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The Impact of AWS in Canada

Accelerating Canada’s growth


Executive Summary

To understand the impact of cloud computing on the Canadian economy, Amazon Web Services (AWS), a company with the world’s most comprehensive and broadly accepted cloud offerings, commissioned Public First to undertake quantitative research on the use of and benefits created by AWS across Canada.

Public First ran a nationally representative survey of over 1,000 Canadian businesses, and over 750 cloud users, to learn more about the cloud and how AWS is supporting their business.

Over the last two years through the COVID-19 pandemic, we saw how cloud computing has proved vital in enabling businesses to adapt and the potential that it has in supporting Canadian growth for the rest of the decade.





In this report, we explore the importance of AWS and cloud computing in enabling four of the key drivers for economic growth: productivity, innovation, competition, and workforce collaboration. We highlight how the cloud benefits the private sector and helps create new solutions for the public sector. We also discuss two key advantages of the cloud for all organizations: security and sustainability.

  • In 2021, we estimate that AWS generated an estimated $8.5 billion in economic value (gross value added1) for Canada and supported 380,000 businesses.
  • 70% of Canadian businesses said that trying to keep their business running without online or cloud tools during the pandemic would have been more difficult—and 11% said that it would have been impossible.
  • By 2030, we estimate that greater use and uptake of cloud computing could help increase the GDP by an additional 1.7%, or the equivalent of over $40 billion.




Maximising the potential of cloud

Over the last five years, total spending by Canadian companies on public cloud has more than doubled. However, there still remains a large difference in cloud prevalence between large companies and small businesses. Addressing this gap could help reduce the digital divide and further increase the cloud’s economic impact.

  • While around 70% of companies with more than 500 employees reported using the cloud, only a third (34%) of those with fewer than 100 employees did.
  • If we could increase cloud share in every province across the country to the level of Quebec, it would boost Canadian GVA by over $3.4 billion. If Canada could increase cloud prevalence in small businesses by 15%, it would increase GVA by over $4.2 billion.

Productivity: Saving businesses money and increasing revenue





The flexibility of the cloud helps companies match their information technology (IT) supply to their exact needs. Companies can adjust their capacity from day to day—or even hour to hour - making it possible to ramp up to meet the demand of a seasonal rush or adapt rapidly to changing circumstances, such as a global pandemic.

  • 84% of AWS users reported saving money when using the cloud compared to using traditional on-site servers, and 89% said that it was helping them earn additional revenue.
  • On average, small businesses that are AWS customers reported saving around $30,000 a year and earning $100,000 a year extra due to their investment in the cloud. The top 10% of customers enjoy an average return on investment (ROI) of over 8 to 1.




Innovation:  Helping businesses grow and take advantage of new technologies

Customers can take advantage of the over 200 services offered by AWS, allowing them to access the latest tech for innovation.

  • 69% of AWS-using businesses said that their business or operating model would not be possible without the cloud.
  • 84% of AWS-using businesses said that it made it easier for their business to innovate and bring new products to market.




Competition: Helping small businesses and startups compete in a global digital economy

By giving small companies access to the economies of scale that were once reserved for large enterprises, the cloud enables small businesses to rapidly grow.

  • 58% of businesses using AWS reported growing in the past three years, compared to just 39% of businesses that had not invested in any cloud.
  • Many Canadian Unicorns (startups worth more than $1 billion) use AWS. This includes 1Password, one of the world’s 50 largest Software as a Service (SaaS) companies.




Workforce: Keeping businesses connected and running

The cloud powers the vast majority of today’s leading online tools and storage, which helped the Canadian economy adapt to a historically unprecedented and rapid switch to remote working in 2020. Over half of Canadian businesses told us that they plan to continue working remotely even after the pandemic.

  • On average, businesses reported doubling the number of cloud tools they used during the pandemic, with the average business using at least four cloud tools.
  • 34 of the world’s 50 largest Software as a Service (SaaS) companies use AWS, including Zoom, Slack, Salesforce, Tableau and Mulesoft, as well as leading Canadian companies such as 1Password, Hootsuite, and Lightspeed.




Public Sector: AWS is helping create new solutions for government

Building on a cloud platform enables a wider range of suppliers to provide for the public sector, reducing costs and unlocking new models of service delivery. Over 6,500 government, education, nonprofit, and health care organizations currently use AWS.

  • Replacing outdated legacy IT systems with a cloud provider like AWS could help save the federal government over $2 billion a year.
  • 83% of companies using AWS and selling into the public sector said that the cloud makes it easier for their business to innovate and bring new products to market.




Security: Keeping data safe and private

Storing data in the cloud helps companies follow security best practices, keep their information secure, and keep their software up to date.

  • 90% of AWS users reported they are confident that the cloud is helping them ensure digital security and protect them from external hacking attempts.




Sustainability: Reducing energy usage

Using the cloud saves companies money, reduces energy use, and improves the sustainability of computing.

  • 74% of Canadian businesses said that using cloud services helps them reduce the environmental impact of their computing.
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Introduction

Imagine what the world would have looked like in 2020 without the cloud. Cloud tools made it possible for millions of workers to go remote, for in-person meetings to switch to video conferencing, and tech start-ups to rapidly scale up to meet new demand.  Seven in ten Canadian businesses told us that trying to keep their business running without online or cloud tools would have been more difficult - and 11% said that it would have been impossible. That is the equivalent to a loss of over $200 billion to the Canadian economy.

