Interview:

Dr Bernd Reichert

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The head of the Directorate's T.4 unit talks about SME research opportunities in the world's largest research funding programme - FP7. A total of €1,336 million has been allocated specifically for SMEs who need to acquire new knowledge from research service providers. Offering choice over a much wider range of activities and scientific themes than did FP6, in principle every SME should find its own niche within the seven-year programme.


SMEs represent more than 99 per cent of European enterprises and employ 75 million people. Comprised of all types of firms, ranging from one-person businesses to cooperatives, they play a decisive role in Europe's economic growth and competitiveness.

While some SMEs offer very traditional services or craft products, many others are fast growing high-tech companies. Just like any other type of organisation, SMEs and SMEs' associations face increasing competition, both within the internal market and globally. In order to solve problems and grow, research must be a major component in their business strategy.

SME-friendly funding

A dynamic SME sector is obviously essential to a modern economy, and the European Commission is therefore working together with its Member States to improve the framework conditions under which SMEs operate. It has integrated the "Think Small First" principle into all policy-making and is reviewing all EU legislation to ensure it is SME-friendly.

The Commission is also playing a key role in making sure that SMEs receive appropriate assistance for their knowledge development and business growth. "We have increased considerably the opportunities for SMEs in FP7," says Dr Bernd Reichert, head of T.4, the Directorate's SME research unit. "It has become more attractive for SMEs to participate in the overall programme because we are providing more money now."

Funding can now cover up to 75 per cent of an SME's research costs and up to 100 per cent of some other types of expenditure, such as training. There is also emphasis on the involvement of enterprises, including SMEs, in Marie-Curie actions, such as the Industry-Academia Partnerships and Pathways (IAPP). This is a dedicated scheme which encourages knowledge sharing in partnerships between the public and private sector, including in particular, SMEs. "IAPP represents the longer term view of research for an SME, helping to develop a product further," says Reichert.

Previously known as 'Cooperative Research', Research for SMEs is for companies with little or no in-house research expertise, as well as high-tech organisations which need to outsource research. Research for SME Associations (formerly Collective Research) targets bodies which act on behalf of their SME members to address common technical problems and promote the results of successful projects. Both these 'bottom-up' schemes address any research topic across the entire field of science and technology, and are key to a new way of thinking.

Becoming more market-savvy

"With these two schemes, SMEs outsource their research to RTD performers, such as universities or other research-performing SMEs, which then carry out research for them under market conditions," says Reichert, who is keen to emphasise the customer-seller relationship between the two types of organisation. "We want to create a new market-driven thinking."

The idea is that SMEs buy the technological know-how they need to develop new, or improve existing products, systems, services or processes, from the RTD performers themselves. "In this way, if they are paying market prices for something, they expect proper results and can start to behave more pro-actively than they have done historically," adds Reichert.

Certainly taking part in FP7 opens the door for an SME to become involved in ambitious, leading-edge projects but, as Reichert points out, there is a series of fundamental steps to be taken, and questions to be asked, before proceeding.

"The National Contact Points (NCP) should be the SMEs' first point of call before they come to us, so they have a clearer idea of where their specialism lies, it has been thought through, and the commercial value has been clarified," he says.

The SME then has to decide whether it needs to go to Europe for funding, or whether it can get appropriate support at regional level. "First of all, the SME must know what it wants to achieve and how it can achieve it. NCP and Info Relay Center networks exist to help them to identify and develop their assets at the national level. However, they may ultimately decide that what they really want is to go multinational. If what they have is strong enough, they then have a chance to compete at the European level by coming to us," says Reichert.

But the initiative for this should come from the SME. "Historically, SMEs have been by their nature, very reactive, conservative. They had a technology they wanted to exploit, and that was it. But what we now see is a shift towards continuous innovation and striving to remain profitable in the market at all times," adds Reichert. "At this point, our new Research for SMEs scheme can kick in as well as the other existing programmes which are based more on collaboration between academia, large industry and SMEs."

Networking is the future

Indeed research networks are becoming increasingly important vehicles for FP7, helping the Commission spread the word about collaborative opportunities and funding on offer, as well as providing the SME with access to larger markets, shared risk, introducing new contacts, facilities and expertise. It's a move which Reichert hopes will encourage organisations to start helping themselves.

In the past, such networks have been mainly academia driven, or focused around one or two big players or industries. Financial and other worries by the network's more established players also made it difficult for SMEs to enter into their fold. "One of the problems we face is how we can reach a single SME in whichever country and tell them what we have to offer. We have to rely on the networks we are creating more and more. This is why we place a lot of emphasis on our Research for SME associations because they are the multipliers. It's much easier to finance a group of SMEs and spread the message among them. It's also important for SMEs to get into these networks and markets where they will become trusted partners," says Reichert.

