Canada's Top 300 Tech Companies

Written by Jessica Collins

Introduction

2007 was a record-setting year of tremendous activity for Canadians and IT, as successful ICT mergers and acquisitions have dominated the news. While the big fish in the pond have not had their fill of the little fish, they have moved onto consuming one another – such as the acquisition of Hummingbird by Open Text. This trend is already evident in 2008, as Telus prepares for the final stages of the acquisition of Emergis. Meanwhile, Constellation Software finalized a remarkable eleven acquisitions in fiscal 2007. A growing concern for improved public health processes and eco-friendly IT has created new niches for existing players and industry veterans. Nightingale Informatix has taken full advantage of this opportunity, having signed a 15 year clinical management systems agreement with OntarioMD – the company exhibited 234 per cent growth over 2007. The landscape of ICT is in a constant state of flux – and Canada has brought its A-game.

For the first time in 30 years, the Canadian dollar closed above the US dollar, having a significant effect on Canadian industry. Peaking on November 7, 2007, the Canadian dollar sold at a remarkable $1.10 against the US dollar, well above parity. As a result, the cost of exports to the United States increased dramatically in a short period of time, adversely affecting the Canadian economy. The ICT sector in Canada surged on despite this setback. Industry Canada reports that both the services and manufacturing sub-sectors of the ICT industry have been outperforming the corresponding overall Canadian services and manufacturing industries since 2002 and 2005 respectively.

The Branham300 rankings realized a great deal of change in 2007, resulting from increased merger and acquisition activity among Canada’s biggest players, and IPOs from a number of new participants. In fiscal 2007, acquisition activity resulted in the loss of four major players listed among the Top 30 on the 2007 Top 250. In total, 21 companies from last year’s list (as published in 2007), with combined revenues of $4.57 billion in fiscal 2006, were either acquired or ceased relative operations. This year’s listing is composed of 43.6 per cent private and 56.4 per cent public companies, with combined total revenues of $64.4 billion – a 1.55 per cent and $1 billion decrease over last year’s total, mainly attributed to acquisition and consolidation activity. Celebrating its fifteenth anniversary, this Branham300 listing celebrates with 198 returning companies and introduces 52 new participants to the Top 250.

Top 250 and ICT Industry Overview

Geographic distribution of results

The geographic distribution of companies appearing in the Top 250 remained relatively static in 2007, compared to the figures reported last year. The representation of companies headquartered in Ontario on the Top 250 has decreased slightly to 53.6 per cent from 55.6 per cent last year. This change could be attributed to the acquisition of some large Ontario companies that were previously included in the listing by foreign owned companies, such as the acquisition of ATI Technologies by Advanced Micro Devices (AMD). In other cases, however, the acquired companies were purchased by Ontario peers. There is very little change in this composition to the Atlantic Provinces, although Newfoundland reappears on the listing this year with 0.8 per cent of companies based there. The figure for Quebec, a slight decrease of 0.4 per cent, as well as small increases in representation in Alberta and British Columbia (0.4 per cent each) remain on par with last year’s results.

In accordance with the geographic distribution of companies, Ontario firms accumulated 57.7 per cent of total revenues earned by the Top 250 companies. Quebec, B.C., and Alberta companies account for 22.01, 13.12, and 3.28 per cent respectively. These figures are proportionately higher than last year’s distribution of revenues.

In contrast, provincial year-over-year revenue growth is dramatically different from previous results. Alberta leads the pack with 22.92 per cent revenue growth from 2006 to 2007, down from 27.53 per cent reported for the previous 12-month period. Quebec has exhibited drastic change with 14.87 per cent, from 3.93 per cent growth in revenues from the previous year. Most notably, Ontario, whose companies saw an 8.68 per cent increase in revenues from 2005 to 2006, realized a decrease of 11.82 per cent in the past year. Again, this can be mostly attributed to the great number of acquisitions of Ontario-based companies on the list.