First pioneered with the creation of Amazon Web Services (AWS) in 2006, cloud computing makes it possible to treat computing as a service: scaling it up or down to meet your needs, enjoying access wherever you need it, and keeping up to date with the latest technologies. This agility has made it possible for much of the economy to adapt to economic disruption and switch courses throughout the COVID-19 pandemic.

Ever since the beginning of the modern industrial era, the vast majority of businesses have not needed to buy their own power or water treatment plant. Instead, they purchase resources from much larger networks run by dedicated infrastructure providers. In the same way, moving from on-premises computing to the cloud helps businesses benefit from on-demand services and economies of scale, without needing to build their own data centers or server farms.

By the early 2000s, the largest enterprises were enjoying the advantages that came from running their own servers and online tools. There was no easy way, however, for smaller companies to share the same advantages, without costly investments in their own infrastructure.

AWS changed this. In 2006, Amazon launched Amazon Simple Storage Service (Amazon S3), which allowed companies of all sizes to store information in the cloud. Soon after, AWS released Amazon Elastic Compute Cloud (Amazon EC2), which enabled companies to rent virtual computers in the cloud to run their programs and build applications. While the ideas behind the cloud had been theorized by technologists for decades, this was the first time they were implemented at scale. Today, AWS offers over 200 products and services globally.

In the past, large companies have often been seen as efficient but slow moving, while small companies were agile but had to build everything afresh. The cloud eliminates many of these differences, making it possible for large enterprises to retain the flexibility of a startup, and startups to use the same computing power and high levels of security as the world’s largest technology companies. For the first time, anybody could start a business running on the latest technology—all without having to invest potentially millions up front in IT resources.

Key Benefits of Cloud

Capacity. The cloud enables on-demand IT resources for companies to collect, store, and analyze data from millions of devices. In today’s cloud computing, businesses can train computer algorithms and create large datasets, which contributes to improved machine learning (ML) solutions.
Scale. By building on the infrastructure that providers like AWS have in place, startups can scale seamlessly from serving zero to millions of customers without continually updating and reconfiguring their computing setup, or building new data centres across the world to serve a global audience.
Security. Instead of relying on individual users or businesses to install the latest software updates or security patches, the majority of cloud software—by design—is up to date. In addition, AWS is designed to satisfy the security requirements for military, global banks, and other high-sensitivity organizations.
Agility. With the ability to add new resources in minutes, businesses can experiment and develop new products and solutions faster.
Flexibility. Businesses no longer need to guess the level of computing resources needed. With cloud services, businesses can scale resources up or down automatically or with a few clicks to meet demand.
Cost. Businesses no longer have to invest in excess computer hardware and can use the exact capacity required for their needs, which results in cost savings.
Sustainability. On average, cloud computing is more energy efficient than traditional computing, helping businesses reduce their carbon footprint.

In Canada, Amazon has more than 39,500 full- and part-time employees, including 2,800 AWS employees. In 2016, AWS launched the AWS Canada (Central) Region in Montreal, which includes of multiple Availability Zones (AZs) and data centers. In 2021, AWS announced the development of a new Region in Calgary, which is expected to launch in late 2023 or early 2024. Over the last five years, AWS’s direct investment of $1.4 billion in Canada in building new data centers is estimated to have supported $1.1 billion in GVA and 687 full-time jobs. By 2037, a future investment of $21 billion in Montreal and Calgary is set to support another 5,195 full-time jobs and contribute an additional $39 billion to the Canadian economy.2

Even more important, however, is the added economic value AWS generates for tens of thousands of Canadian companies, nonprofits, and public sector organizations. AWS’ customers include Aldo Group, National Bank of Canada, Keyara, The Globe and Mail, the Government of Ontario, AlayaCare, BlackBerry, 1Password, Ubisoft, and Imagine Canada.

In this report, we look at the potential of cloud computing in Canada across the rest of the decade and explore how cloud technologies are accelerating the following four main drivers of economic growth:

  • Productivity. The greater flexibility provided by cloud computing saves significant costs for businesses, allowing them to pay only for the computing resources they need. This saves businesses money and helps them reduce their carbon footprint.
  • Innovation. Having access to immense computing power on demand makes new types of business models possible, enabling new types of startups and benefiting both the private and public sectors.
  • Competition. By reducing the barriers to entry and the need for expensive IT investment up front, the cloud attracts new entrants into existing markets and creates a more competitive economy. The cloud also supports small businesses building solutions for the public sector, enabling them to compete in government procurements.
  • Workforce. Cloud tools help employees work together better. Cloud tools empowered many companies to switch from an on-site model to a remote-workforce model during the COVID-19 pandemic.

In 2021, we estimate that AWS generated an estimated $8.5 billion in economic value (GVA) and supported 380,000 businesses, reducing their costs and enhancing their productivity. This is on top of the direct economic value that is supported by AWS’s investments in new cloud infrastructure.

GVA by region (CAD mn)
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Maximising the potential of cloud

Over the last five years, total spending by Canadian companies on public cloud has more than doubled with increased spending across all verticals and business. However, there still remains a difference in cloud prevalence between large companies and small businesses persists. Addressing this gap could help reduce the digital divide and further increase the cloud’s economic impact.

Over the last decade, an increasing number of Canadian companies have moved to cloud computing. In 2019, Statistics Canada estimated that 39% of Canadian businesses were already using cloud computing.3 Other estimates suggest that total spending on the public cloud in Canada has more than doubled in the last five years.4 COVID-19 related lockdowns and social distancing measures have accelerated trends that were already in place.

