20 25 30 35 40 PERCENTAGE OF RESPONDENTS

ANALYSIS

Wage subsidies providing ‘safety net’ for companies, employees As many businesses grappled with a sudden and dramatic drop in revenues this spring, the federal government quickly rolled out several COVID-19 financial support programs that included wage and commercial rent subsidies.

Despite the uneven takeup of these programs across the country, the government measures have been very effective in helping employers

keep their doors open, says Jim McConnery, partner at Welch LLP. “What is impressive and what’s had a very meaningful impact is that the programs were rolled out relatively quickly,” he says. He says the wage subsidy program in particular played a major role in keeping employees at work and the economy moving forward.

“It was really a safety net for lots

18 THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020

of companies that experienced a significant downturn in revenue and continues to keep employees on the payroll,” he says.

There are concerns, however, about the massive financial costs of these programs if an economic recovery is slow to materialize.

“It might be very difficult for governments to cut spending over the next few years given that there’s going to be more and more demands for government support,” adds McConnery. “We are in a slow prolonged recovery, so it may just take longer for the economy to get back on track.”

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THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020 19 125104 (07/2020)

POST-PANDEMIC GROWTH

SECTORS POISED FOR GROWTH Just as COVID-19’s impact was felt differently in various industries, the economic recovery is likely to be unevenly experienced across business sectors.

Survey respondents say they expect tech companies – which, generally speaking, have more flexibility to operate remotely – to see the most growth. Relatively few expect a rapid rebound in hard-hit industries such as hospitality and retail.

What business sector will experience the most growth coming out of the COVID- 19 pandemic?

40%

17%

11%

8%

5%

TECHNOLOGY

HEALTH AND WELLNESS

BANKING AND FINANCIAL SERVICES

PROFESSIONAL SERVICES

CONSTRUCTION

5%

5%

4%

2%

1%

MANUFACTURING AND LOGISTICS

TRAVEL, TOURISM AND HOSPITALITY

REAL ESTATE

RETAIL

NOT-FOR-PROFIT / ASSOCIATION

ANALYSIS

Industries to watch Already riding a wave of growth prior to the COVID-19 outbreak, a significant portion of Ottawa’s tech firms have maintained momentum through the pandemic – a signal for many that tech will likely be among the city’s fastest-growing industries in the coming years.

With several other sectors expected to continue to face shortterm challenges, the tech sector’s relative strength may even help it address its long-standing labour

shortage by attracting students to the industry, suggests Jim McConnery, partner at Welch LLP, which is good news for the city and the recovering economy.

“People will go where the jobs are,” he says. “As (some) industries continue to do well, and maybe some others are struggling, we’ll see a shift in career paths.”

Similarly, there will likely be an uptick in the manufacturing and logistics sectors, says Andrew Arnott,

20 THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020

regional vice-president of business financial services at RBC. Many companies in these industries found creative ways of adapting to the business realities brought on by the pandemic and are poised for future growth, he adds.

“We have a very positive outlook on food processors, manufacturers, wholesalers and anybody that’s aligned with the distribution of food and beverages,” says Arnott. “We expect all of those manufacturers and, broadly speaking, tech companies to be at minimum 80 per cent back to normal within the next six months.”

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POST-PANDEMIC GROWTH

CASE STUDY IN-DEMAND PRODUCTS AND SERVICES

Ottawa growth stories

As COVID-19 increases demand for some products and services, what would your organization consider developing, purchasing or investing in?

43%

TECHNOLOGICAL TOOLS ENABLING REMOTE COLLABORATION

32%

IT SUPPORT AND DATA SECURITY SERVICES

25%

E-COMMERCE

19%

HEALTH AND SAFETY SERVICES

14%

Tehama CEO Paul Vallée

TEHAMA With the COVID-19 pandemic now forcing Canadians to stay away from their traditional office spaces, Paul Vallée’s new startup, Tehama, is seeing a steady stream of inquiries about its cloud-based platform that lets off-site employees securely access company data on their laptops and other devices.