Average revenues per company were highest once again in Quebec, at $363.32 million. The province has 39 companies on the list, three of which appear within the top 10 on the listing. It is interesting to note however, that Ontario firms achieved average revenues of $277.25 million with 134 firms accounted for throughout the listing, and four within the top 10.

Performance by Category

The Top 250 consists of companies from four categories; of which, 96 belong to the Software category, 67 to IT Professional Services, 54 to IT Hardware and Infrastructure, and 33 to xSP. Companies who participate in the Branham300 are also free to apply to any number of the following sub-categories, as applicable: IT Security, Wireless Solutions, and new this year to the Branham300, Healthcare IT companies. The Top 10 companies in the sub-categories are also ranked based on fiscal year end revenues.

Industry Canada divides the Canadian ICT sector into two sub-classifications by the North American Industry Classification System (NAICS): ICT services and ICT manufacturing. According to their statistics, the manufacturing sub-sector has experienced 18 per cent growth in GDP since 2005, leading to the third quarter of 2007, where it fell by just 0.8 per cent. The IT Hardware and Infrastructure companies on the Top 250 generated the highest revenues of any Branham300 category at $27.72 billion – a year-over-year decrease of 14.9 per cent as compared to those companies listed last year. This decline can largely be attributed to the loss of companies previously listed in this category, which were either acquired or changed their business focus. The Top 25 hardware companies in this year’s listing showed combined growth of 2.15 per cent.

The IT Professional Services grouping brought in $8.5 billion in combined revenues, exhibiting the highest year-over-year growth of all Branham300 categories at 14.24 per cent. The highest revenue generating Branham300 category, of those classified in Canada’s ICT services sub-sector, as defined by Industry Canada, is the xSP category with $23.91 billion in combined revenues – 12.59 per cent growth year-over-year. With nine fewer participants than last year (still representing 38.4 per cent of the Top 250), the Software category saw revenue growth of just 2.71 per cent – reporting the lowest combined total revenues of the Branham300 categories – $4.25 billion. This finding correlates with Industry Canada’s third quarter report on the Canadian ICT industry that software companies in the ICT services sub-sector exhibited slow growth throughout 2007, with 1.3 per cent growth in the third quarter.

Top Performers

The composition of this year’s Top 10 companies appearing the in Top 250 list is similar to last year, with just two new companies. Nortel, Celestica, and BCE take the top three spots respectively for the fourth consecutive year, while Nortel celebrates its fifth consecutive year as Canada’s highest revenue generating firm. However, the race was significantly closer this year with Nortel and Celestica reporting a decrease in revenues by 4.58 per cent and 9.1 per cent over 2006, respectively. MDA progressed from twelfth position in 2005 to eleventh in 2006, inching to tenth this year. The acquisition of ATI in fiscal 2007 left one space open on the Top 10, which newcomer CAE Inc. filled at $1.25 billion. RIM saw the greatest year-over-year revenue growth with 47.02 per cent. Other notable year-over-year revenue growths were achieved by Shaw, Rogers Wireless, and MDA, with 25.19 per cent, 19.77 per cent, and 13.79 per cent, respectively.

Significant Trends

Merger and acquisition activity was high in 2007, a trend expected to continue into 2008. The financial impact of much of the activity in fiscal 2007 will be depicted next year, once the fruits of these acquisitions are realized. Cognos, in the number twelve position, is to be acquired by IBM in the first quarter of 2008. Notably, this will be the last year of inclusion for DataMirror, also acquired by IBM, on August 31, 2007. In total, 16 companies from last year’s Top 250 were acquired in fiscal 2007. Industry peers in the pure-play software sector are consuming one another, while major players seek to expand their offerings through merger and acquisition activity.

A number of trends observed in 2006 continued into 2007, such as adaptive security, software as a service (SaaS), and Unified Messaging and Communications. In addition, some new trends emerged in 2007 that are expected to have an impact in 2008. Green IT is a growing concern, as firms strive to limit the environmental impact of their operations. As consumers and corporations alike seek timely and immediate information, social networking and RSS feeds, as well as wikis and all-in-one devices such as Apple’s iPhone, will become increasingly available and adopted by households and corporations. As such, IT security needs have shifted to mitigate the privacy risks associated with the portability and accessibility of corporate IT and personal IT. ICT Security has become increasingly proactive in the past decade.

