Tech-hunting CIOs should consider going back to school?not for extra credits, but for the tools to make their lives easier. Hundreds of colleges and universities offer access to research through their Offices of Technology Licensing (OTLs). The University of California at Berkeley’s OTL, for example, readily hawks The Psuedoflow Algorithm, a software component that promises to boost cross-supply chain query speeds anywhere from 25 percent to a whopping 32,500 percent. School reps will also tell you about the university’s Mobile People Architecture, which formats communications (faxes, e-mails, phone calls) to fit just about any device. But both come with a caveat: They might not work in the real world.
University research has traditionally been more about theoretical rather than applied science. But an accelerating rate of practical innovation on campus?particularly in IT?means that CIOs willing to invest their time will find the effort worthwhile. On occasion, the payoff will be a new product or technology suitable for internal use. But even if they don’t find something to run on their servers or connect to their networks, CIOs will almost always glean greater knowledge of what technology is coming down the pike. And that information can be valuable. Ashwin Rangan, CIO of Newport Beach, Calif.-based semiconductor maker Conexant, is unequivocal about his company’s relationships with local research universities: “It is a source of a competitive advantage.”
Much of today’s information technology?everything from optical fiber to the Internet?originated in academic re- search. These innovations traditionally go through a lengthy commercialization process, however, where companies take the concept pioneered at a university and turn it into a viable product or service?and it can take years. But this situation is beginning to change. During the last decade a confluence of circumstances, including a decrease in government research funding, industry’s increasing need for innovation and a greater percentage of applied research in the universities, has pushed academic and commercial interests closer together.
To facilitate school-business relationships, most research universities have OTLs and industry liaison groups tasked with keeping corporations involved in on-campus research. OTLs deal with specific technologies, says Katharine Ku, director of Stanford University’s OTL. Industry liaison programs, on the other hand, use newsletters, conferences and site visits to provide companies with a broader look at the research conducted across a university and to give members a chance to rub elbows with professors. Nearly 200 companies, including Ford Motor Co. and Pfizer, belong to MIT’s Industrial Liaison Program, for example.
In the quest for new technology, companies work with schools in three ways: directly funding research; licensing a research-quality technology directly from the school; and funding graduate students or professors to start their own companies.
The modern relationship between research universities and commercial interests dates from the end of World War II, when the military invested heavily in technical institutions?MIT and Stanford in particular. The goal was to develop innovative technologies that would help the United States win the Cold War. But most of the innovations in information technology from the ’60s through the ’80s were Defense Advanced Research Projects Agency (DARPA) projects, including the technologies that launched Cisco, Silicon Graphics and Sun Microsystems.
“Government saw it as their responsibility to fund research, especially that which might be relevant to the military,” says Thomas Hughes, professor emeritus at the University of Pennsylvania and chair of the National Research Council’s study on the funding of the computer revolution. “Until about 1980, the government was the major source of funds. Slowly, as the funding began to taper off, industry began to spend more.”
The decline in spending coincided with the slowdown and eventual end of the Cold War. The Department of Defense still sponsors considerable academic research (the military gives about $300 million a year to MIT’s off-campus Lincoln Labs, for example). But sources for the remainder have changed significantly during the past decade.
Corporations, which had slashed R&D budgets during the economic slump of the ’80s, returned to the university fold en masse, partly owing to the tech boom of the ’90s. At MIT, the percentage of industry-sponsored on-campus research has increased from 10 percent in the beginning of the ’90s to 20 percent today, or about $90 million, says Karl Koster, the university’s director of corporate relations.
Increased corporate involvement has coincided with a trend toward applied research meant to address real-world needs. During the Cold War, Hughes says, researchers received loose mandates and were allowed to address far-reaching theoretical problems. This free rein produced many well-known advances in computer technology, such as Unix, workstations and reduced instruction set computing (see “Academia’s New Economy,” Page 104). Today much of the computer science research conducted in universities uses real-world technology to address current problems, says Steve Halperin, professor and dean of the college of computer, mathematical and physical sciences at the University of Maryland (UMD) in College Park. Such projects could have a business impact as soon as someone builds a commercially scalable version. As recently as a decade ago most university technology was at least five to 10 years away from commercialization.
The trend toward applied research, however, is not a direct result of increased corporate funding. The senate passed the Bayh-Dole Act in 1980 and a series of amendments in 1984 that for the first time granted universities commercial rights to technology developed with any degree of federal funding. Patenting innovations and finding a company that could license and develop the technology into a full-fledged product emerged as an important revenue source, says Stanford’s Ku. And professors, thus assured of retaining their intellectual capital, became more inclined to undertake applied research.