“There has been a huge surge in demand for what we do,” says Vallée.

In a typical week before the outbreak of the novel coronavirus, he says, Tehama probably would have received anywhere from 10-20 inquiries a week from potential customers.

“That has easily tripled if not quadrupled,” Vallée says.

DOMESTIC MANUFACTURING OF ESSENTIAL PRODUCTS, SUCH AS PERSONAL PROTECTIVE EQUIPMENT

7%

MEDICAL DEVICES, PHARMACEUTICALS, BIOSCIENCE AND OTHER HEALTH CARE TECHNOLOGIES

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Epiphan Video chief financial officer Jeff Kushner

EPIPHAN VIDEO

13%

LEISURE AND RECREATION EXPERIENCES THAT CAN BE DONE WHILE RESPECTING PHYSICAL DISTANCING

aimed at helping companies manage their office capacity as employees start to emerge from the COVID-19 lockdown can be a springboard to new markets.

Foko launched a new app called Get Working, a combination deskbooking and COVID-19 screening platform that’s aimed at easing the transition to traditional office life for employees who had been working remotely during the pandemic.

CEO Marc Gingras said that over the past few months, the company kept hearing from clients who were worried about making sure their employees could return safely to the office once the lockdown ended. He said “it just made natural sense” to build the new app.

Foko CEO Marc Gingras

FOKO A Gatineau-based retail software firm that began life seven years ago as a photo-sharing app for businesses hopes a new product

With colleges and universities across North America closing campuses and moving their courses almost entirely online to combat the spread of the coronavirus, demand for Epiphan’s products ​– which capture, stream and record video for easy playback on computers and mobile devices – has gone through the roof.

“I can’t get enough product to meet our sales,” says CFO Jeff Kushner. “It’s a very good problem to have – it’s just taking up a lot of time.”

THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020 21

EVENTS

VIRTUAL NETWORKING With most in-person conferences and business events cancelled due to COVID-19, many individuals have been turning to virtual events to find new connections and advance their professional development. While survey respondents say the format works well for education and learning programs, the results suggest that it’s less effective for finding new sales opportunities.

To what extent have you been able to switch to virtual ways of connecting, such as through LinkedIn and online events, for…

FINDING SALES PROSPECTS AND LEADS

19%

NETWORKING

LEARNING AND PROFESSIONAL DEVELOPMENT

10% 25%

19%

17%

42% 48%

56%

64%

n NOT AT ALL – IT’S TOTALLY INEFFECTIVE n SOMEWHAT – IT’S A MAKESHIFT SOLUTION n COMPLETELY – IT’S AS GOOD OR BETTER THAN TRADITIONAL EVENTS

ANALYSIS

Learning to make the most of virtual meetings The sudden cancellation of virtually all in-person events pushed legions of business professionals to start experimenting with new video conferencing tools. But those who are limiting themselves to Zoom and Google Meet for virtual events are just scratching the surface, experts say.

“There are some very sophisticated systems out there that have a high level of interactivity,” says Mike Greenwood, the co-founder of Oxygen Events – a company specializing in both virtual and in-

person events.

With the ability to embed live social media tracking, Q&As and even gamification – which engages attendees to gather points to win prizes – connecting through a virtual platform opens up new opportunities for meetings and allows businesses to engage with broader audiences, he says.

One of the biggest perceived drawbacks to virtual events is missing out on sales leads due to the limited interaction with fellow attendees.

22 THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020

But that doesn’t have to be the case, Greenwood says.

Conference software can let users build avatars and interact with one another as if they were in a room together, he explains, adding that sponsors can also collect more data than during an in-person event.

“If you have a virtual exhibitor booth, we can tell you exactly who clicked on your booth, what they interacted with and supply their contact information for a follow up,” he says.