It's often forgotten that SMEs can also be wary of entering such networks because they fear collaborating with what they see as big company competition capable of stealing their ideas. "It's not an easy ride. You have to be aware of what you are doing. It might be a dance with the devil but it can be very profitable for the SME to network and collaborate with its competitors because it helps them both move forward," says Reichert.

To help this process along, the Commission has relaxed its rules on collective financial responsibility which makes sure companies have sufficient funding for the duration of the project. Depending on the outcome of the financial check, a bank guarantee (or any other financial security) was often requested from a contractor.

"SMEs worried about the financial risk that joining up with a partner might bring. Now, this risk is covered by us via an in-house guarantee fund and we will not ask in general for bank guarantees anymore," says Reichert. "This is important. We are providing a cushion for SMEs so they can explore these high risk areas. This is also providing them with an opportunity to become known and trusted if they deserve it."

But Reichert maintains SMEs must still be careful about which knowledge they give away. Complications between competing industrial factions can blow up very quickly in an environment where the first on to the market wins.

"One solution is the vertical network where those which develop knowledge, or the raw product, work closely with the buyer, or end user of the product rather than other competitors. SMEs can feel they are operating in a much safer environment where trust operates very much more in their favour," Reichert concludes.


Actions:

€45 million IAPP scheme lays foundation for next generation of research entrepreneurs

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Marie Curie action offers individual SMEs the opportunity to exchange cutting-edge know-how with academic groups. Scheme stimulates two-way secondment of experienced research staff from different sectors. Workshops and conferences encourage networking.

The ultimate goal of the new Marie Curie Industry-Academia Partnerships and Pathways (IAPP) scheme is to produce well trained, entrepreneurially-minded researchers of the future.

An IAPP conference held on 14th January by the EC in Brussels, and opened by Commissioner for Research Janez Potočnik, highlighted the huge opportunities to industry of participating in the scheme. Transferring cutting-edge science and technology from creative academic groups to SMEs is the key to successful business.

"A knowledge based economy is all about its people. Making it easier to move between the public and private sectors is a challenge for all of Europe, and I think that the Marie Curie Industry-Academia Partnerships and Pathways action blazes a trail, which other research funders can follow," said Commissioner Potočnik.

The IAPP scheme focuses on providing researchers with the adequate skills and opportunities to contribute to SME growth: Support is provided for the creation and development of strategic partnerships based on a longer-term cooperation programme between the participants, aimed at knowledge sharing and inter-sector mobility, based on targeted human resources interaction, recruitment of experienced researchers, and organisation of meetings, workshops and conferences to facilitate sharing of knowledge and culture between the participants.

Private partners may range in size from the smallest micro-companies with a small research capability to very large multinational enterprises. Public sector organisations can include universities, NGOs, and government research institutes.

EC funding for such Marie Curie actions is €1 million for a four-year project, and worth up to 100 per cent of the costs. No matching financing is required and a large advance payment is available immediately. The SME’s research equipment can also be funded (up to 10 per cent of the EC contribution for each SME).

There will be yearly deadlines until 2013. For 2008, the deadline is 25th March.


Points of View:

Turkey's SMEs make enthusiastic leap into European research arena

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Their entrepreneurial spirit and keenness to innovate, supported by the activities of an extremely proactive Programmes National Coordination Office (NCO) and National contact Point (NCP), is driving up Turkey's response to FP7.

The 2005 Eurobarometer survey "Europeans, science and technology" asked around 1,000 people in each European country "will internationally collaborative research funded by the EU become more important?" In Turkey, 67 per cent agreed. The same survey asked "should scientists and industrialists cooperate more?" This time 69 per cent said yes. Of this figure, 50 per cent agreed strongly - one of the highest scores in Europe.

Turkey has a long tradition of science and technology policy making dating back to the 1960s. Its government has set itself ambitious targets: to gradually increase the Gross Expenditure on Research and Development (GERD) as a percentage of GDP from 0.67 per cent (2002) to two per cent in 2010.

"This is very necessary. Increasing industry's share in research and development investment is key to achieving this target. It should be Turkey's top priority to create the necessary conditions to stimulate investment in research by the private sector," says Okan Kara, EU Framework Programmes National Coordinator and SME NCP.

Turkey participated as an associate country in the Sixth Framework Programme (FP6), which helped it to stimulate the country's research community and become familiar with research cooperation at EU level. "Our association yielded impressive results during the last two years of FP6. This was mainly the consequence of the learning process and a more active research policy in Turkey itself," says Kara.