The cheapest of the ways to actively benefit from university research is to license a promising technology and make it commercially viable. This approach, however, also takes the most internal effort, since a license is simply permission to use or commercialize a research-grade application and usually requires significant reengineering to make it enterprise-worthy. Conexant works with several universities, funds a wireless project at the University of California at San Diego and founded a student internship program with Kyungpook National University in Korea, among other things. In late 2000, says CIO Rangan, Conexant took a research-grade project-tracking concept and rudimentary application from University of California Irvine, which is just across the street from company headquarters.
The application went well beyond traditional project metrics like design and testing to include ongoing ROI calculations. But the software was far from business-ready. Rangan has five employees working on the project, which at this point doesn’t have a definitive end date.
Making the application enterprise-ready has taken longer than Rangan expected, but he says that directly licensing a technology for internal use is a strategy he would pursue again if he found another technology that was production-worthy. In this case, the potential benefit from the system (not to mention the negligible monetary investment) made it worthwhile.
Providing the students or professors who developed a technology with funding to turn their research into a product is more expensive, but it requires less hands-on work. “Everybody thinks we’re looking for the next new gadget to put in a car,” says Chris Johnson, venture fund manager with Ford in Dearborn, Mich. “[But] in the time I have been here we have done nothing for new vehicle technology. It’s been entirely manufacturing applications and enterprise applications.”
The automotive giant is a longtime member of MIT’s Industrial Liaison Program, and in June 2000 that foot in the door proved useful. Assistant Professor Matt Wall had developed a design-sharing technology that would work across CAD systems and allow companies to share only parts of a file. Now, with supply chain-wide collaboration coming closer to reality, Wall’s technology provided an opportunity for supply chain partners to team up while protecting their intellectual assets.
Ford decided to give Wall and his partners the funding he needed to develop a startup, Oculus Technologies, which would in turn sell the software to Ford. The software that came out of the university was rough, says Johnson. Ford did not want to license the software and turn it into something commercially viable itself?it would have cost too much money?but wanted to make sure that the product was developed with the automotive industry as a priority. Ford estimates that it will save $5 million to $15 million per vehicle design program through improved efficiency as a result of using Oculus’s system. “The technology might be two years out, but if we can get them an inside track we might be the first market they target,” says Johnson. “It has the potential to save millions of dollars for Ford, so the potential to save millions of dollars two years earlier is important.”
Fujitsu, the Japanese software giant, combined the two approaches, both sponsoring research and working directly with the academics. This is a costly venture for Fujitsu but one with a high return.
During the past few years, the University of Maryland had made a concerted effort to align itself more closely with industry. “My belief is that the science colleges that will succeed in this century are those that learn to interact with a nonacademic world,” says UMD’s Halperin. “It is important for generating an inflow of new questions and ideas, and providing a link between our undergrad and graduate students and the outside world where most will find careers.” Halperin’s effort to attract businesses paid off in April when Fujitsu funded Professor Ashok Agrawala’s Mindlab and occupied its own research facility literally next door.
Agrawala, whose previous research includes such projects as a real-time operating system that ran on any computer with a Pentium chip, started a dialogue with Fujitsu about sponsoring his current research, including wireless networking, in September 2000. (At the time he was also speaking with Cisco.) The Mindlab research?software for wireless devices that combines multiple personalized services with location-sensitive information?was much more practical than his previous efforts. It was also in line with markets that Fujitsu hoped to pursue. “Basically what we wanted to do fit in well with what they wanted,” he says. “There was very little tailoring [required].”
Agrawala hopes to pilot his software soon at one of the Smithsonian museums, where visitors will be able to use rented Compaq iPaqs to create their own gallery schedule agenda, make lunch reservations and purchase stuffed Spirit of St. Louis toy airplanes from the gift shop. The software allows devices to recommend exhibits based on user preferences and can even take advantage of location information to tell users when and in what direction they need to move in order to meet their friend for lunch.
Jonathan Agre, a director at Fujitsu Laboratories of America in College Park, says that before working with UMD, Fujitsu didn’t have location technology. Now they have demonstration systems and are working on research papers. Agre thinks that Fujitsu could have location-based software on the market within two years.
John Carrow, CIO of Blue Bell, Pa.-based software integrator Unisys, says that the need for a solid relationship with universities has never been stronger. “[But] from a CIO’s perspective, we are not looking five years out for technology,” he says. “We want to implement things that are up to speed. I don’t think many CIOs are in the R&D game. We want to help the business today.” Although Unisys has worked with Villanova University, Drexel University, the University of Pennsylvania and Rutgers University on different projects, Carrow says that the biggest benefits are having an advantage when it comes to hiring former students and generally staying educated on emerging technology.
“CIOs are always interested in what is coming down the pike,” he says. “And so knowing what is happening by staying close to university research helps you keep your company on the leading edge.”