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CASE STUDY

How Ottawa event organizers are adapting

segments that spotlighted the achievements of the 2020 recipients and other local entrepreneurs, live interviews with community leaders and a slew of congratulatory messages from well-known figures such as David Chilton of the Wealthy Barber fame and Hockey Night in Canada’s Ron MacLean.

scheduled for late August.

“We don’t want it to feel like an Amazon package delivery,” explained Ottawa Riverkeeper Elizabeth Logue in an interview. “We want to offer something that’s different and more along the lines of what people would expect from our gala.”

While COVID-19 caused countless businesses to pause or postpone their plans, that wasn’t an option for many event organizers. Here are some examples of how organizations hosted virtual events that helped the community connect, celebrate and support local causes:

TULIP FESTIVAL RIVERKEEPER GALA

OTTAWA STRONGER TOGETHER The annual Forty Under 40 gala, hosted by the Ottawa Business Journal and the Ottawa Board of Trade, is one of the biggest business events of the year, bringing hundreds of people together each June to honour the region’s rising business stars.

When it became clear that an inperson event would not be possible, the two organizations pivoted to create a special hour-long broadcast that attracted thousands of viewers on YouTube and Rogers television.

“When we realized we could not present the Forty Under 40 at a posh gala, we needed a new plan,” says OBJ publisher Michael Curran. “Working with my colleagues at OBJ and the Board of Trade, we decided to create a full-scale television production and broaden the scope of the broadcast to acknowledge what’s happening in the larger business community.”

The Ottawa Stronger Together broadcast featured pre-recorded

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Leave it to Ottawa Riverkeeper to go with the flow during a global health crisis.

The environmental watchdog organization is all about keeping our treasured Ottawa River healthy and clean for the benefit of existing residents and future generations to come. But, in order to achieve its mission, the charity relies on grants and donations, as well as the proceeds that it generates each year from its large and wildly successful gala held along the banks of the river.

Its eighth annual gala was among the wave of fundraisers cancelled or postponed this spring in response to the coronavirus pandemic that has swept the globe. Initially, organizers looked to delay their fundraiser until early autumn but, with the crisis creating so much uncertainty and social distancing, they came up with a viable and creative alternative — Riverkeeper Gala: Deconstructed, presented by the Insurance Bureau of Canada.

In June, organizers started handing out care packages to ticket holders and sponsors, while still respecting social distancing guidelines. The packages were “river pick-me-up” gifts while a larger second delivery of the “gala in a box” containing a three-course meal, beverages and party swag, was

Moving its entire slate of events online doesn’t appear to have stunted the Canadian Tulip Festival’s growth when it comes to sponsorship revenues – an encouraging sign for the beleaguered industry that’s increasingly looking to virtual events amid the COVID-19 pandemic.

Instead of outdoor events, the festival showed a series of music videos, photo exhibitions and articles on its website and social media channels that commemorate the 75th anniversary of the liberation of the Netherlands during the Second World War. Festival organizers said in May that the popular annual spring celebration ​ – which was forced to abandon its usual offerings such as music concerts and other public events after mass gatherings were banned to prevent the spread of the novel coronavirus – is on track to surpass last year’s total sponsorship revenues of $61,000.

“It is a bit of a surprise,” conceded outgoing Canadian Tulip Festival president and chairman Grant Hooker.

“On the other hand, it just demonstrates that corporations, businesses know that the tulip festival serves the economy while at the same time serving the community and they know that we are going to need to survive in order to maintain the tulip festival tradition and also to have tourism products when we are recovered.”

THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020 23

EXPORTING

GLOBAL MARKETS Despite Canada being a trading nation, many of the country’s small and medium-sized businesses have traditionally struggled or been reluctant to pursue export opportunities. Those trends are also present in Ottawa, where three-quarters of survey respondents say they don’t have any plans to explore international markets. Among those interested in export opportunities, identifying and connecting with local customers and partners was most commonly cited as the biggest hurdle.

