Best practises

Contract Research

Contract research, together with Strategic RDI are often the primary research service categories for a DIH and is of key importance to SMEs, larger companies and public entities to solve challenges and/or gain new knowledge not already available in the market. Contract research differs from Strategic RDI in that contract research is focused on shorter term projects (see figure below), but both categories are typically within one or more of the technology areas described in relation to the Strategic RDI service. 

Contract research is typically offered by a competence centre within a DIH to companies that are either too small to run their own R&D department, lacks in-depth knowledge about an area that needs development, or needs additional resources for a limited amount of time in connection with R&D-activities. The contract research can be consultancy-like services in direct cooperation with the industry or in the context of a research project. Contract research as a service is often targeted towards medium to large companies, government agencies, or institutes – and span from a few days up to 3-4 years in duration. Larger contract research activities with SMEs may typically involve some type of third-party funding such a national or European fund.

Traditional contract research projects may be too slow-moving (in terms of time to set up the project and carry it out) for start-ups as they typically need results at a relatively high pace. Nevertheless, start-ups can also benefit significantly from traditional contract research projects. The consultancy-like type of services is typically industry-led and more innovation than research. To this end, a company will ask for a service that it either cannot do or would find expensive to do itself and negotiate a commercial contract with organizations within a DIH (e.g., a competence centre or an SME). These contracts may range from about 10 hours for a site visit and a report to over 1500 hours for major work developing and integrating a solution series for a large company. The more typical size is between 100 and 300 hours for consultancy-like services.

Relation between “Contract research” and “Strategic RDI”. Multiple type of organizations can be involved in both types of initiatives. A DIH may often function as an “initiation mechanism” for establishing new research, development and/or innovation initiatives.

A driver for contract research is that the DIH gets money from those activities, and it aligns the interests of the DIH with those of the industry, which is positive. Negative effects with being too reliant on contract research is that the DIH is very exposed to market changes and will down prioritize long term strategic research. E.g. an institute that mostly does contract research for metal manufacturing businesses will suffer directly from a trade war. When the DIH will look for alternative partners in other areas, it is important that the DIH has not been too aligned with one industry to convincingly sell its research in markets new to that DIH.

For contract research it is very important to have a clear joint understanding of the strategy and goals of the customer. This is to ensure that the research is relevant for the customer, and that the results can be commercialized/industrialized in an acceptable manner and time-frame. To this end, there is a need for close and frequent dialog between a partner delivering contract research in a project and the customer. Similarly, the project development phase should not be underestimated. It has been found that proper and close collaboration between RTOs/universities and companies during the project development phase can lead to more efficient and targeted contract research collaboration. To achieve and maintain a common understanding of the goals of a contract research activity an incremental (new features are added for new iterations) and iterative (existing features are refined/revised for each iteration) R&D process with demonstrations for each iteration may have some benefits.

This will enable early-stage demonstrations that customers can evaluate and give feedback on to ensure that research activities are steered in a direction that is important to the company. Moreover, such a process can also help the customer of the contract research to determine what can be a minimum viable product (MVP) that they can sell to their customers or take into use in their organization.

A minimum viable product (MVP) is a version of a product with just enough features to satisfy early customers and provide feedback for future product development

A path to commercialization / industrialization of results from contract research can also include the involvement of system integrator companies – either during the project or toward the end of the project. This is discussed further in the next service on technical support on scale-up.