A fiercely proactive Scientific and Technological Research Council of Turkey (TUBITAK) - the lead agency responsible for promoting, developing, organising, conducting and coordinating research and technology development in line with national targets and priorities - has also helped boost SME interest in FP7. Its EU Framework NCOstirred companies up for the first FP7 SME Activities call - applications were up three-fold compared with FP6.

"Turkish SMEs tend to be small - with an annual turnover of less than €10 million - but they all have technology acquisition strategies," says Kara.

SMEs went through the usual process of identifying their research needs, searching out other SMEs experiencing the same technological bottlenecks, and then jointly outsourcing research to the providers of research services, such as universities. Their projects are quite diverse and range from forging, powder metallurgy, dried food processing and e-training technologies, to plant nursery processes, waste water treatment, energy efficiency, and nano-encapsulated ingredient production.

Turkey's NCO targeted SMEs with Industry Awareness Programmes, organising 100 information events, workshops, and similar activities during 2007. To make Turkish SMEs attractive to potential international consortia, NCO promoted Turkish research and development expertise through its Research Catalogue and distributed it to all countries participating in FP7.

SMEs also form part of a comprehensive database that is used for matching up project partners with each other. "Turkish SMEs are quite interested in this service and we received quick responses," says Kara.

An SME Site Visit Programme helped identify the financial and management challenges faced by SMEs conducting FP7 projects. "The results helped us to remove administrative and legal bottlenecks. SMEs have a lack of Intellectual Property Rights (IPR) knowledge. This causes very serious problems, especially at the end of the project. To bridge the gap TUBITAK has already initiated a new IPR Support Programme," says Kara.

Turkish SMEs are looking upon FP7 funding and expertise as a way of acquiring the competitive advantage they so desperately need to compete effectively in Europe. "It's opening the door to new markets, and that's a very attractive proposition for Turkish SMEs right now," says Kara.


Success Story:

Pan-European project aims for worldwide sales

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The increase in diabetic kidney disease globally is placing pressure on hospitals to treat patients under dialysis more efficiently and cost-effectively. A Swedish SME says it is working on a solution which could transform the entire process.


With €577,500 in funding, medical equipment specialist Nordic Medcom has been working with RTD performers from five European countries to develop a new technology which could not only help kidney patients receive dialysis treatment more safely and effectively than is currently possible, it also has the potential to cut medical costs and reduce treatment time worldwide.

Over the past two years, the Swedish SME has been coordinating its project with eight partners in Sweden, Denmark, Finland, The Netherlands and Italy to develop a completely new generation of robust, yet low-cost fistula catheter. Because of the way it is being designed, the device will keep the fistula working for longer than it would otherwise do during the dialysis process, and lower the risk of potential infection.

Currently about to enter clinical trials, the device is destined to make a huge impact on the care kidney patients receive in hospitals as it shortens dialysis time. Dialysis patients face spending a lifetime in hospital - 12 hours each week. The average cost of supporting a dialysis patient is estimated to be around €60,000 per year. Fistula costs alone can be as much as €16,000 per patient, per year.

The worldwide market for such technologies is estimated to be worth €580 million: "Even if our development takes a small slice of that, it will provide a great boost to our partners who will be manufacturing it in Sweden and Italy and selling it throughout Europe, the US and Japan, one of the largest markets for dialysis technology," says Arne Puhasmägi, project coordinator and Nordic Medcom's Managing Director.

"During the early research stages it was important that our RTD performers were near to us in western Sweden. Quick and direct access to their expertise helped us move to develop and patent the device quicker than would have been possible otherwise," adds Puhasmägi. "Working with partners from the south, middle and north of Europe also helped us to understand the different treatment cultures and find out whether our device would actually work in practice."


Policy Update:

New initiatives support cooperation and trans-national research

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National research programmes are being encouraged to work more closely together; Support Actions help SME Associations; and new studies for 2008 analyse SME participation in European research.

A total of €4 million in funding is being made available to finance the further coordination of two ongoing FP6 ERA-NET projects - ERA-SME and CORNET. Ultimately this will encourage SMEs to network and build relationships with international partners so they can access research centres of excellence, and develop the research and innovation skills they'll need to compete effectively in international markets.

One way that SMEs can respond to strong global competition is by increasing their knowledge base and research efforts in trans-national cooperation: "Networking national SME research programmes under the ERA-NET umbrella will encourage integration. Through the national programmes SMEs and SME Associations are now also able to carry out international research, thus providing them with additional opportunities to participate in trans-national projects," says DG Research's Head of SME research Policy, Barend Verachtert.