CASE STUDY

World markets warm to Kanata firm’s high-tech ocean sensors With the earth’s temperature on the rise and global warming a hot topic the world over, a Kanata North company is quietly carving out a major market niche with high-tech products that help measure the planet’s vital signs.

“What was a small business now is getting larger,” says Eric Siegel, director of sales and marketing at RBR, which is headquartered on Hines Road and has offices around the world.

Founded in 1973 by British-born engineer Richard Brancker in his Glebe basement, RBR started out as an electronics consultant serving the federal government. After Brancker retired in the late 1990s, fellow Brit expat Frank Johnson took over and focused the company’s efforts on a sensor the firm had developed to measure water temperature.

When it comes to exporting, what are the biggest barriers to your business or organization expanding into foreign markets?

14% IDENTIFYING AND CONNECTING WITH CUSTOMERS AND LOCAL PARTNERS

8%

LACK OF A MARKET ENTRY STRATEGY

9%

RISKS OF CURRENCY FLUCTUATIONS AND EXTERNAL ECONOMIC CONDITIONS

3%

A GENERAL FEELING THAT MY ORGANIZATION IS NOT “EXPORT-READY”

75%

3%

EXPORT FINANCING

DON’T HAVE ANY PLANS TO EXPAND INTO FOREIGN MARKETS

Since then, RBR has evolved into one of the world’s foremost producers of cutting-edge sensors that travel to the depths of the ocean, recording and documenting data that not only includes the temperature of the water but other vital information such as water pressure, the amount of salt in the ocean and the levels of oxygen in the sea.

Such variables provide invaluable data for scientists studying the longterm impact of global warming, and RBR’s growing list of customers today features major foreign agencies such as NASA, the U.S.-based National Oceanographic and Atmospheric Administration, the U.S. Geological Survey and the U.S. National Science Foundation.

Though it’s still the “underdog” in a highly specialized industry ​– Siegel estimates that RBR accounts for around 20 per cent of global sales of tools that “take the pulse of the ocean” – he says it’s gaining on its competition.

RBR is a truly global enterprise, generating about a third of its revenues in China and another 40 per cent in other parts of the world.

In an effort to serve the rapidly

24 THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020

8%

CONCERNS ABOUT A LACK OF AWARENESS SURROUNDING MY PRODUCT OR SERVICE IN FOREIGN MARKETS

growing response to its products in the world’s most populous country, RBR opened a wholly owned subsidiary in the Chinese port city of Qingdao in late 2018, where it now employs three sales and technical staff. The company also has salespeople on the ground in the U.S., France and New Zealand.

RBR now has employees who speak seven languages, ranging from German and Portugese to Mandarin and Japanese. Siegel says it’s all part of the firm’s bid to better serve customers that come from a multitude of cultures and have different business customs.

“We need to have people that speak those languages and understand those systems,” he explains.

Although RBR has chosen to set up shop in a city that’s a full day’s drive from the nearest sea – Siegel jokes that it’s “equally inconvenient to all three of Canada’s oceans” – he says that’s not a drawback to becoming a global leader in its field. Developing and building RBR’s technology requires topnotch engineers, skilled manufacturing personnel and sharp technical minds, “and we can find lots of those in Ottawa,” he says.

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THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020 25

MUNICIPAL POLITICS

WATSON’S POPULARITY REMAINS HIGH THROUGH PANDEMIC Ottawa Mayor Jim Watson continues to receive relatively high approval ratings from the city’s business community.

Abacus Data CEO David Coletto notes that he’s seen similar trends among other politicians during the pandemic.

“In times of crisis, we look to our leaders to guide us,” he says, noting that Ottawa was successfully controlling the

spread of COVID-19 when respondents were being polled. “The mayor has been a voice of reason, which people have found comforting.”

Coletto adds that the pandemic has overshadowed some of the challenges the city was facing prior to the COVID-19 outbreak, such as the unreliability of Ottawa’s new light-rail line.