Top 25 Canadian Software Companies

The Canadian software industry has undergone a number of changes in 2007 in the name of consolidation, and with large ICT players looking to expand into new market niches. Acquisition activity throughout 2007 has resulted in a much different Top 25 software firms compared to last year’s list.

The Top 25 software companies generated total revenues of $3.295 billion in 2007, a 1.21 per cent decrease from last year’s listed companies. However, remarkable growth rates (over 10 per cent) were reported by 17 of the 25 firms on this year’s list. This year’s Top 25 software companies realized 15.91 per cent year-over-year revenue growth, up from $2.843 billion in 2006. The cut-off revenue figure for the Top 25 Software companies has risen this year to $32 million, up from $27.2 million last year.

Four of last year’s Top 25 companies were acquired or relocated in fiscal 2006: Hummingbird by Open Text (formerly ranked third on the list), Cryptologic (moved head office to Ireland), Longview by Exact Software, and Whitehill by Skywire Software. This created space for newcomers to the category such as Emergis, Platform Computing and Sigma Systems. The composition of the Top 5 remains otherwise unchanged. These firms exhibited significant growth in 2007 – notably Open Text and Corel with 45.44 per cent and 39.96 per cent year-over-year growth respectively. Cognos, with 11.6 per cent growth over fiscal 2007 and $967.6 million in revenues, was nevertheless able to retain the number one position.

Significant activity is also observed at the bottom of this year’s list, as two newcomers and four seasoned participants, each with noteworthy growth rates, were able to knock out some long-standing Top 25 software companies. Gemcom exhibited the highest year-over-year growth of the Top 25 software companies at 93.77 per cent. The mining productivity solutions company attributes this success to new economies of scale achieved following the July 2006 acquisition of Surpac Minex Group Pty Ltd. Sigma Systems, whose focus is the design, development and deployment of Operations Support Systems (OSS) service management solutions, exhibited the second highest growth at 74.8 per cent. 2007 was a busy year for Sigma Systems, as the firm was awarded new contracts by major players such as TELUS, as well as the availability of Sigma SMP Release 4.0. The other companies between 21st and 25th position, realized between 18.09 and 93.77 per cent growth. High industry growth will continue to fuel M&A activity among the ICT sector’s major players into 2008.

Software companies represent 38 per cent of this year’s Top 250, down from 42 per cent of the listing last year. Fifteen of the Top 25 firms are from Ontario (60 per cent), as are 42.71 per cent of all the software companies noted in the Top 250. Firms from Quebec, B.C., and Manitoba make up the rest of the Top 25 software companies, with 28 per cent, 8 per cent, and 4 per cent representation, correspondingly. The provincial distribution of software companies in the Top 250 is much different, with Quebec and B.C. having an equal share of companies on the list at 21.88 per cent, while 8.33 per cent being from Alberta.

Top 25 Professional Services Companies

This year’s Top 25 Professional Services companies realized a significant increase in revenues over last year’s list – at 11.89 per cent year-over-year growth. Whereas the minimum revenue last year’s Top 25 listing was $22.5 million, this year’s list is more exclusive with a cut-off of $27 million. The 67 Professional Services firms comprising 26.8 per cent of the Top 250 companies, represented just 13.22 per cent of the combined revenues earned by the Top 250. This figure is notably lower than the revenue contribution of the 2006 and 2005 listings – when the Services category represented 26 per cent and 25 percent respectively. Ten of the Top 25 Professional Services firms experienced growth of over 20 per cent throughout 2007.