In our business polling, we saw a similar pattern of rapid growth:

Growth in cloud spending over last three years

Digital technology is a powerful driver of business productivity and growth. Over the last 30 years, information and communications technology (ICT) is conservatively estimated to be responsible for at least 28% of total Canada growth.5 The vast majority of these returns go to ordinary businesses and workers, not ICT companies. Cloud computing enables flexible business models and spurs future technologies, such as machine learning and artificial intelligence.

Continuing to increase cloud uptake could be a powerful driver of future Canada growth. In our central scenario, we estimate that greater use and uptake of cloud computing could help increase the Canadian economy by another 1.7%.

GVA impact of cloud computing in Canada6

One of the biggest barriers to achieving this growth will be helping small businesses take advantage of the direct and indirect benefits of cloud computing. In our business poll, we saw that the level of cloud uptake varied significantly with the size of the company. Just 34% of small companies—those with fewer than 100 employees—use cloud computing. In contrast, 69% of large companies (more than 500 employees) are on the cloud. Helping small businesses take advantage of cloud computing is a key way Canada can accelerate cloud uptake and economic growth.

Cloud penetration by business size

As part of our polling, we talked to many businesses that don’t currently use cloud and asked them to discuss the important barriers standing in their way. The most significant barrier appeared to be perceived expense (32%), but many people also pointed to the complexity/difficulty in transitioning to the cloud (10%). Small businesses are particularly likely to need support to understand how to best adopt the cloud and what the benefits for them could be.

We also saw a modest difference in cloud computing uptake across the country. Quebec had the highest level of prevalence in our poll, with 38% of businesses reporting that they were using the cloud. In contrast, 30% of businesses in Alberta reported using cloud computing.

Cloud penetration by province

In total, we estimate that the cloud as a whole is currently supporting around the equivalent of 2% of Canadian GVA. Moving forward, there is the potential to significantly boost cloud prevalence and GVA growth:

  • If we could increase cloud share in every province across the country to the level of Quebec, it would boost Canadian GVA by over $3.4 billion.
  • If we could increase Canadian small businesses cloud adoption by 15%, it would increase GVA by over $4.2 billion.
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Productivity: Saving money and increasing revenue

The greater economies of scale and flexibility provided by cloud computing saves significant costs for businesses, allowing them to pay only for the computing resources they need.

Increasingly in today’s economy, every company is a technology company. Just 5% of the businesses we polled thought that new digital technology wasn’t beneficial for their business. The benefits of the cloud can often have a transformative effect on a company’s bottom line and their business model, beyond their IT services.

While building an on-premises data centre is possible, it requires significant upfront investment and ongoing maintenance costs. The average large data centre today costs from $10 to $30 million a year to run, making it cost-prohibitive for all but the largest corporations.7 Even for companies that can afford it, running a data centre is more expensive than using the cloud—and distracts business attention from focusing on what makes their company unique.

In contrast, the flexibility provided by cloud providers offers multiple benefits:

  • Businesses and nonprofits don’t have to spend significant amounts of capital upfront in capacity that they end up not using.
  • Organizations can rapidly flex their capacity from day to day—or even hour to hour—making it possible to ramp up to meet the demand of a seasonal rush or one-off event.
  • As organizations grow, they can seamlessly and rapidly scale across the globe, building on a worldwide infrastructure network and avoiding the cost of procuring IT infrastructure in multiple jurisdictions.

In our polling, we found:

This all adds up to real savings.84% of AWS users reported saving money when using the cloud compared to using traditional on-premises servers. On average, small businesses who are AWS customers reported saving around $30,000 a year due to their investment in the cloud.8

In addition to reducing costs, AWS and the cloud also helps businesses earn additional income. In our business poll, 89% of AWS users estimated that the cloud was helping them earn additional revenue. On average, small businesses reported seeing an average of around $100,000 more in revenue generated from using the cloud.

These benefits applied across sectors:

  • 86% of AWS customers in the retail sector estimated that the cloud has helped them reduce their costs, and 89% said that it has helped them increase revenue.
  • 95% of AWS customers in the manufacturing sector estimated that the cloud has helped them reduce their costs, and 97% said that it has helped them increase revenue.

When we asked companies using AWS more broadly how the cloud had helped them earn additional revenue, they reported the following:

When you combine the savings and additional revenue, we found that AWS customers reported enjoying an average return on investment (ROI) of 1 to 1. That means, for every dollar they spend on AWS, they cover their costs and receive a dollar back in higher profits. In addition, some customers see a much higher ROI, with the top 10% seeing an ROI of over 8 to 1.

