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Why EU-funded R&D Fails

by Andrea Di Maio  |  May 29, 2009  |  5 Comments

I’ve been pondering about this post for a long time, actually even before I was one of the Gartner bloggers. This position of mine has developed over almost 20 years, since when I started being involved in cooperative research & development projects funded by the European Union under the so-called Framework Program for Research and Technology Development.

In those days, I was submitting project proposals for this program and leading European projects that were successful in getting funding. A few years later I joined the European Commission and spent part of my four years there arranging the evaluation of proposal, negotiating contracts with successful proposers and monitoring on-going projects.

After leaving the European Commission in late 1998, I have not been involved in any proposal or project, since Gartner is not in the business of seeking for EU R&D funds. I’ve had a few chances to keep in touch with former colleagues or participate in the evaluation process, but I’ve always remained very detached from the machinery of European R&D since-

After more than two decades of investment in Research and Technology Development (the EU is currently running the seventh edition of its framework program), there is little trace of anything the EU was investing on in the early days. There is very little left in terms of European hardware manufacturers, and not much in the area of software products either (indeed, Europe has SAP, and that’s about it in terms of tier-1 vendors). Of course there are plenty of IT service providers, such as Capgemini, ATOS Origin, T-Systems, Engineering and so forth. But if one is looking for intellectual property, patents, licensed results, it is fair to say there is little left.

On the other hand, these European programs have gradually increased their size, they have been constantly advised by experts and policy-makers in (now) 27 member states, they have spent money in all sorts of networking, best practice, study activity to support projects reach critical mass, network, have an impact. Yet, in the international landscape, software and Internet major brands are from the US, hardware as well as cool consumer electronics are from Asia and the US.

No wonder European authorities have been so vocal about open source. No wonder they have had major cases against companies like Microsoft and Intel but nothing comparable against European players.

The EU Framework program was conceived for an industry where players like Nixdorf, Olivetti, Bull, ICL and few others were seen as the innovation drivers. In the spirit of European integration, the very good idea behind the program was to establish a platform where they would cooperate, complement each other strengths, making European industry more open (inside the EU) and more competitive (outside the EU).

I guess it’s fair to say that if one looked now at what is the percentage of European IP on IT infrastructure and application platforms, results would be quite appalling. This being said, there is nothing wrong with this, provided one recognizes that European strengths are in services and not in hardware or software products. But this would require different ways of investing EU money. Such money should be either spent to foster upstream, very basic research, in areas where joining forces and financial support can lead to breakthroughs that could re-establish European leadership in selected topics; or spent to develop frameworks to help the IT service industry.

To be fair, the latter has happened to some extent, The NESSI initiative is a large collaboration among large service players in Europe: its main goal is to develop “a coherent and consistent open service framework leveraging research in the area of service-based systems to consolidate and trigger innovation in service-oriented economies”. I do not know what this initiative has achieved besides launching a number of projects, but it may be too early to say.

It is possible that the 7th Framework Program will have a greater impact. However I suspect that some of the challenges experienced with previous editions are still there. Let me list a few, and I will be very happy to read that these problems are solved:

1. EU-funded R&D has become a market.
There are research centers, particular branches of universities, as well as many small-and-medium-sized enterprises and boutique consultancies that have specialized in EU R&D funds as a market. Although EU funding is meant to cover a portion of costs, they often have these projects as revenue generators in their accounts. There are different ways in which this can be done, many entirely legal, some more questionable and vulnerable to EU audits: on the other hand, with hundreds and hundreds of projects, the likelihood of an audit is pretty low.
Like in any market, there are specialized sales people, who deal with the European Commission as a specific account. There are also specialized proposal writers and R&D project managers.
Actually one of the relatively new measures in the program, is that the cost of project management – overhead inclusive – is totally refunded by the contract, which has led to the growth of a market of small and micro consultant companies specialized in helping write proposals and manage projects.
There are also additional support actions that look like consulting projects to help the European Commission services run the program, determine priorities, devise roadmaps: these get published as call for proposals pretty much like those for cooperative RTD, as opposed to going through separate calls for tender through the normal procurement process. As a consequence those remain mostly accessible to those organizations that have familiarity with the EU R&D program.