The geographic composition of the Top 25 Professional Services companies list has not changed considerably over the past year. The same three companies from Quebec have achieved the Top 25 once again this year, and account for 12 per cent of the list, namely; CGI Group, Nurun, and GFI Solutions. Ontario firms account for 60 per cent of the list (up from 56 per cent in 2006), while Alberta companies now compose 16 per cent of the list (down from 20 per cent last year). Nova Scotia with two companies on the list, and B.C. with one, account for the remaining 8 per cent and 4 per cent of firms, respectively. The Top 25 is representative of the geographic distribution of all Professional Services firms in the Top 250 this year.

The Top 25 Professional Services firms generated 93.04 per cent of the category’s overall contribution to the Top 250 this year, with combined revenues of $7.92 billion. This year’s Top 25 Professional Services companies saw 13.53 per cent year-over-year growth – up from last year, when the Top 25 Professional Services companies realized just 4.67 per cent year-over-year growth. The category saw 11.89 per cent growth when comparing the combined revenues of this year’s Top 25 Professional Services companies to those of last year’s list.

Despite some significant growth rates over the past year, the revenue disparities between the firms in this category’s Top 25 have kept the list relatively consistent in terms of rankings. TES was the only firm able to climb more than two spaces, moving from 16 to 12 on the ranking with 51.86 per cent year-over-year growth. Teranet, who exhibited the highest growth rate this year at 88.81 per cent, went down one space in the ranking to number seven. Xwave, with year-over-year growth of 12.89 per cent, fell three places in the ranking this year. Compugen is new to this listing, formerly participating as an IT Hardware and Infrastructure firm, and a good example of a trend in which some firms are changing their business models to adapt to changing consumer requirements. Another firm on our Top 25 Professional Services companies listing this year that was formerly listed among the IT Hardware and Infrastructure firms is Cygnal Technologies. As firms modify their value propositions and expand their professional service capabilities, we can expect to see many newcomers to this list in coming years, which were previously listed elsewhere.

Top 25 IT Hardware and Infrastructure Companies

The Top 25 IT Hardware and Infrastructure list suffered a loss this year, as one the category’s central players (ATI Technologies, with 2006 revenues of $2.84 billion) was acquired by AMD, primarily a microprocessor development firm from the United States. In addition, the category lost an additional two of its Top 25 to the Professional Services Category.

Combined 2007 fiscal year end revenues for the Top 25 Hardware and Infrastructure firms were just over $27 billion. Although this category is still the highest in terms of revenue generation of all the Branham300 categories, the combined revenues of the companies in the Top 25 decreased by 16.02 per cent compared to the combined revenues of last year’s group. The combined revenue growth year-over-year for this year’s group alone, however, went up 2.15 per cent.

The 54 firms in this category produced collective revenues of $27.7 billion, resulting in a year-over-year decrease of 14.9 per cent compared to all companies in this category last year, despite including 11 new entrants. This year, the Top 25 companies account for 97.42 per cent of total revenues from this category, with the Top 10 accounting for 91.87 per cent alone.

Overall, Hardware and Infrastructure firms account for 22 per cent of the Top 250 list. However, the Hardware and Infrastructure category continues to be the Branham300’s highest contributing category. The combined revenues of these 54 firms contribute 43.06 per cent of the total revenues earned in 2007 by the Top 250 firms.

Although many of the players in this year’s Top 25 Hardware and Infrastructure category remain constant, there was significant movement in the rankings. Unlike the Top 25 Professional Services list, high growth in this category translated into greater performance in the ranking. Sandvine achieved the highest growth of the Top 25 companies at 155.22 per cent, to claim a space in the Top 25 for the first time. Mitel was able to climb two spaces with 118.35 per cent growth, while Sierra Wireless ascended four spots to number seven with 94.01 per cent growth. The biggest jump in the ranking is attributed to Vecima Networks, climbing 5 spots with just 17.17 per cent growth, highlighting the difference in revenue disparity between the higher and lower ranking firms. Nortel and Celestica reprise the number one and two spots in the category, despite both firms suffering year-over-year decreases of 4.58 per cent and 9.1 per cent respectively.