Other estimates of the financial benefits of cloud computing

Our estimates align well with previous studies, which generally have found that the cloud delivers significant savings for the majority of companies:

  • McKinsey (2021) estimates that the benefits of the cloud could create over $1 trillion for the global economy by 2030.9
  • Public First (2020) found in the UK that AWS customers were receiving a return of £2 for every £1 they spend on AWS, with the top 10% of customers receiving a return of £10 or more.10
  • Deloitte (2018) found that public cloud customers achieve a net return on investment of $2.5 for every $1 invested in cloud services.11
  • IDC (2018) projected that AWS customers achieve a 51% lowered cost of operations and a return on investment of 637% over five years.12
  • European Commission / Deloitte (2016) estimated that taking up cloud computing led to reduction of between 20% and 50% in total IT costs.13

What have been the most significant benefits of AWS?14

"The most significant benefits of Amazon Web Services to our company is its flexibility." Large manufacturing Business in Nova Scotia, 500+ employees
"The surge capacity that is available to handle peak season demands." Large scientific or technical Business in Ontario
"It's very flexible, with its infrastructure on demand, there's basically no limit of how much you can use." Small scientific or technical Business in Ontario
"It has very easy to use services. It is very flexible. It is very secure. It is very reliable. It is very cost effective. It is very scalable. It offers high performance." Large manufacturing Business in Ontario
"Improved the company's bottom line." Medium information and communication Business in British Columbia
"Flexibility, saleability and cost savings. " Small technical Business in Ontario
"Flexibility of being able to use data from any location. With COVID—having AWS helped immensely with being able to store data. " Medium real estate business in Ontario
"Cuts cost, more secure." Small technical business in Alberta
"Cost reduction has been the number one benefit of using AWS. Also needing less dedicated IT personnel has allowed us to allocate funds in different areas such as employee training." Medium wholesale business in British Columbia
"Remote work has been made easier thanks to the cloud. Employees are able to access data specific to them or their department without too much trouble." Medium construction business in Quebec

Answers were in response to the question: ‘In your own words, what has been the most significant benefits of Amazon Web Services to your company?’

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Innovation: Helping businesses grow and take advantage of new technologies

Customers can take advantage of the over 200 services offered by AWS, allowing them to stay on the cutting edge of digital technology.

The cloud is not just important in its own right but as an enabler of other innovations. Machine learning and artificial intelligence (AI), for example, heavily depend on collecting and keeping current large datasets, which the cloud makes significantly easier.

In our polling:

From financial services to honey production, AWS supports innovative Canadian businesses, including:

  • Kidoodle.TV, a children’s streaming service, saw its global customer base skyrocket by 3,200% during 2020 as the Covid-19 pandemic kept families at home. The Calgary company needed to scale its content delivery from 400,000 monthly active users to more than 12 million users in just 1 year. As the backbone of Kidoodle.TV, Amazon Web Services (AWS) helped provide high availability and low-latency streaming to 235 countries by allowing the company to effortlessly ramp up its Amazon Elastic Compute Cloud (Amazon EC2), Amazon Simple Storage Service (Amazon S3) along with other AWS services. “AWS enables growth in the sense that we don’t have to worry about it or even think about it,” says Daniel Riddell, chief technology officer of Kidoodle.TV. The children’s streaming service also used Amazon Elemental MediaTailor, a channel assembly and personalized ad insertion service, to expand its ad-delivery system while ensuring high-quality, high-speed, age-appropriate content and advertisements. “It feels and works like Saturday morning cartoons, where you sit down and there’s this seamless transition between content to ad and back to content,” says James Purdy, senior vice president of development at Kidoodle.TV. In 2020, Kidoodle.TV also tripled its staff from 24 to 75 employees. The company knows AWS will continue providing the right tools for its needs. “If you’re a great designer, you can build a beautiful sculpture with a set of building blocks,” says Riddell. “I think we have a great design team, and I think AWS is like a set of blocks. And I think Kidoodle.TV is a great product that we built with it.”
  • Memento offers an easy way to make professional-quality group videos. Using AWS’s serverless architecture, they handle a 300 times increase in usage without missing a beat during the pandemic.

What have been the most significant benefits of AWS?15

"The support and use of extending new technologies to improve the production of my company" Large manufacturing business in Ontario
"It has allowed us to store information and re-evaluate not only our data but our goals as well. We've been able to do MORE with the servers during this pandemic, and have attracted more attention to our business." Large scientific and technical business in Ontario
"It has allowed us to focus more internally on our urgent needs as opposed to daily grind of IT operational work" Medium financial and insurance business in Alberta
"Because AWS offers a pay-as-you-consume cost model, this greatly helped reduce costs and manage IT more effectively; therefore reduce IT costs and scale resources AWS has provided the company immense benefit in data analytics and AI/ML. Being able to use the data we have to make strategic decisions is much better than guessing with spreadsheets and "gut-feel"." Medium mining and quarrying business in Quebec

Answers were in response to the question: ‘In your own words, what has been the most significant benefits of Amazon Web Services to your company?’

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Competition: Helping small businesses and start-ups compete in the global digital economy

By giving small businesses access to the economies of scale that were once reserved for large enterprises, the cloud enables small businesses and startups to rapidly grow and adapt.

The flexibility and low barriers to entry offered by cloud services makes the cloud a particular good fit for new companies that are looking to grow fast:

In general, we saw in our polling data a significant correlation between the use of cloud and business growth:

  • 58% of businesses building on AWS reported growing in the past three years, compared to just 39% of businesses that had not invested in cloud.
  • 38% of businesses building on AWS reported growing over 5% a year on averagein the past three years, compared to only 23% of businesses not investing in cloud who reported growing over 5% on average.

This applies all the way up to some of Canada’s fastest growing companies:

  • Many Canadian Unicorns (startups worth more than $1 billion) use AWS.16 This includes 1Password, one of the world’s 50 largest Software as a Service (SaaS) companies.
  • 31 of the 100 fastest growing companies in Canada use AWS.17
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Workforce: Keeping businesses connected and running

Cloud tools help employees work better together, unlocking their skills and productivity.

