Innovation in ICT: a changing landscape

Telecommunications Journal of Australia, Spring 2006 by Houghton, John W

Recent developments in ICT related RB-D in Australia have been both rapid and profound. There is a renewed focus on public sector ICT research through the Commonwealth Scientific and Industrial Research Organisation (CSIRO) and National ICT Australia (NICTA), combined with a decline in the activities of Telstra's Research Laboratories (TRL), the closure of ICT related Cooperative Research Centres (CRCs) and the withdrawal of a number of major multinational firms from R&D activities in Australia (e.g. Ericsson, Motorola and Nortel). This paper seeks to identify and understand these developments, and to explore their implications. It concludes that there are profound changes underway and there is an opportunity, perhaps a need, to reexamine innovation strategies, structures and policies in the light of those changes.

RECENT DEVELOPMENTS

Recent trends in information and communication technology (ICT) related R&D paicrt a rather mixed and confusing picture, with expansion in some areas and contraction in others. This section examines trends in R&D expenditure and recent developments in business and public sector research.

R&D expenditure trends

AnnuaLexpenditure on all forms of R&D in Australia increased from AUD 364 million in 1968-69 to AUD 15,773 million in 2004-05, or by 11% per annum in current prices (around 5.2% per annum in real terms). By sector of performance, the business and higher education sectors have witnessed the strongest R&D spending growth (12.6% and 11.5% per annum in current prices, respectively), with the business sector increasing its share of ICT R&D expenditure from 33% to 54%, while governments have reduced theirs from 43% to 16% (Figure 1).

While there is an increasing emphasis on applied research across all sectors, it is still overwhelmingly the case that higher education R&D activity is focused on pure/basic research and business sector R&D aStivity on experimental development. Nevertheless, recent growth trends reflect a restructuring of activities, with an increasing emphasis on applied research and experimental development in universities (Houghton et al. 2003). Within the business sector there has been a marked shift of R&D from manufacturing towards services including computer and communication services (Shanks and Zheng 2006 , p34-37).

Total spending on 'information, computer and communication sciences' R&D (as a field of research) increased from AUD 1,502 million in 1996-97 to AUD 2,548 million in 2004-05, or by 6.8% per annum -slower than the 7.7% per annum increase in R&D expenditure across all research fields.[1] Consequently, its share fell from around 19% of total expenditure in the late 1990s to 16% in 2004-05. The business sector has increased its expenditure faster than the other sectors, and it now accounts for more than 85%, while governments account for around 5%, higher education for 8% and the private non-profit sector for less than 1%.

By contrast, expenditure on 'information and communication services' R&D (as a socioeconomic objective) has increased more rapidly than overall R&D expenditure - by almost 12% per annum between 1996-97 and 2004-05. The business sector is also dominant in this area, accounting for 80% to 90% of total expenditure and increasing its expenditure more rapidly than all other sectors except higher education, which increased its expenditure by 21% per annum (Table 1).

Looking in more detail at business sector spending on 'information, computer and communication sciences' R&D (as a field of research), we find that it increased by around 13% per annum over the eight years to 2004-05 to AUD 2,209 million, led by strong growth in expenditure on information systems and technologies R&D. Expenditure on communication technologies R&D has fallen dramatically in recent years - from AUD 614 million in 2001-02 to just AUD 347 million in 2004-05.

Business spending on 'information and communication services' R&D (as a socioeconomic objective) has increased by around 11 % per annum over the period, to AUD 1,201 million. During 2004-05, an additional ADD 164 million was spent on computer hardware and electronic equipment R&D, and AUD 127 million on communications equipment R&D.

For businesses, 'information, computer and communication sciences' R&D accounts for around 35% of all R&D expenditure, and 'information and communication services' R&D for 20% - both significantly higher than the overall share of ICT R&D in total R&D (Table 2).

Overall, these data reflect Australia's focus on ICT use rather than production, with the objective of developing information and communication services taking priority over the disciplines and sciences that underpin it. In the business sector, there is somewhat more emphasis on ICT related fields of research than is the case elsewhere, while expenditure on communication equipment and technologies R&D has fallen since the beginning of the decade and continues to do so.

Trends in corporate R&D

Recent developments around major corporate laboratories in the ICT industries appear at odds with these overall expenditure figures, with a number of such laboratories being downsized or closed.