With the exception of Alberta, the geographic distribution of Top 25 companies in the Hardware and Infrastructure category is representative of all the firms in the category – Ontario: 68 per cent, Quebec: 16 per cent, B.C.: 12 per cent, and Newfoundland: 4 per cent. Alberta is not represented in the Top 25, while it is home to 7.14 per cent of firms in the category.

Top 10 xSP Companies

The x Service Provider (xSP) category includes application, managed, wireless and Internet service provider companies. With 33 firms, this category has the least representation in the Top 250 Canadian companies listing – accounting for just 13.2 per cent of firms listed. However, the 33 xSP organizations contribute 37.13 per cent of the Top 250 total revenues, with $23.9 billion in combined revenues – up from $21.2 billion generated by last year’s xSP firms. The Top 10 xSP firms generated a combined $23.3 billion in revenues in fiscal 2007, which account for 97.6 per cent of the combined revenues for this category.

Clearly, this is a sector limited to a small number of very large players and many smaller players. All players in last year’s Top 10 reappear in 2007, with the exception of Emergis which shifted to the Software category this year upon an assessment of their business focus. The top four companies remain unchanged since last year, with BCE, TELUS, Rogers Wireless Communications, and Shaw Communications, ranked in that order. Meanwhile, SaskTel (mobility and Internet) has jumped two spaces to surge ahead of MTS Allstream (wireless and data) and Rogers Communications (ISP), gaining the final space in the top five.

Of the companies listed in this year’s Top 10, Cogeco Cable once again had the highest year-over-year revenue growth at 59.92 per cent – up from last year’s reported figure of 30 per cent growth. Shaw Communications was the only other company in the Top 10 to realize revenue growth above 20 per cent.

In terms of provincial distribution, Ontario and Quebec produced 40 per cent and 20 per cent of the Top 10 respectively, with Manitoba, B.C., Alberta, and Saskatchewan each contributing 10 per cent or one company. This is not unlike last year’s composition. The distribution is somewhat different for the category. Here, firms from Ontario comprise 51.52 per cent, while B.C. and Alberta contribute 21.21 per cent and 15.15 per cent of companies, respectively. Quebec is much less represented at 6.06 per cent.

The landscape of the xSP sector is scheduled to change in 2008 with the availability of an additional 105 MHz of spectrum, intended to increase competition in the wireless industry. Jim Prentice, Canadian Minister of Industry announced in 2007 that the Government of Canada will be setting aside spectrum of airwaves for auction, with a designated 40 per cent for new entrants, and 60 per cent to existing competitors.

Furthermore, it is interesting to note that a group led by the Ontario Teacher’s Pension Plan is in the final stages of acquiring BCE in 2008, in what will be Canada’s largest acquisition to date – a value totaling $51.7 billion.

Top 10 Canadian IT Security Companies

IT Security has become a much more proactive industry – unlike ten years ago, when it was much more reactive. The problems that face IT Security professionals are increasingly diverse (such as worms, security violations, spyware, and SPAM), as each new technology brings a new set of security risks to mitigate. Consumer and corporate data portability, social networking, wikis, and all-in-one devices each blur the line between personal and corporate data, shared and private information. There is also a niche for companies whose focus is strictly research and development of multi-faceted security and privacy solutions, such as Absolute Software.

With 15 companies that make up the IT Security category, the distribution in terms of primary focus area within the Branham Top 250 categories is fairly even; with 6 software, 4 professional services, 3 hardware and infrastructure and 2 xSP companies. The combined 2007 fiscal year revenues for all players in this sub-category are $328.16 million. The Top 10 firms exhibited combined year-over-year growth of 33.21 per cent, while the 15 firms in the category realized a 34.34 per cent increase over their revenues from last year.

Within the Top 10 security companies, five companies are new to the category this year. Memory Experts regains first place on the list at $70 million, a 40 per cent growth in revenues compared to 12 months ago. Five companies, including three of the five returning security companies experienced year-over-year growth of over 40 per cent. Notably, Absolute Software, whose focus is primarily IT security, exhibited the highest growth from 2006 of the Top 10 security companies at 72.24 per cent. Graycon Group was able to claim the final spot at $17.2 million.

