Impact study shows that 40% of SMEs declared an increase in commercial output as a result of their research project

The main finding of the Impact Assessment on SME specific measures will show that approximately 40% of SMEs declared that their projects, carried out during FP5 and FP6 programmes, resulted in commercial benefit or that a benefit is expected in the future. The final report is due to be published in October. In the meantime Dr Bernd Reichert, head of the SME unit, takes us through this and some of the other key findings from the draft report.

The impact assessment

The Impact Assessment on SME specific measures evaluates the economic and practical impact of FP5 and FP6 programmes. Dr Reichert explains: "We wanted to examine the performance of European SMEs in their own markets following their involvement in the programmes. We wanted to know if they were affected in a positive way and, ultimately, answer the question: Does it make sense to have, at European Level, a research programme dedicated to SMEs?"

Carrying out the Impact Assessment has taken 16 months. The assessment itself is based on quantitative data and, more predominantly, on case studies. Dr Reichert says: "We used to look at impact from programme level to decipher if it was successful: Did we get enough participants? Were our goals reached? But now we look at the participants, the actual SMEs themselves: Did they produce sufficient results and impact for the effort that was expended? Was it what they expected? This change of focus creates far more tangible and meaningful results and gives us - and those who will read the final report - a much more interesting insight to the work of the programmes."

The assessment began by making contact with nearly 3,000 SME participants of the previous programmes as well as a control group of 1,900 companies who were either unsuccessful in the programmes or did not participate. A lack of accurate data and several SMEs being sold or incorporated into larger companies made this exercise particularly complicated. But around 300 responded from a wide variety of industries, two thirds of which came from manufacturing industries and the machinery sector. And 45 of the respondents were used as detailed case studies for the report.

The consultants producing the case study reports were asked to also include intangible types of impact, such as networking, meeting new partners and gaining access to new markets and business.

Key findings

40% of SMEs achieved increased commercial output or output is expected in the future

The main finding that Dr Reichert and his unit are pleased to report relates to economic standing. Approximately 40% of SMEs declare that their projects resulted in commercial output or that output is expected in the future. "This is great news. The RTD performer reached an objective and the projects created new knowledge. However, many SMEs wanted to take the project further. They felt their business objectives had not been sufficiently met. They had hoped the project would allow them to pursue proof of concept, to create prototypes and move into demonstration." This is something the unit aims to include in the future.

75% of respondents were low-tech SMEs

When the programme was first conceived, the target audience were those low-tech SMEs that have no or very little capacity for self-improvement through research. The draft report shows that 75% of the SMEs who responded were part of this target audience. The other 25% declared themselves as 'high-tech' SMEs with a strong R&D capability. They participated as this is the only programme at EU level that focuses directly on the company's business, has shorter project duration and can provide funding on a smaller scale fairly quickly.

More focus on regional clusters

Other major findings of the draft report relate to regional clusters. When asked about carrying out research, many SMEs revealed that they collaborate with research organisations in their local environment (universities and institutes), even when working on international projects. Dr Reichert relates this support of local economy to the political goal of internationalising SMEs. He believes: "Internationalising helps companies find new markets, new business and more specialised research partners. But the question is how to do it and how far should one go? If SMEs wish to support their local partners, do we need to promote this international approach? I feel we can do something more productive at EU level, which focuses more on regional clusters." Geographical and language barriers were also highlighted as challenges that deter SMEs from seeking distant assistance.

Networking is key

In terms of the intangible impacts looked at in the study, networking produced some of the most interesting results. "Whether the programme created it or the company was already doing it," Dr Reichert explains, "networking was consistently mentioned as being a key part of SME business."

IPR identified as specific success of project in 35% of cases

Intellectual property rights (IPR) management was also highlighted as an area of importance for SMEs. The draft report states that just over a third (35%) of respondents identified IPR as a specific success of their project. Dr Reichert adds: "But the question always arises: should ownership be with the RTD performer or the SME? And even the research on this question is undecided." This is something the unit is now looking into to try to establish a more definitive answer.