Alongside its direct impact for customers, the cloud has an even bigger indirect impact for the large number of people who rely on the digital tools that run on it. Ever since the arrival of the pandemic, an increasing number of workers and businesses have turned to cloud tools to help them collaborate even when they couldn’t meet in person:

In 2021, around a quarter of Canadian workers (24%) said that they were working from home.18 In a recent survey, 71% of respondents said that remote work has had a positive impact on their work–life balance, and 77% agreed that flexibility in location and hours now directly influences whether they’ll stay in a job.19

Many of the world’s most important cloud tools that make remote working possible and offer software as a service rely on AWS Cloud. Today, 34 of the world’s 50 largest SaaS companies (more than two-thirds) use AWS, including Zoom, Slack, and Salesforce, as well as leading Canadian SaaS companies, including 1Password, Hootsuite, and Lightspeed. By building on top of a large cloud service provider such as AWS, companies can take advantage of AWS’s scale and technology—and seamlessly adapt to growing demand. Over the course of 2020, the number of daily meeting participants on Zoom, for example, increased from around 10 million to over 300 million.20

During the pandemic, on average, businesses in Canada reported doubling the number of cloud-based tools they used, with the average business using at least four cloud tools. While email and video chat remained the most popular types of cloud tools, cloud tools were also used for a wider variety of other basic work functions, including recording expenses, tracking inventory, and sales.

Companies also agreed that these online tools made it significantly easier to keep their business going:

Online tools help companies adapt to remote working. Online tools also help companies be more agile, innovative, and fast-moving. 60% of businesses that used over 10 online or cloud tools reported that their revenue had grown in the last three years, with 47% of companies saying they grew by more than 5% a year.

When we asked directly as part of our polling:

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Public Sector: Helping businesses create new solutions for government

Building in the cloud makes it much easier for a wider range of suppliers to provide for the public sector, reducing costs and unlocking new models of service delivery. The cloud is making government IT more flexible, innovative, and cost effective.

By contrast, legacy government IT systems are highly expensive to maintain, often become increasingly less secure over time, and struggle to meet modern user expectations for flexible digital services. In the United Kingdom, “keeping the lights on” for outdated legacy systems is estimated to make up around half the annual IT budget.21 In Canada, TECHNATION estimates that the federal government is spending approximately $12.5 billion a year in maintaining outdated IT.22

Cloud technologies level the playing field—making it easier for small companies to build their software to the level of security needed for the public sector. They also offer the potential for new types of public sector reform: increasing transparency through open data, making it easier to integrate new technology, and offering improved services to citizens.

AWS is at the heart of this shift to the cloud, with over 6,500 government, education, nonprofit, and health care organizations around the world now using AWS.23 If the Canadian federal public sector could achieve the kind of savings we saw in our business poll, it would potentially save over $2 billion a year by moving its legacy outdated IT to the cloud.24

In our business polling, we saw evidence that AWS was helping many businesses sell into the public sector and develop new innovative solutions:

This has proved particularly helpful during the COVID-19 pandemic, with provincial and federal governments needing to be able to rapidly react, as illustrated by the following:

  • The Canadian Digital Service used AWS to scale its Notify system, allowing it to increase its capacity from hundreds of thousands to up to 10 million messages a day.
  • The Canada Border Service Agency (CBSA) and the Public Health Agency of Canada (PHAC) launched the ArriveCAN app in April 2020, built in a few weeks, to allow travelers to report their contact tracing, quarantine, and now, vaccination status information.
  • Cloud Innovation Centre at the University of British Columbia took on the goal to analyze all public sequencing data of the coronaviruses—40 million gigabytes of data. Using AWS’s supercomputing powers, an international team of scientists identified more than 130,000 new RNA viruses, including several new species of coronavirus, in record time—creating a “global viral surveillance system” that could help prevent future pandemics. The supercomputer searched almost 6 million publicly available biological samples for the presence of RNA viruses in less than two weeks for $24,000—achieving what would have taken a standard computer well over 2,000 years and cost at least 10 times more.

AWS Partner Network

The AWS Partner Network (APN) is an international program that connects AWS suppliers with new customers. To support the network, AWS hosts a central listing of accredited partners for customers to choose from, as well as technical and marketing support for the providers themselves.

While many of them remain small businesses, others have grown into significant businesses in their own right. To better understand the impact AWS has had in supporting a growing ecosystem of Canadian IT companies, we spoke to two AWS Partners—Tidal Migrations and SmartSimple.

Tidal Migrations

Tidal Migrations was launched in November 2017 at AWS re:Invent, a learning conference hosted by AWS for the global cloud computing community. Tidal Migration’s goal is to help enterprises dramatically accelerate their cloud adoption journey and embrace cloud native technologies.

David Colebatch, CEO and founder of Tidal Migrations, had been working as a software engineer and using AWS since it was just an application programming interface (API) in 2007. His career involved helping clients build out their physical data centers and, in later years, consolidating and virtualizing them. He recognised that too many enterprises don’t have the full picture of their applications and related technologies, causing cloud migrations to be a cause for anxiety. Tidal Migrations was founded to solve these issues and automate the planning process to make cloud migration easy.

The company started with three people in a small office in Ontario. It now has over 30 people spread across four countries. Initially, Tidal Migrations grew slowly as the enthusiasm for cloud infrastructure in Canada was severely lacking behind more developed markets such as the U.S. and Australia. However, with the significant investments made by AWS in Canada over recent years as well as the pandemic raising awareness of the need for cloud infrastructure, the appetite for Tidal Migration’s services has increased.

