Enterprise Ireland's TechSearch initiative provides a cost-effective way for Irish businesses to enhance their technical expertise, writes Claire Shoesmith.
For many companies, technology is a very important but very costly part of their business. Enterprise Ireland's TechSearch initiative is designed to assist companies in examining the option of technology acquisition as a cost-effective way to enhance technical capability. It enables Irish companies to benefit from a business practice used by companies worldwide as an alternative or supplement to in-house research and development (R&D).
Awareness and uptake of technology licensing in Ireland is relatively low. As well as promoting the benefits of technology acquisition, the initiative supports Irish businesses through each step of the process, including the assessment of the company's existing technologies and processes and the evaluation of projects and contract negotiation.
Traditionally, the biomedical, food processing, electronics and automotive engineering industries have embraced the idea of technology acquisitions, although other companies, particularly small firms, have been slow to take up the practice, although it could save them money.
According to Jim Cuddy, manager of the technology and transfer department at Enterprise Ireland, the main benefit of buying technology is that it can improve a product or process without a huge investment of time, human resources or money. Moreover, the buying process often includes training and assistance on implementation, which leads to the market quicker and with more predictable costs.
The sharing of technology and ideas only became commonplace among multinationals in the late 1990s. A survey conducted by McKinsey & Co in 2004 found 63 per cent of respondents earned more than 10 per cent of their total corporate revenues from intellectual property licensing. Believe it or not, technology licensing is popular among many larger companies, which you would assume developed all their own technology. In fact, some of the world's most recognised technology firms, including Dell, Motorola, Lucent and Microsoft, regularly purchase technology to incorporate into their own designs.
From another standpoint, technology giant Texas Instruments supplies chips and basic technology design for most of its products and offers them in a licensed form. In many cases, leading multinationals operate licensing ventures to exploit non-core technology resulting from their own R&D.
The same goes for pharmaceutical companies. GlaxoSmithKline considers in-licensing a top priority and reports collaboration with a network of more than 50 other companies. It claims that expanding its technology-acquiring technique allows it to extend the potential of its R&D on a larger scale.
Technology acquisition can also benefit the workforces in educated countries. There is potential for the researchers working in the country's universities to develop technology that can then be licensed to a raft of different companies, generating revenues and providing work .
Business expenditure on R&D in the EU has grown from $116 billion in 2000 to $124 billion by 2003, and from $421 to $429 in the same period in the OECD member countries. More than one million patent applications are filed worldwide each year, creating vast technology resources for companies through licensing.
Moreover, there is potential from companies in India and China that are looking to make quick steps up the ladder of commercialisation and therefore are looking for technology they can buy and adapt to suit their own needs, rather than spending large amounts money starting from scratch themselves. In 2004, Irish businesses spent just over €1 billion on R&D, with only about 10 per cent of that amount on licensing. According to Cuddy, this is quite low compared to other countries.
He attributes the low take-up in Ireland to the fact that traditionally it was an area where the Government gave no assistance and it was also shrouded in legal uncertainty, which put people off. In the past, it tended to be the domain of larger companies such as Diageo and CRH, but now it is more used by smaller and medium-sized companies.
"There is an increasing trend internationally for companies to license technology," says Cuddy. "The feeling is that if you can find what you need elsewhere, then why reinvent the wheel?"
In many cases, companies will license raw technology from another source and then build their own product around that. This is common for Microsoft, which often licenses out basic hardware to other companies that then adapt it to suit their own needs. "This way, the companies get what they want but avoid some of the excessive costs of starting from scratch with the development," says Cuddy.
The principals of TechSearch have been around since 1991, though it was rebranded last year and since then the take-up of the service has increased dramatically, according to Cuddy. In the past 12 months, TechSearch has worked with about 120 companies compared with a past average of 50 a year.
"Things are pretty buoyant at the moment," he says.
It is a free service for the companies that are looking for technology to license and can also be used the other way round, and companies that have software they wish to license out can also seek partners through the programme. "It's an underexploited resource," says Cuddy, adding that while it is common in the biotech and informatics areas it is less used elsewhere.
