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University of Manchester Centre for Service Research22 April 2009

Innovation in services: the contribution from Engineering and Physical Sciences

Vince Osgood, Associate Director, Economic Impact

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Presentation to cover:

• Role of EPSRC

• Our approach to working with businesses

• Examples of service sector investments

• Examples of research projects

• Future Opportunities

• Issues/challenges

• Questions

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EPSRC Purpose: Charter

Support high quality basic, strategic and applied research, and related postgraduate training

Advance knowledge and technology to meet the needs of users and beneficiaries

Thereby contribute to the UK’s continued economic competitiveness and quality of life

“Excellence with Impact”

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The Whole EPSRC Picture

“Other cross council themes”Living with environmental change (£9M)Global Uncertainties: security for all in a changing world (£6M)Ageing: life-long health and wellbeing (£11M)

Commitments 2008-11

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Working with Businesses

•Aerospace, Defence and Marine

•Transport Systems and Vehicles

•Electronics, communications and IT

•Creative industries

•Manufacturing

•Medicines and healthcare

•Infrastructure and Environment

•Energy

•Cross cutting themes

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Distribution of Collaborative Funding by Sector

£-

£20,000,000

£40,000,000

£60,000,000

£80,000,000

£100,000,000

£120,000,000

£140,000,000

£160,000,000

£180,000,000

Electro

nics

Power

No re

levan

ce to

Und

erpin

ning

Secto

rs

Health

care

Aeros

pace

and

Def

ence

Man

ufac

turin

g

Chem

icals

Trans

port

Constr

uctio

n

Enviro

nmen

t

Comm

unica

tions

Pharm

aceu

ticals

and

Biot

echn

ology

Softw

are

Wat

er

Financ

ial S

ervic

es

Med

iaOth

er

Food

and

Drink

Retail

Val

ue o

f the

Col

labo

rativ

e P

ortfo

lio b

y S

ecto

r

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o To develop a shared research and training vision between businesses and the research base

•Technology Strategy Board: Innovation Platforms/Integrated Development Programmes; Collaborative R&D; IKCs; KTNs; ICASE; KTPs

•EPSRC £50M: TSB £54M – 128 projects

oCompany Partnerships: range of sectors, organisations in the public, private and third sectors.

•Wellcome; Cancer Research UK; BAE Systems; Proctor and Gamble; Mobile VCE; NPL;Microsoft

Strategic Partnerships

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•Digital Economy Programme - £103M over 3 years

• HACRIC: Salford, Imperial College, Loughborough, Reading- £10M over 5 years

•IMRC at Loughborough on retail and logistics - £18M over 5 years

•Advanced Institute of Management Research – jointly funded with ESRC

•Strategic Partnerships with key organisations (e.g. Technology Strategy Board, Proctor and Gamble; Mobile VCE)

Focused “service” investments

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9

Digital Economy ProgrammeCross Research Councils (EPSRC, ESRC, MRC and AHRC) programme, aimed at realising the transformational impact of ICT for all aspects of business, society and government.

• Ubiquitous Computing

• Rural UK

• Changing Business models in the Creative Industries

• Doctoral Training

£120M over 3 years, 2008/9 – 2010/11 research and training:

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• To significantly increase UK capability in management research and to impact on management practice

• Warwick Business School and Cambridge University (+ others)

• Jointly funded by EPSRC/ESRC

• Fellows, scholars, collaborative research

• Dissemination and best practice

• Strong links to UK businesses and public policy makers

• Productivity and performance; sustainable innovation; public services; promising practices; services

• Contact : Prof Andy Neely@eng.cam.ac.uk

Advanced Institute for Management Research (AIM)

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Fundamental Physics into Services

Fibre Optics: original work in 1800s, more recently (1955 onwards photonics) applications in service sectors such as communications, entertainment, healthcare, virtual and remote networking

