Technology and Innovation Centres - Science and Technology Committee Contents

Written evidence submitted by the Smith Institute for Industrial Mathematics and System Engineering (TIC 20)


1.  The Smith Institute for Industrial Mathematics and System Engineering welcomes the opportunity to contribute to the Science and Technology Committee's inquiry into Technology Innovation Centres. The Smith Institute is an independent company that supports private and public sector clients in maximising return on research investment.

2.  The Institute's distinctive features are its focus on business requirements, its use of advanced mathematics and its close connections with top researchers in the science base. Its clients include major international corporations, small technology companies, and government agencies. As a company limited by guarantee, it generates capital for its future growth by retaining operational surpluses within the business. It receives no institutional funding from either government or the private sector. The Smith Institute was founded in 1993 by Smith System Engineering Ltd, and established as an independent company in 1997.

3.  The Smith Institute's staff have higher degrees in mathematics, statistics, physics, computing or engineering. This expertise is reinforced by close working relationships with the UK's strongest research groups in industrial mathematics and scientific computing, which enable the Institute to mobilise a formidable intellectual resource. We occupy a natural position on the interface of the business world and the academic world, from which we deliver services in contract research, professional development and research management.

4.  The Smith Institute's experience provides an alternative to the Fraunhofer model for connecting strength in basic science to business innovation. In some areas, the Fraunhofer model may well be an appropriate choice for the newly proposed Technology Innovation Centres (TICs) in the UK. However, in other areas, for example the exploitation of mathematics in the UK, we believe that the Smith Institute's approach is preferable, for the reasons laid out below. Any assumption that the Fraunhofer experience can be easily replicated in the UK should be scrutinised very carefully.

What is the Fraunhofer model and would it be applicable to the UK?

5.  The Fraunhofer approach highlights flagship laboratories, sited alongside partner universities. The programme currently has 80 research units, of which 59 are the well-known Fraunhofer Institutes, with a combined workforce of 17,000. Their remits cover a mix of underpinning and emerging technologies, grouped into the following areas: ICT; life sciences; light and surfaces; microelectronics; production; defence and security; materials and components.

6.  The Fraunhofer model is notionally built upon a balanced funding structure, in which income is derived roughly one-third from industry, one third from public sector projects and one third in base funding from national and regional governments. Over the period 2005-09, there has been a trend of decline in the percentage of total income coming from industry, from a historic high of 40% in 2005 to 30% in 2009[33] (the low point over the last 20 years was 25% in 1993). Over the same period there has been an increase in income from public research projects from 16% to 24% of total income. Base funding contributes a steady 32-33%. Approximately 5% of income is secured from the European Commission and 9% from other sources, of which the main component is international activity.[34]

7.  The base funding received by Fraunhofer Institutes (€424 million in 2009) enables them to undertake longer-term strategic research, alongside their contract research activities. PhD students are a significant component in Fraunhofer staffing levels. To take the example closest to the Smith Institute's area of operation, the Fraunhofer Institute in Industrial Mathematics in Kaiserslautern (Fraunhofer-ITWM) has a staff of 200, of which 60 are PhD students.

8.  To copy this approach in the UK could put at risk the strengths of the university base that as a nation we wish to capitalise on, especially where the current research base has strength in diversity, as it does in mathematics. In such an underpinning area, there are many "pockets of excellence", which have strong multidisciplinary interactions with their local colleagues in other areas of technology. For example, no single university in the UK could plausibly claim to be the centre of excellence for the UK's research in industrial mathematics.

9.  To engineer a high concentration of mathematical researchers, in a UK version of a Fraunhofer Institute, would damage the current strengths of the research base. We therefore advocate an alternative approach, in which the existing research base is allowed to thrive, while being provided with new incentives and opportunities to work with industry, through the work of organisations such as the Smith Institute.

Are there existing Fraunhofer-type research centres within the UK, and if so, are they effective?

10.  Fraunhofer Institutes have a distinctive combination of key features: driven by business requirements; independent of business ownership; able to pursue strategic research alongside contract research; training grounds for PhD students and postdoctoral researchers. They combine elements of university research groups, Public Sector Research Establishments and independent Research and Technology Organisations. Many organisations in the UK share some of these features, but it is difficult to identify any that combine them all.