The 2007 edition of Symantec’s Pulse of IT Security in Canada reveals that 82 per cent of respondents thought IT security was important, while 34 per cent are more concerned with IT security compared to 12 months ago. Other findings from the study reveal that the top three investment plans include intrusion detection, anti-virus, and firewall investments, while 68 per cent of respondents revealed that they spend less than 10 per cent of total IT spending on security.

Top 10 Healthcare IT Companies

To keep pace with an ever-changing landscape, the Branham300 will continue to transform and grow to provide the most accurate and inclusive snapshot of the Canadian ICT industry. As such, the Healthcare IT Companies Top 10 list is being introduced for the first time in this year’s publication.

Provincial distribution of the major healthcare players on the listing demonstrates the highest number of companies are located in Ontario and Quebec (30 per cent each), followed by B.C at 20 per cent, and Nova Scotia and Alberta each at 10 per cent. This distribution corresponds somewhat to the figures generated in Branham’s 2007 study of Canadian eHealth vendors. According to this study, most vendors are located in Ontario (47per cent), followed by Quebec (22 per cent), BC (12 per cent) and then Alberta (9 per cent).

There are currently 469 ICT vendors selling to the Canadian healthcare market, of which 61 per cent are Canadian-owned, 87 per cent being privately held. Of the Canadian players in the healthcare space, 54 per cent contribute software applications, while others offer services and infrastructure (27 and 19 per cent respectively).

2007 may be the last year we see Emergis and Telus as separate entities. In December 2007, the proposed acquisition of Emergis by Telus was brought to public attention. The most influential player in the Canadian healthcare space for telecom, software and services will emerge should this acquisition take place.

Other companies within the Top 10 have been involved in a great deal of activity in fiscal 2007. xwave, number two on the Top 10, was awarded contracts (as part of consortiums) to deploy provincial Electronic Health Record (EHR) components in New Brunswick and British Columbia. Nightingale Informatix, ranked number eight on the Top 10, won a number of sales in 2007 within Ontario, Northwest Territories, Alberta and Saskatchewan, and has demonstrated a remarkable jump in revenues of 234.13 per cent from last year.

MediSolution, ranked fifth, is one of few remaining Canadian Health Information Technology players with any significant market share in Canada that has also had success in the American market. CLINICARE was awarded the 2007 Canadian Health Informatics 'Healthcare Transformation of the Year' for the implementation of its EMR/EHR solution at The Winnipeg Clinic.

Top 25 Up and Comers

The Branham300 Top 25 Up and Comers list is composed of companies established within the past three years, no earlier than January 1, 2004. These companies are not ranked, but are rather showcased alphabetically as firms who show tremendous promise within Canada’s ICT industry. These companies are creating innovative products and applications within diverse fields; which range from Voice-Over-IP and wireless application development, to services consulting and security optimization, among others.

This year’s list hosts companies headquartered across Canada, with 8 per cent of companies located in Atlantic provinces, 16 per cent in Quebec, 44 per cent in Ontario, and the remaining 32 per cent in B.C. This geographic composition is not significantly different from last year. Some of these firms have been recognized within their communities as local rising stars, where others have demonstrated accelerated user awareness and adoption.

Top 25 IT Multinationals

Multinational companies are foreign-owned with operations in Canada, whose revenues for the purpose of this listing are comprised of domestic and/or export revenue generated strictly by the Canadian entity. The Multinationals are acknowledged in the Branham300 for their significant contributions to the Canadian workforce, economy, and innovation. The multinational firms, with research and development in Canada, foster innovation within our borders, and offer employment opportunities to Canadians who are able to apply this experience to create net-new Canadian enterprises.