This increase in demand over the past few years has resulted in Tidal Migrations placing 76th on the 2021 Report for Business, which ranks Canada’s fastest growing businesses, due to its growth of 764% in the last three years.

When asked about the impact of partnering with AWS on the business, Colebatch said, “To be taken seriously, you have to be with AWS. People recognise the name, and it helps a lot.”

SmartSimple

SmartSimple was founded in 2002 out of an incubator program at the University of Toronto. The founders recognised the future would involve people working online and needing to collaborate from dispersed locations around the globe. Starting with just four founders, the company now has a team of over 100. SmartSimple is a cloud-based tracking and reporting platform that helps organizations automate their critical processes. With robust baseline Customer Relationship Management (CRM) capabilities and process automation, the company offers unparalleled flexibility in the way its clients can collaborate and engage with their staff and greater community.

The company grew slowly over the first decade of its existence and managed to break into the U.S. market in 2010. “The U.S. market was just way more developed. Canada is socially advanced, but businesswise, we are pretty conservative,” The Canadian client base has started to grow more significantly over the last five years as large Canadian enterprises have recognised the success of European and American cloud transitions and are trying to replicate it.

SmartSimple joined the APN in 2015, as the global nature of their business continued to develop. Privacy issues with their clients' secure data became problematic, since they had to keep sensitive data in the same legal jurisdiction as the client. With AWS, this was no longer an issue because the information can be hosted locally. “I do not think we would be where we are now without AWS”.

“The cloud allows us to be global. AWS really opened the door for us to work on a global scale without having to be a large corporate entity or a government.”

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Security: Keeping data safe and private

Storing data in the cloud helps companies follow security best practices, keep their information secure, and keep their software up to date.

Keeping data safe is an increasing priority for businesses of all sizes. In 2021, independent estimates found that the average cost of a data breach in Canada was $6.75 million per incident,25 while the total cost of cybercrime has grown to over US$1 trillion globally.26

In our polling, we saw that many organizations of all sizes had suffered from insecure data.27

  • The equivalent of 40,000 businesses, or 3% of those in our business poll, experienced serious data loss in the last three years.
  • The equivalent of 89,000 businesses, or 7% of those in our business poll, have been infected by ransomware or malware in the last three years.
  • The equivalent of 55,000 businesses, or 4% of those in our business poll, experienced a hacking or security breach in the last three years.
  • The equivalent of 64,000 businesses, or 5% of those in our business poll, experienced payment fraud in the last three years.

By building in the cloud, companies can automate manual security tasks, while maintaining ownership and privacy for their own data. Using AWS makes it easy to take advantage of built-in security features including:

  • Fine-grained controls of where data is stored, how it is encrypted, and who can access it at any time.
  • Full-time (24x7) team of security experts, monitoring AWS’s infrastructure for potential threats.
  • Extensive monitoring and logging tools to make it easier to detect what is happening with the data, and alert the administrator in real time to any security risks.
  • Reassurance that all software is continually kept up to date, with the ability to automate recurring security checks, thereby reducing the potential for human configuration errors.
  • Ability to easily conform to local data privacy laws and regulations.
  • Access to a wider ecosystem of security partners, who can help advise on best practices.

Together, these features and certifications help businesses feel confident that their data is safe. 67% of businesses using AWS said that security is one of the most important reasons they chose AWS for their platform.

AWS helps local Canadian businesses keep data safe, including:

  • Arctic Wolf is one of the leading cybersecurity technology innovators in the world with a key office located in Ontario. In April 2022, Arctic Wolf, leveraging AWS cloud infrastructure, processes and analyzes more than 2 trillion security events per week across the globe, enabling critical outcomes for security use cases and optimizing customers’ disparate security solutions.
  • NuData helps customers fight fraud and protect consumers online. Acquired by Mastercard in 2017, NuData is a Canadian startup using machine learning to detect and prevent account-takeover fraud. NuData uses Amazon SageMaker to improve detection of fraudulent attacks such as credential stuffing, while Elastic Load Balancing (ELB) and AWS Lambda help provide real-time device intelligence and enable passive biometrics for account verification.

What have been the most significant benefits of AWS?28

"It is very stable and secure." Large information business in Ontario
"The most significant benefits of Amazon Web Services for my company is the ease of use and training to new employees. There is unlimited server capacity which is critical in our growing market. And one of the most important benefits is the reliable encryption and security that it provides us." Medium service business in Alberta
"The security it provides and the fact that when clients hear we are using it, they become more at ease and know we are using a reliable company to help ourselves stay afloat and ahead of the game." Small social work Business in New Brunswick
"Increased security. Applications are well managed. Vendor management as well as cost optimization and cloud management. Convenient and productive. Helps us focus more on business operations." Small wholesale Business in Alberta

Answers were in response to the question: ‘In your own words, what has been the most significant benefits of Amazon Web Services to your company?’

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Sustainability: Reducing Energy Usage

Using the cloud saves businesses money, reduces energy use, and improves the sustainability of computing.

Globally, data centres are estimated to be responsible for around 1% of greenhouse gas emissions.29 In our polling, 37% of Canadian businesses said that they are worried about the environmental impact of their in-house IT infrastructure.

On average, cloud computing is significantly more efficient than on-premises computing.