What other models are there for research centres oriented towards applications and results?

11.  The Smith Institute has developed its approach over more than 15 years, and we believe it is the right one for the space in which we operate. In building up the Smith Institute on the interface between business and academia, we have created a highly connected research environment that enables new ways of innovating through the science base. We provide services and mechanisms that maintain a focus on the priorities and requirements of the business world.

12.  The Smith Institute's independence allows it to enter into contractual relationships that reflect the particular requirements of individual engagements. We deliver rapid results that are readily embedded into industrial planning and operations. We recognise that successful innovation very often depends on the speed with which an idea can be identified, refined and applied in a business setting. We can achieve these aims without the need to concentrate research in a single geographical location or build extensive physical infrastructure.

13.  The success of the Smith Institute derives in large part from its staff's ability to build strong relationships with business and academia. This requires strong intellectual skills coupled to a professional and practical approach. Through the work of the Smith Institute, companies have informed access to the UK's dynamic and diverse research landscape. We are able to take industrial problems and opportunities, and match them to the best sources of know-how and the most relevant experience. In mathematics, the solution has often already been developed in completely different application domains, and so we deliberately operate across a broad industrial front.

14.  Areas where a Fraunhofer approach is better suited will have a research base that is concentrated in a small number of established, stable and internationally leading groups. In these circumstances, it can be highly effective to create a physical centre alongside one of the leading research groups, with the mission of applying and exploiting this research.

15.  In contrast, for areas with many "pockets of excellence", the emphasis is better placed on creating a high density of connections on the interface of business and academia, and with very little reliance on physical infrastructure. This approach is suited to industrial mathematics in the UK and is the approach that we have adopted in developing the Smith Institute. It may well be the right choice for other underpinning technologies, too.

Whose role should it be to coordinate research in a UK-wide network of innovation centres?

16.  The Fraunhofer-Gesellschaft delivers the necessary coordination in Germany, and in fact acts much more like a corporate headquarters for the network of Fraunhofer Institutes than a government sponsor of research. For example, Fraunhofer-Gesellschaft is the employer of the researchers who work in Fraunhofer Institutes, and it publishes annual reports of the sort that one would see from any large corporation.

17.  The indications at present in the UK are that the Technology Strategy Board will have a coordinating and monitoring role for Technology Innovation Centres, but that this would not extend to a role that is comparable with that of Fraunhofer-Gesellschaft in terms of governance.

18.  One option for TICs would be to contract out some or all of the functions of Fraunhofer-Gesellschaft, for example to the companies who already run some of the UK's Public Sector Research Establishments. This would provide uniformity of processes across TICs, with associated economies of scale, but would still fall short of the sense of corporate identity that Fraunhofer-Gesellschaft embodies. Perhaps a more likely choice is to contract (or create) different organisations to take governance responsibility for different TICs, under the general oversight of a government agency such as the TSB.

What effect would the introduction of Fraunhofer-type institutes have on the work of Public Sector Research Establishments and other existing research centres that undertake Government-sponsored research?

19.   It is important that the introduction of TICs, in whatever form, does not distort the markets in which other research centres operate. There is a risk that base funding, in the Fraunhofer mode, can create subsidised competition that would be unfair and unnecessary. On the other hand, existing research centres and PSREs might themselves have many of the capabilities needed to deliver successful TICs, provided that they have the necessary exposure to business requirements as a pre-requisite.


20.  The Smith Institute for Industrial Mathematics and System Engineering successfully uses advanced mathematics to boost innovation. Its provides an effective alternative to the Fraunhofer model that works so well in Germany. The Smith Institute's approach is ideally suited to technology areas such as mathematics, where the UK's research base is naturally fragmented and difficult for companies to navigate. The Fraunhofer model, with its heavier reliance on physical infrastructure, is better suited to areas that seek to exploit more concentrated research landscapes. In developing proposals for Technology Innovation Centres, the UK should take care that their structure is sufficiently flexible to derive greatest return on the investment in all areas of the science base.

Dr Robert Leese
Smith Institute for Industrial Mathematics and System Engineering

1 December 2010

33   These figures include licensing income, which in recent years has included considerable income from the licensing of mp3 technology. Back

34   These figures are drawn from the Annual Report 2009 of Fraunhofer-Gesellschaft, Back

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