It is important to note, when reviewing the revenue figures reported here, that the foreign currency exchange rates used when converting US dollars and Euros to Canadian dollars, with the exceptional performance of Canadian currency in 2007, tend to result in a lower figure than in previous years despite year-over-year growth realized by many firms. Microsoft, for example, exhibited 15 per cent growth over the 12-month period ending June 30, 2007 – although the figure reported is lower than that listed for 2006, due to the lower rate of exchange. The best depiction of a company’s performance, given the rate of exchange, is the percentage change in revenue growth over the 12-month period ending 2007. To provide an accurate comparison, the same rate of exchange was used to report 2006 and 2007 figures.

Siemens Canada is the only new company to the Top 25 Multinational listing this year, making its debut at number 3 with revenues of $2.3 billion, a 28 per cent increase in revenue from 2006. Siemens, established in Canada in 1912, provides ICT consulting services from integration to support, as well as a focus on hardware development for the healthcare sector. Siemens, traditionally low-key on the Canadian front, has been working on expanding their brand equity in the Canadian ICT marketplace.

Apple Canada, jumping one spot to the number 7 spot, produced estimated revenues of $1.08 billion – a year-over-year increase of 24 per cent. Apple has realized a gradual resurgence of its brand in Canada – with the recent availability of the iPod, MacBook, and the highly anticipated iPhone. On October 30, 2007, Apple reported that over the first weekend of sales the Mac OS X version 10.5 Leopard had sold over 2 million copies. This breaks the record previously held by the Mac OS X Tiger, which was the most successful OS release in Apple’s history.

Returning to the list in the number 25 spot, Keane was acquired in June 2007 by Caritor, specialists in software application and product development, and other technology consulting services. The company will proceed under the Keane name, and with Caritor’s history and Keane’s brand success, is positioned to deliver solutions that will help clients improve performance through higher quality and increased efficiency.
Still thriving from the momentum from some significant activity in 2006, when they launched a new Canadian website and opened the Montreal office, TEKsystems realized year-over-year revenue growth of 70 per cent – the highest growth rate of all companies on the Top 25 Multinational list. In 2007, the company acquired the commercial services division of Computer Horizons Corp. of Mountain Lake, New Jersey.

15 Years of Canadian ICT Success!

Branham Group’s annual ranking of Canadian ICT companies celebrates its fifteenth anniversary this year with the 2008 edition of the Branham300. Since its first publication in 1994 as the Branham Top 100 Software Companies, the Branham300, aptly named to represent growth in the industry, has been dedicated to promoting the Canadian ICT industry domestically and abroad, by providing Canadians with an up to date and inclusive snapshot of the health of the industry.

In 1994, it was appropriate to depict strictly the Top 100 pure-play software firms, at the time considered the engine of the Canadian ICT sector. Combined, the 1993 fiscal year revenue of these hundred software firms was $1.076 billion. Nineteen of the firms depicted in this ranking were publicly traded. This was also the year of the introduction of the first GSM cellular phone network, as well as the release of Intel’s Pentium (P5) processor, and the official launch of Microsoft’s Windows NT 3.1. Finally, with the emerging Internet, just 50 World Wide Web servers were known to exist.

By the fifth anniversary edition, the listing had evolved into the Branham200; including the Top 100 Software firms, as well as the Top 50 IT Professional Services, Top 25 Multinational, and Top 25 Up and Comers companies. Meanwhile, organizations were busy with the development and introduction to market of handheld devices such as the PDA, the first DVD players and CD-RW discs, and new operating systems and programming languages. In 1998, Branham reported that the Top 100 software companies employed approximately 17,500 individuals in Canada.

In the years leading up to the tenth anniversary 2003 edition of the Branham listing, the industry experienced a significant downturn, a decline in compounded annual growth rate, that was compounded by the effects of 9/11. Many pioneer companies retired from the industry. Larger companies, as they adapted their business, acquired a number of smaller players – as few companies focused completely in any one category. A single company conceivably provided proprietary software, third party software, consulting services, hardware, and system integration solutions. The Branham300 listed not just the software and professional services rankings, but incorporated IT security, wireless, and xSP. The IT industry was no longer organized in distinct silos.