Approval rate from 2016 to 2020

59% 50%

2017

51%

51%

2018

2019

48% 2016

2020

Do you approve or disapprove of the job each of the following is doing at the City of Ottawa? n STRONGLY APPROVE n APPROVE n NEITHER APPROVE NOR DISAPPROVE n DISAPPROVE n STRONGLY DISAPPROVE n UNSURE

6% 11% 13%

7%

4%

11%

22%

MAYOR JIM WATSON

26 THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020

6%

8%

10% 37%

7%

31%

16% 32%

CITY COUNCIL

9%

37%

32%

CITY OF OTTAWA STAFF

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THE EVOLVING WORK ENVIRONMENT: NEW TECHNOLOGIES AND CYBERSECURITY • Remote workplace software and tools • Cybersecurity practices and training • Threats and vulnerabilities

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THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020 27

CYBERSECURITY

REMOTE WORK READINESS The rapid shift towards working from home amid the COVID-19 pandemic has introduced new cybersecurity questions and issues for many organizations. The 2020 edition of the Welch LLP Ottawa Business Growth Survey takes a closer look at how businesses are responding to data security issues in order to help educate companies across the region about best practices and how to protect themselves.

From a technology perspective, how prepared was your organization to have employees work from home?

9%

3%

5%

5%

4%

5%

7%

18%

17%

25%

1

2

3

4

5

6

7

8

9

10

OUR EMPLOYEES WERE ALREADY SET UP TO DO VIRTUALLY ALL THEIR WORK REMOTELY

VERY UNPREPARED – EMPLOYEES HAD TO PREVIOUSLY WORK FROM OUR PREMISES TO DO THEIR JOBS

If you have employees working remotely, what software tools are staff accessing from home?

83%

83%

67%

59%

EMAIL

VIDEO CONFERENCING (ZOOM, MS TEAMS, GOOGLE HANGOUTS, WEBEX, ETC)

SECURE FILE SHARING (DROPBOX, ONEDRIVE, GOOGLE DRIVE, ETC )

CLOUD-BASED PRODUCTIVITY SUITE (OFFICE365, G SUITE, ETC )

57%

13%

1%

INSTANT MESSAGING (SLACK, MICROSOFT TEAMS, GOOGLE HANGOUTS, ETC)

WE DON’T HAVE ANY EMPLOYEES WORKING REMOTELY

NONE OF THE ABOVE

28 THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020

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CYBERSECURITY

TECHNOLOGY TOOLS Working from home has involved many employees using their own technology tools to conduct company business – and vice-versa.

Have employees at your organization…

12% 49%

USED THEIR PERSONAL DEVICES TO ACCESS COMPANY DATA

38% USED THEIR PERSONAL EMAIL ACCOUNTS FOR WORK

15%

SHARED ACCESS TO THEIR DEVICES WITH FAMILY MEMBERS

40% USED UNLICENSED OR PERSONAL SOFTWARE FOR WORK

NONE OF THE ABOVE USED WORK COMPUTERS FOR PERSONAL USE

NO

YES

Have employees at your organization received training on the specific cybersecurity threats arising from working at home?

33%

36% 64%

ANALYSIS

Mixing business and personal technology While the ubiquity of mobile and portable technology has helped many employees stay connected to their workplace through the pandemic, it has also created new cybersecurity risks for those accessing work files on personal computers and viceversa, says Andrew Loschmann, chief operating officer of Field Effect.

“Accessing email, putting company data on a personal device, or a company device on a personal network increases your threat surface

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substantially,” he says. “It increases the set of things that are attackable and we’re seeing that being leveraged by attackers every day.”

Field Effect recently dealt with a case where a personal computer belonging to one of its client’s employees was compromised. While it may seem like a small issue as it was one system out of many, the attacker was able to gain access to all of the company’s data through the VPN the employee was connected to.

“That’s just one example of how the smallest change in terms of where computers are located can result in a compromise and a cascading set of issues,” says Loschmann, adding that the more users there are on a computer, the riskier it is. “I wouldn’t trust a child to be making smart and reasonable choices as to what website is safe to visit or not, so when you’re talking about sharing devices, you invite all of these risks.”

THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020 29

CYBERSECURITY

LIKELINESS OF A CYBER ATTACK Many respondents say they believe that it’s unlikely their organization will be targeted by a cyber attack.

The majority say the shift to working from home has not changed their vulnerability.

In your estimation, what is the likelihood that your organization will be targeted by a cyber attack?

17%

16%

15%

9%

15%

10%

6%

4%

4%

5%

1

2

3

4

5

6

7

8

9

10

VERY LIKELY

VERY UNLIKELY

How has the pandemic and work-from-home environment changed your perception of cybersecurity?

24%

4%

IT’S MORE LIKELY THAT OUR ORGANIZATION WILL BE TARGETED IN A CYBER ATTACK

IT’S LESS LIKELY THAT OUR ORGANIZATION WILL BE TARGETED IN A CYBER ATTACK

73%

I DON’T BELIEVE THE RISK HAS CHANGED

ANALYSIS

Risk assessment Most survey respondents said they believe they’re at a low risk for a cyber attack – an unsurprising, but often incorrect, perception, says Andrew Loschmann, chief operating officer of Field Effect.

There is often a misconception about what technology or software is needed to prevent an attack, with many businesses assuming

their cloud service provider or firewall will stop all ransomware or phishing schemes.

As a result, business owners often believe that cyber attacks are only threats affecting other organizations, which can be dangerous, he says.

“The threats are automated, indiscriminate and persistent,” adds Loschmann. “They don’t care if you’re a dry cleaner, a national telecommunications company or anywhere in between. They know what

30 THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020

vulnerabilities to look for, and they know how to capitalize on them.”

One of the biggest mistakes Loschmann sees is smaller businesses thinking cyber attackers will only target large companies. Small and medium enterprises are subject to the exact same threats, he says, and unlike a large enterprise, they often haven’t done the preparation and they don’t know who to call when it happens – making the consequences that much more damaging.

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THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020 31

CYBERSECURITY

ONLINE PROTECTION Many survey respondents are using security measures such as VPNs and antivirus software, with some organizations taking a closer look at these technologies with employees working from home.

The majority of respondents, however, have not made any changes since the start of the pandemic.

How has your organization changed its cybersecurity practices since the COVID-19 outbreak in mid-March?

18% UPGRADED OR INTRODUCED OTHER SECURITY MEASURES OR PLATFORMS, SUCH AS VPN CONNECTIVITY

17%

14%

UPGRADED OR INTRODUCED ANTIVIRUS OR OTHER CYBERSECURITY SOFTWARE

INTRODUCED RULES OR POLICIES FOR USING UNLICENSED VERSIONS OF CHAT AND COLLABORATION PLATFORMS

61%

14% INTRODUCED NEW RULES OR POLICIES FOR USING PERSONAL DEVICES TO ACCESS CORPORATE NETWORKS

8% ENGAGED THIRD-PARTY CYBERSECURITY VENDORS AND/OR CONSULTANTS

NONE OF THE ABOVE

Which of the following are you using to secure your network?

42%

PASSWORD MANAGER

41%

VIRTUAL PRIVATE NETWORK (VPN)

19%

NOT SURE

41%

DNS FIREWALL

12%

35%

MULTI-FACTOR AUTHENTICATION (MFA)

21%

END-TO-END ENCRYPTION

NONE OF THE ABOVE

ANALYSIS

Safeguarding networks The relatively high number of survey respondents who reported the use of multiple security tools to safeguard their computers and corporate networks is a positive finding, says Andrew Loschmann, chief operating officer of Field Effect.

“I was encouraged by the number of respondents that actually indicated they were using password managers,” he says, adding that they are a great way to prevent sharing credentials between employees. “At the same time, I was shocked that the use of multi-factor authentication was so low because it is one of the easiest ways to dramatically improve your ability to defend against things like ransomware or a business email being

32 THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020

compromised.”