Programme focused far more closely on SMEs' individual markets

Compared to other research support, this programme focused far more closely on the SMEs' individual markets. Everything done in each project was very specific to the SMEs. Most participants focused on a particular problem that it wanted to resolve. Dr Reichert explains: "One SME tried to develop a system that would apply colour to surfaces more smoothly. It was found not to work, which the SME saw as a disaster but the RTD performer saw as a useful insight to make improvements in the future. The overall industry is therefore improved through research". This is why the RTD performers felt the project was a success, because they have a definitive result - whether positive or negative. Whereas the SMEs wanted their problem resolved - and occasionally it was not.

66% of projects would not have occurred without FP funding

The draft report also found that two thirds (66%) of all respondents' projects would not have taken place without FP funding. This implies that projects would not have taken place without incentive and support from an outside source, a case referred to as full project additionality. Dr Reichert adds: "Personally I feel this is not great. It shows the SMEs' projects were not really necessary and only carried out due to the programme support. But then we must consider that SMEs' capital cover is so thin and many companies, even if they really wanted to, cannot afford such research."

Of those projects that did take place, the key factors that contributed to its success were: commitment of partners, proximity to the market of what is being developed, adequate funding for non-research partners, regular face-to-face interaction, clear IPR arrangements and strong leadership.

The next 'demonstration' phase

Following the pure research phase of the assessment, the unit is now moving into the demonstration phase where its ideas are made a reality. "We have to think about how to help SMEs bring these ideas into their general work to bring benefit to their business," Dr Reichert says. "It won't be easy".

After completing their projects, SMEs were encouraged to look to their own budgets to create a contingent for carrying out research in the future. This was one of the main aims of the programme, as Dr Reichert explains: "We wanted to introduce SMEs to the world of research. To show them it can produce results and to whet their appetite. The hope is that they will then continue to produce technological innovation supported by and through research." The percentage of SMEs who now have an R&D budget is significantly higher than in the original control group of 1,900 companies.

In conclusion, Dr Reichert believes the draft report has produced a moderately positive outcome: "It would have been wrong to expect an enormous impact showing that European industry would fall to pieces without the programme. However, this programme focused directly on the SMEs and their specific markets. As a result, we found that 40% of SMEs declared an increase in commercial output as a result of their research project. This is a major finding and a strong testament to the overall aims and ambitions of the programme in positively encouraging SME research throughout the EU."

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SME Advisory Group - helping SME's think BIG

Small to medium-sized enterprises (SMEs) constitute the largest and most dynamic sector of Europe's economy. Representing 99 % of all enterprises in Europe, it is no surprise that the European Union (EU) is looking to SMEs to boost economic growth and employment. The SME Advisory Group for the Seventh Framework Programme (FP7) plays a key role in helping the EU encourage SMEs to conduct research into developing new products, processes and services. Rudolf Lichtmannegger, Chairman of the SME Advisory Group, tells us how...

In 2007, 19 people from research and development companies and institutions, as well as financial organisations and associations representing SME interests throughout Europe, were called together by the Commissioner for European research, Janez Potočnik, to form the SME Advisory Group for FP7. Among them were a Polish university lecturer, a manager of a food and biotechnology institute in Sweden and the group's chairman Rudolf Lichtmannegger, who is also the R&D policy advisor for the Austrian Federal Economic Chamber. Their goal? To act as advocates for SMEs in fostering EU research and development support, in addition to offering the Commission advice on how to make it easier for SMEs to participate in FP7. This would improve the SMEs' growth potential, help them tap into new markets and render them more competitive.

"All members of the group are driven and motivated professionally to help SMEs do better," said Mr Lichtmannegger. "We all feel a need to support companies in gaining a better idea regarding what they're capable of achieving in the R&D area on a European level."

The role of the SME Advisory Group

The group's core responsibility is to advise the Commission on how to implement the support measures that enable SMEs to undertake research projects funded by FP7. In particular, the group focuses on providing the Commission with advice on financing parameters, evaluation criteria and activities to raise awareness of SME participation. The group also reviews the Commission's progress on implementing support measures and provides feedback from SMEs where appropriate.

"We try to make sure that the measures the Commission takes are appropriate, well structured and focused on the needs of SMEs. This way the SMEs can identify with the content of a call for a research project proposal," said Mr Lichtmannegger.