  • Due to its larger economies of scale, a cloud provider like AWS can enjoy much higher use of each server compared to an on-premises enterprise data centre, which only sees, on average, usage rates of around 18%.30
  • The use of advanced building designs and cooling systems makes data centres significantly more power-efficient than on-premises servers, given that three-quarters of enterprise data centres see electrical efficiency of below 80%.31
  • Data centres are more likely to use less carbon-intensive sources of power, resulting in lower carbon emissions. Amazon is committed to powering its operations globally with 100% renewable energy by 2025 as part of its goal to reach net-zero carbon by 2040.

In 2019, Amazon co-founded The Climate Pledge—a commitment to be net-zero carbon across all businesses by 2040, 10 years ahead of the Paris Agreement. Accordingly, in 2020, Amazon became the largest corporate purchaser of renewable energy.32 AWS’s Canadian data centres in Montreal draw from a regional electricity grid that is almost entirely by hydro power.33 Amazon is investing in two solar farms in Alberta, which will provide up to 1 million megawatt-hours (MWh) in capacity—enough to power more than 100,000 Canadian homes a year.34

In recent years, the shift from on-premises data centres to the more energy-efficient cloud has helped offset most of the increase in demand for digital services. While the total amount of computing output increased sixfold globally between 2010 and 2018, academic research suggests that overall energy consumption from computing has increased by only 6%.35 74% of Canadian businesses said that using cloud platforms makes it easier to reduce the environmental impact of their computing.

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Appendix: Methodology

Like machine learning or the smartphone, cloud computing is one of the most significant technological advances of our time. Unfortunately, at the moment, we only have limited official data on the level of cloud uptake and how it has changed in recent years.

In order to help fill this gap and to better understand the impact of AWS and cloud computing on the Canadian economy, we combined multiple research methods:

  • We ran a new representative poll of 1000 senior business decision-makers, giving them an in-depth questionnaire about which software and cloud services they were using. The questionnaire sought information about the cloud’s impacts on their businesses and what would make them invest more in this area. In order to ensure our data was representative of the Canadian economy as a whole, we quotated and weighted our data to include a range of business sizes, industries, and regions.
  • Following our methodology for past reports for AWS in the UK and France, we built new economic models to fully understand the impact of AWS and how this varies by industry or region. Our modelling was reviewed by multiple independent reviewers.


Estimating the impact of AWS on business productivity

The core measure in our study is an estimate of the total gross value added (GVA) supported by AWS in Canada—or in other words, the total amount of profits earned by businesses and their supply chains, thanks to their usage of AWS.

Our priority was to look at the benefits enjoyed by AWS customers—we did not seek to measure the direct or induced impact of the investment by AWS in data centres or local offices in Canada.

As part of our survey, we asked businesses to estimate:

  • Their business revenue, and its average growth in the last three years
  • Their total spend on cloud computing
  • The amount they had saved from using cloud computing as compared to in-house IT
  • The additional revenue they earned from using cloud computing, not including the above cost saving
  • Their level of confidence in the latter two estimates

For example, to estimate their savings from cloud, we asked businesses the following question:

In an average year, roughly speaking, how much do you estimate your business saves by using a cloud service for your IT infrastructure, as compared to more traditional on-site servers?

Given the timeline and scope of our study, we believed that using an anonymous online business survey was the most proportionate research methodology.

However, as with all self-reported data, polling data comes with inevitable limitations, including:

  • Respondents to an online survey may not be representative of businesses a whole.
  • Businesses may misremember, simply not know, or inaccurately estimate key financial data.
  • Many business leaders may poorly understand the cloud or how their business uses it.

In order to guard against these possible shortcomings, we took the following steps:

  • Provided respondents with a lengthy explanation of what cloud computing is and is not—specifying if they use infrastructure as a service (IaaS) or platform as a service (PaaS) and not just SaaS products;
  • Asked respondents to provide their level of confidence in their estimates separately and used this to weight their response, and;
  • Wherever possible, calibrated our data against other sources.

As is standard practice in economic impact studies, our results look only at the gross economic impact of AWS—the overall business revenue supported by it—rather than comparing it against a hypothetical where AWS does not exist.

In order to generate our headline estimate of AWS’s economic impact, we first created an estimate of the ratio of economic activity created to cloud spend for each business, as follows:

  • We converted estimates of additional revenue into additional gross value added by applying the average Canadian GVA fixed effects multiplier, taken from the latest input-output multiplier tables from Statistics Canada.
  • We added this to each company’s estimate of cost savings and then divided this by their estimated spending on the cloud.

In order to generate an estimate of ROI for each business:

  • We converted estimates of additional revenue into profitability by applying Statistic Canada data on the average Canadian operating profit margin.
  • We added this to each company’s estimate of cost savings and then divided by their estimated spending on the cloud.

In order to aggregate our estimates for the Canadian economy as a whole, we averaged our estimates for four size classes of business, weighting by the respondent’s level of confidence in their estimates. The size classes are defined as follows:

  • Micro businesses (0 to 9 employees)
  • Small businesses (10 to 49 employees)
  • Medium businesses (50 to 99 employees)
  • Large businesses (200+ employees)

We then multiplied each average by the following:

  • Statistics Canada’s estimate of the number of businesses in each size class, taken from Canadian Business Counts, with employees, June 2021.
  • The proportion of businesses in each size class using cloud, and of those, using AWS, taken from our polling.

In order to estimate the economic activity created for each region, we:

  • Apportioned the national impact by the region’s share of total Canadian GVA, using OECD estimates of regional GVA.
  • Applied an adjustment to this value, based on the region’s relative cloud share, drawn from our polling.