Through the course of the past fifteen years, the Branham300 has morphed considerably to include new sub-sectors that have shown considerable growth. Nortel Networks takes the number one spot on the Top 250 in 2008 for the fifth consecutive edition of the Branham300. Adoption rates of the Internet, Email and wireless have risen considerably, demonstrated by the increased revenues exhibited by BCE, Telus and other xSP companies. With innovative technology from Canadian Hardware and Infrastructure firms, the Wireless Wave is expected to continue well into the future. As portability increases, companies are expressing concerns for corporate data security and risk mitigation. Finally, as one of its latest additions, the Branham300 will include the Top 10 healthcare companies for the first time this year.

Top 20 Movers and Shakers

The Movers and Shakers are firms who have climbed the highest number of ranks in the listing compared to their ranking last year. Only those companies included in last year’s Top 250 are considered for this category. In 2007, the Top 20 Movers and Shakers earned combined revenues of $750.01 million – increasing from $423.27 million generated by this group in 2006. This is a 77.2 per cent increase year-over-year.

Wi-LAN tops the Movers and Shakers list this year, having moved 94 spaces from 158th position in 2006 to 64th in 2007. In 2006, the company transformed into a technology intellectual property licensing company, divesting its products manufacturing and engineering services businesses throughout the year. The firm generated $61.27 million in fiscal 2007 – notably the highest year-over-year growth of all Top 250 companies at 2,807 per cent. This growth is directly related to the divestment of certain businesses, and is not expected to continue into 2008.

Verb Exchange, the number one ranked Mover and Shaker from 2006, realized an increase in revenues of 35 per cent throughout fiscal 2007 – although not enough to make this list. Returning to the list again this year are PlateSpin (data centre automation software and solutions), WellPoint (applications for the oil & gas industry), and MaxSys (IT staffing). Although ten companies on the list were able to jump between 17 and 94 spaces, an equal number jumped between 13 and 16 spaces.

The Movers and Shakers come from diverse backgrounds, offering a variety of products and services. Each of the major Branham300 categories is represented in this year’s list. Ten of the companies (50 per cent of the list) are from the Professional Services category of the Branham300. This highlights the aforementioned growing trend for firms who have adopted a services business model to realize significant growth. There is also a heavy weighting of Ontario firms on the list – who account for twelve of the twenty firms.

Nightingale Informatix, a software provider for the healthcare industry established in 2002, appears second on the Movers and Shakers list – having jumped 64 spots to number 165 on this year’s Top 250. This company also exhibited tremendous revenue growth over the 12-month period at 234 per cent.

Blue Line Innovations, not appearing on the Movers and Shakers list because they were not listed in the Top 250 last year, exhibited the second highest growth rate of all firms in the ranking at 1,829 per cent. This firm focuses on creating real-time energy feedback technologies that deliver increased value to clients while maintaining an eco-friendly platform. This firm is setting an example of how seriously firms are dedicated to the adoption of green IT.

2008 Outlook

Canadian companies have had a very successful year. Despite the loss to the listing, through acquisitions (see footnotes), of some major players, firms were able to generate a combined $64.4 billion. With 52 new participants to the listing, companies are prepared to show off just what they can do. Canada’s highly skilled and growing workforce, continued growth for firms across all categories, and continuing innovation in all fields, have set Canada apart as a proven hub for leading edge technology talent and capabilities that continues to garner international recognition. Evidence of this is apparent in the continued merger and acquisition interest in Canadian firms – highlighted by IBM’s recent bid to acquire Ottawa-based Cognos in 2008.

The upcoming year promises to be electrifying, as the pieces are already in place for firms to realize not only tremendous growth, but increased opportunity, competition, and innovation. Major players can expect to realize significant growth, as the fruits of their acquisitions in 2007 bring forth synergies and economies of scale in 2008. The Wireless Wave will continue into 2008, as new entrants are given increased opportunity to buy competitively priced reserved spectrum, while veteran players surge forward with the development of advanced mobile devices and solutions. Trends in IT Security are expected to continue through 2008, as firms dedicate increased amounts of their IT budgets to preventative measures to ensure data privacy and protection.

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