Support Actions to help those participating in Research for SME Associations exploit their research further have already attracted 27 proposals for EC funding worth €7.2 million. "With SME Associations still relatively new to the Framework Programme, they don't have a great deal of experience participating in research programmes. Here we're trying to encourage them to come up with good project ideas, and to help them identify the appropriate topics that can be addressed through a research project," says Verachtert.

And following on from earlier studies which reported on the impact of SME-specific measures in FP5 and FP6, two more studies are planned for 2008 that will analyse those measures in much more detail. Says Verachtert: "A systematic study across the various themes hasn't been done before to see how well SMEs are doing, so we'll be looking at SME participation throughout the Framework programme."


Events:

Conferences and briefings for the SME community

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We've put together details of two FP7 events which will help SMEs with the disciplines of proposal writing and presentation. ENVIETECH introduces SMEs to opportunities in the renewable energy market.



Opportunities for SMEs

14-15 February, Istanbul (Turkey)

Organised by the Scientific and Technological Research Council of Turkey (TUBITAK), the Programmes National Coordination Office (NCO) and National Contact Point (NCP), this conference examines the opportunities for SMEs in the world's largest research funding programme - FP7 (see this issue's Points of View).

The draft agenda includes a number of top government officials and high profile speakers - including the Head of the Directorate's T.4 unit, Dr Bernd Reichert. Networking opportunities with delegates will be scheduled during the conference.which will be held at the Istanbul Chamber of Industry, Istiklal Street, Taksim.

SMEs will also be able to see how other EU-funded organisations are already benefiting from programme support, learn more about how potential project proposals are evaluated, and attend FP7 training sessions to find out more about writing competitive proposals, financial management and reporting.



FP7 Collaboration in Manufacturing

17-18 January, Zurich (Switzerland)

The general aim of this International Partnering Meeting for the Second Call for Proposals in the NMP Programme is to promote trans-national R&D collaboration between industry, SMEs and research organisations active in the field of manufacturing, and in particular to set up FP7 projects.

The two-day event - a series of strategy presentations and partnering workshops - is organised by Euresearch (the Swiss National Contact Point) and Swiss ManuFacture, and being held at the ETH main building in Zurich.



ENVIETECH

31 January - 1 February, Vienna (Austria)

The International Association for Cereal Science and Technology (ICC) is organising an International Congress on Renewable Energy in Vienna. This congress will be a part of ICC's 'Science meets Industry' series, and will mainly focus on technology transfer in renewable energy, biofuels, new plants, wind and solar energy, and sustainable agriculture sectors. It will also examine the response to climate change and climate protection efforts, and analyse new developments and markets.

The ICC Congress is part of an extensive technology exhibition alongside other workshops and meetings. Among others, the event is aimed at scientists, representatives from EU-funded research projects, SMEs, and those from national and international institutions (including the European Commission).


Facts & Figures:

SMEs in the spotlight - first results of the new FP7 SME-specific measures

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SME-specific measures foreseen under the new FP7 successfully made their first steps in 2008. According to Fernando Trabada Crende, head of the operational sector in the SME unit, an analysis of the project proposals shows "that the new programme meets the requirements and needs of SMEs".

Two calls have been published in 2008: "Research for SMEs" with a budget of €100 million, for which 592 proposals have been submitted, and "Research for SME associations" with a budget of €58 million which received 167 proposals.

An analysis of the proposals submitted confirms that the new programme is appropriately tailored to the needs of SMEs.The high quality of submitted projects should make a profound economic impact on the SMEs' business. This is reflected in the high scores the successful proposals have attracted and by the large number of participating SMEs. Many of the participants are represented by industrial organisations which clearly intend to apply project results to their own core businesses.

A good understanding of the outsourcing approach of this scheme is shown by the high value of outsourced research and to the large variety of RTD performers taking part.

An additional interesting discovery from the analysis is related to gender balance. Women are taking the leading role as co-ordinators especially within the "Research for SMEs" scheme.

 

Research for SMEs

Research for SME Association

Number of Proposals submitted592267
Proposals passing all thresholds55%35%
Successful proposal17,16%16,77%
Proposal with score higher
or equal to 12,5 in %
29%
of the proposals passing all thresholds
40%
of the proposals passing all thresholds
Average requested grant€1 million
(72% of the total project costs)
€2,3 million
(74% of the total costs)
Outsourced research 80%
 of the total costs
90%
of the total costs
Successful proposal
co-ordinators
Female 19,4% 31%
Male 16,6%32%
ParticipantsSMEs 68% 63%
RTD Performers 38%30%
Organisations from the industrial sector 56% 50%
  • For further details on country participation etc. for the FP7-SME-2007-1 Research for SMEs call click here.PDF (198 KB)
  • For further details on country participation etc. for the FP7-SME-2007-2 Research for SMEs call click here.PDF (198 KB)