It’s easy to think you have a safe password. However, hackers are getting more sophisticated in their attacks. It is not uncommon for them to stitch together publicly known information to create a very compelling and easy-to-fall-prey-to scenario to get you to give up your passwords, he says, which is why tools such as multi-factor authentication are so important.

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RESPONDENT PROFILES

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THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020 33

RESPONDENT PROFILES

What industry does your organization operate in?

WHO TOOK THE SURVEY?

PROFESSIONAL SERVICES 30% TECHNOLOGY 10% TRAVEL, TOURISM AND HOSPITALITY 8% NOT-FOR-PROFIT / ASSOCIATION 7% BANKING AND FINANCIAL SERVICES 6%

PERCENTAGE OF RESPONDENTS

Some 632 business leaders from across the National Capital Region participated in the 2020 Welch LLP Ottawa Business Growth Survey, representing all of the area’s major industries.

The majority of respondents held senior executive roles in privately held companies, ranging in size from owneroperated ventures to organizations with more than 150 employees.

The Welch LLP Ottawa Business Growth Survey was administered online from June 1 to June 28 by Abacus Data, a leading Ottawa-based research and strategy firm.

Respondents were recruited by email and website intercept by the Ottawa Business Journal, Ottawa Board of Trade and Welch LLP. Members of BIAs from across Ottawa, as well as several leading industry organizations, were also invited to participate.

REAL ESTATE 6% RETAIL 5% CONSTRUCTION 5% HEALTH AND WELLNESS 4% MANUFACTURING AND LOGISTICS 3% ARTS 2% MUSEUMS, SCHOOLS, UNIVERSITIES AND COLLEGE 1% AEROSPACE AND DEFENCE 1% OTHER 12%

0

5

10

15

20

25

30

Is your organization a...

PRIVATE COMPANY 84% GOVERNMENT DEPARTMENT 1% CROWN CORPORATION 1% GOVERNMENT AGENCY 1% PUBLIC COMPANY 5% NOT-FOR-PROFIT 8%

34 THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020

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RESPONDENT PROFILES

What is your position in the business?

10%

5%

54%

7%

PARTNER

PRESIDENT/ CEO (NON-OWNER)

PRESIDENT/ CEO AND OWNER

VICE-PRESIDENT

9%

9%

6%

MANAGER

DIRECTOR

OTHER

How many employees does your organization have?

30

27%

25 20

12% 13%

15

10

9%

16% 11% 6%

6%

51-75 EMPLOYEES

76-149 EMPLOYEES

5

0 OWNER/ OPERATOR

1-5 EMPLOYEES

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6-10 EMPLOYEES

11-20 EMPLOYEES

21-50 EMPLOYEES

150+ EMPLOYEES

THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020 35

RESPONDENT PROFILES

Respondents to the 2020 Welch LLP Ottawa Business Growth Survey come from a variety of industries and geographic communities. More than one in five respondents self-identified as belonging to one of Ottawa’s business improvement areas (BIAs), representing virtually all parts of the city. Of those respondents, here’s where they operate:

BARRHAVEN BIA 21% KANATA NORTH BIA 15% WELLINGTON WEST BIA 10% GLEBE BIA 7% BELLS CORNERS BIA 7% PERCENTAGE OF RESPONDENTS

BANK STREET BIA 6% WESTBORO VILLAGE BIA 6% MANOTICK BIA 4% OTHER 4% HEART OF ORLEANS 3% SPARKS STREET BIA 3% DOWNTOWN RIDEAU BIA 3% KANATA CENTRAL BIA 3% SOMERSET VILLAGE BIA 1% CARP ROAD CORRIDOR 1% BYWARD MARKET BIA 1% PRESTON STREET BIA 1% VANIER (QUARTIER VANIER) 1%

0

5

10

15

20

25

Many respondents are also members of the city’s leading business organizations:

THE OTTAWA BOARD OF TRADE

BETTER BUSINESS BUREAU

CFIB

INVEST OTTAWA

27% 13%

THE OTTAWA CONSTRUCTION ASSOCIATION

6% 5%

BUILDING OWNERS AND MANAGERS ASSOCIATION

5%

OTTAWA TOURISM

12% 10%

36 THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020

2%

RGA

2%

THE FAMILY ENTERPRISE XCHANGE

2%

GREATER OTTAWA HOME BUILDERS’ ASSOCIATION (GOHBA)

1%

NATIONAL CAPITAL HEAVY CONSTRUCTION ASSOCIATION

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THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020 37

INDEX

WELCH LLP OTTAWA BUSINESS GROWTH SURVEY: QUESTIONS AT A GLANCE BUSINESS CONFIDENCE INDEX 11

Compared to a year ago, how has your confidence in the local economy changed?

In the current fiscal year, do you plan to hire more employees, keep your staff numbers stable or reduce your headcount?

12

How have your revenues changed in the last fiscal year?

13

How has your net income changed in the last fiscal year?

13

How will the market for your business sector change in this fiscal year?

14

Compared to a year ago, is credit harder, easier or about the same to access?

14

ECONOMIC RECOVERY AND RE-EMERGENCE What measures has your organization taken or are planning to implement to increase employee health, safety and wellness?

16

What investments is your organization making to increase its operational sustainability?

17

What steps is your organization taking to improve its operational efficiency?

18

What was the impact of government relief measures on your organization?

18

What business sector will experience the most growth coming out of the COVID-19 pandemic?

20

As COVID-19 increases demand for some products and services, what would your organization consider developing,

21

purchasing or investing in?

To what extent have you been able to switch to virtual ways of connecting, such as through LinkedIn and online events, for networking, professional development and finding sales leads?

22

When it comes to exporting, what are the biggest barriers to your business or organization expanding into foreign markets?

24

Do you approve or disapprove of the performance of the mayor, city council and municipal staff?

26

NEW TECHNOLOGIES AND CYBERSECURITY From a technology perspective, how prepared was your organization to have employees work from home?

28

If you have employees working remotely, what software tools are staff accessing from home?

28

What personal technology tools have employees at your organization used to conduct company business while working from home?

29

Have employees at your organization received training on the specific cybersecurity threats arising from working at home?

29

In your estimation, what is the likelihood that your organization will be targeted by a cyber attack?

30

How has the pandemic and work-from-home environment changed your perception of cybersecurity?

30

How has your organization changed its cybersecurity practices since the COVID-19 outbreak?

32

What tools are you using to secure your network?

32

38 THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020

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THE WELCH LLP OTTAWA BUSINESS GROWTH SURVEY 2020 39

THANKS TO OUR SUPPORTING SPONSORS

IN PARTNERSHIP WITH

CA RP ROA D CORRID OR PROMOTING ECONOMIC DEVELOPMENT IN WEST OTTAWA

BLACK

CMYK

PANTONE

Preston Street | OTTAWA

How does your business compare? Contact us to find out more.

Welch LLP 123 Slater St. 3rd Floor, Ottawa, ON K1P 5H2 (613) 236-9191 welchllp.com email: obgs@welchllp.com

Ottawa Board of Trade 328 Somerset St. West Ottawa, ON K2P 0J9 (613) 236-3631 ottawabot.ca email: info@ottawabot.ca

Ottawa Business Journal 250 City Centre, Suite 500 Ottawa, ON K1R 6K7 (613) 238-1818 obj.ca email: news@obj.ca

Want to be involved in the next edition of the Ottawa Business Growth Survey?

Contact sales@obj.ca

Follow us on Twitter at #OBGS © 2020 Ottawa Business Journal. This publication contains information considered accurate at the time of printing. However, the publisher is not responsiblefor any errors or omissions that may occur. Reproduction in any form is prohibited without the written permission of the publisher.

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