Members meet four times a year, debating such questions as: 'How can we improve the FP7 focus on SMEs?', 'How can the Commission tailor FP7 to more closely suit SME needs?' and 'What language can be used in calls for proposals to encourage SME participation?'

"Participation has improved, but it could be better," said Mr Lichtmannegger. "If FP7 is to have a structural and economic impact, it needs participation from a variety of different SMEs, start-ups, science-based companies and traditional sectors with R&D needs and potential."

Looking ahead

With the FP7 approaching its mid-term review, the SME Advisory Group has started working on the second half of the programme. Discussions have concentrated on measures to improve SME participation in the Cooperation programme, considering the majority of FP7 funding is channelled through this category. There are 10 thematic fields in the Cooperation category, and calls for proposals for research projects in these fields are published on a regular basis.

The group is also lobbying the Commission to provide more continuity in its calls for proposals. "We're also trying to convince the Commission that there needs to be continuity in the calls for proposals for the benefit of SMEs because a regular pattern of calls helps SMEs and SME associations to plan their European R&D projects and consortia, and provides a measure of certainty with respect to the availability of funding," said Mr Lichtmannegger.

"We've been trying to encourage the programme managers of the different thematic fields to make sure the calls they publish are fit for SMEs," said Mr Lichtmannegger. "SMEs, though small, are very often by far the most innovative actors in the business sector. Unlike larger companies, who are often not willing to bet the whole company on an innovation project, SMEs are prepared to say: 'We're new in this field, we'll give it a go'."

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Points of View:

Effective proposals: an evaluator's perspective

Funding for technological development and research is a key area of the EU's Research Framework Programme (FP7). The evaluation process that ensures SMEs receive the right funding is a challenging task. Dr Peter McGeehin, a leading technology evaluator, looks at the process and recommends what to include in a proposal.

Proposals submitted to SME Research cover a wide range of technologies and markets. It is therefore useful for evaluators to have broad interests in as many areas of science and technology as possible. Knowledge of management, economics and market trends is also useful as, typically, the evaluation process is organised into panels that take both a technological and economic standpoint when evaluating.

Potential evaluators nominate themselves by joining an EU-wide database of experts, which indicates professional experience and relevant technical interests. When selecting a particular evaluation, a balance of experience and knowledge is sought amongst academics, industrialists and consultants. Before an evaluation commences, evaluators are sent briefing material. If required, further background information is provided at meetings held in Brussels.

The written proposal document is evaluated against a fixed set of criteria. Each evaluator individually assigns scores to the various criteria, awarding '5' for the best and '0' for the worst.

Dr McGeehin said "there is direct correlation between the guidance given to those drafting proposals and the marking sheet that is used to score them. A proposal that addresses the required points explicitly, in the right order and clearly, in terms of structure, will inevitably be more straightforward to evaluate." Guidance on structure and maximum page counts is also included. It is wise to follow this guidance as a demanding reviewer might refuse to read beyond the allowance.

He said that "it can sometimes be quite intellectually challenging to come to a sound judgement, particularly in the case of a weakly structured document or one that does not address the criteria clearly. It is a pleasure to assess a really good proposal - but much more difficult to score proposals that are closer to the average."

Usually, the first stage of the evaluation process is carried out remotely at an individual reviewer's workplace. Typically in SME proposals, three individual readings are involved. Scores from each evaluator are collated to determine the proposal's final consensus score. This is either done remotely or in Brussels where evaluators attend consensus meetings.

"Meeting colleagues is good from a human perspective and enables evaluators to calibrate their individual judgements against those of colleagues" said Dr McGeehin. "Some of these meetings proceed easily, even with quite diverse scores. But every so often there are genuine differences and the debate can become quite heated. In such cases the independent chairperson (an EU member of staff) has to delicately steer the discussion to a conclusion. The temptation to settle with simply an average score must be avoided."

Projects are quite intense and generally last for two years. Dr McGeehin cautioned that a common fault with SME proposals is unrealistic over-ambition, either in respect to the technical idea or the timescale involved. "It can be refreshing to read a proposal that is led by SMEs with the RTD performers being subservient to the company's own market needs."

Evaluators sometimes get the chance to monitor the progress of projects, at the 12 month landmark and at their conclusion. Dr McGeehin said "it is interesting then to compare what has been planned with that which is being achieved".

