2009 in review: Technology innovation

Reding has urged firms to keep spending on R&D

This year was one of financial turmoil and retrenchment. Consolidation and rationalisation were rife, as were fears of closures, liquidation and redundancies.

Given all this, you might assume that innovation was put on the back burner, but in many cases the opposite was true. During these lean times many firms took the opportunity to both scale back and innovate, with many taking advantage of relatively new technologies such as virtualisation, hosted services and videoconferencing to cut costs.

In October, management consultancy Booz & Company warned that UK companies were not spending enough on R&D, and were at risk of being left behind by their European counterparts as a result. But while R&D spending in the UK was indeed more modest than elsewhere in Europe, it still managed to grow by 3.5 per cent over the year.

One area where spending showed a healthy increase was the internet and software sector, where most firms saw the recession as a good reason to boost their technology spend.

Alert to the danger that the slump might hit investment in new technologies, European Commissioner for Information Society and Media Viviane Reding urged organisations back in March to keep spending on innovation. "If Europe wants to be ambitious and take the lead, we should double both private and public investments in ICT research by 2020," she said.

To help with this, Reding announced that the EC would spend €200m a year until at least 2013 to improve local network infrastructure, and urged businesses and public bodies to embrace emerging technologies such as smart tags and wireless networking and devices.

Networking and web-based technologies would appear to be high on a lot of firms’ innovation agendas. Just last month Andy Nicholson, BT's Global Services managing director for financial services, said that firms were using their money in a much more strategic manner. By investing with his firm, and its technol ogy, enterprises were positioning themselves to capitalise on the end of the recession, he explained.

“It is evident that the financial downturn has forced some changes, and not all of these are negative. Investing in technology to improve efficiency in their businesses will help institutions maximise profits when a full recovery has taken place,” he said.

Nicholson added that just over half of those businesses he had spoken to were opting to spend on technologies designed to improve homeworking, with a third investing in teleconferencing and videoconferencing tools, both of which he expects to grow in popularity. Overall, he said, the most innovative firms were those in the financial services sector.

There is still plenty of work to be done, though, if the UK is to rise up the innovation league. A recent worldwide innovation report placed the UK in eighth place overall, behind such countries as the US, which came third, and Sweden, which came first.

The Innovation Capacity Index 2009–2010 ranks countries based on several factors, including the number of registered technology patents and the apparent corruptibility of the government.

The UK scored better than Nigeria in terms of corruptibility, but less than Sweden in its use of technology, the financial state of the country and its legislative environment.

Overall, the UK achieved 74.6 Innovation Capacity Index points, just behind Canada with 74.8 points. The top three countries were Sweden, Finland and the US, with 82.2, 77.8 and 77.5 respectively.

Dr Augusto Lopez-Claro, editor of the report, was fairly positive about the UK's performance. "The UK is strong overall. We rank 131 countries, and to come in the top 10 is an achievement," he said, adding that with such small amounts separating the countries it may be possible for the UK to move up in next year's report.

One way in which the UK could rise in the rankings is by cutting the government deficit, according to Lopez-Claro. Countries like Sweden have little debt and score better as a result, he said.

Drilling down into the results a little deeper reveals that the UK is seventh in the world when it comes to adopting new technologies, but only 10th in terms for mobile penetration.

"Overall, the UK is operating on a sophisticated technology platform, and business is making good use of it," said Lopez-Claro.

"The UK does well in terms of institutional development, political stability and the effectiveness of government, but again, not as well as the Nordic countries."

One area where the UK is lagging behind by some distance is in the registering of new technology patents, where countries such as Taiwan and Israel put us to shame.