2. Unlikely consortia.
From its inception the EU R&D program calls for consortia included organizations from different EU member states, with a balanced participation of academia, research and industry (both suppliers and users of technology). While different parts of the program clearly call for a different balance, one can see plenty of projects where it is hard to detect what keeps project partners together (apart from the common EU funding), who would leverage project results and why, and what dynamics could ever be put in place to make these projects succeed.
Evaluating, negotiating and monitoring a fair amount of these projects when I was at the European Commission, I could tell from the actual consortium composition (who were the partners, and what role they claimed they would play in and beyond the project) whether the project would have any chance to succeed. And I have not found a single case where this was not true.
Of course time has passed and the EU R&D Framework Program has evolved: however I wonder how comes that – although the industry and the world have changed so much in the last ten years – I can still find the same players (through mergers and acquisitions of course) that I was dealing with between 15 and 10 years ago.

3. Little incentive to manage by outcome.
Like any government organization, also the European Commission has no strong reason for killing projects that are not successful. First of all – and this is what happens in almost any government agency – money saved on a project may disappear from the program budget. Second, measuring success and failure is pretty difficult on R&D projects and goes back to the selection process. Third, there are always “political” considerations to be made, since there are organizations from different countries involved and each of them may appeal to their national authorities that in turn sit in the committees approving the budget for the EU R&D program. Fourth, defining measurable outcome to hold project performances to would require a more throough and lengthy contract negotiation process, which may delay fund disbursement and lead to further budgetary and political problems.

4. Small communities of interest, with abundant conflicts of interest.
Most of the experts reviewing projects and evaluating proposals participate in some EU-funded projects. While the European Commission is very careful to prevent any possible conflict of interest, the community remains small and potentially incestuous.
On the other hand, the EU R&D Program covers a variety of areas, and specialized expertise is required to assess the validity of ideas and the progress of R&D projects: it is unavoidable that those skills reside with people who also work in the field and submit proposals.

All the above leaves with a fundamental question. Is there anything that the European Commission and other European institutions involved in funding R&D can do? In my opinion there are a few things that would help:

  • Cross check project and proposal participation across different part of the program, to see whether participating organizations have the capacity and resources to carry on the intended work. This should be done before any technical evaluation is conducted
  • Assess the quality and availability of any result from previous EU-funded R&D projects that are claimed to be an input to a subsequent proposal. If people are looking for further funding, there has to be evidence that they accomplished what they planned in the ancestor project.
  • Provide European Commission’s staff who monitor project with appropriate tools to assess project and participant performances, giving them a complete and up-to-date view of what each contractors does and has done with the European Commission.
  • Start crowdsourcing some of the proposal and project assessment work to overcome the “captive market effect”. While the existing and well tested processes for evaluation cannot be revolutionized, it would be ideal to involve larger constituencies on evaluating specific aspects of proposals or projects (such as a one-page executive summary), asking people to rate them. If the crowd is large enough, possible conflicts of interest would be counterbalanced.


Tags: eu  europe  framework-program  

Thoughts on Why EU-funded R&D Fails

  1. david osimo says:

    Great post Andrea, I have been reflecting on the same issues.

    One important response is to distribute funding via prizes to the best solution, rather then to the best proposal. See our experience with and the article by Kelman

    Regarding the crowdsourcing proposal, I fully agree to copy the “peertopatent” approach, as done for the stimulus bill . I went as far as proposing to crowdsource procurement, but that one be one step too far at the moment:

  2. […] Program for Research and Technology Development, which I had a chance to comment upon in an earlier post. In both cases, striking the balance between pre-competitive R&D and competitive product […]

  3. david osimo says:

    I realized part of the evaluation on EU funding is already crowdsourced, even without the will of the EC. If you look for the EU buzzwords on wikipedia, they invariably come out with “this article is not up to wikipedia quality standard”

  4. […] protection from software product liabilities), less fervor in fighting proprietary software, a more focused approach to R&D and more in general a positive attitude toward free […]

  5. […] a role). But identifying ineffective policies , areas like Research & Development (see previous post), would be a healthy exercise. Incidentally there is a recent post by my colleague Mark Raskino […]

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