In order to estimate the potential impact of higher uptake of cloud, we assumed that the value per cloud user remains constant, and we totaled the potential aggregate impact.



Sensitivity Analysis

In general, we sought to stay with the following conservative assumptions:

  • When calculating AWS’s impact on the economy, we did not include a type 2 multiplier of induced demand. This type of multiplier measures the impact of additional spending by employees in raising demand in the local economy, but it is less relevant for national technologies like the cloud.
  • We used economy-wide averages for the ratios between revenue to GVA or profitability. Given our polling data shows that cloud companies are growing significantly faster than average, we believe that it is likely that their profitability is also higher.
  • We weighted down the answers of respondents who said they were only somewhat or not very confident in their estimates, and did not include at all respondents who said they were not at all confident.
  • We did not ask businesses to provide an estimate of the non-IT savings they earned from the cloud from better ways of working.


The potential future impact of cloud on economic growth

In order to estimate a rough approximation of the potential future impact of cloud computing, we calibrated a logistic S-curve diffusion model against the following:

  • Our existing estimate of the total economic impact of cloud computing for the UK.
  • Central assumption that complete adoption will take 30 years, based on the experience of other business-facing, general-purpose technologies.

In addition, we also provide a more conservative scenario where adoption takes 20 years—implying that more of the cloud’s benefits have already been realized and an optimistic scenario, where total adoption takes 40 years and so greater future opportunity exists.

In order to keep the calculation tractable, we assumed that the average benefit per company remained constant. While, all else being equal, early adopters are likely to have gained a higher marginal return from adopting cloud than the median firm, the benefits from cloud are also expected to grow over time as technology and the wider ecosystem improve.

  1. Gross value added (GVA) is equivalent to gross domestic product (GDP), excluding the impact of taxes and subsides. It is generally regarded as the best measure for the economic contribution of a single company. All figures in Canadian dollars (CAD) unless otherwise specified.
  2. https://pages.awscloud.com/rs/112-TZM-766/images/GEN_aws-economic-impact-canada_Nov-2021.pdf
  3. https://www150.statcan.gc.ca/n1/en/daily-quotidien/201123/dq201123a-eng.pdf?st=__4VEb-1
  4. Statista
  5. Public First estimate based on Conference Board data
  6. Our central scenario is based on the assumption that complete adoption of cloud computing takes 30 years, based on the experience of other business facing general purpose technologies. However, we also provide scenarios where it takes alternatively 20 years (the conservative scenario) or 40 years (the optimistic scenario). For more details, see our methodology appendix.
  7. https://www.streamdatacenters.com/glossary/data-center-cost/
  8. For small businesses, we have included any business with less than 100 em
  9. https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/clouds-trillion-dollar-prize-is-up-for-grabs
  10. https://awsimpactreport.publicfirst.co.uk/
  11. https://www2.deloitte.com/content/dam/Deloitte/es/Documents/tecnologia/Deloitte_ES_tecnologia_economic-and-social-impacts-of-google-cloud.pdf
  12. https://pages.awscloud.com/rs/112-TZM-766/images/AWS-BV%20IDC%202018.pdf
  13. https://ec.europa.eu/digital-single-market/en/news/measuring-economic-impact-cloud-computing-europe
  14. Answers have been edited for clarity and grammar but are otherwise unchanged.
  15. Answers have been edited for clarity and grammar but are otherwise unchanged.
  16. Unicorns taken from https://www.cbinsights.com/research-unicorn-companies
  17. Fastest growing is measured by revenue growth over the last five years, and taken from https://archive.canadianbusiness.com/growth-list-2020/
  18. https://www150.statcan.gc.ca/n1/daily-quotidien/211105/dq211105a-eng.htm
  19. https://newsroom.cisco.com/press-release-content?articleId=2206290
  20. https://www.google.com/url?q=https://investors.zoom.us/news-releases/news-release-details/zoom-sets-stage-future-communications-zoomtopia-2020&sa=D&source=editors&ust=1614363477242000&usg=AOvVaw1uNbs5T1HKGio7fyYwt3-x
  21. https://www.gov.uk/government/publications/organising-for-digital-delivery/organising-for-digital-delivery
  22. Developing a commercial first approach, TECHNATION, 2019
  23. https://aws.amazon.com/canada/publicsector/
  24. Based on TECHNATION’s estimate of $12.5 billion a year in legacy IT spend, and 17% average cost savings from our poll.
  25. https://www.ibm.com/security/digital-assets/cost-data-breach-report/#/
  26. https://www.mcafee.com/enterprise/en-us/assets/reports/rp-hidden-costs-of-cybercrime.pdf
  27. Equivalent numbers estimated by applying the prevalence seen in our business poll to Statistics Canada’s estimate of the total business population
  28. Answers have been edited for clarity and grammar but are otherwise unchanged.
  29. https://www.cloudcarbonfootprint.org/docs/methodology
  30. https://sustainability.aboutamazon.com/environment/the-cloud?energyType=true
  31. https://sustainability.aboutamazon.com/environment/the-cloud?energyType=true
  32. Amazon becomes the largest corporate purchaser of renewable energy, Amazon, 2020
  33. https://youtu.be/yM2GmYWycTE
  34. https://pages.awscloud.com/rs/112-TZM-766/images/GEN_aws-economic-impact-canada_Nov-2021.pdf
  35. Recalibrating global data center energy-use estimates