"Evaluating proposals can be genuinely interesting and stimulating from an intellectual perspective, and quite rewarding in terms of the interesting colleagues that one gets a chance to meet from the different countries and cultures of Europe."

While reviewers receive a fee for the evaluation work they do, the real driving force is to serve the EU's community of SMEs and support the development of collaborative technological innovation.

Dr McGeehin concluded with advice for those drafting proposals: "Managing a consortium and addressing a problem in the form of a proposal is a challenging adventure. The key emphasis in any proposal has to be on the word 'convincing'. Each and every paragraph should be there to convince the evaluator of what you believe to be right, and why you should receive funding."

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Success Story:

Fantastic plastic

Since its invention in 1872, plastic injection moulding has become a multi-billion dollar business, with 32 % of all plastics processed in this way. Now, after three years of recent research and with the help of EU funding, a group of researchers has designed a radical new concept of injection moulding, making the process cheaper and faster for the entire plastic supply chain.

On October 1, 2006, with a budget of EUR 3.7 million - EUR 2.2 million of which was provided by the EU - 16 highly motivated research groups from eight different European countries joined forces to achieve their goal of improving the efficiency of the plastic injection moulding process. Injection moulding is the method of injecting molten thermoplastic polymer into a cavity within a hardened steel mould tool, which opens to reveal a plastic moulding. It is the mould tool which is the basis for the EMOLD project - a collective research project funded under the Sixth Framework Programme (FP6). EMOLD proposes a new concept of plastic injection processes in which moulds would be equipped with sensors and embedded computers to monitor process and production parameters and communicate this information via wireless technology. This will improve the efficiency of the whole life cycle of plastic parts production, from mould-making to the production process itself.

Many hands make light work

Never underestimate the power of collective research. That is the message from project coordinator Joan Guasch, who should know after three years of working closely with a large and diverse group of stakeholders to create EMOLD. "When you work with people from other countries you discover one good thing, which is that you are not alone, and especially for SMEs, this is a very good feeling," said Mr Guasch. "On the other hand, when you have to cooperate with people from abroad, you have to take into account cultural issues and different ways of doing business in other countries."

The countries involved in the project are Austria, Belgium, Finland, Germany, the Netherlands, Slovenia, Spain and the United Kingdom. As well as the support of the industrial associations in each country, there are eight SMEs steering the research of the project to ensure that the results are applied in the industrial environment. There are also four research performers responsible for undertaking the research required to develop the technology for the prototype on behalf of the industrial associations. The four associations which will determine how to use the results of the project are: Feamm, the Spanish Federation of Managerial Associations of Mould and Die Manufacturers; Tecos, the Slovenian Tool and Die Development Centre; VKC - Flanders' Centre for Plastics in Belgium; and GTMA, a UK-based online directory of suppliers in tool making. "All the partners have participated in a very active way," said Mr Guasch. "They knew this was a very challenging project, but everybody has played their role."

All partners have had to make similar contributions to the project, which shows their commitment and confidence in the prototype succeeding. "The benefit of working with several partners on a research project is that it saves time, even though it may not save any more money than if you were doing it on your own," said Mr Guasch.

Light at the end of the tunnel

The EMOLD project was due for completion at the end of September this year, but the group has been granted a three-month extension from the European Commission. "If we had one more year, we could implement more gadgets, but the hard work is done," said Mr Guasch. "This extension will help us to finish the most interesting part of the project." The group is planning a launch event in Barcelona in November to present EMOLD to SMEs and industry representatives. It also plans to release scientific publications about the prototype and develop training programmes for technicians and for the European mould-making community.

The next step is to get the EMOLD prototype trademarked and to put it to market. "It hasn't been decided how or when at this stage," said Mr Guasch. "The four associations are in discussion now. If this succeeds, it will help mould makers throughout Europe deliver revolutionary service, giving them an important advantage in this competitive marketplace."

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Policy Update:

Fuelling innovation in SMEs

DG Enterprise's Strategy Unit on Innovation Policy Development would like to make Europe the world's leading centre for innovation. To do this, the unit is preparing a detailed innovation plan for 2010.

