Written evidence submitted by the Smith
Institute for Industrial Mathematics and System Engineering (TIC
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
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
(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.
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,
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
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
These figures are drawn from the Annual Report 2009 of Fraunhofer-Gesellschaft,