Lasers: principle originally conceived by Einstein, but only in the past 40 years have they been applied to rapid communication through broadband network, fast data storage through CD/DVD technologies, medical diagnosis and treatment;

Liquid Crystals: origins in early 1900s , from the 1950s simple displays in watches, calculators, now more complex displays in mobile devices, phones, computer screens, TV, advertising;

GPS: moved from military to civilian usage and from tracking to satellite navigation and internet-based tracking of stolen cars. Courtesy of IOP

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Case study example from research DAME (Distributed Aircraft Maintenance Environment) e-Science programme:

York, Leeds, Oxford, Sheffield Universities; Rolls-Royce, Data systems and Solutions, Cybula

Use of grid technologies to implement a distributed decision support system for deployment in maintenance applications and environments

In-service engine health monitoring

Enables company to offer “power by the hour” service

Service aspects: safety and reliability; cost reduction; early-stage monitoring; greater in-service availability

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Case study example from research VALID (Value in Design) Construction Project:

Loughborough Innovative Manufacturing research Centre with construction companies and professional institutions

Aims to help the sector create buildings which better meet customer aspirations

Build in expectations of relevant stakeholders through the design evolution and construction process

Outcomes have been development of training courses for companies, application of the approach by the Dutch Government Building Agency, and an EngD project in collaboration with Manchester City Council

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Case study example from research Quantitative financial risk

Quantitative Financial Risk Management Centre, Imperial College:

funded through an EPSRC Strategic Partnership with the Institute of Actuaries with additional funding from ESRC

Aim to develop tools for understanding and controlling risk in the retail banking sector by developing enhanced models for individual customer risk, through to models which incorporate macroeconomic factors

Looking at how banks can analyse risk in retail banking and reduce bad debt

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Case study example from research

SSME Network, University of Manchester (Prof L MacAulay)

Involves 6 other universities

Founding member companies (IBM,HP, BT, Uxonline, Abacus Billing Ltd)

Aims to develop the wider services, management and engineering research agenda

Develop a shared understanding of goals and opportunities

Cohesive research and education programme to enhance UK capacity in services science research and education

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Training in services science: DTCs44 New Centres for Doctoral Training £280M:

Digital Economy Innovation Centre

Digital Music and Media for the Creative Economy

Web Science

Financial computing

Urban Sustainability and Resilience

Technologies for Sustainable Built Environments

Digital Media, Special Effects and Animation

Systems Integration

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Funding opportunities: Current and future

• Designing effective research spaces (with AHRC and British Library)

• Digital economy – research in the wild

• Cold water cleaning (with P+G)

• Science and heritage (with AHRC)

• Information Infrastructure Protection (with TSB, CPNI)

• ICT Discipline hopping

• Ideas factory: Detecting terrorists at a distance

• TSB Collaborative R&D Calls

• Carbon capture and storage (with NERC)

• Next Generation Healthcare

• Fellowships

• Innovation and Knowledge Centres (with TSB)

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Some Issues/Challenges

Many service companies are new and have little previous interactions with the science base or research councils

Existing sectors/companies becoming increasingly “customer focused” rather than technology/product push, but need help to achieve the transformation

But this transformation itself requires new research and skills development – how best can this be provided

So how best to improve the absorptive capacity of businesses to adapt to the new service environment ;

How to influences changes to existing business models/sectors/businesses

Role of regulation and procurement in stimulating innovation, commercialisation and growth in service sectors

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Questions

Is it any longer meaningful to distinguish between service and other sectors (e.g. manufacturing)?

With continued fall in UK manufacturing output/exports, can services realistically make up the “Trade Gap”?

With continuing increase in productivity in manufacturing (output/no of employees) can services realistically make up the “employment gap”?

How best to bridge the skills divide in the service sector (jobs at both low skill/low wage and high skill/high wage) elements in the sector and economy?

To what extent do HEI IP policies help/hinder innovation in the service sectors?

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Thanks for listening

Vince.osgood@epsrc@ac.uk