There is a misconception that innovation within the EU is driven by large companies with the resources to invest in new ideas. But big ideas are not the preserve of big companies. Google, Ikea and Microsoft began life as garage start-ups and have been driven to worldwide success on the back of innovations that change the way we live.

Innovation Policy Development aims to foster innovation in Europe and help SMEs focus more on bringing good ideas to reality. Peter Dröll heads the unit, which began its work a year ago.

Mr Dröll said that "innovation works rather like an eco-system, where all parts are interdependent and affect overall progress. We are charged with producing ideas and guidance that will help adapt the current ecosystem and promote innovative thinking and practices."

Mr Dröll explained that policy-makers have three key angles of approach to adopt when deciding on how to do this. The first is to focus on the framework, such as the research base and the internal market. The second is to improve supply by financing new research, by using networking and through matchmaking events. The third is to help build demand by making choices in regulation and public procurement.

"When dealing with SME innovation within the EU, we must approach policy-making in all three of these areas to improve our innovation output," said Mr Dröll.

The unit is now moving from the internal debate phase to external discussion. The first stage, which is the innovation review, will take place in September. "This is a big deal and the sort of work that academics deal with," said Mr Dröll. "The review comprises a short policy paper and a further 400 pages of detailed analysis on innovation policy in general. It also discusses lead markets, services in innovation, financing innovation in SMEs and the effectiveness of innovation support." By publishing this review, the unit hopes to gain valuable feedback that will influence their overall plans.

In the lead-up to the review, several preparatory actions will already be in place. One of these is Innovation Unlimited, an independent business panel that provides input and ideas on future innovation in the EU from a business perspective. This panel, made up of five consultants, has created an online blog to encourage and provoke open debate on key innovation issues. Open to anyone, the blog closes at the end of August when the panel will include its findings in a report.

"This is just one contribution to the overall research being undertaken and will provide a wider reaction to our current ideas and plans," said Mr Dröll.

The role of research

To find out how innovation can be effectively promoted through policy, the unit's research has to understand SMEs and their staff.

Option papers form an integral part of strategy development. "Options encourage creative thinking and provide a good update on how our ideas are being received," said Mr Dröll. "My principle was to start with no limits where all ideas are welcome. We are not yet at the stage of writing any ideas off."

The research process is highly collaborative and involves working with other departments, launching studies within framework contracts or holding workshops, an initiative which includes universities and SMEs. "For example, we met with experts and representatives from Brazil, Russia, India and China who gave us an insight into cooperation efforts to see what currently exists and how we can improve upon it" said Mr Dröll. "The more we learn to give us ideas into creating a more innovative EU, the better."

One issue that Mr Dröll and his team have run into is the question of results. "It is very hard to quantify innovation and the effect our policies are having," he said. "We do not have any measurable targets, which is something we would like to change."

Some SMEs set specific targets for themselves that are later reviewed. At EU level there is some benchmarking for Member States. The annual European Innovation Scoreboard uses 29 performance indicators to measure a country's enablers (human resources and financial support), activities and outputs. This is used by governments wishing to improve innovation policy based on a wider country comparison.

"The current times provide many opportunities for improving innovation policy and the way in which SMEs operate to incorporate a more creative and innovative way of thinking," said Mr Dröll, "Our task is demanding and extensive, but helping the EU become the innovation leader of the world is a truly exciting prospect."

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Events:

Worthwhile briefings for the SME community.

We've put together details of a wide range of research conferences and seminars, all of which are geared towards valuable networking, information gathering and getting support for your projects.

Seminars to shape SMEs' environmental agenda
Event date: 1 September-31 December 2009
Location: Bulgaria, Denmark, Ireland, Cyprus, Latvia, Lithuania, Luxembourg, Austria, Slovenia, Slovakia and Finland.

The European Commission is to run capacity-building seminars in 11 Member States in a bid to help small and medium-sized enterprises (SMEs) get the best out of the Environmental Compliance Assistance Programme (ECAP). The seminars are scheduled to take place this autumn in Bulgaria, Denmark, Ireland, Cyprus, Latvia, Lithuania, Luxembourg, Austria, Slovenia, Slovakia and Finland.

• Useful link:
  http://ec.europa.eu/enterprise/newsroom/cf/itemlongdetail.cfm?item_id=3147

The 3rd annual European Tech Transfer Summit - FP7 projects to the market
Event date: 24-25 September 2009
Location: Lille, France

The European Tech Transfer Summit is designed to help researchers and Technology Transfer Officers bring the benefits of their research to society and the market. The summit addresses directly the technology transfer gap in Europe. It will help Seventh Framework Programme (FP7)-funded research projects and technology transfer officers at participating universities and research institutes ensure that they have an effective and realistic strategy. The summit will also provide the necessary network and access to expertise in order to ensure the useful application of project research as stipulated in the FP7. amme.

• Useful link: http://www.techtransfersummit.com/

SRC09 - Security Research Conference 2009
Event date: 29-30 September 2009
Location: Stockholm, Sweden

The fourth European Security Research Conference - SRC09 - will be held in Stockholm on 29 and 30 September 2009. Organised under the Swedish Presidency of the European Union with the support of the European Commission, this event will bring together more than 1 200 representatives from the worlds of research, industry and security end-users.

• Useful link:
  http://ec.europa.eu/enterprise/newsroom/cf/itemshortdetail.cfm?item_id=3137

EU Finance Day for SMEs
Event date: 1 October 2009
Location: Brussels, Belgium

Organised by the European Commission, the event raises awareness about different sources of finance and provides a forum for sharing good practises in helping innovative SMEs obtain easier access to finance.

• Useful link: http://www.sme-finance-day.eu/

From the European Charter for Small Enterprises to the Small Business Act
Event date: 5-6 October 2009
Location: Stockholm, Sweden

The next Charter conference 'From the European Charter for Small Enterprises to the Small Business Act' is going to take place from 5 to 6 October 2009 in the conference centre InfraCity near Stockholm, Sweden. A detailed programme will follow at a later stage. Registration for the conference is now possible via the website.

• Useful link:
  http://ec.europa.eu/enterprise/enterprise_policy/charter/conf2009/

SME Forum 2009
Event date: 26-27 November 2009
Location: Luxembourg, Luxembourg

The SME Forum business-to-fair matchmaking event combines the assets of a professional trade fair with a business cooperation exchange platform. It represents an important gathering in one single meeting place of the economic potential of innovative and dynamic entrepreneurs. Countries taking part include Bulgaria, Italy, Luxembourg, Poland, Romania, Serbia and Turkey.

• Useful link:
  http://www.enterprise-europe-network.ec.europa.eu/public/calendar/viewdetails.cfm?EventID=2062&type=future

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Facts & Figures:

SME participation grows

The preliminary evaluation results from the SME Association's latest call for Seventh Framework Programme (FP7) applications reveals that small to medium-sized enterprise (SME) participants account for well over half of the proposals selected to receive funding. This number can only improve.

The latest results reveal SME participation is still growing. Of the 383 proposals received, 140 were invited to stage two of evaluations, and of these, 45 proposals have been selected to receive EU funding.

Overall, 1756 participants were involved in the 137 proposals that qualified for evaluation in the second stage. The type of participants applying for funding were a fairly even split between SMEs, RTD performers and other organisations. Most of the participants were from the industry activity sector, followed by the research activity sector, the higher education activity sector and the services activity sector. The majority of proposals retained for funding involve projects requiring a 36-month duration period.

Most of the proposals involve projects associated with the agricultural/forestry industry, followed closely by the food and information and communication technologies industries, while the least number of applications are for projects within the security, nanotechnologies and chemical/petro chemical sectors. The highest number of proposals came from the United Kingdom, followed by Spain, Italy and Germany.

New publication: SME participation in FP7 Spring 2009 report now available

Following on from our facts and figures section of SME Update Issue 5 (http://ec.europa.eu/research/sme-techweb/newsletter/issue5/facts-figures_en.html) on the third progress report on SME participation in the FP7 Cooperation programme, we have produced a leaflet that explores the applications in more detail.
Over 1,500 FP7 project contracts have been signed to date and 60% of these have at least one SME participant. For more detail about SME participation in the Spring Report 2009 see the leaflet at
http://ec.europa.eu/research/sme-techweb/pdf/fp7_report.pdf.

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